<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1999
Commission File Number 1-12599
VITA FOOD PRODUCTS, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
NEVADA #36-3171548
- ------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2222 WEST LAKE STREET
CHICAGO, ILLINOIS 60612 (312) 738-4500
- ------------------------------- -------------------------------
(Address of principal Issuer's telephone number
executive offices)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Number of shares outstanding of Issuer's common stock, par value $.01 per
share, as of August 9, 1999 is 3,707,477.
Transitional Small Business Disclosure Format: Yes No X
<PAGE> 2
VITA FOOD PRODUCTS, INC.
REPORT ON FORM 10-QSB FOR THE THREE MONTHS ENDED JUNE 30, 1999
INDEX
I. FINANCIAL INFORMATION:
Item 1. Financial Statements (unaudited)
Balance Sheets ................................................... 3
Statements of Operations.......................................... 4
Statements of Shareholders' Equity................................ 4
Statements of Cash Flows ......................................... 5
Notes to Financial Statements .................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ............................................ 6
II. OTHER INFORMATION ....................................................... 8
2
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<TABLE>
<CAPTION>
BALANCE SHEETS VITA FOOD PRODUCTS, INC.
JUNE 30, DECEMBER 31,
1999 1998
(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
Current Assets
Cash $ 36,826 $ 78,488
Accounts receivable-trade, net of allowance for discounts, returns, and doubtful
accounts of $233,000 in 1999 and $250,000 in 1998 2,405,001 3,953,384
Inventories
Raw material and supplies 1,550,481 2,565,741
Work in process 19,069 77,698
Finished goods 1,646,209 1,400,678
Prepaid expenses and other current assets 382,908 234,318
Deferred income taxes 308,797 200,000
----------- -----------
Total Current Assets 6,349,291 8,510,307
Property, Plant and Equipment
Land 35,000 35,000
Building and Improvements 1,561,769 1,433,060
Machinery and Office Equipment 5,005,819 4,931,074
----------- -----------
6,602,588 6,399,134
Less accumulated depreciation and amortization (4,102,736) (3,933,410)
----------- -----------
Net Property Plant & Equipment 2,499,852 2,465,724
Other Assets 120,739 78,279
----------- -----------
Total Assets $ 8,969,882 $11,054,310
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term obligations $ 524,828 $ 329,810
Accounts payable 1,215,391 1,323,851
Accrued other expenses 1,620,117 2,048,825
----------- -----------
Total Current Liabilities 3,360,336 3,702,486
Long-Term Obligations, Less Current Maturities 3,578,513 5,137,589
Commitments and Contingencies
Shareholders' Equity
Preferred stock, $.01 par value, authorized 1,000,000 shares; none issued
Common stock, $.01 par value; authorized 10,000,000 shares; issued and
Outstanding 3,707,477 shares in 1999 and 3,704,724 shares in 1998 37,074 37,047
Additional paid in capital 3,355,604 3,353,583
Retained Earnings (1,361,645) (1,176,395)
----------- -----------
Total Shareholders' Equity 2,031,033 2,214,235
----------- -----------
Total Liabilities and Shareholders' Equity $ 8,969,882 $11,054,310
</TABLE>
3
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<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS VITA FOOD PRODUCTS, INC.
FOR THREE MONTHS ENDED FOR SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ ------------------------
1999 1998 1999 1998
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Net Sales $4,200,431 $4,075,332 $9,580,681 $9,594,198
Cost of Goods Sold 2,978,803 3,141,252 6,902,666 7,158,802
---------- ---------- ---------- ----------
Gross Margin 1,221,628 934,080 2,678,015 2,435,396
Selling and Administrative Expenses
Selling, Marketing & Distribution 900,474 992,154 1,831,974 2,080,685
Administrative 473,416 489,987 983,121 948,996
---------- ---------- ---------- ----------
Total 1,373,890 1,482,141 2,815,095 3,029,681
---------- ---------- ---------- ----------
Operating Profit (Loss) (152,262) (548,061) (137,080) (594,285)
Interest 74,082 101,415 156,967 196,884
---------- ---------- ---------- ----------
Income (loss) before Income tax expense (benefit) (226,344) (649,476) (294,047) (791,169)
Income Tax Expense (Benefit) (83,747) (186,000) (108,797) (238,426)
---------- ---------- ---------- ----------
Net Income (Loss) ($142,597) ($463,476) ($185,250) ($552,743)
Basic and Diluted Earnings (Loss) Per Share (0.04) (0.13) (0.05) (0.15)
Weighted Average Common Shares Outstanding 3,704,724 3,700,000 3,704,724 3,700,000
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) VITA FOOD PRODUCTS, INC.
COMMON STOCK ADDITIONAL
------------------ PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
--------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance, at January 1, 1998 3,700,000 $37,000 $3,348,273 ($566,950) $2,818,323
Proceeds from stock purchase
and stock option plans 2,036 $ 20 $ 3,337 $ 3,357
--------- ------- ----------
Net income (loss) ($552,743) ($552,743)
----------- ----------
Balance, at June 30, 1998 3,702,036 $37,020 $3,351,610 ($1,119,693) $2,268,937
Balance, at January 1, 1999 3,704,724 $37,047 $3,353,583 ($1,176,395) $2,214,235
Proceeds from stock purchase
and stock option plans 2,753 $ 27 $ 2,021 $ 2,048
--------- ------- ----------
Net income (loss) ($185,250) ($185,250)
----------- ----------
Balance, at June 30, 1999 3,707,477 $37,074 $3,355,604 ($1,361,645) $2,031,033
</TABLE>
4
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<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS VITA FOOD PRODUCTS, INC.
