COFFEE HOLDING CO INC
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Filed
by the Registrant [X]
Filed
by a Party other than the Registrant [ ]
Check
the appropriate box:
[
] Preliminary Proxy Statement
[
]
Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X]
Definitive Proxy Statement
[
] Definitive Additional Materials
[
] Soliciting Material Pursuant to §240.14a-12
COFFEE HOLDING CO., INC.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
[X] No
fee required
[ ]
Fee computer on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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1)
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Title
of each class of securities to which transaction
applies:
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2)
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Aggregate
number of securities to which transaction applies:
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3)
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Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was
determined):
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4)
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Proposed
maximum aggregate value of transaction:
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5)
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Total
fee paid:
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[ ]
Fee paid previously with preliminary materials.
[ ]
Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
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1)
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Amount
Previously Paid:
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2)
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Form,
Schedule or Registration Statement No.:
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3)
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Filing
Party:
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4)
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Date
Filed:
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COFFEE HOLDING CO., INC.
3475 Victory Boulevard
Staten Island, NY 10314
February
28, 2020
Dear
Stockholder:
You are
cordially invited to attend the 2020 Annual Meeting of Stockholders
of Coffee Holding Co., Inc., or the Annual Meeting, which will be
held on Thursday, April 23, 2020 at 3:00 p.m., local time, at the
Hilton Garden Inn located at 1100 South Avenue, Staten Island, New
York 10314, for the following purposes:
●
to elect two
directors to the Board of Directors to hold office for the
following three years until their successors are
elected;
●
to ratify the
appointment of Marcum LLP as the Company’s independent
registered public accounting firm for our fiscal year ending
October 31, 2020;
●
to hold an advisory
vote on executive compensation; and
●
to transact any
other business that may properly come before the meeting or any
adjournment thereof.
Please
vote over the Internet, by Fax or by telephone by following the
instructions provided to you in the Notice of Internet Availability
of Proxy Materials, which we will send to you on February 28, 2020,
whether or not you plan to attend the Annual Meeting.
Alternatively, if you request a paper copy and prefer not to vote
over the Internet, by Fax or by telephone please complete, sign and
return the proxy card.
Your vote is
important regardless of the number of shares you own. Voting by
Internet, Fax or by telephone or by returning the proxy card will
not prevent you from voting in person (provided you follow the
revocation procedures described in the accompanying proxy
statement) at the Annual Meeting but will assure that your vote is
counted if you cannot attend.
On
behalf of the Board of Directors and the employees of Coffee
Holding Co., Inc., we thank you for your continued support and look
forward to seeing you at the Annual Meeting.
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Coffee Holding Co., Inc.
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By:
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/s/ Andrew Gordon
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Andrew
Gordon
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President and Chief Executive Officer
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Notice of Annual Meeting of Stockholders
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Date:
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Thursday, April 23, 2020
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Time:
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3:00 p.m., Local Time
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Place:
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Hilton Garden Inn
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1100 South Avenue
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Staten Island, New York 10314
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At our
2020 Annual Meeting of Stockholders (the “Annual
Meeting”), we will ask you:
1.
To elect two
directors to serve for a three-year term to expire at the 2023
annual meeting of stockholders. The following directors have been
nominated by the Nominating and Corporate Governance Committee of
the Board of Directors:
●
David
Gordon
●
John
Rotelli
2.
To ratify the
appointment of Marcum LLP as Coffee Holding Co., Inc.’s
independent registered public accounting firm for the fiscal year
ending October 31, 2020;
3.
To hold an advisory
vote on executive compensation; and
4.
To transact any
other business as may properly come before the Annual
Meeting.
The
Board of Directors recommends that you vote “FOR” each
of the proposals at this year’s Annual Meeting.
You may
vote at the Annual Meeting (or any adjournment or postponement of
the Annual Meeting) if you were a holder of common stock of Coffee
Holding Co., Inc., par value $0.001 per share, at the close of
business on February 25, 2020, or the Record Date. Only
stockholders of record at the close of business on the Record Date
are entitled to notice of, and to vote at, the Annual
Meeting.
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By
Order of the Board of Directors,
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By:
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/s/ David Gordon
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David
Gordon
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Secretary
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Staten
Island, New York
February
28, 2020
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE 2020 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 23,
2020: The Company’s Proxy Statement for the 2020 Annual
Meeting of Stockholders and the Annual Report to Stockholders for
the fiscal year ended October 31, 2019, are available at
https://www.iproxydirect.com/jva.
You are cordially invited to attend the Annual Meeting. To be sure
your vote is counted and assure a quorum is present, it is
important that you vote your shares regardless of the number of
shares you own. The Board of Directors urges you to vote over the
Internet by going to https://www.iproxydirect.com/JVA or by Faxing
your Proxy Card to 202-521-3464 or by telephone by calling
1-866-752-VOTE (8683) following the instructions in the Notice of
Internet Availability of Proxy Materials or, if you request a paper
copy of the proxy materials, to sign, date and mark the proxy card
promptly and return it to Coffee Holding. Voting over the Internet,
Fax or by telephone or by returning the proxy card will not prevent
you from voting in person if you attend the Annual
Meeting.
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THE MEETING
General
Coffee
Holding Co., Inc. (“Coffee Holding”) is a Nevada
corporation. As used in this proxy statement, “we,”
“us,” “our” and the “Company”
refer to Coffee Holding. The term “Annual Meeting” as
used in this proxy statement refers to the 2020 Annual Meeting of
Stockholders and includes any adjournment or postponement of the
Annual Meeting.
Pursuant to the
notice and access rules adopted by the Securities and Exchange
Commission, or SEC, Coffee Holding has elected to provide its proxy
statement and annual report to stockholders over the Internet
through a “notice only” option. Accordingly, we will
mail a Notice of Internet Availability, or Internet Availability
Notice, on February 28, 2020 to our stockholders of record and
beneficial owners. The Internet Availability Notice provides
instructions on how you may access this proxy statement and our
2019 Annual Report on the Internet at
https://www.iproxydirect.com/JVA or request a printed copy at no
charge. In addition, our proxy materials provide instructions on
how you may request to receive, at no charge, all proxy materials
in printed form by mail. Your election to receive proxy materials
by mail will remain in effect until you revoke it.
The
Board of Directors, or the Board, is soliciting your proxy to vote
at the Annual Meeting. This proxy statement summarizes the
information you will need to know to cast an informed vote at the
Annual Meeting. You do not need to attend the Annual Meeting to
vote your shares. If you requested a paper copy of the proxy
materials, you may simply complete, sign and return the proxy card
and your votes will be cast for you at the Annual Meeting or you
may vote online at https://www.iproxydirect.com/JVA. This process
is described below in the section entitled “Voting
Rights.”
This
proxy statement and the Notice of Annual Meeting are dated February
28, 2020. If you owned shares of common stock of Coffee Holding,
par value $0.001 per share, at the close of business on February
25, 2020, or the Record Date, you are entitled to vote at the
Annual Meeting. On the Record Date, there were 5,569,349 shares of
common stock of Coffee Holding outstanding.
Purpose of Annual Meeting
At the
Annual Meeting, you will be asked to vote:
(a)
to elect two
directors, each to serve for a three-year term that will expire at
the 2023 annual meeting of stockholders;
(b)
to ratify the
appointment of Marcum LLP, or Marcum, as Coffee Holding’s
independent registered accounting firm for the fiscal year ending
October 31, 2020;
(c)
to hold an advisory
vote on executive compensation; and
(d)
to transact any
other business that may properly come before the Annual
Meeting.
The
Annual Meeting will be held on Thursday, April 23, 2020 at 3:00
p.m., local time, at the Hilton Garden Inn located at 1100 South
Avenue, Staten Island, New York 10314. If you need to obtain
directions to the Annual Meeting, please contact Myles Felker in
our Investor Relations Department at (718) 832-0800 or
1-800-458-2233.
Quorum
A
quorum of stockholders is necessary to hold a valid meeting. If the
holders of at least a majority of the total number of the
outstanding shares of common stock entitled to vote are represented
in person or by proxy at the Annual Meeting, a quorum will exist.
We will count proxies marked as “abstain”,
“withhold” and broker non-votes as shares present to
determine the total number of shares present at the Annual
Meeting.
1
Voting Rights
You are
entitled to one vote at the Annual Meeting for each share of the
common stock of Coffee Holding that you owned as of record at the
close of business on February 25, 2020. The number of shares you
own (and may vote) is listed on your proxy card.
