<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 24, 1999
REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1 TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SWISS NATURAL FOODS, INC.
(Name of small business issuer in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
2080
(Primary standard industrial classification code number)
13-3762562
(I.R.S. Employer Identification No.)
1031 ROUTE 9W
UPPER GRANDVIEW, NEW YORK 10960
(914) 358-1212
(Address and telephone number of principal executive offices and principal place
of business)
------------------------
DR. RALPH M. FERRANTE
Chairman and Chief Executive Officer
Swiss Natural Foods, Inc.
1031 Route 9W
Upper Grandview, New York 10960
(914) 358-1212
(Name, address and telephone number of agent for service)
------------------------
Copy to:
<TABLE>
<S> <C>
HANK GRACIN, ESQ. STEVEN MORSE, ESQ.
Lehman & Eilen LLP Lester Morse P.C.
50 Charles Lindbergh Blvd. - Suite 505 111 Great Neck Road, Suite 420
Uniondale, New York 11553 Great Neck, New York 11021
Telephone: (516) 222-0888 Telephone: (516) 487-1446
Facsimile: (516) 222-0948 Facsimile: (516) 487-1452
</TABLE>
------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the registration statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
------------------------
<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
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- --------------------------------------------------------------------------------------------------
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE AMOUNT TO OFFERING PRICE OFFERING REGISTRATION
REGISTERED BE REGISTERED PER SHARE(1) PRICE(1) FEE(6)
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<S> <C> <C> <C> <C>
Common Stock, par value $.01 per
share (2) 1,380,000 $ 5.00 $6,900,000 $ 1,918.20
- --------------------------------------------------------------------------------------------------
Warrants, each to purchase one
share of Common Stock (2) 1,380,000 .15 207,000 57.55
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Common Stock, par value $.01 per
share, issuable upon exercise
of the Warrants (2) (3) 1,380,000 6.25 8,625,000 2,397.75
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Underwriter's Common Stock
Warrants, each to purchase one
share of Common Stock (4) 120,000 .0005 60.00 (5)
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Common Stock, par value $.01 per
share, issuable upon exercise
of the Underwriter's Common
Stock Warrants (3) 120,000 7.25 870,000 241.86
- --------------------------------------------------------------------------------------------------
Underwriter's Warrants, each to
purchase one warrant (4) 120,000 .0005 60.00 (5)
- --------------------------------------------------------------------------------------------------
Warrants issuable upon exercise
of the Underwriter's Warrants 120,000 .2175 26,100 7.26
- --------------------------------------------------------------------------------------------------
Common Stock, par value $.01 per
share, issuable upon exercise
of the warrants underlying the
Underwriter's Warrants (3) 120,000 6.25 750,000 208.50
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Total Registration Fee $ 4,831.12
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 promulgated under the Securities Act of 1933, as
amended.
(2) Assumes the Underwriter's over-allotment option to purchase up to 180,000
additional shares of Common Stock and 180,000 additional Warrants is
exercised in full.
(3) Pursuant to Rule 416, there are also being registered such indeterminable
additional shares of Common Stock as may become issuable pursuant to
anti-dilution provisions contained in the Warrants, the Underwriter's
Warrants and the warrants underlying the Underwriter's Warrants.
(4) Represents warrants to be issued by Swiss Natural to the Underwriter at the
time of delivery and acceptance of the securities to be sold by Swiss
Natural to the public hereunder.
(5) None, pursuant to Rule 457(g).
(6) Fees are calculated by multiplying the aggregate offering price by .000278.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED AUGUST 24, 1999
PROSPECTUS
SWISS NATURAL FOODS, INC.
1,200,000 SHARES OF COMMON STOCK
AND 1,200,000 REDEEMABLE
COMMON STOCK PURCHASE WARRANTS
------------------------
Swiss Natural is offering 1,200,000 shares of common stock and 1,200,000
redeemable common stock purchase warrants. Each warrant entitles the holder to
purchase one share of our common stock at $6.25 commencing , 2000
and ending 2003. This is our initial public offering and no
public market currently exists for our shares or our warrants.
------------------------
We have applied for quotation of our common stock and our warrants on the
Nasdaq Smallcap Market under the symbols "SWIS" and "SWISW", respectively.
------------------------
AN INVESTMENT IN OUR SECURITIES INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 4.
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE
NOT APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS
IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
PROCEEDS TO
SELLING
PRICE TO UNDERWRITING PROCEEDS TO SECURITY
PUBLIC DISCOUNTS COMPANY HOLDERS
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Per Share............... $ $ $ $
Per Warrant............. $ $ $ $
Total................... $ $ $ $
</TABLE>
THREE STOCKHOLDERS OF SWISS NATURAL HAVE GRANTED THE UNDERWRITERS THE RIGHT
TO PURCHASE UP TO AN ADDITIONAL 180,000 SHARES OF COMMON STOCK TO COVER
OVER-ALLOTMENTS. SWISS NATURAL HAS ALSO GRANTED THE UNDERWRITERS THE RIGHT TO
PURCHASE UP TO AN ADDITIONAL 180,000 WARRANTS TO COVER OVER-ALLOTMENTS.
------------------------
COMPREHENSIVE CAPITAL CORPORATION
------------------------
, 1999
<PAGE>
[Photos of the Swiss Natural product line.]
"SWISS NATURAL", "REACH FOR THE PEAK", "ULTRA PEAK", "SWISS NATURAL ICY
BERRY","SWISS NATURAL ICY CITRUS", "SWISS NATURAL ICY MELONADE" and "SWISS
NATURAL ICY COFFEE" are registered trademarks of Swiss Natural Foods, Inc.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUMMARY................................................. 5
THE OFFERING....................................................... 5
SUMMARY OF FINANCIAL DATA.......................................... 6
RISK FACTORS....................................................... 7
FORWARD LOOKING STATEMENTS......................................... 10
USE OF PROCEEDS.................................................... 10
DIVIDEND POLICY.................................................... 11
CAPITALIZATION..................................................... 11
DILUTION........................................................... 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS............................................ 12
BUSINESS........................................................... 14
MANAGEMENT......................................................... 20
SWISS NATURAL 1999 STOCK OPTION PLAN............................... 22
CERTAIN TRANSACTIONS............................................... 24
PRINCIPAL STOCKHOLDERS............................................. 25
DESCRIPTION OF CAPITAL STOCK....................................... 27
SHARES ELIGIBLE FOR FUTURE SALE.................................... 30
UNDERWRITING....................................................... 31
LEGAL MATTERS...................................................... 34
EXPERTS............................................................ 34
ADDITIONAL INFORMATION............................................. 34
</TABLE>
3
<PAGE>
In this prospectus, the terms "Swiss Natural", "we", "us" and "our" refer
to Swiss Natural Foods, Inc. Unless otherwise indicated, all information in this
prospectus assumes that the underwriters' over-allotment option will not be
exercised. See "Description of Capital Stock" and "Underwriting".
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
which is contained in this prospectus. We are offering to sell shares of common
stock and seeking offers to buy shares of common stock only in jurisdictions
where offers and sales are permitted. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of the
time of delivery of this prospectus or of any sale of the common stock.
Until , 1999 (25 days after the date of this prospectus),
all dealers that buy, sell or trade in our common stock or our warrants, whether
or not participating in this offering, may be required to deliver a prospectus.
This delivery requirement is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
4
<PAGE>
PROSPECTUS SUMMARY
Swiss Natural was formed to market and sell beverages under our Swiss
Natural brand. We have developed and currently sell vitamin-fortified flavored
fruit and tea beverages, as well as a vitamin-fortified 100% orange juice
product and a 100% apple juice product, under our registered Swiss Natural
trademark. We also sell a variety of fruit and tea beverages, an orange juice
product and an apple juice product under a private label beverage program
developed for a nationwide chain of pizza restaurants. Our beverages are made
with natural flavors and juices and do not contain any preservatives or
artificial colors. All our Swiss Natural label beverages are fortified with our
proprietary Ultra Peakt vitamin formula to provide an enhanced nutritional
value. In addition, all of our beverages are bottled in our proprietary glass
bottles.
We sell a majority of our beverages through customer-owned or
customer-designated distribution systems and, to a lesser extent, through a
network of select independent distributors. We are currently developing an
Internet distribution system which is expected to permit us to distribute our
products in new packaging directly to consumers and retailers who place orders
with us via the Swiss Natural website.
Swiss Natural was incorporated under the laws of the State of Delaware in
April 1993. Our principal office is located at 1031 Route 9W, Upper Grandview,
New York 10960, and our telephone number at that location is (914) 358-1212.
THE OFFERING
<TABLE>
<S> <C>
Securities offered....................... 1,200,000 shares of common stock and 1,200,000
warrants. Each warrant entitles the holder to
purchase one share of common stock at a price of
$6.25 per share during a three year period
commencing 2000 (one year from the
effective date of this prospectus).
Common Stock to be outstanding after the
offering................................. 5,068,221 shares. This figure excludes an
aggregate of up to 4,171,667 shares of common
stock issuable upon:
* exercise and/or conversion of all outstanding
warrants and convertible securities and
* exercise of:
* the common stock purchase warrants
offered by this Prospectus;
* the underwriters' over-allotment option
of 180,000 warrants; and
* all underwriters' warrants to be issued in
connection with this offering.
Warrants to be outstanding after the
offering................................. 1,200,000 warrants. This figure excludes
* the underwriters' over-allotment option of
180,000 warrants;
* all underwriters' warrants to be issued in
connection with this offering; and
* warrants to purchase 246,667 shares of common
stock outstanding prior to the date of this
prospectus.
Proposed Nasdaq Smallcap Symbols......... Common Stock -- SWIS
Warrants -- SWISW
</TABLE>
5
<PAGE>
SUMMARY OF FINANCIAL DATA
FOR THE FISCAL YEARS ENDED
FEBRUARY 28, 1999 AND 1998 (AUDITED) AND FOR THE
FOUR MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
The following summary financial data should be read in conjunction with
Swiss Natural's financial statements and the notes thereto included elsewhere in
this Prospectus and "Management's Discussion and Analysis of Financial Condition
and Results of Operations". The balance sheet data and statement of operations
data as of and for the years ended February 28, 1999 and February 28, 1998 are
derived from the financial statements of Swiss Natural, included elsewhere in
this Prospectus, that have been audited by Goldstein Golub Kessler LLP,
independent certified public accountants. The statement of operations data and
balance sheet data as of June 30, 1999 and for each of the four month periods
ended June 30, 1999 and 1998 are derived from the unaudited financial statements
of Swiss Natural; however, such information reflects all adjustments (consisting
of only normal recurring adjustments) which are, in the opinion of management,
necessary for a fair presentation of financial position, results of operations
and cash flows of the interim periods.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED FISCAL 2000-- FISCAL 1999--
FEBRUARY 28, FOUR MONTHS FOUR MONTHS
--------------------------- ENDED ENDED
STATEMENT OF OPERATIONS DATA: 1999 1998 JUNE 30, 1999 JUNE 30, 1998
----------- ----------- ------------- --------------
<S> <C> <C> <C> <C>
Net sales............................. $ 3,005,872 $ 2,324,189 $ 1,476,861 $ 917,433
Cost of sales......................... 2,001,701 1,941,074 849,397 604,291
----------- ----------- ----------- ------------
Gross profit........................ 1,004,171 383,115 627,464 313,142
----------- ----------- ----------- ------------
Expenses:
General and administrative.......... 871,057 834,679 310,953 233,536
Selling and promotional............. 502,652 508,401 177,335 99,572
Product development................. 30,895 12,602 1,441 23,637
----------- ----------- ----------- ------------
Total expenses........................ 1,404,604 1,355,682 489,729 356,745
----------- ----------- ----------- ------------
Income (loss) from operations......... (400,433) (972,567) 137,735 (43,603)
Other income.......................... 11,079 23,036 5,949 4,291
Interest expense...................... (50,062) (80,759) (59,310) (12,900)
----------- ----------- ----------- ------------
Net Income (loss)..................... (439,416) (1,030,290) 84,374 (52,212)
----------- ----------- ----------- ------------
Income (loss) per common share --
Basic............................... (.08) (.21) .01 (.01)
----------- ----------- ----------- ------------
Weighted average number of common
shares outstanding -- Basic......... 5,668,221 4,891,002 5,668,221(1) 5,668,221
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1999
-------------------------------
BALANCE SHEET DATA: ACTUAL AS ADJUSTED(2)
----------- --------------
<S> <C> <C>
Cash and cash equivalents...................................... $ 360,962 $ 5,010,004
Working capital................................................ 132,449 5,110,499
Total assets................................................... 1,486,238 6,095,230
Total liabilities.............................................. 1,923,479 1,594,471
Stockholders' (deficiency) equity.............................. (437,241) 4,500,759
</TABLE>
- ------------------
(1) Does not give effect to the conversion of any shares of the convertible
preferred stock which were issued on June 30, 1999 in exchange for 1,800,000
shares of common stock. Also does not give effect to the conversion of any
convertible subordinated debentures.
(2) Gives effect to the sale of the 1,200,000 shares of common stock and
1,200,000 warrants being offered hereby and anticipated application of the
estimated net proceeds therefrom including the repayment of indebtedness and
interest payable to a stockholder.
6
<PAGE>
RISK FACTORS
You should carefully consider the following risks before making an
investment decision. The trading price of our common stock and warrants could
decline due to any of these risks, and you could lose all or part of your
investment. You also should refer to the other information set forth in this
prospectus, including our financial statements and the related notes thereto.
SWISS NATURAL HAS INCURRED LOSSES FROM INCEPTION AND MAY NEVER GENERATE
SUBSTANTIAL PROFITS,
IF ANY AT ALL.
For each fiscal year since our inception in April 1993, Swiss Natural has
generated net losses. We may never generate substantial profits, if any at all.
Swiss Natural had an accumulated deficit of $2,490,051 as of June 30, 1999. We
can provide no assurances that our operations will be profitable in the future.
WE MAY NEED ADDITIONAL CAPITAL AND MAY NOT BE ABLE TO OBTAIN IT.
We believe that the proceeds from this offering together with our current
cash balances and anticipated cash to be generated from operations will be
sufficient to meet our expected operating and capital requirements for at least
one year. However, we may need to raise additional funds in order to support
further expansion, meet competitive pressures, or respond to unanticipated
requirements. We cannot assure you that additional financing will be available
if needed on terms favorable to us.
WE HAVE LIMITED WORKING CAPITAL AND MAY ENCOUNTER FUTURE LIQUIDITY PROBLEMS.
We have historically had limited working capital. We had working capital of
$132,449 at June 30, 1999. While we expect the proceeds of this offering to
provide us with sufficient working capital, there is no assurance that future
operations will not encounter capital resource and liquidity problems.
THE LOSS OF SBARRO, INC. AS A CUSTOMER WOULD HAVE A MATERIAL ADVERSE EFFECT ON
OUR BUSINESS.
We sell a substantial portion of our private label beverages to Sbarro,
Inc., a nationwide chain of restaurants. The loss of Sbarro, Inc. as a customer
would have a material adverse effect on our business. We also depend
significantly upon the revenue derived from the sale of our beverages to Dunkin'
Donuts franchisees, Sam's Club stores and several major independent
distributors. Our agreements with Sbarro, Dunkin' Donuts and Sam's Club do not
require them to purchase any specified quantity of products from us. Although we
consider our relationship with each of these customers to be good, any one of
them could decide not to purchase our beverages.
THE LOSS OF ANY OF OUR THIRD-PARTY SUPPLIERS OR SERVICE PROVIDERS COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR OPERATIONS AND FINANCIAL RESULTS.
We rely on third parties to produce our beverages, to produce our glass
bottles and to bottle our beverages. The loss of our third-party suppliers or
service providers could have a material adverse effect on our operations and
financial results.
THE LOSS OF OUR THIRD PARTY BEVERAGE DISTRIBUTORS COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR OPERATIONS AND FINANCIAL RESULTS.
We depend on customer-owned or customer-designated distributors and other
third-party distributors to distribute our Swiss Natural products. The loss of
our third party beverage distributors could have a material adverse effect on
our operations and financial results. Most of our distributors are not bound by
written agreements with us and may discontinue their relationship with us on
short notice. The loss of one or more of our distributors could have a
significant negative effect on the sales of our Swiss Natural label beverages.
7
<PAGE>
IF WE ARE UNABLE TO COMPETE EFFECTIVELY WITH OUR COMPETITORS, MANY OF WHOM HAVE
BEEN IN EXISTENCE LONGER THAN US, HAVE A MORE ESTABLISHED MARKET PRESENCE AND
HAVE SUBSTANTIALLY GREATER RESOURCES THAN US, WE WILL NOT BE ABLE TO INCREASE
REVENUES OR GENERATE PROFITS.
Our ability to increase revenues and generate profitability is directly
related to our ability to compete effectively with our competitors. Swiss
Natural faces intense competition from other beverage companies producing
similar products, including Snapple, Fruitopia, Ocean Spray, Arizona, Mistic and
various other lesser known brands. Increased competition could diminish our
ability to be profitable or result in loss of market share and damage the Swiss
Natural brand. Many of our competitors are larger, better established and have
greater financial, marketing and distribution resources than Swiss Natural.
These greater resources permit our competitors to implement extensive
advertising and promotional programs which Swiss Natural has not been, and will
not be, able to match.
IF WE ARE NOT ABLE TO RETAIN OUR CHIEF EXECUTIVE OFFICER, IT WILL BE MORE
DIFFICULT FOR US TO MANAGE OUR OPERATIONS AND OUR OPERATING PERFORMANCE WOULD
SUFFER.
The success of our business is greatly dependent upon the active
involvement of our Chief Executive Officer, Dr. Ralph Ferrante, who is
responsible for the development of the formulas used to manufacture our
products. The loss of the services of Dr. Ferrante would materially and
adversely affect our business and prospects.
IF OUR COMPETITORS MISAPPROPRIATE OUR UNPATENTED PROPRIETARY KNOW-HOW, TRADE
DRESS AND TRADE SECRETS IT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS.
If our competitors develop substantially equivalent proprietary information
or otherwise obtain access to Swiss Natural's know-how it could materially and
adversely affect our business. We rely primarily on unpatented proprietary
know-how in the production of our beverages, as well as on confidentiality
agreements with the companies that produce our beverages and with our employees.
We regard the protection of our trademarks, trade dress and trade secrets
as critical to our future success. We have registered our trademarks in the
United States. We also rely on a combination of laws and contractual
restrictions, such as confidentiality agreements, to establish and protect our
proprietary rights, trade dress and trade secrets. However, laws and contractual
restrictions may not be sufficient to prevent misappropriation of our
proprietary rights, trade dress or trade secrets.
THE YEAR 2000 PROBLEM COULD CAUSE US TO SUFFER BUSINESS INTERRUPTIONS, OR
SHUTDOWN, REPUTATIONAL HARM OR LEGAL LIABILITY, AND AS A RESULT, MATERIAL
FINANCIAL LOSS.
We rely on information technology supplied by third parties, and our third
party suppliers and vendors also are dependent on information technology systems
and on their own third party vendors' systems. The Year 2000 problem could cause
us to suffer business interruptions, or shutdown, reputational harm or legal
liability, and as a result, material financial loss.
We are evaluating our internal information technology systems and
contacting our information technology suppliers and third party suppliers and
vendors to ascertain their Year 2000 status. However, we cannot guarantee that
our own systems will be Year 2000 compliant in a timely manner, that any of our
third party suppliers and vendors will be Year 2000 compliant in a timely
manner, or that there will not be significant interrelated operational problems
among information technology systems.
ANY DECREASE IN THE SUPPLY OF FRUIT JUICES OR INCREASE IN THE PRICES OF FRUIT
JUICES COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND RESULTS OF
OPERATIONS.
We depend upon an uninterrupted supply of fruit juices from the fruit of
apple trees and orange trees. Any decrease in the supply of these fruit juices
or increase in the prices of these fruit juices as a result of any adverse
weather conditions, pests or fungal disease could have a material adverse effect
on our business and results of operations. Apple and orange trees may become
damaged, diseased or destroyed as a result of any adverse weather conditions,
pests or fungal disease. Additionally, there
8
<PAGE>
are types of controllable fungal diseases that can affect fruit production
although not fatal to the trees themselves. These types of fungal diseases are
generally controllable with fungicides. However, we can't be sure that such
control measures will continue to be effective.
STOCKHOLDERS MAY NOT BE ABLE TO RE-SELL THEIR STOCK AND WARRANTS OR MAY HAVE TO
SELL AT PRICES SUBSTANTIALLY LOWER THAN THE PRICE THEY PAID FOR IT.
Prior to this offering, you could not buy or sell our common stock or
warrants publicly. Although the initial public offering price was determined
based on several factors, the market price after the offering may vary from the
initial offering price. As a result, shareholders may not be able to re-sell
their stock or may have to sell at prices substantially lower than the price
they paid for it. In addition, the stock market is subject to price and volume
fluctuations affecting the market price for public companies generally, or
within broad industry groups, which fluctuations may be unrelated to the
operating results or other circumstances of a particular company. Such
fluctuations may adversely affect the liquidity of the common stock and
warrants, as well as the price that holders may achieve upon any future sale.
BECAUSE IT MAY BE DIFFICULT TO EFFECT A CHANGE IN CONTROL OF SWISS NATURAL
WITHOUT CURRENT MANAGEMENT'S CONSENT, A POTENTIAL SUITOR WHO OTHERWISE MIGHT BE
WILLING TO PAY A PREMIUM TO ACQUIRE SWISS NATURAL MAY DECIDE NOT TO ATTEMPT AN
ACQUISITION.
Upon consummation of this offering, Dr. Ralph M. Ferrante, the Chairman and
Chief Executive Office of Swiss Natural, and Herbert Paul, the President and
Chief Financial Officer of Swiss Natural, together with trusts owned by their
respective family members, will hold approximately 38% and 11%, respectively, of
our outstanding voting stock, including our convertible preferred stock which
carries rights to vote with the common stock on a one-vote-per-share basis. Such
concentration of ownership may have the effect of delaying, deferring or
preventing a change in control of Swiss Natural. In addition, the issuance of a
poison-pill or another large block of preferred stock with voting rights could
have the effect of delaying, deferring or preventing a change in control of
Swiss Natural. Potential suitors who otherwise might be willing to pay a premium
to acquire Swiss Natural may decide not to try to acquire us because it may be
difficult to effect a change in control of Swiss Natural without current
management's consent. If Messrs. Ferrante and Paul and their family members act
together, they will have the ability to control the outcome on all matters
requiring stockholder approval, including the election and removal of directors
and any merger, consolidation or sale of all or substantially all of our assets,
and the ability to control our management and affairs.
FUTURE SALES OF COMMON STOCK MAY CAUSE THE MARKET PRICE OF THE COMMON STOCK TO
DROP.
Future sales of shares of common stock by Swiss Natural and/or its
stockholders could cause the market price of the common stock to drop. After
this offering, we will have outstanding 5,068,221 shares of common stock and
1,200,000 warrants sold to investors in this offering. If the underwriters'
over-allotment option is exercised in full, we will have outstanding 1,380,000
warrants after this offering, not including the warrants outstanding prior to
this offering. We have reserved an additional 4,171,667 shares of common stock
for issuance pursuant to such warrants and other outstanding convertible
securities, preferred stock, stock options and warrants. All of the shares of
common stock to be sold in this offering will be freely tradeable without
restriction or further registration under the federal securities laws unless
purchased by our "affiliates", as that term is defined in Rule 144 under the
Securities Act of 1933, as amended. Assuming the underwriters' over-allotment
option is exercised in full, the remaining shares of outstanding common stock,
representing approximately 73% of the outstanding common stock upon completion
of this offering, will be "restricted securities" under the Securities Act
subject to restrictions on the timing, manner and volume of sales of such
shares. Sales of a substantial number of shares of our common stock after the
offering, including shares of common stock acquired through the exercise of the
warrants, could adversely affect the market price of the common stock. Such
sales could cause the market price of the common stock and the warrants to
decline.
9
<PAGE>
YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION.
The initial public offering price is expected to be substantially higher
than the net tangible book value of each outstanding share of common stock.
Purchasers of common stock in this offering will suffer immediate and
substantial dilution. The dilution will be $4.17 per share in the net tangible
book value of the common stock from the expected initial public offering price.
If the warrants offered hereby and the other outstanding options and warrants to
purchase shares of common stock are exercised, there would be further dilution.
FORWARD LOOKING STATEMENTS
Some of the statements under "Prospectus Summary", "Risk Factors",
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", "Business" and elsewhere in this prospectus constitute
forward-looking statements. These statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, levels of
activity, performance, or achievements to be materially different from any
future results, levels of activity, performance, or achievements expressed or
implied by such forward-looking statements. Such factors include, among other
things, those listed under "Risk Factors" and elsewhere in this prospectus.
In some cases, you can identify forward-looking statements by terminology
such as "may", "will", "should", "could", "expects", "plans", "anticipates",
"believes", "estimates", "predicts", "potential", or "continue" or the negative
of such terms or other comparable terminology.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance, or achievements. Moreover, neither we nor any other
person assumes responsibility for the accuracy and completeness of such
statements. We are under no duty to update any of the forward-looking statements
after the date of this prospectus.
USE OF PROCEEDS
The primary purposes of this offering are to obtain additional capital,
create a public market for the common stock and the warrants, and facilitate
future access to public markets. The net proceeds to Swiss Natural from the sale
of our common stock and our warrants offered hereby are estimated to be
approximately $4,938,000, after deducting underwriters' compensation and other
estimated offering expenses totaling $1,242,000. If the underwriters'
over-allotment option is exercised in full, the net proceeds to Swiss Natural
are estimated to be approximately $4,965,000. Swiss Natural intends to use the
net proceeds as follows:
* $822,000 for the purchase of additional inventory;
* $825,000 for the purchase of vending and refrigeration equipment;
* $498,000 for the purchase of manufacturing equipment;
* $545,000 for marketing and promotion;
* $235,000 for new product research and development;
* $135,000 for internet distribution computing and telecommunications
equipment;
* $235,000 for new client selling and collateral materials;
* $329,008 for the repayment of its indebtedness including accrued
interest of $7,053, to A. Donald McCulloch, Jr. and Carolyn B.
McCulloch, both of whom are stockholders of Swiss Natural, and one of
whom is a former director; and
* $1,313,992 for general corporate purposes, including working capital.
The indebtedness of Swiss Natural to the A. Donald McCulloch, Jr. and
Carolyn B. McCulloch as of June 30, 1999 is evidenced by two promissory notes,
one in the principal amount of $152,500, the other in the principal amount of
$169,455. Both promissory notes to the McCullochs mature upon the earlier to
occur of:
* February 10, 2000;
* ten days after the receipt of funds by Swiss Natural of the proceeds of
an initial public offering of its common stock in an amount of at least
$10,000,000; or
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* the sale of all or substantially all of the assets of Swiss Natural.
The note in the principal amount of $152,500 bears interest at the rate of
12% per annum, and the other note is non-interest bearing.
Pending the above uses, Swiss Natural intends to invest the net proceeds
from this offering in short-term, interest-bearing, investment-grade securities.
DIVIDEND POLICY
Swiss Natural has not declared or paid any cash dividends on its common
stock since its inception and does not expect to pay any cash dividends on its
common stock in the foreseeable future. Holders of shares of Swiss Natural's
Series A Preferred Stock are entitled to receive a quarterly dividend of two
($0.02) cents per share prior to any other class of stock receiving any
dividends, and to participate in dividends declared and paid on the common
stock, on an "as-converted" basis. Swiss Natural currently intends to retain
future earnings, if any, after paying the dividend on the preferred stock, to
finance the expansion of its business.
CAPITALIZATION
The following table sets forth the capitalization of Swiss Natural as of
June 30, 1999: (1) on an actual basis, and (2) as adjusted to reflect the
receipt by Swiss Natural of the estimated net proceeds from the sale of our
1,200,000 shares of common stock and 1,200,000 warrants offered hereby (after
deducting the estimated offering expenses and underwriter' compensation). The
information described in the following table assumes that none of the
convertible subordinated debentures of Swiss Natural have been converted. This
table should be read in conjunction with "Management"s Discussion and Analysis
of Financial Condition and Results of Operations" and the financial statements
and related notes thereto included elsewhere in this prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1999
----------------------------
AS ADJUSTED
TO REFLECT
NET
PROCEEDS OF
ACTUAL OFFERING
----------- -----------
<S> <C> <C>
Convertible Subordinated Debentures..................... $ 757,500 $ 757,500
----------- -----------
Compensation Payable.................................... 101,092 101,092
----------- -----------
Preferred Stock, $.01 par value, 3,000,000 shares
authorized; Series A Convertible Preferred Stock,
1,800,000 shares issued and outstanding (actual and as
adjusted)............................................. 18,000 18,000
Common Stock, $.01 par value, 20,000,000 shares
authorized, 3,868,221 shares issued and outstanding
actual; 5,068,221 shares outstanding, as adjusted..... 38,682 50,682
Additional paid in capital.............................. 1,996,128 6,922,128
Accumulated Deficit..................................... (2,490,051) (2,490,051)
----------- -----------
Stockholders' equity (deficiency)....................... (437,241) 4,500,759
----------- -----------
Total capitalization.................................... $ 421,351 $ 5,359,351
----------- -----------
----------- -----------
</TABLE>
DILUTION
The net tangible book value of Swiss Natural as of June 30, 1999 was a
negative $588,718, or a negative $.15 per share. "Net tangible book value per
share" is determined by dividing the number of outstanding shares of common
stock into the net tangible book value of Swiss Natural (total tangible assets
less total liabilities). Assuming the sale by Swiss Natural of the 1,200,000
shares of common stock offered hereby at a price of $5.00 for one share, and
without considering the sale of the warrants, the net tangible book value of
Swiss Natural as of June 30, 1999 would have been approximately $4,209,332 or
$.83 per share. This represents an immediate increase in net tangible book value
of $4,798,050 to existing stockholders and an immediate dilution of $4.17 per
share to new
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<PAGE>
investors purchasing shares at the initial public offering price of $5.00 per
share. The following table illustrates the per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.................. $ 5.00
Net tangible book value per share as of June 30, 1999.......... $(.15)
Increase in net tangible book value per share attributable to
new investors............................................... $ .98
Net tangible book value per share after the offering............. $ .83
Dilution per share to new investors.............................. $ 4.17
</TABLE>
The following table summarizes as of June 30, 1999 the number of shares of
capital stock purchased from Swiss Natural, the total cash consideration paid to
Swiss Natural, without considering the sale of the warrants, and the average
cash price per share paid by existing stockholders and by investors purchasing
shares of common stock in this offering at an initial public offering price of
$5.00 per share, before deducting the underwriters' compensation and other
estimated offering expenses:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
--------------------- ----------------------
NUMBER PERCENT AMOUNT PERCENT
--------- ------- ---------- -------
<S> <C> <C> <C> <C>
Existing stockholders.............................. 3,868,221 76% $2,052,810 25%
New investors...................................... 1,200,000 24% $6,000,000 75%
--------- --- ---------- ---
Total.............................................. 5,068,221 100% $8,052,810 100%
--------- --- ---------- ---
--------- --- ---------- ---
</TABLE>
The sale by Messrs. Ferrante, Paul and Brescio of 180,000 shares of common
stock upon exercise in full of the underwriters' over-allotment option will
reduce the percentage of common stock held by existing stockholders to 73% of
the total number of shares of common stock to be outstanding upon consummation
of this offering and will increase the percentage of common stock held by new
investors to 27% of the total number of shares of common stock to be outstanding
upon consummation of this offering. See "Principal Stockholders."
The foregoing discussion and table exclude:
* the 1,200,000 shares of common stock issuable upon exercise of the
common stock purchase warrants offered by this prospectus;
* the 180,000 shares of common stock issuable upon exercise of the common
stock purchase warrants included in the underwriters' over-allotment
option;
* the 120,000 shares of common stock issuable upon exercise of the 120,000
underwriters' common stock purchase warrants to be issued in connection
with this offering;
* the 120,000 shares of common stock issuable upon exercise of 120,000
warrants, which warrants are issuable upon exercise of an additional
120,000 underwriters' warrants to be issued in connection with this
offering;
* 1,800,000 shares of common stock issuable upon conversion of the Series
A Preferred Stock;
* 500,000 additional shares of common stock reserved for issuance under
the 1999 Stock Option Plan;
* 246,667 shares of common stock issuable upon exercise of outstanding
warrants at an exercise price of approximately $1.50 per share; and
* 505,000 shares of common stock issuable upon conversion of the $757,500
aggregate principal amount of convertible debentures presently
outstanding.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF SWISS NATURAL ALSO SHOULD BE READ IN CONJUNCTION WITH THE
FINANCIAL STATEMENTS AND RELATED NOTES THERETO INCLUDED ELSEWHERE IN THIS
PROSPECTUS.
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<PAGE>
FISCAL YEAR 1999 ENDED FEBRUARY 28, 1999 COMPARED TO FISCAL YEAR 1998 ENDED
FEBRUARY 28, 1998.
Swiss Natural's net loss for the year ended February 28, 1999 was
$(439,416) as compared to ($1,030,290) for the year ended February 28, 1998 and
loss from operations was ($400,433) for the year ended February 28, 1999 as
compared to ($972,567) for the year ended February 28, 1998. The decrease in net
loss and loss from operations was primarily due to an increase in net sales
which was offset by an increase in expenses. Net sales for the year ended
February 28, 1999 increased approximately 29% from those of the year ended
February 28, 1998. The increase in sales is attributable to the addition of new
customers, the sale of new products such as orange and apple juice, and
increased sales of private label beverages in new territories. Cost of sales as
a percentage of sales was approximately 67% for the year ended February 28, 1999
as compared to 84% for the year ended February 28, 1998. Gross profit as a
percentage of sales was approximately 33% for the year ended February 28, 1999
as compared to approximately 16% for the year ended February 28, 1998. The
reduction in cost of sales reflects the decrease in expenses associated with the
bottling of Swiss Natural's products on account of a change in bottling
facilities and a one time loss on abandonment of inventory of $185,942. Expenses
for the year ended February 28, 1999 increased approximately 4% as compared to
the prior year primarily as a result of the fact that there was an increase in
wages, product development expenses, and to a lesser extent costs associated
with higher sales volume. The increase in such expenses was partially offset by
a decrease in selling and promotional expenses. Other income decreased slightly
as compared with that of the prior year and interest expenses decreased $30,697
as compared with that of the prior year as a result of the reduction of
stockholder debt.
FOUR MONTHS ENDED JUNE 30, 1999 COMPARED TO FOUR MONTHS ENDED JUNE 30, 1998.
Swiss Natural generated net income of $84,374 for the four months ended
June 30, 1999 as compared to a net loss of $52,212 for the four months ended
June 30, 1998. This increase is attributable to an increase in sales which was
partially offset by an increase in expenses. Net sales for the four months ended
June 30, 1999 were $1,476,861 as compared to $917,433 for the four months ended
June 30, 1998, representing an approximately 61% increase. The increase in sales
was primarily a result of an increase in the sale of the Company's Swiss Natural
brands products, and, to a lesser extent, an increase in the sale of our private
label beverages.
Cost of sales as a percentage of sales was approximately 58% for the four
months ended June 30, 1999, as compared to 66% for the four months ended June
30, 1998. Gross profit as a percentage of sales was approximately 42% for the
four months ended June 30, 1999, as compared to approximately 34% for the four
months ended June 30, 1998. The increase in gross profit reflects an increase in
the overall selling price of the Swiss Natural brand. Expenses for the four
months ended June 30, 1999 increased approximately 37% as compared to that of
the four months ended June 30, 1998, primarily as a result of an increase in
promotional and marketing expenses and an increase in compensation paid to
employees and consultants.
Since our inception, we have experienced greater sales of our beverages in
the spring and summer months and reduced sales of our beverages in the winter
and fall months. We expect to continue to experience fluctuations in our
revenues resulting from such seasonal variations in sales.
LIQUIDITY AND CAPITAL RESOURCES.
At February 28, 1999, Swiss Natural had cash and cash equivalents of
$530,729 as compared to $364,088 at February 28, 1998. The increase in cash and
cash equivalents during the twelve month period ended February 28, 1999 is due
to $545,532 of cash provided by financing activities which was partially offset
by $340,154 of cash used in operating activities and, to a lesser extent,
$38,737 of cash used in investing activity. Cash provided by financing
activities during the twelve month period ended February 28, 1999 consisted of
the proceeds from Swiss Natural's issuance of convertible subordinated
debentures, less amounts utilized to pay debt placement fees and to retire
certain indebtedness owed to two stockholders of Swiss Natural, one of whom is
also a former director of Swiss Natural. Cash used in investing activities
during the twelve month period ended February 28, 1999 consisted of payments
made to purchase property and equipment.
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<PAGE>
At June 30, 1999, Swiss Natural had cash and cash equivalents of $360,962
as compared to $208,756 at June 30, 1998. The decrease in cash and cash
equivalents of $169,767 from February 28, 1999 is due to $40,050 of cash used in
financing activities, $86,735 of cash used in operating activities, and $42,982
of cash used in investing activities. Cash used in financing activities during
the four month period ended June 30, 1999 consisted of debt offering costs. Cash
used in investing activities during the four month period ended June 30, 1999
consisted of payments made to purchase equipment. Swiss Natural invests its cash
in a money market fund.
Based upon its current operating plan, Swiss Natural anticipates that the
net proceeds of this offering, together with cash generated from operations,
will be sufficient to satisfy its future liquidity requirements for at least the
next 12 months. However, the ability of Swiss Natural to meet future liquidity
needs is directly related to its sales volume and the costs associated with the
development and marketing of its products. It is anticipated that a portion of
the proceeds of this offering will be used to purchase refrigeration equipment
and vending equipment to be used by our customers to hold and display our
products. It is anticipated that this will be an ongoing expense which will
adversely affect Swiss Natural's cash flow. Furthermore, Swiss Natural may have
the on-going expense of making interest payments to any holder of its
convertible debentures who does not convert its debenture into shares of common
stock. Since Swiss Natural does not currently have any outside sources of
financing, such as a line of credit, all of these expenses will have to be paid
for either out of the proceeds of this offering or cash generated from
operations.
BUSINESS
INDUSTRY OVERVIEW
Our business competes in the alternative beverage category of the beverage
industry.
Alternative beverages consist of fruit juices, fruit drinks that are not
100% juice, sparkling and still water, ready-to-drink teas, sports drinks and
natural soda. From 1992 to 1998, the alternative beverage market has experienced
significant growth, with volumes approximately doubling, from 480 million cases
to 1.10 billion cases. In 1998, the volume of the alternative beverage market
grew to approximately 1.28 billion cases. Nonetheless, alternative beverages
currently remain only a small portion of the entire beverage market, which, in
the opinion of management, provides significant opportunity for future growth.
In general, the segments of the alternative beverage category in which
Swiss Natural competes enjoyed strong growth in 1998. According to information
published in the Beverage Digest Fact Book, the fruit juice and fruit juice
drink segment grew from 450 million cases sold in 1997 to 515 million cases sold
in 1998. The ready to-drink tea segment grew from 310 million cases sold in 1997
to 355 million cases sold in 1998.
The alternative age beverage category generally consists of products
classified as "premium", more specialized goods, and to a lesser extent,
"non-premium", lower-margin, generic or more mainstream products. Premium
beverage products typically command higher prices and higher margins for the
brand owner, the distributor and the retailer than other beverages because of
the following:
* Higher Quality Ingredients. Premium beverage ingredients are positioned
to be higher quality and usually do not include preservatives.
* Distribution. The primary distribution channels for premium beverages are
convenience stores and other small retail outlets. These locations
usually sell premium beverages in single refrigerated cold servings
instead of at room temperature in larger containers.
* Packaging and Marketing. Packaging is a key differentiation in the
single-serve market and critical to building a premium image. Marketing
premium beverages relies heavily on product innovation, unique
advertising and availability.
We market and distribute a variety of premium beverages, including fruit
drinks, ready-to-drink teas and 100% juice products under our Swiss Natural
brand name and under a private label program.
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<PAGE>
Under the Swiss Natural brand, we market and distribute nine flavored beverages
and two 100% juice products, including three diet beverages. Under our private
label program, we sell six flavored beverages, including one diet beverage and
two 100% juice products.
OUR BUSINESS STRATEGY
Our business strategy for our Swiss Natural label products and private
label beverage business is to:
* Continue to develop new products and innovative packaging: During 1998,
we redeveloped our diet line of products, Diet Icy Tea With Lemon, Diet
Icy Berry and Diet Icy Peach utilizing a new zero calorie sweetener. We
intend to continue to introduce new products and flavors. We also intend
to continue to develop proprietary and innovative packaging to attract
consumers to the Swiss Natural brand.
* Increase consumer awareness and brand imagery: We intend to develop
innovative marketing and promotions to increase the visibility and image
of our Swiss Natural brand.
* Commence distribution via the Internet: We are in the process of
developing a new system of marketing and distribution utilizing the
Internet in an effort to increase direct sales to consumers and to
retailers.
* Expand our sales to private label clients: We plan to continue to expand
our sales to private label clients for whom we develop specific private
label beverage programs.
* Expand and enhance distributor relationships: We intend to focus our
sales force to continue to improve relationships with distributors. We
intend to continue to assist our distributors in developing local
marketing promotions.
* Expand and improve distribution: We plan to continue to expand in
existing and new geographic markets and channels of trade.
* Expand and improve in-store distribution and marketing: We plan to
increase the rate at which we place cold drink equipment in stores and
other outlets.
* Control production costs: We expect to continue to control production
costs through favorable supply agreements for raw materials, flavors, and
packaging. We also plan to introduce additional production initiatives to
further reduce costs and improve freight management.
* Minimize capital expenditures: We plan to continue to minimize capital
expenditures through the use of third party manufacturers for production
of our premium beverage products.
OUR BUSINESS
We market and sell premium beverages under both our proprietary Swiss
Natural brand and private label brands. A significant portion of our business
consists of sales of a variety of fruit and tea beverages, orange juice and
apple juice under a private label beverage program developed by us for Sbarro
Inc. We sell vitamin-fortified flavored fruit and tea beverages, a 100% orange
juice product and a 100% apple juice product under our registered Swiss Natural
trademark. Two of the largest customers for our Swiss Natural brand products are
Dunkin' Donuts franchisees and Sams Club stores.
Prior to March 1996, our revenues were derived solely from the sale of our
Swiss Natural labeled beverages. At present we sell our beverages under a
private label in almost all Sbarro franchise restaurants including many Sbarro
restaurants located outside the United States. Our line of beverages is the only
authorized bottled soft drink of its kind to be sold in the Sbarro restaurants.
In January 1998, we renewed our agreement with Sbarro granting us a right of
first refusal to be the exclusive supplier of Sbarro private label beverages for
a three year period of time. We have agreed, as long as we are supplying
beverages to Sbarro, to refrain from developing a private label program for any
other company which sells pizza as its primary source of revenue.
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<PAGE>
Sbarro is a major customer of ours and we depend significantly upon the
sale of our beverages to Sbarro. At the request of Sbarro, we began production
of two 100% juice products to be supplied to Sbarro under the private label
program. We have been advised that the two 100% juice products supplied by Swiss
Natural have replaced all other juices currently being sold by the Sbarro
franchise restaurants and are the only authorized 100% juice products sold by
such franchise restaurants.
In February 1998, we began to supply our juice and other beverage products
on a trial basis to approximately 22 Dunkin' Donut franchisees which are
supplied from one Dunkin' Donut regional distribution center. On March 29, 1999
we executed a three year agreement with a Dunkin' Donuts regional distribution
center which designates our Swiss Natural label beverages as authorized
beverages for the region, which includes approximately 900 Dunkin' Donuts
franchisees. We currently supply approximately 200 Dunkin' Donuts franchisees
with our Swiss Natural label beverages. The Dunkin' Donut franchisees, however,
may purchase bottled beverage products from any supplier that they choose. Our
revenues have increased as a result of the sales of our beverages to the Dunkin'
Donut franchisees.
We entered into an agency agreement with Bentonville Associates Ventures
LLC effective May 5, 1998 whereby Bentonville agreed to act as the exclusive
marketing representative for us with regard to certain specified accounts which
include Walmart Stores and Sams Clubs stores, and a nonexclusive agent for other
accounts, all for a commission based upon a percentage of sales generated by
Bentonville.
We have also entered into a vendor agreement with Sams Club stores, an
affiliate of Wal-Mart, to supply some of its distribution centers and retail
outlets with a Swiss Natural branded twelve pack of beverages. At this time
however we distribute to only 18 stores out of approximately 500 Sams Club
stores.
We also utilize multiple independent distributors to sell our Swiss Natural
label beverages. These distributors sell Swiss Natural beverages to food service
accounts, convenience stores, delicatessens, pizza restaurants, golf courses,
hotels, schools, cafeterias, fitness clubs and a variety of other outlets which
sell beverages. In March 1997, we executed a letter of understanding with
Ritter/Sysco Food Services, Inc., a division of Sysco, a national food service
distributor for distribution of our beverages to food service customers
receiving our beverages within a 100 mile radius of Columbus Circle, New York,
New York.
During the fiscal year ended February 28, 1998, the five largest
distributors of Swiss Natural label beverages purchased approximately 85% of the
case sales of our Swiss Natural label beverages (approximately 11% of the case
sales of all of our beverages including our private label beverages), each
purchasing in excess of approximately 7% of the case sales of Swiss Natural
label beverages, with none of the distributors accounting for more than
approximately 31% of our sales of Swiss Natural label beverages. During the
fiscal year ended February 28, 1999, the five largest distributors of Swiss
Natural label beverages purchased approximately 76% of the case sales of our
Swiss Natural label beverages (approximately 14% of the case sales of all of our
beverages including our private label beverages), each purchasing in excess of
approximately 9% of the case sales of Swiss Natural label beverages. No one
distributor accounted for more than approximately 30% of our sales of Swiss
Natural label beverages sold in such fiscal year.
Swiss Natural has initiated the development of an e-commerce plan to
increase direct distribution to customers and retailers utilizing the Internet
and a company website. In connection with our Internet distribution initiative,
we are developing new packaging concepts for our products which we believe will
help to promote our sales over the Internet.
OUR PRODUCTS
We currently sell nine (9) naturally flavored beverages under the
trademarks Swiss Natural Icy Berry, Swiss Natural Diet Icy Berry, Swiss Natural
Icy Citrus, Swiss Natural Icy Melonade, Swiss Natural Lemon Icy Tea, Swiss
Natural Diet Icy Tea With Lemon, Swiss Natural Raspberry Icy Tea, Swiss Natural
Peach Icy Tea and Swiss Natural Diet Peach Icy Tea. In addition, Swiss Natural
sells a
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<PAGE>
100% orange juice product and a 100% apple juice product under the Swiss Natural
label. The Swiss Natural Diet Icy Berry, Diet Peach Icy Tea and Diet Icy Tea
With Lemon were introduced to attract customers who are calorie conscious. All
of our beverages are made utilizing natural flavors and juices and none contain
preservatives or artificial colors. In addition, the beverages sold under the
Swiss Natural label are fortified with our "Ultrapeak(R)" vitamin formula, a
specific combination of vitamins. Our beverages have a shelf life of
approximately nine (9) months.
RAW MATERIALS
We procure our bottles, water, juice products, apple and orange juice
concentrates, high fructose corn syrup, citric acid, our vitamin formulation and
other designated ingredients used in our proprietary beverages from various
suppliers which then supply our independent bottling company. Each of these
ingredients is readily available from several alternative suppliers.
We purchase our proprietary flavor bases from an independent flavor
supplier. We are the sole owner of the service formulae used in connection with
the production and manufacture of our beverages. If for any reason our flavor
supplier were to cease to supply the flavor bases used in our proprietary
service formula to us, we believe we would be able to secure an alternate source
of supply.
PRODUCTION
All of our Swiss Natural label and private label beverages are currently
manufactured and bottled by an independent bottling company. We have recently
reached a multi-year production agreement with our current bottling facility. In
accordance with our proposed arrangement with our current bottling facility,
they are to provide basic raw materials for our beverages such as water, while
we provide a flavor base, together with our Ultrapeakt vitamin formula. Our
finished product is then manufactured in accordance with our specifications in
distinctive glass bottles supplied by us utilizing our specified labels on such
bottles. We purchase our labels from an independent label manufacturer. We place
orders for finished goods with the bottler based upon our best estimates of our
future needs prior to our receipt of orders from distributors. We monitor the
production of our beverages to assure adherence to production procedures and
quality standards. In addition, some of our suppliers have entered into
confidentiality agreements to protect our trade secrets.
In March 1998, we entered into an arrangement with an independent storage
company for the storage of all of our finished goods inventory. Pursuant to the
terms of such arrangement, our storage company, which operates its own trucking
company, transports our finished goods from the bottling facility to its own
storage facility at a fixed charge per case. In addition, our storage company
has agreed to transport our finished goods from the storage facility to our
customers for an additional fee. Inasmuch as neither we nor a majority of our
customers own or operate any trucking companies, we utilize our storage
company's trucking services for a majority of our customers.
All of our tea and fruit beverages, including both the Swiss Natural and
the private label beverages, are currently sold in our proprietary 16 ounce and
12 ounce, single serve, wide-mouth glass container, which has a distinctive and
unique shape designed to stimulate consumer interest and create brand
recognition. We use a private mold for the production of such glass containers
and we purchase these containers from the Canadian office of an independent
third party glass manufacturer, which has production facilities located in
Canada as well as in the United States. The glass manufacturer does not have a
written supply agreement with us. We are researching and developing the use of
other packaging containers, such as plastic containers and aluminum cans, to
expand the distribution of our brand. We plan to use the new types of packaging
in additional distribution channels including electronic commerce.
TRADEMARKS AND COPYRIGHTS
We have obtained registered trademarks to protect the name "Swiss
Natural(R)" and the slogan "Reach For The Peak(R)" used in selling our
beverages. We have also obtained registered trademarks
17
<PAGE>
for the product names "Swiss Natural Icy Berry(R)", "Swiss Natural Icy
Citrus(R)", "Swiss Natural Icy Melonade(R)", "Swiss Natural Icy Coffee(R)" and
for "Swiss Natural Icy Tea(R)", and "Ultra Peak(R)", the name of our vitamin
formula. We use a private mold for the production of our proprietary glass
container. As to our beverage formulations, we rely on the unpatented know-how
of our Chief Executive Officer and the confidentiality agreements with our
flavor manufacturer, our bottling company and our employees.
COMPETITION
Competition in the beverage industry is intense. We face competition from
other beverage companies providing similar products such as Snapple, Fruitopia,
Ocean Spray, Arizona and Mistic and various other lesser known brands. We also
face competition from other beverage companies providing other beverages. Many
of our competitors, including the dominant brands named above, are better
established and have greater financial resources than us. We believe that the
quality of our beverages, distribution strategy, private label business,
competitive prices and profit margins will enable us to compete with these
companies.
SALES AND MARKETING STRATEGY
Our marketing strategy is to create a consumer awareness of our brand in
our targeted markets as well as to increase our client base of private label
customers. The core marketing campaign theme of our Swiss Natural label
beverages has been and will be centered around our "Reach For The Peakt"
registered trademark. We also emphasize the fact that our products provide great
taste with enhanced nutritional benefits and utilize no artificial coloring or
preservatives. We also promote the fact that our products are natural.
To date, we have focused our marketing efforts mainly in the New York
metropolitan area. Following the consummation of this offering, we intend to
market our Swiss Natural label beverages in other regions of the United States
such as the Northeast, the Southeast, the Mid- Atlantic and the West Coast and
to increase our sales to private label customers.
Our sales strategy has been to provide a superior product at an
advantageous profit margin for both the distributor and retailer. This strategy
enables us to secure a degree of market acceptance and distribution capability
generating repeat sales with minimal expense for advertising. In addition, we
have offered, from time to time, discounts to distributors. In order to increase
our sales volume, we intend to expend additional capital for an expanded sales
force and enhanced promotional material.
GOVERNMENT REGULATION
The production and sale of our beverages are subject to the rules and
regulations of various federal, state and local food and health agencies,
including the U.S. Food and Drug Administration. The FDA also regulates the
labeling of containers including, without limitation, statements concerning
product ingredients.
We are also subject to various federal, state and local environmental laws
and regulations that limit the discharge, storage, handling and disposal of a
variety of substances and by laws and regulations relating to workplace safety
and worker health, principally the Occupational Safety and Health Administration
Act, as well as similar state laws and regulations. We believe that we comply in
all material respects with these laws or regulations, although we cannot assure
that future compliance with such laws or regulations will not have a material
adverse effect on our results of operations or financial condition. We did not
incur any significant costs in the fiscal year ended February 28, 1999 to comply
with environmental laws.
EMPLOYEES AND CONSULTANTS
Our chief executive officer and chief financial officer are also directors
and stockholders of Swiss Natural. We presently employ four other people at our
executive offices on a full time basis, none of whom has a written employment
agreement with us other than a confidentiality agreement. Two of the
18
<PAGE>
other employees are engaged in sales and marketing, one employee is a certified
public accountant who performs accounting services and the fourth is a
bookkeeper/secretary. Each of these individuals devote such business time as is
needed to the affairs of Swiss Natural. The chief financial officer of Swiss
Natural, an attorney and certified public accountant, is engaged in the practice
of law. In addition, from time to time we engage sales consultants to assist us
in expanding the sales and distribution of our products.
We do not currently have any contingent forms of compensation for our
officers and directors, including any pension, retirement, stock appreciation,
or other compensation plan other than our 1999 Stock Option Plan. However, Swiss
Natural anticipates that it will institute such other forms of compensation in
the future.
We have never had a work stoppage and our employees are not represented by
any collective bargaining unit. We consider our relations with our employees to
be good. Our future success will depend, in part, on our ability to continue to
attract, integrate, retain and motivate highly qualified sales and managerial
personnel for whom competition is intense.