FOR THE SIX MONTHS
ENDED JUNE 30
1999 1998
(UNAUDITED) (UNAUDITED)
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Income (Loss) (185,250) (552,743)
Adjustments to reconcile Net Income (Loss) to net cash provided by (used in) operating activities
Depreciation and amortization 170,308 168,796
Deferred income taxes (108,797) (238,426)
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 1,548,383 1,653,068
Federal tax receivable 0 0
Decrease (increase) in inventories 828,358 39,854
Decrease (increase) in prepaid expenses and other current assets (148,590) (34,096)
Decrease (increase) in other assets (43,442) (116,572)
Increase (decrease) in accounts payable (108,460) (440,656)
Increase (decrease) in accrued expenses (428,708) (327,158)
Increase (decrease) in income taxes payable 0 0
---------- ---------
Net cash provided by (used in) operating activities 1,523,802 152,067
CASH FLOWS FROM INVESTING ACTIVITIES (203,454) (97,439)
---------- ---------
Net cash used in investing activities (203,454) (97,439)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock purchase and stock option plans 2,048 3,357
Proceeds from (payments on) bank and other debt obligations (1,364,058) (116,465)
---------- ---------
Net cash provided by (used in) financing activities
(1,362,010) (113,108)
Net Increase (decrease) in Cash (41,662) (58,480)
Cash, at beginning of period 78,488 107,933
---------- ---------
Cash, at end of Period 36,826 49,453
</TABLE>
5
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VITA FOOD PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
The accompanying unaudited interim financial statements have been prepared in
accordance with the instructions for Form 10-QSB and do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements and should be read in conjunction with the
financial statements and related notes included in the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1998. In the opinion of
management, all adjustments necessary for a fair presentation of such interim
financial statements have been included. All such adjustments are of a normal
recurring nature.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This report contains forward-looking statements about the Company's future
growth, profitability and competitive position. Any such statements are
subject to risks and uncertainties, including changes in economic and market
conditions, industry competition, raw material prices, the success of new
product introductions, management of growth and other risks noted in the
Company's filings with the Securities and Exchange Commission. Readers are
cautioned not to place undue reliance on forward-looking statements, which
reflect management's analysis only as of the date hereof.
COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 1999 AND THE THREE MONTHS ENDED
JUNE 30, 1998
REVENUES. Net sales for the three months ended June 30, 1999 were $4,200,000
compared to $4,075,000 for the same period in 1998, an increase of $125,000 or
3%. This increase was attributable to a combination of a 6% decrease in sales
of herring products, a 19% increase in sales of salmon products, and a 16%
decrease in the sale of other specialty products. The increase in salmon
product sales was attributable in part to sales to a new large customer, and
continued market penetration for salmon burger products.
GROSS MARGIN. Gross margin for the three months ended June 30, 1999 was
$1,222,000 compared to $934,000 for the same period in 1998, an increase of
$288,000 or 31%. As a percentage of net sales, gross margin was 28.1% in the
three months versus 22.9% in the same period in 1998. The increase in the gross
margin percentage was attributable in part to favorable production labor and
overhead variances. Favorable labor variances resulted from reduced production
downtime due to updated equipment and increased efficiencies from improved
personnel management. Favorable overhead variances resulted from reduced costs
of operating the production facility.
OPERATING EXPENSES. Selling, marketing and administrative expenses for the
three months ended June 30, 1999 were $1,374,000 compared to $1,482,000 for the
same period in 1998, a decrease of $108,000 or 7%. As a percentage of net
sales, selling, marketing and administrative expenses decreased to 32.7% from
36.4% for the same period in 1998. The decrease in the selling, marketing and
administrative expense margin was attributable to a combination of factors,
including lower slotting costs, selling expenses, and distribution costs.
Slotting costs are incurred to increase distribution of new products, and the
Company was very aggressive in the prior year in increasing distribution of
several of its newer products by incurring a high amount of slotting costs.
Selling expenses were lower primarily as a result of reduced staffing, and
distribution costs were lower as a result of increased efforts at reducing
freight costs.
INTEREST EXPENSE. Interest and other expense, net, for the three months ended
June 30, 1999 was $74,000 compared to $101,000 for the same period in 1998, a
decrease of $27,000 or 27%. This decrease was attributable to a lower level of
bank debt outstanding due to lower inventories which resulted from improved
inventory management. The decrease
6
<PAGE> 7
was slightly offset by a higher interest rate charged on the Company's bank
credit facilities.
INCOME TAXES. The Company provided for an income tax benefit of $84,000 for
the three months ended June 30, 1999, compared to an income tax benefit of
$186,000 for the same period in 1998. As a percent to pretax loss, the income
tax benefit was 37% in 1999 and 29% in 1998. The income tax benefits for each
period represents anticipated utilization of these tax benefits during the
respective fiscal years. The income tax benefit for the three months ended June
30, 1999 was higher as a percent of pretax income than the income tax benefit
for the three months ended June 30, 1998 because the Company expected higher
pretax income for the year ended December 31, 1999 and, accordingly, the
ability to take advantage of a more substantial income tax benefit, as compared
to the year ended December 31, 1998.
NET INCOME AND LOSS. As a result of the increases and decreases discussed
above, net loss for the three months ended June 30, 1999 was $143,000 or $0.04
per share compared to net loss of $463,000 or $0.13 per share for the same
period in 1998, a decrease in net loss of $320,000 or $0.09 per share.