You may
vote your shares in person at the Annual Meeting, by Internet, by
fax, by telephone or by returning the proxy card by mail. To vote
in person, you must attend the Annual Meeting and obtain and submit
a ballot, which we will provide to you at the Annual Meeting.
If your shares are not registered
in your own name, you will need appropriate documentation from your
stockholder of record to vote in person at the Annual
Meeting.
Examples of such documentation include a
broker’s statement, letter or other document that will
confirm your ownership of shares of Coffee Holding.
To vote
over the Internet, you must go to https://www.iproxydirect.com/JVA.
To vote your shares by Fax, you must complete your proxy card and
Fax it to 202-521-3464. To vote by telephone you must call
1-866-752-VOTE (8683). To vote by proxy, you must request a paper
copy of the proxy materials and you must complete, sign and return
the proxy card by mail. If you properly complete your proxy card
and send it to us in time to vote, your “proxy” (one of
the individuals named on your proxy card) will vote your shares as
you have directed.
If you sign the
proxy card but do not make specific choices, your proxy will vote
your shares FOR each of the proposals identified in the Notice of
the Annual Meeting.
If any other matter is presented, your
proxy will vote your shares as a majority of the Board determines.
As of the date of this proxy statement, we know of no other matters
that may be presented at the Annual Meeting, other than those
listed in the Notice of the Annual Meeting.
If you
hold your shares through a bank, brokerage firm or other nominee,
you should vote your shares in accordance with the steps required
by such bank, brokerage firm or other nominee.
Vote Required
Proposal 1 relates
to the election of directors. For Proposal 1 you may vote your
shares “for” or “withhold.” Pursuant to the
Company’s Bylaws, a nominee will be elected by the vote of a
plurality of the votes cast by the holders of the Company’s
shares of common stock (meaning that the two director nominees who
receive the highest number of shares voted “for” their
election are elected). Only shares that are voted in favor of a
particular nominee will be counted toward such nominee’s
achievement of a plurality. You may not vote your shares
cumulatively for the election of directors. “Withhold”
votes, if any, and broker non-votes, if any, are not considered
votes cast for the foregoing purpose, and will have no effect on
the election of the nominees.
Proposal 2 relates
to the appointment of Marcum as the Company’s independent
registered accounting firm for fiscal year ending October 31, 2020.
For Proposal 2, you may vote your shares “for”,
“against” or “abstain.” Based on the
Company’s Bylaws, the affirmative vote of a majority of the
votes cast present in person or by proxy at the Annual Meeting is
necessary to ratify Proposal 2 (meaning the number of shares voted
“for” Proposal 2 must exceed the number of shares voted
“against” Proposal 2). Abstentions, if any, and broker
non-votes, if any, will have no effect on this proposal. The
Company is not required to seek stockholder approval for the
appointment of our independent registered accounting firm, but the
Company’s Audit Committee and full Board believe it is sound
corporate practice to seek such approval. If a majority of such
stockholders does not vote to ratify the appointment of the
independent registered accounting firm, the Audit Committee will
investigate the reasons for stockholder rejection and will
re-consider the appointment. Even if the selection is ratified, the
Audit Committee in its discretion may direct the appointment of a
different independent registered public accounting firm at any time
during the year if it determines that such change would be in the
best interests of us and our stockholders.
Proposal
3 relates to an advisory vote on executive compensation. For
Proposal 3, you may vote your shares “for”,
“against” or “abstain.” Based on the
Company’s Bylaws, the affirmative vote of a majority of the
votes cast present in person or by proxy at the Annual Meeting is
necessary to ratify Proposal 3 (meaning the number of shares voted
“for” Proposal 3 must exceed the number of shares voted
“against” such proposal). Abstentions, if any, and
broker non-votes, if any, will have no effect on this
proposal.
The
Board has determined that a vote in favor of Proposal 1, Proposal 2
and Proposal 3 is in the best interests of Coffee Holding and its
stockholders and unanimously recommends a vote
FOR
each of the director nominees and
FOR
each of the
proposals.
2
Shares Held in “Street Name” and Broker
Non-Votes
If you
own shares through a bank, broker, trust or other nominee rather
than in your own name, you are the beneficial owner of shares, but
considered to be holding the shares in “street name.”
If your shares are held in street name, these proxy materials are
being forwarded to you by your broker, bank or other record holder,
along with a voting instruction card. As the beneficial owner, you
have the right to direct your record holder how to vote your
shares, and the record holder is required to vote your shares in
accordance with your instructions.
Banks,
brokers or others acting as nominees are permitted to use
discretionary voting authority to vote proxies for proposals that
are deemed “routine” by the New York Stock Exchange,
but are not permitted to use discretionary voting authority to vote
proxies for proposals that are deemed “non-routine” by
the New York Stock Exchange. A broker “non-vote” occurs
when a proposal is deemed “non-routine” and a nominee
holding shares for a beneficial owner does not have discretionary
voting authority with respect to the matter being considered and
has not received instructions from the beneficial owner. The
determination of which proposals are deemed “routine”
versus “non-routine” may not be made by the New York
Stock Exchange until after the date on which this proxy statement
has been mailed to you. As such, it is important that you provide
voting instructions to your bank, broker or other nominee, if you
wish to determine the voting of your shares. If the New York Stock
Exchange determines any of our proposals to be
“non-routine,” a failure to vote, or to instruct your
broker how to vote any shares held for you in your broker’s
names will have no effect with respect to Proposal 1, Proposal 2 or
Proposal 3.
The
Board of Directors is not aware of any other matters to be
presented for action at the meeting, but if other matters are
properly brought before the meeting, shares represented by properly
completed proxies received by mail, telephone, Fax or the Internet
will be voted in accordance with the judgment of the persons named
as proxies.
Changing Your Vote after Voting over the Internet or Revoking Your
Proxy
You may
change your vote by voting in person at the Annual Meeting even if
you previously voted over the Internet. Alternatively, you may
change your vote by contacting Issuer Direct Corporation by e-mail
at
proxy@iproxydirect.com
or by
telephone at (919) 481-4000, whose contact information will be
provided in the Internet Availability Notice, and then re-voting
over the Internet following the instructions provided.
You may
revoke your proxy at any time before it is exercised
by:
●
filing with our
Secretary, a letter revoking the proxy;
●
submitting another
signed proxy with a later date; or
●
attending the
Annual Meeting and voting in person, provided you file a written
revocation with the Secretary of the Annual Meeting prior to the
voting of such proxy.
If your shares are not registered in your own
name, you will need appropriate documentation from your stockholder
of record to vote in person at the Annual Meeting.
Examples
of such documentation include a broker’s statement, letter or
other document that will confirm your ownership of shares of Coffee
Holding.
Solicitation of Proxies
Coffee
Holding will pay the costs of soliciting proxies from its
stockholders. Directors, officers or employees of Coffee Holding
may solicit proxies by mail, telephone or other forms of
communication. We will also reimburse banks, brokers, nominees and
other fiduciaries for the expenses they incur in forwarding the
proxy materials to you.
Obtaining Copies of the Proxy Materials or the Annual Report on
Form 10-K
If you
would like a full set copy of the proxy materials or if you would
like a copy of our Annual Report on Form 10-K and audited financial
statements for the fiscal year ended October 31, 2019 (without
exhibits), which was filed with the SEC on January 29, 2020, we
will send you a copy free of charge via mail or email. Please write
to or call:
David
Gordon, Secretary
Coffee
Holding Co., Inc.
3475
Victory Boulevard
Staten
Island, New York 10314
(718)
832-0800
3
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following table shows the number of shares of Coffee
Holding’s common stock, par value $0.001 per share,
beneficially owned by (i) each person known to be the owner of 5%
or more of our common stock, (ii) each director and nominee, (iii)
the Named Executive Officers identified in the Summary Compensation
Table included elsewhere in this proxy statement and (iv) all
directors and executive officers of Coffee Holding as a group, as
of February 25, 2020. The percent of common stock outstanding was
based on a total of 5,569,349 shares of Coffee Holding’s
common stock outstanding as of February 25, 2020. Except as
otherwise indicated, each person shown in the table has sole voting
and investment power with respect to the shares of common stock
listed next to his or her name. The address for each person shown
in the table is c/o Coffee Holding Co., Inc., 3475 Victory
Boulevard, Staten Island, New York 10314.