SLOTTING FEES
For us to achieve placement of our products in certain supermarket chains
and individual supermarket stores, it may sometimes be necessary for us to
purchase shelf space by paying slotting fees. Typically, supermarket chains and
prominent local supermarkets impose these charges as a one time payment before
the products are permitted in the store or chain. Slotting fees are less
frequently imposed by other types of retail outlets such as individual
convenience stores and delicatessens. The fees are negotiated on an individual
basis.
MARKETING AND PROMOTION
We intend to position Swiss Natural as a brand name synonymous with
products of superior quality and nutritional benefit with great taste. To date,
we have used a limited amount of point of sale promotion material, and we
previously utilized some radio advertisements.
We believe that increased marketing expenditures may be necessary in order
to increase sales volume. During the current fiscal year, marketing expense is
budgeted at approximately three percent (3%) of Swiss Natural label beverage net
sales. On an ongoing basis we anticipate our marketing budget to be
approximately six percent (6%) to eight percent (8%) percent of the Swiss
Natural label beverage net sales. In addition, we anticipate a continuation of
our discount policy to distributors, which may result in higher promotional
expenses.
LEGAL PROCEEDINGS
On November 20, 1997, Sterling Color Process, Inc. ("Sterling") filed a
lawsuit in Supreme Court, Rockland County, New York entitled Sterling Color
Process, Inc. v. Swiss Natural Foods, Inc., Case Number 7670-97 (the "Sterling
Action"). In the Sterling Action, Sterling claims that it supplied labels to
Swiss Natural between June 1995 and May 1996 and that Swiss Natural did not pay
for such goods. Sterling claims it is owed a balance of $72,776.60. An answer
and counterclaim was served on behalf of Swiss Natural on February 13, 1998. In
its answer, Swiss Natural denied any liability and alleged that Sterling was
fully paid for the labels. Swiss Natural stated in its counterclaim that
Sterling failed to perform according to the agreement between the parties
thereby causing damages of $84,090.00. Swiss Natural has filed a Demand for
Written Particulars. Swiss Natural intends to vigorously pursue its
counter-claim against, and defend the claim from, Sterling.
In addition to the matters set forth above, from time to time we may be
subject to legal proceedings and claims in the ordinary course of business. Such
claims, even if not meritorious, could result in the expenditure by us of
significant financial and managerial resources. We are not aware of any legal
proceedings or claims that we believe will have individually or in the
aggregate, a material adverse effect on our business, financial condition or
results of operations.
19
<PAGE>
FACILITIES
Our executive and administrative office is located in approximately 1,250
square feet of office space located at 1031 Route 9W, Upper Grandview, New York.
Swiss Natural does not pay rent for the use of this office space. The office
space is owned by Dr. Ralph M. Ferrante, our Chairman and Chief Executive
Officer. Swiss Natural is currently seeking new office space to occupy as a
primary site of executive operations. Swiss Natural has no other office
facilities.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information regarding the directors and
executive officers of Swiss Natural.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Dr. Ralph M. Ferrante........................... 45 Chief Executive Officer, Chairman of the
Board and Secretary
Herbert M. Paul................................. 63 Chief Financial Officer, President,
Assistant Secretary and Director
James P. McCann................................. 41 Director
Kenneth D. Greenblatt........................... 53 Director -- Nominee
Donald L. Antle................................. 60 Director -- Nominee
</TABLE>
DR. RALPH M. FERRANTE has been the Chief Executive Officer, Chairman of the
Board of Directors and Secretary of Swiss Natural since 1993. From 1982 to 1992,
he was the Executive Vice President of Ferrante Enterprises, Inc., a real estate
development company which he co-founded. From 1981 to 1985, he was a practicing
chiropractor at the Rockland Health Center. Dr. Ferrante has a Doctor of
Chiropractic degree from New York Chiropractic College and a BBA degree from
Pace University.
HERBERT M. PAUL is a certified public accountant and an attorney and has
been the Chief Financial Officer, President, Assistant Secretary and a Director
of Swiss Natural since 1993. Since 1981, Mr. Paul has been the managing partner
of Herbert Paul, P.C., a law firm specializing in business and tax matters.
Prior to 1981, he was a senior partner at Touche Ross & Co., an international
accounting firm which was the predecessor to Deloitte & Touche. Mr. Paul has
been a trustee and a professor at New York University as well as a member of
various professional committees. Mr. Paul has an MBA degree from the New York
University Graduate School of Business, an LLM degree from the New York
University Graduate School of Law, a JD degree from Harvard Law School and a BBA
degree from Baruch College. Mr. Paul is listed in Who's Who in Finance &
Industry, Who's Who in American Law and Who's Who in America.
JAMES P. MCCANN has been a First Vice President at Paine Webber since 1994,
where he is directly responsible for the management of in excess of $240 million
of funds. Mr. McCann's responsibilities include fixed income management and
equity investments for clients. Mr. McCann has been employed by Paine Webber
since 1981 when he graduated from Manhattan College with a B.B.A. degree. Mr.
McCann has been a director of Swiss Natural since March 1, 1999.
KENNETH D. GREENBLATT was employed from 1968 to 1981 at Gilbert Frank
Corporation, a privately held textile company where he became President in 1976.
In 1981 Gilbert Frank Corporation was purchased by Guilford Mills Incorporated,
a public company where Mr. Greenblatt served as Chairman of the Gilbert Frank
division until 1987. In 1987 Mr. Greenblatt founded Waverly Converting Inc. a
textile company which was purchased by Missbrenner, Inc. where Mr. Greenblatt
served as President until 1997. From 1997 to the present, Mr. Greenblatt has
been Chairman of the Board of Kenneth John Productions, a Broadway production
company which has produced 17 shows winning 23 Tony awards since 1981. Mr.
Greenblatt has a BBA degree in Finance from the University of Miami. Mr.
Greenblatt is a member of the Presidents Council of the University of Miami, and
serves on the Board of Directors of the Helen Hayes Theater.
20
<PAGE>
DONALD L. ANTLE has since 1987 been founder and President of Antle
Enterprises a private beverage industry consulting firm specializing in company
sales, mergers and acquisitions, corporate financing, industry expert witness,
and new product introductions. Mr. Antle began his beverage career in 1958 with
the Seven-Up Bottling Company in Colorado. In 1962 he joined the Dr Pepper
Company as a zone manager, in 1964 he became Division manager, and then in 1973
became Vice President of Franchise at the Dr. Pepper Company. In 1982 Mr. Antle
became President of Premier Beverages, which marketed the Welch's soft drink
brand. Mr. Antle has a BBA degree from the University of Colorado.
Directors are elected by the stockholders to hold office for a designated
period not to exceed one year. Officers and consultants serve at the discretion
of the Board.
BOARD OF DIRECTORS
Directors are elected at the annual meeting of Swiss Natural's stockholders
to hold office until the next annual meeting and until their successors are
elected and qualified. Officers serve at the discretion of the Board. Directors
may receive such compensation for their services as is fixed from time to time
by resolution of the Board.
DIRECTOR'S COMPENSATION
Directors of Swiss Natural currently receive no compensation for their
service as such. We anticipate granting directors options to purchase shares of
common stock at the initial public offering price as compensation for their
services. We do reimburse directors for their reasonable expenses incurred in
attending meetings of the Board of Directors.
COMPENSATION OF OFFICERS AND KEY EMPLOYEES
Each of Swiss Natural's officers has agreed to forego payment for all
services performed by them on behalf of Swiss Natural during the period from
Swiss Natural's inception until February 28, 1995 pursuant to agreements between
Swiss Natural and each of its officers. However, such officers, as well as two
employees of Swiss Natural, one of whom is no longer with Swiss Natural, were
owed money for services performed for Swiss Natural during the fiscal year ended
February 29, 1996 and a portion of the fiscal year ended February 28, 1997. In
February, 1998, Dr. Ferrante, Mr. Paul and Mr. Brescio canceled all indebtedness
owed to them by Swiss Natural, including all indebtedness for compensation owed
to them by Swiss Natural, in exchange for shares of common stock. At that time,
Swiss Natural owed $601,737, $152,819 and $93,419 to Dr. Ferrante, Mr. Paul and
Mr. Brescio, respectively. Accordingly, in exchange for the cancellation of
indebtedness, Swiss Natural issued 527,840, 134,052 and 81,946 additional shares
of its common stock to Dr. Ferrante, Mr. Paul and Mr. Brescio, respectively. At
present, the only indebtedness of Swiss Natural remaining for accrued and unpaid
compensation is to a former employee and stockholder of Swiss Natural in the
amount of $101,092.
We have entered into an employment agreement with Dr. Ralph M. Ferrante
pursuant to which Dr. Ferrante has agreed to continue to serve as the chief
executive officer of Swiss Natural until February 28, 2002. Dr. Ferrante's
employment agreement provides that for the year ended February 29, 2000 he will
receive a base salary of $168,000 per annum, a $13,000 payment for medical
insurance, a $10,000 payment for life insurance and a $7,200 car allowance; and
that for each of the fiscal years ended February 28, 2001 and February 28, 2002
he will receive a ten percent increase from the previous year's base salary, a
$13,000 payment for medical insurance, a $12,000 payment for life insurance and
a car allowance of $9,600. In addition, for the first five full fiscal years
immediately following this offering, Dr. Ferrante shall be granted a bonus of
3,000 common stock purchase options exercisable at $.50 per share for every
$50,000 of earnings that Swiss Natural reports in its audited financial
statements in excess of earnings of $750,000 before interest, taxes, charges
resulting from stock, debenture or stock option issuances and underwriter's
consulting fees.
Herbert Paul has agreed to continue to serve as president and chief
financial officer of Swiss Natural. We have also entered into a consulting
agreement with Mr. Paul until February 28, 2002. Mr.
21
<PAGE>
Paul's consulting agreement provides that for the year ended February 29, 2000
he will receive consulting fees of $99,750 per annum, a $4,750 allocation for
medical insurance and a $4,750 allocation for life insurance; and that for each
of the fiscal years ended February 28, 2001 and February 28, 2002 he will
receive a ten percent increase from the previous year's consulting fees and a
continuation of the allocations for medical and life insurances. For the first
five full fiscal years immediately following this offering, Mr. Paul shall be
granted a bonus of 3,000 common stock purchase options exercisable at $.50 per
share for every $50,000 of earnings that Swiss Natural reports in its audited
financial statements in excess of earnings of $750,000 before interest, taxes,
charges resulting from stock, debenture or stock option issuances and
underwriter's consulting fees.
SUMMARY OF COMPENSATION
The following Summary Compensation Table sets forth information concerning
compensation earned in the three fiscal years ended February 28, 1997, 1998 and
1999, by Swiss Natural's Chief Executive Officer and its President (the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------------------ ---------------------------------------------------
AWARDS PAYOUTS
------------------------- -----------------------
RESTRICTED SECURITIES
NAME AND FISCAL YEAR OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
PRINCIPAL ENDED SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS COMPENSATION
POSITION FEBRUARY 28 ($) ($) ($) ($) (#) ($) ($)
--------- ----------- ------ ----- ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dr. Ralph Ferrante. 1999 160,000 -- 7,200 -- -- -- --
Chairman of the 1998 140,000 -- 7,200 -- -- -- --
Board and Chief 1997 132,000 -- -- -- -- -- --
Executive Officer
Herbert Paul............. 1999 -- -- 99,750 -- -- -- --
President and Chief 1998 -- -- 87,083 -- -- -- --
Financial Officer 1997 -- -- 79,000 -- -- -- --
</TABLE>
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
As permitted pursuant to the corporate law of the State of Delaware, Swiss
Natural's state of incorporation, the Certificate of Incorporation requires that
Swiss Natural indemnify its directors and officers against certain liabilities
and expenses incurred in their service in such capacities to the fullest extent
permitted by applicable law. These provisions would provide indemnification for
liabilities arising under the federal securities laws to the extent that such
indemnification is found to be enforceable under, and to be in accordance with
applicable law. Additionally, Swiss Natural has entered into an indemnity
agreement with each director and officer which generally provides that they are
indemnified with respect to actions taken in good faith. Furthermore, the
personal liability of the directors is limited as provided in Swiss Natural's
Certificate of Incorporation.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of Swiss Natural
pursuant to the foregoing provisions, or otherwise, Swiss Natural has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore unenforceable.
SWISS NATURAL 1999 STOCK OPTION PLAN
The Swiss Natural 1999 Stock Option Plan was ratified and approved by the
Board of Directors of Swiss Natural as of June 30, 1999. The 1999 Stock Option
Plan is intended to promote the long term financial interests and growth of
Swiss Natural by providing employees, officers, directors, and consultants of
Swiss Natural with appropriate incentives and rewards to enter into and continue
in the employ of, or their relationship with, Swiss Natural and to acquire a
proprietary interest in the long-
22
<PAGE>
term success of Swiss Natural; and to reward the performance of individual
officers, other employees, consultants and directors in fulfilling their
responsibilities for long-range achievements.
GENERAL
The 1999 Stock Option Plan provides for the granting of awards to such
officers, other employees, consultants and directors of Swiss Natural and its
affiliates as the Board of Directors may select from time to time. A total of
500,000 shares of common stock has been reserved for issuance under the 1999
Stock Option Plan.
If any shares subject to an award are forfeited, canceled, exchanged or
surrendered or if an award otherwise terminates or expires without a
distribution of shares to the holder of such award, the shares of common stock
with respect to such award will, to the extent of any such forfeiture,
cancellation, exchange, surrender, termination or expiration, again be available
for the awards under the 1999 Stock Option Plan.
In the event that the compensation committee determines that any dividend
or other distribution (whether in the form of cash, common stock, or other
property), recapitalization, stock split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, affects the common stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of holders of awards under 1999 Stock Option Plan, then the compensation
committee will make such equitable changes or adjustments as it deems necessary
or appropriate to any or all of (i) the number and kind of shares of common
stock or other property (including cash) that may thereafter be issued in
connection with awards, (ii) the number and kind of shares of common stock or
other property (including cash) issued or issuable in respect of outstanding
awards and (iii) the exercise price, grant price, or purchase price relating to
any award; provided that, with respect to incentive stock options, such
adjustment shall be made in accordance with Section 424(h) of the Code.
ADMINISTRATION
The 1999 Stock Option Plan will be administered by the compensation
committee. The compensation committee has the authority in its sole discretion,
subject to and not inconsistent with the express provisions of the 1999 Stock
Option Plan, to administer the 1999 Stock Option Plan and to exercise all the
powers and authorities either specifically granted to it under, or necessary or
advisable in the administration of, the 1999 Stock Option Plan, including,
without limitation, the authority to grant awards; to determine the persons to
whom and the time or times at which awards shall be granted; to determine the
type and number of awards to be granted, the number of shares of common stock to
which an award may relate and the terms, conditions, restrictions and
performance goals relating to any award; to determine whether, to what extent,
and under what circumstances an award may be settled, canceled, forfeited,
exchanged, or surrendered; to make adjustments in the performance goals in
recognition of unusual or non-recurring events affecting Swiss Natural or the
financial statements of Swiss Natural (to the extent not inconsistent with
Section 162(m) of the Code, if applicable), or in response to changes in
applicable laws, regulations, or accounting principles; to construe and
interpret the 1999 Stock Option Plan and any award; to prescribe, amend and
rescind rules and regulations relating to the 1999 Stock Option Plan; to
determine the terms and provisions of agreements evidencing awards; and to make
all other determinations deemed necessary or advisable for the administration of
the 1999 Stock Option Plan.
AWARDS UNDER THE 1999 STOCK OPTION PLAN
No options have been granted under the 1999 Stock Option Plan. Unless
otherwise determined by the compensation committee, options granted pursuant to
the 1999 Stock Option Plan will become exercisable ratably over three years
commencing on the first anniversary of the date of grant, but in no event may an
option be exercised more than 10 years following the date of its grant. The
purchase price per share payable upon the exercise of an option will be
established by the compensation committee; provided, however, that incentive
stock options may not have an exercise price less than
23
<PAGE>
the fair market value of a share of common stock on the date of the grant. In
addition, Swiss Natural has agreed that if any options are granted prior to the
closing of this offering or within 90 days after the closing, the exercise price
of the options will be no less than $5.00 per share. The option exercise price
is payable by any one of the following methods or a combination thereof:
* in cash or by personal check, certified check, bank cashier's check or
wire transfer;
* in shares of common stock owned by the participant for at least six
months prior to the date of exercise and valued at their fair market
value on the effective date of such exercise; or
* by such other method as the compensation committee may from time to time
authorize.
The compensation committee also has the authority to specify, at the time
of grant or, with respect to options that are not intended to qualify as
incentive stock options ("non-qualified stock options"), at or after the time of
grant, that a participant shall be granted a new non-qualified stock option (a
"reload option") for a number of shares of common stock equal to the number of
shares of common stock surrendered by the participant upon exercise of all or a
part of an option in the manner described above, subject to the availability of
common stock under the 1999 Stock Option Plan at the time of such exercise;
provided, however, that no reload option shall be granted to a non-employee
director. Reload options shall be subject to such conditions as may be specified
by the compensation committee in its discretion, subject to the terms of the
1999 Stock Option Plan.
EMPLOYMENT ARRANGEMENTS
Ferrante Employment Agreement. We have entered into an employment agreement
with Dr. Ralph M. Ferrante pursuant to which Dr. Ferrante has agreed to continue
to serve as the chief executive officer of Swiss Natural until February 28,
2002. Dr. Ferrante's employment agreement provides that for the year ended
February 29, 2000 he will receive a base salary of $168,000 per annum, a $13,000
payment for medical insurance, a $10,000 payment for life insurance and a $7,200
car allowance; and that for each of the fiscal years ended February 28, 2001 and
February 28, 2002 he will receive a ten percent increase from the previous
year's base salary, a $13,000 payment for medical insurance, a $12,000 payment
for life insurance and a car allowance of $9,600. In addition, for the first
five full fiscal years immediately following this offering, Dr. Ferrante shall
be granted a bonus of 3,000 common stock purchase options exercisable at $.50
per share for every $50,000 of earnings that Swiss Natural reports in its
audited financial statements in excess of earnings of $750,000 before interest,
taxes, charges resulting from stock, debenture or stock option issuances and
underwriter's consulting fees.
Paul Consulting Agreement. Herbert Paul has agreed to continue to serve as
president and chief financial officer of Swiss Natural. We have also entered
into a consulting agreement with Mr. Paul until February 28, 2002. Mr. Paul's
consulting agreement provides that for the year ended February 29, 2000 he will
receive consulting fees of $99,750 per annum, a $4,750 allocation for medical
insurance and a $4,750 allocation for life insurance; and that for each of the
fiscal years ended February 28, 2001 and February 28, 2002 he will receive a ten
percent increase from the previous year's consulting fees and a continuation of
the allocation for medical and life insurances. For the first five full fiscal
years immediately following this offering, Mr. Paul shall be granted a bonus of
3,000 common stock purchase options exercisable at $.50 per share for every
$50,000 of earnings that Swiss Natural reports in its audited financial
statements in excess of earnings of $750,000 before interest, taxes, charges
resulting from stock, debenture or stock option issuances and underwriter's
consulting fees.
CERTAIN TRANSACTIONS
Swiss Natural utilizes approximately 1,250 square feet of office space for
its corporate headquarters in a facility owned by Dr. Ferrante, Swiss Natural's
Chairman of the Board, Chief Executive Officer and principal stockholder. Swiss
Natural does not pay rent for the use of its corporate headquarters. Swiss
Natural does not have any written agreement with respect to such arrangement.
24
<PAGE>
As of February 1, 1999, Swiss Natural owed an aggregate amount of $455,527
to A. Donald and Carolyn B. McCulloch, Jr. for loans made by them to Swiss
Natural in order to fund Swiss Natural's operations. Mr. McCulloch is a former
director and stockholder of Swiss Natural. In February 1999, Swiss Natural paid
the McCullochs $75,000 out of the proceeds received by Swiss Natural from its
private placement of convertible debentures. In addition, two employees of Swiss
Natural paid the McCullochs $95,000 in exchange for the transfer to such
employees of 73,643 shares of common stock of Swiss Natural owned by the
McCullochs. The McCullochs also forgave $95,000 due to them by Swiss Natural and
released Swiss Natural from certain negative covenants.
The aggregate indebtedness of Swiss Natural to the McCullochs as of June
30, 1999 is $329,008, inclusive of accrued interest. The indebtedness is
evidenced by two promissory notes, one in the principal amount of $152,500 plus
accrued interest of $7,053, and the other in the principal amount of $169,455.
Both promissory notes to the McCullochs mature on the earlier to occur of:
* February 10, 2000;
* ten days after the receipt by Swiss Natural of the proceeds of an
initial public offering of its common stock in an amount of at least
$10,000,000; or
* the sale of all or substantially all of the assets of Swiss Natural.
Swiss Natural will use a portion of the proceeds of this offering to
repay such amount plus all accrued interest thereon.
OTHER TRANSACTIONS
Dr. Ferrante was previously owed an aggregate of $180,888 by Swiss Natural
for compensation due to him on account of services performed for Swiss Natural.
As of February 28, 1998 Dr. Ferrante exchanged this indebtedness owed to him by
Swiss Natural for 158,673 newly issued shares of common stock.
Dr. Ferrante was previously owed an aggregate of $420,849 by Swiss Natural
for loans made by him to fund the operations of Swiss Natural. As of February
28, 1998 Dr. Ferrante exchanged this indebtedness owed to him by Swiss Natural
for 369,167 newly issued shares of common stock.
Mr. Paul was previously owed an aggregate of $102,599 by Swiss Natural for
compensation due to him on account of services performed for Swiss Natural. As
of February 28, 1998 Mr. Paul exchanged this indebtedness owed to him by Swiss
Natural for 89,999 newly issued shares of common stock.
Mr. Paul was previously owed an aggregate of $50,220 by Swiss Natural for
loans made by him to fund the operations of Swiss Natural. As of February 28,
1998 Mr. Paul exchanged this indebtedness owed to him by Swiss Natural for
44,053 newly issued shares of common stock.
Mr. Brescio was previously owed an aggregate of $93,419 by Swiss Natural
for compensation due to him on account of services performed for Swiss Natural.
As of February 28, 1998 Mr. Brescio exchanged this indebtedness owed to him by
Swiss Natural for 81,946 newly issued shares of common stock.
Effective June 30, 1999, Messrs. Ferrante, Paul and Brescio exchanged
1,800,000 shares of common stock of Swiss Natural owned by them for 1,800,000
shares of Series A Preferred Stock. See "Description of Capital Stock -Preferred
Stock" for a more detailed description of the terms of such preferred stock.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information known to Swiss Natural
with respect to beneficial ownership of Swiss Natural's common stock as of the
date of this prospectus by
* each stockholder known by Swiss Natural to be the beneficial owner of
more than 5% of Swiss Natural's common stock;
* each director of Swiss Natural;
* the Named Executive Officers; and
* all executive officers and directors as a group.
25
<PAGE>
Except as otherwise indicated, Swiss Natural believes that the beneficial
owners of common stock listed below, based on information furnished by such
owners, have sole investment and voting power with respect to such shares,
subject to community property laws where applicable. Swiss Natural assumes that
the underwriter's over-allotment option will not be exercised. In event the
underwriter's over-allotment option is exercised, Messrs. Ferrante, Paul and
Brescio will hold 1,183,502 shares, 235,537 shares and 161,759 shares,
respectively, after the offering. The table does not give effect to 166,667
shares of common stock purchasable by Mr. Rolls upon the exercise of warrants.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME AND ADDRESS OWNED PRIOR TO OFFERING OWNED AFTER OFFERING
OF BENEFICIAL ----------------------- --------------------
OWNER NUMBER PERCENT NUMBER PERCENT
- ------------------------------------------------ ------ ------- ------ -------
<S> <C> <C> <C> <C>
Ralph M. Ferrante............................... 1,311,302 33.9% 1,311,302 25.9%
c/o Swiss Natural Foods, Inc.
1031 Route 9W
Upper Grandview, NY 10960
Herbert M. Paul................................. 267,937 6.9% 267,937 5.3%
c/o Swiss Natural Foods, Inc.
1031 Route 9W
Upper Grandview, NY 10960
A. Donald & Carolyn B. McCulloch, Jr............ 516,156 13.3% 516,156 10.2%
c/o Swiss Natural Foods, Inc.
1031 Route 9W
Upper Grandview, NY 10960
Ernest Rolls.................................... 333,334 8.6% 333,334 6.6%
c/o Swiss Natural Foods, Inc.
1031 Route 9W
Upper Grandview, NY 10960
Ronald Brescio.................................. 181,559 4.7% 181,559 3.6%
c/o Swiss Natural Foods, Inc.
1031 Route 9W
Upper Grandview, NY 10960
James P. McCann................................. 0 0% 0 0%
c/o Swiss Natural Foods, Inc.
1031 Route 9W
Upper Grandview, NY 10960
Mario V. Ferrante............................... 275,240 7.1% 275,240 5.4%
c/o Swiss Natural Foods, Inc.
1031 Route 9W
Upper Grandview, NY 10960
All directors and executive officers as a group
(3 persons)................................... 1,579,239 40.8% 1,579,239 31.2%
</TABLE>
The following table sets forth certain information known to Swiss Natural
with respect to beneficial ownership of Swiss Natural's Series A Preferred Stock
as of the date of this prospectus by
* each stockholder known by Swiss Natural to be the beneficial owner of
more than 5% of Swiss Natural's Series A Preferred Stock;
* each director of Swiss Natural;
* the Named Executive Officers; and
* all executive officers and directors as a group.
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<PAGE>
Except as otherwise indicated, Swiss Natural believes that the beneficial
owners of Series A Preferred Stock listed below, based on information furnished
by such owners, have sole investment and voting power with respect to such
shares, subject to community property laws where applicable.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME AND ADDRESS OWNED PRIOR TO OFFERING OWNED AFTER OFFERING
OF BENEFICIAL ----------------------- --------------------
OWNER NUMBER PERCENT NUMBER PERCENT
- ------------------------------------------------ ------ ------- ------ -------
<S> <C> <C> <C> <C>
Ralph M. Ferrante. 1,268,458 70.5% 1,268,458 70.5%
c/o Swiss Natural Foods, Inc.
1031 Route 9W
Upper Grandview, NY 10960
Herbert M. Paul................................. 355,915 19.8% 355,915 19.8%
c/o Swiss Natural Foods, Inc.
1031 Route 9W
Upper Grandview, NY 10960
Ronald Brescio.................................. 175,627 9.7% 175,627 9.7%
c/o Swiss Natural Foods, Inc.
1031 Route 9W
Upper Grandview, NY 10960
All directors and executive officers as a group
(3 persons)................................... 1,624,373 90.2% 1,624,373 90.2%
</TABLE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized common stock of Swiss Natural consists of 20,000,000 shares,
par value $.01 per share. The authorized preferred stock of Swiss Natural
consists of 3,000,000 shares, par value $.01 per share. The 3,868,221 currently
outstanding shares of Swiss Natural common stock are owned by approximately 70
holders of record. Upon consummation of this offering, 5,068,221 shares of
common stock will be issued and outstanding. An additional 1,200,000 shares of
common stock will be outstanding if the common stock purchase warrants offered
hereby are exercised and an additional 180,000 shares of common stock will be
outstanding if the warrants included within the over-allotment option are
exercised in full. An additional 120,000 shares of common stock will be
outstanding if the 120,000 underwriter's common stock purchase warrants are
exercised in full, and an additional 120,000 shares of common stock will be
outstanding if the 120,000 warrants which may be acquired upon exercise of the
additional 120,000 underwriter's warrants, are exercised in full. An additional
1,800,000 shares of common stock will be outstanding upon conversion of all
outstanding shares of the Series A Preferred Stock. The foregoing description of
the capital stock excludes shares of common stock issuable upon exercise of the
outstanding warrants and upon exercise of the $757,500 aggregate principal
amount of the convertible debentures.
COMMON STOCK
Voting Rights. Each holder of common stock outstanding is entitled to one
vote per share on all matters submitted to a vote of Swiss Natural's
stockholders, including the election of directors. Holders do not have
cumulative voting rights in connection with the election of directors or any
other matter.
Any action that may be taken at a meeting of the stockholders may be taken
by written consent in lieu of a meeting if Swiss Natural receives consents
signed by stockholders having the minimum number of votes that would be
necessary to approve the action at a meeting at which all shares entitled to
vote on the matter were present and voted. This could permit Dr. Ferrante and
Mr. Paul to
27
<PAGE>
take action regarding certain matters without providing other stockholders the
opportunity to voice dissenting views or raise other matters.
Liquidation. In the event of any dissolution, liquidation or winding up of
the affairs of Swiss Natural, whether voluntary or involuntary, holders of the
common stock are entitled to share ratably in all assets remaining after payment
of the debts and other liabilities of Swiss Natural.
Dividends, distributions and stock splits. Each share of common stock will
have an equal and ratable right to receive dividends when, if and as declared
from time to time by the board of directors out of funds legally available
therefor. Swiss Natural does not anticipate paying cash dividends in the
foreseeable future.
Other provisions. The holders of common stock are not entitled to
preemptive rights. There are no redemption or sinking fund provisions applicable
to the common stock. Certain principal stockholders have certain rights of first
refusal with respect to the transfer and sale by other stockholders of shares of
Swiss Natural's common stock.
PREFERRED STOCK
Messrs. Ferrante, Paul and Brescio have exchanged 1,800,000 shares of
common stock owned by them for 1,800,000 shares of Series A Preferred Stock
("Series A Preferred"), a newly issued series of preferred stock. The Series A
Preferred is non-redeemable, assignable and carries rights to vote with the
common stock on a one-vote-per-share basis. The Series A Preferred is
convertible into common stock, at the option of the holder, at any time after
the earliest to occur of:
* the first fiscal year of Swiss Natural or any trailing twelve (12) month
period in which Swiss Natural's financial statements show earnings
before interest, taxes, charges resulting from stock, debenture or stock
option issuances and underwriter's consulting fees have equaled or
exceeded $750,000;
* the date on which the closing price of the common stock of Swiss Natural
as reported by the NASDAQ system or its successor, or any national
securities exchange on which such stock is listed (or if not so
reported, the average of the closing bid and asked prices as furnished
by two members of the NASD selected by Swiss Natural for that purpose)
is equal to or greater than ten dollars ($10.00) per share;
* the closing date of any acquisition of all or a portion of the equity
securities of Swiss Natural, the acquisition of all or a portion of
Swiss Natural's assets, the merger of Swiss Natural with or into another
entity regardless of whether Swiss Natural is the surviving entity, or
any additional equity financing by Swiss Natural;
* five (5) years after the closing date of this offering; or
* December 31, 1999 if the closing of this offering and the closing of the
sale of the over-allotment shares hereunder have not occurred prior to
such date.
The Series A Preferred shall pay a quarterly dividend of two cents ($0.02)
per share prior to any other class of stock receiving any dividends, and to
participate in dividends declared and paid on the common stock, on an
"as-converted"basis. In addition, the Series A Preferred will upon liquidation
participate pari passu with the common stock, on an "as-converted" basis. The
holders of the Series A Preferred shares shall be protected against dilution of
their interest in the common stock into which their shares are convertible upon
the occurrence of certain events. If the holders of the Series A Preferred do
not receive their quarterly dividends on a timely basis, the amount of such
dividend shall accrue and shall be paid in full prior to the payment of any
dividends to the holders of common stock.
If and to the extent that the shares of common stock issuable upon
conversion of the Series A Preferred are not includable in a registration
statement on the form to be utilized by Swiss Natural, then at the request of
the holders thereof, delivered to Swiss Natural, Swiss Natural will prepare and
file, at its own expense, one (1) registration statement on such form as
required, to enable such holders to resell shares of common stock acquired upon
the conversion of the Series A Preferred.
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<PAGE>
COMMON STOCK PURCHASE WARRANTS
Each of the common stock purchase warrants being offered hereby entitles
the holder thereof to purchase one share of common stock at an exercise price
equal to $6.25 per share during a period of three years, commencing
, 2000 (one year from the effective date of this prospectus). The
common stock purchase warrants shall be redeemable by Swiss Natural at a price
of $.05 per warrant in the event the closing sales price of the common stock is
not less than $7.50 for at least twenty of the thirty consecutive trading days
ending on the tenth day prior to the date on which the notice of redemption is
given for such warrants.
UNDERWRITERS' WARRANTS
At the closing of this offering, Swiss Natural will sell to Comprehensive
Capital Corporation underwriters' stock warrants to purchase 120,000 shares of
common stock and 120,000 underwriters' warrants at an aggregate purchase price
of $100. The underwriters' stock warrants will be exercisable to purchase one
share of common stock at a price equal to $7.25 per share at any time during the
four-year period commencing one year from the effective date of this prospectus.
Each of the underwriters' warrants will be exercisable to purchase one
underlying warrant at a price equal to $.2175. Each underlying warrant shall be
identical to the common stock purchase warrants sold to the public in this
prospectus and shall be exercisable at the same price and on the same terms as
the common stock purchase warrants. The underwriters' stock warrants expire on
and the underwriter's warrants expire on . In the event the
expiration date of the common stock purchase warrants is extended by Swiss
Natural, the underwriters' warrants shall be extended until the earlier of the
new expiration date of the common stock purchase warrants or five years from the
date of this prospectus.
OTHER WARRANTS AND OPTIONS
Swiss Natural has issued 246,667 warrants to purchase 246,667 shares of
common stock at a price of $1.50 per share. Of such warrants, 166,667 are issued
to one of the principal stockholders listed in the table set forth under
Principal Stockholders.
All of the warrants previously issued by Swiss Natural are exercisable at
any time prior to the earlier to occur of (a) June 14, 2002 or (b) the date
which is ten days after the date on which Swiss Natural mails to the holder of
the warrant a copy of a preliminary prospectus included in a registration
statement which has been filed with the Securities and Exchange Commission for
the registration of Swiss Natural's common stock under the Securities Act of
1933, as amended. The warrants are exercisable at a price of $1.50 per share,
subject to adjustment to prevent dilution in certain circumstances.
For the life of the warrant, the holders thereof are given the opportunity
to profit from a rise in the market price of Swiss Natural's common stock, which
exercise at the time of such rise may result in a dilution of the interests of
other stockholders. Swiss Natural may find it more difficult to raise additional
equity capital if it should be needed for the business of Swiss Natural while
the warrants are outstanding.
CONVERTIBLE DEBENTURES
In January, 1999 Swiss Natural sold $757,500 principal amount of
convertible debentures. The convertible debentures bear interest at a rate of
12% per annum, payable annually. The convertible debentures mature in February,
2001. The holder of any convertible debenture has the right, exercisable at any
time up to the maturity of the convertible debenture, at his option, to convert
such convertible debenture at the principal amount thereof (or any portion
thereof that is an integral multiple of $1,500) into shares of the common stock
at a price of $1.50 per share (except that, in the event such convertible
debenture shall be called for redemption, such right shall terminate on the
close of business on the fifth day immediately preceding the redemption date).
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<PAGE>
INDEBTEDNESS
As of June 30, 1999, after the conversion into common stock of all the
indebtedness owed by Swiss Natural to Dr. Ferrante, Mr. Paul and Mr. Brescio,
Swiss Natural had outstanding debt, notes and interest payable to stockholders
in the aggregate amount of $430,100. $329,008 of such indebtedness is owed to A.
Donald and Carolyn B. McCulloch, Jr. for loans and accrued interest made by such
individuals to Swiss Natural in order to fund Swiss Natural's operations. The
two promissory notes evidencing such indebtedness to the McCullochs mature on
the earlier to occur of (i) February 10, 2000, (ii) ten days after the receipt
of funds by Swiss Natural from an initial public offering in any amount not less
than $10,000,000, or (iii) the sale of all or substantially all of the assets of
Swiss Natural. Swiss Natural intends to use a portion of the proceeds of this
offering to repay such amount plus all accrued interest thereon. See "Use of
Proceeds".
CERTAIN ANTI-TAKEOVER EFFECTS OF LAW AND CERTIFICATE OF INCORPORATION
Following consummation of the offering, Swiss Natural will be subject to
the business combination provisions of Section 203 of Delaware corporation law.
In general, such provisions prohibit a publicly held Delaware corporation from
engaging in various business combination transactions with any interested
stockholder (in general, a stockholder owning 15% of a corporation's outstanding
voting securities) for a period of three years after the date of the transaction
in which the person became an interested stockholder, unless:
* the transaction is approved by the corporation's board of directors prior
to the date the stockholder became an interested stockholder;
* upon consummation of the transaction which resulted in the stockholder's
becoming an interested stockholder, the stockholder owned at least 85% of
the shares of stock entitled to vote generally in the election of
directors of the corporation outstanding at the time the transaction
commenced, excluding, for purposes of determining the number of shares
outstanding, those shares owned by (a) persons who are directors and also
officers and (b) employee stock plans in which employee participants do
not have the right to determine confidentiality whether shares held
subject to the plan will be tendered in a tender or exchange offer; or
* on or after such date, the business combination is approved by the board
of directors and authorized by the affirmative vote of at least 66 2/3%
of such outstanding voting stock not owned by the interested stockholder.
TRANSFER AGENT AND REGISTRAR
[ ] has been appointed as transfer agent and
registrar for the common stock.
LISTING
Swiss Natural has applied for listing of the common stock and the warrants
on the Nasdaq SmallCap Market under the symbols "SWIS" and "SWISW" respectively.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for the common
stock or the warrants. Swiss Natural cannot predict the effect, if any, that
sales of shares of the common stock to the public or the availability of shares
for sale to the public will have on the market price of the common stock
prevailing from time to time.
Upon consummation of this offering, Swiss Natural will have 5,068,221
shares of common stock outstanding. Of the shares outstanding after this
offering, the 1,200,000 shares of common stock sold in this offering and the
180,000 shares offered to the underwriters under the over-allotment option will
be freely tradeable without restriction under the Securities Act of 1933, except
that shares owned by
30
<PAGE>
an affiliate of Swiss Natural will be subject to the volume limitations of Rule
144 under the Securities Act of 1933. As defined in Rule 144, an affiliate of an
issuer is a person who, directly or indirectly, through one or more
intermediaries, controls or its controlled by, or is under common control with,
such issuer.
The remaining 3,688,221 shares of common stock will be restricted
securities (as that phrase is defined in Rule 144) and may not be resold in the
absence of registration under the Securities Act or pursuant to an exemption
from such registration, including the exemption provided by Rule 144 under the
Securities Act. Substantially all of the holders of such shares of common stock
have registration rights which entitle them under certain circumstances to
register their shares for resale in the event Swiss Natural proposes to register
additional shares of common stock in the future.
Subject to the foregoing and to the lock-up agreements described below,
under Rule 144 as currently in effect, a stockholder, including an affiliate,
who has beneficially owned his or her restricted shares for at least one year
from the date they were acquired from Swiss Natural or an affiliate of Swiss
Natural may sell, within any three-month period, a number of such shares that
does not exceed certain volume restrictions, provided that certain requirements
concerning availability of public information, manner of sale and notice of sale
are satisfied. In addition, under Rule 144(k), if a period of at least two years
has elapsed from the date any restricted shares were acquired from Swiss Natural
or an affiliate, a stockholder that is not an affiliate of Swiss Natural at the
time of sale and that has not been an affiliate for at least three months prior
to the sale is entitled to sell those shares without compliance with the
requirements of Rule 144 set forth above. An affiliate of Swiss Natural,
however, must comply with the volume restrictions and the other requirements
referred to above.
Except for the holders of 180,000 shares offered to the underwriter
pursuant to the over-allotment option and the holders of the 1,200,000 shares
offered to the public in this offering, the holders of all other outstanding
shares of common stock are subject to the underwriters' lockup restrictions.
Pursuant to the lockup, the holders have agreed not to sell, transfer,
hypothecate or convey, without the written consent of Comprehensive Capital
Corporation, by registration or otherwise, (i) one third of their shares for a
period of at least one year from the effective date of this prospectus, (ii) one
third of their shares for a period of at least eighteen months from the
effective date of this prospectus, and (iii) the balance of their shares for a
period of at least two years from the effective date of this prospectus. In
addition, the holders have agreed not to sell, transfer, hypothecate or convey
their shares for any longer period as may be required by NASDAQ. Any such
stockholder may however transfer his or her stock in a transaction not involving
a public offering including a transfer to a member of his family or in the event
of death, by will or operation of law, provided that any such transferee shall
agree, as a condition to such transfer, to be bound by such restrictions. The
foregoing lock-up restrictions will not apply to grants or awards under the 1999
Stock Option Plan or to shares sold to the underwriters to cover
over-allotments. If the 180,000 over-allotment shares are not purchased by the
underwriters, such shares will not be subject to the underwriters' lockup
restrictions.
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement, the form
of which has been filed as an exhibit to the registration statement of which
this prospectus forms a part, the underwriters named below, acting through
Comprehensive Capital Corporation as representative, have severally agreed to
purchase from Swiss Natural, and Swiss Natural has agreed to sell, an aggregate
of 1,200,000 shares of common stock and 1,200,000 common stock purchase
warrants. The underwriters' obligations to pay for and accept delivery of the
shares of common stock and warrants are subject to certain conditions set forth
in the underwriting agreement, including, but not limited to, satisfactory
completion of due diligence, delivery of a comfort letter from Swiss Natural's
auditors, receipt of an opinion of Swiss Natural's counsel and other closing
conditions. The underwriters are committed to purchase all of the shares of
common stock and warrants if any securities are purchased. Under certain
circumstances, the commitments of non-defaulting underwriters may be increased.
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<PAGE>
<TABLE>
<CAPTION>
UNDERWRITERS
------------
<S> <C>
Comprehensive Capital Corporation...........................
---------
Total..................................................
---------
---------
</TABLE>
The underwriters propose to offer the shares of common stock and warrants
to the public at the public offering price set forth on the cover page of this
prospectus and to certain dealers, who are members of the NASD, at such price
less an underwriting discount of 10% of the public offering price, or $
per share and $ per warrant. The underwriters may allow a concession of
$ per share and $ per warrant to dealers that are members of the
NASD. Comprehensive Capital Corporation may permit dealers to reallow to other
dealers securities and receive a reallowance of $ per share and
$ per warrant. Until completion of this offering, the public offering
price, the underwriting discount, concession and reallowances will not be
changed.
Swiss Natural has agreed to pay Comprehensive Capital Corporation a
non-accountable expense allowance of 3% of the aggregate offering price of the
securities sold in this offering (including any shares of shares and warrants
purchased pursuant to the over-allotment option), of which $15,000 has been paid
by Swiss Natural to Comprehensive Capital Corporation to cover a portion of the
due diligence expenses and underwriting costs related to this offering.
Swiss Natural has agreed to indemnify the underwriters against liabilities
under the Securities Act of 1933 in connection with this offering.
Messrs. Ferrante, Paul and Brescio have granted to the underwriters an
option, exercisable during the 45-day period after the date of this prospectus,
to purchase up to 180,000 additional shares of the common stock owned by them at
the public offering price, less underwriting discounts and a pro rata portion of
the non-accountable expense allowance. Specifically, Mr. Ferrante has granted an
option to purchase 127,800 shares, Mr. Paul has granted an option to purchase
32,400 shares and Mr. Brescio has granted an option to purchase19,800 shares to
the underwriter. Swiss Natural has granted to the underwriters an option,
exercisable during the 45-day period after the date of this prospectus, to
purchase up to 180,000 additional common stock purchase warrants at the public
offering price, less underwriting discounts and a pro rata portion of the
non-accountable expense allowance. The underwriters may exercise these options
solely to cover over-allotments, if any, made in the sale of the securities
offered hereby and may not exercise one of the options without exercising the
other option. Generally, to the extent that these options are exercised, each
underwriter will become obligated to purchase approximately the same percentage
of such additional securities as the percentage of securities it was originally
obligated to purchase as set forth above. If the underwriters exercise the
over-allotment option in full, the total gross public offering price will be
$ , the total underwriting discounts will be $ and the total
proceeds to Swiss Natural and the selling security holders will be $ and
$ , respectively.
Prior to this offering, there has been no public market for the common
stock or warrants. Accordingly, the public offering price for the securities was
determined by negotiation between Swiss Natural and Comprehensive Capital
Corporation. Among the factors considered in determining the public offering
price were the services, the experience of management, the economic conditions
of Swiss Natural's industry in general, the general condition of the equity
securities market and the demand for similar securities of companies considered
comparable to Swiss Natural and other relevant factors. There can be no
assurance, however, that the prices at which the common stock and warrants will
sell in the public market after this offering will not be lower than the price
at which the shares of common stock and warrants are sold by the underwriters.
The underwriting agreement also provides that Comprehensive Capital
Corporation shall have the right to designate a non-voting advisor to the Board
of Directors of Swiss Natural, which advisor shall be acceptable to Swiss
Natural, for a period of two years after the effective date of this prospectus.
Said designee shall attend meetings of the Board of Directors and shall be
entitled to receive reimbursement for all reasonable costs incurred in attending
such meetings.
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<PAGE>
Swiss Natural has agreed to sell to Comprehensive Capital Corporation or
its designees, for nominal consideration, the underwriter's common stock
purchase warrants to purchase an aggregate of 120,000 shares of common stock at
a price of $7.25 per share, and the underwriter's warrants to purchase an
additional 120,000 warrants at a price of $.2175 per warrant, which warrants are
exercisable to purchase an additional 120,000 shares of common stock at 100% of
the then effective exercise price of the publicly held warrants. The shares of
common stock and warrants subject to the underwriter's warrants will be
identical to the shares of common stock and warrants offered to the public
hereby in all respects. All of the underwriter's warrants will be exercisable
for a four-year period commencing one year after the date of the consummation of
this offering, except that the underlying warrant will expire the same date as
the termination date or redemption date of the publicly-held warrants. During
the period beginning on the date of exercise and ending five years thereafter,
Swiss Natural has agreed to maintain a current registration statement with
respect to the underwriter's warrants and the underlying common stock. The
underwriter's warrants will contain anti-dilution provisions providing for
appropriate adjustment of the exercise price and number of securities that may
be purchased upon the occurrence of specified certain specified events.
The underwriting agreement also provides that commencing twelve months
after the effective date of this prospectus, Swiss Natural will pay an amount
equal to five (5%) percent of the aggregate exercise price of each warrant
exercised to each dealer who solicited the exercise (which may also be
Comprehensive Capital Corporation) provided that:
* the market price of the common stock on the date the warrant was
exercised was greater than the warrant exercise price on that date;
* exercise of the warrant was solicited by a member of the NASD and the
NASD member is designated in writing by the warrantholder;
* the warrant was not held in a discretionary account;
* disclosure of compensation arrangements was made both at the time of the
offering and at the time of the exercise of the warrant; and
* the solicitation of the exercise of the warrant was not in violation of
Regulation M promulgated under the Securities Exchange Act of 1934, as
amended.
Upon the closing of this offering, Swiss Natural shall enter into a
financial consulting agreement with Comprehensive Capital Corporation pursuant
to which Comprehensive Capital Corporation shall receive a consulting fee in an
amount equal to two (2%) percent of the total dollar amount of the securities
sold in this offering less those consulting and other fees previously paid
(including securities sold pursuant to the over-allotment option, to the extent
exercised) for consulting services which shall be rendered by Comprehensive
Capital Corporation for a period of two (2) years from the date of this
prospectus. Such consulting services shall include, but shall not be limited to,
advising Swiss Natural in connection with possible acquisition opportunities,
advising Swiss Natural regarding shareholder relations including the preparation
of the annual report and other releases, assisting in long-term financial
planning, advising Swiss Natural in connection with corporate reorganizations,
expansion and capital structure, and other financial assistance. Such consulting
fee, less amounts previously paid, shall be paid in full in advance at the
closing of this offering.
The underwriting agreement also provides that if Swiss Natural shall,
within two (2) years from the effective date of this prospectus, enter into any
agreement or understanding with any person or entity introduced by Comprehensive
Capital Corporation involving any of the following transactions which were
originated by Comprehensive Capital Corporation:
* the sale of all or substantially all of the assets of Swiss Natural,
* the merger or consolidation of Swiss Natural (other than a merger or
consolidation effected for the purpose of changing Swiss Natural's
domicile) with another entity, or
* the acquisition by Swiss Natural of the assets or stock of another
business entity, which agreement or understanding is thereafter
consummated, whether or not during such two (2) year period.
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<PAGE>
Swiss Natural, upon such consummation, shall pay to Comprehensive Capital
Corporation an amount equal to the following percentages of the consideration
paid by Swiss Natural in connection with such transaction: 5% of the first
$1,000,000, or portion thereof, of such consideration; 4% of the second
$1,000,000, or portion thereof, of such consideration; and 3% of such
consideration in excess of the first $2,000,000 of such consideration. The fees
payable to Comprehensive Capital Corporation will be in the same form of
consideration as that paid by or to Swiss Natural, as the case may be, in any
such transactions.
Until the distribution of securities in this offering is completed, the
rules of the SEC may limit the ability of the underwriters and certain selling
group members to bid for and purchase the securities. As an exception to these
rules, the underwriters are permitted to engage in certain transactions that
stabilize the price of the securities. Such transactions consist of bids or
purchases for the purchases for the purpose of maintaining the price of the
securities. If the underwriters create a short position in the securities in
connection with this offering, i.e., if they sell more shares of common stock or
warrants than are set forth on the cover page of this prospectus, the
underwriters may reduce the short position by purchasing common stock or
warrants in the open market. Comprehensive Capital Corporation may also elect to
reduce any short position by exercising all or part of the over-allotment option
described above. In addition, Comprehensive Capital Corporation may impose a
penalty bid on certain underwriters and selling group members. This means that
if Comprehensive Capital Corporation purchases shares of common stock or
warrants in the open market to reduce the underwriters' short position or to
stabilize the price of the common stock or warrants, it may reclaim the amount
of the selling concession from the underwriters and selling group members that
sold those securities as part of this offering. In general, purchases of a
security for the purpose of stabilization or to reduce a short position could
cause the price of the security to be higher than it might be in the absence of
such purchases. The imposition of a penalty bid might also have an effect on the
price of a security to the extent that it discouraged resales of that security.
Neither Comprehensive Capital Corporation nor any of the underwriters makes any
representations or predictions as to the direction or magnitude of any effect
that the transactions described above may have on the price of the securities.
In addition, neither Comprehensive Capital Corporation nor any of the
underwriters makes any representations that Comprehensive Capital Corporation or
any such underwriter will engage in such transactions or that such transactions,
once commenced, will not be discontinued without notice.
The underwriters have informed Swiss Natural that sales to any account over
which the underwriters exercise discretionary authority will not exceed 1% of
this offering.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered hereby
will be passed upon for Swiss Natural by Lehman & Eilen LLP, Uniondale, New
York. Lester Morse P.C., Great Neck, New York will pass upon certain legal
matters for the Underwriters. Hank Gracin, Esq., counsel to Lehman & Eilen, owns
1,500 shares of the common stock.
EXPERTS
The financial statements of Swiss Natural as of February 28, 1999 and for
each of the two years in the period ended February 28, 1999 included in this
Prospectus and in this Registration Statement have been included herein in
reliance upon the report of Goldstein Golub Kessler LLP, independent certified
public accountants, given upon the authority of such firm as experts in
accounting and auditing.
ADDITIONAL INFORMATION
Swiss Natural has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form SB-2 under the Securities Act
with respect to the common stock and warrants offered hereby. This Prospectus
does not contain all of the information set forth in the Registration Statement
and the exhibits thereto. For further information with respect to Swiss Natural
and the common stock and warrants offered hereby, reference is made to the
Registration Statement
34
<PAGE>
and the exhibits thereto. Statements contained in this Prospectus regarding the
contents of any contract or any other document to which reference is made are
not necessarily complete, and, in each instance where a copy of such contract or
other document has been filed as an exhibit to the Registration Statement,
reference is made to the copy so filed, each such statement being qualified in
all respects by such reference. A copy of the Registration Statement and the
exhibits thereto may be inspected without charge at the offices of the
Commission at Judiciary Plaza, 450 Fifth Street, Washington, D.C. 20549, and
copies of all or any part of the Registration Statement may be obtained from the
Public Reference Section of the Commission, Washington, D.C. 20549 upon the
payment of the fees prescribed by the Commission. The Commission maintains a Web
site (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants, such as Swiss Natural,
that file electronically with the Commission.
Swiss Natural intends to provide its stockholders with annual reports
containing financial statements audited by an independent accounting firm and
quarterly reports containing unaudited financial data for the first three
quarters of each year.
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<PAGE>
SWISS NATURAL FOODS, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
INDEPENDENT AUDITOR'S REPORT.................................................. F-2
FINANCIAL STATEMENTS:
Balance Sheet at February 28, 1999 and June 30, 1999 (unaudited)............ F-3
Statement of Operations for the Years Ended February 28, 1998 and 1999 and
the Four-month Periods Ended June 30, 1998 and 1999 (unaudited).......... F-4
Statement of Stockholders' Deficiency for the Years Ended February 28, 1998
and 1999 and the Four-month Period Ended June 30, 1999 (unaudited)....... F-5
Statement of Cash Flows for the Years Ended February 28, 1998 and 1999 and
the Four-month Periods Ended June 30, 1998 and 1999 (unaudited).......... F-6
Notes to Financial Statements............................................... F-7 - F-11
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Stockholders of
Swiss Natural Foods, Inc.
We have audited the accompanying balance sheet of Swiss Natural Foods, Inc. as
of February 28, 1999, and the related statements of operations, stockholders'
deficiency, and cash flows for each of the two years in the period ended
February 28, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Swiss Natural Foods, Inc. as of
February 28, 1999, and the results of its operations and its cash flows for each
of the two years in the period ended February 28, 1999 in conformity with
generally accepted accounting principles.
