Exhibit 2.1
ASSET PURCHASE AGREEMENT
AGREEMENT,
dated this 4th day of
February, 2004,
by and between
Coffee
Holding Co., Inc., a Nevada corporation ("Buyer") and Premier Roasters LLC, a
Delaware limited liability company
("Seller").
RECITALS:
This
Agreement is made with reference to the following facts and
circumstances:
(a)
Seller
owns certain assets used in connection with its coffee
business and
operations
located at La Junta,
Colorado and Rocky
Ford, Colorado (the "Facilities").
(b)
Seller
desires to sell certain of its assets to Buyer and Buyer
desires to purchase
such assets from
Seller, all on the
terms and
conditions contained herein.
AGREEMENT:
In
consideration of the foregoing recitals which are incorporated with
and
are made a part of this Agreement,
and in further
consideration
of the mutual
covenants and agreements hereinafter contained, the parties hereto agree,
subject to the terms and conditions
hereinafter set forth, as follows:
1. Sale of
Properties and Assets. Seller hereby sells, conveys, assigns,
transfers and delivers to Buyer, free and clear of all liens, claims and
encumbrances, the following described
properties and assets
(collectively the
"Assets"):
1.1 Equipment.
All installed and uninstalled equipment, furniture
and fixtures owned or used by the Seller, presently located at
the Facilities,
including but not limited to those assets
described on Exhibit 1.1 attached hereto, and all additions
thereto, replacements thereof, and substitutions
therefore,
wherever located,
relating to any of the foregoing (the
"Equipment").
1.2 Labels.
All labels,
both finished and unfinished, for all
coffee products currently owned by Seller (the "Labels").
1.3 Records.
All customer lists, software (to the extent the
software can be assigned), sales records, purchase records and
other books and records, all sales and administrative
assets
owned by Seller.
2.
Excluded Assets; Liabilities.
2.1 Excluded
Assets. Buyer shall not purchase any assets of Seller
other than those
described in Section 1 above and shall
not
purchase or assume any
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contract or agreement other than those contracts described in
Exhibit 2.1 (the "Contracts").
2.2 Liabilities.
Buyer does not assume
and shall not be deemed to
have assumed any liability or obligation of Seller including,
but not limited to:
2.2.1 Any liability
or obligation of Seller for any taxes
(including interest and penalties thereon) imposed on or
measured by
Seller's income for any period or
periods
ending before
or after the date hereof, including
foreign, federal,
state and local income
taxes, or any
liability or
obligation of Seller
for any
withholding
taxes, Social Security taxes, unemployment taxes, excise
taxes, capital
stock taxes,
sales taxes, use taxes,
gross receipt taxes or other foreign, federal, state or
local taxes of any nature (including all penalties) with
respect to any time period;
2.2.2 Any liability or
obligation of Seller
for any accounts
payable or under any loan agreement, lease agreement or
any other contract or
agreement (except as otherwise
specifically provided for herein);
2.2.3 Any liability or obligation of Seller arising out of or
resulting from
any breach by Seller of any lease,
contract or other
agreement to which Seller is a party,
whether or not such
agreements
are assumed by Buyer
hereunder;
2.2.4 Any liability or obligation of Seller arising out of or
resulting from any
violation by Seller of
any foreign,
federal, state or
local laws or regulations including,
without limitation,
environmental laws and
regulations
or from the sale by Seller of any product;
2.2.5 Any liability or obligation arising out of or resulting
from any release or disposal by Seller of any Hazardous
Substances, Pollutants
or Contaminants (as
these terms
are defined
under
applicable
federal
and state
environmental laws);
2.2.6 Any claims, actions, suits, proceedings, arbitrations,
consent decrees,
product claims or litigation relating
to, or resulting from, actions or omissions of Seller;
2.2.7 Any
liabilities for
defective
product,
product
replacements, allowances, warranties (whether express or
implied) and refunds for damaged, defective or returned
product provided by Seller;
2.2.8 Any and all workers' compensation (including, without
limitation,
weekly benefits,
medical rehabilitation
expenses and any other
expenses or
obligations)
with
respect to
injuries or illnesses suffered
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by any employee of
Seller resulting
from occurrences
prior to the Closing Date, whether known or unknown, as
of the Closing Date; or
2.2.9 Any and all
liabilities or obligations for all employee
matters, severance,
termination or similar
obligations
of Seller or any of its predecessors or affiliates or
resulting from
the consummation of the transactions
contemplated herein including, without limitation, any
liability resulting
from or arising in connection with
the Union Contract (as defined in Section 8.13 below) or
resulting or in connection with any multi-employer plan
as defined in Section
3(37) of the Employee
Retirement
Income Security Act of
1974, as amended
("ERISA") and
any liability, fines
and/or penalties resulting from or
arising in connection
with the Worker
Adjustment
and
Retraining Notification Act ("WARN Act") and all similar
state statutes.