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Name
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Position
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Amount
and
Nature
of
Beneficial
Ownership
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Percent
of
Common
Stock
Outstanding
(%)
(1)
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Directors
and Executive Officers
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Andrew
Gordon
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President, Chief
Executive Officer, Chief Financial Officer, Treasurer and
Director
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394,083
(2)
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6.9
%
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David
Gordon
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Executive Vice
President - Operations, Secretary and Director
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475,854
(3)
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8.4
%
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Gerard
DeCapua
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Director
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14,100
(4)
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*
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Daniel
Dwyer
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Director
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19,900
(5)
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*
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Barry
Knepper
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Director
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15,000
(6)
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*
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John
Rotelli
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Director
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15,850
(7)
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*
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George F.
Thomas
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Director
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5,600
(8)
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*
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All directors and
executive officers as a group (7 persons)
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940,387
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16.6
%
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______________
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* Less
than 1.0%
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(1)
Beneficial
ownership includes shares of common stock as to which a person or
group has sole or shared voting power or investment power. Shares
of common stock subject to stock options that are exercisable
currently or within 60 days of February 25, 2020, are deemed
outstanding for purposes of computing the number of shares
beneficially owned and percentage ownership of the person or group
holding such stock options, warrants or convertible securities, but
are not deemed outstanding for computing the percentage of any
other person
(2)
Includes 4,000
shares owned by Mr. A. Gordon directly, a stock option to purchase
349,000 shares held directly by Mr. A Gordon, of which 116,333
shares are exercisable within sixty days of February 25, 2020, and
273,750 shares owned indirectly by Mr. A. Gordon through A. Gordon
Family Ventures LLC.
(3)
Includes 357,181
shares owned by Mr. D. Gordon directly, a stock option to purchase
281,000 shares owned directly by Mr. D. Gordon, of which 93,666
shares are exercisable within sixty days of February 25, 2020, and
25,007 shares indirectly held by Mr. Gordon as custodian for his
minor child.
(4)
Includes 100 shares
and an option to purchase 14,000 shares owned directly by Mr.
DeCapua.
(5)
Includes 5,900
shares and an option to purchase 14,000 shares owned directly by
Mr. Dwyer.
(6)
Includes 1,000
shares and an option to purchase 14,000 shares owned directly by
Mr. Knepper.
(7)
Includes 1,850
shares and an option to purchase 14,000 shares owned directly by
Mr. Rotelli.
(8)
Includes 2,000
shares owned by Mr. Thomas directly, an option to purchase 3,000
shares owned by Mr. Thomas directly, and 600 shares owned by Mr.
Thomas’ wife.
4
____________________________________
PROPOSAL 1
ELECTION
OF DIRECTORS
____________________________________
Coffee
Holding has a classified Board, divided into three classes, and the
term of David Gordon and John Rotelli will expire on the date of
the 2020 Annual Meeting. Coffee Holding’s Board currently
consists of seven members. The Nominating and Corporate Governance
Committee of the Board has re-nominated David Gordon and John
Rotelli as nominees with a three-year term expiring at the 2023
annual meeting of stockholders or until their successors have been
elected and qualified. The Board expects that each of the nominees
will be available for election as a director. However, if by reason
of an unexpected occurrence, one or more of the nominees is not
available for election, the persons named in the form of proxy have
advised that they will vote for such substitute nominees as the
Nominating and Corporate Governance Committee may propose. We know
of no reason why any of the nominees may be unable to serve as a
director. The nominees have consented to being named in this proxy
statement and to serve as director if elected.
Nominees:
●
David
Gordon
●
John
Rotelli
The Board of Directors unanimously recommends a vote
“FOR” all of the nominees for election as
directors.
Information About Our Nominees, Board of Directors and
Management
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Name
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Age
(1)
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Term
Expires
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Position(s) Held
With
Coffee
Holding
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Director
Since
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Nominees:
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David
Gordon
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55
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2023
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Executive
Vice President - Operations, Secretary and Director
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1995
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John
Rotelli
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61
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2023
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Director
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2005
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Continuing Directors:
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Andrew
Gordon
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57
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2021
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President,
Chief Executive Officer, Chief Financial Officer, Treasurer and
Director
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1997
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Daniel
Dwyer
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62
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2021
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Director
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1998
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Barry
Knepper
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68
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2021
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Director
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2005
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Gerard
DeCapua
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59
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2022
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Director
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1997
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George
F. Thomas
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72
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2022
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Director
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2016
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(1) As
of February 28, 2020.
The
principal occupation and business experience of each nominee for
election as director and each continuing director are set forth
below. Unless otherwise indicated, each of the following persons
has held his present position for at least the last five
years.
5
David Gordon
has
been the Executive Vice President - Operations, Secretary and a
director of Coffee Holding since 1995. He is responsible for
managing all aspects of Coffee Holding’s roasting and
blending operations, including quality control, and has worked for
Coffee Holding for 38 years, previously as an Operating Manager
from 1989 to 1995. He is a charter member of the Specialty Coffee
Association of America, or SCAA. Mr. Gordon attended Baruch College
in New York City. He is the brother of Andrew Gordon. Through his
38 years of service with the Company, Mr. Gordon has demonstrated
the requisite qualifications and skills necessary to serve as an
effective director. We believe Mr. Gordon’s extensive
institutional knowledge and leadership are invaluable to Coffee
Holding’s current and future successes. Mr. Gordon’s
leadership, as demonstrated by the launch of the Specialty Green
segment of the business as well as the founding of the SCAA, is a
valuable resource for Coffee Holding’s business development
and future strategy.
John Rotelli
has
served as a director of Coffee Holding since 2005. Mr. Rotelli has
over 40 years of experience in the green coffee industry business
consisting of procurement from growing countries, every aspect of
traffic and warehousing, quality analysis, and knowledge of both
suppliers and competitors. Mr. Rotelli is currently the Vice
President of L.J. Cooper Company, one of the largest green coffee
brokers and agents in North America. He is also a director of the
Green Coffee Association. Mr. Rotelli’s industry and business
experience provides the Board with valuable expertise within the
coffee industry as well as beneficial relationships that can help
form new beneficial relationships for Coffee Holding.
Andrew Gordon
has
been the Chief Executive Officer, President, Treasurer and a
director of Coffee Holding since 1997 and its Chief Financial
Officer since November 2004. He is responsible for managing Coffee
Holding’s overall business and has worked for Coffee Holding
for over 35 years, previously as a Vice President from 1993 to
1997. Mr. Gordon has worked in all capacities of Coffee
Holding’s business and serves as the direct contact with its
major private label accounts. Mr. Gordon received his Bachelor of
Business Administration degree from Emory University. He is the
brother of David Gordon. Through his experience as President and
Chief Executive Officer of the Company, as well as his over 35
years of service with the Company, Mr. Gordon has demonstrated the
requisite qualifications and skills necessary to serve as an
effective director. We believe Mr. Gordon’s extensive
experience with, and institutional knowledge of, Coffee Holding and
the industry is an integral contribution to Coffee Holding’s
current successes and its ability to grow and flourish in the
industry.
Daniel Dwyer
has
served as a director of Coffee Holding since 1998. Mr. Dwyer is the
Chief Executive Officer at Rothfos Corporation, a green coffee bean
supplier, and prior to that, had been a senior coffee trader at
Rothfos, since 1995. Mr. Dwyer is responsible for our account with
Rothfos. We paid Rothfos approximately $8.3 million, $9.1 million
and $6.7 million for green coffee purchases in fiscal years 2019,
2018 and 2017, respectively. All purchases are made on arms’
length terms. We believe that Mr. Dwyer’s experience with the
coffee industry will enable him to provide the Board with
beneficial insight for Coffee Holding’s business development
and strategy. Mr. Dwyer’s relationship with Rothfos has
helped to foster a beneficial relationship between Rothfos and
Coffee Holding. Mr. Dwyer serves on the board of directors of the
National Coffee Association.
Barry Knepper
has
served as a director of Coffee Holding since 2005. From July 2004
to the present, Mr. Knepper has been the President and Chief
Executive Officer of CFO Business Solutions, a management
consulting firm. Mr. Knepper was the Chief Financial Officer for
TruFoods Corporation, a growth oriented franchise management
company from April 2001 through June 2004. From January 2000
through March 2001, he was the Chief Financial Officer of Offline
Entertainment, an early stage television and motion picture
production company. From 1982 through 1999, he served as the Chief
Financial Officer of Unitel Video, Inc., a formerly publicly-traded
nationwide high tech service company in the television, film and
new media fields. We believe that Mr. Knepper’s diversified
financial, accounting and business expertise provide him with the
qualifications and skills to serve as a director.