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 1999 AND THE SIX MONTHS ENDED
JUNE 30, 1998
REVENUES. Net sales for the six months ended June 30, 1999 were $9,581,000
compared to $9,594,000 for the same period in 1998, a decrease of $13,000 or
less than 1%. The slight decrease was attributable to a combination of a 2%
decrease in sales of herring products, an 8% increase in sales of salmon
products, and a 4% decrease in the sale of other specialty products. Both the
herring decrease and the salmon increase are consistent with consumer demand
for these products in the marketplace.
GROSS MARGIN. Gross margin for the six months ended June 30, 1999 was
$2,678,000 compared to $2,435,000 for the same period in 1998, an increase of
$243,000 or 10%. As a percentage of net sales, gross margin was 28.0% in the
six months versus 25.4% in the same period in 1998. The increase in the gross
margin percentage was attributable in part to favorable production labor and
overhead variances, offset by a change in the sales mix from higher margin
herring products to lower margin salmon products.
OPERATING EXPENSES. Selling, marketing and administrative expenses for the six
months ended June 30, 1999 were $2,815,000 compared to $3,030,000 for the same
period in 1998, a decrease of $215,000 or 7%. As a percentage of net sales,
selling, marketing and administrative expenses decreased to 29.4% from 31.6%
for the same period in 1998. The decrease in the selling, marketing and
administrative expense margin was attributable to a combination of factors,
including lower slotting costs, selling expenses, and distribution costs. The
Company was very aggressive in the prior year in increasing several of its
newer products by incurring a high amount of slotting costs. Selling expenses
were lower primarily as a result of reduced staffing, and distribution costs
were lower as a result of increased efforts at reducing freight costs.
INTEREST EXPENSE. Interest and other expense, net, for the six months ended
June 30, 1999 was $157,000 compared to $197,000 for the same period in 1998, a
decrease of $40,000 or 20%. This decrease was attributable to a lower level of
bank debt outstanding due to lower inventories which resulted from improved
inventory management.
INCOME TAXES. The Company provided for an income tax benefit of $109,000 for
the six months ended June 30, 1999, compared to an income tax benefit of
$238,000 for the same period in 1998. The income tax benefits for each period
represents anticipated utilization of these tax benefits during the respective
fiscal years. The income tax benefit for the six months ended June 30, 1999 was
higher as a percent of pretax income than the income tax benefit for the six
months ended June 30, 1998 because the Company expected higher pretax income
for the year ended December 31, 1999 and, accordingly, the ability to take
advantage of a more substantial income tax benefit, as compared to the year
ended December 31, 1998.
NET INCOME AND LOSS. As a result of the increases and decreases discussed
above, net loss for the six months ended June 30, 1999 was $185,000 or $0.05
per share compared to net loss of $553,000 or $0.15 per share for the same
period in 1998, a decrease in net loss of $368,000 or $0.10 per share.
7
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FINANCIAL CONDITION
Through the second quarter 1999, the current ratio decreased to 1.9 from 2.3
but the ratio of long-term debt-to-total capitalization decreased to 64% from
70%. As is typical between yearend and the second quarter, inventory levels
and accounts receivable dropped substantially, reflecting the lower level of
sales and production activity at the end of the second quarter compared with
the end of the fourth quarter. Cash generated from operations was primarily
used to pay down bank debt, resulting in the lower long-term debt-to-total
capitalization ratio.
CASH FLOWS FROM OPERATING ACTIVITIES. Net cash provided by operating activities
was $1,524,000 for the six months ended June 30, 1999, compared to $152,000 for
the same period in 1998. The increase was primarily attributable to the lower
net loss and a larger decrease in inventory levels in 1999, compared to 1998.
The decrease in inventory levels was primarily attributable to improved
inventory management.
CASH FLOWS FROM INVESTING ACTIVITIES. Net cash used in investing activities was
$203,000 for the six months ended June 30, 1999, compared to $97,000 for the
same period in 1998. The increase was primarily due to increased capital
spending on building improvements.
CASH FLOWS FROM FINANCING ACTIVITIES. Net cash used in financing activities was
$1,362,000 for the six months ended June 30, 1999, compared to $113,000 for the
same period in 1998. The increase in net cash used in financing activities was
attributable to payments made under the Company's bank credit facilities
resulting from the higher level of cash generated from operations.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) The date of the Company's Annual Meeting of Stockholders was May 24,
1999.
(b), (c) At the Annual Meeting of Stockholders, the following matters were
submitted to a vote of the stockholders with the stated results:
(1) The election of the following persons as directors of the Company:
<TABLE>
<CAPTION>
Director Votes For Votes Withheld
--------------------- ---------- --------------
<S> <C> <C>
Stephen D. Rubin 2,980,380 13,512
Clark L. Feldman 2,980,380 13,512
Sam Gorenstein 2,980,380 13,512
Jeffrey C. Rubenstein 2,980,380 13,512
Neal Jansen 2,980,380 13,512
Michael Horn 2,980,380 13,512
Steven A. Rothstein 2,980,380 13,512
</TABLE>
(2) The ratification of the appointment of BDO Seidman, LLP as the
Company's independent accountants for the year ending December 31,
1999.
<TABLE>
<CAPTION>
Votes For Votes Against Votes Abstained
--------- ------------- ---------------
<S> <C> <C>
2,985,113 6,679 2,100
</TABLE>
8
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- ------------------------------------------------------------------------------
<S> <C>
10.1.6 Seventh Amendment to Loan and Security Agreement
10.4.1 Amendment One to Employment Agreement between the Company and Stephen D. Rubin
10.5.1 Amendment One to Employment Agreement between the Company and Clark L. Feldman
10.8 Employment Agreement between the Company and Jay H. Dembsky
27.1 Financial Data Schedule
</TABLE>
(b) No reports on Form 8-K were filed during the quarter for which this
report is filed.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
VITA FOOD PRODUCTS, INC.