GOLDSTEIN GOLUB KESSLER LLP
New York, New York
April 7, 1999, except for Note 13, as to
which the date is August 18, 1999
F-2
<PAGE>
SWISS NATURAL FOODS, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
FEBRUARY 28, JUNE 30,
1999 1999
------------ ------------
<S> <C> <C>
(UNAUDITED)
ASSETS
Current Assets:
Cash and cash equivalents..................................... $ 530,729 $ 360,962
Accounts receivable, less allowance for doubtful accounts of
$19,000.................................................... 227,038 392,571
Inventory..................................................... 332,609 408,638
Other current assets.......................................... 12,913 35,165
---------- ----------
TOTAL CURRENT ASSETS.................................. 1,103,289 1,197,336
Property and Equipment, at cost, less accumulated depreciation
and amortization of $75,028 and $83,249, respectively 76,514 111,275
Trademarks, less accumulated amortization of $34,521 and
$35,517, respectively......................................... 3,990 2,994
Debt Placement Fees, less accumulated amortization of $5,707 and
$28,535, respectively......................................... 131,261 108,433
Deferred Offering Costs......................................... -- 40,050
Deferred Income Tax Asset, net.................................. -- --
Other Assets.................................................... -- 26,150
---------- ----------
TOTAL ASSETS $1,315,054 $1,486,238
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Accounts payable and accrued expenses......................... $ 655,169 $ 735,879
Debt and interest payable -- stockholder...................... 322,908 329,008
---------- ----------
TOTAL CURRENT LIABILITIES............................. 978,077 1,064,887
Convertible Subordinated Debentures............................. 757,500 757,500
Compensation Payable............................................ 101,092 101,092
---------- ----------
TOTAL LIABILITIES..................................... 1,836,669 1,923,479
---------- ----------
Commitments
Stockholders' Deficiency:
Preferred stock -- Series A, $.01 par value; authorized
3,000,000 shares, issued and outstanding 1,800,000
shares..................................................... -- 18,000
Common stock -- $.01 par value; authorized 20,000,000 shares,
issued and outstanding 5,668,221 and $3,868,221 shares,
respectively............................................... 56,682 38,682
Additional paid-in capital.................................... 1,996,128 1,996,128
Accumulated deficit........................................... (2,574,425) (2,490,051)
---------- ----------
STOCKHOLDERS' DEFICIENCY.............................. (521,615) (437,241)
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY........ $1,315,054 $1,486,238
---------- ----------
---------- ----------
</TABLE>
See Notes to Financial Statements
F-3
<PAGE>
SWISS NATURAL FOODS, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED FOUR-MONTH PERIOD ENDED
FEBRUARY 28, JUNE 30,
-------------------------- -------------------------
1998 1999 1998 1999
----------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net sales.............................. $ 2,324,189 $3,005,872 $ 917,433 $1,476,861
Cost of sales.......................... 1,941,074 2,001,701 604,291 849,397
----------- ---------- ---------- ----------
Gross profit........................... 383,115 1,004,171 313,142 627,464
----------- ---------- ---------- ----------
Expenses:
General and administrative........ 834,679 871,057 233,536 310,953
Selling and promotional........... 508,401 502,652 99,572 177,335
Product development............... 12,602 30,895 23,637 1,441
----------- ---------- ---------- ----------
1,355,682 1,404,604 356,745 489,729
----------- ---------- ---------- ----------
Income (loss) from operations.......... (972,567) (400,433) (43,603) 137,735
Other income........................... 23,036 11,079 4,291 5,949
Interest expense....................... (80,759) (50,062) (12,900) (59,310)
----------- ---------- ---------- ----------
Net income (loss)...................... $(1,030,290) $ (439,416) $ (52,212) $ 84,374
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
Income (loss) per common share --
basic................................ $ (.21) $ (.08) $ (.01) $ .01
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
Weighted-average number of common
shares outstanding -- basic.......... 4,891,002 5,668,221 5,668,221 5,668,221
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
</TABLE>
See Notes to Financial Statements
F-4
<PAGE>
SWISS NATURAL FOODS, INC.
STATEMENT OF STOCKHOLDERS' DEFICIENCY
YEARS ENDED FEBRUARY 28, 1998 AND 1999 AND
THE FOUR-MONTH PERIOD ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL
-------------------- --------------------- PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT TOTAL
--------- -------- ---------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at February 28, 1997... -- -- 4,712,449 $ 47,124 $ 845,466 $(1,104,719) $ (212,129)
Issuance of common stock
through private placement
transaction.................. -- -- 211,934 2,120 215,125 -- 217,245
Conversion of notes and
compensation payable into
common stock................. -- -- 743,838 7,438 840,537 -- 847,975
Net loss....................... -- -- -- -- -- (1,030,290) (1,030,290)
--------- -------- ---------- -------- ----------- ----------- -----------
Balance at February 28, 1998... -- -- 5,668,221 56,682 1,901,128 (2,135,009) (177,199)
Forgiveness of debt and
interest payable --
stockholder.................. -- -- -- -- 95,000 -- 95,000
Net loss....................... -- -- -- -- -- (439,416) (439,416)
--------- -------- ---------- -------- ----------- ----------- -----------
Balance at February 28, 1999... -- -- 5,668,221 56,682 1,996,128 (2,574,425) (521,615)
Exchange of 1,800,000 common
shares for 1,800,000
preferred shares
(unaudited).................. 1,800,000 $ 18,000 (1,800,000) (18,000) -- -- --
Net income (unaudited)......... -- -- -- -- -- 84,374 84,374
--------- -------- ---------- -------- ----------- ----------- -----------
Balance at June 30, 1999
(unaudited).................. 1,800,000 $ 18,000 3,868,221 $ 38,682 $1,996,128 $(2,490,051) $ (437,241)
--------- -------- ---------- -------- ----------- ----------- -----------
--------- -------- ---------- -------- ----------- ----------- -----------
</TABLE>
See Notes to Financial Statements
F-5
<PAGE>
SWISS NATURAL FOODS, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED FOUR-MONTH PERIOD ENDED
FEBRUARY 28, JUNE 30,
------------------------- ------------------------
1998 1999 1998 1999
----------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)........................... $(1,030,290) $ (439,416) $ (52,212) $ 84,374
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization............. 26,712 28,826 9,220 9,217
Amortization of debt placement fees....... -- 5,707 22,828
Accrued interest.......................... 80,759 37,381 12,900 6,100
Changes in operating assets and
liabilities:
Decrease in funds held in escrow....... 919,599 -- -- --
(Increase) decrease in accounts
receivable........................... 94,090 (179,880) (141,780) (165,533)
Increase in inventory.................. (38,936) (118,819) (92,926) (76,029)
Increase in other current assets....... -- (9,512) (10,522) (22,252)
(Increase) decrease in other assets.... (15,459) 16,093 16,093 (26,150)
Increase in accounts payable and
accrued expenses..................... 226,334 319,466 107,474 80,710
Decrease in compensation payable....... (74,607) -- -- --
----------- ---------- ---------- ----------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES................. 188,202 (340,154) (151,753) (86,735)
----------- ---------- ---------- ----------
Cash used in investing activity -- purchases
of property and equipment................. (37,709) (38,737) (3,579) (42,982)
----------- ---------- ---------- ----------
Cash flows from financing activities:
Proceeds from issuance of convertible
subordinated debentures................ -- 757,500 -- --
Payment for debt placement fees........... -- (136,968) -- --
Deferred offering costs................... -- -- -- (40,050)
Net proceeds from issuance of common
stock.................................. 217,245 -- -- --
Payments of notes payable --
stockholders........................... (100,872) (75,000) -- --
----------- ---------- ---------- ----------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES................. 116,373 545,532 -- (40,050)
----------- ---------- ---------- ----------
Net increase (decrease) in cash and cash
equivalents............................... 266,866 166,641 (155,332) (169,767)
Cash and cash equivalents at beginning of
period.................................... 97,222 364,088 364,088 530,729
----------- ---------- ---------- ----------
Cash and cash equivalents at end of
period.................................... $ 364,088 $ 530,729 $ 208,756 $ 360,962
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Income taxes........................... $ 661 $ 1,150 $ 730 $ 380
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
Interest to stockholders.................... $ 50,874 $ -0- $ -0- $ -0-
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING
ACTIVITIES:
Forgiveness of debt and interest payable --
stockholder............................... $ -0- $ 95,000 $ -0- $ -0-
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
</TABLE>
See Notes to Financial Statements
F-6
<PAGE>
SWISS NATURAL FOODS, INC.
NOTES TO FINANCIAL STATEMENTS
(ALL INFORMATION PERTAINING TO THE FOUR-MONTH PERIODS ENDED
JUNE 30, 1998 AND 1999 IS UNAUDITED)
1. PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES:
Swiss Natural Foods, Inc. (the "Company") was incorporated on April 22, 1993 in
the State of Delaware. The Company's principal business activity involves the
production and sale of refreshment drinks (the "Product").
The financial information included herein as of June 30, 1999 and for the
four-month periods ended June 30, 1998 and 1999 is unaudited. Such information
reflects all adjustments (consisting of only normal recurring adjustments) which
are, in the opinion of management, necessary for a fair presentation of the
financial position, results of operations and cash flows of the interim periods.
The results of operations for the four-month periods ended June 30, 1998 and
1999 are not necessarily indicative of the results for the full years.
The Company uses one independent outside bottler to handle all of its production
needs. The Company sells the Product directly to independent distributors who in
turn distribute the Product to the outside market, primarily in the New York,
New Jersey and Connecticut Tri-State Area. The Company also supplies the Product
under a private label program to a nationally franchised restaurant chain
comprised of approximately 750 restaurants. For the years ended February 28,
1998 and 1999, 83% and 81%, respectively, of the Company's sales, were to one
customer. For the four-month periods ended June 30, 1998 and 1999, 82% and 63%,
respectively, of the Company's sales were to one customer.
Inventory is stated at the lower of cost, determined by the first-in, first-out
method, or market.
Depreciation of property and equipment is being provided for by the
straight-line method over the estimated useful lives of the assets.
Trademarks are being amortized by the straight-line method over a period of 60
months.
Cash equivalents consist of a money market account.
The Company maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Company has not experienced any losses in
such accounts. The Company believes it is not exposed to any significant credit
risk on cash.
Sales are recorded as the product is shipped.
Costs incurred for advertising are expensed as incurred and included in selling
and promotional expenses in the accompanying statement of operations.
Advertising expenses amounted to $92,376 and $11,792 for the years ended
February 28, 1998 and 1999, respectively. For the four-month periods ended June
30, 1998 and 1999, advertising expenses amounted to $142 and $1,145,
respectively.
Deferred offering costs represent costs attributable to a proposed initial
public offering (the "IPO"). The Company intends to offset these costs against
the proceeds from this transaction. In the event that such offering is not
completed, these costs will be charged to operations.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates by management. Actual
results could differ from these estimates.
Basic income (loss) per share is computed by dividing net income (loss) by the
weighted-average number of common shares outstanding during the period. Shares
to be issued upon the conversion of the subordinated debentures are not included
in the computation of loss per share as their effect is antidilutive for all
periods presented.
F-7
<PAGE>
SWISS NATURAL FOODS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(ALL INFORMATION PERTAINING TO THE FOUR-MONTH PERIODS ENDED
JUNE 30, 1998 AND 1999 IS UNAUDITED)
Management does not believe that any recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect on the
accompanying financial statements.
2. INVENTORY:
Inventory consists of the following:
<TABLE>
<CAPTION>
FEBRUARY 28, JUNE 30,
1999 1999
------------ ------------
<S> <C> <C>
(UNAUDITED)
Raw materials.................................................. $124,570 $107,717
Finished goods................................................. 208,039 300,921
-------- --------
$332,609 $408,638
-------- --------
-------- --------
</TABLE>
3. PROPERTY AND EQUIPMENT:
Property and equipment, at cost, consists of the following:
<TABLE>
<CAPTION>
FEBRUARY 28, JUNE 30, ESTIMATED
1999 1999 USEFUL LIFE
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Machinery and equipment......................... $116,014 $157,184 5 years
Office equipment................................ 20,378 22,190 5 years
Leasehold improvements.......................... 10,185 10,185 5 years
Furniture and fixtures.......................... 4,965 4,965 5 years
-------- -------- ---------
151,542 194,524
Less accumulated depreciation and
amortization.................................. 75,028 83,249
-------- --------
$ 76,514 $111,275
-------- --------
-------- --------
</TABLE>
4. DEBT AND INTEREST PAYABLE -- STOCKHOLDER:
Debt and interest payable -- stockholder consist of two notes payable to a
stockholder, one in the principal amount of $152,500 on which interest accrues
at 12% per annum. The other is the principal amount of $169,455 which bears no
interest. Both notes payable are due the earlier of February 10, 2000 or as
defined in the agreements.
5. PRIVATE PLACEMENTS:
On January 29, 1999, the Company issued convertible subordinated debentures (the
"Debentures"), in the amount of $757,500, that mature in February 2001. Interest
is payable on the principal amount at 12% per annum, payable in arrears, on the
last day of each calendar year. The Debentures may be redeemed, at the option of
the Company, in whole or part at anytime, at a price equal to the principal
amount plus any unpaid accrued interest. The holders of the Debentures may
convert the principal amount into common stock of the Company, at any time prior
to maturity or redemption, at a price of $1.50 per share. In connection with the
issuance of these Debentures, the Company incurred debt placement fees of
$136,968 which are being amortized on the straight-line basis over the term of
the Debentures. As of February 28, 1999 and for the four-month period ended June
30, 1999, $5,707 and $22,828, respectively, of amortization was recorded as
interest expense in the accompanying statement
F-8
<PAGE>
SWISS NATURAL FOODS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(ALL INFORMATION PERTAINING TO THE FOUR-MONTH PERIODS ENDED
JUNE 30, 1998 AND 1999 IS UNAUDITED)
of operations. The payment of the Debentures is subordinated to any bank,
financial institution engaged in lending money, insurance company or similar
institution.
During the year ended February 28, 1998, as part of a private placement, the
Company completed the sale of 211,934 shares of common stock. The Company
received net proceeds of $217,245 after incurring fees of $40,332 associated
with raising these funds. These costs have been shown as a reduction of
additional paid-in capital.
6. COMPENSATION PAYABLE:
For the year ended February 28, 1997 and prior, a former employee/stockholder of
the Company has not been paid his entire salary. The Company has accrued
compensation payable, in the amount of $101,092. The Company has an informal
arrangement whereby this individual has agreed not to demand repayment before
one year from the date of the financial statements.
7. INCOME TAXES:
At February 28, 1999, the Company had net operating loss carryforwards for both
financial reporting and income tax purposes of approximately $2,165,000, which
are available to offset future federal, state and local taxable income. The
carryforwards resulted in a deferred tax asset of approximately $736,000 at
February 28, 1999 for which the Company has provided a full valuation allowance
due to the uncertainty about future realization of this tax benefit. Utilization
of the net operating loss carryforwards may be limited based upon the ownership
changes relating to the IPO.
8. INTEREST EXPENSE:
Interest expense consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED FOUR-MONTH PERIOD ENDED
FEBRUARY 28, JUNE 30,
----------------------- -----------------------
1998 1999 1998 1999
------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Debentures.............................. -- $ 6,973 -- $30,382
Stockholder............................. $80,759 37,382 $12,900 6,100
Amortization of debt placement fees..... -- 5,707 -- 22,828
------- ------- ------- -------
$80,759 $50,062 $12,900 $59,310
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
9. WARRANTS:
The Company has 246,667 warrants outstanding to purchase an equal amount of the
Company's common stock at an exercise price of $1.50 per share. These warrants
are exercisable at the earlier of June 14, 2002, subject to antidilution
provisions, or 10 days after the date on which the Company mails to the
warrantholders a copy of the preliminary prospectus included in a Registration
Statement filed with the Securities and Exchange Commission under the Securities
Act of 1933.
F-9
<PAGE>
SWISS NATURAL FOODS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(ALL INFORMATION PERTAINING TO THE FOUR-MONTH PERIODS ENDED
JUNE 30, 1998 AND 1999 IS UNAUDITED)
10. COMMITMENTS:
In the normal course of business, the Company may from time to time have
commitments to purchase preprinted custom packaging materials from certain
vendors. At February 28, 1999, these commitments totaled approximately $65,000.
11. RELATED PARTY TRANSACTIONS:
Included in professional fees and costs associated with the private placements
are legal fees paid to a relative of one of the principal stockholders. For the
years ended February 28, 1998 and 1999, this amounted to approximately $30,000
and $80,000, respectively. Of the $80,000 paid during the year ended February
28, 1999, $50,000 relates to the private placements and is included in debt
placement fees on the balance sheet. For both of the four-month periods ended
June 30, 1998 and 1999, professional fees paid to this individual amounted to
$10,000.
In addition, approximately $95,000 was paid to a stockholder for professional
services rendered during each of the years ended February 28, 1998 and 1999. For
each of the four-month periods ended June 30, 1998 and 1999, approximately
$32,000 was paid to this stockholder for professional services.
The Company occupies office space that is owned by the principal stockholder.
There were no amounts paid as rent expense for the years ended February 28, 1998
and 1999, nor for the four-month periods ended June 30, 1998 and 1999.
12. INITIAL PUBLIC OFFERING:
The Company is in the process of filing a registration statement on Form SB-2
under the Securities Act of 1933. The registration statement contemplates an
offering of 1,200,000 shares of common stock at an offering price of $5.00 and
1,200,000 warrants at an offering price of $.15 per warrant. Each warrant will
entitle the holder to purchase one share of common stock at an exercise price
equal to 125% of the offering price. The warrants will be exercisable for three
years commencing one year from the effective date of the prospectus.
13. SUBSEQUENT EVENTS:
As of March 1, 1999, the Company entered into an employment agreement with a key
employee and a consulting agreement with a stockholder, each for a three-year
period ending February 28, 2002. The employment agreement includes a base
compensation of $168,000 per annum with additional benefits as defined in the
agreement. The consulting agreement includes compensation of $99,750 per annum
with additional compensation as defined in the agreement. Both agreements
include a 10% increase in compensation during the second and third years.
Additionally, both agreements include a bonus of common stock purchase options
based upon the Company meeting certain earnings levels as defined in the
agreements.
In August 1999, effective as of June 30, 1999, several major stockholders
exchanged 1,800,000 shares of common stock for the same amount of Series A
Preferred Stock (the "Preferred Stock"). The Preferred Stock is nonredeemable,
assignable and carries rights to vote with the common stock on a
one-vote-per-share basis. The Preferred Stock will, upon liquidation,
participate pari passu with the common stock on an "as converted" basis. The
holders of the Preferred Stock are entitled to receive a quarterly dividend of
$.02 per share prior to any other dividends. The Preferred Stock is convertible
into common stock at the option of the holder at any time if the Company meets
certain earnings
F-10
<PAGE>
SWISS NATURAL FOODS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(ALL INFORMATION PERTAINING TO THE FOUR-MONTH PERIODS ENDED
JUNE 30, 1998 AND 1999 IS UNAUDITED)
levels and other criteria, as defined in the agreement, or at the earlier of
five years after the date of the IPO or December 31, 1999 if the IPO is not
completed.
The board of directors of the Company has approved the 1999 Stock Option Plan
(the "Plan"). All employees, officers, directors and consultants are eligible to
participate in the Plan.
The board of directors has increased the number of authorized shares of common
stock from 7,500,000 to 20,000,000 shares.
F-11
<PAGE>
YOU SHOULD RELY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT CONTAINED
IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS TO BUY, COMMON
STOCK AND WARRANTS ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED.
THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF
THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR OF ANY
SALE OF THE COMMON STOCK AND WARRANTS.
---------------------
DEALER PROSPECTUS DELIVERY OBLIGATION
UNTIL , 1999, ALL DEALERS EFFECTING TRANSACTIONS IN THESE SECURITIES,
WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER
A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SWISS NATURAL FOODS, INC.
1,200,000 Shares of Common Stock
and 1,200,000 Redeemable
Common Stock Purchase Warrants
---------------
PROSPECTUS
---------------
Comprehensive Capital
Corporation
August , 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Amended and Restated certificate of incorporation and by-laws of the
Registrant provide that the Registrant shall indemnify any person to the full
extent permitted by the Delaware General Corporation Law (the "GCL"). Section
145 of the GCL, relating to indemnification, is hereby incorporated herein by
reference.
In accordance with Section 102(a)(7) of the GCL, the certificate of
incorporation of the Registrant eliminates the personal liability of directors
to the Registrant or its stockholders for monetary damage for breach of
fiduciary duty as a director with certain limited exceptions set forth in
Section 102(a)(7) of the GCL.
The Registrant has entered into indemnification agreements with each of its
officers and directors, the form of which is filed as Exhibit 10.19, to which
reference is hereby made.
Reference is made to Section 9 of the underwriting agreement (Exhibit 1.1)
which provides for indemnification by the underwriter of the Registrant, its
officers and directors.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses (other than
underwriting discounts, consulting fees and the underwriters % non-accountable
expense allowance) payable by the Registrant in connection with the issuance and
distribution of the securities being registered. Except for the SEC and NASD
filing fees, all expenses have been estimated and are subject to future
contingencies.
<TABLE>
<S> <C>
SEC registration................................................... $ 4,831.00
NASD fee...........................................................
Nasdaq Listing Fees................................................
Legal fees and expenses............................................
Printing and engraving expenses....................................
Accounting fees and expenses.......................................
Blue sky fees and expenses.........................................
Transfer agent and registrar fees and expenses.....................
Miscellaneous......................................................
Total.............................................................. $
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Since June 30, 1996, the Registrant has issued unregistered securities in
the transactions described below:
In February and April, 1997, the Registrant completed a private placement
offering pursuant to which it issued 653,133 and 211,934 shares respectively, of
common stock to investors. The offering raised an aggregate of approximately
$1,300,000 from such investors. The Registrant issued the common stock pursuant
to the provisions of Rule 506 promulgated under the Securities Act of 1933, as
amended. Winchester Investment Securities, Inc. acted as the placement agent for
such offering and received a placement fee of 10% in connection with such
offering. Winchester, its designees and certain consultants also received
127,316 shares of common stock in connection with such offering.
In February, 1998, Dr. Ferrante, Mr. Paul and Mr. Brescio canceled all
indebtedness owed to them by the Registrant, including all indebtedness for
compensation owed to them by the Registrant, in exchange for shares of common
stock. At that time, the Registrant owed $601,737, $152,819 and $93,419 to Dr.
Ferrante, Mr. Paul and Mr. Brescio, respectively. Accordingly, in exchange for
the cancellation of indebtedness, the Registrant issued 527,840, 134,052 and
81,946 additional shares of its
II-1
<PAGE>
common stock to Dr. Ferrante, Mr. Paul and Mr. Brescio, respectively. The
Registrant issued the shares pursuant to the exemption afforded by Section 3(a)9
of the Securities Act, as amended.
In January, 1999 the Registrant issued $757,500 principal amount of
convertible debentures. The convertible debentures bear interest at a rate of
12% per annum, payable annually. The convertible debentures mature in February,
2001. The holder of any convertible debenture has the right, exercisable at any
time up to the maturity of the convertible debenture, at his option, to convert
such convertible debenture at the principal amount thereof (or any portion
thereof that is an integral multiple of $1,500) into shares of the common stock
at a price of $1.50 per share (except that, in the event such convertible
debenture shall be called for redemption, such right shall terminate on the
close of business on the fifth day immediately preceding the redemption date).
The Registrant issued the convertible debentures pursuant to the provisions of
Rule 506 promulgated under the Securities Act of 1933, as amended. Comprehensive
Capital Corporation acted as the placement agent for such offering and received
placement fees of $136,968 in connection with such offering.
As of June 30, 1999 the Registrant issued 1,800,000 shares of the Series A
Preferred Stock to Messrs. Ferrante, Paul and Brescio in exchange for the
delivery to the Registrant by such persons of 1,800,000 shares of common stock
held by them. The Registrant issued the Preferred Stock pursuant to the
exemption afforded by Section 3(a)9 of the Securities Act of 1933, as amended.
ITEM 27. EXHIBITS
<TABLE>
<C> <S>
*1.1 --Form of Underwriting Agreement.
*1.2 --Agreement Among Underwriters.
*1.3 --Selected Dealer Agreement.
*3.1 --Amended and Restated Certificate of Incorporation of the Registrant
*3.2 --Amended and Restated By-Laws of the Registrant.
*3.3 --Certificate of Designations for Series A Preferred Stock.
**4.1 --Specimen Certificate for Registrant's Common Stock
**4.2 --Form of Redeemable Common Stock Purchase Warrant.
*4.3 --Form of Underwriter's Stock Warrant
*4.4 --Form of Underwriter's Warrant to Purchase Warrants
**4.5 --Form of Convertible Subordinated Debenture
**5 --Opinion of Lehman & Eilen LLP
*10.1 --1999 Stock Option Plan of Registrant.
*10.2 --Employment Agreement dated as of March 1, 1999 between Registrant and Ralph
M. Ferrante
*10.3 --Consulting Agreement dated as of March 1, 1999 between Registrant and
Herbert M. Paul
*10.4 --Amended Agreement dated as of February 10, 1999 among the Registrant, A.
Donald McCulloch, Jr., Carolyn B. McCulloch, Ralph M. Ferrante and
Herbert M. Paul.
*10.5 --Promissory Note dated February 10, 1999 in the principal amount of $152,500
made by the Registrant in favor of A. Donald McCulloch, Jr. and Carolyn
B. McCulloch.
*10.6 --Promissory Note dated February 10, 1999 in the principal amount of $169,455
made by the Registrant in favor of A. Donald McCulloch, Jr. and Carolyn
B. McCulloch.
+*10.7 --Glass Supply Agreement between the Registrant and Consumers Packaging Inc.,
as amended.
*10.8 --Agreement of Confidentiality dated January 11, 1995 between the Registrant
and Consumers Glass Company.
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
*10.9 --Agreement dated August 7, 1997 between the Registrant and Comax
Manufacturing Corporation.
*10.10 --Confidentiality Agreement dated November 6, 1998 between the Registrant and
Comax Manufacturing Corporation.
*10.11 --Agreement dated October 31, 1997 by and between the Registrant and
Ritter/Sysco Foods, Inc.
*10.12 --Hold Harmless Agreement and Guaranty/Warranty of Product dated February 7,
1997 between the Registrant and Sysco Corporation.
*10.13 --Agreement dated January 30, 1998 between the Registrant and Sbarro, Inc.
+*10.14 --Beverage Supply Agreement dated March 29, 1999 between the Registrant and
Dunkin' Donuts MidAtlantic DCP, Inc.
+*10.15 --Agency Agreement dated May 5, 1998 between the Registrant and Bentonville
Associates Ventures, LLC, as amended.
*10.16 --Vendor Agreement between the Registrant and Wal-Mart Stores.
*10.17 --Form of Financial Consulting Agreement between the Registrant and the
Underwriter.
*10.18 --Form of Warrant Exercise Fee Agreement between the Registrant, the Warrant
Agent and the Underwriter.
*10.19 --Form of Indemnification Agreement between the Registrant and each officer
and director of the Registrant.
*23.1 --Consent of Goldstein Golub Kessler LLP
**23.2 --Consent of Lehman & Eilen LLP (contained in opinion of counsel set forth as
Exhibit 5).
24.1 --Power of Attorney (set forth on page II-5).
*27 --Financial Data Schedule.
</TABLE>
- ------------------
* Filed herewith.
** To be filed by amendment
+ Confidential treatment has been granted with respect to the redacted portions
of this exhibit.
ITEM 28. UNDERTAKINGS.
(1) The undersigned Registrant hereby undertakes that it will:
(a) File, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act,
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
(b) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
II-3
<PAGE>
(c) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of this offering.
(2) The undersigned Registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreement certificates
in such denominations and registered in such names as required by the
underwriter to permit prompt delivery to each purchaser.
(3) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(4) The undersigned Registrant hereby undertakes that it will:
(a) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4), or 497(h)
under the Securities Act as part of this registration statement as of the time
it was declared effective.
(b) For determining any liability under the Securities Act, treat each post
effective amendment that contains a form of prospectus as a new registration
statement for the securities offered in the registration statement, and the
offering of such securities at that time as the initial bona fide offering of
those securities.
II-4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and has authorized this registration
statement or amendment thereto to be signed on its behalf by the undersigned,
whereunto duly authorized, in the City of Upper Grandview, State of New York on
the 19th day of August, 1999.
SWISS NATURAL FOODS, INC.
By: /s/ Ralph M. Ferrante
___________________________________
Ralph M. Ferrante
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Ralph M. Ferrante and Herbert Paul, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-
effective amendments) to this Registration Statement (or any other registration
statement for the same offering that is to be effective upon filing pursuant to
Rule 462(b) under the Securities Act), and to file the same, with all exhibits
thereto, and all documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully and to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof. This power of attorney may be executed in counterparts.
In accordance with the requirements of the Securities Act of 1933, this
registration statement or amendment thereto has been signed by the following
persons in the capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- ---------------------------- ----------------------
<C> <S> <C>
/s/ RALPH M. FERRANTE Chairman of the Board, Chief August 19, 1999
- ---------------------------------------- Executive Officer and
Ralph M. Ferrante Secretary
/s/ HERBERT PAUL President, Chief Financial August 19, 1999
- ---------------------------------------- Officer, (Principal
Herbert Paul Financial Officer
Principal Account Officer)
Assistant Secretary and
Director
/s/ JAMES P. MCCANN Director August 19, 1999
- ----------------------------------------
James P. McCann
</TABLE>
II-5
<PAGE>
EXHIBIT 1.1
Swiss Natural Foods, Inc.
1031 Route 9W
Grandview, New York 10960
UNDERWRITING AGREEMENT
Comprehensive Capital Corporation , 1999
1600 Stewart Avenue, Suite 405
Westbury, New York 11590
Gentlemen:
Swiss Natural Foods, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to Comprehensive Capital Corporation ("Comprehensive"
or the "Representative") and to each of the other underwriters named in Schedule
I hereto (the "Underwriters"), for each of whom you are acting as Representative
the following securities: (i) 1,200,000 shares of Common Stock (the "Shares") at
a public offering price of $5.00 per share; and (ii) 1,200,000 Common Stock
Purchase Warrants (the "Warrants") at a public offering price of $.15 per
Warrant.
Each Warrant shall entitle the holder thereof to purchase at a price of
$6.25 per share, one share of Common Stock for a period of three years
commencing one year from the effective date of the Registration Statement (the
"Effective Date") as declared by the Securities and Exchange Commission (the
"Commission"). Commencing one year after the Effective Date, the Company may
redeem the Warrants at any time upon at least 30 days prior written notice at a
price of $.05 per warrant, provided that the closing bid quotation of the Common
Stock on all 20 trading days ending on the tenth day prior to the day on which
the Company gives notice, has been at least 120% of the then effective exercise
price of the Warrants. The Warrant holders shall have the right to exercise
their Warrants until the close of business on the date fixed for their
redemption.
The 1,200,000 Shares and the 1,200,000 Warrants are hereinafter
sometimes referred to as the "Firm Common Stock," and the "Firm Warrants,"
respectively. The Firm Common Stock, and the Firm Warrants are sometimes
hereinafter referred to as the "Firm Securities." Upon the request of the
Representative, and as provided in Section 3 hereof, the "Selling Security
Holders" named herein in Schedule II will sell to the Underwriters up to a
maximum of 180,000 shares of Common Stock, and the Company will issue and sell
180,000 Warrants for the purpose of covering over-allotments. Such additional
shares of Common Stock and Warrants are hereinafter sometimes referred to as the
"Optional Common Stock" and the "Optional Warrants," respectively. The Optional
Common Stock and Optional Warrants are sometimes hereinafter referred to as the
"Optional Securities." Both the Firm Securities and the Optional Securities are
sometimes collectively referred
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<PAGE>
to herein as the "Securities." All of the securities which are the subject of
this Agreement are more fully described in the Prospectus of the Company
described below.
In the event that the Representative does not form an underwriting
group but decides to act as the sole Underwriter, then all references to
Comprehensive herein as Representative shall be deemed to be to it as such sole
Underwriter and Section 14 hereof shall be deemed deleted in its entirety.
The Company and the Selling Security Holders understand that the
Underwriters propose to make a public offering of the Securities as soon as the
Representative deems advisable after the Registration Statement hereinafter
referred to becomes effective. The Company and the Selling Security Holders
hereby each confirms its agreement with the Representative and the other
Underwriters as follows:
SECTION 1. Description of Securities. The Company's authorized and
outstanding capitalization when the public offering of securities contemplated
hereby is permitted to commence, under the Securities Act of 1933, as amended
(the "Act"), and at the Closing Date (hereinafter defined) and the terms of the
Warrants will be as set forth in the Prospectus (hereinafter defined) and
mutually agreed upon by the Company and the Representative.
SECTION 2. Representations and Warranties of the Company and the
Selling Security Holders. The Company hereby represents and warrants to, and
agrees with, the Underwriters as follows:
(a) A Registration Statement on Form SB-2 and amendments
thereto (No. 333- ) with respect to the Securities, including a form of
prospectus relating thereto, copies of which have been previously delivered to
you, has been prepared by the Company in conformity with the requirements of the
Act, and the rules and regulations (the "Rules and Regulations") of the
Commission thereunder, and has been filed with the Commission under the Act. The
Company, subject to the provisions of Section 6(a) hereof, may file one or more
amendments to such Registration Statement and Prospectus. The Underwriters will
receive copies of each such amendment.
The Effective Date of the Registration Statement represents the date
that the public offering of the Securities as contemplated by this Agreement is
therefore authorized to commence. The Registration Statement and Prospectus, as
finally amended and revised immediately prior to the Effective Date, are herein
called respectively the "Registration Statement" and the "Prospectus." If,
however, a prospectus is filed by the Company pursuant to Rule 424(b) of the
Rules and Regulations which differs from the Prospectus, the term "Prospectus"
shall also include the prospectus filed pursuant to Rule 424(b).
(b) The Registration Statement (and Prospectus), at the time
it becomes effective under the Act, (as thereafter amended or as supplemented if
the Company shall have filed with the Commission an amendment or supplement),
and, with respect to all
2
<PAGE>
such documents, on the Closing Date (hereinafter defined), will in all material
respects comply with the provisions of the Act and the Rules and Regulations,
and will not contain an untrue statement of a material fact and will not omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that none of the representations
and warranties contained in this subsection (b) shall extend to the Underwriters
in respect of any statements in or omissions from the Registration Statement
and/or the Prospectus, based upon information furnished in writing to the
Company by the Underwriters specifically for use in connection with the
preparation thereof.
(c) The Company has been duly incorporated and is now, and on
the Closing Date will be, validly existing as a corporation in good standing
under the laws of the State of Delaware, having all required corporate power and
authority to own its properties and conduct its business as described in the
Prospectus. The Company is now, and on the Closing Date will be, duly qualified
to do business as a foreign corporation in good standing in all of the
jurisdictions in which it conducts its business or the character or location of
its properties requires such qualifications except where the failure to so
qualify would not materially adversely affect the Company's business, properties
or financial condition. The Company has no subsidiaries, except as are set forth
in the Prospectus.
(d) The financial statements of the Company included in the
Registration Statement and Prospectus present fairly the financial position and
results of operations and changes in financial condition of the Company at the
respective dates and for the respective periods to which they apply; and such
financial statements have been prepared in conformity with generally accepted
accounting principles, consistently applied throughout the periods involved, and
are in accordance with the books and records of the Company.
(e) The Company's auditors, Goldstein,Golub & Kessler, who
have given their report on certain financial statements which are included as a
part of the Registration Statement and the Prospectus, are independent public
accountants as required under the Act and the Rules and Regulations.
(f) Subsequent to the respective dates as of which information
is given in the Prospectus and prior to the Closing Date and, except as set
forth in or contemplated in the Prospectus, (i) the Company has not incurred,
nor will it incur, any material liabilities or obligations, direct or
contingent, nor has it, nor will it have entered into any material transactions,
in each case not in the ordinary course of business; (ii) there has not been,
and will not have been, any material change in the Company's certificate of
incorporation or in its capital stock or funded debt; and (iii) there has not
been, and will not have been, any material adverse change in the business, net
worth or properties or condition (financial or otherwise) of the Company whether
or not arising from transactions in the ordinary course of business.
3
<PAGE>
(g) Except as otherwise set forth in the Prospectus, the real
and personal properties of the Company as shown in the Prospectus and
Registration Statement to be owned by the Company are owned by the Company by
good and marketable title free and clear of all liens and encumbrances, except
those (i) specifically referred to in the Prospectus, which do not materially
adversely affect the use or value of such assets, (ii) for current taxes not now
due, or (iii) are held by the Company by valid leases, none of which is in
default. Except as disclosed in the Prospectus and Registration Statement, the
Company in all material respects has full right and licenses, permits and
governmental authorizations required to maintain and operate its business and
properties as the same are now operated and, to its best knowledge, none of the
activities or business of the Company is in material violation of, or causes the
Company to violate any laws, ordinances and regulations applicable thereto, the
violation of which would have a material adverse impact on the condition
(financial or otherwise), business, properties or net worth of the Company.
(h) The Company has no material contingent obligations, nor
are its properties or business subject to any material risks, which may be
reasonably anticipated, which are not disclosed in the Prospectus.
(i) Except as disclosed in the Prospectus and Registration
Statement, there are no material actions, suits or proceedings at law or in
equity of a material nature pending, or to the Company's knowledge, threatened
against the Company which are not adequately covered by insurance, which might
result in a material adverse change in the condition (financial or otherwise),
properties or net worth of the Company, and there are no proceedings pending or,
to the knowledge of the Company, threatened against the Company before or by any
federal or state commission, regulatory body, or administrative agency or other
governmental body, wherein an unfavorable ruling, decision or finding would
materially adversely affect the business, properties or net worth or financial
condition or income of the Company, which are not disclosed in the Prospectus.
(j) All of the outstanding shares of Common Stock are duly
authorized and validly issued and outstanding, fully paid, non-assessable, and
do not have any and were not issued in violation of any preemptive rights. All
of the Common Stock as described in the Prospectus when paid for shall be duly
authorized and validly issued and outstanding, fully paid, non-assessable, and
will not have any and will not be issued in violation of any preemptive rights.
The Common Stock issuable upon exercise of the Warrants when issued and paid for
in accordance with the Warrant Agreement, shall be duly authorized and validly
issued and outstanding, fully paid, non-assessable, and will not have any and
will not be issued in violation of any preemptive rights. The Common Stock and
Warrants will be delivered in accordance with this Agreement and the Warrant
Agreement filed as Exhibit __ to the Registration Statement between the Company
and its transfer agent. The Underwriters will receive good and marketable title
to the Securities purchased by them from the Company, free and clear of all
liens, encumbrances, claims, security interests, restrictions, stockholders'
agreements and voting trusts whatsoever. Except as set forth in the prospectus,
there are no outstanding shares of preferred stock and there are no outstanding
options, warrants, or other rights or commitments,
4
<PAGE>
providing for the issuance of any shares of any class of capital stock of the
Company, or any security convertible into, or exchangeable for, any shares of
any class of capital stock of the Company. All of the Securities of the Company
to which this Agreement relates conform to the statements relating to them that
are contained in the Registration Statement and Prospectus.
(k) The certificate or certificates required to be furnished
to the Underwriters pursuant to the provisions of Section 11 hereof will be true
and correct.
(l) The execution and delivery by the Company of this
Agreement has been duly authorized by all necessary corporate action and it is a
valid and binding obligation of the Company, enforceable against it in
accordance with its terms except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws pertaining to
creditors rights generally.
(m) Except as disclosed in the Prospectus, no default exists,
and no event has occurred which, with notice or lapse of time, or both, would
constitute a default in the due performance and observance of any material term,
covenant or condition by the Company or any other party, of any material
indenture, mortgage, deed of trust, note or any other material agreement or
instrument to which the Company is a party or by which it or its business or its
properties may be bound or affected, except as disclosed in the Prospectus. The
Company has full power and lawful authority to authorize, issue and sell the
Firm Securities and Optional Warrants to be sold by it hereunder on the terms
and conditions set forth herein and in the Registration Statement and in the
Prospectus. No consent, approval, authorization or other order of any regulatory
authority is required for such authorization, issue or sale, except as may be
required under the Act or state securities laws. The execution and delivery of
this Agreement, the consummation of the transactions herein contemplated, and
compliance with the terms hereof will not conflict with, or constitute a default
under any indenture, mortgage, deed of trust, note or any other agreement or
instrument to which the Company is now a party or by which it or its business or
its properties may be bound or materially affected; the certificate of
incorporation and any amendments thereto; the by-laws of the Company, as
amended; or to the best knowledge of the Company, any law, order, rule or
regulation, writ, injunction or decree of any government, governmental
instrumentality, or court, domestic or foreign, having jurisdiction over the
Company or its business or properties.
(n) No officer or director of the Company has taken, and each
officer and director has agreed that he will not take, directly or indirectly,
any action designed to stabilize or manipulate the price of the Common Stock or
the Warrants in the open market following the Closing Date or any other type of
action designed to, or that may reasonably be expected to cause or result in
such stabilization or manipulation, or that may reasonably be expected to
facilitate the initial sale, or resale, of any of the Securities which are the
subject of this Agreement.
(o) The Warrants to purchase Common Stock to be issued at
closing to the Representative (the Representative's Stock Warrants") and the
Warrants to purchase
5
<PAGE>
Warrants to be issued at closing to the Representative (the "Representative's
Warrants," which together with the Representative's Stock Warrants are
collectively hereinafter referred to as the "Representative's Securities") will
be, when issued and paid for, duly and validly authorized and executed by the
Company and will constitute valid and binding obligations of the Company,
legally enforceable in accordance with their terms (except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws pertaining to creditors rights generally), and the Company will have
duly authorized, reserved and set aside the shares of its Common Stock issuable
upon exercise of the Representative's Securities and underlying Warrants, and
such stock, when issued and paid for upon exercise of the Representative's
Securities and underlying Warrants in accordance with the provisions of the
Warrant Agreement will be duly authorized and validly issued, fully-paid and
non-assessable.
(p) All of the aforesaid representations, agreements, and
warranties shall survive delivery of, and payment for, the Securities.
The Selling Securities Holder represents and warrants to, and
agrees with the several Underwriters, as follows:
(i) There is no litigation, arbitration, claim, governmental
or other proceeding (formal or informal), or investigation before any court or
beneficiary, public body or board pending, threatened, or disclosed in the
Prospectus (or any basis therefor known to the Selling Security Holders) with
respect to the Optional Common Stock and the Selling Security Holders. The
Selling Security Holders are not in violation of, or in default with respect to,
any law, rule, regulation, order, judgment, or decree; nor are the Selling
Security Holders required to take any action in order to avoid such violation or
default.
(ii) The Selling Security Holders have all requisite power and
authority to execute, deliver, and perform this Agreement. This Agreement has
been duly executed and delivered by or on behalf of the Selling Security
Holders, is the legal, valid and binding obligation of the Selling Security
Holders, and is enforceable as to the Selling Security Holders in accordance
with its terms. No consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with, any federal,
state, local or other governmental authority or any court or other tribunal is
required by the Selling Security Holders for the execution, delivery or
performance of this Agreement (except filings under the Act which have been made
before the applicable Closing Date and such consents consisting only of consents
under "blue sky" or securities laws which have been obtained at or prior to the
date of this Agreement) by the Selling Security Holders. No consent of any party
to any contract, agreement, instrument, lease, license, indenture, mortgage,
deed of trust, note, arrangement or understanding to which the Selling Security
Holders are a party, or to which any of the Selling Security Holders' properties
or assets are subject, is required for the execution, delivery or performance of
this Agreement; and the execution, delivery and performance of this Agreement
will not violate, result in a breach of, conflict with, or (with or without the
giving of notice of the passage of time or both) entitle any party to terminate
or call a default under such contract, agreement, instrument, lease, license,
indenture, mortgage, deed of trust, note, arrangement or understanding,
6
<PAGE>
or violate, result in a breach of, or conflict with, any law, rule, regulation,
order, judgment or decree binding on the Selling Security Holders.
(iii) The Selling Security Holders have good title to their
Optional Common Stock to be sold by them pursuant to this Agreement, free and
clear or all liens, security interests, pledges, charges, encumbrances,
stockholders' agreements and voting trusts.
(iv) Neither the Selling Security Holders nor any of the
Selling Security Holders' affiliates (as defined in the Regulations) have taken
or will take, directly or indirectly, prior to the termination of the
underwriting syndicate contemplated by this Agreement, any action designed to
stabilize or manipulate the price of the Securities of the Company, or which has
caused or resulted in, or which might in the future reasonably be expected to
cause or result in, stabilization or manipulation of the price of the
securities, to facilitate the sale or resale of any of the Selling Security
Holder Optional Common Stock.
(v) All information furnished or to be furnished to the
Company by or on behalf of the Selling Security Holders for use in connection
with the preparation of the Registration Statement and the Prospectus is true in
all respects and does not and will not include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(vi) Except as may be set forth in the Prospectus, the Selling
Security Holders have not incurred any liability for a fee, commission or other
compensation on account of the employment of a broker or finder in connection
with the transactions contemplated by this Agreement.
(vii) The Selling Security Holders have no knowledge that, and
do not believe that, any representation or warranty of the Company in Section 2
is incorrect.
(viii) The Selling Security Holders have not, directly or
indirectly: used any individual or corporate funds for unlawful contributions,
gifts, entertainment, or other unlawful expenses individual or relating to
political activity; made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or campaigns
from individual or corporate funds; violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or made any bribe, rebate, payoff,
influence payment, kickback, or other unlawful payment.
(ix) The Optional Common Stock to be sold by the Selling
Security Holders pursuant to this Agreement are duly and validly authorized and
issued, fully paid and non-assessable, and have not been issued and are not
owned or held in violation of any preemptive right of stockholders,
optionholders, warrant holders or other persons.
(x) No transaction has occurred between the Selling Security
Holders and the Company or any third party that is required to be described in
the Registration Statement or the Prospectus.
7
<PAGE>
SECTION 3. Issuance, Sale and Delivery of the Firm Securities, the
Optional Securities and the Representative's Warrants.
(a) Upon the basis of the representations, warranties,
covenants and agreements of the Company herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the several
Underwriters, and the Underwriters, severally and not jointly, agree to purchase
from the Company, the number of the Firm Securities set forth opposite the
respective names of the Underwriters in Schedule I hereto, plus any additional
Securities which such Underwriter may become obligated to purchase pursuant to
the provisions of Section 14 hereof.
The purchase price of the Common Stock and Warrants to be paid by the
several Underwriters shall be $4.50 and $.135, respectively (the initial public
offering price less a ten percent discount).
In addition, and upon the same basis, subject to the same terms and
conditions, the Selling Security Holders and the Company hereby grants to you
individually and not as Representative an option to purchase, but only for the
purpose of covering over-allotments, upon not less than two days' notice from
you, the Optional Common Stock and Optional Warrants, respectively, or any
portion thereof, at the same price per share of Common Stock, and/or Warrant as
that set forth in the preceding paragraph; provided that if any portion of the
optional warrants are so purchased, a corresponding portion of the optional
shares must be purchased as well. Notwithstanding anything contained herein to
the contrary, you individually and not as Representative are entitled to
purchase all or any part of the Optional Securities and are not obligated to
offer the Optional Securities to the other Underwriters. The Optional Securities
may be exercised at any time, and from time to time, thereafter within a period
of 45 calendar days following the Effective Date. The time(s) and date(s) (if
any) so designated for delivery and payment for the Optional Securities shall be
set forth in the notice to the Company. Such dates are herein defined as the
Additional Closing Date(s).
(b) Payment for the Firm Securities shall be made by certified
or official bank checks in New York Clearing House funds, payable to the order
of the Company, at the offices of the Representative at 1600 Stewart Avenue,
Suite 405, Westbury, NY 11590, or its clearing agent, or at such other place as
shall be agreed upon by the Representative and the Company, upon delivery of the
Firm Securities to the Representative for the respective accounts of the
Underwriters. In making payment to the Company, the Representative may first
deduct all sums due to it for the balance of the non-accountable expense
allowance and under the Financial Consulting Agreement (as hereinafter defined).
Such delivery and payment shall be made at 9:30 A.M., New York City Time on a T+
3 business days basis, which may be delayed by the Representative at its option
to a T+5 business days basis (unless postponed in accordance with the provisions
of Section 14 hereof) or at such other time as shall be agreed upon by the
Representative and the Company. The time and date of such delivery and payment
are hereby defined as the Closing Date. It is understood that each Underwriter
has authorized the Representative, for the account of such Underwriter, to
accept delivery of, receipt for, and make payment of the purchase price for, the
Firm Securities which it has agreed to purchase. Subsequently, each Underwriter
shall make payment and accept delivery of the Firm
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Securities from the Representative through the facilities of Depository Trust
Company ("DTC"); however, the Representative may, at its option, require payment
to be made outside of the facilities of DTC as provided for in the Agreement
Among Underwriters. In the event that the Closing is not through the facilities
of DTC, you individually, and not as Representative may (but shall not be
obligated to) make payment of the purchase price for the Firm Securities to be
purchased by any Underwriter whose check shall not have been received by the
Closing Date, for the account of such Underwriter, but any such payment shall
not relieve such Underwriter from its obligations hereunder.
(c) Payment for the Optional Securities shall be made at the
offices of the Representative in Westbury, New York, or its clearing agent or at
such other place as shall be designated by the Representative, in accordance
with the notice delivered to the Selling Security Holders and the Company
pursuant to Section 3(a) which shall be no later than five business days from
the expiration of the forty-five day option period.
(d) Certificates for the Firm Securities and for the Optional
Securities shall be registered in such name or names and in such authorized
denominations as the Representative may request in writing at least two business
days prior to the Closing Date, and the Additional Closing Date(s) (if any). The
Company and the Selling Security Holders shall permit the Representative to
examine and package said certificates for delivery at least one full business
day prior to the Closing Date and prior to the Additional Closing Date(s). The
Company shall not be obligated to sell or deliver any of the Firm Securities
except upon tender of payment by the Underwriters for all of the Firm Securities
agreed to be purchased by them hereunder. The Representative, however, shall
have the sole discretion to determine the number of Optional Securities, if any,
to be purchased.
(e) At the time of making payment for the Firm Securities, the
Company also hereby agrees to sell to the Representative, Representative's Stock
Warrants to purchase 120,000 shares of Common Stock at any time during a four
year period commencing one year after the Effective Date and Representative's
Warrants to purchase 120,000 Warrants at an aggregate purchase price of $100.
The Representative's Stock Warrants will be exercisable at a price of $7.25 per
share. The Representative's Warrants shall be exercisable at any time during a
four year period commencing one year after the Effective Date at a price of
$.2175 per Warrant, but in no event after the Termination Date of the public
Warrants. The Warrants underlying the Representative's Warrants shall be
identical in all respects to the Warrants sold to the public. From the Effective
Date and until one (1) year thereafter, such Representative Securities and
underlying securities may be transferred only to officers or partners of the
Representative and selling group members and their officers or partners.
SECTION 4. Public Offering. The several Underwriters agree, subject to
the terms and provisions of this Agreement, to offer the Common Stock, and
Warrants to the public as soon as practicable after the Effective Date, at the
initial offering price of $5.00 and $.15, respectively and upon the terms
described in the Prospectus. The Representative may, from time to time, decrease
the public offering price, after the initial
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<PAGE>
public offering, to such extent as the Representative may determine, however,
such decreases will not affect the price payable to the Company hereunder.
SECTION 5. Registration Statement and Prospectus. The Company will
furnish the Representative, without charge, two signed copies of the
Registration Statement and of each amendment thereto, including all exhibits
thereto and such amount of conformed copies of the Registration Statement and
Amendments as may be reasonably requested by the Representative for distribution
to each of the Underwriters and Selected Dealers.
The Company will furnish, at its expense, as many printed copies of a
Preliminary Prospectus and of the Prospectus as the Representative may request
for the purposes contemplated by this Agreement. If, while the Prospectus is
required to be delivered under the Act or the Rules and Regulations, any event
known to the Company relating to or affecting the Company shall occur which
should be set forth in a supplement to or an amendment of the Prospectus in
order to comply with the Act (or other applicable law) or with the Rules and
Regulations, the Company will forthwith prepare, furnish and deliver to the
Representative and to each of the other Underwriters and to others whose names
and addresses are designated by the Representative, in each case at the
Company's expense, a reasonable number of copies of such supplement or
supplements to or amendment or amendments of, the Prospectus.
The Company authorizes the Underwriters and the selected
dealers, if any, in connection with the distribution of the Securities and all
dealers to whom any of the Securities may be sold by the Underwriters, or by any
Selected Dealer, to use the Prospectus, as from time to time amended or
supplemented, in connection with the offering and sale of the Securities and in
accordance with the applicable provisions of the Act and the applicable Rules
and Regulations and applicable State Securities Laws.
SECTION 6. Covenants of the Company. The Company covenants and agrees
with each Underwriter that:
(a) After the date hereof, the Company will not at any time,
whether before or after the Effective Date, file any amendment to the
Registration Statement or the Prospectus, or any supplement to the Prospectus,
of which the Representative shall not previously have been advised and furnished
with a copy, or to which the Representative or the Underwriters' counsel, shall
have reasonably objected in writing on the ground that it is not in compliance
with the Act or the Rules and Regulations.
(b) The Company will use its best efforts to cause the
Registration Statement to become effective as promptly as reasonably practicable
and will advise the Representative, (i) when the Registration Statement shall
have become effective and when any amendment thereto shall have become
effective, and when any amendment of or supplement to the Prospectus shall be
filed with the Commission, (ii) when the Commission shall make request or
suggestion for any amendment to the Registration Statement or the Prospectus or
for additional information and the nature and substance thereof, and (iii) of
the issuance by the Commission of an order suspending the
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<PAGE>
effectiveness of the Registration Statement or of the initiation of any
proceedings for that purpose, and will use every reasonable effort to prevent
the issuance of such an order, or if such an order shall be issued, to obtain
the withdrawal thereof at the earliest possible moment.
(c) The Company will prepare and file with the Commission,
promptly upon the request of the Representative, such amendments, or supplements
to the Registration Statement or Prospectus, in form and substance satisfactory
to counsel to the Company, as in the reasonable opinion of Lester Morse P.C., as
counsel to the Underwriters, may be necessary or advisable in connection with
the offering or distribution of the Securities, and will use its best efforts to
cause the same to become effective as promptly as possible.