Gerard DeCapua
has
served as a director of Coffee Holding since 1997. Mr. DeCapua has
had his own law practice in Rockville Centre, New York since 1986.
Mr. DeCapua received his law degree from Pace University. We
believe that Mr. DeCapua’s legal experience brings
significant knowledge regarding legal issues Coffee Holding faces
and provide him with the skills and qualifications to serve as a
director.
George F. Thomas
has
served as a director of Coffee Holding since February 2016. Mr.
Thomas has over 38 years of domestic and international corporate
business experience in top management positions. Since February
2007, Mr. Thomas has served as a Principal at Radix Consulting
Corporation, a consulting firm which provides specialized advice in
the field of electronic payments. From 1981 through 2007, Mr.
Thomas served in a number of positions at The Clearing House
Payments Company L.L.C., a limited liability company which operates
electronic payment systems, including such positions as Executive
Vice President of the Payments Services Division, President of the
Electronic Payments Network, Senior Vice President of Business
Development and Information Technology and Vice President of
Technical Services and Systems Development. Since 2007, Mr. Thomas
has served as a director of eGistics, Inc., a provider of
cloud-based document and data management solutions which was
acquired by Top Image Systems, Ltd. in 2014. We believe that Mr.
Thomas’ financial and business experience provide him with
the qualifications and skills to serve as a director.
6
CORPORATE GOVERNANCE
Board of Directors Operations and Meetings
The
Board oversees our business and monitors the performance of our
management. In accordance with our corporate governance procedures,
the Board does not involve itself in the day-to-day operations of
Coffee Holding. Our executive officers and management oversee our
day-to-day operations. Our directors fulfill their duties and
responsibilities by attending meetings of the Board, which are
usually held on a quarterly basis. Our directors also discuss
business and other matters with other key executives and our
principal external advisers (legal counsel, auditors, financial
advisors and other consultants).
The
Board held two meetings during the fiscal year ended October 31,
2019 and acted by written consent on two occasions. Each director
serving during the fiscal year ended October 31, 2019 attended at
least 75% of the meetings of the Board, plus meetings of committees
on which that particular director served during the fiscal year
ended October 31, 2019.
Coffee
Holding is committed to establishing and maintaining high standards
of corporate governance. Our executive officers and the Board have
worked together to construct a comprehensive set of corporate
governance initiatives that we believe will serve the long-term
interests of our stockholders and employees. We believe these
initiatives comply fully with the Sarbanes-Oxley Act of 2002 and
the rules and regulations of the SEC adopted thereunder. In
addition, we believe our corporate governance initiatives fully
comply with the rules of the Nasdaq Stock Market LLC
(“Nasdaq”). The Board will continue to evaluate, and
improve upon as appropriate, our corporate governance principles
and policies.
Board Leadership Structure and Role in Risk Oversight
Andrew
Gordon serves as both our principal executive officer and chairman
at the pleasure of the Board. The directors have determined that
Mr. Gordon’s experience in our industry and in corporate
transactions, and his personal commitment to Coffee Holding as an
investor and employee, make him uniquely qualified to supervise our
operations and to execute our business strategies. The Board is
also cognizant of Coffee Holding’s relatively small size
compared to its publicly traded competitors. We do not have a lead
independent director. Management’s activities are monitored
by standing committees of the Board, principally the Audit
Committee, the Compensation Committee and the Nominating and
Corporate Governance Committee. Each of these committees is
comprised solely of independent directors. For these reasons, the
Board deems this leadership structure appropriate for
us.
Code of Ethics
The
Board has adopted a Code of Conduct and Ethics that applies to each
of our directors, officers and employees. The Code of Conduct and
Ethics sets forth our policies and expectations on a number of
topics, including:
●
acceptance of
gifts;
●
financial
responsibility regarding both personal and business affairs,
including transactions with Coffee Holding;
●
personal conduct,
including ethical behavior and outside employment and other
activities;
●
affiliated
transactions, including separate identities and usurpation of
corporate opportunities;
●
preservation and
accuracy of Coffee Holding’s records;
●
compliance with
laws, including insider trading compliance;
●
preservation of
confidential information relating to our business and that of our
clients;
●
conflicts of
interest;
●
the safeguarding
and proper use of our assets and institutional
property;
●
code administration
and enforcement;
●
reporting,
investigating and resolving of all code violations;
and
●
code-related
training, certification of compliance and maintenance of
code-related records.
7
The
Audit Committee of our Board reviews the Code of Conduct and Ethics
on a regular basis, and will propose or adopt additions or
amendments to the Code of Conduct and Ethics as appropriate. The
Code of Conduct and Ethics is available on our website at
www.coffeeholding.com
under
“Investor Relations - Corporate Governance.” A copy of
the Code of Conduct and Ethics may also be obtained free of charge
by sending a written request to:
David
Gordon, Secretary
Coffee
Holding Co., Inc.
3475
Victory Boulevard
Staten
Island, NY 10314
We
intend to satisfy the disclosure requirement under Section 5.05(c)
of Form 8-K regarding an amendment to, or waiver from, a provision
of our Code of Ethics by posting such information on our
website.
Independent Directors
Our
Board currently consists of seven directors, four of whom our Board
has determined are independent directors. The standards relied on
by the Board in affirmatively determining whether a director is
“independent,” in compliance with Nasdaq’s rules,
are comprised of those objective standards set forth in the rules
promulgated by Nasdaq. The Board is responsible for ensuring that
independent directors do not have a relationship that, in the
opinion of the Board, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a
director.
The
Board has determined that Gerard DeCapua, Barry Knepper, John
Rotelli and George F. Thomas, comprising a majority of the Board,
are “independent” directors under Nasdaq’s
rules.
Nasdaq’s
rules, as well as SEC rules, impose additional independence
requirements for all members of the Audit Committee. Specifically,
in addition to the “independence” requirements
discussed above, “independent” audit committee members
must: (1) not accept, directly or indirectly, any consulting,
advisory, or other compensatory fees from Coffee Holding or any
subsidiary of Coffee Holding other than in the member’s
capacity as a member of the Board and any Board committee; (2) not
be an affiliated person of Coffee Holding or any subsidiary of
Coffee Holding; and (3) not have participated in the preparation of
the financial statements of Coffee Holding or any current
subsidiary of Coffee Holding at any time during the past three
years. In addition, Nasdaq’s rules require that all audit
committee members be able to read and understand fundamental
financial statements, including Coffee Holding’s balance
sheet, income statement, and cash flow statement. The Board
believes that the current members of the Audit Committee meet these
additional standards.
Furthermore, at
least one member of the Audit Committee must be financially
sophisticated, in that he or she has past employment experience in
finance or accounting, requisite professional certification in
accounting, or any other comparable experience or background which
results in the individual’s financial sophistication,
including but not limited to being or having been a chief executive
officer, chief financial officer, other senior officer with
financial oversight responsibilities. Additionally, the SEC
requires that Coffee Holding disclose whether the Audit Committee
has, and will continue to have, at least one member who is a
“financial expert.” The Board has determined that Barry
Knepper meets the SEC’s definition of an audit committee
financial expert.
Committees of the Board
The
Board of Coffee Holding has established the following
committees:
Audit Committee.
The
Audit Committee oversees and monitors our financial reporting
process and internal control system, reviews and evaluates the
audit performed by our registered independent public accountants
and reports to the Board any substantive issues found during the
audit. The Audit Committee is directly responsible for the
appointment, compensation and oversight of the work of our
registered independent public accountants. The Audit Committee
reviews and approves all transactions with affiliated parties. The
Board has adopted a written charter for the Audit Committee, which
is available on our website at
www.coffeeholding.com
under
“Investor Relations - Corporate Governance.” All
members of the Audit Committee are independent directors as defined
under Nasdaq’s listing standards. Gerard DeCapua, Barry
Knepper and George F. Thomas serve as members of the Audit
Committee with Barry Knepper serving as its chairman. The Board has
determined that Barry Knepper qualifies as an audit committee
financial expert as that term is defined by SEC regulations. The
Audit Committee held five meetings during the fiscal year ended
October 31, 2019.
8
Compensation
Committee.