Date: August 9, 1999 By: //Stephen D. Rubin//
--------------------------------------------
Stephen D. Rubin
President
Date: August 9, 1999 By: //Jay H. Dembsky//
--------------------------------------------
Jay H. Dembsky
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
9
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Exhibit 10.1.6
SEVENTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment")
is made as of April 30, 1999, by and between AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO (the "Lender") and VITA FOOD PRODUCTS, INC., a Nevada
corporation (the "Borrower").
W I T N E S S E T H:
WHEREAS, Borrower (by reason of merger) and Lender entered into a Loan and
Security Agreement dated as of March 20, 1995, as thereafter amended from time
to time (collectively, the "Credit Agreement"); and
WHEREAS, Borrower has requested certain modifications to the Credit
Agreement; and
WHEREAS, Lender is willing to grant such modifications on the terms and
conditions contained herein;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
and other good and valuable consideration, the receipt and sufficiency of which
is acknowledged by the parties hereto, it is hereby agreed as follows:
1. The recitals hereinabove contained shall form a part of this Amendment
and this Amendment shall be construed in the light thereof. All capitalized
terms contained herein and not otherwise defined shall have the same meaning as
contained in the Credit Agreement.
2. Section 1.64 of the is hereby amended by deleting the date "April 30,
1999" and by inserting in place thereof the date April 30, 2000.
3. The first thirteen lines of Section 2.6 are deleted and in lieu thereof
is inserted the following:
Effective with the date of this Amendment, Borrower
shall pay Lender interest on the outstanding
principal balance of the Revolving Loans and the
Term Loans at a pre-Default rate per annum equal to
the Prime Rate plus one-half percent (1/2%) (the
"Note Rate").
4. Sections 10.2(L) and 10.2(V) are hereby deleted in their entirety.
<PAGE> 2
5. Section 10.2(W) is hereby deleted in its entirety and in lieu thereof
is inserted the following:
Permit Borrower's cumulative net income for the fiscal year
ending December 31, 1999 (excluding and unusual or
non-recurring items of income), and cumulative income for the
first fiscal quarter ending March 31, 2000 to be less than
the following amounts for the following periods:
<TABLE>
<S> <C>
1/1/99 through 3/31/99 negative $ 43,000
1/1/99 through 6/30/99 negative $350,000
1/1/99 through 9/30/99 negative $475,000
1/1/99 through 12/31/99 $ 70,000
1/1/2000 through 3/31/2000 negative $ 43,000
</TABLE>
6. Section 10.2(X) is hereby deleted and in lieu thereof is inserted the
following:
Permit Tangible Net Worth to be less than:
<TABLE>
<S> <C>
as of 3/31/99 $1,570,000
as of 6/30/99 $1,012,000
as of 9/30/99 $ 817,000
as of 12/31/99 $1,638,000
as of 3/31/2000 $1,595,000
</TABLE>
7. Exhibit L of the Credit Agreement is amended and restated in its
entirety by the Amended and Restated Revolving Note, a copy of which is
attached hereto as Schedule 1, and all references to the Revolving Note
contained in the Credit Agreement shall mean and be references to said Amended
and Restated Revolving Note.
8. Borrower shall also execute the Amended and Restated Term Note, a copy
of which is attached hereto as Schedule 2.
9. Borrower agrees to execute and deliver to Lender this Amendment, the
Amended
2
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and Restated Revolving Note, the Amended and Restated Term Note, and such
additional documents, including financing statements, as may be necessary to
effectuate the purpose of this Amendment.
10. Borrower shall pay to Lender the reasonable legal fees and expenses of
counsel incurred in connection with the preparation of this Amendment and
related documentation.
11. Borrower expressly acknowledges and agrees that all collateral,
security interests, liens, pledges, and mortgages heretofore, under this
Amendment, or hereafter granted to Lender, including, without limitation, such
collateral, security interests, liens, pledges and mortgages granted under the
Credit Agreement, and all other supplements to the Credit Agreement, extend to
and cover all of the obligations of Borrower to Lender, now existing or
hereafter arising including, without limitation, those arising in connection
with the Credit Agreement, as amended by this Amendment, upon the terms set
forth in such agreements, all of which security interests, liens, pledges, and
mortgages are hereby ratified, reaffirmed, confirmed and approved.
12. Borrower represents and warrants to Lender that (i)it has all
necessary power and authority to execute and deliver this Amendment and perform
its obligations hereunder, (ii) this Amendment and the Credit Agreement, as
amended hereby, constitute the legal, valid and binding obligations of Borrower
and are enforceable against Borrower in accordance with their terms, and (iii)
all representations and warranties of Borrower contained in the Credit
Agreement, as amended, and all other agreements, instruments and other writings
relating thereto, are true, correct and complete as of the date hereof.
13. The parties hereto acknowledge and agree that the terms and provisions
of this Amendment amend, add to and constitute a part of the Credit Agreement.
Except as expressly modified and amended by the terms of this Amendment, all of
the other terms and conditions of the Credit Agreement and all documents
executed in connection therewith or referred to or incorporated therein remain
in full force and effect and are hereby ratified, reaffirmed, confirmed and
approved.
14. If there is an express conflict between the terms of this Amendment
and the terms of the Credit Agreement, or any of the other agreements or
documents executed in connection therewith or referred to or incorporated
therein, the terms of this Amendment shall govern and control.
15. This Amendment may be executed in one or more counterparts, each of
which shall be deemed to be an original.