(d) The Company will, at its expense, when and as requested by
the Representative, supply all necessary documents, exhibits and information,
and execute all such applications, instruments and papers as may be required or
desirable, in the opinion of the Underwriters' counsel; to qualify the
Securities or such part thereof as the Representative may determine, for sale
under the so-called "Blue Sky" Laws of such states as the Representative shall
designate, and to continue such qualification in effect so long as required for
the purposes of the distribution of the Securities, provided, however, that the
Company shall not be required to qualify as a foreign corporation or to file a
consent to service of process in any state in any action other than one arising
out of the offering or sale of the Securities.
(e) The Company will, at its own expense, file and provide,
and continue to file and provide, such reports, financial statements and other
information as may be required by the Commission, or the proper public bodies of
the states in which the Securities may be qualified for sale, for so long as
required by applicable law, rule or regulation and will provide the
Representative with copies of all such registrations, filings and reports on a
timely basis.
(f) During the period of five years from the Effective Date,
the Company will deliver to the Underwriter a copy of each annual report of the
Company, and will deliver to the Underwriter (i) within 50 days after the end of
each of the Company's first three quarter-yearly fiscal periods, a balance sheet
of the Company as at the end of such quarter-yearly period, together with a
statement of its income and a statement of changes in its cash flow for such
period (Form 10-QSB), all in reasonable detail, signed by its principal
financial or accounting officer, (ii) within 105 days after the end of each
fiscal year, a balance sheet of the Company as at the end of such fiscal year,
together with a statement of its income and statement of changes in cash flow
for such fiscal year (Form 10-KSB), such balance sheet and statement of cash
flow for such fiscal year to be in complete detail and to be accompanied by a
certificate or report of independent public accountants, (who may be the regular
accountants for the Company), (iii) as soon as available a copy of every other
report (financial or other) mailed to the shareholders, and (iv) as soon as
available a copy of every report and financial statement furnished to or filed
with the Commission or with any securities exchange pursuant to requirements by
or
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<PAGE>
agreement with such exchange or the Commission pursuant to the Securities
Exchange Act of 1934, as amended, or any regulations of the Commission
thereunder. If the Company has one or more active subsidiaries, the financial
statements required by (i) and (ii) above shall be furnished on a consolidated
basis in respect of the Company and its subsidiaries. Separate financial
statements shall be furnished for each subsidiary, the accounts of which are not
so consolidated. The financial statements referred to in (ii) shall also be
furnished to all of the shareholders of the Company as soon as practicable after
the 105 days referred to therein.
(g) The Company represents that with respect to the
Securities, it will prepare and file a Registration Statement with the
Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934, as
amended, prior to the Effective Date with a request that such Registration
Statement will become effective on the first day following the Effective Date.
The Company understands that, to register, it must prepare and file with the
Commission a General Form of Registration of Securities (Form 8-A or Form 10).
In addition, the Company agrees to qualify its Securities for listing on the
NASDAQ System as Small-Cap Issues and the Boston Stock Exchange on the Effective
Date and will take all necessary and appropriate action so that any outstanding
Securities continue to be listed for trading in the NASDAQ System for at least
five years from the Effective Date provided the Company otherwise complies with
the prevailing maintenance requirements of NASDAQ System and the Boston Stock
Exchange. In addition, at such time as the Company qualifies for listing its
securities on the National Market System of NASDAQ, the Company will take all
steps necessary to have the Company's Securities thereof listed on the National
Market System of NASDAQ in lieu of listing as Small-Cap Issues or on the Boston
Stock Exchange. The Company shall comply with all periodic reporting and proxy
solicitation requirements imposed by the Commission pursuant to the 1934 Act,
and shall promptly furnish you with copies of all material filed with the
Commission pursuant to the 1934 Act or otherwise furnished to shareholders of
the Company.
(h) The Company will make generally available to its security
holders, as soon as practicable, but in no event later than 15 months after the
Effective Date, an earnings statement of the Company (which need not be audited)
in reasonable detail, covering a period of at least twelve months beginning
after the Effective Date, which earnings statement shall satisfy the provisions
of Section 11(a) of the Act.
(i) The Company shall, on the Effective Date, apply for
listing in Standard and Poor's Corporation Records (requesting coverage in the
Daily News Supplement) and Standard & Poor's Monthly Stock Guide and shall use
its best efforts to have the Company listed in such reports for a period of not
less than five (5) years from the Closing Date.
(j) Left Blank Intentionally
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(k) The Company shall employ the services of Goldstein, Golub
& Kessler LLP or such other auditing firm acceptable to the Representative in
connection with the preparation of the financial statements required to be
included in the Registration Statement and shall continue to appoint such
auditors or such other auditors as are reasonably acceptable to the
Representative for a period of three (3) years following the Effective Date of
the Registration Statement. The Company shall appoint
as transfer agent for the Shares and as Warrant Agent for
the Warrants.
(l) Within ninety (90) days subsequent to the Effective Date,
the Company will furnish "Key Man" Life Insurance in the amount of $1,000,000 on
the life of Dr. Ralph M. Ferrante with the Company as the beneficiary thereof
and the Company shall pay the annual premium therefor for a period of not less
than five years from the Effective Date. The Company will also enter into an
employment contract with Dr. Ferrante on terms satisfactory to the
Representative.
(m) The Company will for a period of five years at its
expense, shall cause its regularly engaged independent certified public
accountants to examine (but not audit) the Company's financial statements for
each of the first three (3) fiscal quarters prior to the announcement of
quarterly financial information, the filing of the Company's Form 10-QSB
quarterly report and the mailing of quarterly financial information to security
holders.
(n) Except for the Stock Option Plan described in the
Prospectus, for a period of two years after the date of this Prospectus, the
Company shall not file a Registration Statement on Form S-8 or any other
appopriate form to register shares underlying a stock option plan without the
prior written consent of the Representative.
(o) The Company, at its expense, shall retain the services of
Blue Sky Data Corp. or another company or legal counsel acceptable to the
Representative to provide the Underwriters with an after market blue sky survey
in those states which the Company's securities are eligible for sale. The
Company shall also pay the annual cost of providing updates to the Underwriters
for a period of five years or until the Company's Securities are listed on the
New York Stock Exchange, American Stock Exchange or NASDAQ National Market.
(p) As soon as practicable after the Closing Date, the Company
will deliver to the Representative and its counsel a total of three bound
volumes of copies of all documents relating to the public offering which is the
subject of this Agreement.
(q) The Company will at its cost for a period of three years
after the Effective Date, distribute an annual report to all stockholders
setting forth the results of operations and the financial position of the
Company. The Company will, at its cost, for
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<PAGE>
a period of one year after the Effective Date furnish the Representative at the
Company's sole cost with a duplicate copy of the daily transfer sheets prepared
by the Transfer Agent and copy of the weekly sheets prepared by Depository Trust
Company and a duplicate copy of a list of stockholders.
(r) After the Effective Date, the Company shall retain the
services of a financial public relations firm(s) reasonably satisfactory to the
Representative, and unrelated to or unassociated with the Representative. Such
firm shall be engaged no later than 30 days after the Closing of the public
offering and for a period of three years thereafter.
(s) The Company agrees that no Common or Preferred Stock with
super voting rights will be issued for a period of one year after the Effective
Date without the Representative's prior written consent.
SECTION 7. Expenses of the Company.
(a) The Company shall be responsible for and shall bear all of
its expenses directly and necessarily incurred in connection with the proposed
financing, including: (i) the preparation, printing and filing of the
Registration Statement and amendments thereto, including NASD and SEC filing
fees, preliminary and final Prospectus and the printing of the Underwriting
Agreement, the Agreement Among the Underwriters and the Selected Dealers'
Agreement, a Blue Sky Memorandum and material to be circulated to the
Underwriters by us; (ii) the issuance and delivery of certificates representing
the Securities, including original issue and transfer taxes, if any; (iii) the
qualifications of the Company's Securities (covered by the "firm commitment"
offering) under State Securities or Blue Sky Laws, including counsel fees of
Lester Morse P.C. relating thereto in the sum of Thirty-Five Thousand ($35,000)
Dollars plus disbursements relating to, but not limited to, long-distance
telephone calls, photocopying, messengers, excess postage, overnight mail and
courier services; (iv) the fees and disbursements of counsel for the Company and
the accountants for the Company; (v) costs of qualifying the Securities for
listing on NASDAQ and the Boston Stock Exchange and (vi) post closing tombstone
advertisements not to exceed $12,000. Upon the commencement of the necessary
state Blue Sky filings by our counsel, the Company shall supply him at his
request, all necessary state filing fees. In addition, the Company shall pay
Lester Morse P.C. $12,500 on or before the filing of the initial Registration
Statement as an advance toward the blue sky fees.
(b) In addition, the Company shall bear each of the following
costs: (i) investigative reports (such as Bishop's Reports) of the Company's
executive officers, directors and principal stockholders, as well as travel and
other reasonable due diligence expenses not to exceed $10,000 in the aggregate,
including without limitation, informational meetings and presentations in
connection with the offering; and (ii) otherwise unreimbursed postage, including
mailing of preliminary and final prospectuses incurred by or on behalf of the
Representative and the Underwriters in preparation for, or in connection with
the offering and sale and distribution of the Securities on an accountable
basis.
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<PAGE>
SECTION 8. Payment of Underwriters' Expenses.
On the Closing Date and Additional Closing Date(s) (if any) the Company
will pay to you an expense allowance equal to three (3%) percent of the total
gross proceeds derived from the public offering (including the sale by the
Company and/or the Selling Security Holders of the Optional Warrants and
Optional Common Stock, respectively), contemplated by this Agreement, $____ of
which has been paid in advance to the Representative, for the fees and
disbursements of counsel to the Underwriters and for costs of otherwise
unreimbursed advertising, traveling, postage, telephone and telegraph expenses
and other miscellaneous expenses incurred by or on behalf of the Representative
and the Underwriters in preparation for, or in connection with the offering and
sale and distribution of the Securities; and you shall not be obligated to
account to the Company for such disbursements and expenses. Further, in the
event that this Agreement is terminated pursuant to Section 12 hereof, the
Company will be obligated to reimburse the Representative on an accountable
basis for its reasonable out-of-pocket expenses incurred in connection
hereunder, less any amounts previously advanced.
SECTION 9. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act against any
and all losses, claims, damages and liabilities, joint or several (including any
reasonable investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they, or any of them, may become subject under the
Act, the Exchange Act or other Federal or state law or regulation, at common law
or otherwise, insofar as such losses, claims, damages or liabilities arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus, the Registration
Statement or the statement of a material fact contained in any preliminary
prospectus, the Registration Statement or the Prospectus or any amendment
thereof or supplement thereto, or arise out of or are based upon any omission or
alleged omission to state therein such fact required to be stated therein or
necessary to make such statements therein not misleading. The Selling Security
Holders agree to indemnify each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, against any and all losses, claims, damages and
liabilities, joint or several (including any reasonable investigation, legal and
other expenses incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claim asserted), to which they, or any
of them, may become subject under the Act, the Exchange Act or other Federal or
state law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities, joint or several (including any reasonable
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the Act, the
Exchange Act or other Federal or state law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities arise out of
or are based upon any untrue statement or alleged
15
<PAGE>
untrue statement of a material fact with respect to the Selling Security Holders
contained in any preliminary prospectus, the Registration Statement or the
Prospectus or any amendment thereof or supplement thereto (which amendments or
supplements are furnished to the Selling Security Holders), or which arise out
of or are based upon any omission or alleged omission to state therein such fact
required to be stated therein or necessary to make such statements therein not
misleading, but only with reference to information relating to the Selling
Security Holders furnished in writing to the Company by or on behalf of the
Selling Security Holders expressly for use in connection with the preparation of
the Registration Statement and Prospectus or any amendment thereof or supplement
thereto (which amendments or supplements are furnished to the Selling Security
Holders), or which arise out of or are based upon any omission or alleged
omission to state therein such fact required to be stated therein or necessary
to make such statements therein not misleading.
(b) Such indemnity shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) on account of any
losses, claims, damages or liabilities arising from the sale of the Securities
to any person by such Underwriter if such untrue statement or alleged untrue
statement or omission was made in such preliminary prospectus, the Registration
Statement or the Prospectus, or such amendment or supplement, in reliance upon
and in conformity with information furnished in writing to the Company by the
Representatives on behalf of any Underwriter specifically for use therein. The
obligations of the Selling Security Holders, pursuant to this Section 9(a) shall
be limited to an amount not exceeding the product of the Per Security Price to
Public of the Securities as set forth on the cover page of the Prospectus and
the number of Securities being sold by each of them. In no event shall the
indemnification agreement contained in this Section 9(a) inure to the benefit of
any Underwriter on account of any losses, claims, damages, liabilities or
actions arising from the sale of the Securities upon the public offering to any
person by such Underwriter if such losses, claims, damages, liabilities or
actions arise out of, or are based upon, a statement or omission or alleged
omission in a preliminary prospectus and if, in respect to such statement,
omission or alleged omission, the Prospectus differs in a material respect from
such preliminary prospectus and a copy of the Prospectus has not been sent or
given to such person at or prior to the confirmation of such sale to such
person. This indemnity agreement will be in addition to any liability which the
Company and the Selling Security Holders may otherwise have.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, each director of the Company, and each officer of the Company who
signs the Registration Statement and the Selling Security Holders, to the same
extent as the foregoing indemnity from the Company and the Selling Security
Holders to each Underwriter, but only insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which was made in any Preliminary
Prospectus, any Rule 430A Prospectus, the Registration Statement or the
Prospectus, or any amendment thereof or supplement thereto, which were made in
reliance upon and in conformity with information furnished in writing to the
Company by the Representatives on
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<PAGE>
behalf of any Underwriter for specific use therein; provided, however, that the
obligation of each Underwriter to indemnify the Company (including any
controlling person, director or officer thereof) and the Selling Security
Holders shall be limited to the net proceeds received by the Company and the
Selling Security Holders, respectively, from such Underwriter. For all purposes
of this Agreement, the amounts of the selling concession and reallowance set
forth in the Prospectus constitute the only information furnished in writing by
or on behalf of any Underwriter expressly for inclusion in any Preliminary
Prospectus, any Rule 430A Prospectus, the Registration Statement or the
Prospectus or any amendment or supplement thereto.
(d) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such action,
suit or proceeding, enclosing a copy of all papers served. No indemnification
provided for in Section 9(a) 9(b), or 9(c) shall be available to any party who
shall fail to give notice as provided in this Section 9(d) if the party to whom
notice was not given was unaware of the proceeding to which such notice would
have related and was prejudiced by the failure to give such notice but the
omission so to notify such indemnifying party of any such action, suit or
proceeding shall not relieve it from any liability that it may have to any
indemnified party for contribution or otherwise than under this Section. In case
any such action, suit or proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and the
approval by the indemnified party of such counsel, the indemnifying party shall
not be liable to such indemnified party for any legal or other expenses, except
as provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its counsel in any
such action, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the employment of counsel by such
indemnified party has been authorized in writing by the indemnifying parties,
(ii) the indemnified party shall have reasonably concluded that there may be a
conflict of interest between the indemnifying parties and the indemnified party
in the conduct of the defense of such action (in which case the indemnifying
parties shall not have the right to direct the defense of such action on behalf
of the indemnified party, or (iii) the indemnifying parties shall not have
employed counsel to assume the defense of such action within a reasonable time
after notice of the commencement thereof, in each of which cases the reasonable
fees and expenses of counsel shall be at the expense of the indemnifying
parties. An indemnifying party shall not be liable for any settlement of any
action, suit, proceeding or claim effected without its written consent.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Sections 9(a) and (b)
is due in accordance with
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its terms but for any reason is held to be unavailable from the Company, the
Selling Security Holders or the Underwriters, the Company, the Selling Security
Holders and the Underwriters shall contribute to the aggregate losses, claims,
damages and liabilities (including any investigation, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claims asserted, but after deducting any
contribution received by the Company from persons other than the Underwriters,
such as the Selling Security Holders, persons who control the company within the
meaning of the Act, officers of the Company who signed the Registration
Statement and directors of the Company, who may also be liable for contribution)
to which the Company and the Selling Security Holders and one or more of the
Underwriters may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Security Holders on
the one hand and the Underwriters on the other from the offering of the
Securities or, if such allocation is not permitted by applicable law or
indemnification is not available as a result of the indemnifying party not
having received notice as provided herein in such proportion as is appropriate
to reflect not only the relative benefits referred to above but also the
relative fault of the Company and the Selling Security Holders on the one hand
and the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant omissions which resulted
in such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, the Selling Security Holders and the Underwriters shall be deemed to be
in the same proportion as (x) the total proceeds from the Offering (net of
underwriting discounts but before deducting expenses) received by the Company or
the Selling Security Holders from the sale of the Securities, as set forth in
the table on the cover page of the Prospectus (but not taking into account the
use of the proceeds of such sale of Securities by the Company), bear to (y) the
underwriting discount received by the Underwriters, as set forth in the table on
the cover page of the Prospectus. The relative fault of the Company, the Selling
Security Holders and the Underwriters shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
related to information supplied by the Company, the Selling Security Holders or
the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Security Holders and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 9 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable consideration referred to above. Notwithstanding
the provisions of this Section 9, (i) in no case shall any Underwriter (except
as may be provided in the Agreement Among Underwriters) be liable or responsible
for any amount in excess of the underwriting discount applicable to the
Securities purchased by such Underwriter hereunder, (ii) in no case shall the
Selling Security Holders be liable or responsible for any amount in excess of
the product of the Per Security Price to Public of the Securities as set forth
on the cover page of the Prospectus and the number of Securities being sold by
each of them subject to the limitation expressed in Section 9(a), and (iii) the
Company shall be liable and responsible
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for any amount in excess of the underwriting discount and the amount referred to
in clause (ii) provided, however (i) that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 9, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act shall have the same rights to contribution as such
Underwriter, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to clauses (i), (ii) and (iii) in the immediately
preceding sentence of this Section 9. Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section, notify such party
or parties from whom contribution may be sought, but the omission so to notify
such party or parties from whom contribution may be sought shall not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have hereunder or otherwise than under this Section. No party
shall be liable for contribution with respect to any action, suit, proceeding or
claim settled without its written consent. The Underwriters' obligations to
contribute pursuant to this Section 9 are several in proportion to their
respective underwriting commitments and not joint.
SECTION 10. Effectiveness of Agreement. This Agreement shall become
effective (i) at 9:30 A.M., New York Time, on the first full business day after
the Effective Date, or (ii) at the time of the initial public offering by the
Underwriters of the Securities whichever shall first occur. The time of the
initial public offering by the Underwriters of the Securities for the purposes
of this Section 10, shall mean the time, after the Registration Statement
becomes effective, of the release by the Representative for publication of the
first newspaper advertisement which is subsequently published relating to the
Securities, or the time, after the Registration Statement becomes effective,
when the Securities are first released by the Representative for offering by the
Underwriters or dealers by letter or telegram, whichever shall first occur. The
Representative agrees to notify the Company immediately after it shall have
taken any action, by release or otherwise, whereby this Agreement shall have
become effective. This Agreement shall, nevertheless, become effective at such
time earlier than the time specified above, after the Effective Date, as the
Representative may determine by notice to the Company.
SECTION 11. Conditions of the Underwriters' Obligations. The
obligations of the several Underwriters to purchase and pay for the Securities
which the Underwriters have agreed to purchase hereunder are subject to: the
accuracy, as of the date hereof and as of the Closing Dates of all of the
representations and warranties of the Company and the Selling Security Holders
contained in this Agreement; the Company's and the Selling Security Holders'
compliance with, or performance of, all of its covenants, undertakings and
agreements contained in this Agreement that are required to be complied with or
performed on or prior to each of the Closing Dates and to the following
additional conditions:
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(a) On or prior to the Closing Date, no order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceeding for that purpose shall have been instituted or be pending or, to the
knowledge of the Company, shall be threatened by the Commission; any request for
additional information on the part of the Commission (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been complied
with to the satisfaction of the Commission; and neither the Registration
Statement nor any amendment thereto shall have been filed to which counsel to
the Underwriters shall have reasonably objected, in writing.
(b) The Representative shall not have disclosed in writing to
the Company that the Registration Statement or Prospectus or any amendment or
supplement thereto contains an untrue statement of a fact which, in the opinion
of counsel to the Underwriters, is material, or omits to state a fact which, in
the opinion of such counsel, is material and is required to be stated therein,
or is necessary to make the statements therein not misleading.
(c) Between the date hereof and the Closing Date, the Company
shall not have sustained any loss on account of fire, explosion, flood,
accident, calamity or other such cause, of such character as materially
adversely affects its business or property, whether or not such loss is covered
by insurance.
(d) Between the date hereof and the Closing Date, there shall
be no litigation instituted or threatened against the Company (or the Selling
Security Holders with respect to the Optional Common Stock), and there shall be
no proceeding instituted or threatened against the Company (or the Selling
Security Holders with respect to the Optional Common Stock) before or by any
federal or state commission, regulatory body or administrative agency or other
governmental body, domestic or foreign, wherein an unfavorable ruling, decision
or finding would materially adversely affect the business, licenses, permits,
operations or financial condition or income of the Company or the right of the
Selling Security Holders to deliver unencumbered title to the Underwriters for
the Optional Common Stock.
(e) Except as contemplated herein or as set forth in the
Registration Statement and Prospectus, during the period subsequent to the
Effective Date and prior to the Closing Date, (A) the Company shall have
conducted its business in the usual and ordinary manner as the same was being
conducted on the date of the filing of the initial Registration Statement and
(B) except in the ordinary course of its business, the Company shall not have
incurred any material liabilities or obligations (direct or contingent), or
disposed of any of its assets, or entered into any material transaction, and (C)
the Company shall not have suffered or experienced any material adverse change
in its business, affairs or in its condition, financial or otherwise. On the
Closing Date, the capital stock and surplus accounts of the Company shall be
substantially as great as at its last financial report without considering the
proceeds from the sale of the Securities except to the extent that any decrease
is disclosed in or contemplated by the Prospectus.
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(f) The authorization of the Securities, the Registration
Statement, the Prospectus and all corporate proceedings and other legal matters
incident thereto and to this Agreement, shall be reasonably satisfactory in all
respects to counsel to the Underwriters.
(g) The Company shall have furnished to the Representative the
opinions, dated the Closing Date, and Additional Closing Date(s), addressed to
you, of its counsel that:
(i) The Company has been duly incorporated and is a validly
existing corporation in good standing under the laws of the State of Delaware
with full corporate power and authority to own and operate its properties and to
carry on its business as set forth in the Registration Statement and Prospectus;
it has authorized and outstanding capital as set forth in the Registration
Statement and Prospectus; and the Company is duly licensed or qualified as a
foreign corporation in all jurisdictions in which by reason of maintaining an
office in such jurisdiction or by owning or leasing real property in such
jurisdiction it is required to be so licensed or qualified except where failure
to be so qualified or licensed would have no material adverse effect.
(ii) All of the outstanding Shares of Common Stock are duly
and validly issued and outstanding, fully paid, and non-assessable, and do not
have any, and were not issued in violation of any, preemptive rights. The
Company will have duly authorized, reserved and set aside shares of Common Stock
issuable upon exercise of the Warrants and any other outstanding options or
warrants and when issued in accordance with such terms contained in the
Prospectus, will be duly and validly authorized and issued, fully paid and
non-assessable.
(iii) All of the Securities of the Company to which this
Agreement relates conform to the statements relating to them that are contained
in the Registration Statement and Prospectus (excluding financial statements).
(iv) The Underwriters against payment therefor, will receive
good and marketable title to the Securities purchased by them from the Company
and the Selling Security Holders in accordance with the terms and provisions of
this Agreement.
(v) To the best of the knowledge of such counsel, except as
set forth in the Prospectus, there are no outstanding options, warrants, or
other rights, providing for the issuance of, and, no commitments, plans or
arrangements to issue, any shares of any class of capital stock of the Company,
or any security convertible into, or exchangeable for, any shares of any class
of capital stock of the Company.
(vi) To the best of such counsel's knowledge, no consents,
approvals, authorizations or orders of agencies, officers or other regulatory
authorities are necessary for the valid authorization, issuance or sale of the
Securities hereunder, except such as may be required under the Act or state
securities or blue sky laws.
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(vii) The Registration Statement has become effective under
the Act and, to the best of the knowledge of such counsel, no order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or contemplated
under the Act, and the Registration Statement and Prospectus, and each amendment
thereof and supplement thereto, comply as to form in all material respects with
the requirements of the Act and the Rules and Regulations (except that no
opinion need be expressed as to financial statements and financial data
contained in the Registration Statement or Prospectus), and in the course of the
preparation of the Registration Statement, nothing has come to the attention of
said counsel to cause them to believe that either the Registration Statement or
the Prospectus or any such amendment or supplement contains any untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and such
counsel is familiar with all contracts referred to in the Registration Statement
or in the Prospectus and such contracts are sufficiently summarized or disclosed
therein, or filed as exhibits thereto, as required, and such counsel does not
know of any other contracts required to be summarized or disclosed or filed; and
such counsel does not know of any legal or governmental proceedings pending or
threatened to which the Company is a party, or in which property of the Company
is the subject, of a character required to be disclosed in the Registration
Statement or the Prospectus which are not disclosed and properly described
therein.
(viii) The Representative's Securities to be issued to the
Representative hereunder will be, when issued against payment therefor duly and
validly authorized and executed by the Company and will constitute valid and
binding obligations of the Company, legally enforceable in accordance with their
terms (except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally), and the Company will have duly
authorized, reserved and set aside the shares of its Common Stock issuable upon
exercise of the Representative's Securities and underlying warrants, and such
stock, when issued and paid for upon exercise of the Representative's Securities
and underlying warrants in accordance with the provisions thereof, will be duly
and validly authorized and issued, fully-paid and non-assessable.
(ix) The Company holds by valid lease, its properties as shown
in the Prospectus, and is in all material respects complying with all laws,
ordinances and regulations applicable thereto.
(x) This Agreement has been duly authorized and executed by
the Company and the Selling Security Holders and is a valid and binding
agreement of the Company and the Selling Security Holders enforceable in
accordance with its terms subject to bankruptcy, insolvency, reorganization,
moratorium and other laws affecting creditors rights generally and except that
no opinion need be given with regard to the enforceability of Section 9 hereof
or the availability of equitable relief.
(xi) To the best knowledge of such counsel: (a) no default
exists, and no event has occurred which, with notice or lapse of time, or both,
would constitute a
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default in the due performance and observance of any material term, covenant or
condition by the Company or the Selling Security Holders, of any indenture,
mortgage, deed of trust, note or any other agreement or instrument to which the
Company or the Selling Security Holders are a party or by which it or its
business or its properties may be bound or affected, except where such default
would not have a material adverse effect on the business of the Company and
except as disclosed in the Prospectus; (b) the Selling Security Holders have
full power and legal authority to sell the Optional Common Stock to the
Underwriters free and clear of all liens and encumbrances; (c) the Company has
full power and lawful authority to authorize, issue and sell the Firm Securities
and Optional Warrants on the terms and conditions set forth herein and in the
Registration Statement and in the Prospectus; (d) no consent, approval,
authorization or other order of any regulatory authority is required for such
authorization, issue or sale, except as may be required under the Act or state
securities laws, clearance with the NASD and such other consent, approval,
authorization or order as has been obtained and is in full force and effect; and
(e) the execution and delivery of this Agreement, the consummation of the
transactions herein contemplated, and compliance with the terms hereof will not
conflict with, or constitute a default under, any material indenture, mortgage,
deed of trust, note or any other agreement or instrument to which the Company
and the Selling Security Holders are now a party or by which it or its business
or its properties may be bound or affected, the Certificate of Incorporation and
any amendments thereto, the by-laws of the Company, or any order, rule or
regulation, writ, injunction or decree of any government, governmental
instrumentality, or court, domestic or foreign, having jurisdiction over the
Company or the Selling Security Holders or its business or properties.
(xii) Except as disclosed in the Registration Statement and
Prospectus, to the best knowledge of such counsel, there are no material
actions, suits or proceedings at law or in equity of a material nature pending,
or to such counsel's knowledge, threatened against the Company or the Selling
Security Holders which are not adequately covered by insurance and there are no
proceedings pending or, to the knowledge of such counsel, threatened against the
Company or the Selling Security Holder before or by any federal or state
Commission, regulatory body, or administrative agency or other governmental
body, wherein an unfavorable ruling, decision or finding would materially and
adversely affect the business, operation or condition (financial or otherwise)
of the Company or the ability of Selling Security Holders to deliver
unencumbered title of the Optional Common Stock to the Underwriters, which are
not disclosed in the Prospectus.
Such opinion shall also cover such other matters incident to
the transactions contemplated by this Agreement as the Representative shall
reasonably request. In rendering such opinion, such counsel may rely upon
certificates of any officer of the Company or public officials as to matters of
fact.
(h) The Company shall have furnished to the Representative
certificates of the President or Chairman of the Board and the Secretary of the
Company, dated as of the Closing Date, and Additional Closing Date(s), to the
effect that:
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(i) Each of the representations and warranties of the Company
contained in Section 2 hereof are true and correct in all material respects at
and as of such Closing Date, and the Company has performed or complied with all
of its agreements, covenants and undertakings contained in this Agreement and
has performed or satisfied all the conditions contained in this Agreement on its
part to be performed or satisfied at the Closing Date;
(ii) The Registration Statement has become effective and no
order suspending the effectiveness of the Registration Statement has been
issued, and, to the best of the knowledge of the respective signers, no
proceeding for that purpose has been initiated or is threatened by the
Commission;
(iii) The respective signers have each carefully examined the
Registration Statement and the Prospectus and any amendments and supplements
thereto, and to the best of their knowledge the Registration Statement and the
Prospectus and any amendments and supplements thereto and all statements
contained therein are true and correct in all material respects, and neither the
Registration Statement nor the Prospectus nor any amendment or supplement
thereto includes any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading and, since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an amended or
supplemented Prospectus which has not been so set forth except changes which the
Registration Statement and Prospectus indicate might occur.
(iv) Except as set forth or contemplated in the Registration
Statement and Prospectus, since the respective dates as of which, or periods for
which, information is given in the Registration Statement and Prospectus and
prior to the date of such certificate (A) there has not been any material
adverse change, financial or otherwise, in the business, business prospects,
earnings, general affairs or condition (financial or otherwise), of the Company
(in each case whether or not arising in the ordinary course of business), and
(B) the Company has not incurred any liabilities, direct or contingent, or
entered into any transactions, otherwise than in the ordinary course of business
other than as referred to in the Registration Statement or Prospectus and except
changes which the Registration Statement and Prospectus indicate might occur.
(i) The Company and the Selling Security Holders shall have
furnished to the Representative on the Closing Date, such other certificates,
additional to those specifically mentioned herein, as the Representative may
have reasonably requested, as to: the accuracy and completeness of any statement
in the Registration Statement or the Prospectus, or in any amendment or
supplement thereto; the representations and warranties of the Company and the
Selling Security Holderrs herein; the performance by the Company and the Selling
Security Holders of its obligations hereunder; or the fulfillment of the
conditions concurrent and precedent to the obligations of the Underwriters
hereunder, which are required to be performed or fulfilled on or prior to the
Closing Date.
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(j) At the time this Agreement is executed, and on the Closing
Date you shall have received a letter from Goldstein, Golub & Kessler, addressed
to the Representative, as Representative of the Underwriters, and dated,
respectively, as of the date of this Agreement and as of the Closing Date and
Additional Closing Date as the case may be (based upon information not more than
five business days prior to such Effective Date, Closing Date and Additional
Closing Date as the case may be), in form and substance reasonably satisfactory
to the Representative, to the effect that:
(i) They are independent public accountants with respect to
the Company within the meaning of the Act and the applicable published Rules and
Regulations of the Commission;
(ii) In their opinion, the financial statements and related
schedules of the Company included in the Registration Statement and Prospectus
and covered by their reports comply as to form in all material respects with the
applicable accounting requirements of the Act and the published Rules and
Regulations of the Commission issued thereunder;
(iii) On the basis of limited procedures, not constituting an
audit, including a review of the latest interim unaudited financial statements
of the Company on the basis specified by the American Institute of Certified
Public Accountants for a review of interim financial information, a reading of
the minutes of meetings of the boards of directors, and stockholders of the
Company, inquiries of officials of the Company responsible for financial and
accounting matters and such other inquiries and procedures as may be specified
in such letter, nothing came to their attention which caused them to believe:
(A) that at the date of the latest balance sheet read by them
and at a subsequent specified date not more than five business days prior to the
date of such letter, there was any change in the capital stock or increase in
long-term debt of the Company as compared with amounts shown in the most recent
balance sheet included in the Prospectus, except for changes which the
Prospectus discloses have occurred or may occur or which are described in such
letter;
(B) that at the date of the latest balance sheet read by them
and at a subsequent specified date not more than five business days prior to the
date of such letter, there were any decreases, as compared with amounts shown in
the most recent balance sheet included in the Prospectus, in total assets, net
current assets or stockholder's equity of the Company except for decreases which
the Prospectus discloses have occurred or may occur or which are described in
such letter; or
(C) that for the period from the date of the most recent
financial statements in the Registration Statement to a subsequent specified
date not more than five business days prior to the date of such letter, there
were any decreases, as compared with the corresponding period of the preceding
year, in gross profit or the total or per share
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amounts of net income of the Company except for decreases which the Prospectus
discloses have occurred or may occur or which are described in such letter.
(iv) In addition to the audit referred to in their report
included in the Registration Statement and the Prospectus and the limited
procedures referred to in clause (iii) above, they have carried out certain
specified procedures, not constituting an audit, with respect to certain
amounts, percentages and financial information which are derived from the
general accounting records of the Company which appear in the Prospectus under
the captions "Summary Financial Data," "Capitalization", "Management",
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", "Certain Transactions", Summary of Financial Data", "Dilution" and
"Risk Factors," as well as such other financial information as may be specified
by the Representative, and that they have compared such amounts, percentages and
financial information with the accounting records of the Company and have found
them to be in agreement.
(k) Selling Security Holders shall furnish to the
Representative on the Closing Date and the Additional Closing Date(s), if any,
insofar as it applies to the Selling Security Holders, such other certificates,
additional to those specifically mentioned herein, as the Representative may
have reasonably requested, as to: the accuracy and completeness of any statement
in the Registration Statement or the Prospectus, or in any amendment or
supplement thereto; the representations and warranties of the Selling Security
Holders herein; the performance by the Selling Security Holders of its
obligations hereunder; or the fulfillment of the conditions concurrent and
precedent to the obligations of the Underwriters hereunder, which are required
to be performed or fulfilled on or prior to the Closing Date.
All the opinions, letters, certificates and evidence mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel to the Representative, whose approval shall not be
unreasonably withheld, conditioned or delayed.
If any of the conditions specified in this section shall not
have been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement and all obligations of the Underwriters hereunder may be terminated
and canceled by the Representative by notifying the Company and the Selling
Security Holders of such termination and cancellation in writing or by telegram
at any time prior to, or on, the Closing Date and any such termination and
cancellation shall be without liability of any party hereto to any other party,
except with respect to the provisions of Sections 7 and 8 hereof. The
Representative may, of course, waive, in writing, any conditions which have not
been fulfilled or extend the time for their fulfillment.
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SECTION 12. Termination.
(a) This Agreement may be terminated by the Representative by
written or telegraphic notice to the Company and the Selling Security Holders at
any time before it becomes effective pursuant to Section 10.
(b) This Agreement may be terminated by the Representative by
written or telegraphic notice to the Company and the Selling Security Holders,
at any time after it becomes effective, in the event that the Company, after
notice from the Representative and an opportunity to cure, shall have failed or
been unable to comply in material respects with any of the material terms,
conditions or provisions of this Agreement on the part of the Company to be
performed, complied with or fulfilled within the respective times herein
provided for, including without limitation Section 6(g) hereof, unless
compliance therewith or performance or satisfaction thereof shall have been
expressly waived by the Representative in writing. This Agreement may also be
terminated if there is any action, suit or proceeding, threatened or pending, at
law or equity against the Company, or by any federal, state or other commission,
board or agency wherein any unfavorable result or decision could materially
adversely affect the business, property, or financial condition of the Company
which was not disclosed in the Prospectus.
(c) This Agreement may be terminated by the Representative by
written or telegraphic notice to the Company at any time after it becomes
effective, if the offering of, or the sale of, or the payment for, or the
delivery of, the Securities is rendered impracticable because (i) additional
material governmental restriction, not in force and effect on the date hereof,
shall have been imposed upon trading in securities generally or minimum or
maximum prices shall have been generally established on the New York Stock
Exchange or trading in securities generally on such exchange shall have been
suspended or a general banking moratorium shall have been established by Federal
or New York State authorities or (ii) a war or other national calamity shall
have occurred involving the United States or (iii) the condition of the market
for securities in general shall have materially and adversely changed, or (iv)
the Company or its business or business prospects is materially adversely
affected so that it would be impractical to proceed with, or consummate, this
Agreement or the public offering of the Securities.
(d) Any termination of this Agreement pursuant to this Section
12 shall be without liability of any character (including, but not limited to,
loss of anticipated profits or consequential damages) on the part of any party
hereto, except that the Company shall remain obligated to pay the costs and
expenses provided to be paid by it specified in Sections 6, 7 and 8, to the
extent therein provided. In addition, the Representative shall account to the
Company for any advance and shall reimburse the Company for any portion of the
advance not expended for actual out-of-pocket expenses.
SECTION 13. Finder. The Company and the Underwriters mutually represent
that they know of no person who rendered any service in connection with the
introduction of the Company to the Underwriters and that they know of no claim
by anyone for a "finder's fee" or similar type of fee, in connection with the
public offering which is the subject of this
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Agreement. Each party hereby indemnifies the other against any such claims by
any person known to it, and not known to the other party hereto, who shall claim
to have rendered services in connection with the introduction of the Company to
the Underwriters and/or to have such a claim.
SECTION 14. Substitution of Underwriters.
(a) If one or more Underwriters default in its or their
obligations to purchase and pay for Securities hereunder and if the aggregate
amount of such Securities which all Underwriters so defaulting have agreed to
purchase does not exceed 10% of the aggregate number of Securities constituting
the Securities, the non-defaulting Underwriters shall have the right and shall
be obligated severally to purchase and pay for (in addition to the Securities
set forth opposite their names in Schedule I) the full amount of the Securities
agreed to be purchased by all such defaulting Underwriters and not so purchased,
in proportion to their respective commitments hereunder. In such event the
Representative, for the accounts of the several non-defaulting Underwriters, may
take up and pay for all or any part of such additional Securities to be
purchased by each such Underwriter under this subsection (a), and may postpone
the Closing Date to a time not exceeding seven full business days; or
(b) If one or more Underwriters (other than the
Representative) default in its or their obligations to purchase and pay for the
Securities hereunder and if the aggregate amount of such Securities which all
Underwriters so defaulting shall have agreed to purchase shall exceed 10% of the
aggregate number of Securities or if one or more Underwriters for any reason
permitted hereunder cancel its or their obligations to purchase and pay for
Securities hereunder, the non-canceling and non-defaulting Underwriters
(hereinafter called the "Remaining Underwriters") shall have the right, but
shall not be obligated to purchase such Securities in such proportion as may be
agreed among them, at the Closing Date. If the Remaining Underwriters do not
purchase and pay for such Securities at such Closing Date, the Closing Date
shall be postponed for 24 hours and the remaining Underwriters shall have the
right to purchase such Securities, or to substitute another person or persons to
purchase the same or both, at such postponed Closing Date. If purchasers shall
not have been found for such Securities by such postponed Closing Date, the
Closing Date shall be postponed for a further 24 hours and the Company shall
have the right to substitute another person or persons, satisfactory to you to
purchase such Securities at such second postponed Closing Date. If the Company
shall not have found such purchasers for such Securities by such second
postponed Closing Date, then this Agreement shall automatically terminate and
neither the Company, the Selling Security Holders nor the remaining Underwriters
(including the Representative) shall be under any obligation under this
Agreement (except that the Company shall remain liable to the extent provided in
Paragraph 7 hereof). As used in this Agreement, the term "Underwriter" includes
any person substituted for an Underwriter under this Section 14. Nothing in this
subparagraph (b) will relieve a defaulting Underwriter from its liability, if
any, to the other Underwriters for damages occasioned by its default hereunder
(and such damages shall be deemed to include, without limitation, all expenses
reasonably incurred by each Underwriter in connection with the proposed purchase
and sale of the Securities)
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or obligate any Underwriter to purchase or find purchasers for any Securities in
excess of those agreed to be purchased by such Underwriter under the terms of
Sections 3 and 14 hereof.
Notwithstanding anything contained herein to the contrary, no
provisions of this Section 14 or any other section of this Underwriting
Agreement are intended to permit an Underwriter to terminate its obligation to
purchase the Firm Securities (as such term is defined in this Underwriting
Agreement) from the Company based upon: (i) the occurrence of non-material
events affecting the Company or the securities market or (ii) the inability to
market the securities.
SECTION 15. Registration of the Representative's Securities and/or the
Underlying Securities. The Registration Statement filed with the Commission
shall register the Representative's Securities and underlying securities. The
Company agrees to maintain a current Registration Statement with respect to the
Representative's Securities and the underlying securities at the sole cost of
the Company until five years after the Effective Date. The Company may satisfy
this requirement by one or more post-effective amendments to the Registration
Statement or through the filing of a new Registration Statement.
SECTION 16. Other Agreements.
(a) Consulting Agreement. On the Effective Date, the Company will enter
into an agreement retaining the Representative as a financial consultant
pursuant to which the Representative shall receive a consulting fee in an amount
equal to two(2%) of the gross proceeds of this offering (including the
Over-Allotment Option) for services for two (2) years from the Effective Date,
payable in full in advance on the Closing Date, which shall include, but not be
limited to, advising the Company in connection with possible acquisition
opportunities, advising the Company regarding shareholder relations including
the preparation of the annual report and other releases, assisting in long-term
financial planning, advice in connection with corporate re-organizations and
expansion and capital structure, and other financial assistance.
(b) Warrant Solicitation Agreement. Commencing twelve months after the
Effective Date, the Company will pay the Representative as its Warrant
solicitation agent an amount equal to five percent (5%) of the aggregate
exercise price of each Warrant exercised of which a portion may be allowed to
the dealer who solicited the exercise (which may also be the Representative);
provided: (1) the market price of the Common Stock on the date the Warrant was
exercised was greater than the Warrant exercise price on that date; (2) exercise
of the Warrant was solicited by a member of the NASD and the NASD member is
designated in writing by the Warrant holder; (3) the Warrant was not held in a
discretionary account; (4) disclosure of compensation arrangements was made both
at the time of the offering and at the time of exercise of the Warrant; (5) the
solicitation of the exercise of the Warrant was not in violation of Regulation M
promulgated under the Securities Exchange Act of 1934; and (6) the Warrant
Holder acknowledges in writing that the Representative or one of the members of
the syndicate solicited the
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exercise of the Warrants. The Company agrees to pay over to the Representative
any fees due it within five business days after receipt by the Company of
Warrant proceeds. Within ten (10) days of the last day of each month commencing
one year from the Effective Date, the Company will instruct the Warrant Agent to
notify the Representative of each Warrant certificate which has been properly
completed and delivered for exercise by holders of Warrants during each such
month. The Company will instruct the Transfer Agent that the Representative may
at any time during business hours, at its expense, examine the records of the
Company and the Warrant Agent which relate to the exercise of the Warrants. It
is understood that this agreement is on an exclusive basis to solicit the
exercise of the Warrants and that the Company may not engage other
broker-dealers to solicit the exercise of Warrants without the consent of
Werbel-Roth Securities, Inc. It is understood that no solicitation fee will be
paid where the Warrant exercise was not solicited by Comprehensive or a
syndicate member.
(c) Finder's Fee: The Company agrees that if it shall within two (2)
years from the Effective Date, enter into any agreement of understanding with
any person or entity introduced by the Representative involving the following
originated by Representative (i) the sale of all or substantially all of the
assets and properties of the Company, (ii) the merger or consolidation of the
Company (other than a merger or consolidation effected for the purpose of
changing the Company's domicile) or (iii) the acquisition by the Company of the
assets or stock of another business entity, which agreement or understanding
thereafter consummated, whether or not during such two (2) year period, the
Company, upon such consummation, shall pay to the Representative an amount equal
to the following percentages of the consideration paid by the Company in
connection with such transaction:
5% of the first $1,000,000 or portion thereof, of such
consideration;
4% of the second $1,000,000 or portion thereof, of such
consideration; and
3% of such consideration in excess of the first $2,000,000 of
such consideration.
The fees payable to the Representative will be in the same
form of consideration as that paid by or to the Company, as the case may be, in
any such transactions.
(d) Designation of Non-voting Advisor to the Board: The Company agrees
that unless waived by us, that the Representative shall have the right to
designate a non-voting advisor to the Board acceptable to the Company who
resides in the New York metropolitan area for a period of two years after the
Effective Date. Said designee shall attend meetings of the Board and shall be
entitled to receive reimbursement for all approved reasonable costs incurred in
attending such meetings, including but not limited to, food, lodging and
transportation. In the event the Company maintains a liability insurance policy
affording coverage for the act of its officers and/or directors, it will agree,
to the extent permitted under such policy, to include each of the Representative
and its designee as an insured under such policy.
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SECTION 17. Lock-Up Agreement.
Except for the 180,000 shares subject to the Optional Common Stock
which are held by Selling Security Holders and the possible issuance of Common
Stock to certain noteholders, the holders of 100% of the outstanding shares of
Common Stock and warrants/options convertible into Common Stock as of the
Effective Date, have agreed to enter into certain Lock-Up Agreements as
described in the Prospectus.
SECTION 18. Notice. Except as otherwise expressly provided in
this Agreement, (A) whenever notice is required by the provisions hereof to be
given to the Company, such notice shall be given in writing, by certified mail,
return receipt requested, addressed to the Company at the address set forth
herein on the first page, copy to Lehman & Eilen LLP, Suite 505, 50 Charles
Lindberg Boulevard, Uniondale, NY 11553; (B) whenever notice is required by the
provisions hereof to be given to the Underwriters, such notice shall be in
writing addressed to the Representative at Comprehensive Capital Corporation;
and (C) whenever notice is required by the provisions hereof to be given to the
Selling Security Holders, such notice shall be given in writing, by certified
mail, return receipt requested, addressed to the Selling Security Holders at the
addresses set forth in Schedule II. forth herein on the first page copy to
Steven Morse, Esq., Lester Morse P.C., Suite 420, 111 Great Neck Road, Great
Neck, NY 11021. Any party may change the address for notices to be sent by
giving written notice to the other persons.
SECTION 19. Representations and Agreements to Survive
Delivery. Except as the context otherwise requires, all representations,
warranties, covenants, and agreements contained in this Agreement shall be
deemed to be representations, warranties, covenants, and agreements as at the
date hereof and as at the Closing Date and the Additional Closing Date(s), and
all representations, warranties, covenants, and agreements of the Selling
Security Holders, the several Underwriters and the Company, shall remain
operative and in full force and effect regardless of any investigation made by
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or on behalf of any of the Underwriters or any of their controlling persons, and
shall survive any termination of this Agreement (whensoever made) and/or
delivery of the Firm Shares and the Optional Shares to the several Underwriters.
SECTION 21. Miscellaneous. This Agreement is made solely for the
benefit of the Selling Security Holders, the Underwriters and the Company and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successor" or the
term "successors and assigns" as used in this Agreement shall not include any
purchaser, as such, of any of the Shares.
This Agreement shall not be assignable by any party without
the other party's prior written consent. This Agreement shall be binding upon,
and shall inure to the benefit of, our respective successors and permitted
assigns. The foregoing represents the sole and entire agreement between us with
respect to the subject matter hereof and supersedes any prior agreements between
us with respect thereto. This Agreement may not be modified, amended or waived
except by a written instrument signed by the party to be charged. The validity,
interpretation and construction of this Agreement, and of each part hereof,
shall be governed by the internal laws of the State of New York, without giving
effect to the conflict of laws provisions thereof.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall be
deemed to be one and the same instrument.
If a party signs this Agreement and transmits an electronic
facsimile of the signature page to the other party, the party who receives the
transmission may rely upon the electronic facsimile as a signed original of this
Agreement.
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If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
the Selling Security Holders, the Company and the Underwriters in accordance
with its terms.
Very truly yours,
SWISS NATURAL FOODS, INC.
By:_______________________
Herbert Paul, President
SELLING SECURITY HOLDERS:
__________________________
Ronald Brescia
__________________________
Dr. Ralph Ferrante
__________________________
Herbert Paul
CONFIRMED AND ACCEPTED, as of the date first above written:
COMPREHENSIVE CAPITAL CORPORATION
By________________________________
Olga Scoppa, President
For itself and as the Representative
of the other Underwriters named in
Schedule I hereto.
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SCHEDULE I
Underwriter Firm Securities to be
Purchased
Number of
Common Number of
Shares Warrants
Comprehensive Capital Corporation
Total 1,200,000 1,200,000
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SCHEDULE Il
Name and Address of Amount of
Selling Security Holders Common Shares
Ralph Ferrante
Ronald Brescia
Herbert Paul
Total 180,000
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EXHIBIT 1.2
Swiss Natural Foods, Inc.
1,200,000 Shares of Common Stock
1,200,000 Common Stock Purchase Warrants
AGREEMENT AMONG UNDERWRITERS
__________, 1999
To each of the Underwriters named in Schedule I
to the attached Underwriting Agreement
Dear Sirs:
1. Underwriting Agreement. Swiss Natural Foods, Inc. (the "Company"),
proposes to enter into an underwriting agreement in the form of the Underwriting
Agreement attached hereto as Exhibit "A" (the "Underwriting Agreement") with the
underwriters named in Schedule I to the Underwriting Agreement (the
"Underwriters"), acting severally and not jointly, with respect to the purchase
from the Company of 1,200,000 Shares of Common Stock and 1,200,000 Warrants
(collectively referred to as the "Securities"). Such Securities are hereinafter
sometimes referred to as the "Firm Securities." Upon our request, and as
provided in Section 3 of the Underwriting Agreement, the Selling Security
Holders named in Schedule II of the Underwriting Agreement will sell to the
Underwriters up to a maximum of 180,000 Shares of Common Stock, and the Company
will sell to the underwriters up to a maximum of 180,000 Warrants. Such
additional Securities are hereinafter sometimes referred to as the "Optional
Securities." Both the Firm Securities and the Optional Securities are sometimes
collectively referred to herein as the "Securities." All of the Securities which
are the subject of this Agreement are more fully described in the Prospectus of
the Company described below. Under the terms of the Underwriting Agreement, each
of the Underwriters will agree, in accordance with the terms thereof to purchase
the aggregate number of Firm Securities set forth opposite its name in said
Schedule I, subject to adjustment pursuant to Section 12 hereof and Section 14
of the Underwriting Agreement.
2. Registration Statement and Prospectus. The Securities are described
in a registration statement and related prospectus which have been filed with
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Act"). An amendment to such registration statement
has been or will be filed in which you have been or will be named as one of the
Underwriters of the Securities. Copies of the registration statement as filed
and as amended have been delivered to you, and you hereby authorize us to
approve on your behalf any further amendments or supplements which may be
necessary or appropriate. The registration statement, as amended at the time it
becomes effective, is called the "Registration Statement" and the
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final prospectus relating to the Securities as filed by the Company with the
Commission pursuant to Rule 424(b) under the Act is referred to as the
"Prospectus."
3. Authority of Representative. You authorize us as your Representative
to execute the Underwriting Agreement with the Company in the form attached with
such insertions, deletions or other changes as we may approve (but not as to the
number of, and price of, the Securities to be purchased by you except as
provided herein and therein) and to take such action as in our discretion we may
deem advisable in respect of all matters pertaining to the Underwriting
Agreement, this Agreement, the transactions for the accounts of the several
Underwriters contemplated thereby and hereby, and the purchase, carrying, sale
and distribution of the Securities.
4. Public Offering. In connection with the public offering of the
Securities, you authorize us, in our discretion:
(a) To determine the time and manner of the initial public
offering (after the Registration Statement become effective), the initial public
offering price, and the concessions and reallowances to dealers, to change the
public offering price and such concessions and reallowances after the initial
public offering, to furnish the Company with the information to be included in
the Registration Statement and the Prospectus (and any amendment or supplement
thereto) with respect to the terms of the public offering, and to determine all
matters relating to the public advertisement of the Securities and any
communications with dealers or others;
(b) To reserve all or any part of your Securities for sale to
retail purchasers (including institutions) and to dealers selected by us
("Selected Dealers") among which may be included any Underwriter (including
ourselves) and each of which shall be a member of the National Association of
Securities Dealers, Inc., and each of which shall agree that in making sales to
purchasers in the United States it will conform to the Rules of Fair Practice of
said Association (or, in the case of a foreign dealer not eligible for
membership in such Association, which shall agree not to reoffer, resell or
deliver Securities in the United States, its territories or its possessions, or
to persons whom it has reason to believe are citizens thereof or residents
therein), such reservations for sales to retail purchasers to be as nearly as
practicable in proportion to the respective underwriting obligations of the
Underwriters and such reservations for sales to Selected Dealers to be in such
proportion as we determine, and from time to time to add to the reserved
Securities such Securities retained by you remaining unsold and to release to
you any of your Securities reserved but not sold;
(c) To sell reserved Securities as nearly as practicable in
proportion to the respective reservations to retail purchasers at the public
offering price, and to Selected Dealers at the public offering price less the
Selected Dealer's concession pursuant to the Selected Dealers Agreement in
substantially the form attached; and
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(d) To buy Securities for your account from Selected Dealers
at the public offering price less such amount not in excess of the Selected
Dealer's concession as we may determine.