The Compensation Committee provides advice and
makes recommendations to the Board in the areas of employee
salaries, benefit programs and director compensation. The
Compensation Committee also reviews the compensation of the
President and Chief Executive Officer of Coffee Holding and makes
recommendations in that regard to the Board as a whole. The Board
has adopted a written charter for the Compensation Committee, which
is available on our website at
www.coffeeholding.com
under
“Investor Relations - Corporate Governance.” All
members of the Compensation Committee are independent directors as
defined under Nasdaq’s listing standards. Barry Knepper, John
Rotelli and George F. Thomas serve as members of the Compensation
Committee, with John Rotelli serving as its chairman. The
Compensation Committee acted by written consent once during the
fiscal year ended October 31, 2019.
Nominating and Corporate
Governance Committee.
The Nominating and Corporate
Governance Committee nominates individuals to be elected to the
full Board by our stockholders. The Nominating and Corporate
Governance Committee considers recommendations from stockholders if
submitted in a timely manner in accordance with the procedures set
forth in Article II, Section 11 of our Bylaws and applies the same
criteria to all persons being considered. All members of the
Nominating and Corporate Governance Committee are independent
directors as defined under the Nasdaq listing standards. Gerard
DeCapua, John Rotelli and George F. Thomas serve as members of the
Nominating and Corporate Governance Committee, with Gerard DeCapua
serving as its chairman. The Board has adopted a written charter
for the Nominating and Corporate Governance Committee, which is
available on our website at
www.coffeeholding.com
under
“Investor Relations - Corporate Governance.” The
Nominating and Corporate Governance Committee acted by written
consent once during the fiscal year ended October 31,
2019.
There
are no minimum qualifications that must be met by a Nominating and
Corporate Governance Committee-recommended nominee. It is the
policy of the Nominating and Corporate Governance Committee to
recommend individuals as director nominees who have the highest
personal and professional integrity, who have demonstrated
exceptional ability and judgment and who will be most effective, in
conjunction with the other members of the Board, in collectively
serving the long-term interests of our stockholders.
Delinquent Section 16(a) Reports
Section
16(a) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), requires our directors and executive
officers, and persons who own more than 10% of our common stock to
file an initial report of ownership on Form 3 and changes in
ownership on Forms 4 or 5 with the SEC. Such officers, directors
and greater than 10% stockholders are also required by the rules of
the SEC to furnish the Company with copies of all Section 16(a)
reports they file.
During
the fiscal year ended October 31, 2019, the Form 4 reporting the
transfer of shares from a joint account to the individual account
of Mr. D. Gordon’s child was filed late.
Other
than the above, based solely upon the Company’s review of
copies of Forms 3, 4 and 5, the Company believes that all of its
other directors, officers and any other applicable stockholders
timely filed all reports required by Section 16(a) of the Exchange
Act during the fiscal year ended October 31, 2019.
Stockholder Communication with the Board of Directors and
Attendance at Annual Meetings
The
Board maintains a process for stockholders to communicate with the
Board and its committees. Stockholders of Coffee Holding and other
interested persons may communicate with the Board or the
chairperson of the Audit Committee, Compensation Committee or
Nominating and Corporate Governance Committee by writing to the
Secretary of Coffee Holding at 3475 Victory Boulevard, Staten
Island, NY 10314. All communications that relate to matters that
are within the scope of the responsibilities of the Board will be
presented to the Board no later than the next regularly scheduled
meeting. Communications that relate to matters that are within the
responsibility of one of the Board committees will be forwarded to
the chairperson of the appropriate committee. Communications that
relate to ordinary business matters that are not within the scope
of the Board’s responsibilities, such as customer complaints,
will be forwarded to the appropriate officer. Solicitations, junk
mail and obviously frivolous or inappropriate communications will
not be forwarded, but will be made available to any director who
wishes to review them.
Directors are
expected to prepare themselves for and attend all Board meetings,
the Annual Meeting of Stockholders and the meetings of the
committees on which they serve, with the understanding that, on
occasion, a director may be unable to attend a meeting. All of our
directors who served as directors during the 2019 fiscal year
attended the 2019 Annual Meeting of Stockholders.
9
EXECUTIVE COMPENSATION
The
summary compensation table below summarizes information concerning
compensation for the fiscal years ended 2019 and 2018 of the
individuals who served as President, Chief Executive Officer, Chief
Financial Officer and Treasurer (Andrew Gordon) and Executive Vice
President - Operations and Secretary (David Gordon). We refer to
these individuals as the “Named Executive
Officers.”
SUMMARY COMPENSATION TABLE
The
following table sets forth information with respect to the
compensation of our Named Executive Officers for services in all
capacities to us and our subsidiaries.
|
Name and
Principal Position
|
|
Year
|
Salary
(1)
($)
|
Bonus
($)
|
Stock Option
Awards ($)(2)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings(3)
($)
|
All
Other
Compensation(4)
($)
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew Gordon,
President, Chief
Executive Officer,
|
|
2019
|
$
363,865
|
$
0
|
$
844,580
|
$
0
|
$
0
|
$
31,280
|
$
1,239,725
|
|
Chief Financial Officer and
Treasurer
|
|
2018
|
$
357,004
|
$
10,000
|
--
|
$
0
|
$
0
|
$
30,285
|
$
397,289
|
|
|
|
|
|
|
|
|
|
|
|
|
David Gordon,
Executive Vice President
-
|
|
2019
|
$
330,231
|
$
0
|
$
680,020
|
$
0
|
$
0
|
$
71,902
|
$
1,082,043
|
|
Operations and
Secretary
|
|
2018
|
$
324,000
|
$
10,000
|
-
|
$
0
|
$
0
|
$
64,881
|
$
398,881
|
(1)
The figures shown
represent amounts earned for the fiscal year, whether or not
actually paid during such year.
(2)
Stock option awards
represent the grant date fair value of the awards pursuant to FASB
ASC Topic 718, as described in Note 12
“Stockholders’ Equity” in the Notes to the
Consolidated Financial Statements in our Annual Report
on Form 10-K for the year ended October 31,
2019.
(3)
Includes the amount
of interest accrued on defined contribution deferred compensation
balances at a rate in excess of 120% of the applicable federal
mid-term rate under section 1274(d) of the Internal Revenue Code of
1986 (the “Code”) and dividends or dividend equivalents
on balances denominated in Coffee Holding common stock in excess of
the dividends paid to stockholders generally during the fiscal
year.
(4)
The Named Executive
Officers participate in certain group life, health, disability
insurance and medical reimbursement plans, not disclosed in the
Summary Compensation Table, that are generally available to
salaried employees and do not discriminate in scope, terms and
operation. The figures shown for Andrew Gordon include $10,436 and
$10,161 in employer contributions to the 401(k) plan for 2019 and
2018, respectively; life insurance premiums of $1,332 and $1,428
for 2019 and 2018, respectively, and health insurance premiums of
$19,512 and $18,696 for 2019 and 2018, respectively. The figures
shown for David Gordon include $6,876 and $6,876 for a business car
lease in 2019 and 2018, respectively; $7,227 and $7,054 in employer
contributions to the 401(k) plan for 2019 and 2018, respectively,
life insurance premiums of $9,113 and $4,883 for 2019 and 2018,
respectively and health insurance premiums of $48,576 and $46,068
for 2019 and 2018, respectively.
Narrative to Summary Compensation Table
Overview
Our
Compensation Committee has responsibility for establishing,
implementing and monitoring adherence with our compensation
philosophy. In that regard, the Compensation Committee provides
advice and makes recommendations to the Board in the areas of
employee salaries and benefit programs. The Compensation Committee
ensures that the total compensation paid to our executive
leadership team is fair and reasonable. Generally, the types of
compensation and benefits provided to members of the executive
leadership team, including the Named Executive Officers, are
similar to those provided to our other officers and
employees.
10
Compensation Components
Our
compensation program for Named Executive Officers consists
generally of base salary and annual bonuses. These elements are
intended to provide an overall compensation package that is
commensurate with our financial resources, that is appropriate to
assure the retention of experienced management personnel, and that
aligns their financial interests with those of our stockholders. We
pay our Named Executive Officers commensurate with their experience
and responsibilities.
Base Salary.
Each of
our Named Executive Officers receives a base salary to compensate
him for services performed during the year. The base salaries of
our Named Executive Officers are established annually by the Board
upon recommendation by the Compensation Committee. When determining
the base salary for each of our Named Executive Officers, the
Compensation Committee considers the performance of the Named
Executive Officer, the duties of the Named Executive Officer, the
experience of the Named Executive Officer in his position and
salary levels of the companies in our peer group. Salary levels are
also intended to reflect our financial performance. We have entered
into employment agreements with each of the Named Executive
Officers that provide for minimum annual base salaries. The Named
Executive Officers are eligible for annual increases in their base
salaries as a result of company performance, individual performance
and any added responsibility since their last salary
increase.