16. This Amendment was executed an delivered in Chicago, Illinois and
shall be governed by and construed in accordance with the internal laws (as
opposed to conflicts of law provisions) of the State of Illinois.
3
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IN WITNESS WHEREOF, this Credit Agreement has been duly executed as of the
day and year specified at the beginning hereof.
AMERICAN NATIONAL BANK VITA FOOD PRODUCTS, INC., a
AND TRUST COMPANY OF Nevada corporation
CHICAGO
By: _________________________________ By: _________________________________
Title: ______________________________ Title: ______________________________
4
<PAGE> 1
EXHIBIT 10.4.1
AMENDMENT ONE
TO
EMPLOYMENT AGREEMENT
This Amendment One to the Employment Agreement ("FIRST AMENDMENT") is made
this _____ day of _______________, 1999 between VITA FOOD PRODUCTS, INC., a
Nevada corporation (the "COMPANY") and STEVEN D. RUBIN (the "EMPLOYEE").
RECITALS
1. The Company and Employee entered into an Employment Agreement on
January 16, 1997 ("EMPLOYMENT AGREEMENT") whereby the Company hired the
Employee to serve as an executive and operating officer of the Company.
2. The Company and Employee desire to amend the Employment Agreement
extending the term of the Employment Agreement and providing for annual
renewals after expiration of the Initial Term (as defined herein).
CLAUSES
NOW, THEREFORE, for and in consideration of the above premises and mutual
agreements hereinafter set forth, the Employee and the Company agree as
follows:
1. CAPITALIZED TERMS. Capitalized terms not otherwise defined herein
shall have the meanings as set forth in the Employment Agreement.
2. TERM. Section 3 of the Employment Agreement is hereby deleted and
replaced by the following new Section 3:
"3. TERM. The term of Employee's employment hereunder (the
"TERM") shall be extended an additional one (1) year (the "INITIAL
TERM") expiring on January 15, 2001 (the "EXPIRATION DATE"). The
Expiration Date shall be automatically extended, unless terminated
by the Company or Employee, for successive one (1) year periods
("RENEWAL TERM") following the expiration of the Initial Term. If
the Company desires to terminate Employee's employment under this
Employment Agreement at the end of the Initial Term or at the end
of any succeeding Renewal Term, the Company shall give written
notice of such desire to Employee on or prior to April 30 of the
year prior to expiration of the Initial Term or any Renewal Term.
If Employee desires to terminate Employee's employment under this
Employment Agreement at the end of the Initial Term or at the end
of any succeeding Renewal Term, Employee shall give written notice
of such desire to the Company at least six (6) months prior to
expiration of the Initial Term or any succeeding Renewal Term."
3. RATIFICATION. In all other respects, the Employment Agreement, as
amended by this First Amendment, is hereby ratified and confirmed.
<PAGE> 2
IN WITNESS WHEREOF, Employee and the Company have executed and delivered
this First Amendment as of the date first shown above.
<TABLE>
<S> <C>
EMPLOYEE: COMPANY:
STEVEN D. RUBIN VITA FOOD PRODUCTS, INC.
____________________________ By:____________________________
Title:___________________________
Address:____________________ Address: 2222 West Lake Street
Chicago, Illinois 60612
____________________
</TABLE>
<PAGE> 1
Exhibit 10.5.1
AMENDMENT ONE
TO
EMPLOYMENT AGREEMENT
This Amendment One to the Employment Agreement ("FIRST AMENDMENT") is made
this _____ day of _______________, 1999 between VITA FOOD PRODUCTS, INC., a
Nevada corporation (the "COMPANY") and CLARK L. FELDMAN (the "EMPLOYEE").
RECITALS
1. The Company and Employee entered into an Employment Agreement on
January 16, 1997 ("EMPLOYMENT AGREEMENT") whereby the Company hired the
Employee to serve as an executive and operating officer of the Company.
2. The Company and Employee desire to amend the Employment Agreement
extending the term of the Employment Agreement and providing for annual
renewals after expiration of the Initial Term (as defined herein).
CLAUSES
NOW, THEREFORE, for and in consideration of the above premises and mutual
agreements hereinafter set forth, the Employee and the Company agree as
follows:
1. CAPITALIZED TERMS. Capitalized terms not otherwise defined herein
shall have the meanings as set forth in the Employment Agreement.
2. TERM. Section 3 of the Employment Agreement is hereby deleted and
replaced by the following new Section 3:
"3. TERM. The term of Employee's employment hereunder (the
"TERM") shall be extended an additional one (1) year (the "INITIAL
TERM") expiring on January 15, 2001 (the "EXPIRATION DATE"). The
Expiration Date shall be automatically extended, unless terminated
by the Company or Employee, for successive one (1) year periods
("RENEWAL TERM") following the expiration of the Initial Term. If
the Company desires to terminate Employee's employment under this
Employment Agreement at the end of the Initial Term or at the end
of any succeeding Renewal Term, the Company shall give written
notice of such desire to Employee on or prior to April 30 of the
year prior to expiration of the Initial Term or any Renewal Term.
If Employee desires to terminate Employee's employment under this
Employment Agreement at the end of the Initial Term or at the end
of any succeeding Renewal Term, Employee shall give written notice
of such desire to the Company at least six (6) months prior to
expiration of the Initial Term or any succeeding Renewal Term."
3. RATIFICATION. In all other respects, the Employment Agreement, as
amended by this First Amendment, is hereby ratified and confirmed.
<PAGE> 2
IN WITNESS WHEREOF, Employee and the Company have executed and delivered
this First Amendment as of the date first shown above.
<TABLE>
<S> <C>
EMPLOYEE: COMPANY:
CLARK L. FELDMAN VITA FOOD PRODUCTS, INC.