3.
Consideration
Payable to Seller by Buyer. Subject to the terms and
conditions of this Agreement, and in consideration of the sale, conveyance,
assignment, transfer and delivery by Seller of
the Assets pursuant to Section 1
hereof, Buyer agrees as follows:
3.1 Assumption
of Contracts. Buyer does not assume or agree to
pay, perform and
discharge any of the
obligations of
Seller
accruing before or on
the Closing
Date with respect to the
Contracts.
3.2 Purchase
Price for the
Assets. The purchase price for the
Assets described in Section 1 (the "Purchase Price") shall be
an amount equal to $825,000.
3.3 Payment of
Purchase Price.
At Closing, Buyer shall pay, in
immediately available
funds, an aggregate cash payment of
$820,000 (the "Payment"), which shall be allocated among,
and
paid directly to, the
parties shown on the
payment schedule
attached hereto as
Exhibit 3.3.1 (the "Payment Schedule") in
the respective
amounts shown on the Payment Schedule. The
remaining $5,000 (the "Escrow Amount") shall be held in escrow
with an escrow agent
designated by Buyer (the "Escrow Agent")
pursuant to an Escrow Agreement in the form attached hereto as
Exhibit 3.3.2
(the "Escrow Agreement") to satisfy any
indemnity or other claims by Buyer against Seller, provided
that any portion of the Escrow Amount which remains in escrow
after sixty (60) days after the Closing Date and against which
no claims have been
made shall be released to the party shown
as "Escrow Amount Beneficiary" on the Payment Schedule.
3.4 Allocation
of Purchase Price.
The parties
hereto agree that
the Purchase
Price shall be allocated to the Assets in
accordance with
Exhibit 3.4 hereto. The parties hereto
acknowledge that such
allocation
represents the fair
market
value of the Assets
and shall be
binding upon the parties
hereto for
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federal and state tax purposes. Each party covenants to report
gain or loss or cost
basis, as the case may
be, in a manner
consistent with
Exhibit 3.4 for federal and state tax
purposes. As soon as
practicable after
Closing, the
parties
shall exchange
mutually acceptable and completed IRS Forms
8594 which
they
shall
use to report the transaction
contemplated under
this Agreement
to the Internal Revenue
Service in accordance with such allocation.
4.
Closing. Subject to the terms and conditions contained in this
Agreement, the transfer of the Assets by
Seller to Buyer (the
"Closing") will
take place simultaneously with the
execution of this Agreement at the offices of
Thacher Proffitt & Wood LLP, 25
DeForest Avenue, Summit, NJ 07901, or some other
time and place as the parties may mutually
agree. The actual date on which the
Closing occurs is herein referred to as the
"Closing Date".
4.1 Buyer's
Obligations at Closing. At the Closing, Buyer shall:
4.1.1 Payment. Pay to Seller, in immediately available funds,
the Payment.
4.1.2 Buyer Deliveries. Deliver, or cause to be delivered,
to
Seller a certificate
of a senior executive
officer of
Buyer, dated as of the
Closing Date,
certifying that:
(i) each of the
representations and warranties of Buyer
contained in this
Agreement is true and
correct in all
material respects
(if not subject to a materiality
qualifier) or
in all respects (if subject to a
materiality qualifier) as of the Closing Date (except to
the extent
such
representations
and warranties
specifically relate to
an earlier date,
in which case
such representations
and warranties will be true and
correct as of such
earlier date); and (ii) Buyer has
performed or complied in all material respects with all
agreements and
covenants required by
this Agreement to
be performed or
complied with by it on
or prior to the
Closing Date (the "Buyer Closing Deliveries").