Annual Bonus.
Our
Named Executive Officers are eligible to receive annual cash
bonuses. These bonuses are intended to reward the achievement of
corporate goals and individual performance objectives. The bonus
levels are intended to be competitive with those typically paid by
the companies in our peer group and commensurate with the Named
Executive Officers’ successful execution of duties and
responsibilities.
Equity Compensation.
At the 2013 Annual Meeting of Stockholders, our stockholders
approved the 2013 Equity Compensation Plan. Through the 2013 Equity
Compensation Plan, we provide our employees, including our Named
Executive Officers, with equity incentives that help align their
interests with those of our stockholders by tying the value
delivered to our Named Executive Officers to the value of our
shares of common stock. We also believe that stock option grants to
our Named Executive Officers provide them with long-term incentives
that will aid in retaining executive talent by providing
opportunities to be compensated through the Company’s
performance and rewarding executives for creating shareholder value
over the long-term.
During
the year ended October 31, 2019, we granted stock option awards to
the Named Executive Officers to purchase an aggregate of 630,000
shares of common stock at an exercise price of $5.43 per share. The
stock options have a ten year expiration date and vest ratably over
a three year period commencing one year after the grant
date.
Implementation for Fiscal Year 2019
For the
2019 fiscal year, Andrew Gordon received a base salary of $373,865
and did not receive a bonus. David Gordon received a base salary of
$340,231 and did not receive a bonus. As stated elsewhere in this
proxy statement, on April 18, 2019, Andrew Gordon was granted a
stock option to purchase 349,000 shares of common stock, and David
Gordon was granted a stock option to purchase 281,000 shares of
common stock. The stock options have an exercise price of $5.43 and
will vest in equal installments on each of the one year, two year
and three year anniversaries of the date of grant
Compensation Decision-Making Policies and Procedures
Decision-Making and
Policy-Making.
As a Nasdaq listed company, we must observe
governance standards that require executive officer compensation
decisions to be made by the independent director members of our
Board or by a committee of independent directors. Consistent with
these requirements, our Board has established a Compensation
Committee all of whose members are independent
directors.
The
Compensation Committee provides advice and makes recommendations to
our Board in the areas of employee salaries and benefit programs.
The Compensation Committee has established a formal charter.
Compensation may consist of three components: (1) base salary; (2)
bonuses; and (3) long-term incentives (
e.g.,
deferred compensation and fringe
benefits).
The
Compensation Committee generally meets at least once each year or
acts by written consent. It considers the expectations of the Chief
Executive Officer with respect to his own compensation and his
recommendations with respect to the compensation of more junior
executive officers, as well as empirical data on compensation
practices at peer group companies. The Compensation Committee does
not delegate its duties to others.
Employment Agreements
We have
entered into employment agreements with Andrew Gordon to secure his
continued service as President, Chief Executive Officer, Chief
Financial Officer and Treasurer and with David Gordon to secure his
continued service as Executive Vice President - Operations and
Secretary. These employment agreements have rolling five-year terms
that began on May 6, 2005. These agreements may be converted to a
fixed five-year term by the decision of our Board or the executive.
These agreements provide for minimum annual salaries, discretionary
cash bonuses, and participation on generally applicable terms and
conditions in other compensation and fringe benefit plans. The
employment agreements also guarantee customary corporate
indemnification and errors and omissions insurance coverage
throughout the employment term and thereafter for so long as the
executives are subject to liability for such service to the extent
permissible by the Nevada Revised Statutes.
11
The
terms of the employment agreements provide that each executive will
be entitled to severance benefits if his employment is terminated
without “cause” or if he resigns for “good
reason” or following a “change in control” (as
such terms will be defined in the employment agreements) equal to
the value of the cash compensation and fringe benefits that he
would have received if he had continued working for the remaining
unexpired term of the agreement. The employment agreements also
provide uninsured disability benefits. During the term of the
employment agreements and, in case of discharge with
“cause” or resignation without “good
reason,” for a period of one year thereafter, the executives
are subject to (1) restrictions on competition with us; and (2)
restrictions on the solicitation of our customers and employees.
For all periods during and after the term of the employment
agreements, the executives are subject to nondisclosure and
restrictions relating to our confidential information and trade
secrets.
The
employment agreements provide that in the event either executive
terminates employment in connection with a change in control under
circumstances entitling him to severance benefits, and it is
determined that the executive would be subject to a 20% excise tax
imposed by Section 4999 of the Code which applies to certain
“excess parachute payments” (the “Excise
Tax”), we will pay the executive a “Tax Indemnity
Payment” such that the net amount received by the executive
after payment of such Excise Tax, and any federal, Medicare and
state and local income taxes and Excise Tax upon the Tax Indemnity
Payment, will be equal to the payments the executive would have
retained had there been no Excise Tax. The effect of this provision
is that we, and not the executives, bear the financial cost of the
Excise Tax. In accordance with Section 280G of the Code, we cannot
claim a federal income tax deduction for payments subject to the
Excise Tax, including the Tax Indemnity Payment.
Potential Payments Upon a Change of Control
Under
the 2013 Equity Compensation Plan, in the event of a change in
control (as defined in the 2013 Equity Compensation Plan), the
Compensation Committee may, at the time of the grant of an award
provide for, among other things, the (i) accelerating or extending
the time periods for exercising, vesting in, or realizing gain from
any award, (ii) eliminating or modifying the performance or other
conditions of an award, or (iii) providing for the cash settlement
of an award for an equivalent cash value, as determined by the
Compensation Committee. The Compensation Committee may, in its
discretion and without the need for the consent of any recipient of
an award, also take one or more of the following actions contingent
upon the occurrence of a change in control: (a) cause any or all
outstanding options and stock appreciation rights to become
immediately exercisable, in whole or in part; (b) cause any other
awards to become non-forfeitable, in whole or in part; (c) cancel
any option or stock appreciation right in exchange for a substitute
option; (d) cancel any award of restricted stock, restricted stock
units, performance shares or performance units in exchange for a
similar award of the capital stock of any successor corporation;
(e) redeem any restricted stock, restricted stock unit, performance
share or performance unit for cash and/or other substitute
consideration with a value equal to the fair market value of an
unrestricted share of our common stock on the date of the change in
control; (f) cancel any option or stock appreciation right in
exchange for cash and/or other substitute consideration based on
the value of our common stock on the date of the change in
control
,
and cancel any
option or stock appreciation right without any payment if its
exercise price exceeds the value of our common stock on the date of
the change in control; or (g) make such other modifications,
adjustments or amendments to outstanding awards as the Compensation
Committee deems necessary or appropriate. To date, there have been
630,000 options granted under the 2013 Equity Compensation Plan to
the Named Executive Officers.
Other
than the severance benefits described under “Employment
Agreements” and the potential payments described under
“Potential Payments Upon a Change of Control” above, we
do not maintain contracts, agreements, plans or arrangements that
provide for payments to the Named Executive Officers at, following,
or in connection with any termination of employment.
Deferred Compensation Plan for Executive Officers
In
January 2005, we established the Coffee Holding Co., Inc.
Non-Qualified Deferred Compensation Plan for Named Executive
Officers. Currently, Andrew Gordon is the only participant in the
plan. Each Named Executive Officer who participates in the plan may
defer receipt of all or a portion of his annual cash compensation
received from Coffee Holding. The deferred amounts are allocated to
a deferral account and credited with interest according to the
investment classifications made available by the Board. The plan is
an unfunded, non-qualified plan that provides for distribution of
the amounts deferred to participants or their designated
beneficiaries upon the occurrence of certain events. The amounts
deferred, and related investment earnings, are held in a corporate
account for the benefit of participating Named Executive Officers
until such amounts are distributed pursuant to the terms of the
plan.
Outstanding Equity Awards at Fiscal Year-End
The
following table sets forth information regarding outstanding stock
options awarded to each of our Named Executive Officers as of
October 31, 2019.
|
Number of Securities Underlying Unexercised Options
|
|
|
|
|
|
Name
|
Exercisable
|
Unexercisable
|
Option exercise price ($)
|
Option expiration date
|
|
Andrew
Gordon
|
--
|
349,000
(1)
|
$
5.43
|
4/18/2029
|
|
David
Gordon
|
--
|
281,000
(1)
|
$
5.43
|
4/18/2029
|
(1)
Vests in three
equal annual installments commencing April 18, 2020.