_____________________________ By:______________________________
Title:___________________________
Address:______________________ Address: 2222 West Lake Street
Chicago, Illinois 60612
______________________
</TABLE>
<PAGE> 1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made on the _____ day of __________, 1999,
between VITA FOOD PRODUCTS, INC., a Nevada corporation (the "COMPANY") and JAY
H. DEMBSKY (the "EMPLOYEE").
RECITALS
1. The Company is engaged in the business of processing and manufacturing
cured and smoked herring and salmon products and distributing other related
products (the "BUSINESS").
2. The Company has determined that in view of the Employee's past
experience with and services to the Company and his knowledge, expertise and
experience in finance and accounting, the Employee's services as chief
financial officer of the Company will be of great continued value to the
Company, and accordingly, the Company desires to enter into this Agreement with
the Employee as set forth herein in order to secure such continued services.
3. The Employee desires to continue to serve as chief financial officer of
the Company on the terms set forth herein.
CLAUSES
NOW, THEREFORE, for and in consideration of the Employee's employment by
the Company, the above premises and the mutual agreements hereinafter set
forth, the Employee and the Company agree as follows:
1. DEFINITIONS.
(a) "CAUSE" means the Employee's (i) commission of any act of fraud
or dishonesty relating to the business affairs of the Company; (ii)
conviction of any felony in connection with employment by the Company; or
(iii) material failure, after written notice specifying such failure and
a reasonable opportunity to cure such failure, to perform his material
duties or responsibilities hereunder.
(b) "CHANGE IN CONTROL EVENT" means any of the following events: (1)
the sale of all or substantially all of the assets of the Company; or (2)
the sale or other transfer of ownership or voting control of the majority
of the voting stock of the Company to any one entity/individual or to a
group of affiliated entities/individuals who are not presently owners of
at least ten percent (10%) of the outstanding voting stock of the
Company.
(c) "TOTAL DISABILITY" means the Employee's inability, through
physical or mental illness or accident, to perform the majority of his
usual duties and responsibilities hereunder (as such duties are
constituted on the date of the commencement of such disability) in the
manner and to the extent required under this Agreement for a period of at
least one hundred eighty (180) consecutive days or for two hundred
seventy (270) days during a period of three hundred sixty-five (365)
days. Total Disability shall be deemed to have occurred on the first day
following the expiration of such period.
<PAGE> 2
2. EMPLOYMENT; DUTIES.
(a) The Company agrees to employ the Employee as Vice President,
Treasurer, Assistant Secretary - Chief Financial Officer of the Company
with the duties and responsibilities generally associated with such
position and currently performed by the Employee and such other
reasonable additional responsibilities and positions as may be added to
the Employee's duties from time to time by the Board consistent with the
Employee's position.
(b) During the term of employment hereunder, Employee shall (i)
diligently follow and implement all management policies and decisions
communicated by the Board; and (ii) timely prepare and forward to the
Board all reports and accountings as may be requested.
3. TERM. The term hereof shall have commenced on October 14, 1998 (the
"EFFECTIVE DATE") and shall continue for a period of two (2) years (the
"TERM").
4. COMPENSATION.
(a)(1) Employee shall be paid a base salary of One Hundred Twenty
Five Thousand Dollars and 00/100 ($125,000) per year (the "BASE SALARY")
for the period beginning on the Effective Date and ending on October 13,
1999. The Base Salary shall accrue and be due and payable in equal, or
as nearly equal as practicable, weekly installments or in the manner and
on the timetable which the Company's payroll is customarily handled or at
such intervals as Company and the Employee may hereafter agree to from
time to time. The Base Salary shall be increased for the twelve (12)
month period beginning on October 14, 1999 and ending on October 13, 2000
by a percentage equal to at least the percentage increase in the cost of
living. The adjustment shall be made by adding to such Base Salary an
amount obtained by multiplying the Base Salary at such time by the
percentage by which the level of the Consumer Price Index for the
Metropolitan Area encompassing the location of Employee's then principal
place of employment as reported on the last day of the preceding calendar
year by the Bureau of Labor Statistics of the United States Department of
Labor has increased over its level as of the Effective Date of this
Agreement.
(2) The Base Salary may be increased from time to time and at any
time by the Compensation Committee and approved by the Board, but shall
in no event be reduced or decreased below the highest level attained at
any time by Employee.
(3) If the Term shall begin on other than the first business day of
a calendar month and if the Term hereof shall terminate on other than the
last day of a calendar month, Employee's compensation for such month
shall be prorated according to the number of days during such month that
occur within the Term.
(b) The Employee shall receive: (1) Guaranteed Bonus ("GUARANTEED
BONUS") of $31,500; and (2) the higher of an annual bonus based on the
Company's Management Bonus Plan, as amended from time to time, only as
approved by the Compensation Committee and by the Board (the "INCENTIVE
BONUS"), whereby Employee shall have the opportunity to earn an Incentive
Bonus based upon a percentage of total amount of Employee's Base Salary
and Guaranteed Bonus or an
2
<PAGE> 3
earning bonus equal to 5% of the Company's net income in excess of fifty
thousand dollars ($50,000) ("Earnings Bonus") with a maximum of ten
thousand dollars ($10,000) per year for calendar year 1999 and 2000. The
Incentive Bonus and Earning Bonus, if any, and the Guaranteed Bonus
(collectively the "BONUS PAYMENTS") shall be paid on or before the 15th
day of March following the calendar year for which such Bonus Payments
were earned.
(c) While Employee is performing the services described herein, the
Company shall, upon request, reimburse Employee for all reasonable and
necessary expenses incurred by Employee in connection with the
performance of duties of employment hereunder.