After advice from us that the Securities are released for public
offering, you will offer to the public in conformity with the terms of offering
set forth in the Prospectus, or any amendment or supplement, such of your
Securities as we advise you are not reserved.
You recognize the importance of a broad distribution of the Securities
among bona fide investors and you agree to use your best efforts to obtain such
broad distribution and to that end, to the extent you deem practicable, to give
priority to small orders. In offering the Securities to Selected Dealers we will
take such action as we deem appropriate to effect a broad distribution.
5. Repurchase of Securities Not Effectively Placed for Investment. You
are requested to place for investment those of your Securities which are not
reserved as aforesaid. Any Securities sold by you (otherwise than through us)
which may be delivered to us against a purchase contract made by us for the
account of any Underwriter prior to termination of the provisions referred to in
Section 11 of this Agreement, shall be purchased by you upon demand from us at
the cost of such purchase plus brokerage commissions and transfer taxes on
redelivery. Securities delivered on such repurchase need not be identical to
those purchased by you. In lieu of demand repurchase by you we may in our
discretion (i) sell for your account the Securities so purchased by us, at such
price and upon such terms as we may determine, and debit or credit your account
with the loss and expense or net profit resulting from such sale, or (ii) charge
your account with an amount not in excess of the Selected Dealer's concession
with respect to such Securities plus brokerage commissions and transfer taxes
paid in connection with such purchase.
6. Payment and Delivery. We shall give you at least 24 hours prior
notice of the Closing Date. You agree to deliver payment and receive securities
through the facilities of the Depository Trust Company ("DTC") or, at our
option, to deliver to us at or before 9:00 a.m. New York City Time, on such
Closing Date at the office of Comprehensive Capital Corporation, 1600 Stewart
Avenue, Suite 405, Westbury, NY 11590 (or such other office as we may direct), a
certified check or bank cashier's check payable in New York Clearing House funds
to the order of Comprehensive Capital Corporation, as Representative, for the
full purchase price of the Securities which you shall have agreed to purchase
from the Company less the concession to selected dealers. The proceeds to the
Company shall be delivered by us in the amount required in payment of the full
purchase price to the Company against delivery of the Securities to us for your
account. We are authorized to accept that delivery and to give a receipt
therefor. You authorize us, as your custodian, to take delivery of your
Securities, registered as we may direct in order to facilitate deliveries. You
also authorize us to hold for your account such of your Securities as we have
reserved for sale to retail purchasers and to Selected Dealers, and to deliver
your reserved Securities against such sales. We will deliver your unreserved
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Securities to you promptly and, after we receive payment for reserved Securities
sold by us for your account, we will remit to you, as promptly as practicable,
an amount equal to the price paid by you for such Securities. As soon as
practicable after termination of Sections 4, 5 and 9 and the first and
penultimate sentences of Section 8 of this Agreement (pursuant to Section 11
hereof) we will deliver to you any of your Securities reserved but not sold. All
Securities delivered to you pursuant to this Section will be evidenced by
certificates in such denominations as you shall direct by written notice
received by us not later than the second full business day preceding the Closing
Date.
7. Authority to Borrow. In connection with the purchase or carrying of
any Securities purchased hereunder for your account, you authorize us, in our
discretion, to advance funds for your account, charging current interest rates,
or to arrange loans for your account, and in connection therewith to execute and
deliver any notes or other instruments and hold or pledge as security any of
your Securities. Any lender may rely on our instructions in all matters relating
to any such loan. Any of your Securities held by us for your account may be
delivered to you for carrying purposes only, and subject to our further
direction.
8. Stabilization and Over-Allotment. To facilitate the distribution of
the Securities, you authorize us during the term of this Agreement, or for such
longer period as may be necessary in our discretion, to make purchases and sales
of the Securities for your account in the open market or otherwise, for long or
short account, on such terms as we deem advisable and, in arranging sales, to
over-allot. You also authorize us to cover any short position incurred pursuant
to this Section on such terms as we deem advisable. Included in the authority
granted to us by you is the authority to exercise the over-allotment option to
purchase the Optional Securities granted by Section 3 of the Underwriting
Agreement for our individual account and not as Representative. All such
purchases and sales (except for purchases and sales of the Optional Securities)
shall be made for the accounts of the several Underwriters as nearly as
practicable in proportion to their respective underwriting obligations. Your net
commitment under this Section shall not, at the end of any business day, exceed
15% of your maximum underwriting obligation. You will on our demand take up at
cost or deliver against payment any Securities purchased or sold for your
account and, if any such other Underwriter defaults in its corresponding
obligation, you will assume your proportionate share of such obligation without
relieving the defaulting Underwriter from liability. You will be obligated in
respect to purchases and sales made for your account hereunder whether or not
the proposed purchase of the Securities is consummated. Upon request you will
advise us of Securities retained by you and unsold and will sell to us for the
account of one or more of the Underwriters such of your unsold Securities as we
may designate, at the public offering price thereof less such amount as we may
determine, but not in excess of the Selected Dealer's concession with respect
thereto. Until the termination of this Agreement pursuant to Section 11 hereof,
or prior notification by us, we shall have the sole right to effect stabilizing
transactions in the Securities. You agree that until such time you will not make
any purchases or sales of any of such securities except as provided in Section 9
hereof. You also agree to timely provide
4
<PAGE>
us with the information required by Rule 17a-2(d) under the Securities Exchange
Act of 1934, as amended (the "1934 Act").
9. Open Market Transactions. You agree not to bid for, purchase,
attempt to induce others to purchase, or sell, directly or indirectly, any
Securities, except as brokers pursuant to unsolicited orders and as otherwise
provided in this Agreement or in the Underwriting Agreement. You further agree
not to offer the Securities for sale until notified by us, as the Representative
of the Underwriters, that they are released for that purpose.
10. Expenses and Settlement. We may charge your account with Selected
Dealer's concessions and all transfer taxes on sales made by us for your account
and with your proportionate share (based upon your underwriting obligation) of
all other expenses incurred by us under the terms of this Agreement or the
Underwriting Agreement, in excess of those reimbursed by the Company pursuant to
Section 8 of the Underwriting Agreement, or in connection with the purchase,
carrying, sale or distribution of the Securities. Our determination of the
amount and allocation of expenses shall be conclusive. As soon as practicable
after termination of the provisions referred to in Section 11, the accounts
hereunder will be settled, but we may reserve from distribution such amount as
we deem advisable to cover possible additional expenses. We may at any time make
partial distribution of credit balances or call for payment of debit balances.
Any of your funds in our hands may be held with our general funds without
accountability for interest. Notwithstanding any settlement, you will pay (i)
your proportionate share (based upon your underwriting obligation) of any
liability which may be incurred by the Underwriters, or any of them, based on
the claim that the Underwriters constitute an association, partnership,
unincorporated business or other separate entity, and of any expenses incurred
by us, or by any other Underwriter with our approval, in contesting any such
liability, and (ii) any transfer taxes which may be assessed and paid after such
settlement on account of any sale or transfer for your account.
11. Termination and Settlement. This Agreement will terminate (a) at
the close of business on the 30th day after the date of the Underwriting
Agreement; or (b) on such earlier or later date, not more than 30 days after the
date specified in (a), as we may determine; or (c) on the date of termination of
the Underwriting Agreement, if the same shall be terminated as provided by its
terms.
Upon termination of this Agreement, all authorizations, rights and
obligations hereunder will cease, except (a) the mutual obligation to settle
accounts hereunder, (b) your obligation to pay any claims referred to in the
last paragraph of this Section, (c) the obligations with respect to indemnity
set forth in Section 15 hereof (all obligations of which will continue until
fully discharged), and (d) your obligation with respect to purchases which may
be made by us from time to time thereafter to cover any short position with
respect to the offering, all of which will continue until fully discharged, and
except our authority with
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respect to matters to be determined by us, or by us and the Company, pursuant to
the terms of the Underwriting Agreement, which will survive the termination of
this Agreement.
The accounts arising pursuant to this Agreement will be settled and
paid as soon as practicable after termination. The determination by us of the
amounts to be paid to or by you will be final and conclusive.
Notwithstanding any settlement upon the termination of this Agreement,
you will pay your proportionate share of any amount asserted against and
discharged by the Underwriters, or any of them, based upon the claim that the
Underwriters constitute an association, unincorporated business or other
separate entity, or based upon or arising out of a claim that this Agreement or
the Underwriting Agreement is invalid or illegal for any reason, including any
expense incurred in defending against such claim, and will pay any transfer
taxes which may be assessed thereafter on account of any sale or transfer of
Securities for our account.
12. Default by Underwriters. Default by one or more Underwriters
hereunder or under the Underwriting Agreement shall not release the other
Underwriters from their obligations or affect the liability of any defaulting
Underwriter to the other Underwriters for damages resulting from such default.
In case of default under the Underwriting Agreement by one or more Underwriters,
we may arrange for the purchase by others, including non-defaulting
Underwriters, of Securities not taken up by such defaulting Underwriter and you
will, at our request, increase pro rata with the other non-defaulting
Underwriters the aggregate principal amount of Securities which you are to
purchase, or both, by an amount not exceeding one-ninth of your original
underwriting obligations. In the event any such arrangements are made, the
respective Securities to be purchased by non-defaulting Underwriters and by such
others shall be taken as the basis for the underwriting obligations under this
Agreement.
In the event of default by one or more Underwriters in respect of their
obligations under this Agreement, each non-defaulting Underwriter shall assume
its proportionate share of the obligations under this Agreement of each such
defaulting Underwriter (other than, to the extent stated in the first paragraph
of this Section, the purchase obligation of such defaulting Underwriter).
13. Position of Representative. We shall be under no liability to you
for any act or omission except for obligations expressly assumed by us in this
Agreement, but no obligation on our part shall be implied or inferred. Nothing
shall constitute the Underwriters, or any of them, an association, partnership,
unincorporated business or other separate entity and the rights and liability of
ourselves and each of the Underwriters are several and not joint.
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14. Compensation to Representative. As compensation for our services as
Representative, you agree to pay us $___ per share of Common Stock and/or $__
per Warrant out of the aggregate underwriting discount attributable to
Securities which you agree to purchase from the Company and/or the Selling
Security Holders pursuant to the Underwriting Agreement. We are authorized to
charge your account with such an amount.
15. Indemnification. You will indemnify and hold harmless each other
Underwriter and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Act to the extent and upon the terms by which each
Underwriter agrees to indemnify the Company in the Underwriting Agreement. Such
indemnity agreement shall survive the termination of any of the provisions of
this Agreement.
In the event that at any time any claim shall be asserted against us as
or as a result of our having acted as Representative, or otherwise involving the
Underwriters generally, relating to the Registration Statement or any
preliminary prospectus or the Prospectus, as from time to time amended or
supplemented, the public offering of the Securities or any of the transactions
contemplated by this Agreement, you authorize us to make such investigation, to
retain such counsel and to take such other action as we shall deem necessary or
desirable under the circumstances, including settlement of any claim or claims
if such course of action shall be recommended by counsel retained by us. You
agree to pay to us, on request, your proportionate share (based upon your
underwriting obligation) of all expenses incurred by us (including, but not
limited to, the disbursements and fees of counsel so retained) in investigating
and defending against such claim or claims, and your proportionate share (based
upon your underwriting obligation) of any liability incurred by us in respect of
such claim or claims, whether such liability shall be the result of a judgment
against us or as a result of any such settlement.
16. Blue Sky Matters. We shall not have any responsibility with respect
to the right of any Underwriter or other person to sell Securities in any
jurisdiction, notwithstanding any information we may furnish in that connection.
You hereby authorize us to take such action as may be necessary or advisable to
qualify the Securities for offering and sale in any jurisdiction. We have caused
to be filed Further State Notices respecting the Securities to be offered to the
public in New York in the form required by, and pursuant to, the provisions of
Article 23A of the General Business Law of the State of New York.
17. Title to Securities. The Securities purchased for the respective
accounts of the several Underwriters shall remain the property of those
Underwriters until sold; and no title to such securities shall in any event pass
to us, as Representative, by virtue of any of the provisions of this Agreement.
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18. Capital Requirements. Unless the provisions of clause (b) of the
second sentence of the last paragraph of this Agreement are applicable to you,
you confirm that your commitment hereunder will not result in any violation of
Section 8(b) or 15(c) of the 1934 Act or in any violation of any of the rules
and regulations promulgated under the 1934 Act, including, without limitation,
Rule 15c3-1, or any provision of any applicable rules of any securities exchange
to which you are subject or of any restriction imposed upon you by such
exchange.
19. Notices and Governing Laws. Any notice from you to us shall be
mailed or transmitted by any standard form of written telecommunication to us at
1600 Stewart Avenue, Suite 405, Westbury, New York 11590. Any notice from us to
you shall be mailed or transmitted by any standard from of written
telecommunication to you at your address as set forth in your Underwriter's
Questionnaire. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
We represent that we are a member in good standing of the National
Association of Securities Dealers, Inc. You represent that you are (a) a member
in good standing of such Association or (b) a foreign dealer which is not
eligible for membership in such Association, in which event you will make sales
of any Securities only outside the United States and its territories and
possessions to persons who are not citizens or residents of the United States or
its territories or possessions, and that in making any such sales, you will
comply with such Association's Interpretation with respect to Free-Riding and
Withholding. You further represent that: (i) you will notify each of your
customers with respect to whose account you have investment discretion and to
whose account you intend to sell any Securities that you propose to sell
Securities to such account as a principal and you will obtain the customer's
written consent to such sale; and (ii) you will comply with the requirements of
Rule 15c2-8 under the 1934 Act and have distributed or are distributing copies
of a Preliminary Prospectus to all persons to whom you then expected to mail
confirmations of sale, not less than 48 hours prior to the time it is expected
to mail such confirmations.
Very truly yours,
COMPREHENSIVE CAPITAL CORPORATION
By:________________________________
As Representative of the several
Underwriters
Confirmed and accepted as of the date first above written.
- -------------------------------
Attorney-in-fact for the several
Underwriters named in Schedule I
to the Underwriting Agreement
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EXHIBIT 1.3
Comprehensive Capital Corporation
1600 Stewart Avenue
Suite 405
Westbury, NY 11590
Swiss Natural Foods, Inc.
1,200,000 Shares of Common Stock
1,200,000 Common Stock Purchase Warrants
SELECTED DEALER AGREEMENT
Dear Sirs: __, 1999
We, as the Underwriter named in the Prospectus dated , 1999 have
agreed, subject to the terms and conditions of the Underwriting Agreement dated
this date (the "Underwriting Agreement") to purchase from Swiss Natural Foods,
Inc. (the "Company"), at the prices set forth on the cover of such Prospectus,
the above referred to 1,200,000 Shares of Common Stock and 1,200,000 Warrants
and, at our option, from the Selling Security Holders named in Schedule II of
the Underwriting Agreement, up to an additional 180,000 shares of Common Stock
to cover over-allotments and at our option, from the Company, 180,000 Warrants
to cover over-allotments (collectively being called the "Securities"). The
Securities and certain of the terms on which they are being purchased and
offered are more fully described in the enclosed Prospectus. Additional copies
of the Prospectus will be supplied to you, in reasonable quantities upon
request.
We, as the Underwriter, are offering to certain dealers ("Selected
Dealers"), among whom we are pleased to include you, part of the Securities, at
the public offering price less a concession of $.___ per Share of Common Stock
and $.___ per Warrant. The offering to Selected Dealers is made subject to the
issuance and delivery of the Securities to us and their acceptance by us, to the
approval of legal matters by our counsel, and to the terms and conditions
hereof, and may be made by us on the basis of the reservation of Securities or
an allotment against subscription, or otherwise in our discretion.
The initial public offering prices of the Securities are as set forth
in the Prospectus. With our consent, Selected Dealers may allow a re-allowance
of not in excess of $ -0- per Share of Common Stock and $-0- per Warrant in
selling the Shares of Common Stock and Warrants to other dealers meeting the
requirements of the specifications set forth in the affirmation of dealers
contained in the attached Acceptance and Order. Upon our request, you will
notify us of the identity of any dealer to whom you allow such a reallowance and
any Selected Dealer from whom you receive such a re-allowance.
All orders will be strictly subject to confirmation and we reserve the
right in our uncontrolled discretion to reject any order in whole or in part, to
accept or reject orders in the order of their receipt or otherwise, and to
allot. You are not authorized to give any
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information or make any representation other than as set forth in the Prospectus
in connection with the sale of any of the Securities. No dealer is authorized to
act as agent for the Underwriter, or for the Company, when offering any of the
Securities. Nothing contained herein shall constitute the Selected Dealers
partners with us or with one another.
Upon release by us, you may offer the Securities at the public offering
prices, subject to the terms and conditions hereof. We may, and the Selected
Dealers may, with our consent, purchase Securities from and sell Securities to
each other at the public offering price less a concession not in excess of the
concession to Selected Dealers.
Payment for Securities purchased by you is to be made at our office (or
at such other place as instructed) at the public offering price, on such date as
we may advise, on one day's notice to you, by certified or official bank check
in New York Clearing House funds payable to our order. Delivery to you of
certificates for the Securities will be made as soon as is practicable
thereafter. Unless specifically authorized by us, payment by you may not be
deferred until delivery of certificates to you. The concession payable to you
will be paid as soon as practicable after the closing.
This Agreement shall terminate at the close of business on the 30th day
after the effective date of the Registration Statement. We may terminate this
Agreement at any time prior thereto by notice to you. Notwithstanding the
termination of this Agreement, you shall remain liable for your proportionate
share of any transfer tax or any liability which may be asserted or assessed
against us or Selected Dealers based upon the claim that the Underwriter and the
Selected Dealers, or any of them, constitute a partnership, association,
unincorporated business or other entity, including in each case your
proportionate share of expenses incurred in defending against any such claim or
liability.
In the event that, prior to the termination of this Agreement we
purchase in the open market or otherwise any Securities delivered to you, you
agree to repay to us for the account of the Underwriter the amount of the above
concession to Selected Dealers plus brokerage commissions and any transfer taxes
paid in connection with such purchase; which amounts can be withheld from the
concession otherwise payable to you hereunder. Certificates for Securities
delivered on any such purchase need not be the identical certificates originally
issued to you.
At any time prior to the termination of this Agreement, you will, upon
our request, report to us the number of Securities purchased by you under this
Agreement which then remain unsold and will, upon our request, sell to us for
the account of the Underwriter the number of such unsold Securities that we may
designate, at the public offering price less an amount to be determined by us
not in excess of the concession allowed you.
We shall have full authority to take such action as we may deem
advisable in respect of all matters pertaining to the offering, including,
without limitation, stabilization and over-allotment. We shall be under no
liability to you except for our lack of good faith and for obligations assumed
by us in this Agreement, except that you do not waive any
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rights that you may have under the Securities Act of 1933 (the "1933 Act") or
the rules and regulations thereunder.
Upon application to us, we will inform you of the states and other
jurisdictions of the United States in which it is believed that the Securities
are qualified for sale under, or are exempt from the requirements of, their
respective securities laws, but we assume no responsibility with respect to your
right to sell Securities in any jurisdiction. We have filed Further State
Notices with respect to the Securities with the Department of State of the State
of New York.
You confirm that you are familiar with Rule 15c2-8 under the Securities
Exchange Act of 1934 (the "1934 Act"), relating to the distribution of
preliminary and final prospectuses, and confirm that you have complied and will
comply therewith (whether or not the Company is subject to the reporting
requirements of Section 13 or 15(d) of the 1934 Act). We will make available to
you, to the extent made available to us by the Company such number of copies of
the Prospectus as you may reasonably request for purposes contemplated by the
1933 Act, the 1934 Act, and the rules and regulations thereunder.
Your attention is directed to Regulation M under the 1934 Act, which
contains certain prohibitions against trading by a person interested in a
distribution until such person has completed its participation in the
distribution. You confirm that you will at all times comply with the provisions
of such Regulation M in connection with this offering.
Any notice from us shall be deemed to have been duly given if
telephoned, and subsequently mailed or transmitted by any standard form of
written tele-communication to you at the address to which this Agreement is
mailed, or if so mailed or transmitted in the first instance.
Please advise us promptly by telephone or any standard form of written
telecommunication of the principal amount of Securities ordered by you and
confirm your agreement hereto by signing the Acceptance and Order on the
enclosed duplicate hereof and returning promptly such signed duplicate copy to
Comprehensive Capital Corporation 1600 Stewart Avenue, Suite 405, Westbury, NY
11590.
Upon receipt thereof, this instrument and such signed duplicate copy
will evidence the agreement between us.
Very truly yours,
Comprehensive Capital Corporation
By:_________________________________
Olga Scoppa, President
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Comprehensive Capital Corporation
1600 Stewart Avenue
Suite 405
Westbury, NY 11590
Dear Sirs:
We hereby enter our order for ______ Shares of Common Stock and/or
_______ Warrants of Swiss Natural Foods, Inc. under the terms and conditions of
the foregoing Agreement.
We agree to all the terms and conditions stated in the foregoing
Agreement. We acknowledge receipt of the Prospectus relating to the above
Securities and we further state that in entering this order we have relied upon
said Prospectus and no other statements whatsoever, written or oral. We affirm
that we are either (i) a member in good standing of the National Association of
Securities Dealers, Inc. (the "NASD") or (ii) a dealer with its principal place
of business located outside the United States, its territories, or possessions
and not registered under the Securities Exchange Act of 1934 and not eligible
for membership in the NASD, who hereby agrees to make no sales within the United
States, its territories or its possessions or to persons who are nationals
thereof or residents therein, and in making any sales, to comply with the NASD's
interpretation with respect to free-riding and withholding, as well as all other
pertinent interpretations of the NASD that may be applicable to us. We also
affirm and agree that we will promptly re- offer any Securities purchased by us
in conformity with the terms of the offering and in conformity with Rules 2730,
2740, 2420 and 2750 of the NASD Conduct Rules and all applicable Rules and
Regulations promulgated under the Securities Exchange Act of 1934.
Date: ___________, 1999
(Name of Selected Dealer)
By:
(Authorized Signature)
Address:
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EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SWISS NATURAL FOODS, INC.
* * * *
Swiss Natural Foods, Inc., a corporation organized and existing under
the laws of the State of Delaware hereby certifies as follows:
1. The name of the corporation is Swiss Natural Foods, Inc. The date of
filing of its original Certificate of Incorporation with the Secretary of State
was April 22, 1993, under the name of Nature's Best Food Products, Inc.
2. This Restated Certificate of Incorporation restates and integrates
and further amends the provisions of the Certificate of Incorporation of this
corporation by amending the Certificate of Incorporation in its entirety.
3. The text of the Certificate of Incorporation as amended or
supplemented heretofore is further amended hereby to read as herein set forth in
full:
FIRST: The name of the corporation is: SWISS NATURAL FOODS, INC.
SECOND: The address of its registered office in the State of Delaware
is to be located at The Corporation Trust Center, 1209 Orange Street, in the
City of Wilmington, County of New Castle. The name of its registered agent at
such address is The Corporation Trust Company.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is TWENTY MILLION (20,000,000) shares of Common Stock,
par value $.01 per share (the "Common Stock"), and THREE MILLION (3,000,000)
shares of Preferred Stock, par value $.01 per share (the "Preferred Stock").
The Preferred Stock of the corporation shall be issued by the Board of
Directors of the corporation in one or more classes or one or more series within
any class and such classes or series shall have such voting powers, full or
limited, or no voting powers, and such designations, preferences, limitations or
restrictions as the Board of Directors of the corporation may determine, from
time to time.
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The holders of the Common Stock are entitled to one vote for each share
held at all meetings of stockholders (and written actions in lieu of meetings).
There shall be no cumulative voting.
Shares of Common Stock and Preferred Stock may be issued from time to
time as the Board of Directors shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
FIFTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter or repeal
the By-laws of the corporation.
SIXTH: Meetings of stockholders may be held within or without the State
of Delaware, as the By-laws may provide. The books of the corporation may be
kept (subject to any provisions contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-laws of the corporation. Elections of directors
need not be by written ballot unless the By-laws of the corporation shall so
provide.
SEVENTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware General Corporation Law
or on the application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under the provisions of Section 279 of Title 8 of
the Delaware General Corporation Law order a meeting of the creditors or class
of creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this corporation, as the case
may be, and also on this corporation.
EIGHTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
NINTH: The corporation shall to the fullest extent permitted by Section
145 of the Delaware General Corporation Law, as the same may be amended or
supplemented, or by any successor thereto, indemnify and reimburse any and all
persons whom it shall have the power to indemnify under said Section from and
against any and all of the expenses, liabilities or other matters referred to
in, or covered by said Section. Notwithstanding the foregoing, the
indemnification provided for in this Article NINTH shall not be deemed exclusive
of any other rights to which those entitled to
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receive indemnification or reimbursement hereunder may be entitled under any
By-laws of the corporation, agreement, vote of stockholders or disinterested
directors or otherwise.
TENTH: No director of this corporation shall be personally liable to
the corporation or any of its stockholders for monetary damages for breach of a
fiduciary duty as a director, except for liability (i) for any breach of a
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law as the same exists or hereafter may be amended or (iv) for any
transaction from which the director derived an improper benefit. If the Delaware
General Corporation Law hereafter is amended to authorize the further
elimination of limitation of the liability of directors, then the liability of a
director of the corporation, in addition to the limitation on personal liability
provided herein, shall be limited to the fullest extent permitted by the amended
Delaware General Corporation Law. Any repeal or modification of this paragraph
by the stockholders of the corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of directors of the
corporation existing at the time of such repeal or modification.
4. This Amended and Restated Certificate of Incorporation was duly
adopted by written consent of the stockholders in accordance with the applicable
provisions of Section 228, 242 and 245 of the General Corporation Law of the
State of Delaware and written notice of the adoption of this Amended and
Restated Certificate of Incorporation has been given as provided by Section 228
of the General Corporation Law of the State of Delaware to every stockholder
entitled to such notice.
IN WITNESS WHEREOF, said SWISS NATURAL FOODS, INC. has caused this
Certificate to be signed by Ralph M. Ferrante, its Chief Executive Officer, this
30th day of June, 1999.
SWISS NATURAL FOODS, INC.
By: /s/Ralph M. Ferrante
-----------------------
Ralph M. Ferrante
Chief Executive Officer
CORPORATE SEAL
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EXHIBIT 3.2
AMENDED AND RESTATED
BY-LAWS
OF
SWISS NATURAL FOODS, INC.
ARTICLE I
Stockholders
Section 1.1. Annual Meetings. An annual meeting of
stockholders shall be held for the election of Directors at such date, time and
place either within or without the State of Delaware as may be designated by the
Board of Directors from time to time. Any other proper business may be
transacted at the annual meeting.
Section 1.2. Special Meetings. Special meetings of
stockholders may be called at any time by the Chairman of the Board, if any, the
Vice Chairman of the Board, if any, or the President to be held at such date,
time and place either within or without the State of Delaware as may be stated
in the notice of the meeting. A special meeting of stockholders shall be called
by the Sec retary upon the written request, stating the purpose of the meeting,
of stockholders who together own of record ten percent (10%) of the outstanding
shares of each class of stock entitled to vote at such meeting.
Section 1.3. Notice of Meetings. Whenever stockholders are
required or permitted to take any action at a meeting, a written notice of the
meeting shall be given which shall state the place, date and hour of the
meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called. Unless otherwise provided by law, the written
notice of any meeting shall be given not less than ten nor more than sixty days
before the date of the meeting to each stockholder entitled to vote at such
meeting. If mailed, such notice shall be deemed to be given when deposited in
the United States mail, postage prepaid, directed to the stockholder at such
stockholder's address as it appears on the records of the Corporation.
Section 1.4. Adjournments. Any meeting of stockholders, annual
or special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 1.5. Quorum. At each meeting of stockholders, except
where otherwise provided by law or the certificate of incorporation or these
by-laws, the holders of a majority of the outstanding shares of each class of
stock entitled to vote at the meeting, present in person or repre sented by
proxy, shall constitute a quorum. For purposes of the foregoing, two or more
classes or
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series of stock shall be considered a single class if the holders thereof are
entitled to vote together as a single class at the meeting. In the absence of a
quorum the stockholders so present may, by majority vote, adjourn the meeting
from time to time in the manner provided by Section 1.4 of these by-laws until a
quorum shall attend. Shares of its own capital stock belonging on the record
date for the meeting to the Corporation or to another corporation, if a majority
of the shares entitled to vote in the election of directors of such other
corporation is held, directly or indirectly, by the Corporation, shall neither
be entitled to vote nor be counted for quorum purposes; provided, however, that
the foregoing shall not limit the right of the Corporation to vote stock,
including but not limited to its own stock, held by it in a fiduciary capacity.
Section 1.6. Organization. Meetings of stockholders shall be
presided over by the Chairman of the Board, if any, or in the absence of the
Chairman of the Board by the Vice Chairman of the Board, if any, or in the
absence of the Vice Chairman of the Board by the President, or in the absence of
the President by a Vice President, or in the absence of the foregoing persons by
a chairman designated by the Board of Directors, or in the absence of such
designation by a chairman chosen at the meeting. The Secretary, or in the
absence of the Secretary an Assistant Secretary, shall act as secretary of the
meeting, but in the absence of the Secretary and any Assistant Secretary the
chairman of the meeting may appoint any person to act as secretary of the
meeting.
Section 1.7. Voting; Proxies. Unless otherwise provided in the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of stock held by
such stockholder which has voting power upon the matter in question. If the
certificate of incorporation provides for more or less than one vote for any
share on any matter, every reference in these by-laws to a majority or other
proportion of stock shall refer to such majority or other proportion of the
votes of such stock. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for such
stockholder by proxy, but no such proxy shall be voted or acted upon after three
years from its date, unless the proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and if,
and only as long as, it is coupled with an interest sufficient in law to support
an irrevocable power. A stockholder may revoke any proxy which is not
irrevocable by attending the meeting and voting in person or by filing an
instrument in writing revoking the proxy or another duly executed proxy bearing
a later date with the Secretary of the Corporation. Voting at meetings of
stockholders need not be by written ballot and need not be conducted by
inspectors unless the holders of a majority of the outstanding shares of all
classes of stock entitled to vote thereon present in person or by proxy at such
meeting shall so determine. At all meetings of stockholders for the election of
directors a plurality of the votes cast shall be sufficient to elect. With
respect to other matters, unless otherwise provided by law or by the certificate
of incorporation or these by-laws, the affirmative vote of the holders of a
majority of the shares of all classes of stock present in person or represented
by proxy at the meeting and entitled to vote on the subject matter shall be the
act of the stockholders, provided that (except as otherwise required by law or
by the certificate of incorporation) the Board of Directors may require a larger
vote upon any such matter. Where a separate vote by class is required, the
affirmative vote of the holders of a majority of the shares of each class
present in person or represented by proxy at the meeting shall be the act of
such class, except as otherwise provided by law or by the certificate of
incorporation or these by-laws.
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Section 1.8. Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or to express consent to corporate action in writing without a meeting, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which shall not be
more than sixty nor less than ten days before the date of such meeting, nor more
than sixty days prior to any other action. If no record date is fixed: (1) the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held; (2) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
by the Board is necessary, shall be the day on which the first written consent
is expressed; and (3) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board adopts
the resolution relating thereto. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board may fix a new
record date for the adjourned meeting.
Section 1.9. List of Stockholders Entitled to Vote. The
Secretary shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof and may be inspected by any stockholder who is
present.
Section 1.10. Consent of Stockholders in Lieu of Meeting. Any
action required by law to be taken at any annual or special meeting of
stockholders of the Corporation, or any action which may be taken at any annual
or special meeting of such stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
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ARTICLE II
Board of Directors
Section 2.1. Powers; Number; Qualifications. The business and
affairs of the Corporation shall be managed by or under the direction of the
Board of Directors, except as may be otherwise provided by law or in the
certificate of incorporation. The Board shall consist of one or more members,
the number thereof to be determined from time to time by the Board. Directors
need not be stockholders.
Section 2.2. Election; Term of Office; Resignation; Removal;
Vacancies. Each director shall hold office until the annual meeting of
stockholders next succeeding his or her election and until his or her successor
is elected and qualified or until his or her earlier resignation or removal. Any
director may resign at any time upon written notice to the Board of Directors or
to the President or the Secretary of the Corporation. Such resignation shall
take effect at the time specified therein, and unless otherwise specified
therein no acceptance of such resignation shall be necessary to make it
effective. Any director or the entire Board of Directors may be removed, with or
without cause, by the holders of a majority of the shares then entitled to vote
at an election of directors; except that, if the certificate of incorporation
provides for cumulative voting and less than the entire Board is to be removed,
no director may be removed without cause if the votes cast against his or her
removal would be sufficient to elect him or her if then cumulatively voted at an
election of the entire Board, or, if there be classes of directors, at an
election of the class of directors of which he or she is a part. Whenever the
holders of any class or series of stock are entitled to elect one or more
directors by the provisions of the certificate of incorporation, the provisions
of the preceding sentence shall apply, in respect to the removal without cause
of a director or directors so elected, to the vote of the holders of the
outstanding shares of that class or series and not to the vote of the
outstanding shares as a whole. Unless otherwise provided in the certificate of
incorporation or these by-laws, vacancies and newly created directorships
resulting from any increase in the authorized number of directors elected by all
of the stockholders having the right to vote as a single class or from any other
cause may be filled by a majority of the directors then in office, although less
than a quorum, or by the sole remaining director. Whenever the holders of any
class or classes of stock or series thereof are entitled to elect one or more
directors by the provisions of the certificate of incorporation, vacancies and
newly created directorships of such class or classes or series may be filled by
a majority of the directors elected by such class or classes or series thereof
then in office, or by the sole remaining director so elected.
Section 2.3. Regular Meetings. Regular meetings of the Board
of Directors may be held at such places within or without the State of Delaware
and at such times as the Board may from time to time determine, and if so
determined notice thereof need not be given.
Section 2.4. Special Meetings. Special meetings of the Board
of Directors may be held at any time or place within or without the State of
Delaware whenever called by the Chairman cf the Board, if any, by the Vice
Chairman of the Board, if any, by the President or by any two directors.
Reasonable notice thereof shall be given by the person or persons calling the
meeting.
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Section 2.5. Participation in Meetings by Conference Telephone
Permitted. Unless otherwise restricted by the certificate of incorporation or
these by-laws, members of the Board of Directors, or any committee designated by
the Board, may participate in a meeting of the Board or of such committee, as
the case may be, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this by-law shall
constitute presence in person at such meeting.
Section 2.6. Quorum; Vote Required for Action. At all meetings
of the Board of Directors one-third of the entire Board shall constitute a
quorum for the transaction of business. The vote of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
unless the certificate of incorporation or these by-laws shall require a vote of
a greater number. In case at any meeting of the Board a quorum shall not be
present, the members of the Board present may adjourn the meeting from time to
time until a quorum shall attend.
Section 2.7. Organization. Meetings of the Board of Directors
shall be presided over by the Chairman of the Board, if any, or in the absence
of the Chairman of the Board by the Vice Chairman of the Board, if any, or in
the absence of the Vice Chairman of the Board by the President, or in their
absence by a chairman chosen at the meeting. The Secretary, or in the absence of
the Secretary an Assistant Secretary, shall act as secretary of the meeting, but
in the absence of the Secretary and any Assistant Secretary the chairman of the
meeting may appoint any person to act as secretary of the meeting.
Section 2.8. Action by Directors Without a Meeting. Any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board or of such committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
or committee.
Section 2.9. Compensation of Directors. The Board of
Directors shall have the authority to fix the compensation of directors.
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<PAGE>
ARTICLE III
Committees
Section 3.1. Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The Board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the Board to act at the
meeting in place of any such absent or disqualified member. Any such committee,
to the extent provided in the resolution of the Board, shall have and may
exercise all the powers and authority of the Board in the management of the
business and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have power or authority in reference to amending the certificate
of incorporation, adopting an agreement of merger or consolidation, recommending
to the stockholders the sale, lease or exchange of all or substantially all of
the Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of dissolution, removing or
indemnifying directors or amending these by-laws; and, unless the resolution
expressly so provides, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock.
Section 3.2. Committee Rules. Unless the Board of Directors
otherwise provides, each committee designated by the Board may adopt, amend and
repeal rules for the conduct of its business. In the absence of a provision by
the Board or a provision in the rules of such committee to the contrary, a
majority of the entire authorized number of members of such committee shall
constitute a quorum for the transaction of business, the vote of a majority of
the members present at a meeting at the time of such vote if a quorum is then
present shall be the act of such committee, and in other respects each committee
shall conduct its business in the same manner as the Board conducts its business
pursuant to Article II of these by-laws.
ARTICLE IV
Officers
Section 4.1. Officers; Election. As soon as practicable after
the annual meeting of stockholders in each year, the Board of Directors shall
elect a President and a Secretary, and it may, if it so determines, elect from
among its members a Chairman of the Board and a Vice Chairman of the Board. The
Board may also elect one or more Vice Presidents, one or more Assistant Vice
Presidents, one or more Assistant Secretaries, a Treasurer and one or more
Assistant Treasurers and such other officers as the Board may deem desirable or
appropriate and may give any of them such further designations or alternate
titles as it considers desirable. Any number of offices may be held by the same
person.
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Section 4.2. Term of office; Resignation; Removal; Vacancies.
Except as otherwise provided in the resolution of the Board of Directors
electing any officer, each officer shall hold office until the first meeting of
the Board after the annual meeting of stockholders next succeeding his or her
election, and until his or her successor is elected and qualified or until his
or her earlier resignation or removal. Any officer may resign at any time upon
written notice to the Board or to the President or the Secretary of the
Corporation. Such resignation shall take effect at the time specified therein,
and unless otherwise specified therein no acceptance of such resignation shall
be necessary to make it effective. The Board may remove any officer with or
without cause at any time. Any such removal shall be without prejudice to the
contractual rights of such officer, if any, with the Corporation, but the
election of an officer shall not of itself create contractual rights. Any
vacancy occurring in any office of the Corporation by death, resignation,
removal or otherwise may be filled for the unexpired portion of the term by the
Board at any regular or special meeting.
Section 4.3. Chairman of the Board. The Chairman of the Board,
if any, shall preside at all meetings of the Board of Directors and of the
stockholders at which he or she shall be present and shall have and may exercise
such powers as may, from time to time, be assigned to him or her by the Board
and as may be provided by law.
Section 4.4. Vice Chairman of the Board. In the absence of the
Chairman of the Board, the Vice Chairman of the Board, if any, shall preside at
all meetings of the Board of Directors and of the stockholders at which he or
she shall be present and shall have and may exercise such powers as may, from
time to time, be assigned to him or her by the Board and as may be provided by
law.
Section 4.5. President. In the absence of the Chairman of the
Board and Vice Chairman of the Board, the President shall preside at all
meetings of the Board of Directors and of the stockholders at which he or she
shall be present. The President shall be the chief executive officer and shall
have general charge and supervision of the business of the Corporation and, in
general, shall perform all duties incident to the office of president of a
corporation and such other duties as may, from time to time, be assigned to him
or her by the Board or as may be provided by law.
Section 4.6. Vice Presidents. The Vice President or Vice
Presidents, at the request or in the absence of the President or during the
President's inability to act, shall perform the duties of the President, and
when so acting shall have the powers of the President. If there be more than one
Vice President, the Board of Directors may determine which one or more of the
Vice Presidents shall perform any of such duties; or if such determination is
not made by the Board, the President may make such determination; otherwise any
of the Vice Presidents may perform any of such duties. The Vice President or
Vice Presidents shall have such other powers and shall perform such other duties
as may, from time to time, be assigned to him or her or them by the Board or the
President or as may be provided by law.
Section 4.7. Secretary. The Secretary shall have the duty to
record the proceedings of the meetings of the stockholders, the Board of
Directors and any committees in a book to be kept for that purpose, shall see
that all notices are duly given in accordance with the provisions of these
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by-laws or as required by law, shall be custodian of the records of the
Corporation, may affix the corporate seal to any document the execution of
which, on behalf of the Corporation, is duly authorized, and when so affixed may
attest the same, and, in general, shall perform all duties incident to the
office of secretary of a corporation and such other duties as may, from time to
time, be assigned to him or her by the Board or the President or as may be
provided by law.
Section 4.8. Treasurer. The Treasurer shall have charge of and
be responsible for all funds, securities, receipts and disbursements of the
Corporation and shall deposit or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust companies
or other depositories as shall, from time to time, be selected by or under
authority of the Board of Directors. If required by the Board, the Treasurer
shall give a bond for the faithful discharge of his or her duties, with such
surety or sureties as the Board may determine. The Treasurer shall keep or cause
to be kept full and accurate records of all receipts and disbursements in books
of the Corporation, shall render to the President and to the Board, whenever
requested, an account of the financial condition of the Corporation, and, in
general, shall perform all the duties incident to the office of treasurer of a
corporation and such other duties as may, from time to time, be assigned to him
or her by the Board or the President or as may be provided by law.
Section 4.9. Other Officers. The other officers, if any, of
the Corporation shall have such powers and duties in the management of the
Corporation as shall be stated in a resolution of the Board of Directors which
is not inconsistent with these by-laws and, to the extent not so stated, as
generally pertain to their respective offices, subject to the control of the
Board. The Board may require any officer, agent or employee to give security for
the faithful performance of his or her duties.
ARTICLE V
Stock
Section 5.1. Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed by or in the name of
the Corporation by the Chairman or Vice Chairman of the Board of Directors, if
any, or the President or a Vice President, and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary, of the Corporation,
certifying the number of shares owned by such holder in the Corporation. If such
certificate is manually signed by one officer or manually countersigned by a
transfer agent or by a registrar, any other signature on the certificate may be
a facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if such
person were such officer, transfer agent or registrar at the date of issue.
Section 5.2. Lost, Stolen or Destroyed Stock Certificates;
Issuance of New Certificates. The Corporation may issue a new certificate of
stock in the place of any certificate theretofore issued by it, alleged to have
been lost, stolen or destroyed, and the Corporation may require the owner of the
lost, stolen or destroyed certificate, or such owner's legal representative, to
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give the Corporation a bond sufficient to indemnify it against any claim that
may be made against it on account of the alleged loss, theft or destruction of
any such certificate or the issuance of such new certificate.
ARTICLE VI
Miscellaneous
Section 6.1. Fiscal Year. The fiscal year of the Corporation
shall be determined by the Board of Directors.
Section 6.2. Seal. The Corporation may have a corporate seal
which shall have the name of the Corporation inscribed thereon and shall be in
such form as may be approved from time to time by the Board of Directors. The
corporate seal may be used by causing it or a facsimile thereof to be impressed
or affixed or in any other manner reproduced.
Section 6.3. Waiver of Notice of Meetings of Stockholders,
Directors and Committees. Whenever notice is required to be given by law or
under any provision of the cer tificate of incorporation or these by-laws, a
written waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice unless so required by the certificate
of incorporation or these by-laws.
Section 6.4. Indemnification of Directors, Officers and
Employees. The Corporation shall indemnify to the full extent authorized by law
any person made or threatened to be made a party to any action, suit or
proceeding, whether criminal, civil, administrative or investigative, by reason
of the fact that such person or such person's testator or intestate is or was a
director, officer or employee of the Corporation or serves or served at the
request of the Corporation any other enterprise as a director, officer or
employee. For purposes of this by-law, the term "Corporation" shall include any
predecessor of the Corporation and any constituent corporation (including any
constituent of a constituent) absorbed by the Corporation in a consolidation or
merger; the term "other enterprise" shall include any corporation, partnership,
joint venture, trust or employee benefit plan; service "at the request of the
Corporation" shall include service as a director, officer or employee of the
Corporation which imposes duties on, or involves services by, such director,
officer or employee with respect to an employee benefit plan, its participants
or beneficiaries; any excise taxes assessed on a person with respect to an
employee benefit plan shall be deemed to be indemnifiable expenses; and action
by a person with respect to an employee benefit plan which such person
reasonably believes to be in the interest of the participants and beneficiaries
of such plan shall be deemed to be action not opposed to the best interests of
the Corporation.
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Section 6.5. Interested Directors; Quorum. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or committee
thereof which authorizes the contract or transaction, or solely because his or
her or their votes are counted for such purpose, if: (1) the material facts as
to his or her relationship or interest and as to the contract or transaction are
disclosed or are known to the Board or the committee, and the Board or committee
in good faith authorizes the contract or transaction by the affirmative votes of
a majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or (2) the material facts as to his or her
relationship or interest and as to the contract or transaction are disclosed or
are known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the stockholders;
or (3) the contract or transaction is fair as to the Corporation as of the time
it is authorized, approved or ratified, by the Board, a committee thereof or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board or of a committee which
authorizes the contract or transaction.
Section 6.6. Form of Records. Any records maintained by the
Corporation in the regular course of its business, including its stock ledger,
books of account and minute books, may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, microphotographs or any other information
storage device, provided that the records so kept can be converted into clearly
legible form within a reasonable time. The Corporation shall so convert any
records so kept upon the request of any person entitled to inspect the same.
Section 6.7. Amendment of By-Laws. These by-laws may be
amended or repealed, and new by-laws adopted, by the Board of Directors, but the
stockholders entitled to vote may adopt additional by-laws and may amend or
repeal any by-law whether or not adopted by them.
Section 6.8. Antitakeover Provisions. The Corporation hereby
elects not to be governed by any of the anti-takeover provisions of the Delaware
General Corporation Law (the "GCL"), including, without limitation, the
provisions of Section 203 of the GCL relating to transactions with interested
stockholders.
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EXHIBIT 3.3
CERTIFICATE OF DESIGNATIONS, RIGHTS AND PREFERENCES
OF A SERIES OF PREFERRED STOCK BY RESOLUTION
OF THE BOARD OF DIRECTORS PROVIDING FOR AN ISSUE OF 1,800,000
SHARES OF SERIES OF PREFERRED STOCK, $.01 PAR VALUE, DESIGNATED
AS THE "SERIES A CONVERTIBLE PREFERRED STOCK"
-----------------------------------
We, Ralph M. Ferrante, Chairman of the Board and Secretary, and Herbert
Paul, President and Assistant Secretary, of SWISS NATURAL FOODS, INC., a
Delaware corporation (hereinafter called the "Corporation"), pursuant to the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, do hereby make this Certificate of Designation under the corporate
seal of the Corporation and do hereby state and certify that pursuant to the
authority expressly vested in the Board of Directors of the Corporation by the
Certificate of Incorporation, the Board of Directors duly adopted the following
resolutions:
RESOLVED, that, pursuant to Article Fourth of the Certificate
of Incorporation (which authorizes 3,000,000 shares of Preferred Stock,
$.01 par value, of which no shares presently are issued and
outstanding), the Board of Directors hereby fixes the designation and
preferences and relative, participating, optional and other special
rights and qualifications, limitations and restrictions of a series of
1,800,000 shares of Series A Convertible Preferred Stock referred to
herein as the "Series A Convertible Preferred Stock" or "Series A
Preferred Shares."
RESOLVED, that each share of the Series A Convertible
Preferred Stock shall rank equally in all respects and shall be subject
to the following provisions:
1. Number of Shares. The number of shares constituting the
Series A Convertible Preferred Stock shall be and the same is hereby
fixed as 1,800,000.
2. Stated Capital. The amount to be represented in stated
capital at all times for each share of the Series A Convertible
Preferred Stock shall be its par value of $.01 per share.
3. Rank. Subject to Section 5, the Series A Convertible
Preferred Stock shall, with respect to rights on liquidation, rank
equivalent to all classes of the common stock, $0.01 par value per
share (collectively, the "Common Stock" or "Common Shares"), of the
Corporation.
4. Dividends. The holders of outstanding Series A Convertible
Preferred Stock, in preference to the holders of shares of the Common
Stock and any other capital stock of the Corporation ranking junior to
the Series A Convertible Preferred Stock as to the payment of
dividends, shall be entitled to receive out of funds legally available
for the purpose, cumulative cash dividends at the annual rate of $.08
per share in equal quarterly payments on the first day of March, June,
September and December of each year (each, a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date
which is at least 10 days after the date
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of original issue of the Series A Convertible Preferred Stock.
Dividends payable pursuant to this Section 4 shall begin to accrue and
be cumulative from the date of original issue of the Series A
Convertible Preferred Stock. Accrued but unpaid dividends shall not
bear interest and shall be paid in full prior to the payment of any
dividends to the holders of Common Stock. Dividends paid on the shares
of Series A Convertible Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A
Convertible Preferred Stock entitled to receive payment of dividends,
which record date shall be not less than ten days and not more than
sixty days prior to the date fixed for the payment thereof. Thereafter,
the Series A Convertible Preferred Stock will participate in any
dividends declared on the Common Stock, on an as converted basis.
5. Liquidation Rights. In the event of a voluntary or
involuntary liquidation, dissolution or winding up of the Corporation,
the holders of Series A Convertible Preferred Stock shall be entitled
to share with the holders of Common Shares pari passu in the assets of
the Corporation, on an as converted basis, whether such assets are
capital or surplus of any nature. A Reorganization (as defined in
Subsection 8(e) below) shall not be deemed to be a liquidation,
dissolution or winding up within the meaning of this Section 5.
6. Redemption. Shares of Series A Convertible Preferred Stock
may not be redeemed by the Corporation absent the unanimous consent of
the holders thereof.
7. Conversion Rights.
(a) The Series A Preferred Shares shall be
convertible upon the earliest to occur of (i) December 31, 1999 if the
closing of the Corporation's initial public offering of securities and
the closing of the sale of the over-allotment shares thereunder have
not occurred prior to such date; (ii) five (5) years after the closing
date of the Corporation's initial public offering of securities; (iii)
the first fiscal year of the Corporation or any trailing 12 (twelve)
month period in which the Corporation's financial statement shows
earnings before interest, taxes, charges resulting from stock,
debenture, or stock option issuances and underwriters' consulting fees
have equaled or exceeded $750,000; (iv) the closing date of any
acquisition of all or a portion of the equity securities of the
Corporation, the acquisition of all or a portion of its assets, the
merger of the Corporation with or into another entity regardless of
whether the Corporation is the surviving entity, or any additional
equity financing by the Corporation; or (v) the date on which the
closing price of the Common Stock as reported by the NASDAQ system or
its successor, or any national securities exchange on which such Common
Stock is listed (or if not so reported, the average of the closing bid
and asked prices as furnished by two
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members of the NASD selected by the Corporation for that purpose) is
equal to or greater than ten dollars ($10.00) per share.
(b) The date on which a conversion of Series A
Preferred Shares takes place shall be termed the "Conversion Date" for
such shares. The conversion of Series A Preferred Shares shall be on
the basis of one share of Common Stock for one Series A Preferred
Share; provided, however, that such one for one conversion rate shall
be subject to adjustment from time to time in certain instances as
provided in Section 8 below (the conversion rate in effect at any given
time shall be termed the "Conversion Rate").
(c) As promptly as practicable after the Conversion
Date, the Corporation shall issue and deliver to the holders at the
office of the Corporation for the Series A Convertible Preferred Stock,
a certificate or certificates for the number of full shares of Common
Stock to which such holders are entitled and a check or cash with
respect to any fractional interest in a share of Common Stock as
provided in Subsection 7(d) below. Each holder shall be deemed to have
become a stockholder of record of the Common Stock on the Conversion
Date.
(d) No fractional shares of Common Stock or script
shall be issued upon conversion of Series A Convertible Preferred
Stock. The number of full shares of Common Stock issuable upon
conversion of such Series A Preferred Shares shall be computed on the
basis of the aggregate number of Series A Preferred Shares so
surrendered. Instead of any fractional shares of Common Stock which
otherwise would be issuable upon conversion of any shares of Series A
Convertible Preferred Stock, the Corporation shall pay a cash
adjustment in respect to such fractional interest based upon the Market
Price (as defined in Subsection 12(a)) of the Common Stock at the close
of business on the last business day prior to the Conversion Date.
(e) If any shares of Common Stock to be reserved for
the purpose of conversion of Series A Convertible Preferred Stock
require registration or listing with or approval of any governmental
authority, stock exchange or other regulatory body under any federal or
state law or regulation or otherwise before such shares may be validly
issued or delivered upon conversion, the Corporation shall at its sole
cost and expense in good faith and as expeditiously as possible
endeavor to secure such registration, listing or approval, as the case
may be.
(f) All shares of Common Stock which may be issued
upon conversion of Series A Convertible Preferred Stock upon issuance
will be validly issued, fully paid and nonassessable. The Corporation
will pay any and all documentary taxes that may be payable in respect
of any issue or delivery of shares of Common Stock on conversion of
Series A Preferred Shares pursuant hereto. The Corporation shall not be
required to pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of shares of Common Stock in a name
other than that in which the Series A Preferred Shares so converted are
registered,
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and no such issue or delivery shall be made unless and until the person
requesting such transfer has paid to the Corporation the amount of any
such tax or has established to the satisfaction of the Corporation that
such tax has been paid. If and to the extent the Corporation is
required to withhold taxes in connection with the conversion of Series
A Preferred Shares, the holders thereof may, at their option (and
subject to compliance with federal securities laws), effect such
withholding by causing the Corporation to retain a portion of the
common Stock issuable upon such conversion (valued at Market Price).
(g) All certificates representing Series A Preferred
Shares surrendered for conversion shall be appropriately canceled on
the books of the Corporation and the shares so converted represented by
such certificates shall be restored to the status of authorized but
unissued shares of Preferred Stock of the Corporation.