12
Equity Compensation Plan Information
The
following table sets forth information regarding outstanding stock
options and rights and shares reserved for future issuance under
our existing equity compensation plans as of October 31,
2019.
Equity Compensation Plan Information
|
Plan Category
|
Number
of securities to be issued upon exercise of outstanding
options, warrants and rights
|
Weighted-average
exercise price of outstanding options, warrants and
rights
|
(Number of
securities remaining available for future
issuance under equity compensation plans
(excluding securities
reflected in column(a))
|
|
|
(a)
|
(b)
|
(c)
|
|
Equity compensation
plans approved by stockholders (1)
|
1,000,000
|
$
5.43
|
0
|
|
Equity compensation
plans not approved by stockholders
|
—
|
$
—
|
—
|
|
|
|
|
|
|
Total
|
1,000,000
|
$
5.43
|
0
|
|
|
|
|
|
(1)
Represents
outstanding stock options granted to current or former employees
and directors of the Company pursuant to its 2013 Equity
Compensation Plan.
13
DIRECTOR COMPENSATION
Non-employee
directors receive $800 per Board meeting and committee meeting
attended in person and $400 per each Board meeting and committee
meeting attended telephonically. Non-employee directors are also
reimbursed for travel expenses and other out-of-pocket costs
incurred in connection with attendance at Board and committee
meetings.
Total
directors’ meeting and committee fees for the fiscal year
ended October 31, 2019 were $9,600. We do not compensate our
employee directors for service as directors. Directors are also
entitled to the protection of certain indemnification provisions in
our Amended and Restated Articles of Incorporation and
Bylaws.
The
following table sets forth information regarding compensation
earned by our non-employee directors during the 2019 fiscal
year.
DIRECTOR COMPENSATION TABLE
|
Name
|
Fees Earned
or
Paid in Cash
($)(1)
|
Stock Options
(2)(3)
|
All
Other
Compensation
($)
|
Total
($)
|
|
Gerard
DeCapua
|
$
2,800
|
$
55,300
|
$
0
|
$
58,100
|
|
Daniel
Dwyer
|
$
800
|
$
55,300
|
$
0
|
$
56,100
|
|
Barry
Knepper
|
$
2.800
|
$
55,300
|
$
0
|
$
58,100
|
|
John
Rotelli
|
$
1,600
|
$
55,300
|
$
0
|
$
56,900
|
|
George F.
Thomas
|
$
1,600
|
$
11,850
|
$
0
|
$
13,450
|
(1)
Meeting fees earned
during the fiscal year, whether such fees were paid currently or
deferred.
(2)
Stock option awards
represent the grant date fair value of the awards pursuant to FASB
ASC Topic 718, as described in Note 12
“Stockholders’ Equity” in the Notes to the
Consolidated Financial Statements in our Annual Report
on Form 10-K for the year ended October 31,
2019, to which reference is hereby made.
(3)
The total number of
shares of common stock covered by stock options held by
each non-employee director at October 31, 2019 were
as follows:
|
|
No. of Shares
|
|
Gerard
DeCapua
|
14,000
|
|
Daniel
Dwyer
|
14,000
|
|
Barry
Knepper
|
14,000
|
|
John
Rotelli
|
14,000
|
|
George F.
Thomas
|
3,000
|
14
____________________________________
PROPOSAL 2
RATIFICATION
OF ACCOUNTANTS
____________________________________
Independent Registered Public Accounting Firm
The
Audit Committee of the Board has appointed Marcum LLP, or Marcum,
as our independent registered accounting firm for the fiscal year
ending October 31, 2020. We are not required to seek stockholder
approval for the appointment of our independent registered public
accounting firm, however, the Audit Committee and the full Board
believe it is sound corporate practice to seek such approval. If
the appointment is not ratified, the Audit Committee will
investigate the reasons for stockholder rejection and will
re-consider the appointment. Even if the selection is ratified, the
Audit Committee in its discretion may direct the appointment of a
different independent registered public accounting firm at any time
during the year if it determines that such change would be in the
best interests of us and our stockholders.
The Board unanimously recommends that you vote “FOR”
the ratification of the appointment of Marcum LLP as Coffee
Holding’s independent registered public accounting firm for
the fiscal year ending October 31, 2020.
Attendance at Annual Meeting
Representatives of
Marcum will be present at the Annual Meeting, will have the
opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions from
stockholders.
Fees Billed to the Company in fiscal years 2019 and
2018
The
following table summarizes the fees for professional services
rendered by Marcum, our independent registered public accounting
firm, for each of the last two fiscal years:
|
|
Fiscal
Year
|
|
|
|
2019
|
2018
|
|
Audit Fees
(1)
|
$
138,250
|
$
125,410
|
|
Audit-Related
Fees
|
$
|
$
|
|
Tax
Fees
|
$
|
$
|
|
All Other
Fees
|
$
|
$
|
|
Total
|
$
138,250
|
$
125,410
|
____________
(1)
Audit fees
consisted of work performed in connection with the audit of the
consolidated financial statements as well as work generally only
the independent auditors can reasonably be expected to provide,
such as quarterly reviews and review of our Annual Reports on Form
10-K.
Audit Committee Pre-Approval Policy
The
Audit Committee, or a designated member of the Audit Committee,
shall preapprove all auditing services and permitted non-audit
services (including the fees and terms) to be performed for Coffee
Holding by our registered independent public accountants, subject
to the de minimis exceptions for non-audit services that are
approved by the Audit Committee prior to completion of the audit,
provided that: (1) the aggregate amount of all such services
provided constitutes no more than five percent of the total amount
of revenues paid by Coffee Holding to its registered independent
public accountant during the fiscal year in which the services are
provided; (2) such services were not recognized by Coffee Holding
at the time of the engagement to be non-audit services; and (3)
such services are promptly brought to the attention of the Audit
Committee and approved prior to the completion of the audit by the
Audit Committee or by one or more members of the Audit Committee
who are members of the Board to whom authority to grant such
approvals has been delegated by the Audit Committee. Of the
services set forth in the table above, all were preapproved by the
Audit Committee.
15
AUDIT COMMITTEE REPORT
The
Audit Committee has reviewed and discussed the audited financial
statements for the fiscal year ended October 31, 2019 with
management.
The
Audit Committee has also reviewed and discussed with Marcum LLP,
Coffee Holding’s independent registered public accounting
firm, the applicable requirements of the Public Company Accounting
Oversight Board (“PCAOB”) and the Securities and
Exchange Commission.
The
Audit Committee also has received the written disclosures and the
letter from Marcum LLP required by applicable requirements of the
Public Company Accounting Oversight Board regarding the independent
accountant’s communications with the Audit Committee covering
independence, and has discussed with Marcum LLP its
independence.
Based
on the foregoing discussions, the Audit Committee recommended to
the Board of Directors of Coffee Holding Co., Inc. that the audited
financial statements be included in Coffee Holding Co. Inc.’s
Annual Report on Form 10-K for the fiscal year ended October 31,
2019.
|
|
Audit Committee of Coffee Holding Co., Inc.
|
|
|
|
|
|
|
|
|
Barry
Knepper, Chairman
|
|
|
|
Gerard
DeCapua
|
|
|
|
George
F. Thomas
|
16
____________________________________
PROPOSAL 3
ADVISORY VOTE ON EXECUTIVE COMPENSATION
____________________________________
Section
14A of the Exchange Act and the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010, or the Dodd-Frank Act, enable our
stockholders to vote to approve on an advisory (non-binding) basis,
the compensation of our Named Executive Officers as disclosed in
this proxy statement in accordance with the SEC’s
rules.
The Board unanimously recommends that you vote “FOR”
the approval, on an advisory basis, of the compensation of the
Coffee Holding’s Named Executive Officers as disclosed in
this proxy statement relating to its 2020 Annual Meeting of
Stockholders pursuant to the SEC’s compensation disclosure
rules.
As
previously described in detail in the “Executive
Compensation” section of this proxy statement, our
compensation program for executive officers consists generally of
base salary, annual bonuses and equity compensation. These elements
are intended to provide an overall compensation package that is
commensurate with our financial resources, that is appropriate to
assure the retention of experienced management personnel, and that
aligns their financial interests with those of our
stockholders.