(d) If the Company now maintains or, while Employee renders services
to the Company, establishes an incentive or other compensation plan
(however described or denominated) for the corporate, operating or
executive officers or other management of the Company, or if the Company
now maintains or, while Employee renders services to the Company,
establishes any other benefit program(s) (however described or
denominated) for corporate, operating or executive officers or other
management employees of the Company, Employee shall be eligible to fully
participate in each such plan or benefit program.
(e) During the Term, the Company shall provide health, medical,
disability and term life insurance to Employee in accordance with any
group plan which it now maintains or which may hereafter be established
by the Company.
(f) Employee shall receive not less than three (3) weeks paid
vacation during each twelve (12) month period of employment. Such
vacation period may be increased from time to time and at any time by the
Board but shall in no event be shortened to less than the longest period
attained by Employee at any time during his employment.
(g) On October 14, 1996, the Employee was granted incentive stock
options to purchase 80,000 shares of common stock pursuant to the
Company's 1996 Employee Stock Option Plan, which were canceled and
terminated by Employee and the Company on November 6, 1999.
5. TERMINATION.
(a) Employee's employment may be terminated only as follows:
(1) By the Company: For Cause; or
(2) By the Employee: (A) because of a material breach of this
Agreement by the Company which is not cured after written notice
specifying such failure and reasonable opportunity to cure such
failure; or (B) if a Change in Control Event occurs; or (C) if the
Employee is requested by the Company to relocate more than fifty
(50) miles from its current offices; or
(3) Upon death of the Employee; or
(4) Upon the Total Disability of the Employee.
3
<PAGE> 4
(b) In the event that employment is terminated due to the Employee's
death or Total Disability, the Company will be obligated to pay to the
Employee the full amount of Base Salary earned by Employee through the
effective date of termination or death, as the case may be.
(c) In the event that employment is terminated by the Company for
Cause, the Company will have no obligations to pay any amount beyond the
effective date of such termination whether as Base Salary, Bonus Payments
or otherwise or to provide any benefits arising hereunder except as
required by law.
(d) In the event that within one hundred eighty (180) days after a
Change of Control Event, (1) Employee's employment with the Company is
terminated by the Company, its successor, or (2) Employee's position with
or duties for the Company are changed to a level not substantially
commensurate with Employee's current position or duties hereunder:
(i) The Company shall pay Employee on the date of such
termination the full amount of Base Salary earned by Employee
through the Effective Date of termination and a prorata amount of
the Guaranteed Bonus, plus an amount equal to $250,000.
(e) In the event employment is terminated by Employee:
(i) pursuant to Section 5(a)(2)(A); or
(ii) pursuant to Section 5(a)(2)(B) or Section 5(a)(2)(C)
(either hereinafter referred to as an "EVENT") within 90 days of
the Event,
the Company will be obligated to pay Employee the full amount of Base
Salary earned by Employee through the Effective Date of termination plus
liquidated and sole damages with respect to an Event of an amount equal
to $100,000.
(f) Upon a Change of Control event, all of Employee's stock options
shall immediately become fully vested.
6. CONFIDENTIAL INFORMATION. Employee acknowledges that the nature of his
engagement by the Company is such that Employee shall have access to
information of a confidential and/or trade secret nature which has great value
to the Company. Such information includes financial, manufacturing and
marketing data, business plans and methods, processes, product formulas,
developmental work, work in process, methods, trade secrets (including, without
limitation, customer lists, supplier lists and lists of customer, supplier and
food broker sources), and any other information relating to the products,
services, customers, sales or business affairs of the Company, which has value
and is treated as secret and/or confidential by the Company (the "CONFIDENTIAL
INFORMATION"). The Company and Employee have and will also have access to
Confidential Information of its suppliers ("SUPPLIERS" means any persons with
whom the Company has a co-packing or joint venture relationship with or who
supplies any products or materials to the Company). Confidential Information
includes not only information disclosed by the Company or its Suppliers to
Employee in the course of employment, but also information developed or learned
by Employee during the course of employment with the Company. Confidential
Information is to be broadly defined. Confidential Information includes all
information that has or could have commercial value or other utility in the
business in which the
4
<PAGE> 5
Company or Suppliers are engaged or in which they contemplate engaging.
Confidential Information also includes all information of which the
unauthorized disclosure could be detrimental to the interests of the Company or
Suppliers, whether or not such information is identified as Confidential
Information by the Company or Suppliers. Employee agrees to keep all
Confidential Information that could be materially detrimental to the interests
of the Company or Suppliers in confidence during the term of this Agreement and
at any time thereafter and shall not use, disclose, publish or otherwise
disseminate any of such Confidential Information to any other person, except to
the extent such disclosure is (i) necessary to the performance of this
Agreement and in furtherance of the Company's best interests, (ii) required by
applicable law, (iii) lawfully obtainable from other sources, (iv) authorized
in writing by the Company, or (v) no longer qualifies as a trade secret or
Confidential Information under applicable law. Upon termination of employment
with the Company, Employee shall deliver to the Company all documents, records,
notebooks, work papers, and all similar material containing Confidential
Information, whether prepared by Employee, the Company or anyone else.
7. NON-COMPETITION. In order to protect the Confidential Information,
Employee agrees that during the term of employment, and for a period of one (1)
year thereafter, Employee will not, directly or indirectly, whether as an
owner, partner, shareholder, agent, employee, creditor, or otherwise, promote,
participate or engage in any activity or other business directly competitive
with the Company's then existing Business, if Company reasonably believes that
such activity or other business may involve any use of any of the Confidential
Information by Employee.