4.2 Seller's
Obligations at Closing. At the Closing, Seller shall
deliver or cause to be delivered, to Buyer the following (the
"Seller Closing Deliveries"):
4.2.1
Instruments of Conveyance. Such assignments, bills of
sale, endorsements,
notices, consents,
assurances and
such other instruments
of conveyance and transfer as
counsel for Buyer shall reasonably request and as shall
be effective to vest in Buyer good and marketable title
to all of the Assets. Simultaneously with such delivery,
Seller shall take all
such steps as may be necessary to
grant Buyer full
access to the
Facilities
and to put
Buyer in actual
possession and
control of the
Assets.
Seller further agrees that it will at any time, and from
time to time after the Closing Date, upon
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the reasonable request
of Buyer and without
additional
consideration, do,
execute, acknowledge and deliver, or
will cause
to be done, executed, acknowledged and
delivered, all
such
further
acts,
assignments,
transfers,
conveyances,
powers of
attorney
and
assurances as may be
required in conformity
with this
Agreement for
the better assigning, transferring,
granting, conveying, assuring and confirming to Buyer or
to its successors and assigns, or for aiding and
assisting in collecting and reducing to possession, any
or all of the Assets or other properties sold, conveyed,
assigned, transferred
and delivered at the Closing to
Buyer as provided herein.
4.2.2 Releases.
Releases or other
appropriate
evidence of
termination reasonably acceptable to Buyer, effective as
of the Closing, of the
secured debt (including related
security
agreements,
guaranties and
other related
documents), and all other claims of controlling members,
directors and
officers. A list of all such required
releases is
attached as Section 4.2.2 of Seller's
Disclosure Schedule (the Secured Debt").
4.2.3 Payment of Employees. Evidence that Seller has paid
all
amounts due to its
employees at Seller's La Junta,
Colorado Facility (the "La Junta Employees") through and
including the Closing Date.
4.2.4 Non-Competition
Agreement. Copy of the
non-competition
agreement with Seller
and Thomas Paper, CEO
of Seller,
to be effective
as of the Closing Date
in the form set
forth as Exhibit 5.4.
4.2.5 Opinion of Counsel. An opinion of counsel to the
Seller
substantially in the
form attached
hereto as Exhibit
4.2.5.
4.2.6 Certificates of Good Standing. Certificates dated as of
a day as close as
practicable to the
Closing Date from
appropriate
Governmental
Entities as
to the good
standing or corporate existence, as applicable, of the
Seller.
4.2.7 Officer's Certificate. Certificate of a senior executive
officer of
Seller, dated as of the Closing Date,
certifying that:
(i) each of the
representations
and
warranties of Seller contained in this Agreement is true
and correct in all material respects (if not subject to
a materiality
qualifier) or in all respects (if subject
to a materiality
qualifier)
as of the Closing Date
(except to
the extent such representations and
warranties
specifically relate to
an earlier date,
in
which case such
representations and
warranties will be
true and correct as of such earlier date); (ii) Seller
has performed or complied in all material respects with
all agreements and covenants required by this Agreement
to be performed
or complied
with by it on or
prior
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to the Closing
Date; and (iii) there has not been
any
change, occurrence or circumstance in the Assets, having
or that would
have a material adverse effect on the
Assets.
4.2.8 Secretary's Certificate.
Certificate, including
attachments, dated as of the Closing Date, signed by the
Secretary of Seller, relating to Seller's Certificate of
Formation and Operating Agreement, resolutions of the
Board of Directors of Seller unanimously authorizing the
transactions
contemplated by
this Agreement, and
incumbency.
4.2.9 Other Documents.
Such other documents
as Buyer and its
counsel shall reasonably request.
5.
Employee Matters.
Seller shall terminate as of the Closing Date all of
the La Junta Employees. Buyer may extend offers of employment to the La
Junta
Employees as Buyer may choose upon terms
and conditions
acceptable to Buyer. In
addition, the parties agree as follows:
5.1 Severance.
Seller shall be
responsible
for any severance
or
similar obligations payable to any employee or former employee
of Seller resulting
from events occurring
on or prior to the
Closing Date, or resulting from the transactions contemplated
herein including,
without limitation,
obligations under
the
WARN Act and comparable state statutes.