In
2019, the Board determined, based upon the results of our
stockholders’ vote on an advisory basis, to hold an advisory
vote on executive compensation every year. The next advisory vote
on the frequency of holding an advisory vote on executive
compensation will take place at the 2025 Annual Meeting of
Stockholders. We are asking our stockholders to indicate their
support for the Named Executive Officer compensation as described
in this proxy statement and as set forth below:
RESOLVED, that the stockholders of Coffee Holding Co., Inc. hereby
approve, on an advisory basis, the compensation of the
Company’s Named Executive Officers, as such compensation is
disclosed in the Company’s 2020 proxy statement pursuant to
Item 402 of Regulation S-K, which disclosure includes the proxy
statement’s Summary Compensation Table and other executive
compensation tables and related narrative disclosures.
This
proposal, commonly known as “say-on-pay” proposal,
gives our stockholders the opportunity to express their views on
the compensation of our Named Executive Officers. This vote is not
intended to address any specific item of compensation, but rather
the overall compensation of our Named Executive Officers and the
philosophy, policies and practices described in this proxy
statement. The say-on-pay vote is advisory, and therefore not
binding on the Company, the Compensation Committee or our Board of
Directors. Our Board of Directors and our Compensation Committee
value the opinions of our stockholders and, to the extent there is
any significant vote against the Named Executive Officer
compensation as disclosed in the proxy statement, we will consider
our stockholders’ concerns and the Compensation Committee
will evaluate whether any actions are necessary to address those
concerns.
17
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS
AND CERTAIN CONTROL PERSONS
The
Company has engaged its 40% partner in Generations Coffee Company,
LLC, or GCC, with which the Company has a joint venture, as an
outside contractor. Coffee Holding is the 60% equity owner of the
joint venture and Caruso’s Coffee Company
(“Caruso’s”) owns the other 40% equity interest.
Payments to Caruso’s during the years ended October 31, 2019,
October 31, 2018 and October 31, 2017 amounted to $401,227,
$447,140 and $427,931, respectively, for the processing of finished
goods.
Mr.
Dwyer, a member of our Board of Directors, is a senior coffee
trader for Rothfos Corporation, a coffee trading company, or
Rothfos. Mr. Dwyer is responsible for our account with Rothfos. We
paid Rothfos approximately $8.3 million, $9.1 million and $6.7
million for green coffee purchases in fiscal 2019, 2018 and 2017,
respectively. Rothfos accounted for approximately $840,000,
$215,000 and $72,000 of the Company’s accounts payable in
fiscal 2019, 2018 and 2017, respectively. All purchases are made on
arms’ length terms.
We
believe that the transactions set forth above were made on terms no
less favorable to us than could have been obtained from
unaffiliated third parties. All transactions between us and our
officers, directors and principal stockholders and their affiliates
are subject to approval by an independent committee of our Board of
Directors.
ADDITIONAL INFORMATION
Information About Stockholder Proposals
In
order to include information with respect to a stockholder proposal
in our proxy statement and related form of proxy for a
stockholders’ meeting, stockholders must provide notice as
required by the regulations promulgated under the Exchange Act.
Proposals that stockholders wish to include in our proxy statement
and form of proxy for presentation at our 2021 annual meeting of
stockholders must be received by us by October 31, 2020 at:
Attention: David Gordon, Secretary, Coffee Holding Co., Inc., 3475
Victory Boulevard, Staten Island, NY 10314 unless the date of the
annual meeting is changed by more than 30 days from the date of the
anniversary of the 2020 annual meeting of stockholders. The SEC
rules contain standards as to whether stockholder proposals are
required to be included in our proxy statement.
In
addition, if you wish to submit a proposal for the 2021 annual
meeting of stockholders without including such proposal in the
proxy statement and related form of proxy for that meeting, timely
notice of any stockholder proposal must be received by us in
accordance with our Bylaws and our rules and regulations no later
than 90 days in advance of the date of the annual meeting at:
Attention: David Gordon, Secretary, Coffee Holding Co., Inc., 3475
Victory Boulevard, Staten Island, NY 10314. Any proxies solicited
by the Board will confer discretionary authority to vote on any
proposals, notice of which is not timely received.
|
|
By
Order of the Board of Directors,
|
|
|
|
|
|
|
|
By:
|
/s/ David Gordon
|
|
|
|
David
Gordon
|
|
|
|
Secretary
|
Staten
Island, New York
February
28, 2020
|
|
To assure that your shares are represented at the Annual Meeting,
please either vote over the Internet, by Fax, or by phone following
the instructions provided to you in the Internet Availability
Notice or if you requested a paper copy of the proxy materials,
complete, sign, date and promptly return the proxy card to Coffee
Holding.
|
|
18
|
COFFEE HOLDING CO., INC.
THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL
MEETING OF STOCKHOLDERS APRIL 23, 2020 AT 3:00
PM
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|||||||
|
CONTROL
ID:
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|||||
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REQUEST
ID:
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||||||
|
The undersigned stockholder of
Coffee Holding Co., Inc. hereby appoints Andrew Gordon and David
Gordon, or either of them, with full powers of substitution, to
represent and to vote as proxy, as designated, all shares of common
stock of Coffee Holding Co., Inc. held of record by the undersigned
on February 25, 2020, at the annual meeting of stockholders (the
“Annual Meeting”) to be held on Thursday, April 23,
2020 at 3:00 p.m., Eastern time, at the Hilton Garden Inn located
at 1100 South Avenue, Staten Island, New York 10314, or at any
adjournment or postponement thereof. The undersigned
hereby revokes all prior proxies.
|
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(CONTINUED AND
TO BE SIGNED ON REVERSE SIDE.)
|
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||||||
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VOTING
INSTRUCTIONS
|
|
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|
||||||
|
If you vote by
phone, fax or internet, please DO NOT mail your proxy
card.
|
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||||||
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MAIL:
|
Please mark, sign, date, and return
this Proxy Card promptly using the enclosed
envelope.
|
|
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|
|
|||||
|
FAX:
|
Complete the reverse portion of
this Proxy Card and Fax to
202-521-3464.
|
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|
|||||
|
INTERNET:
|
https://www.iproxydirect.com/JVA
|
|
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|
|||||
|
PHONE:
|
1-866-752-VOTE(8683)
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||||||||
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ANNUAL MEETING
OF THE STOCKHOLDERS OF
COFFEE HOLDING
CO., INC.
|
PLEASE COMPLETE,
DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE
MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE:
☒
|
|||||||||
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|
|||||||||
|
PROXY SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
|
|
|||||||||
|
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|
|||||||
|
Proposal
1
|
|
|
FOR
|
|
WITHHOLD
|
|
|
|
|
|
|
|
Election of Directors to a term set
forth below:
|
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Nominees Term
Expires
|
|
|
|
|
|
|
|
CONTROL
ID:
|
|
|
|
David
Gordon
2023
|
|
☐
|
|
☐
|
|
|
|
REQUEST
ID:
|
|
|
|
John Rotelli
2023
|
|
☐
|
|
☐
|
|
|
|
|
|
|
Proposal
2
|
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
|
|
|
|
|
To ratify the appointment of Marcum
LLP as the independent registered public accounting firm of Coffee
Holding Co., Inc. for the fiscal year ending October 31,
2020.
|
|
☐
|
|
☐
|
|
☐
|
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Proposal
3
|
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
|
|
|
|
|
To hold an advisory vote on the
Company’s executive compensation.
|
|
☐
|
|
☐
|
|
☐
|
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MARK
“X” HERE IF YOU PLAN TO ATTEND THE MEETING:
☐
|
|||||
|
The Board of
Directors of Coffee Holding Co., Inc. unanimously recommends a vote
“FOR” all nominees in Proposal 1 and “FOR”
Proposal 2 and 3.
This Proxy, when properly executed,
will be voted in the manner directed herein by the undersigned
stockholder.
If no
direction is given, this Proxy will be voted FOR each of the
proposals listed above. In their discretion, the proxies are
authorized to vote upon such other business as may properly come
before the Annual Meeting or any adjournment or postponement
thereof. As of the date of the Proxy Statement for the
Annual Meeting, the Board of Directors is not aware of any such
other business.
|
|
|
|
MARK HERE FOR ADDRESS CHANGE
☐ New Address (if applicable):
____________________________
____________________________
____________________________
IMPORTANT:
Please sign exactly as your
name or names appear on this Proxy. When shares are held jointly,
each holder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized
person.
Dated: ________________________,
2020
|
||||||
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|
||||||||||
|
|
(Print Name of Stockholder and/or
Joint Tenant)
|
|||||||||
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|
||||||||||
|
(Signature of
Stockholder)
|
||||||||||
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|
||||||||||
|
(Second Signature if held
jointly)
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TABLE OF CONTENTS