8. NON-SOLICITATION OF CUSTOMERS OR SUPPLIERS. Employee agrees that for a
period of one (1) year after the termination of employment with the Company,
Employee will not, on his own behalf or on behalf of any other individual,
association or entity, call on any of the customers or Suppliers of the Company
for the purpose of soliciting or inducing any of such customers to acquire (or
providing to any of such customers) or any of the Suppliers to provide any
product or service provided by or to the Company, nor will Employee in any way,
directly or indirectly, as agent or otherwise, in any other manner solicit,
influence or encourage such customers or Suppliers to take away or to divert or
direct their business away from the Company to Employee or to any other person
or entity with which Employee is employed, associated, affiliated or otherwise
related.
9. NONINTERFERENCE WITH EMPLOYEES. In order to protect the Confidential
Information and as a consideration for this Agreement, Employee agrees that
during the term hereof and for a period of one (1) year thereafter, Employee
will not, directly or indirectly, induce or entice any employee of the Company
to leave such employment or cause anyone else to leave such employment.
10. REMEDIES. The parties hereto agree that the services to be rendered
by Employee pursuant to this Agreement, and the rights and privileges granted
to the Company pursuant to this Agreement, are of a special, unique,
extraordinary and intellectual character, which gives them a peculiar value,
the loss of which cannot be reasonably or adequately compensated in damages in
any action at law, and that a breach by Employee of any of the terms of this
Agreement will cause the Company great and irreparable injury and damage.
Employee hereby expressly agrees that the Company shall be entitled to the
remedies of injunction, specific performance and other equitable relief to
prevent a breach of this Agreement by Employee. This Section 10 shall not be
construed as a waiver of any other rights or remedies which the Company may
have for damages or otherwise.
5
<PAGE> 6
11. SEVERABILITY. In case any one or more of the provisions of this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, the same shall not affect any other provision of this
Agreement, but this Agreement shall be construed as if such invalid or illegal
or unenforceable provision had never been contained herein.
12. ASSIGNMENT. This Agreement and the rights and obligations of the
parties hereunder may not be assigned by either party hereto without the prior
written consent of the other party hereto.
13. NOTICES. Except as otherwise specifically provided herein, any notice
required or permitted to be given to Employee pursuant to this Agreement shall
be given in writing, and personally delivered or mailed to Employee by
certified mail, return receipt requested, at the address set forth below
Employee's signature on this Agreement or at such other address as Employee
shall designate by written notice to the Company given in accordance with this
Section 13, and any notice required or permitted to be given to the Company
shall be given in writing, and personally delivered or mailed to the Company by
certified mail, return receipt requested, addressed to the Company at the
address set forth under the signature of the President of the Company or his
designee on this Agreement or at such other address as the Company shall
designate by written notice to Employee given in accordance with this Section
13. Any notice complying with this Section 13 shall be deemed received upon
actual receipt by the addressee.
14. WAIVER. The waiver by either party hereto of any breach of this
Agreement by the other party hereto shall not be effective unless in writing,
and no such waiver shall operate or be construed as the waiver of the same or
another breach on a subsequent occasion.
15. GOVERNING LAW. This Agreement and the rights of the parties hereunder
shall be governed by and construed in accordance with the laws of the State of
Illinois.
16. BENEFICIARY. All of the terms and provisions of this Agreement shall
be binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, heirs, executors, administrators and
permitted assigns.
17. ENTIRE AGREEMENT. This Agreement embodies the entire agreement of the
parties hereto relating to Employee's employment by the Company in the capacity
herein stated and, except as specifically provided herein, no provisions of any
employee manual, personnel policies, Company directives or other agreement or
document shall be deemed to modify the terms of this Agreement. No amendment or
modification of this Agreement shall be valid or binding upon Employee or the
Company unless made in writing and signed by the parties hereto. All prior
understandings and agreements relating to Employee's employment by the Company,
in whatever capacity, are hereby expressly terminated.
18. CONFIDENTIALITY. The terms, conditions and existence of this
Agreement shall be confidential.
IN WITNESS WHEREOF, Employee and the Company have executed and delivered
this agreement as of the date first shown above.
<TABLE>
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EMPLOYEE: THE COMPANY:
JAY H. DEMBSKY VITA FOOD PRODUCTS, INC.
</TABLE>
6
<PAGE> 7
<TABLE>
<S> <C>
___________________________________ By:__________________________________
Address:___________________________ Printed Name:________________________
___________________________ Title:_______________________________
___________________________ Address: 2222 West Lake Street
Chicago, IL 60612
</TABLE>
7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL INFORMATION
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 36,826
<SECURITIES> 0
<RECEIVABLES> 2,638,629
<ALLOWANCES> 233,628
<INVENTORY> 3,216,759
<CURRENT-ASSETS> 6,349,291
<PP&E> 6,502,568
<DEPRECIATION> (4,102,736)
<TOTAL-ASSETS> 8,969,582
<CURRENT-LIABILITIES> 3,360,336
<BONDS> 3,575,513
0
0
<COMMON> 37,074
<OTHER-SE> 1,993,959
<TOTAL-LIABILITY-AND-EQUITY> 8,969,882
<SALES> 9,580,681
<TOTAL-REVENUES> 9,580,681
<CGS> 6,902,688
<TOTAL-COSTS> 6,902,666
<OTHER-EXPENSES> 2,815,095
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 156,967
<INCOME-PRETAX> (294,047)
<INCOME-TAX> (108,797)
<INCOME-CONTINUING> (185,250)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (185,250)
<EPS-BASIC> (0,05)
<EPS-DILUTED> (0,05)
</TABLE>