5.2 Seller
Employees. Buyer shall
have no obligation or liability
with respect
to any employee or former employee or
compensation due to
any employee or former employee of Seller
and Seller shall be
responsible for any
and all
liabilities
and
obligations
with respect to any employee or former
employee of Seller.
5.3 Offers of
Employment.
No employee of Seller
is precluded by
agreement from accepting an offer of employment with Buyer.
5.4 Employment
Restrictions. Buyer
shall enter into and execute a
non-competition agreement with Seller and Thomas Paper, CEO of
Seller, to be effective as of the Closing Date in the form set
forth as Exhibit 5.4.
6.
Representations,
Warranties
and Covenants of Seller. Seller hereby
represents, warrants, and covenants to and
with Buyer as follows, subject in all
cases to exceptions and qualifications set forth in Seller's Disclosure
Schedule:
6.1
Organization, Good
Standing and Corporate Power. Seller is a
limited liability company duly organized, validly existing and
in good standing
under the laws of the
State of Delaware and
has the corporate power to own, operate and lease its
properties and carry on its business as now being conducted.
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6.2 Corporate
Authorization;
Binding
Effect. The execution,
delivery and
performance of this
Agreement by Seller and the
consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action
on the part of Seller
and this Agreement constitutes the
legal, valid and binding obligation of Seller, and enforceable
against Seller in accordance with its terms.
6.3 No
Authorization Required. No consent, approval, authorization
or order of, or
qualification with,
any court, regulatory
authority or other
governmental
body or any third
party is
required for the
consummation by Seller
of the
transactions
contemplated by this Agreement.
6.4 Effect of
Agreement.
Except as discussed on Section 6.4 of
Seller's Disclosure
Schedule, the execution, delivery and
performance of this
Agreement and the consummation of the
transactions
contemplated hereby do
not, with or without the
giving of notice or the lapse of time or both, (a) violate any
provision of law, statute, rule or regulation to which
Seller
is subject; (b) violate any judgment, order, writ or decree of
any court applicable
to Seller;
or (c) result in the
breach
of, or conflict with, any term, covenant, condition or
provision of, result in the modification or termination of,
constitute a default
under, or result in the creation or
imposition of
any lien, security interest, charge or
encumbrance upon any
of the properties
or assets of
Seller,
pursuant to
any corporate charter, by-law, commitment,
contract or other agreement or instrument to which Seller is a
party or by which
Seller or any of its assets or property is
or may be bound or
affected or from which Seller derives
substantial benefits.
6.5 Financial
Statements. Seller has heretofore delivered to Buyer
copies of Seller's
balance sheets for the
fiscal years ended
December 31,
2001 and 2002,
and the related
statements
of
income for the years then ended. Seller has also delivered to
Buyer copies of its balance sheets and related statements of
income for the year to date period ended November 29, 2003.
All such financial statements are collectively referred to as
the "Financial
Statements". The
Financial Statements present
fairly the financial
position and results
of operations
of
Seller as of the years and periods then ended, in conformity
with generally
accepted accounting
principles
applied on a
basis consistent with
prior years and periods. The Financial
Statements do not
contain any
material items of special or
nonrecurring income or
any other income not earned in the
ordinary course of business. Seller has not used any
improper
accounting practice
for the purpose of not reflecting or
incorrectly reflecting
in the financial
statements or
books
and records of Seller
any properties,
assets, liabilities,
revenues or expenses, and all books and records of Seller have
been maintained
and prepared in
conformity
with generally
accepted accounting principles, consistently followed.
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6.6 Absence of
Undisclosed Liabilities. Seller does not, as of the
date hereof,
have any material (individually or in the
aggregate) liabilities
(secured or unsecured and whether
accrued, absolute, direct, indirect, contingent or otherwise),
except as disclosed
on Section
6.6 of Seller's Disclosure
Schedule.
6.7 Title to
Assets, Absence of Liens, Condition of Assets. Seller
has good and
marketable
title to all of the Assets, and,
except as disclosed
on Section
6.7 of Seller's Disclosure
Schedule, the Assets are free and clear of all pledges, liens,
defects, leases,
licenses, equities, conditional sales
contracts, charges, claims, encumbran