8. Adjustment of Conversion Rights.
(a) In case the Corporation shall, with respect to
its Common Stock, (i) pay a dividend or make a distribution on its
shares of Common Stock which is paid or made in shares of Common Stock
or in securities convertible into or exchangeable for its Common Stock
(in which latter event the number of shares of Common Stock initially
issuable upon the conversion or exchange of such securities shall be
deemed to have been distributed), (ii) subdivide its outstanding shares
of Common Stock, (iii) combine its outstanding shares of Common Stock
into a smaller number of shares, or (iv) issue by reclassification of
its Common Stock any shares of capital stock of the Corporation, the
Conversion Rate in effect immediately prior thereto shall be adjusted
so that each holder of a Series A Preferred Share thereafter converted
shall be entitled to receive the number and kind of shares of Common
Stock or other capital stock of the Corporation which it would have
owned or been entitled to receive in respect of such Series A Preferred
Share immediately after the happening of any of the events described
above had such Series A Preferred Share been converted immediately
prior to the happening of such event. An adjustment made pursuant to
this Section shall become effective immediately after the record date,
in the case of a dividend, and shall become effective immediately after
the effective date, in the case of subdivision, combination or
reclassification. If, as a result of an adjustment made pursuant to
this Subsection 8(a), the holder of any Series A Preferred Share
thereafter surrendered for conversion shall become entitled to receive
shares of two or more classes of capital stock or shares of Common
Stock and other capital stock of the Corporation, the Board of
Directors (whose determination shall be conclusive), shall determine
the allocation of the adjusted Conversion Rate between or among shares
of such classes of capital stock or shares of Common Stock and other
capital stock.
In the event that at any time as a result of an
adjustment made pursuant to this Subsection 8(a), the holder of any
Series A Preferred Share thereafter surrendered for conversion shall
become entitled to receive any shares of the
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Corporation other than shares of Common Stock, thereafter the
Conversion Rate with respect to other shares so receivable upon
conversion of any Series A Preferred Share shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Common
Stock contained in this Section 8.
(b) In case the Corporation shall issue rights or
warrants to all holders of its Common Stock entitling them to subscribe
for or purchase shares of Common Stock (or securities convertible into
or exchangeable for its Common Stock) at a price per share less than
the Market Price per share of Common Stock on the record date mentioned
below (other than pursuant to an automatic dividend reinvestment plan
of the Corporation or any substantially similar plan) the Conversion
Rate shall be adjusted so that the same shall equal the rate determined
by multiplying the Conversion Rate in effect immediately prior to the
issuance of such rights or warrants by a fraction, of which the
numerator shall be the number of shares of Common Stock outstanding
(excluding treasury shares) on the date of issuance of such rights or
warrants plus the number of additional shares of Common Stock offered
for subscription or purchase, and of which the denominator shall be the
number of shares of Common Stock outstanding (excluding treasury
shares) on the date of issuance of such rights or warrants, plus the
number of shares of Common Stock which the aggregate subscription or
purchase price of the total number of shares offered for subscription
or purchase would purchase at such Market Price. Such adjustment shall
become effective immediately after the opening of business on the day
following the record date for such rights or warrants.
In case the Corporation shall distribute to all
holders of its Common Stock evidences of its indebtedness or assets
(excluding cash dividends out of legally available funds and dividends
or distributions payable in capital stock or other securities for which
adjustment is made pursuant to Subsection 8(a) and excluding for
purposes of this section rights or warrants to subscribe to securities
of the Corporation), then in each such case the Conversion Rate shall
be adjusted so that the same shall equal the rate determined by
multiplying the Conversion Rate in effect immediately prior to such
distribution by a fraction, of which the numerator shall be the Market
Price per share of Common Stock on the record date mentioned below, and
of which the denominator shall be such Market Price per share of Common
Stock less the then fair market value (as determined by the Board of
Directors of the Corporation, whose determination shall be conclusive)
of the portion of the assets or evidences of indebtedness so
distributed applicable to one share of Common Stock. Such adjustment
shall become effective immediately after the record date for the
determination of stockholders entitled to receive such distribution.
Anything in this Section 8 to the contrary notwithstanding, the
Corporation shall be entitled to make such increase in the number of
shares of Common Stock to be acquired upon conversion of a Series A
Preferred Share, in addition to those required by this Section 8, as it
in its discretion shall determine to be advisable in order that any
stock dividend, subdivision of shares, distribution of rights to
purchase stock or securities,
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or distribution of securities convertible into or exchangeable for
stock hereafter made by the Corporation to its stockholders shall not
be taxable to the recipients.
(c) On the expiration of any rights or warrants
referred to in Subsection 8(b), or the termination of any rights of
conversion or exchange referred to in Subsection 8(a)(i), the
Conversion Rate then in effect shall forthwith be readjusted to such
Conversion Rate as would have obtained had the adjustment made upon the
issuance of such rights or warrants or convertible or exchangeable
securities been made upon the basis of the delivery of only the number
of shares of Common Stock actually delivered upon the exercise of such
rights or warrants or upon the conversion or exchange of such
securities.
(d) Except as provided in Subsections 8(a), 8(b) and
8(c) above, no other event shall effect a change in the Conversion
Rate. Whenever the Conversion Rate is adjusted as herein provided, the
Chief Financial Officer of the Corporation shall compute the adjusted
Conversion Rate in accordance with the provisions of this Section 8 and
shall prepare a certificate setting forth such Conversion Rate showing
in detail the facts upon which such adjustment is made (the "Adjustment
Certificate"). Such Adjustment Certificate shall forthwith be filed
with the corporate records of the Company and a notice thereof mailed
to the holders of record of the outstanding shares of such series.
(e) It the event of any consolidation or merger to
which the Corporation is a party other than a consolidation or merger
in which the Corporation is the continuing corporation, or the sale or
conveyance to another corporation of the property of the Corporation as
an entirety or substantially as an entirety or any statutory exchange
of securities with another corporation (including any exchange effected
in connection with a merger of a third corporation into the
Corporation) (each such transaction referred to herein as
"Reorganization"), no adjustment of conversion rights or the Conversion
Rate shall be made; provided, however, each holder of a Series A
Preferred Share shall thereupon be entitled to receive upon conversion
of the Series A Preferred Share, and provision shall be made therefor
in any agreement relating to a Reorganization, the kind and number of
securities or property (including cash) of the corporation ("Successor
Corporation") resulting from such consolidation or surviving such
merger or to which such properties and assets shall have been sold or
otherwise transferred or with whom securities have been exchanged,
which such holder would have owned or been entitled to receive as a
result of such Reorganization had such Series A Preferred Share been
converted immediately prior to such Reorganization (and assuming such
holder failed to make an election, if any was available, as to the kind
or amount of securities, property or cash receivable by reason of such
Reorganization; provided that if the kind or amount of securities,
property or cash receivable upon such Reorganization is not the same
for each share of Common Stock in respect of which such rights of
election shall not have been exercised ("non-electing share") then for
the purpose of this Subsection 8(e) the kind and amount of securities,
property or cash receivable upon such
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Reorganization for each non-electing share shall be deemed to be the
kind and amount so receivable per share by a plurality of the
non-electing shares). In any case, appropriate adjustment shall be made
in the application of the provisions herein set forth with respect to
the rights and interests thereafter of the holders of Series A
Preferred Shares, to the end that the provisions set forth herein
(including the specified changes and other adjustments to the
Conversion Rate) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares, other securities or
property thereafter receivable upon conversion of the Series A
Preferred Shares. The provisions of this Subsection 8(e) shall
similarly apply to successive Reorganizations.
(f) The Corporation shall at all times reserve and
keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of Series A
Convertible Preferred Stock, such number of shares of Common Stock as
shall from time to time be sufficient to effect a conversion of all
outstanding Series A Convertible Preferred Stock, and if at any time
the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the conversion of all then outstanding shares
of the Series A Convertible Preferred Stock, the Corporation shall
promptly take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such
purpose. In the event of a Reorganization to which Subsection 8(e)
above applies, effective provision shall be made in the certificate or
articles of incorporation, merger or consolidation or otherwise of the
Successor Corporation so that such Successor Corporation will at all
times reserve and keep available a sufficient number of shares of
common stock or other securities or property to provide for the
conversion of the Series A Convertible Preferred Stock in accordance
with the provisions of this Section 8.
(g) The Corporation shall not amend its Certificate
of Incorporation, or participate in any reorganization, sale or
transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action for the purpose of avoiding
or seeking to avoid the observance or performance of any of the terms
to be observed or performed hereunder by the Corporation, but shall at
all times in good faith use its best efforts, and assist in carrying
out all such action as may be reasonably necessary or appropriate in
order to protect the conversion rights of the holders of the Series A
Convertible Preferred Stock set forth herein.
9. Voting Rights.
(a) The holders of the Series A Convertible Preferred
Stock shall vote on all matters with the holders of the Common Stock
(and not as a separate class) on a one vote per share basis. The
holders of the Series A Convertible Preferred Stock shall be entitled
to receive all notices relating to voting as are required to be given
to the holders of the Common Stock.
(b) In addition to any other rights provided by
Subsection 9(a) or by applicable law, so long as any Series A
Convertible Preferred Stock shall be
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outstanding, the Corporation shall not, without first obtaining the
affirmative vote or written consent of all of the holders of the Series
A Preferred Shares outstanding:
(i) increase the authorized number of shares
of Series A Convertible Preferred Stock;
(ii) create any class or series of shares
ranking prior or pari passu to the Series A Convertible
Preferred Stock either as to dividends or upon liquidation;
(iii) amend, alter or repeal any of the
preferences or rights of the Series A Convertible Preferred
Stock; or
(iv) authorize any reclassification of the
Series A Convertible Preferred Stock.
10. Transferability. Subject to restriction imposed under
federal and state securities laws, the Series A Preferred Shares shall
be freely transferable by the holders thereof.
11. Registration Rights. If and to the extent that the shares
of Common Stock issuable upon conversion of the Series A Preferred
Shares are not includable in a registration statement filed by the
Corporation, the Corporation will prepare and file, at its own expense,
a shelf registration statement on Form S-3 (or such other available
Form if Form S-3 shall not be available to the Corporation) to enable
the holders thereof to resell shares of Common Stock acquired upon
conversion of the Series A Preferred Shares.
12. Definitions.
(a) The "Market Price" per share of Common Stock at
the time as of which such "Market Price" is determined shall be deemed
to be the average of the Closing Prices for twenty (20) business days
selected by the Corporation out of the thirty (30) consecutive days
immediately preceding the date as of which such "Market Price" is
determined, except that for purposes of Section 7(d) above, the "Market
Price" shall be the Closing Price on the last business day preceding
the event requiring such determination. For the purpose of the
foregoing sentence, a "business day" means a day on which the exchange
or over-the-counter market on which the Common Shares are traded was
open for at least one-half (1/2) of its normal business day.
(b) The "Closing Price" on any day shall be the last
sale price, regular way, as reported in a composite published report of
transactions which includes transactions on the exchange or other
principal markets in which the Common Shares are traded or, if there is
no such composite report as to any day, the last reported sale price,
regular way (or if there is no such reported sale on such day, the
average of the
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<PAGE>
closing reported bid and asked prices) on the principal United States
securities trading market (whether a stock exchange, NASDAQ, or
otherwise) in which the Common Shares are traded; provided, however,
that if the Common Shares are not publicly traded or listed during the
time of any computation pursuant to this section, their "Market Price"
for the purposes hereof shall be the fair value as determined in good
faith and certified to the Corporation by any person agreed upon by,
and mutually satisfactory to, the President of the Corporation and the
holders of the Series A Convertible Preferred Stock; provided, however,
that if such persons are unable to agree upon a mutually satisfactory
person, then the "Market Price" shall be the fair value as determined
in good faith by the Board of Directors of the Corporation.
IN WITNESS WHEREOF, said SWISS NATURAL FOODS, INC. has caused
this Certificate of Designation to be signed by Ralph M. Ferrante, its Chairman
of the Board, and attested to by Herbert M. Paul, its Assistant Secretary this
30th day of June, 1999.
SWISS NATURAL FOODS, INC.
By:/s/Ralph M. Ferrante
-----------------------
Ralph M. Ferrante
Chairman of the Board
CORPORATE SEAL
ATTEST:
By:/s/Herbert M. Paul
-------------------
Herbert M. Paul
Assistant Secretary
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<PAGE>
Exhibit 4.3
No sale, offer to sell or transfer of the securities represented by this
certificate or any interest therein shall be made unless a registration
statement under the Securities Act of 1933, as amended, with respect to such
transaction is then in effect, or the issuer has received an opinion of counsel
satisfactory to it that such transfer does not require registration under that
Act.
This Warrant will be void after 5:00 p.m. New York time on
, 2004 (i.e. five years from the effective date of the Registration
Statement).
REPRESENTATIVE'S STOCK WARRANT
WARRANT NO. 1
To Subscribe for and Purchase Shares of
Swiss Natural Foods, Inc.
(Transferability Restricted as Provided in Paragraph 8 Below)
THIS CERTIFIES THAT, for value received, or registered
assigns, is entitled to subscribe for and purchase from SWISS NATURAL FOODS,
INC., incorporated under the laws of the State of Delaware (the "Company") up to
fully paid and non-assessable shares of Common Stock (the "Shares") of the
Company, as hereinafter defined, at the "Purchase Price" and during the period
hereinafter set forth, subject, however, to the provisions and upon the terms
and conditions hereinafter set forth. This Warrant is one of an issue of the
Company's Common Stock Purchase Warrants (herein called the "Warrants"),
identical in all respects except as to the names of the holders thereof and the
number of Shares purchasable thereunder, representing on the original issue
thereof rights to purchase up to 120,000 Shares.
1. As used herein:
(a) "Common Stock" or "Common Shares" shall initially refer to
the Company's Common Stock, $.01 par value, per share as more fully set forth in
Section 5 hereof.
(b) "Purchase Price" shall be $7.25 per share (145% of the
public offering price per share) which is subject to adjustment pursuant to
Section 4 hereof.
(c) "Underwriter" or "Representative" shall refer to
Comprehensive Capital Corporation.
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(d) "Underwriting Agreement" shall refer to the Underwriting
Agreement dated as of , 1999 between the Company and the Underwriter.
(e) "Warrants" or "Representative's Stock Warrants" shall
refer to Warrants to purchase an aggregate of up to 120,000 Shares issued to the
Underwriter or its designees by the Company pursuant to the Underwriting
Agreement, as such may be adjusted from time to time pursuant to the terms of
Section 4 and including any Warrants represented by any certificate issued from
time to time in connection with the transfer, partial exercise, exchange of any
Warrants or in connection with a lost, stolen, mutilated or destroyed Warrant
certificate, if any, or to reflect an adjusted number of Shares.
(f) "Underlying Securities" shall refer to and include the
Common Shares issuable or issued upon exercise of the Representative's Stock
Warrants.
(g) "Holders" shall mean the registered holder of such
Representative's Stock Warrants or any issued Underlying Securities.
(h) "Effective Date" shall refer to the effective date of the
Form SB-2 Registration Statement File No. 333-_______________.
(i) Warrant Agreement shall refer to the agreement dated as
of ,1999 by and among the Company, the Representative and .
(j) "Representative's Warrants" shall refer to Warrants to
purchase up to 120,000 Warrants identical to the Warrants being offered to the
public and which are covered by a separate Warrant.
2. The purchase rights represented by this Warrant may be exercised by
the holder hereof, in whole or in part at any time, and from time to time,
during the period commencing on the Effective Date until ________________, 2004
(the "Expiration Date"), by the presentation of this Warrant, with the purchase
form attached duly executed, at the Company's office (or such office or agency
of the Company as it may designate in writing to the Holder hereof by notice
pursuant to Section 14 hereof), and upon payment by the Holder to the Company in
cash, or by certified check or bank draft of the Purchase Price for such Shares
of Common Stock. The Company agrees that the Holder hereof shall be deemed the
record owner of such Underlying Securities as of the close of business on the
date on which this Warrant shall have been presented and payment made for such
Shares as aforesaid. Certificates for the Underlying Securities so purchased
shall be delivered to the Holder hereof within a reasonable time, not exceeding
five (5) days, after the rights represented by this Warrant shall have been so
exercised. If this Warrant shall be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, deliver a new Representative's
Stock Warrant evidencing the rights of the Holder hereof to purchase the balance
of the Shares which such Holder is entitled to purchase hereunder. Exercise in
full of the rights represented by this Warrant shall not extinguish the rights
granted under Section 9 hereof.
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<PAGE>
3. Subject to the provisions of Section 8 hereof, (i) this Warrant is
exchangeable at the option of the Holder at the aforesaid office of the Company
for other Representative's Stock Warrants of different denominations entitling
the Holder thereof to purchase in the aggregate the same number of Shares of
Common Stock as are purchasable hereunder; and (ii) this Warrant may be divided
or combined with other Representative's Stock Warrants which carry the same
rights, in either case, upon presentation hereof at the aforesaid office of the
Company together with a written notice, signed by the Holder hereof, specifying
the names and denominations in which new Representative's Stock Warrants are to
be issued, and the payment of any transfer tax due in connection therewith.
4. Subject and pursuant to the provisions of this Section 4, the
Purchase Price and number of Common Shares subject to this Warrant shall be
subject to adjustment from time to time as set forth hereinafter.
(A) If the Company shall, at any time, subdivide its
outstanding Common Shares by recapitalization, reclassification, split up
thereof, or other such issuance without additional consideration, the
appropriate Purchase Price immediately prior to such subdivision shall be
proportionately decreased, and if the Company shall at any time combine the
outstanding Common Shares by recapitalization, reclassification or combination
thereof, the Purchase Price immediately prior to such combination shall be
proportionately increased. Any such adjustment to the Purchase Price or the
corresponding adjustment to the Purchase Price shall become effective at the
close of business on the record date for such subdivision or combination. No
adjustment to the Purchase Price and the number of shares issuable upon exercise
of this Warrant shall be required if such adjustment provides the holders of
this Warrant with disproportionate rights, privileges and economic benefits
which are not provided to the public shareholders.
(B) In the event that prior to the Representative's Stock
Warrant's expiration date the Company adopts a resolution to merge, consolidate,
or sell percentages in all of its assets, each Warrant holder upon the exercise
of his Representative's Stock Warrant will be entitled to receive the same
treatment as a holder of any other share of Common Stock. In the event the
Company adopts a resolution for the liquidation, dissolution, or winding up of
the Company's business, the Company will give written notice of such adoption of
a resolution to the registered holders of the Representative's Stock Warrants.
Thereupon all liquidation and dissolution rights under this Warrant will
terminate at the end of thirty (30) days from the date of the notice to the
extent not exercised within those thirty (30) days.
(C) If any capital reorganization or reclassification of the
capital stock of the Company or consolidation or merger of the Company with
another corporation, shall be effected in such a way that holders of Common
Stock shall be entitled to receive stock, securities, cash or assets with
respect to or in exchange for Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, the Company or
such successor or purchasing corporation, as the case may be, shall execute with
the Warrant Agent a supplemental Warrant Agreement providing that each
registered
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<PAGE>
holder of a Representative's Stock Warrant shall have the right thereafter and
until the expiration date to exercise such Warrant for the kind and amount of
stock, securities, cash or assets receivable upon such reorganization,
reclassification, consolidation, merger or sale by a holder of the number of
shares of Common Stock for the purchase of which such Warrant might have been
exercised immediately prior to such reorganization, reclassification,
consolidation, merger or sale, subject to adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
4.
(D) In case at any time the Company shall declare a dividend
or make any other distribution upon any stock of the Company payable in Common
Stock, then such Common Stock issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without consideration.
(E) Upon any adjustment of the appropriate respective Purchase
Price as hereinabove provided, the number of Common Shares issuable upon
exercise of each class of Warrant shall be changed to the number of shares
determined by dividing (i) the aggregate Purchase Price payable for the purchase
of all shares issuable upon exercise of that class of Warrant immediately prior
to such adjustment by (ii) the appropriate Purchase Price per share in effect
immediately after such adjustment.
(F) No adjustment in the Purchase Price shall be required
under Section 4 hereof unless such adjustment would require an increase or
decrease in such price of at least 1% provided, however, that any adjustments
which by reason of the foregoing are not required at the time to be made shall
be carried forward and taken into account and included in determining the amount
of any subsequent adjustment, and provided further, however, that in case the
Company shall at any time subdivide or combine the outstanding Common Shares as
a dividend, said amount of 1% per share shall forthwith be proportionately
increased in the case of a combination or decreased in the case of a subdivision
or stock dividend so as to appropriately reflect the same.
(G) On the effective date of any new Purchase Price the number
of shares as to which this Warrant may be exercised shall be increased or
decreased so that the total sum payable to the Company on the exercise of this
Warrant shall remain constant.
(H) The form of Representative's Stock Warrant need not be
changed because of any change pursuant to this Article, and Representative's
Stock Warrants issued after such change may state the Purchase Price and the
same number of shares as is stated in the Representative's Stock Warrants
initially issued pursuant to this Warrant. However, the Company may at any time
in its sole discretion (which shall be conclusive) make any change in the form
of Representative's Stock Warrant that the Company may deem appropriate and that
does not affect the substance thereof, and any Representative's Stock Warrant
thereafter issued or countersigned, whether in exchange or substitution for an
outstanding Warrant or otherwise, may be in the form as so changed.
5. For the purposes of this Warrant, the terms "Common Shares"
or "Common Stock" shall mean (i) the class of stock designated as the Common
Stock, $.01
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<PAGE>
par value, of the Company on the date set forth on the first page hereof or (ii)
any other class of stock resulting from successive changes or re-classifications
of such Common Stock consisting solely of changes in par value, or from no par
value to par value, or from par value to no par value. If at any time, as a
result of an adjustment made pursuant to Section 4, the securities or other
property obtainable upon exercise of this Warrant shall include shares or other
securities of the Company other than Common Shares or securities of another
corporation or other property, thereafter, the number of such other shares or
other securities or property so obtainable shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Shares contained in Section 4 and all
other provisions of this Warrant with respect to Common Shares shall apply on
like terms to any such other shares or other securities or property. Subject to
the foregoing, and unless the context requires otherwise, all references herein
to Common Shares shall, in the event of an adjustment pursuant to Section 4, be
deemed to refer also to any other securities or property then obtainable as a
result of such adjustments.
6. The Company covenants and agrees that:
(a) During the period within which the rights represented by
the Representative's Stock Warrant may be exercised, the Company shall, at all
times, reserve and keep available out of its authorized capital stock, solely
for the purposes of issuance upon exercise of this Warrant, such number of its
Common Shares as shall be issuable upon the exercise of this Warrant and at its
expense will obtain the listing thereof on all national securities exchanges on
which the Common Shares are then listed; and if at any time the number of
authorized Common Shares shall not be sufficient to effect the exercise of this
Warrant, the Company will take such corporate action as may be necessary to
increase its authorized but unissued Common Shares to such number of shares as
shall be sufficient for such purpose; the Company shall have analogous
obligations with respect to any other securities or property issuable upon
exercise of this Warrant.
(b) All Common Shares which may be issued upon exercise of the
rights represented by this Warrant will, upon issuance be validly issued, fully
paid, nonassessable and free from all taxes, liens and charges with respect to
the issuance thereof.
(c) All original issue taxes payable in respect of the
issuance of Common Shares upon the exercise of the rights represented by this
Warrant shall be borne by the Company but in no event shall the Company be
responsible or liable for income taxes or transfer taxes upon the transfer of
any Representative's Stock Warrants.
7. Until exercised, this Warrant shall not entitle the Holder hereof to
any voting rights or other rights as a shareholder of the Company, except that
the Holder of this Warrant shall be deemed to be a shareholder of this Company
for the purpose of bringing suit on the ground that the issuance of shares of
stock of the Company is improper under the New York Corporation Law.
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<PAGE>
8. This Warrant and the Underlying Securities shall not be sold,
transferred, assigned or hypothecated for a period of twelve (12) months from
the Effective Date, except to officers or partners of the Representative, and/or
the other underwriters and/or selected dealers who participated in such
offering, or the officers or partners of such underwriters and/or selected
dealers. In no event shall this Warrant and the Underlying Securities be sold,
transferred, assigned or hypothecated except in conformity with the applicable
provisions of the Securities Act of 1933, as then in force (the "Act"), or any
similar Federal statute then in force, and all applicable "Blue Sky" laws.
9. The Holder of this Warrant, by acceptance hereof, agrees that, prior
to the disposition of this Warrant or of any Underlying Securities theretofore
purchased upon the exercise hereof, under circumstances that might require
registration of such securities under the Act, or any similar federal statute
then in force, such Holder will give written notice to the Company expressing
such Holder's intention of effecting such disposition, and describing briefly
such Holder's intention as to the disposition to be made of this Warrant and/or
the Underlying Securities theretofore issued upon exercise hereof. Promptly upon
receiving such notice, the Company shall present copies thereof to its counsel
and the provisions of the following subdivisions shall apply:
(a) If, in the opinion of such counsel, the proposed
disposition does not require registration under the Act, or any similar federal
statute then in force, of this Warrant and/or the securities issuable or issued
upon the exercise of this Warrant, the Company shall, as promptly as
practicable, notify the Holder hereof of such opinion, whereupon such holder
shall be entitled to dispose of this Warrant and/or such Underlying Securities
theretofore issued upon the exercise hereof, all in accordance with the terms of
the notice delivered by such Holder to the Company.
(b) If, in the opinion of such counsel, such proposed
disposition requires such registration under the Act, or similar federal statute
then in effect, of this Warrant and/or the Underlying Securities issuable or
issued upon the exercise of this Warrant, the Company shall promptly give
written notice of such opinion to the Holder hereof and to the then holders of
the securities theretofore issued upon the exercise of this Warrant at the
respective addresses thereof shown on the books of the Company. The registration
rights contained in Section 15 of the Underwriting Agreement are incorporated by
reference as if set forth in their entirety herein.
10. The Company agrees to indemnify and hold harmless the holder of
this Warrant, or of securities issuable or issued upon the exercise hereof, from
and against any claims and liabilities caused by any untrue statement of a
material fact, or omission to state a material fact required to be stated, in
any such registration statement or prospectus except insofar as such claims or
liabilities are caused by any such untrue statement or omission based on
information furnished in writing to the Company by such holder, or by any other
such holder affiliated with the holder who seeks indemnification, as to which
the holder hereof, by acceptance hereof, agrees to indemnify and hold harmless
the Company.
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<PAGE>
11. If this Warrant, or any of the securities issuable pursuant hereto,
require qualification or registration with, or approval of, any governmental
official or authority (other than registration under the Act, or any similar
federal statute at the time in force), before such securities may be issued on
the exercise hereof, the Company, at its expense, will take all requisite action
in connection with such qualification, and will use its best efforts to cause
such securities and/or this Warrant to be duly registered or approved, as may be
required.
12. This Warrant is exchangeable, upon its surrender by the registered
holder at such office or agency of the Company as may be designated by the
Company, for new Representative's Stock Warrants of like tenor, representing, in
the aggregate, the right to subscribe for and purchase the number of Common
Shares that may be subscribed for and purchased hereunder, each of such new
Representative's Stock Warrants to represent the right to subscribe for and
purchase such number of Common Shares as shall be designated by the registered
holder at the time of such surrender. Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant, and,
in the case of any such loss, theft or destruction, upon delivery of a bond of
indemnity satisfactory to the Company, or in the case of such mutilation, upon
surrender or cancellation of this Warrant, the Company will issue to the
registered holder a new Representative's Stock Warrant of like tenor, in lieu of
this Warrant, representing the right to subscribe for and purchase the number of
Common Shares that may be subscribed for and purchased hereunder. Nothing herein
is intended to authorize the transfer of this Warrant except as permitted under
Paragraph 8.
13. Every holder hereof, by accepting the same, agrees with any
subsequent holder hereof and with the Company that this Warrant and all rights
hereunder are issued and shall be held subject to all of the terms, conditions,
limitations and provisions set forth in this Warrant, and further agrees that
the Company and its transfer agent may deem and treat the registered holder of
this Warrant as the absolute owner hereof for all purposes and shall not be
affected by any notice to the contrary.
14. All notices required hereunder shall be given by first-class mail,
postage prepaid; if given by the holder hereof, addressed to the Company at 1031
Route 9W, Grandview, New York 10960 or such other address as the Company may
designate in writing to the holder hereof; and if given by the Company,
addressed to the holder at the address of the holder shown on the books of the
Company.
15. The validity, construction and enforcement of this Warrant shall be
governed by the laws of the State of New York and jurisdiction is hereby vested
in the Courts of said State in the event of the institution of any legal action
under this Warrant.
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<PAGE>
IN WITNESS WHEREOF, SWISS NATURAL FOODS, INC. has caused this
Warrant to be signed by its duly authorized officers under its corporate seal,
to be dated as of ____________________, 1999.
Swiss Natural Foods, Inc.
By:________________________
(Corporate Seal) Herbert Paul, President
Attest:
_____________________________
Ralph M. Ferrante, Secretary
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<PAGE>
PURCHASE FORM
To Be Executed
Upon Exercise of Warrant
The undersigned hereby exercises the right to purchase ____ Common Shares
evidenced by the within Warrant, according to the terms and conditions thereof,
and herewith makes payment of the purchase price in full. The undersigned
requests that certificates for such shares shall be issued in the name set forth
below.
Dated:
_________________________________
Signature
_________________________________
Print Name of Signatory
_________________________________
Name to whom certificates are to
be issued if different from above
Address:_________________________
_________________________________
Social Security No. or other
identifying number_______________
If said number of shares shall not be all the shares purchasable under
the within Warrant, the undersigned requests that a new Warrant for the
unexercised portion shall be registered in the name of :
_________________________________
(Please Print)
Address:_________________________
_________________________________
Social Security No. or other
identifying number: ______________
_________________________________
Signature
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<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED , hereby
sells assigns and transfers to , Soc. Sec. No.
[ ] the within Warrant, together with all rights, title and interest therein,
and does hereby irrevocably constitute and appoint attorney to transfer such
Warrant on the register of the within named Company, with full power of
substitution.
_________________________________
Signature
Dated:
__________________________
Signature Guaranteed:
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Exhibit 4.4
No sale, offer to sell or transfer of the securities represented by this
certificate or any interest therein shall be made unless a registration
statement under the Securities Act of 1933, as amended, with respect to such
transaction is then in effect, or the issuer has received an opinion of counsel
satisfactory to it that such transfer does not require registration under that
Act.
This Warrant will be void after 5:00 p.m. New York time on the earlier
of __________ 2004 (i.e. five years from the effective date of the Registration
Statement) or the Warrant Expiration Date of the Warrants as defined in the
Warrant Agreement.
REPRESENTATIVE'S WARRANT TO PURCHASE
COMMON STOCK PURCHASE WARRANT
WARRANT NO. 1
To Subscribe for and Purchase
Common Stock Purchase Warrants of
SWISS NATURAL FOODS, INC.
(Transferability Restricted as Provided in Paragraph 8 Below)
THIS CERTIFIES THAT, for value received, ____________ or
registered assigns, is entitled to subscribe for and purchase from Swiss Natural
Foods, Inc., incorporated under the laws of the State of Delaware (the
"Company") up ____________ to fully paid Common Stock Purchase Warrants of the
Company, as hereinafter defined, at the "Purchase Price" and during the period
hereinafter set forth, subject, however, to the provisions and upon the terms
and conditions hereinafter set forth. This Warrant is one of an issue of the
Company's Representative's Warrants (as defined herein) to purchase Common Stock
Purchase Warrants, identical in all respects except as to the names of the
holders thereof and the number of Common Stock Purchase Warrants purchasable
thereunder, representing on the original issue thereof rights to purchase up to
120,000 Common Stock Purchase Warrants.
1. As used herein:
(a) "Common Stock" or "Common Shares" shall initially refer to
the Company's Common Stock, $.01 par value, as more fully defined in the Warrant
Agreement.
(b) "Purchase Price" shall be $.2175 per Warrant which is
subject to adjustment pursuant to Section 4 hereof.
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(c) "Underwriter" or "Representative" shall refer to
COMPREHENSIVE CAPITAL CORPORATION.
(d) "Underwriting Agreement" shall refer to the Underwriting
Agreement dated as of 1999 between the Company and the Underwriter.
(e) "Representative's Warrants" or "this Warrant" shall refer
to Warrants to purchase an aggregate of up to 120,000 Common Stock Purchase
Warrants issued to the Underwriter or its designees by the Company pursuant to
the Underwriting Agreement, as such may be adjusted from time to time pursuant
to the terms of Section 4 and including any Representative's Warrants
represented by any certificate issued from time to time in connection with the
transfer, partial exercise, exchange of any Representative's Warrants or in
connection with a lost, stolen, mutilated or destroyed Representative's Warrant
certificate, if any, or to reflect an adjusted number of Representative's
Warrants.
(f) "Common Stock Purchase Warrants" issuable upon exercise of
the Representative's Warrants shall be identical in all respects to the Common
Stock Purchase Warrants sold to the public in the Form SB-2 Registration
Statement File No.
333- and covered by the Warrant Agreement.
(g) "Holders" shall mean the registered holder of the
Representative's Warrants or any Common Stock Purchase Warrants issued upon
exercise of same.
(h) "Effective Date" shall refer to the effective date of the
Form SB-2 Registration Statement File No. 333- .
(i) Warrant Agreement shall refer to the agreement dated as
of , 1999 by and among the Company, the Representative and .
(j) "Representative's Stock Warrants shall refer to Warrants
to purchase up to 120,000 shares of Common Stock and which are covered by a
separate Warrant.
2. The purchase rights represented by this Warrant may be exercised by
the holder hereof, in whole or in part at any time, and from time to time,
during the period commencing on the Effective Date until the earlier __________,
2004 or the Warrant Expiration Date of the Common Stock Purchase Warrants as
defined in the Warrant Agreement (the "Expiration Date"), by the presentation of
this Warrant, with the purchase form attached duly executed, at the Company's
office (or such office or agency of the Company as it may designate in writing
to the Holder hereof by notice pursuant to Section 14 hereof), and upon payment
by the Holder to the Company in cash, or by certified check or bank draft of the
Purchase Price for such Common Stock Purchase Warrants. The Company agrees that
the Holder hereof shall be deemed the record owner of such Common Stock Purchase
Warrants as of the close of business on the date on which this Warrant shall
have been presented and payment made for such Common Stock Purchase
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Warrants as aforesaid. Certificates for the Common Stock Purchase Warrants so
purchased shall be delivered to the Holder hereof within a reasonable time, not
exceeding five (5) days, after the rights represented by this Warrant shall have
been so exercised. If this Warrant shall be exercised in part only, the Company
shall, upon surrender of this Warrant for cancellation, deliver a new
Representative's Warrant evidencing the rights of the Holder hereof to purchase
the balance of the Common Stock Purchase Warrants which such Holder is entitled
to purchase hereunder. Exercise in full of the rights represented by this
Warrant shall not extinguish the rights granted under Section 9 hereof.
3. Subject to the provisions of Section 8 hereof, (i) this Warrant is
exchangeable at the option of the Holder at the aforesaid office of the Company
for other Representative's Warrants of different denominations entitling the
Holder thereof to purchase in the aggregate the same number of Common Stock
Purchase Warrants as are purchasable hereunder; and (ii) this Warrant may be
divided or combined with other Representative's Warrants which carry the same
rights, in either case, upon presentation hereof at the aforesaid office of the
Company together with a written notice, signed by the Holder hereof, specifying
the names and denominations in which new Representative's Warrants are to be
issued, and the payment of any transfer tax due in connection therewith.
4. The Purchase Price and number of Common Stock Purchase Warrants
purchasable upon exercise of this Warrant are subject to adjustment by the Board
of Directors of the Company as deemed appropriate by them acting in good faith
in order to protect the holder on a similar basis as the anti-dilution
provisions contained in the Warrant Agreement applicable to the Common Stock
Purchase Warrants. Notwithstanding anything contained herein to the contrary, no
adjustment will be made to the Purchase Price or number of Common Stock Purchase
Warrants where no adjustment has been made pursuant to the terms of the Warrant
Agreement to the number of Common Stock Purchase Warrants held by the public
Warrant holders.
The exercise price of the Common Stock Purchase Warrants underlying
this Warrant and securities issuable upon exercise of the Common Stock Purchase
Warrants are subject to adjustment pursuant to the terms and conditions
contained in the Warrant Agreement.
5. For the purposes of this Warrant, the term "Common Stock Purchase
Warrants" shall mean any other class of Common Stock Purchase Warrants resulting
from successive changes or re-classifications of such Warrants. If at any time,
as a result of an adjustment made pursuant to Section 4, the securities or other
property obtainable upon exercise of this Warrant shall include securities of
the Company other than Common Stock Purchase Warrants or securities of another
corporation or other property, thereafter, the number of such securities or
property so obtainable shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Stock Purchase Warrants contained in Section 4 and all
other
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provisions of this Warrant with respect to Common Stock Purchase Warrants shall
apply on like terms to any such other securities or property. Subject to the
foregoing, and unless the context requires otherwise, all references herein to
Common Stock Purchase Warrants shall, in the event of an adjustment pursuant to
Section 4, be deemed to refer also to any other securities or property then
obtainable as a result of such adjustments.
6. The Company covenants and agrees that:
(a) During the period within which the rights represented by
the Representative's Warrant may be exercised, the Company shall, at all times,
reserve and keep available out of its authorized capital stock, solely for the
purposes of issuance upon exercise of the Common Stock Purchase Warrants, such
number of its Common Shares as shall be issuable upon the exercise of the Common
Stock Purchase Warrants and at its expense will obtain the listing thereof on
all national securities exchanges on which the Common Shares are then listed;
and if at any time the number of authorized Common Shares shall not be
sufficient to effect the exercise of the Common Stock Purchase Warrants, the
Company will take such corporate action as may be necessary to increase its
authorized but unissued Common Shares to such number of shares as shall be
sufficient for such purpose; the Company shall have analogous obligations with
respect to any other securities or property issuable upon exercise of the Common
Stock Purchase Warrants.
(b) All securities which may be issued upon exercise of the
rights represented by this Warrant and the Common Stock Purchase Warrant will,
upon issuance be validly issued, fully paid, nonassessable and free from all
taxes, liens and charges with respect to the issuance thereof; and,
(c) All original issue taxes payable in respect of the
issuance of Common Stock Purchase Warrants upon the exercise of the rights
represented by this Warrant shall be borne by the Company but in no event shall
the Company be responsible or liable for income taxes or transfer taxes upon the
transfer of any Representative's Warrants and/or Common Stock Purchase Warrants.
7. Until the Common Stock Purchase Warrants are exercised, this Warrant
shall not entitle the Holder hereof to any voting rights or other rights as a
shareholder of the Company, except that the Holder of this Warrant and/or the
Common Stock Purchase Warrants shall be deemed to be a shareholder of this
Company for the purpose of bringing suit on the ground that the issuance of
shares of stock of the Company is improper under the New York Corporation Law.
8. This Warrant and the Common Stock Purchase Warrants shall not be
sold, transferred, assigned or hypothecated for a period of twelve (12) months
from the Effective Date, except to officers or partners of the Representative,
and/or the other underwriters
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and/or selected dealers who participated in such offering, or the officers or
partners of such underwriters and/or selected dealers. In no event shall this
Warrant and the Common Stock Purchase Warrants be sold, transferred, assigned or
hypothecated except in conformity with the applicable provisions of the
Securities Act of 1933, as then in force (the "Act"), or any similar Federal
statute then in force, and all applicable "Blue Sky" laws.
9. The holder of this Warrant, by acceptance hereof, agrees that, prior
to the disposition of this Warrant or of any securities theretofore purchased
upon the exercise hereof, under circumstances that might require registration of
such securities under the Act, or any similar federal statute then in force,
such holder will give written notice to the Company expressing such holder's
intention of effecting such disposition, and describing briefly such holder's
intention as to the disposition to be made of this Warrant and/or the securities
theretofore issued upon exercise hereof. In this event, the provisions of the
following subdivisions shall apply:
(a) If, in the opinion of company counsel, the proposed
disposition does not require registration under the Act or any similar federal
statute then in force, of this Warrant and/or the securities issuable or issued
upon the exercise of this Warrant, the Company shall, as promptly as practicable
after the receipt of written opinion of counsel to the holder of this Warrant to
such effect, notify the holder hereof of such opinion, whereupon such holder
shall be entitled to dispose of this Warrant and/or such securities theretofore
issued upon the exercise hereof, all in accordance with the terms of the notice
delivered by such holder to the Company.
(b) If, in the opinion of either such counsel, such proposed
disposition requires such registration or qualification under the Act, or
similar federal statute then in effect, of this Warrant and/or the Common Stock
Purchase Warrants issuable or issued upon the exercise of this Warrant, the
Company shall promptly give written notice to all then holders of the
Representative's Warrants and/or Common Stock Purchase Warrants at the
respective addresses thereof shown on the books of the Company. The registration
rights contained in Section 15 of the Underwriting Agreement are incorporated by
reference as if set forth in their entirety herein.
10. The Company agrees to indemnify and hold harmless the holder of
this Warrant and/or the Common Stock Purchase Warrants issuable or issued upon
the exercise hereof, from and against any claims and liabilities caused by any
untrue statement of a material fact, or omission to state a material fact
required to be stated, in any such registration statement or prospectus, except
insofar as such claims or liabilities are caused by any such untrue statement or
omission based on information furnished in writing to the Company by such
holder, or by any other such holder affiliated with the holder who seeks
indemnification, as to which the holder hereof, by acceptance hereof, agrees to
indemnify and hold harmless the Company.
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11. If this Warrant and/or the Common Stock Purchase Warrants require
qualification or registration with, or approval of, any governmental official or
authority (other than registration under the Act, or any similar federal statute
at the time in force), before such securities may be issued on the exercise
hereof, the Company, at its expense, will take all requisite action in
connection with such qualification, and will use its best efforts to cause this
Warrant to be duly registered or approved, as may be required.
12. This Warrant is exchangeable, upon its surrender by the registered
holder at such office or agency of the Company as may be designated by the
Company, for new Representative's Warrants of like tenor, representing, in the
aggregate, the right to subscribe for and purchase the number of Common Stock
Purchase Warrants that may be subscribed for and purchased hereunder, each of
such new Representative's Warrants to represent the right to subscribe for and
purchase such number of Common Stock Purchase Warrants as shall be designated by
the registered holder at the time of such surrender. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and, in the case of any such loss, theft or destruction, upon
delivery of a bond of indemnity satisfactory to the Company, or in the case of
such mutilation, upon surrender or cancellation of this Warrant, the Company
will issue to the registered holder a new Representative's Warrant of like
tenor, in lieu of this Warrant, representing the right to subscribe for and
purchase the number of Common Stock Purchase Warrants that may be subscribed for
and purchased hereunder. Nothing herein is intended to authorize the transfer of
this Warrant except as permitted under Paragraph 8.
13. Every holder hereof, by accepting the same, agrees with any
subsequent holder hereof and with the Company that this Warrant and all rights
hereunder are issued and shall be held subject to all of the terms, conditions,
limitations and provisions set forth in this Warrant, and further agrees that
the Company and its transfer agent may deem and treat the registered holder of
this Warrant as the absolute owner hereof for all purposes and shall not be
affected by any notice to the contrary.
14. All notices required hereunder shall be given by first-class mail,
postage prepaid; if given by the holder hereof, addressed to the Company at 1031
Route 9W, Grandview, N.Y. 10960 or such other address as the Company may
designate in writing to the holder hereof; and if given by the Company,
addressed to the holder at the address of the holder shown on the books of the
Company.
15. The validity, construction and enforcement of this Warrant shall be
governed by the laws of the State of New York and jurisdiction is hereby vested
in the Courts of said State in the event of the institution of any legal action
under this Warrant.
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IN WITNESS WHEREOF, Swiss Natural Foods, Inc. has caused this Warrant
to be signed by its duly authorized officers under its corporate seal, to be
dated as of _____________________ 1999.
SWISS NATURAL FOODS, INC.
By:_______________________
(Corporate Seal) Herbert Paul, President
Attest:
_________________________
Ralph Ferrante, Secretary
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PURCHASE FORM
To Be Executed
Upon Exercise of Warrant
The undersigned hereby exercises the right to purchase ____ Common Stock
Purchase Warrants evidenced by the within Representative's Warrant, according to
the terms and conditions thereof, and herewith makes payment of the purchase
price in full. The undersigned requests that certificates for such Common Stock
Purchase Warrants shall be issued in the name set forth below.
Dated: ,
_________________________________
Signature
_________________________________
Print Name of Signatory
_________________________________
Name to whom certificates are to
be issued if different from above
Address:_________________________
_________________________________
Social Security No. or other
identifying number:______________
If said number of Common Stock Purchase Warrants shall not be all the
Common Stock Purchase Warrants purchasable under the within Warrant, the
undersigned requests that a new Representative's Warrant for the unexercised
portion shall be registered in the name of :
_________________________________
(Please Print)
Address:_________________________
_________________________________
Social Security No. or other
identifying number: _____________
_________________________________
Signature
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FORM OF ASSIGNMENT
FOR VALUE RECEIVED , hereby
sells assigns and transfers to , Soc. Sec. No.
[ ] the within Representative's Warrant, together with all rights, title and
interest therein, and does hereby irrevocably constitute and appoint attorney to
transfer such Representative's Warrant on the register of the within named
Company, with full power of substitution.
_________________________________
Signature
Dated: ,
Signature Guaranteed:
__________________________
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EXHIBIT 10.1
SWISS NATURAL FOODS, INC.
1999 STOCK OPTION PLAN
1. Establishment, Purpose and Types of Awards
Swiss Natural Foods, Inc. (the "Corporation") hereby establishes the
SWISS NATURAL 1999 STOCK OPTION PLAN (the "Plan"). The purpose of the Plan is to
promote the long-term growth and profitability of Swiss Natural Foods, Inc. by
(i) providing key people with incentives to improve stockholder value and to
contribute to the growth and financial success of the Corporation and (ii)
enabling the Corporation to attract, retain and reward the best available
persons for positions of substantial responsibility.
The Plan permits the granting of stock options, including nonqualified
stock options and incentive stock options qualifying under Section 422 of the
Code, in any combination (collectively, "Options").
2. Definitions
Under this Plan, except where the context otherwise indicates, the following
definitions apply:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Change in Control" shall mean: (i) an acquisition of the Company,
which in the sole discretion of the Board immediately prior to such acquisition,
is determined to be an acquisition hostile to, and not in the best interests of,
the stockholders of the Company, or (ii) an acquisition of fifty percent (50%)
or more of the combined voting power of the Company's then outstanding
securities by any person, as such term is used in Sections 13(d) and 14(d)(ii)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
(iii) a change in the composition of the Board so that a majority of the members
of the Board immediately prior to such change of control or change in
composition of the Board, is determined to be a change hostile to, and not in
the best interests of, the stockholders of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended,
and any regulations issued thereunder.
(d) "Committee" shall mean the Board or committee of Board members
appointed pursuant to Section 3 of the Plan to administer the Plan.
(e) "Common Stock" shall mean shares of the Corporation's common stock,
$.01 par value.
(f) "Fair Market Value" of a share of the Corporation's Common Stock
for any purpose on a particular date shall be determined in a manner such as the
Committee shall in good faith determine to be appropriate; provided, however,
that if the Common Stock is publicly traded, then Fair Market Value shall mean
the last reported sale price per share of Common Stock, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on a national securities exchange or included for quotation on a system
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established by the National Association of Securities Dealers, Inc. ("Nasdaq
System"), or if the Common Stock is not so listed or admitted to trading or
included for quotation, the last quoted price, or if the Common Stock is not so
quoted, the average of the high bid and low asked prices, regular way, in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or, if such system is no longer in use,
the principal other automated quotations system that may then be in use or, if
the Common Stock is not quoted by any such organization, the average of the
closing bid and asked prices, regular way, as furnished by a professional market
maker making a market in the Common Stock as selected in good faith by the
Committee or by such other source or sources as shall be selected in good faith
by the Committee; and, provided further, that in the case of incentive stock
options, the determination of Fair Market Value shall be made by the Committee
in good faith in conformance with the Treasury Regulations under Section 422 of
the Code. If, as the case may be, the relevant date is not a trading day, the
determination shall be made as of the next preceding trading day. As used
herein, the term "trading day" shall mean a day on which public trading of
securities occurs and is reported in the principal consolidated reporting system
referred to above, or if the Common Stock is not listed or admitted to trading
on a national securities exchange or included for quotation on the Nasdaq
System, any day other than a Saturday, a Sunday or a day in which banking
institutions in the State of New York are closed.
(g) "Grant Agreement" shall mean a written agreement between the
Corporation and a grantee memorializing the terms and conditions of an Option
granted pursuant to the Plan.
(h) "Grant Date" shall mean the date on which the Committee formally
acts to grant an Option to a grantee or such other date as the Committee shall
so designate at the time of taking such formal action.
(i) "Parent" shall mean a corporation, whether now or hereafter
existing, within the meaning of the definition of "parent corporation" provided
in Section 424(e) of the Code, or any successor thereto of similar import.
(j) "Rule 16b-3" shall mean Rule 16b-3 as in effect under the Exchange
Act on the effective date of the Plan, or any successor provision prescribing
conditions necessary to exempt the issuance of securities under the Plan (and
further transactions in such securities) from Section 16(b) of the Exchange Act.
(k) "Subsidiary" and "subsidiaries" shall mean only a corporation or
corporations, whether now or hereafter existing, within the meaning of the
definition of "subsidiary corporation" provided in Section 424(f) of the Code,
or any successor thereto of similar import.
3. Administration
(a) Procedure. The Plan shall be administered by the Board. In the
alternative, the Board may appoint a Committee consisting of not less than two
(2) members of the Board to administer the Plan on behalf of the Board, subject
to such terms and conditions as the Board may prescribe. Once appointed, the
Committee shall continue to serve until otherwise directed by the Board. From
time to time, the Board may increase the size of the Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies, however caused, and remove
all members of the Committee and, thereafter, directly administer the Plan.
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In the event that the Board is the administrator of the Plan in lieu of a
Committee, the term "Committee" as used herein shall be deemed to mean the
Board. The Plan shall be administered in accordance with the then effective
provisions of Rule 16b-3, provided that any amendment to the Plan required for
compliance with such provisions shall be made in accordance with Section 10 of
the Plan.
Members of the Board or Committee who are either eligible for Options
or have been granted Options may vote on any matters affecting the
administration of the Plan or the grant of Options pursuant to the Plan, except
that no such member shall act upon the granting of an Option to himself or
herself, but any such member may be counted in determining the existence of a
quorum at any meeting of the Board or the Committee during which action is taken
with respect to the granting of an Option to him or her.
The Committee shall meet at such times and places and upon such notice
as it may determine. A majority of the Committee shall constitute a quorum. Any
acts by the Committee may be taken at any meeting at which a quorum is present
and shall be by majority vote of those members entitled to vote. Additionally,
any acts reduced to writing or approved in writing by all of the members of the
Committee shall be valid acts of the Committee.
(b) Powers of the Committee. The Committee shall have all the powers
vested in it by the terms of the Plan, such powers to include authority, in its
sole and absolute discretion, to grant Options under the Plan, prescribe Grant
Agreements evidencing such Options and establish programs for granting Options.
The Committee shall have full power and authority to take all other actions
necessary to carry out the purpose and intent of the Plan, including, but not
limited to, the authority to:
(i) determine the eligible persons to whom, and
the time or times at which Options shall be granted,
(ii) determine the types of Options to be granted,
(iii) determine the number of shares to be covered by
each Option,
(iv) impose such terms, limitations, restrictions and
conditions upon any such Option as the Committee shall deem
appropriate,
(v) modify, extend or renew outstanding Options,
accept the surrender of outstanding Options and substitute new Options,
provided that no such action shall be taken with respect to any
outstanding Option which would adversely affect the grantee without the
grantee's consent, and
(vi) accelerate or otherwise change the time in which
an Option may be exercised, in whole or in part, including, but not
limited to, any restriction or condition with respect to the vesting or
exercisability of an Option following termination of any grantee's
employment.
The Committee shall have full power and authority to administer and interpret
the Plan and to adopt such rules, regulations, agreements, guidelines and
instruments for the administration of the Plan and
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for the conduct of its business as the Committee deems necessary or advisable
and to interpret same, all within the Committee's sole and absolute discretion.
(c) Limited Liability. To the maximum extent permitted by law, no
member of the Committee shall be liable for any action taken or decision made in
good faith relating to the Plan or any Option thereunder.
(d) Indemnification. To the maximum extent permitted by law, the
members of the Committee shall be indemnified by the Corporation in respect of
all their activities under the Plan.
(e) Effect of Committee's Decision. All actions taken and decisions and
determinations made by the Committee on all matters relating to the Plan
pursuant to the powers vested in it hereunder shall be in the Committee's sole
and absolute discretion and shall be conclusive and binding on all parties
concerned, including the Corporation, its stockholders, any participants in the
Plan and any other employee of the Corporation, and their respective successors
in interest.
4. Shares Available for the Plan: Maximum Awards
Subject to adjustments as provided in Section 9 of the Plan, the shares
of stock that may be delivered or purchased under the Plan, including with
respect to incentive stock options intended to qualify under Section 422 of the
Code, shall not exceed an aggregate of 500,000 shares of Common Stock of the
Corporation. The Corporation shall reserve said number of shares for Options to
be awarded under the Plan, subject to adjustments as provided in Section 9 of
the Plan. If any Option, or portion of an Option, under the Plan expires or
terminates unexercised, becomes unexercisable or is forfeited or otherwise
terminated, surrendered or canceled as to any shares, the shares subject to such
Option shall thereafter be available for further Options under the Plan unless
such shares would not be deemed available for future Options pursuant to Section
16 of the Exchange Act.
The maximum number of shares of Common Stock subject to Options of any
combination that may be granted during any 12 consecutive month period to any
one individual shall be limited to 350,000 shares. To the extent required by
Section 162(m) of the Code, shares of Common Stock subject to the foregoing
limit with respect to which the related Option is terminated, surrendered or
canceled shall not again be available for grant under this limit.
5. Participation
Participation in the Plan shall be open to all employees, officers,
directors and consultants of the Corporation, or of any Parent or Subsidiary of
the Corporation, as may be selected by the Committee from time to time.
Notwithstanding the foregoing, participation in the Plan with respect to awards
of incentive stock options shall be limited to employees of the Corporation or
of any Parent or Subsidiary of the Corporation. To the extent necessary to
comply with Rule 16b-3 or to constitute an "outside director" within the meaning
of Section 162(m) of the Code, and only in the event that Rule 16b-3 or Section
162(m) of the Code is applicable to the Plan or an Option awarded thereunder,
Committee members shall not be eligible to participate in the Plan while members
of the Committee.
Options may be granted to such eligible persons and for or with respect
to such number of shares of Common Stock as the Committee shall determine,
subject to the limitations in Section 4 of the Plan.
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A grant of any type of Option made in any one year to an eligible person shall
neither guarantee nor preclude a further grant of that or any other type of
Option to such person in that year or subsequent years.
6. Stock Options
Subject to the other applicable provisions of the Plan, the Committee
may from time to time grant to eligible participants nonqualified stock options
or incentive stock options as that term is defined in Section 422 of the Code.
The Options granted shall be subject to the following terms and conditions.
(a) Grant of Option. The grant of an Option shall be evidenced by a
Grant Agreement, executed by the Corporation and the grantee, stating the number
of shares of Common Stock subject to the Option evidenced thereby and the terms
and conditions of such Option, in such form as the Committee may from time to
time determine.
(b) Price. The price per share payable upon the exercise of each Option
("exercise price") shall be determined by the Committee; provided, however, that
in the case of incentive stock options, the exercise price shall not be less
than 100% of the Fair Market Value of the shares on the date the Option is
granted.
(c) Payment. Options may be exercised in whole or in part by payment of
the exercise price of the shares to be acquired in accordance with the
provisions of the Grant Agreement, and/or such rules and regulations as the
Committee may have prescribed, and/or such determinations, orders, or decisions
as the Committee may have made. Payment of the exercise price shall be made in
cash (or cash equivalents acceptable to the Committee) or by such other means as
the Committee may prescribe. The Corporation may make or guarantee loans to
grantees to assist grantees in exercising Options.
The Committee, subject to such limitations as it may determine, may
authorize payment of the exercise price, in whole or in part, by delivery of a
properly executed exercise notice, together with irrevocable instructions, to:
(i) a brokerage firm designated by the Corporation to deliver promptly to the
Corporation the aggregate amount of sale or loan proceeds to pay the exercise
price and any withholding tax obligations that may arise in connection with the
exercise, and (ii) the Corporation to deliver the certificates for such
purchased shares directly to such brokerage firm.
(d) Terms of Options. The term during which each Option may be
exercised shall be determined by the Committee. In no event shall an Option be
exercisable less than six months nor more than ten years from the date it is
granted. Prior to the exercise of the Option and delivery of the shares
certificates represented thereby, the grantee shall have none of the rights of a
stockholder with respect to any shares represented by an outstanding Option.
(e) Restrictions on Incentive Stock Options. The aggregate Fair Market
Value (determined as of the Grant Date) of shares of Common Stock with respect
to which all incentive stock options first become exercisable by any grantee in
any calendar year under this or another plan of the Corporation and its Parent
and Subsidiary corporations may not exceed $100,000 or such other amount as may
be permitted from time to time under Section 422 of the Code. To the extent that
such aggregate Fair Market Value shall exceed $100,000, or other applicable
amount, such Options (taking Options into account in the order in which they
were granted) shall be treated as nonqualified stock options. In such
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case, the Corporation may designate the shares of Common Stock that are to be
treated as stock acquired pursuant to the exercise of an incentive stock option
by issuing a separate certificate for such shares and identifying the
certificate as incentive stock option shares in the stock transfer records of
the Corporation.
The exercise price of any incentive stock option granted to a grantee
who owns (within the meaning of Section 422(b)(6) of the Code, after the
application of the attribution rules in Section 424(d) of the Code) more than
10% of the total combined voting power of all classes of shares of the
Corporation or its Parent or Subsidiary corporations (within the meaning of
Sections 422 and 424 of the Code) shall be not less than 110% of the Fair Market
Value of the Common Stock on the grant date and the term of such Option shall
not exceed five years.
Incentive stock options shall only be issued to employees of the
Corporation or of a Parent or Subsidiary of the Corporation.
(f) Other Terms and Conditions. Options may contain such other
provisions, not inconsistent with the provisions of the Plan, as the Committee
shall determine appropriate from time to time. No Option shall be an incentive
stock option unless so designated by the Committee at the time of grant or in
the Grant Agreement evidencing such Option.
7. Withholding of Taxes
The Corporation may require, as a condition to any exercise of an
Option under the Plan or a Grant Agreement (hereinafter referred to as a
"taxable event"), that the grantee pay to the Corporation, in cash, any federal,
state or local taxes of any kind required by law to be withheld with respect to
any taxable event under the Plan. The Corporation, to the extent permitted or
required by law, shall have the right to deduct from any payment of any kind
(including salary or bonus) otherwise due to a grantee any federal, state or
local taxes of any kind required by law to be withheld with respect to any
taxable event under the Plan, or to retain or sell without notice a sufficient
number of the shares to be issued to such grantee to cover any such taxes.
8. Transferability
To the extent required to comply with Rule 16b-3, and in any event in
the case of an incentive stock option, no Option granted under the Plan shall be
transferable by a grantee otherwise than by will or the laws of descent and
distribution. Unless otherwise determined by the Committee in accord with the
provisions of the immediately preceding sentence, an Option may be exercised
during the lifetime of the grantee, only by the grantee or, during the period
the grantee is under a legal disability, by the grantee's guardian or legal
representative.
9. Adjustments; Business Combinations
In the event of a reclassification, recapitalization, stock split,
stock dividend, combination of shares, or other similar event, the maximum
number and kind of shares reserved for issuance or with respect to which Options
may be granted under the Plan as provided in Section 4 shall be adjusted to
reflect such event, and the Committee shall make such adjustments as it deems
appropriate and equitable in the number, kind and price of shares covered by
outstanding Options made under the Plan, and in any
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other matters which relate to Options and which are affected by the changes in
the Common Stock referred to above.
In the event of any proposed Change in Control, the Committee shall
take such action as it deems appropriate to effectuate the purposes of this Plan
and to protect the grantees of Options, which action may include, but without
limitation, any one or more of the following: (i) acceleration or change of the
exercise dates of any Option; (ii) arrangements with grantees for the payment of
appropriate consideration to them for the cancellation and surrender of any
Option; and (iii) in any case where equity securities other than Common Stock of
the Corporation are proposed to be delivered in exchange for or with respect to
Common Stock of the Corporation, arrangements providing that any Option shall
become one or more Options with respect to such other equity securities.
In the event the Corporation dissolves and liquidates (other than
pursuant to a plan of merger or reorganization), then notwithstanding any
restrictions on exercise set forth in this Plan or any Grant Agreement (i) each
grantee shall have the right to exercise his Option at any time up to ten (10)
days prior to the effective date of such liquidation and dissolution; and (ii)
the Committee may make arrangements with the grantees for the payment of
appropriate consideration to them for the cancellation and surrender of any
Option that is so canceled or surrendered at any time up to ten (10) days prior
to the effective date of such liquidation and dissolution. The Committee may
establish a different period (and different conditions) for such exercise,
cancellation, or surrender to avoid subjecting the grantee to liability under
Section 16(b) of the Exchange Act Any Option not so exercised, canceled, or
surrendered shall terminate on the last day for exercise prior to such effective
date.
10. Termination and Modification of the Plan
The Board, without further approval of the stockholders, may modify or
terminate the Plan or any portion thereof at any time, except that no
modification shall become effective without prior approval of the stockholders
of the Corporation if stockholder approval is necessary to comply with any tax
or regulatory requirement or rule of any exchange or Nasdaq System upon which
the Common Stock is listed or quoted; including for this purpose stockholder
approval that is required for continued compliance with Rule 16b-3 or
stockholder approval that is required to enable the Committee to grant incentive
stock options pursuant to the Plan.
The Committee shall be authorized to make minor or administrative
modifications to the Plan as well as modifications to the Plan that may be
dictated by requirements of federal or state laws applicable to the Corporation
or that may be authorized or made desirable by such laws. The Committee may
amend or modify the grant of any outstanding Option in any manner to the extent
that the Committee would have had the authority to make such Option as so
modified or amended. No modification may be made that would materially adversely
affect any Option previously made under the Plan without the approval of the
grantee.
11. Non-Guarantee of Employment
Nothing in the Plan or in any Grant Agreement thereunder shall confer
any right on an employee to continue in the employ of the Corporation or shall
interfere in any way with the right of the Corporation to terminate an employee
at any time.
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12. Termination of Employment
For purposes of maintaining a grantee's continuous status as an
employee and accrual of rights under any Options, transfer of an employee among
the Corporation and the Corporation's Parent or Subsidiaries shall not be
considered a termination of employment. Nor shall it be considered a termination
of employment for such purposes if an employee is placed on military or sick
leave or such other leave of absence which is considered as continuing intact
the employment relationship; in such a case, the employment relationship shall
be continued until the date when an employee's right to reemployment shall no
longer be guaranteed either by law or contract.
13. Written Agreement
Each Grant Agreement entered into between the Corporation and a grantee
with respect to an Option granted under the Plan shall incorporate the terms of
this Plan and shall contain such provisions, consistent with the provisions of
the Plan, as may be established by the Committee.
14. Non-Uniform Determinations
The Committee's determinations under the Plan (including, without
limitation, determinations of the persons to receive Options, the form, amount
and timing of such Options, the terms and provisions of such Options and the
agreements evidencing same) need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, Options under
the Plan, whether or not such persons are similarly situated.
15. Limitation on Benefits
With respect to persons subject to Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3. To the extent any provision of the Plan or action by
the Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee.
16. Listing and Registration
If the Corporation determines that the listing, registration or
qualification upon any securities exchange or upon any Nasdaq System or under
any law, of shares subject to any Option is necessary or desirable as a
condition of, or in connection with, the granting of same or the issue or
purchase of shares thereunder, no such Option may be exercised in whole or in
part and no restrictions on such Option shall lapse, unless such listing,
registration or qualification is effected free of any conditions not acceptable
to the Corporation.
17. Compliance with Securities Laws
The Corporation may require that a grantee, as a condition to exercise
of an Option, and as a condition to the delivery of any share certificate,
provide to the Corporation, at the time of each such exercise and each such
delivery, a written representation that the shares of Common Stock being
acquired shall be acquired by the grantee solely for investment and will not be
sold or transferred without registration or the availability of an exemption
from registration under the Securities Act and
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applicable state securities laws. The Corporation may also require that a
grantee submit other written representations which will permit the Corporation
to comply with federal and applicable state securities laws in connection with
the issuance of the Common Stock, including representations as to the knowledge
and experience in financial and business matters of the grantee and the
grantee's ability to bear the economic risk of the grantee's investment. The
Corporation may require that the grantee obtain a "purchaser representative" as,
that term is defined in applicable federal and state securities laws. The stock
certificates for any shares of Common Stock issued pursuant to this Plan may
bear a legend restricting transferability of the shares of Common Stock unless
such shares are registered or an exemption from registration is available under
the Securities Act and applicable state securities laws. The Corporation may
notify its transfer agent to stop any transfer of shares of Common Stock not
made in compliance with these restrictions. Common Stock shall not be issued
with respect to an Option granted under the Plan unless the exercise of such
Option and the issuance and delivery of share certificates for such Common Stock
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act, the Exchange Act, the rules and
regulations promulgated thereunder, and the requirements of any national
securities exchange or Nasdaq System upon which the Common Stock may then be
listed or quoted, and shall be further subject to the approval of counsel for
the Corporation with respect to such compliance to the extent such approval is
sought by the Committee.
18. Governing Law
The validity, construction and effect of the Plan, of Grant Agreements
entered into pursuant to the Plan, and of any rules, regulations, determinations
or decisions made by the Board or Committee relating to the Plan or such Grant
Agreements, and the rights of any and all persons having or claiming to have any
interest therein or thereunder, shall be determined exclusively in accordance
with applicable federal laws and the laws of the State of Delaware, without
regard to its conflict of laws rules and principles.
19. Plan Subject to Certificate of Incorporation and By-Laws
This Plan is subject to the Certificate of Incorporation and By-Laws of
the Corporation, as they may be amended from time to time.
20. Effective Date; Termination Date
The Plan is effective as of ______, 1999, the date on which the Plan
was adopted by the Board, subject to approval of the stockholders within twelve
months of such date. Unless previously terminated, the Plan shall terminate on
the close of business on ______, 2009, ten years from the effective date.
Subject to other applicable provisions of the Plan, all Options granted under
the Plan prior to termination of the Plan shall remain in effect until such
Options have been satisfied or terminated in accordance with the Plan and the
terms of such Options.
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EXHIBIT 10.2
Agreement made as of March 1, 1999, between SWISS
NATURAL FOODS, INC., a Delaware corporation (the "Company") and Ralph Ferrante
(the "Executive").
1. EMPLOYMENT
The Company hereby employs Executive and Executive accepts employment
as an executive. Executive will travel as reasonably necessary and has
heretofore been his practice for the performance of his duties. Executive will
devote his skills and best efforts, as required, to advance the interests of the
Company.
2. TERM
2.1 The term of this Agreement will begin on March 1, 1999 and
will continue until February 28, 2002 unless sooner terminated.
3. COMPENSATION
3.1 The Company will pay Executive a base salary at the rate of one
hundred sixty-eight thousand ($168,000) dollars per annum and during the period
March 1, 1999 through February 29, 2000 ($80,000 of which is to be paid March 1,
1999 through August 31, 1999); a base salary of one hundred eighty-five thousand
<PAGE>
($185,000) dollars during the period March 1, 2000 through February 28, 2001 and
a base salary of two hundred four thousand ($204,000) dollars during the period
March 1, 2001 through February 28, 2002. Said base salary is to be paid no less
frequently than monthly. Notwithstanding any provision of this Agreement to the
contrary, the Company may at any time or from time to time, increase the base
salary, provide for a bonus, or otherwise increase or add to the benefits
receivable by the Executive. In the event that such base salary or benefit shall
be so increased, then, from and after the date of such increase, each base
salary or benefit shall be so increased.
4. BENEFITS
4.1 Executive shall be eligible to participate in any plan adopted in
the future for the benefit of any employee of the Company, such as pension
plans, profit sharing plans, stock option or stock purchase plans, bonus,
investment funds, and group or other insurance or hospitalization plans and
benefits. In lieu of participating in a medical or life insurance program, the
Executive shall receive an allowance for medical insurance of thirteen thousand
($13,000) dollars for each of the periods March 1, 1999 through February 29,
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2000 ($1,500 of which is to be paid March 1, 1999 through August 31, 1999),
March 1, 2000 through February 28, 2001 and March 1, 2001 and March 1, 2001
through February 28, 2002. The Executive shall receive an allowance for life
insurance of ten thousand ($10,000) dollars for the period March 1, 1999 through
February 28, 2000 (to be paid September 1, 1999 through February 28, 2000) and
twelve thousand ($12,000) dollars for the periods March 1, 2000 through February
28, 2001 and March 1, 2001 through February 28, 2002.
4.2 The Executive shall be given a car allowance of seventy-two hundred
($7,200) dollars for the period March 1, 1999 through February 29, 2000;
ninety-six hundred ($9,600) dollars for the periods March 1, 2000 through
February 28, 2001 and March 1, 2001 through February 28, 2002.
4.3 Executive shall be entitled to the equivalent of four weeks
vacation in each 12 month period.
4.4 The Company shall reimburse Executive for all reasonable business
expenses incurred in connection with the performance of his duties under this
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Agreement or paid by Executive on behalf of the Company in accordance with the
Company's general policies regarding accounting for expenses.
4.5 All base salary payable under this Agreement will be subject to
applicable tax withholding if any.
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5. BONUS
For the five (5) consecutive full fiscal years following an initial
public offering Executive shall be granted a bonus of 3,000 common stock
purchase options, exercisable at $.50, for every fifty thousand ($50,000)
dollars of earnings that the Company reports in its audited financial statements
in excess of earnings of $750,000 before interest, taxes, charges resulting from
stock, debenture or stock option issuances and underwriter's consulting fees.
6. TERMINATION
6.1 The Executive's employment hereunder shall terminate upon the
Executive's death, in which event the Company shall pay to the designee of the
Executive, or if there be no designee, to his estate, the salary to which he
would be entitled pursuant hereto through the date of his death and for a period
of one hundred eighty (180) days thereafter.
6.2 Disability. The Company may terminate the Executive's employment
hereunder by written notice to the executive if (i) as a result of the
executive's permanent incapacity due to physical or mental disability or illness
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as determined by a physician mutually agreed upon by the Executive and the
Company and the Executive shall have been unable to perform a substantial
portion of his duties hereunder for a period of 180 consecutive days in any 12
consecutive months and (ii) within fifteen (15) days after written notice of
termination hereunder is given by the Company (which may be given at any time
after the end of such 180 days of absence) the Executive shall not have returned
to the substantial performance of his duties hereunder. During any period that
the Executive fails to perform his duties hereunder as a result of incapacity
due to physical or mental disability or illness (a "Disability Period"), the
Executive shall continue to receive his full base salary hereunder until his
employment is terminated pursuant to this Section provided that payments so made
to the Executive shall be reduced by the sum of the amounts, if any, payable to
the Executive for the Disability Period under any disability benefit plans
obtained by the Company.
6.3 Termination by Company. The Company may, pursuant to the procedure
prescribed in Section 6.5 below, terminate the Executive's employment hereunder
for "Cause." "Cause" shall mean any of the following:
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(i) Executive is convicted of a felony including conviction under
state or federal laws of any embezzlement, theft relating to the Company or any
of its subsidiaries or affiliated entities;
(ii) Executive becomes an alcoholic or addicted to drugs;
(iii) Executive is convicted of a felony; and
(iv) Cause shall not include death or disability of the Executive.
6.4 Termination by Executive. The Executive may, pursuant to the
procedure prescribed in Section 6.5. below, terminate his employment hereunder
at any time, if with "Good Reason." "Good Reason" shall mean any of the
following (without Executive's express written consent):
(i) a material change or reduction in the position, duties,
status or reporting responsibilities; a removal from or failure to be elected to
a previously held position or failure to comply with Section 1 above, except in
connection with the termination of his employment for Cause, as a result of the
Executive's disability or death or termination by the Executive other than for
Good Reason;
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(ii) a reduction in the Executive's compensation or benefits
provided in Sections 3 and 4; and
(iii) any material breach by Company of its material
obligations hereunder which breach is not cured within thirty (30) days after
written demand for performance which identifies the manner in which the
Executive believes that the Company has not performed its obligations hereunder
is delivered to the Company by the Executive.
6.5 Procedure to Terminate for Cause or With Good Reason. In the event
that (i) the Company proposes to terminate the Executive's employment for Cause
or (ii) the Executive proposes to terminate his employment with Good Reason,
then the Company or the Executive, as the case may be, shall give written notice
of such proposed termination to the other party, specifying such alleged Cause
or Good Reason, and the other party, shall have thirty (30) days from the time
of receipt of such notice to cure the alleged deficiency. In the event that the
Cause or Good Reason for termination, as the case may be, is not subject to cure
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or is not, if subject to cure, acknowledged by the party proposing to terminate
to have been cured within thirty (30) days thereafter, then notice of such
proposed termination may be given by the party proposing termination to an
arbitrator or arbitrators, to be chosen pursuant to Section 13 hereof, who shall
determine if such proposed termination is in fact for Cause or with Good Reason,
as the case may be, and if curable, if any attempt at cure was successful.
If, in the case of a proposed termination by the Company for
Cause the arbitrator(s) shall determine that Cause for termination existed and,
if curable, was not cured, then the Company, acting through its Board of
Directors, may proceed to give notice of such termination to the Executive and
this Agreement shall be terminated without any further liability of the Company
to the Executive other than for unpaid compensation and benefits to the date of
termination. If the arbitrator(s) shall determine that such proposed termination
by the Company was either without Cause, or that the Cause thereof was
appropriately cured as aforesaid, then the notices of proposed termination
theretofore given by the Company shall be deemed withdrawn and of no further
force or effect. Despite such adverse determination, the Company, acting through
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its Board of Directors, may give notice to the Executive electing to terminate
the Executive's employment without Cause. In the event the Company nevertheless
after such adverse determination elects to terminate without Cause, the Company
shall continue to provide the Executive the compensation and benefits provided
in Section 3, 4 and 5 hereof for the remaining term of this Agreement.
If such notice of proposed termination shall have been given
by the Executive and the arbitrator shall determine that Good Reason for such
termination existed and, if curable, was not cured, then the Executive may
proceed to give notice of termination to the Company and the Company shall
continue to provide the Executive the compensation and benefits provided in
Section 3, 4 and 5 hereof for the remaining term of this Agreement. If the
arbitrator shall determine that Good Reason did not exist or that Good Reason
existed but was cured, then the notice of proposed termination theretofore given
by the Executive shall be deemed withdrawn. Despite such adverse determination,
the Executive may give notice to the Company of his election to terminate his
employment without Good Reason, in which later event the Executive shall be
entitled to receive his unpaid compensation to the date of termination and to no
further compensation hereunder.
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6.6 Leave of Absence. If the Executive is indicted or otherwise charged
by a governmental agency with having committed a felony or otherwise commit
misconduct which materially adversely affects the reputation of the Company, the
Company shall have the right to require the Executive to take a leave of absence
until such indictment or charge is satisfactorily resolved, or this Agreement
otherwise terminates in accordance with its terms or the Board of Directors
determines that no such material adverse effect persists. During any such leave
of absence, the Executive shall continue to receive all compensation and
benefits provided for to the same extent as if he had not taken a leave of
absence.
6.7 Mitigation. Executive shall not be required to mitigate the amount
of any payment provided for in this Agreement by seeking employment or
otherwise.
6.8 Effect of Termination. The termination of this Agreement shall not
result in a waiver or other termination of the liabilities of any party for a
breach of this Agreement or of any liabilities which, by their express terms or
by implication, survive the termination of this Agreement or Executive's
employment hereunder.
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7. NON-COMPETITION.
7.1 Restrictive Covenant. If this Agreement is (i) terminated by the
Company pursuant to Section 6.3 or if the Agreement is terminated by the
Executive without Good Reason or by the Company with Cause, then for a period of
two (2) years following such termination date or (ii) if this Agreement expires
according to its terms then for a period of one (1) year following such
termination date, the Executive or any member of his family or any entity
controlled by Executive will not, directly or indirectly, in the geographic area
in which the Company does business as of the date of termination without the
prior written consent of the Company, directly or indirectly, act as an officer,
director, employee or stockholder of, or as a partner or principal in, any
business in which the Company is then participating, provided, however, that
nothing contained in this clause shall be deemed to prohibit the Executive from,
directly or indirectly, owning, as an investment, individually
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not more than a 10% equity interest in any such operation or enterprise.
8. NOTICE. Any notice or other communication hereunder shall be in writing and
shall be personally delivered or sent by registered or certified mail, return
receipt requested, to the respective parties hereto as follows:
(a) If to the Company:
Swiss Natural Foods, Inc.
1031 Route 9W
Upper Grandview, NY 10960
(b) If to the Executive:
Dr. Ralph Ferrante
1031 Route 9W
Upper Grandview, NY 10960
The address of either party hereto above specified may be changed by
written notice to the other party.
9. INDEMNIFICATION. The Company will indemnify the Employee (and his legal
representative or other successors) to the fullest extent permitted by the laws
of the State of Delaware and its existing certificate of incorporation and
by-laws, and the Employee shall be entitled to the protection of any insurance
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policies the Company may elect to maintain generally for the benefit of its
officers and employees, against all costs, charges and expenses whatsoever
incurred or sustained by him (or his legal representatives or other successors)
in connection with any action, suit or proceeding to which he (or his legal
representatives or other successors) may be made a party by reason of his being
or having been a director, employee or consultant of the Company or its
subsidiaries and affiliates.
10. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding
between the parties with respect to the subject matter hereof, superseding all
prior or contemporaneous negotiations, discussions and agreements (written or
oral).
11. BENEFIT AND BINDING EFFECT. This Agreement shall inure to the benefit of and
be binding upon the successors and assigns of the Company but shall be personal
to and not assignable by the Executive. The Company may assign its rights and/or
obligations hereunder only with the prior written consent of the Executive.
12. AMENDMENT; WAIVER. This Agreement may be amended, superseded, cancelled,
renewed, extended or otherwise modified, and the terms or covenants hereof may
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be waived, only by, and only to the extent provided in, a written instrument
executed by the party against whom such modification or waiver is sought to be
enforced, and no conduct, behavior or pattern of conduct or behavior shall
constitute, or be deemed to constitute, any such modification or waiver. The
failure of either party at any time or times to require performance of any
provision hereof shall in no manner affect the right at a later time to enforce
the same. No waiver by either party of the breach of any term or covenant
contained in this Agreement, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in this Agreement.
13. ARBITRATION. Any determination of whether any proposed termination is for
"Cause" or with "Good Reason" and any other dispute arising under this Agreement
shall be determined by arbitration in the City of New York in accordance with
the then prevailing rules of the American Arbitration Association, before an
arbitrator or arbitrators appointed pursuant to such rules, and the
determination of such arbitrator or arbitrators shall be final, binding and
conclusive on the parties. The prevailing party shall be entitled to recover
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<PAGE>
reasonable attorneys' fees and the costs of initiating the arbitration
proceeding.
14. HEADINGS. Any headings preceding the text of any of the Sections or
Subsections of this Agreement are inserted for convenience of reference only,
and shall neither constitute a part of this Agreement nor effect its
construction, meaning or effect.
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15. SEVERABILITY. If any provision of this Agreement is invalid, illegal or
unenforceable, the balance of this Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. If any provision of
this Agreement is too broad, in scope or duration or otherwise, as to be
unenforceable, such provision shall be interpreted to be only so broad as is
enforceable.
16. GOVERNING LAW. This Agreement shall be deemed to be a contract made under,
and shall be governed by, the laws of the State of New York and for all purposes
shall be construed in accordance with the laws of the State of New York.
17. ATTORNEYS' FEES. If any action at law or in equity, including an action for
declaratory relief, is brought to enforce or interpret the provisions of this
Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees from the other party, which fees may be set by the court in the
trial of such action or may be enforced in a separate action
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brought for that purpose, and which fees shall be in addition to any other
relief which may be awarded.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the 1st day of March, 1999.
SWISS NATURAL FOODS, INC.
By:/s/Herbert Paul
/s/Ralph Ferrante
Ralph Ferrante
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EXHIBIT 10.3
Consulting Agreement made as of March 1, 1999, between SWISS
NATURAL FOODS, INC., a Delaware corporation (the "Company") and Herbert Paul,
P.C. (the "Consultant").
1. ENGAGEMENT
The Company hereby engages Consultant and Consultant accepts engagement
as a business consultant. Consultant will travel as reasonably necessary and has
heretofore been its practice in the past for the Company.
2. TERM
2.1 The term of this Agreement will begin on March 1, 1999 and will
continue until February 28, 2002 unless sooner terminated as herein provided.
3. FEE
3.1 The Company will pay Consultant a fee at the rate of ninety-nine
thousand seven hundred-fifty ($99,750) dollars during the period March 1, 1999
through February 29, 2000 ($47,500 of which is to be paid March 1, 1999 through
August 31, 1999), a fee to be paid of one hundred ten thousand ($110,000)
dollars for the period March 1, 2000 through February 28, 2001 and a fee of one
<PAGE>
hundred twenty-one thousand ($121,000) dollars during the period March 1, 2001
through February 28, 2002. Such fees to be paid no less frequently than monthly.
As an additional fee, Consultant shall receive a payment towards each of medical
and other insurance of forty-seven hundred fifty ($4,750) dollars for the period
March 1, 1999 through February 29, 2000 (to be paid September 1, 1999 through
February 28, 2000); forty-seven hundred fifty ($4,750) dollars for each
insurance for the period March 1, 2000 through February 28, 2001 and March 1,
2001 through March 1, 2002. For the five (5) consecutive full fiscal years
following an initial public offering Consultant shall be granted a bonus fee of
3,000 common stock purchase options, exercisable at $.50, for every fifty
thousand ($50,000) dollars of earnings that the Company reports in its audited
financial reports in excess of $750,000 before interest, taxes, charges
resulting from stock, debenture or stock option issuances and underwriters
consulting fees. Notwithstanding any provision of this Agreement to the contrary
the Company may at any time or from time to time, provide for additional fees or
bonus to be received by the Consultant. In the event such fees are increased,
then, from and after the date of such increase, each fee shall be so increased.
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4.1 The Company shall reimburse Consultant for all reasonable business
expenses incurred in connection with the performance of his services under this
Agreement or paid by Consultant on behalf of the Company.
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4.2 Termination by Company. The Company may, pursuant to the procedure
prescribed in Section 5.5 below, terminate the Consultant's engagement hereunder
for "Cause." "Cause" shall mean any of the following:
(i) Consultant is convicted under state or federal laws of any
embezzlement, theft relating to the Company or any of its subsidiaries or
affiliated entities;
(ii) Consultant becomes an alcoholic or addicted to drugs;
(iii) Consultant is convicted of a felony; and
(iv) Cause shall not include death or disability of Consultant.
4.3 Termination by Consultant. The Consultant may, pursuant to the
procedure prescribed in Section 5.5. below, terminate his engagement hereunder
at any time, if with "Good Reason." "Good Reason" shall mean any of the
following (without Consultant's express written consent):
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<PAGE>
(i) Failure to comply with Section 1 above, except in connection with
the termination of his engagement for Cause;
(ii) a reduction in the Consultant's fees;
(iii) any material breach by Company of its material obligations
hereunder which breach is not cured within thirty (30) days after written demand
for performance which identifies the manner in which the Consultant believes
that the Company has not performed its obligations hereunder is delivered to the
Company by the Consultant.
4.4 Procedure to Terminate for Cause or With Good Reason. In the event
that (i) the Company proposes to terminate the Consultant's engagement for Cause
or (ii) the Consultant proposes to terminate his engagement with Good Reason,
then the Company or the Consultant, as the case may be, shall give written
notice of such proposed termination to the other party, specifying such alleged
Cause or Good Reason, and the other party, shall have
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thirty (30) days from the time of receipt of such notice to cure the alleged
deficiency. In the event that the Cause or Good Reason for termination, as the
case may be, is not subject to cure or is not, if subject to cure, acknowledged
by the party proposing to terminate to have been cured within thirty (30) days
thereafter, then notice of such proposed termination may be given by the party
proposing termination to an arbitrator or arbitrators, to be chosen pursuant to
Section 11 hereof, who shall determine if such proposed termination is in fact
for Cause or with Good Reason, as the case may be, and if curable, if any
attempt at cure was successful.
If, in the case of a proposed termination by the Company for
Cause the arbitrator(s) shall determine that Cause for termination existed and,
if curable, was not cured, then the Company, acting through its Board of
Directors, may proceed to give notice of such termination to the Consultant and
this Agreement shall be terminated without any further liability of the Company
to the Consultant other than for unpaid fees and benefits to the date of
termination. If the arbitrator(s) shall determine that such proposed termination
by the Company was either without Cause, or that the Cause thereof was
appropriately cured as aforesaid, then the notices of proposed termination
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<PAGE>
theretofore given by the Company shall be deemed withdrawn and of no further
force or effect. Despite such adverse determination, the Company, acting through
its Board of Directors, may give notice to the Consultant electing to terminate
the Consultant's engagement without Cause. In the event the Company nevertheless
after such adverse determination elects to terminate without Cause, the Company
shall continue to provide the Consultant the fees and benefits provided in
Section 3 hereof for the remaining term of this Agreement.
If such notice of proposed termination shall have been given
by the Consultant and the arbitrator shall determine that Good Reason for such
termination existed and, if curable, was not cured, then the Consultant may
proceed to give notice of termination to the Company and the Company shall
continue to provide the Consultant the fees and benefits provided in Section 3
hereof for the remaining term of this Agreement. If the arbitrator shall
determine that Good Reason did not exist or that Good Reason existed but was
cured, then the notice of proposed termination theretofore given by the
Consultant shall be deemed withdrawn. Despite such adverse determination, the
Consultant may give notice to the Company of his election to terminate his
engagement without Good Reason, in which later event the Consultant shall be
entitled to receive his unpaid fees to the date of termination and to no further
fees hereunder.
7
<PAGE>
4.5 Mitigation. Consultant shall not be required to mitigate the amount
of any payment provided for in this Agreement by seeking other engagements or
otherwise.
4.6 Effect of Termination. The termination of this Agreement shall not
result in a waiver or other termination of the liabilities of any party for a
breach of this Agreement or of any liabilities which, by their express terms or
by implication, survive the termination of this Agreement or Consultant's
engagement hereunder.
4.7 The Consultant's engagement hereunder shall terminate upon the
Consultant's death, in which event the Company shall pay to the designee of the
Consultant, or if there be no designee, to his estate, the fee to which he would
be entitled pursuant hereto through the date of his death and for a period of
one hundred eighty (180) days thereafter.
4.8 The Company may terminate the Consultant's engagement hereunder by
written notice to the Consultant if (i) as a result of the Consultant's
permanent incapacity due to physical or mental disability or illness, which is
determined by a physician mutually agreed upon by the Consultant and the
8
<PAGE>
Company, the Consultant shall have been unable to perform a substantial portion
of his services hereunder for a period of 180 consecutive days in any 12
consecutive months and (ii) within fifteen (15) days after written notice of
termination hereunder is given by the Company (which may be given at any time
after the end of such 180 days of absence) the Consultant shall not have
returned to the substantial performance of his services hereunder. During any
period that the Consultant fails to perform his services hereunder as a result
of incapacity due to physical or mental disability or illness (a "Disability
Period"), the Consultant shall continue to receive his full fee hereunder until
his engagement is terminated pursuant to this Section.
5. NON-COMPETITION.
5.1 Restrictive Covenant. If this Agreement is (i) terminated by the
Company pursuant to Section 4.2 or if the Agreement is terminated by the
Consultant without Good Reason or by the Company with Cause, then for a period
of two (2) years following such termination date or (ii) if this Agreement
expires according to its terms then for a period of one (1) year following such
termination date, the Consultant will not, directly or indirectly, in the
geographic area in which the Company does business as of the date of termination
9
<PAGE>
without the prior written consent of the Company, directly or indirectly, act as
a consultant to any business in which the Company is then participating.
6. NOTICE. Any notice or other communication hereunder shall be in writing and
shall be personally delivered or sent by registered or certified mail, return
receipt requested, to the respective parties hereto as follows:
(a) If to the Company:
Swiss Natural Foods, Inc.
1031 Route 9W
Upper Grandview, NY 10960
(b) If to the Consultant:
Mr. Herbert Paul
775 Oakleigh Rd.
N. Woodmere, NY 11581
The address of either party hereto above specified may be changed by
written notice to the other party.
10
<PAGE>
7. INDEMNIFICATION. The Company will indemnify the Consultant to the fullest
extent permitted by the laws of the State of Delaware and its existing
certificate of incorporation and by-laws, and the Consultant shall be entitled
to the protection of any insurance policies the Company may elect to maintain
generally for the benefit of its officers, employees, consultants, and others,
against all costs, charges and expenses whatsoever incurred or sustained by him
(or his legal representatives or other successors) in connection with any
action, suit or proceeding to which he (or his legal representatives or other
successors) may be made a party by reason of his being or having been a
consultant of the Company or its subsidiaries and affiliates.
8. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding between
the parties with respect to the subject matter hereof, superseding all prior or
contemporaneous negotiations, discussions and agreements (written or oral).
9. BENEFIT AND BINDING EFFECT. This Agreement shall inure to the benefit of and
be binding upon the successors and assigns of the Company but shall not be
assignable by the Consultant. The Company may assign its rights and/or
obligations hereunder only with the prior written consent of the Consultant.
11
<PAGE>
10. AMENDMENT; WAIVER. This Agreement may be amended, superseded, cancelled,
renewed, extended or otherwise modified, and the terms or covenants hereof may
be waived, only by, and only to the extent provided in, a written instrument
executed by the party against whom such modification or waiver is sought to be
enforced, and no conduct, behavior or pattern of conduct or behavior shall
constitute, or be deemed to constitute, any such modification or waiver. The
failure of either party at any time or times to require performance of any
provision hereof shall in no manner affect the right at a later time to enforce
the same. No waiver by either party of the breach of any term or covenant
contained in this Agreement, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in this Agreement.
11. ARBITRATION. Any determination of whether any proposed termination is for
"Cause" or with "Good Reason" and any other dispute arising under this Agreement
shall be determined by arbitration in the City of New York in accordance with
12
<PAGE>
the then prevailing rules of the American Arbitration Association, before an
arbitrator or arbitrators appointed pursuant to such rules, and the
determination of such arbitrator or arbitrators shall be final, binding and
conclusive on the parties. The prevailing party shall be entitled to recover
reasonable attorneys' fees and the costs of initiating the arbitration
proceeding.
12. HEADINGS. Any headings preceding the text of any of the Sections or
Subsections of this Agreement are inserted for convenience of reference only,
and shall neither constitute a part of this Agreement nor effect its
construction, meaning or effect.
13. SEVERABILITY. If any provision of this Agreement is invalid, illegal or
unenforceable, the balance of this Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. If any provision of
this Agreement is too broad, in scope or duration or otherwise, as to be
unenforceable, such provision shall be interpreted to be only so broad as is
enforceable.
14. GOVERNING LAW. This Agreement shall be deemed to be a contract made under,
and shall be governed by, the laws of the State of New York and for all purposes
shall be construed in accordance with the laws of the State of New York.
13
<PAGE>
15. ATTORNEYS' FEES. If any arbitration action is brought to enforce or
interpret the provisions of this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees from the other party, which fees
may be set by
14
<PAGE>
the arbitrators, and such fees shall be in addition to any other relief which
may be awarded.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the 1st day of March, 1999 effective as of March 1, 1999.
Swiss Natural Foods, Inc.
By:/s/Ralph Ferrante
Herbert Paul, P.C.
By:/s/Herbert Paul
15
<PAGE>
EXHIBIT 10.4
AMENDED AGREEMENT dated as of February 10, 1999 by and among SWISS NATURAL
FOODS, INC. a Delaware corporation (the "Company") A. DONALD MCCULLOCH, JR. and
CAROLYN B. MCCULLOCH, as tenants by the entirety (collectively, the
"McCullochs"), Ralph Ferrante ("Ferrante") and Herbert Paul ("Paul").
WHEREAS, the Company, Ferrante, Paul and the McCullochs are parties to an
agreement dated as of December, 1, 1998 (the "Agreement");
WHEREAS, the parties hereto desire to amend certain of the provisions of
the Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. The numbers One Hundred Thousand ($100,000) and $175,000 in clause (ii)
of the first sentence of paragraph (i) of Part B of Article FIRST are hereby
changed to Ninety-Five Thousand ($95,000) and $170,000 respectively, and clause
(ii) of the first sentence of paragraph 1 of Part B of Article First shall
hereinafter read as follows:
"(ii) The Company will cause certain employees of the Company or
individuals designated by the Company or the Company itself to pay the
McCullochs ad additional aggregate principal amount of Ninety-Five Thousand
Dollars ($95,000), which together shall reduce the outstanding principal amount
of the Debt by $170,000."
<PAGE>
2. The last sentence of paragraph 1 of Part B of Article FIRST shall be
amended and shall hereinafter read as follows:
"All payments shall be made by wire transfer of immediately available funds
into an account designated by the McCullochs or checks made payable to the
McCullochs."
3. The number $147,500 in the first sentence of paragraph 2(a) of part B of
Article FIRST is hereby changed to $152,500 and the first sentence of paragraph
2(a) of Part B of this Article FIRST shall hereinafter read as follows: "the
McCullochs shall deliver to the Company for cancellation the originally executed
promissory notes (the "Notes"), representing the Debt and the Company shall
issue to the McCullochs two new promissory notes, substantially in the forms of
Exhibit A and B hereto, one of which shall be non-interest bearing and be in the
principal amount of the accrued interest on the Debt remaining unpaid on the
date of closing (the "Interest Note"), and the other of which shall bear
interestat a rate of 12% per annum payable quarterly and be in the principal
amount of $152,000 (the "Principal Note") representing the remaining unpaid
principal balance of the Debt.
<PAGE>
4. The number 77,519 in clause (ii)(x) of paragraph 2(b)(i) of Part B of
Article FIRST is hereby changed to 73,644 and the number 512,281 in clause
(ii)(y) of paragraph 2(b)(i) of Part B of Article FIRST is hereby changed to
516,156 such that clause (ii) of paragraph 2(b)(i) of Part B of Article FIRST
shall hereinafter read as follows:
"(ii) the Company shall deliver to (x) the individuals from whom the
payments referred to in paragraphs B(1) (ii) of this Article FIRST were received
new stock certificates registered in such individuals names representing an
aggregate of 73,644 shares of the common stock of the Company and (y) the
McCullochs a new stock certificate registered in the McCulloch's name
representing 516,156 shares of the common stock of the Company."
This Amended Agreement may be executed in any number of counterparts, each
of which shall be an original and all of which shall together constitute one and
the same Amended Agreement.
<PAGE>
IN WITNESS WHEREOF each of the undersigned have executed this Amended
Agreement on the date written above.
SWISS NATURAL FOODS, INC.
By: /s/ A. Donald McCulloch, Jr.
--------------------------------
A. Donald McCulloch, Jr.
/s/ Carolyn B. McCulloch
--------------------------------
Carolyn B. McCulloch
/s/ Ralph Ferrante
--------------------------------
Ralph Ferrante
/s/ Herbert Paul
--------------------------------
Herbert Paul
<PAGE>
EXHIBIT 10.5
PROMISSORY NOTE
$152,500 February 10, 1999
FOR VALUE RECEIVED, SWISS NATURAL FOODS, INC., a Delaware corporation
("Maker"), hereby promises to pay to the order of A. DONALD MCCULLOCH, JR. AND
CAROLYN B. MCCULLOCH, as tenants by the entirety, (collectively, the "Payee") at
such address as the Payee may designate in writing, the principal amount of ONE
HUNDRED FIFTY TWO THOUSAND FIVE HUNDRED DOLLARS ($152,500) (the "Principal
Amount") together with interest from the date hereof, on the unpaid Principal
Amount at the rate of 12% per annum, all in such coin or payment, as shall be
legal tender in the United States of America for the payment of public and
private debts. Unless sooner paid the entire amount owed hereunder shall be
payable on the earlier to occur of (i) the date which is one year from the date
hereof (ii) ten days after the receipt by the Maker of the proceeds of an
initial public offering of the Common Stock of the Maker registered under the
Securities Act of 1933, as amended, for the account of the Maker and declared
effective by the Securities and Exchange Commission in an aggregate amount of
not less than $10,000,000 or (c) a sale of all or substantially all of the
assets of Maker. Interest accrued on the principal amount shall be payable
quarterly on the last day of March, June, September and December commencing
March 31, 1999.
<PAGE>
The Maker may at any time and from time to time make optional prepayments
of all or any portion of the then unpaid Principal Amount, without premium or
penalty of any kind.
This Note and the Principal Amount are subordinate in right of payment to
any indebtedness of the Maker, whether secured or unsecured, for money borrowed
from banks, insurance companies and other institutional lenders which
indebtedness, by its terms, provides that it ranks senior to the indebtedness
evidenced by this Note.
This Note shall be construed in accordance with and governed by the laws of
the State of New York.
Demand, presentment for payment, notice of dishonor, protest and notice of
protest are hereby waived.
It is expressly agreed that the Maker shall pay all expenses, court costs
and reasonable attorneys' fees should this Note be placed in the hands of an
attorney for collection or be collected by suit, through bankruptcy court or by
legal proceedings.
IN WITNESS WHEREOF, SWISS NATURAL FOODS, INC. has caused this Note to be
executed by a duly authorized officer as
<PAGE>
of the day and year first above written.
SWISS NATURAL FOODS, INC.
By: /s/ Herbert Paul, President
--------------------------------
Herbert Paul, President
<PAGE>
EXHIBIT 10.6
PROMISSORY NOTE
$169,455 February 10, 1999
FOR VALUE RECEIVED, SWISS NATURAL FOODS, INC., a Delaware corporation
("Maker"), hereby promises to pay to the order of A. DONALD MCCULLOCH, JR. AND
CAROLYN B. MCCULLOCH, as tenants by the entirety, (collectively, the "Payee") at
such address as the Payee may designate in writing, the principal amount of ONE
HUNDRED SIXTY NINE THOUSAND FOUR HUNDRED FIFTY FIVE DOLLARS ($169,455) (the
"Principal Amount") in such coin or payment, as shall be legal tender in the
United States of America for the payment of public and private debts. Unless
sooner paid the entire amount owed hereunder shall be payable on the earlier to
occur of (i) one year from the date hereof (ii) ten days after the receipt by
the Maker of the proceeds of an initial public offering of the Common Stock of
the Maker registered under the Securities Act of 1933, as amended, for the
account of the Maker and declared effective by the Securities and Exchange
Commission in an amount not less than $10,000,000 or (c) a sale of all or
substantially all of the assets of Maker.
The Maker may at any time and from time to time make optional prepayments
of all or any portion of the then unpaid Principal Amount, without premium or
penalty of any kind.
This Note and the Principal Amount are subordinate in right of payment to
<PAGE>
any indebtedness of the Maker, whether secured or unsecured, for money borrowed
from banks, insurance companies and other institutional lenders which
indebtedness, by its terms, provides that it ranks senior to the indebtedness
evidenced by this Note.
This Note shall be construed in accordance with and governed by the laws of
the State of New York.
Demand, presentment for payment, notice of dishonor, protest and notice of
protest are hereby waived.
It is expressly agreed that the Maker shall pay all expenses, court costs
and reasonable attorneys' fees should this Note be placed in the hands of
attorney for collection or be collected by suit, through bankruptcy court or by
legal proceedings.
IN WITNESS WHEREOF, SWISS NATURAL FOODS, INC. has caused this Note to be
executed by a duly authorized officer as of the day and year first above
written.
SWISS NATURAL FOODS, INC.
By: /s/ Herbert Paul, President
--------------------------------
Herbert Paul, President
<PAGE>
EXHIBIT 10.7
CONSUMERS GLASS
[Logo]
Consumers Packaging Inc.
------------------------
777 Kipling Avenue
Etobicoke, Ontario M8Z 5Z4
Sales Office (416) 232-3088
Fax (416) 232-3020
March 30, 1995
Mr. Ralph M. Ferrante,
Chief Executive Officer,
Swiss Natural Foods, Inc.
1031 Route 9W,
Grandview, N.Y. 10960
RE: GLASS SUPPLY AGREEMENT -- REVISED
- -------------------------------------
Dear Ralph:
I would like to thank you for this opportunity, and look forward to growing the
Swiss Natural brand with you.
Below please find glass prices for both your 16 oz. Private bottle and the 16
oz. Industry bottle, mould 0322.
This supply proposal is based on a three-year commitment by both of our
organizations. The proposal is effective July 1, 1995 through July 1, 1998.
Consumers Glass has also committed to duplicate your 16 oz. Swiss Natural bottle
currently supplied by Owens-Brockway at no cost to Swiss Natural. In order to
get a return on our investment for the equipment, we need a minimum volume of
150,000 gross over a three-year period.
The cost of the equipment will go on a memo account and will be reviewed at the
end of the two years.
Prices are for bulk glass only, and are delivered prices to co-packer of your
choice in the Toronto area.
GLASS PRICES
* 16 oz. Swiss Natural - $12.60 U.S./gross
($2.10 U.S./case)
* 16 oz. Industry (0362) - $12.60 U.S./gross
($2.10 U.S./case)
The above prices are firm from July 1, 1995 - July 1, 1996. Pricing is subject
to increase after July 1, 1996 upon announcement of a U.S. industry increase.
<PAGE>
MOULD COST - 16 OZ. SWISS NATURAL
* Memo Account - Rebateable $48,880.00 Cdn.
- Non-Rebateable 5,740.00
------------------
Total $54,628.00 Cdn.
TARGET VOLUMES
* 16 OZ. SWISS NATURAL
Year 1 - 50,000 gross (300,000 cases)
Year 2 - 100,000 gross (600,000 cases)
* 16 OZ. INDUSTRY (0362)
Year 1 - 35,000 gross (210,000 cases)
Test Market
Year 2 - Natural Roll Out
250,000 gross (1.5 million cases).
Consumers Glass is committed to provide Swiss Natural the quality and service
you require to continue to grow your business. If there is anything I can do at
any time, please do not hesitate to contact me directly.
Signature: Dated: Signature: Dated:
/s/ John B. Zanini 30.3.95 /s/ Ralph M. Ferrante April 10,1995
- ------------------------------- ----------------------------------------
John B. Zanini Ralph M. Ferrante
on behalf of CONSUMERS GLASS on behalf of SWISS NATURAL
<PAGE>
CONSUMERS PACKAGING INC.
[Logo]
EMBALLAGES CONSUMERS INC.
777 Kipling Avenue
Etobicoke, Ontario M8Z 5Z4
Telephone (416) 232-3000
November 13, 1998
Mr. Ralph M. Ferrante,
Swiss Natural Foods, Inc.
1031 Route 9W,
Upper Grandview NY 10960
Via Fax: 914-358-2828
RE: November 12, 1998 Meeting Follow-up
- ---------------------------------------
Dear Ralph,
Thank you again for your time and hospitality on November 12, 1998.
As promised, I have gathered details on the issues we discussed and have
outlined them below. You were concerned about the following issues:
* 1999 Glass Production
* Mould Rebate for 16oz glass
* Overpayment of moulds for 16oz Glass.
1. GLASS PRODUCTION
In discussion with Anchor Glass, both your 12oz and 16oz containers are shop
loaded in our Salem plant in the U.S.A. for 1999.
Swiss Natural must evaluate our current inventory position on both containers
and advise when new glass production is required in 1999 based on your sales
forecast. These requirements need to also be firmed up with purchase orders.
2. 16OZ. GLASS SUPPLY AGREEMENT
On March 30, 1995, I confirmed in a letter to you the details of your pricing
for both glass and moulds. That information is as follows:
Glass prices
* 16oz. Private Swiss Natural container (Mould 0561)
* $12.60 U.S./gross
Note: This price has been firm for 3 years.
<PAGE>
Mr. Ralph Ferrante
Page 2
November 13, 1998
3. MOULD COST
Consumers Packaging Inc. did not charge Swiss Natural for the cost of moulds up
front, nor did we amortize the cost of moulds in our glass price.
We charged on a memo account (Invoice #942854), $58,451.96 CDN$, over a 2 year
period. This invoice clearly stated "MEMO ACCOUNT" for which payment was not
expected. We also forward to you credit notes as you reach rebate plateaus.
These rebate plateaus are evaluated in 1/3 increments. The credit notes are
strictly a paper trail indicating your position towards full amortization of the
mould.
4. 12OZ MOULD COST
We have recently invoiced you incorrectly for the above moulds. That invoice has
been cancelled and a new invoice "MEMO ACCOUNT" has been issued.
This invoice, again, is on a "MEMO ACCOUNT" and payment is NOT expected, nor
has the cost of the 12oz mould been amortized in the glass container price.
The rebate volume for the 12oz mould is 80,000 gross over 2 years.
Ralph, I hope this clarifies the issues we discussed. Should you have further
questions, please contact me directly.
Kind Regards,
/s/ John B. Zanini
- --------------------------------------
John B. Zanini
Regional Director, Ontario & Western Sales
JBZ:dw
cc: Gordon Love, Anchor Glass
John Robichaud, Anchor Glass
Bill Higginson Robichaud, Anchor Glass
Greg Sinatro Robichaud, Anchor Glass
Marsha Van Wagner Robichaud, Consumers Glass
Denis Tisdel, Consumers Glass
<PAGE>
GENERAL INFORMATION
PAGE 1
DATE: January 4, 1999
- ------------------------------------------------------------------------------
Information set out herein is general and subject to exceptions.
EASTERN CANADA - comprises all points from and including Newfoundland to and
including Thunder Bay.
WESTERN CANADA - comprises all points West of Thunder Bay to the Pacific Ocean.
TERMS
SALES TAX - extra, at rate effective at time of shipment, unless otherwise
indicated.
TERMS OF SALES - Net 30 days (on approval of Credit Department).
LATE PAYMENT PENALTY - 1 1/2% PER MONTH WILL BE CHARGED ON OVERDUE ACCOUNTS.
CASH DISCOUNT - 1% 10 days, calculated on the invoice value of glass, ACL, and
cartons, including GST and Provincial Sales Tax, if applicable, but not
including freight charges. Cash discount applicable to C.O.D. as well as net
terms.
PALLETS, NEW MOULDS AND ALTERATIONS, ART & SCREEN CHARGES - No cash discount
applicable.
Orders for other than standard stock ware will be made up as closely as possible
to quantity ordered, but Purchaser agrees to accept quantities under or over,
within reasonable limits, as complete fulfillment of the order.
THE STANDARD ORDER TERM is four months. The terms for Liquors and selected SSL
containers is six months. These terms will be printed on Purchase Order
confirmations. For orders less than the minimum run, terms and pricing are to be
defined by PRICING.
MAKE & SHIP DISCOUNT is offered at a 4% discount off published book prices.
Glass is to be shipped within forty-eight hours of manufacture, weekends and
holidays excluded. Orders are to be clearly identified and booked at least
forty-five days in advance. This discount does not apply to Distributors.
<PAGE>
GENERAL INFORMATION
PAGE 2
DATE: January 4, 1999
- ------------------------------------------------------------------------------
PRE-INVOICE POLICY - CHARGE UP
ANY WARE LEFT ON HAND AT THE END OF THE TERM IS OVERDUE, AND IS SUBJECT TO
PRE-INVOICING. Charge-up invoices are to be issued for full value of ware on
hand immediately order becomes overdue, coincidental with which monthly storage
will be applicable.
EXPIRY DATE, calculated in calendar months, shall be from date of first
requirement, or first manufacture, whichever is later.
The manufacturer shall not be responsible for loss or damage to goods, including
cartons, resultant from inability to deliver overdue goods which have been in
inventory eight months or more, due to packaging deterioration, handling loss,
etc. Subject to the foregoing, the adjustment billings/credits following final
shipment of charged-up ware must have an invoice value of a minimum of $50 for
processing.
STORAGE CHARGES - are $15/pallet. They will be assessed on a prepaid monthly
basis with first full month's storage chargeable coincidental with charge up for
quantity remaining in stock at close of business day of charge up. Charges will
be on an item basis with a minimum of $50 per item. Ware remaining in stock
three months after charge up will be subject to storage at $30/pallet. Following
30 days' notice to our customers, all ware in inventory for at least seven
months will be subject to disposal instructions. Ware will be shipped or
scrapped during the eighth month with cost of disposal to customer's account.
Cullet values where applicable will be credited to customer's account.
It may be to the customer's advantage to take title to pre-invoiced inventory
and store at offsite locations. Consumers Glass will assist in this transfer.
Details available at regional offices.
PACKAGING POLICY
CUSTOMER'S PACKAGING - Where customers supply their own packaging, it is a
requirement that full quantity be available for release from carton manufacturer
at time of our initial production. An exception is wehre quantity available for
release for each production is not less than quantity shown for the price at
which order is booked. If quantity available for release is less than that
required for quantity at which order is priced, order must be priced according
to quantity of each package release. Packaging will be released from
manufacturer by Consumers Glass in such quantities as not to penalize customer
cost-wise.
<PAGE>
GENERAL INFORMATION
PAGE 3
DATE: January 4, 1999
- ------------------------------------------------------------------------------
Consumers Glass reserves the right to approve packaging suppliers, ISO approved
suppliers are preferred.
Storage will be charged at $15.00 per month per pallet for customer owned empty
packaging where there is no purchase order for glass on hand to fill the
cartons.
Policy covers normal or standard type packaging suitable for assembly on
automatic sealing machines. If packaging that is to be supplied is of double
wall construction or requires special operation for set up or assembly, a sample
must be submitted to PACKAGING SERVICES for costing and report to PRICING for
possible handling surcharge.
Packaging while in our possession is insured against fire and theft. However,
due to hazards connected with handling, we shall only be responsible for losses
shown below for quantities delivered to Consumers Glass.
In excess of 1% of packaging, including components, when outers are not over
No. 30 brightness;
In excess of 2% of packaging, including components, when outers are over No.
30 brightness;
In excess of 3% of take-home carriers;
If the customer requests production to be cut, resulting in empty customer
packaging remaining on hand, the Account Manager will arrange to send them to
the customer.
Claims for carton loss in excess of these allowances must be sent to Consumers
Glass within a reasonable time after the loss is incurred. There shall be no
responsibility for unused packaging remaining on hand eight months.
Packaging is to be delivered to our factory free of cost to us and only upon our
release.
Where we are requested to supply interior packing for customer's own packaging
refer to PRICING.
Requests for short-height trays and trays with collapsible score lines, will be
reviewed by PACKAGING SERVICES in conjunction with SALES.
<PAGE>
GENERAL INFORMATION
PAGE 4
DATE: January 4, 1999
- ------------------------------------------------------------------------------
Where acceptable and subject to safety aspects, extended storage and/or distant
shipping conditions, pallets may be restricted to half heights (double decked)
at time of shipment.
REDUCED HEIGHT PALLETS WILL ATTRACT A 1% SURCHARGE FOR EACH TIER LESS THAN
OPTIMUM, TO A MAXIMUM OF 5%. WHEN IT IS TO CONSUMERS GLASS' ADVANTAGE, THERE IS
NO SURCHARGE FOR HALF PALLETS THAT ARE DOUBLE-DECKED.
UNASSEMBLED "U" SHAPE PARTITIONS
- - 1/2 dozen pack 2-part partition will attract handling charge 8(cent)/carton.
- - 1 dozen pack 4-part partition will attract handling charge for
22(cent)/carton.
MADE-UP CARTONS - will not be accepted.
USED PACKAGING - We do not accept the return of used packaging, either
customer's own or Consumers Glass' packaging for reuse.
KD PACKAGING - Enquiries for small lots up to 2000 of stock or package deal KD
reshipper packaging (where available) will price at published selling price plus
25% converted to nearest cent per unit. Small pack handling charge, if any, or
machine charge for package deal items not to be included, including COCs,
minimum shipment of full pallet or unitized loads only. The customer is
responsible for freight costs. On prepaid shipments to Toronto or Montreal,
there is a charge of $15.75 per pallet.
PACKAGE DEALS - We will supply packaging on the basis of specifications and
printing. Upon request, PACKAGING SERVICES will develop specifications, and
PURCHASING will negotiate competitive costs for quotation. All package deals are
to be made on the basis of cost at time of purchase plus the following standard
financing/service charges (which are applicable to the outer as well as the
inner components according to the brightness of the outer package board).
KRAFT BOARDS - (not over #30 brightness) 8%
PEARL BOARD - (over #30 brightness) 9%
TAKE-HOME CARRIERS 10%
PRICE WILL BE NEGOTIATED AT TIME OF CORRUGATED INDUSTRY PRICE INCREASE.
<PAGE>
GENERAL INFORMATION
PAGE 5
DATE: January 4, 1999
- ------------------------------------------------------------------------------
PRINTING AND STEEL RULE DIES - Where required and customer does not supply, we
will arrange for same, charging customer at cost PLUS AN ADMINISTRATION CHARGE
OF 20%.
MULTIPLE PACKS - Where more than one pack is involved for packing of any one
item, either by size, type, or printing etc., total quantity will govern price.
Any pack that is less than 50% of the minimum list quantity for capacity
involved will be subject to a one-month term. Policy applies to packaging
supplied by customer or by Consumers Glass.
MULTIPLE PACKS INVOLVING TAKE-HOME CARRIERS - May be pooled to earn a quantity
glass price. Minimum order for any single pack is 500 gross. Orders for lesser
quantities will be subject to a 3% surcharge on the glass price and be a
one-month term.
TAKE-HOME CARRIERS - A set-up charge will apply where customer uses carry-home
packs of standard one-piece design, quick snap assembly to be set up and
inserted in customer's or Consumers Glass' outer packing. All take-home carriers
must be new material.
4(cent)/carrier, to and including 16 oz. size, and not over 8 pack;
8(cent)/carrier, over 16 oz. size; or over 8 pack, 16 oz. size and under.
If Consumers Glass is requested to develop outer package, samples of customer's
take-home carriers must be submitted to PACKAGING SERVICES in order to
facilitate outer package design.
TABLOCK CARTONS - This feature involves retention tabs, made in the slotting
operation, which lock top flaps down at diagonal corners (manufacturers joint
and opposite) creating an open top when set up. Handling charge of
4(cent)/carton applies.
MINIMUM PACKS - are indicated on price screens. For lesser packs refer to
PRICING.
PALLET STABILIZATION WRAP (PSW)
PSW will be supplied on all tray packs
PSW can be supplied on cartons at customer's request
PSW to be charged where supplied, EXCEPT;
Ref./NR Beers/Sodas in tray or tablock cartons packs
Items in service trays at service carton prices
Pallet piling stability problem items
<PAGE>
GENERAL INFORMATION
PAGE 6
DATE: January 4, 1999
- ------------------------------------------------------------------------------
Charges for PSW applied at time of manufacturing are:
43 x 57 pallet - 4.26/pallet
46 x 53 slip sheet - 4.26/pallet
40 x 48 pallet/slip sheet - 3.76/pallet
UNSHRUNK POLYETHYLENE BAGS OR HOODS AS DUST PROTECTORS:
On request, we will supply unshrunk hoods extending downward 36" from top of
pallet, at following charges per pallet:
HOOD
43 x 57 pallet .90
46 x 53 slip sheet .84
40 x 48 pallet/slip sheet .77
PRICING
Prices are per gross of glass, unless otherwise noted, and are determined by
the following basic specifications, in accordance with appropriate price list.
1. Shape 5. Diameter/width
2. Nominal/brimful design capacity 6. Finish size/type
3. Overall height 7. Order quantity/item
4. Mean design weight 8. Packaging
GLASS FINISHES - List prices are essentially for ware made with standard GPI
finishes. Enquiries for other finish types, or finishes subject to other than
standard tolerances, to be referred to PRICING.
FINISHES OR BOTTOM PLATES - Where two different finishes and/or bottom plates
are required on one item, total quantity ordered will govern price, providing
quantity of either finish and/or bottom plate is not less than equivalent
one-day run. Any individual SKU for equivalent two manufacturing days or less -
term to be defined by PRICING.
Where an item is SSL, with one finish and/or bottom plate, and is required with
another finish and/or bottom plate, it will be priced as MTO.
GLASS COLOUR - List prices apply for Flint, Amber or Emerald Green.
<PAGE>
GENERAL INFORMATION
PAGE 7
DATE: January 4, 1999
- ------------------------------------------------------------------------------
Special colours are available as shown. The surcharges are applied to the base
price. The minimum production for a given colour on the colour feeder is two
weeks. Orders can be accumulated to achieve the minimum requirements. Shorter
runs will attract a surcharge.
COLOUR SALES CLASS/COLOUR CODE
Georgia Green Xx7 5%
Champagne Green Xx9 15%
Light Olive Green 418 15%
Topaz 428 15%
Light Emerald Green 448 15%
Antique Green 458 25%
Reflex Blue 718 15%
Light Blue 728 10%
Ice Blue 738 15%
Dead Leaf Green 748 15%
Cobalt Blue 768 15%
Ice Blue Juice 778 15%
Arizona Cobalt 788 30%
Dumont Blue 798 15%
Smoke 808 15%
F.O.B. - Where customer requests two destinations be combined for pricing
purposes, customer is to choose one F.O.B. point. A separate order should be
entered and cross-referenced.
SPECIFICATIONS - Capacity must qualify in correct capacity group, but where
height, weight, diameter or width fall between two listed maximum
specifications, price applicable to higher specification will apply.
WEIGHT - Mean design weight will be used for pricing purposes. There will be no
reduction in price for bottles made at lighter weight than lightest weight shown
for capacity. Bottles designed at intermediate weights will price at next higher
weight.
OVER SPECIFICATION CHARGES - When height and/or weight and/or diameter or width
exceed maximum specification shown, price from highest group within proper
capacity and add surcharge as follows:
Overheight - $2.55/gross each 1/2 inch or fraction
Overnight - $2.55/gross each ounce or fraction
Overdiameter/Overwidth - $2.55/gross each 1/4 inch or fraction.
However, where an item exceeds a particular specification, but that
specification is constant to the highest group within the capacity, price at
lowest group where other specifications are met and add surcharge.
<PAGE>
GENERAL INFORMATION
PAGE 8
DATE: January 4, 1999
- ------------------------------------------------------------------------------
GLASS HANDLES - Price lists for Glass Handle jugs (GH-01) and Narrow Mouth foods
(NM-03) include glass handles. For all other lists, items with glass handles
will price from appropriate list with surcharges as follows:
Neck Ring Shoulder/Body
Glass Handle Glass Handle
------------ ------------
up to and including
40 oz. capacity $3.31/gross $ 9.26/gross
Over 40 oz. capacity $6.62 gross $17.64 gross
STANDARDS STOCK LINE (SSL) - Such items have fixed specifications such as
colour, finish, type of packing, and quantity per carton.
MADE TO ORDER (MTO) - Includes private moulds and stock moulds not included
under SSL.
SHORT RUN ORDERS - All manufacturing orders for less than the lowest quantity
shown for a specific mould are to be approved by PRICING.
Orders for less than minimum production are to be referred to Pricing for price
determination.
REPACKING - Cartons/Trays - Charges as shown are for standard type one-tier
packaging. For other types, refer to PRICING. Disposal instructions for
customer's packaging must be available. Add appropriate PACK FROM charge to
appropriate PACK TO charge for total repacking charge. The price of the
discarded packaging is added to the repacking charge.
PER GROSS OF GLASS
MINIMUM
DOZEN PACK FROM PACK TO
- ------ --------- -------
2 $5.00 $ 5.00
1 7.72 8.82
1/2 15.23 17.33
1/3 24.15 27.30
GLASS SAMPLING - Customer requested samples, run at Consumers Glass'
convenience, are chargeable as follows: - $8,000 flat charge
including maximum 1 gross of samples.
- Quantities in excess of 1 gross, refer to PRICING.
- For special coloured glass samples, refer to PRICING.
- Samples shipped in service cartons or trays at above charges.
<PAGE>
GENERAL INFORMATION
PAGE 9
DATE: January 4, 1999
- ------------------------------------------------------------------------------
CUSTOMER CLAIMS - QUALITY - SERVICE
FOR CLAIMS CONSIDERATION, THE FOLLOWING CONDITIONS MUST BE MET:
1. Immediate notification by the customer of the problem and intention to claim.
2. Full co-operation with Consumers Glass to mitigate the claim - adopt the
most cost-effective approach to resolve the problem.
3. Submission of qualitative and quantitative evidence of losses incurred.
4. Claims limited to direct out-of-pocket costs proven to be a result of a
quality or service deficiency.
BLOW MOULD CHANGE PRICING (DESIGN PLUS)
This concept is defined as pricing based on the total quantity of two or more
containers produced sequentially and requiring blow mould and bottom plate
changes only.
Standardization of blow mould and blank designs is required within the following
parameters:
1. Common neck diameters.
2. Common weight
3. Common finish
4. Height could vary +1/16"
5. Body profiles/diameters or combination could vary +3/64"
For containers falling within these parameters and ordered to be produced
sequentially, we offer Blow Mould Change pricing, provided that the order for
each container is a minimum of one-half of published minimum production runs.
The price for the container with the greatest volume is based on the combined
quantity of the orders. The other containers will have a 10% surcharge. The
order period will be the same for all orders.
<PAGE>
GENERAL INFORMATION
PAGE 10
DATE: January 4, 1999
- ------------------------------------------------------------------------------
SERVICES
PRESSURE SENSITIVE FILM LABEL (PSFL) ROUND BOTTLES ONLY
Price of labels and application is dependent on:
- number of labels
- size of labels
- printing process and number of colours
- film type
- quantity per design
- ease of operation
Label Development Costs are to be handled between the customer and label
supplier. No costs will be incurred by Consumers Glass.
The customer is responsible for label obsolescence.
Dependent on the container and label, additional labelling equipment may be
needed. This influences the minimum quantity required and pricing.
PLASTI-SHIELD - Items for which no lists are published should be referred to
PRICING.
PLSS LABEL DEVELOPMENT CHARGE - For customer's account and should be between the
customer and the label supplier.
Please consult with PRICING for details.
BULK PALLETIZATION - On round, straight-sided ware, the following will apply:
Refer other shapes to PRICING.
MINIMUM
QUANTITY EAST/WEST
- -------- ---------
3-Day Production Glass only
2-Day Production Glass only plus 40(cent)/gross
1-Day Production Glass only plus 80(cent)/gross
For lesser quantities, refer to PRICING.
STRAPPING of pallet loads will be free of charge, as well as PSW applied at our
option for stability purposes.
TIER SHEETS are to be returned to Consumers Glass.
PICTURE/TOP FRAMES - subject to deposit of $6 each.
FREIGHT involved in return of re-usable material will be for customer's account.
<PAGE>
GENERAL INFORMATION
PAGE 11
DATE: January 4, 1999
- ------------------------------------------------------------------------------
FREIGHT POLICIES
MINIMUM SHIPPING RELEASE is a full load on AT LEAST A 53' VAN. On shipments for
less than full loads, a charge of $1,000 will be assessed. No release for less
than eight pallets will be acceptable. In addition, there will be no part
pallets on combined loads.
REFUSED/RETURNED LOADS - Will be assessed the cost to cover outbound and inbound
freight on prepaid accounts; when freight out and returned is for customer's
account, there is an administration charge of $120.
DEMURRAGE - A daily demurrage charge of $65 applies where customers hold
trailers. (Trailer dropped - no tractor or driver).
DETENTION - Detention occurs when Consumers Glass' drive or agent is detained at
the customer two hours beyond the scheduled appointment time. There will be a
$65/hour charge commencing with the third hour of detention. Detention will not
be accepted by Consumers Glass or charged by Consumers Glass unless there is
written proof of arrival and departure time with which to verify the detention
charge to the customer.
DETENTION AND DEMURRAGE CHARGES can be assessed concurrently with the same load.
THE BILLING OF DEMURRAGE AND DETENTION WILL BE DONE BY DIRECTOR CUSTOMER SERVICE
BASED ON INFORMATION SUPPLIED BY THE LOAD DISPATCH.
F.O.B. POINTS
Prices are F.O.B. factory Montreal, Toronto, Bramalea, and Lavington in minimum
truckload quantities.
Prices are F.O.B. Scoudouc, except WISPA wines.
FREIGHT EQUALIZATION
ATLANTIC PROVINCES & EASTERN QUEBEC
Shipments ex Scoudouc are collect. Shipments to Newfoundland may be prepaid with
a charge for actual freight.
Shipments ex-Montreal of minimum truckload quantity to be prepaid with freight
charge as indicated F.O.B. field to read "F.O.B. Scoudouc."
<PAGE>
GENERAL INFORMATION
PAGE 12
DATE: January 4, 1999
- ------------------------------------------------------------------------------
FREIGHT CHARGES FOR EX MONTREAL
SHIPMENTS TO EQUALIZE ON SCOUDOUC
TRUCK RATES SUBJECT TO FUEL SURCHARGE IN EFFECT AT TIME OF SHIPMENT.
EASTERN CANADA - MARITIMES - Equalized Scoudouc.
On direct customer shipments from Central Canada, we prepay and charge the
indicated rates. Shipments from Scoudouc are collect.
TO: MTL. EQ.
NOVA SCOTIA POINTS SCOUDOUC
------------------ --------
Coldbrook $676.00
Dartmouth 567.00
Halifax 567.00
Kentville/Berwick 654.00
Malagash 385.00
Truro 425.00
TO: NEW BRUNSWICK POINTS
--------------------
Campbellton $638.00
Chatham 365.00
Grand Falls 722.00
Moncton 157.00
Okomocto 428.00
Saint John 370.00
Scoudouc ----
Woodstock 565.00
Sussex 235.00
TO: PRINCE EDWARD ISLAND
--------------------
Charlottetown $470.00
<PAGE>
GENERAL INFORMATION
PAGE 13
DATE: January 4, 1999
- ------------------------------------------------------------------------------
PALLET REGULATIONS
Any freight charges assessed by transportation companies for carrying of pallets
will be for customer's account. This applies to both outbound loaded shipments
and return of empty pallets to our factory/warehouse location. We will, however,
deliver on pallets subject to conditions of standard services. Empty pallets may
be returned to nearest Consumers Glass factory/warehouse at customer's option.
PALLET DEPOSIT - $18.00
A DEPOSIT OF $18 will be charged on each pallet left with customer, including
those used as stabilizers or dunnage. Credit computed on same basis will be
issued upon return of pallets in good condition.
MOULD POLICY
MOULD EQUIPMENT AND MOULD ACCESSORY CHARGES - reflect a cost-sharing policy and
are applicable when supported by initial glass order to minimum base quantity.
For lesser glass quantities refer to PRICING.
A signed purchase order from the customer must accompany a mould requisition.
TERMS - Net 30 days.
MOULD CHARGES - Charges do not constitute purchase of moulds. Moulds must remain
in our possession, but we will be responsible for storage, repair as may be
necessary, and maintenance in proper operating condition as long as the item
remains active. Moulds are considered to be inactive when not operated for a
period of two years.
REPLACEMENT OF MOULD EQUIPMENT for containers that carry a four-year volume less
than the rebate quantity shown on the Mould Charge Schedule will be invoiced
rebatable charges with payment based on Memo Account. The balance remaining in
this account at the completion of this term will be due.
REPLACEMENT MOULD EQUIPMENT for containers that carry a four-year volume less
than the rebate quantity shown on the Mould Charge Schedule will be invoiced
rebatable charges upon completion. Any rebates earned will be credited.
DUPLICATION OF COMPETITIVE MOULDS - Consumers Glass will duplicate competitor's
moulds and charge rebatable amount only, provided duplication is exact in all
respects.
<PAGE>
GENERAL INFORMATION
PAGE 14
DATE: January 4, 1999
- ------------------------------------------------------------------------------
MOULD WORD HELD, CHANGED OR CANCELED - When customer places a "hold" during
mould manufacture, a charge on basis of full cost plus an administration charge
will be made, if release is not given within 60 days of notification.
A revision to the original mould order may attract further charges for mould
equipment. Refer these instances to PRICING for resolution.
ALTERATIONS to existing mould equipment, which are required by customer, will be
chargeable at cost plus an administration charge. Where cost exceeds
non-rebatable amount, the difference will be rebatable as per the policy.
MOULD OBSOLESCENCE - when a customer discontinues using or replaces a mould with
an unearned rebate, the rebate will be forfeited and any unpaid rebatable charge
will immediately become due for payment.
BLOW MOULD CHANGE MOULD CHARGES WITHIN CUSTOMER GROUP - The primary mould
(highest volume) is priced according to the price book for the appropriate mould
group. The remaining moulds are priced at 60% of the mould charge for the
appropriate mould group. This amount is fully rebatable upon shipment/billing of
the published rebatable quantity. The applicable non-rebatable engineering
applies for each subsequent mould.
UNIT MOULDS developed at customer's request will be subject to unit mould charge
of $25,600 for round moulds or $30,800 for other shapes, plain or decorated. If
unit mould is approved and order placed for a full set of equipment at full
mould charges, unit mould charge will be fully refunded. Sampling charges as
published will apply to all customer requested glass sampling.
WITH A GLASS HANDLE in the neck, shoulder or body (other than in the finish) the
appropriate non-rebatable mould charge - group 3 or 6 will be increased by
$8,400 without change to the listed rebatable amount. If other than round or if
the handle area is cut away so as to alter the true round shape, group #6
applies.
THE SHARP HIGH COLLAR (SHC) FEATURE will increase the non-rebatable mould charge
by $7,000 without change to listed rebatable amount.
NEW BOTTOM PLATES (non-rebatable)
Regular - $3,100/set. Fancy design decoration - $4,400/set.
Plus $13.00/letter or numeral - Consumers Glass identification excepted.
Requests for additional lettering on existing plates treated as alteration at
cost.
<PAGE>
GENERAL INFORMATION
PAGE 15
DATE: January 4, 1999
- ------------------------------------------------------------------------------
NEW NECK RINGS
To and including 38 mm but not including glass handles - $16,500
Over 38 mm and including all mm sizes with glass handles - $25,600.
Only amount in excess of appropriate mould group number non-rebatable charge is
rebatable on regular basis.
MOULD STORAGE COSTS to charge customers for moulds that remain inactive over two
years, in order to ensure that these storage costs are recovered.
In September of each year, the Mould Controller issues scrap requests for all
items inactive for at least two years. There are three options available to the
customer:
a) Mould to be scrapped. No charge applicable.
b) Moulds to be crated and shipped to customer. Charge to be applied.
c) Moulds to remain at Consumers Glass. Storage charges to be applied.
In order to ensure these charges are raised, a form will be attached to the
scrap requests. If option "B or C" is selected, the Account Manager should route
a copy of this form to the appropriate CSR, who will then be alerted to raise an
invoice to the customer for either mould storage or creating charges. The CSR
will not need to follow up the following year, as the Mould Controller will
again raise another scrap request and the whole charge of $1,500 per year until
the fifth year at which time the moulds are scrapped. If the customer elects to
have the moulds shipped to his location, a charge of $500 for crating is
applicable. In addition, customer should be aware that if moulds are returned to
Consumers Glass for future production, a refurbishing charge will be assessed
for the customer's account.
If option "A" (Mould to be Scrapped) is chosen, the form is to be returned to
PRICING for approval.
Under extenuating circumstances, approval may be obtained from PRICING to waive
Mould Storage charges.
A NEW DESIGN SERVICE is offered for hand outline drawings and/or dimensional
drawings free of charge for new or altered mould designs.
MODELS will be charged, and one wood and plastic will be permitted per
engineered drawing. A wood model is required to make a plastic. When an invoice
has been received from the model maker, the regional office will be advised, so
the customer may be invoiced.
MODELS at creative stages will be allowed at the discretion of SALES MANAGEMENT.
<PAGE>
GENERAL INFORMATION
PAGE 16
DATE: January 4, 1999
- ------------------------------------------------------------------------------
WHERE REGISTRATION DRAWINGS are required by customer for design registration
purposes refer to PRICING.
A NON-CONTAINER DESIGN WORK charge to apply to all Creative Design work that is
not directly related to the glass container design will be priced on an
individual basis. This covers such work as labels, exterior packaging, logo
medallion, etc.
<PAGE>
GENERAL INFORMATION
PAGE 17
DATE: January 4, 1999
- ------------------------------------------------------------------------------
MOULD GROUPINGS
PLAIN - GROUPS 1 AND 4
Applies to perfectly plain straight-sided moulds (rounds may be straight taper
but other than rounds cannot be tapered). Includes moulds on which there is
minimum amount of lettering, e.g., simple trade mark, monogram, content
lettering, product or trade name on body, and/or lettered bottom plates. Label
panel of maximum .030" depth is permitted in group 1 rounds only provided panel
is of same depth completely around the item (panel may be tapered but not
greater than .030" depth at top or bottom).
SEMI-DECORATED - GROUPS 2 AND 5
Applies to plain moulds other than straight sided, (including plain tapered
other than round) and/or straight-sided moulds on which there is considerable
lettering. Includes decorated moulds on which decoration is of simple horizontal
or vertical design only, but no combination of the two. Includes plain fluted
moulds and plain moulds with indented or raised finger grip or label space
(except as noted in plain group above). Decorationis restricted to horizontal
design that can be turned on a lathe or vertical design that can be cut on a
shaper. Does not include decorations which require extensive bench work.
Lettering must be high in glass/deep in metal.
HIGHLY-DECORATED - GROUP 3 AND 6
Applies to moulds of fancy shape or with fancy designs, and/or fancy
decorations. Includes all moulds with glass handle in finish or neck ring only.
Generally these charges will apply to any design which requires extensive
benchwork. Also includes moulds with angular parting line.
Stippling is not considered a decoration.
REBATE QUANTITY - represents the total quantity required to be shipped/billed
within twenty-four month period from date of first shipment to acquire full
rebate of the rebatable amount. Rebates on one-third shipment/billing of rebate
quantity - no rebate being applicable to shipment/billing of intermediate
quantities. Total rebate will not exceed rebatable amount indicated and
shipment/billings in excess of quantity required for full rebate on one item
cannot be used towards rebate for any other items.
<PAGE>
EXHIBIT 10.8
SWISS
NATURAL
AGREEMENT OF CONFIDENTIALITY
DATED: JANUARY 3, 1999
BETWEEN: SWISS NATURAL FOODS, INC. (the "Company")
AND: CONSUMERS GLASS COMPANY (the "Business Associate")
It is requested that SWISS NATURAL FOODS, INC. (the "Company") furnish to
CONSUMERS GLASS CO. ("Business Associate") certain confidential information and
proprietary data regarding the Company and originating, producing,
distributing, advertising, promoting and selling of beverages and or other
products. Business Associate shall only utilize such information and data as
agreed to by the Company in assisting the Company in the development of
products(s). As a condition of Company furnishing such information to, Business
Associate, Business Associate agrees, as set forth below, to treat
confidentially such information and any other information furnished by the
Company or its agents, either in writing, orally, electronically or by any
other means, together with analyses, compilations, studies or other documents
or records as may be prepared by Business Associate, its directors, officers,
employees, agents, advisors, subsidiaries, representatives, employer or
co-employee (collectively, "Representatives"), which contain or otherwise
reflect or are generated from such information (collectively, the "Material").
The Company shall furnish to Business Associate the Material on the following
terms and conditions:
1. The Information will be received and maintained by Business Associate
in the strictest of confidence for use only as agreed to in writing by the
Company in the development of formula, products, production, distribution,
advertising, promotion and or, any other related aspects of the Companies
product development. Such Material will not at any time be used by the Business
Associate in its business or operations or disclosed directly or indirectly, in
whole or in part) to others without first obtaining the written permission of
the Company, which the Company may refuse to provide in its sole and absolute
discretion. In particular, the Material will not be used by Business Associate
to contact any other person, company(s), stockholder(s), owner(s), employee(s),
agent(s), representative(s), supplier(s), bottler(s), distributor(s) or to
solicit any trade business of usage of any of the Material to the detriment of
the Company. All persons to whom the Material is permitted by the Company to be
disclosed to the Business Associate shall be informed by the Business Associate
of each entire provision contained within this Confidentiality Agreement, and
the Business Associate shall accept full responsibility for actions of any such
individual or entity which may violate any of the provisions provided herein.
<PAGE>
2. It is understood that no failure or delay by the Company on exercising
any right, power or privilege hereunder, shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise of any right, power or privilege.
3. At any time upon the Company's request Business Associate will promptly
return to the Company all copies of the Material in whatever form or media, and
no copies or reproductions, abstracts or summaries thereof (in whole or in
part) shall be retained by Business Associate or its Representatives.
4. The Company agrees that neither Business Associate or its
Representatives to whom the Material is disclosed shall have any obligation to
the Company with respect to any of the Material which (a) was in possession
prior to the time of such disclosure by the Company (as evidenced by written
records), (b) becomes available to the Business Associate on a non-confidential
basis from a source other than the Company, provided that such source is not
bound by a confidentiality agreement with the Company, (c) was already known to
the general public.
5. Without the prior written consent of the Company, Business Associate
shall not disclose to any person or entity, the fact that discussions,
negotiations, planning, and development, are taking place between the Company
and Business Associate, or any of the terms, conditions or other facts with
respect to Company information and Material including the status thereof, nor
shall Business Associate solely, or by any person, firm, corporation, group,
officer, director, employee, agent, advisor, institution (financial or
otherwise), shareholder, representative, or subsidiary, (each, hereinafter a
"Person") or by any third party, company, or entity associated in any way
(either directly or indirectly) with such Person, communicate in any form
whatsoever information or Material as relates to the Company.
<PAGE>
6. The person signing this agreement on behalf of each party warrants that
such person has the authority to sign personally or as representative of the
party provided herein.
7. The parties acknowledge that the provisions of this Confidentiality
Agreement are binding, and this agreement shall be governed and construed in
accordance with the laws of the State of New York, without regard to the
principles of conflict of laws, and all sections shall remain in force for five
(5) years from the date as affixed hereon.
Accepted and Agreed to:
By: ________________________
Swiss Natural Foods, Inc.
Date: ______________________
Accepted and Agreed to:
By: /s/
_____________________
Business Associate
Date: Jan 11/95
<PAGE>
EXHIBIT 10.9
August 7, 1997
Ralph Ferrante
Chief Executive Officer
Swiss Natural Foods, Inc.
1031 Route 9W
Grandview, NY 10960
Dear Mr. Ferrante:
This letter shall serve to confirm our understanding that, among other
things, Swiss Natural Foods, Inc. ("Swiss Natural") is the sole owner of the
complete service formulas (as opposed to the flavor formulas) used by it in
connection with the production and manufacture of the Swiss Natural beverages.
Comax Manufacturing Corporation ("Comax") claims no right, title or interest in
any of said complete service formulas it has been given or helped formulate, or
may in the future be given or help to formulate, in order to assist it in the
development of flavors and complete service formulas for particular Swiss
Natural products. Comax has entered into a Confidentiality Agreement with Swiss
Natural to protect Swiss Natural's rights to these complete service formulas.
Furthermore, Comax acknowledges and agrees that those flavors set forth on
the attached Schedule "A" and those flavors formulated specifically for Swiss
Natural, and which have been manufactured by Comax for sale to and use by Swiss
Natural, in its beverage products, will be available for sale exclusively to
Swiss Natural, and no other customer, for so long as Swiss Natural remains a
customer of Comax. The parties hereto agree that by placing at least one order
for flavors during each successive twelve month period, Swiss Natural will
remain a "customer" of Comax.
However, Comax acknowledges that Swiss Natural may rely upon Comax for the
production and manufacture of flavors used in its beverage products; therefore,
in the event Comax, voluntarily or involuntarily, ceases its operations or, for
any reason whatsoever, is unable to manufacture flavors, Comax shall, upon
written request of Swiss Natural, supply to Swiss Natural, for its use only,
the detailed formulas for all flavors which have been sold to Swiss Natural,
including, but not limited to, those listed on Schedule "A", whether or not
exclusively formulated for Swiss Natural. Nothing herein contained shall grant
Swiss Natural any rights of ownership, or any indicia of ownership, to any of
the formulas used and generated by Comax in the manufacture of its flavors.
<PAGE>
Kindly indicate your agreement to the terms herein contained by signing
below where indicated. Thank you.
Very truly yours,
/s/ Norman Katz
Norman Katz
Acknowledged and Agreed To:
Swiss Natural Foods, Inc.
/s/ Ralph Ferrante
Ralph Ferrante
<PAGE>
SCHEDULE A
1. NAT ICY PEACH TYPE 2031A13880
2. NAT ICY RASPBERRY TYPE 2031A15004
3. NAT ICY LEMON WONF 2031A15401
4. NAT ICY ORANGE WONF 2031A15452
5. NAT ICY APPLE WONF 2031A15460
6. NAT ICY KIWI BERRY WONF 2031A15497
7. NAT ICY MELONADE 2031A15523
<PAGE>
EXHIBIT 10.10
October 31, 1997
Ritter/Sysco Foods, Inc.
20 Theodore Conrad Drive
Jersey City, NJ 07305-4614
Re: Swiss Natural Foods, Inc. / beverage distribution
Gentlemen:
This letter amends certain of the provisions of the letter of understanding
(the "Letter") dated March 3, 1997, between Ritter/Sysco Food Services, Inc.
("Ritter/Sysco") and Swiss Natural Foods, Inc. ("Swiss Natural").
Section Number 6 of the Letter, entitled "Distribution rights", is hereby
amended in its entirety to read as follows:
"6. Distribution rights.
a) Ritter/Sysco shall be the exclusive food service distributor of
Swiss Natural branded beverages for food service distribution
of food service customers within the hereinafter defined
geographic region. The following exceptions shall apply to the
foregoing:
i) All accounts serviced by Lisanti Foods, Inc.; and
ii) Any retail supermarket of 15,000 square feet or larger.
iii) Customer to be named once all agreements are in place
(customer to be a retail fast food chain similar to
Burger King or Manhattan Bagel with multiple
distribution centers serving said chain); provided,
however, that the exception shall not apply to any such
customer if Ritter/Sysco currently or in the future
actively distributes products to such customer so long
as such customer will allow Ritter/Sysco to distribute
the Swiss Natural branded beverages to such customer.
b) Definition of a foodservice customer: A deli, restaurant,
diner, pizza parlor, business and industry unit, school,
university, college, hospital, long term health care unit,
short term health care unit, a place where food is consumed on
site.
c) The geographic area covered shall consist of any point within
a 100 mile radius from Columbus Circle, New York, NY."
Except as expressly amended herein, the terms and conditions of the Letter
remain unchanged and in full force and effect.
ACCEPTED & AGREED:
RITTER/SYSCO FOODS, INC. SWISS NATURAL FOODS, INC.
/s/ /s/ Ralph M. Ferrante
- --------------------------------- -------------------------------
Title: Merchandising Manager Title: CEO
Date: 11/7/97 Date: 10/31/97
SWISS NATURAL FOODS, INC. * 1031 ROUTE 9W * GRANDVIEW, NY 10960 *
TEL: 914-358-1212 * FAX: 914-358-2828
<PAGE>
EXHIBIT 10.11
HOLD HARMLESS AGREEMENT
AND
GUARANTY/WARRANTY OF PRODUCT
Sysco Corporation and/or its Affiliates
ATTN: Vice President of Merchandising
Ritter Sysco Food Services, Inc.
P.O. Box 2000
Jersey City, New Jersey 07303-2000
Gentlemen:
The undersigned person or entity ("Seller"), for value received, hereby
represents and agrees as follows:
1. The articles contained in any shipment or delivery made by Seller, its
subsidiaries or divisions (a "Product") made to or on the order of Sysco
Corporation, its subsidiaries, affiliates or divisions (collectively referred to
as "Buyer") is hereby guaranteed, as of the date of such shipment or delivery,
(a) to not be adulterated or misbranded within the meaning of the Federal Food,
Drug and Cosmetic Act (the "Act"), (b) to not be an article which cannot be
introduced into interstate commerce under the provisions of Sections 404 and 505
of the Act, and (c) to be in compliance with all applicable federal, state, and
local laws.
2. Seller agrees to defend, indemnify and hold harmless Buyer and its
employees, officers, directors and customers (individually, an Indemnitee")
from all actions, suits, claims and proceedings ("Claims"), and any judgements,
damages, fines, costs and expenses (including reasonable attorneys' fees)
resulting therefrom:
(i) brought or commenced by federal, state of local governmental
authorities against any Indemnitee alleging that any Product sold by Seller to
or on the order of Buyer did not, as of the date of delivery, meet the guaranty
set forth in Paragraph 1;
(ii) brought or commenced by any person or entity against any Indemnitee
for recovery of damages for the injury, illness and/or death of any person or
damage to property arising out of or alleged to have arisen out of (a) the
delivery, sale, resale, labeling, use or consumption of any product, or (b) the
negligent acts or omissions of Seller; provided, however, that Seller's
indemnification obligations hereunder shall not apply to the extent that Claims
are caused by the negligence of Buyer.
<PAGE>
Indemnitee shall notify Seller promptly of the service of process or the
receipt of actual notice of any Claim.
3. Seller agrees to maintain in effect insurance coverage with reputable
insurance companies covering worker's compensation and employees' liability,
automobile liability, comprehensive general liability, including product
liability and excess liability, all with such limits as are sufficient in
Buyer's reasonable judgement, to protect Seller and Buyer from the liabilities
insured against by such coverages. Seller shall furnish a certificate evidencing
the obligation of its insurance carriers not to cancel or materially amend such
policies without thirty (30) days prior written notice to Buyer. In addition,
Buyer shall be named as an additional insured using Form CG 20 26 - Designated
Person or Organization Endorsement - with respect to the comprehensive general,
Product, automobile and excess liability coverages specified herein and all such
policies shall provide a waiver of subrogation in favor of Buyer.
4. This Guaranty and Agreement is continued and shall be in full force and
effect and shall be binding upon the Seller with respect to each and every
Product shipped or delivered to Buyer by the Seller before the receipt by the
Buyer of written notice of revocation thereof.
Dated this 7th day of February, 1997.
Swiss Natural Foods, Inc.
------------------------------------
Name of Company, Seller
/s/ Ralph Ferrante CEO
------------------------------------
Signature of Authorized Officer
and Title
1031 Route 9W
------------------------------------
Street Address
Upper Grandview, NY 10960
------------------------------------
City, State and Zip Code
<PAGE>
Ritter Sysco Food Services, Inc.
- -------------------------------------------------------------------------------
Company Name Ritter Sysco Food Services, Inc.
20 Theodore Conrad Drive
Liberty Industrial Park
Jersey City, New Jersey 07305
(201) 433-2000
Federal Identification Number 22-1717732
D & B Number 003-855-640
Parent Company SYSCO Corporation
1390 Enclave Parkway
Houston, Texas 77077
(281) 584-1380
Bank Summit Bank
186 Newark Ave.
Jersey City, New Jersey 07302
(201) 432-4400
Contact Betty Silfa
Trade References Lamb Weston
P.O. Box 70075
Chicago, Illinois 60673
(800) 536-5720
Hormel Foods
P.O. Box 93624
Chicago, Illinois 60673
(507) 437-5284
Tyson Foods, Inc.
Springdale, Arkansas
(800) 431-1297
Nabisco
P.O. Box 19274
Newark, New Jersey 07195
(800) 828-0398
<PAGE>
EXHIBIT 10.12
AGREEMENT
This Agreement dated January 30, 1998 between Swiss Natural Foods, Inc.
(hereinafter referred to as "SWISS NATURAL"), a Delaware corporation with
offices located in Grandview, New York, and Sbarro, Inc. (hereinafter referred
to as "SBARRO") a Delaware corporation with its principal offices located in
Commack, New York.
SWISS NATURAL is the owner of the proprietary glass container(s) and
proprietary formula(s) for the manufacture of various soft drink concentrates,
finished beverages and 100% juice beverages and has developed, produced, and
supplies the private label package, beverage and juices for SBARRO (such
specified products being hereinafter referred to as the "Beverages") under
trademark "SBARRO"; and
Based upon mutual consideration:
SWISS NATURAL agrees to supply SBARRO with Beverages for a period of three
(3) years and during such period, as long as SWISS NATURAL is supplying
Beverages to SBARRO, to refrain from developing a private label beverage program
for any other company which sells pizza as a primary source of revenue; and
SBARRO grants to SWISS NATURAL, for a period of three (3) years, the
exclusive right of first refusal to be the supplier of the SBARRO private label
Beverages subject to the ability of SWISS NATURAL to supply SBARRO with a
comparative product as specified by SBARRO at competitive prices. Nothing
herein shall prohibit SBARRO from investigating and entering into discussions
with alternative suppliers.
SBARRO, INC.
By:
--------------------------------------
Title:
SWISS NATURAL FOODS, INC.
By:
--------------------------------------
Title:
<PAGE>
SBARRO 763 LARKFIELD ROAD
COMMACK, NEW YORK 11725
(516) 864-0200
FAX (516) 462-9058
July 31, 1998
Dear Sbarro Vendor;
We appreciate the very fine business relationship we have enjoyed these past
years. It is always our intention to bring to Sbarro Inc. the very finest of
quality products plus the most competitive pricing in the industry. Only by
utilizing the best of quality and pricing can we remain a strong contender in
these very competitive times. And, as we continue to grow and prosper hopefully
so do those who are associated with us.
This brings me to an issue of inventory control. In the past we have requested
that Lisanti Foods Inc. must always have inventoried a one month supply of all
Sbarro spec merchandise. In retrospect, we expect our vendors to have a one
month supply of product manufactured. Of late, it is brought to our attention
that when some changes occur, very large product inventories are still available
sometimes leading to a two to three month supply; this is unacceptable.
For the future and to reiterate past requests, we will require one months
inventory of product be available to Sbarro Inc. from Lisanti's three (3)
distribution centers. And, only one months inventory should be on hand by the
manufacturer; Sbarro will not be responsible for unusually high volumes.
Thank you for your loyalty to Sbarro; it is always our intention to reciprocate.
We at Sbarro have never set aside our sincere feelings on the importance of
family. We look upon all that we associate with as family to include our many
employees, our distributor, Lisanti Foods, Inc. and you, our vendor.
Sincerely,
/s/ Joseph Sbarro
Joseph Sbarro
Sr. Executive Vice President
Cororate Purchasing
<PAGE>
EXHIBIT 10.13
November 6, 1998
Comax Manufacturing Corporation
130 Baylis Rd.
Melville, NY 11747
To Whom It May Concern:
In connection with your relationship with (i) Swiss Natural Foods, Inc.
(ii) any affiliated entity, (iii) any entity formed by the major stockholder(s)
of Swiss Natural Foods, Inc. or (iv) Ralph M. Ferrante, collectively referred to
as (the "Company"), you have received and will receive valuable and unique
information relating to the business, operations, customers and employees of the
Company which is not generally available in the public domain and is
confidential and proprietary in nature. The Company hereby requests that as a
condition to your entering into relationship with the Company, you agree to
treat any such information concerning the business, operations, customers or
employees of the Company (whether provided by the Company, any of its
representatives or otherwise) which you receive by or on behalf of the Company
(herein collectively referred to as the "Confidential Information") in
accordance with the provisions of this Agreement and to take or abstain from
taking certain other actions herein set forth.
For purposes of this Agreement, Confidential Information shall include by
way of illustration and not limitation, and in addition to any meaning ascribed
to it by law, information with respect to the raw materials including the
flavors used by the Company in producing its beverages or other products, the
mix of such raw materials, the final product, lists of distributions, suppliers,
and customers, research and product development and planning and trade secrets,
whether written or transferred orally, visually, electronically, or by any other
means.
1. You recognize and acknowledge the competitive value and confidential nature
of internal, non-public financial and business information now, previously
or hereafter furnished to your or obtain by you from the Company or its
representatives relating to the Company's business, affairs, operations and
products, as well as the damage which could result to the Company if any of
this information is disclosed to any third party.
2. You hereby agree that the Confidential Information will be used solely for
the purpose of fulfilling your obligations to the Company and that you or
your agents (hereinafter collectively referred to as "Your
Representatives") will not directly or indirectly use, publish, disseminate
or otherwise disclose to any third party any of the Confidential
Information now, previously or hereafter received or obtained by you from
the Company, its representatives or otherwise without the Company's prior
written consent; provided, however that any such information may be
disclosed to your accountants, attorneys and other confidential advisors
(collectively, "Advisors") who need to know such information for the
purpose of performing services for you. You agree to be responsible for any
breach of this Agreement by Your Representatives and Advisors who need to
know such information for the purpose of performing services for you and
who will be advised by you in writing of the confidential nature of such
information and shall agree to be bound by this agreement. You agree to
exercise all due and diligent precautions to protect the integrity of the
Company's customer and prospective customer lists, mailing lists and
sources thereof, agreements, contracts, manuals or any other documents
embodying any Confidential Information.
<PAGE>
3. In the event that your relationship with the Company shall terminate,
either at your request or at the request of the Company, you shall promptly
redeliver to the Company all written documents embodying Confidential
Information including without limitation any customer lists, mailing lists,
agreements, contracts, quality assistance or operations manuals provided to
you by the Company and any other written material containing or reflecting
any information that is Confidential Information (whether prepared by the
Company, its representatives or otherwise) and will not retain any copies,
extracts or other reproductions in whole or in part of such written
material. All documents, memoranda, notes and other writings whatsoever
prepared by you, your Representatives or your Advisors based on the
information in the Confidential Information shall be destroyed, and such
destruction shall be certified in writing to the Company by an authorized
officer or person supervising such destruction.
4. Neither you, your Representatives, officers or major stockholders shall:
(a) use any of the Confidential Information now, previously or hereafter
received or obtained from the Company with respect to any of the
business, affairs, operations or products of the Company in
furtherance of your business, or the business of anyone else whether
or not in competition with the Company or for any other purpose
whatsoever,
(b) recruit, solicit or hire any employee of the company on behalf of
yourself, any third party or any business similar to or competitive
with the activities of the Company.
(c) Be engaged in any way as an employee, partner, officer, or owner of
a form of business which competes, directly of indirectly, with the
Company,
(d) use the Confidential Information to contact any other company(s),
stockholder(s), owner(s), agent(s), representative(s), supplier(s),
customer(s), bottler(s), distributor(s), or to solicit any trade
business or usage of any of the Confidential Information to the
detriment of the Company,
<PAGE>
5. By signature below and execution of this agreement, you confirm that any
company, corporation, organization, firm which the signatory is a party to
or member of, is bound by this agreement.
6. All Confidential Information furnished or obtained by you prior on or after
the date hereof shall be subject to the terms of this Agreement.
7. The provisions of this Agreement shall be binding upon you and be governed
and construed in accordance with the laws of the State of New York.
8. You acknowledge that were you to breach any of the provisions of this
Agreement, the damages to the Company would be irreparable and therefore,
you agree that, in addition to damages and reasonable attorneys' fees, the
Company shall be entitled to enjoin any such breach in a competent court.
9. If any of the restrictions contained herein shall for any reason be held by
a court of competent jurisdiction to excessively broad in any way
whatsoever, such restrictions shall be construed so as thereafter to be
limited or reduced to be enforceable to the extent compatible with the
applicable law as it shall then appear it being understood that by the
execution of this Agreement the parties hereto regard such restrictions as
reasonable and compatible with their respective rights.
10. No failure or delay in exercising any right, power or privilege
hereunder, shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise of any
right, power or privilege.
Please acknowledge your agreements to hold all matters strictly
confidential as discussed herein and to abide by all terms and conditions of
this letter by countersigning this Agreement.
Very truly yours,
/s/ Ralph Ferrante
-----------------------------------
Ralph Ferrante individually, and in
his capacity as an officer of
Swiss Natural Foods, Inc.
Received and consented to this 11th day of November, 1998.
By: /s/ Paul J. Calabretta
- -----------------------------------
Company: Comax Mfg. Corp.
Name: Paul J. Calabretta
Title: Vice-President
<PAGE>
EXHIBIT 10.14
BEVERAGE SUPPLY AGREEMENT
DATED: March 29, 1999
BETWEEN: SWISS NATURAL Foods, Inc. (hereinafter referred to as "SWISS
NATURAL"), a Delaware corporation with offices located in
Grandview, New York,
AND: DUNKIN' DONUTS MIDATLANTIC DCP, Inc. (hereinafter referred to as
the "DCP") a New Jersey corporation with its principal offices
located in Swedesboro, New Jersey.
WHEREAS, SWISS NATURAL agrees to supply to the DCP tea, fruit and juice drinks
(such products being hereinafter referred to as set forth in exhibit A attached
hereto as the "PRODUCTS'; and the DCP desires that SWISS NATURAL be designated
an authorized DCP supplier of tea, fruit, and juice drinks and SWISS NATURAL is
the owner of various proprietary glass container(s), trademarks, and proprietary
formula for the manufacture of various soft drink concentrates and finished
products and shall hereby develop, produce, and supply products under the
trademark of SWISS NATURAL to the DCP.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, SWISS NATURAL and the
DCP hereby agree as follows:
1. DCP hereby grants to SWISS NATURAL the right to be an authorized DCP
supplier of the PRODUCTS. During the term of this Agreement, the DCP shall
purchase from SWISS NATURAL the PRODUCTS for supply to all Mid-Atlantic
Dunkin Donut FRANCHISES (the "FRANCHISES") to whom the DCP shall distribute
such PRODUCTS. It is understood and agreed that the DCP has the right to
resell PRODUCTS purchased from SWISS NATURAL only to the Dunkin Donut
FRANCHISES.
2. This Agreement shall be effective on the date hereof and shall terminate at
the expiration of thirty-six (36) months from the date hereof unless
terminated earlier pursuant to the provisions of paragraph II hereof. This
agreement shall be extended beyond the termination date for an additional
period of time as mutually agreed to by both parties, no later than 90 days
prior to the termination of this agreement.
3. The DCP shall submit to SWISS NATURAL purchase orders for all PRODUCTS in a
form agreed to by the DCP and SWISS NATURAL. All orders shall be placed no
less than fourteen (14) days prior to the expected delivery date of the
PRODUCTS ordered. All orders shall be paid in US dollars in accordance with
the terms as set forth on Exhibit A and D.
<PAGE>
4. The price for PRODUCTS supplied by SWISS NATURAL shall be as set forth in
exhibit A. Each delivery of PRODUCTS shall be made FOB the DCP warehouse
facility at Swedesboro, New Jersey or FOB the SWISS NATURAL warehouse
facility at Carteret, New Jersey. In either case upon the delivery of any
PRODUCTS, the DCP shall become responsible for all charges, expenses, loss
or damage to such PRODUCTS.
5. SWISS NATURAL may make available to the FRANCHISES serviced by the DCP,
beverage coolers owned by SWISS NATURAL, its affiliate or associate upon
certain terms and conditions. During the term of this agreement each
FRANCHISES, approved by the DCP, shall be granted the opportunity to have
SWISS NATURAL provide, and the DCP deliver such cooler, at no initial cost,
other than the standard DCP $1.55 unit delivery charge, either a single
door or countertop cooler (the size of the cooler to be determined by both
SWISS NATURAL and the FRANCHISES based upon account needs). All FRANCHISES
shall be required by SWISS NATURAL to store in such coolers only PRODUCTS,
and milk based products which are determined by SWISS NATURAL not to be
competitive with the PRODUCTS and which milk based products shall only be
merchandised on the bottom two shelves of a single door cooler and bottom
shelf of a countertop cooler.
A. Cooler Inception Schedule: Immediately following the execution of this
agreement each franchise shall be offered an initial introductory period of
90 days in which to enroll in the beverage program and thereby receive a
beverage cooler as mutually agreed to by SWISS NATURAL and the franchisee.
Any FRANCHISES which enroll in this beverage program after the initial
period shall be provided a pro rata Cooler Termination schedule from SWISS
NATURAL based on the enclosed Cooler Termination schedule B and C.
B. Cooler Termination: The following cooler termination structure shall be
offered to FRANCHISES:
I. If any FRANCHISES (a) does not purchase a minimum amount of sixty cases
of PRODUCTS for a single door cooler and or thirty nine cases of product
for a counter top cooler within each consecutive three month period from
receipt of a cooler or (b) does not purchase the minimum annual amount of
two-hundred and forty cases of PRODUCTS for a single door cooler and or
one-hundred and fifty-six cases of PRODUCTS for a counter top cooler within
each three consecutive twelve month period from receipt of a cooler or (c)
notifies SWISS NATURAL of their intent not to participate in the SWISS
NATURAL beverage program offered by the DCP or (d) SWISS NATURAL, at its
sole discretion notifies the FRANCHISES that the cooler is to be removed,
then in each case the cooler(s) may be removed at the discretion of SWISS
NATURAL.
II. Provided FRANCHISES implements this program and during a 36 month
period from and after the receipt of a cooler complies with the minimum
purchase requirements then the following cooler provisions shall be
applicable:
<PAGE>
a. Each single door cooler shall have an initial cost value of $1,200.00
which shall be reduced by $400.00 per year for each consecutive year
commencing with the delivery date of such cooler to the FRANCHISES. In
consideration of SWISS NATURAL providing the cooler the FRANCHISES
agrees to purchase a minimum of two hundred and forty (240) cases of
PRODUCTS each consecutive year for a three year period from the DCP,
commencing with the delivery date of the cooler to the FRANCHISES.
Within thirty (30) days after a maximum of 36 consecutive months the
cooler may be purchased directly by the FRANCHISES for $1.00 or the
cooler at the discretion of SWISS NATURAL, will remain the property of
SWISS NATURAL, or
b. Each counter top cooler shall have an initial cost value of $800.00
which shall be reduced by $266.67 per year for each consecutive year
commencing with the delivery date of the FRANCHISES. In consideration
of SWISS NATURAL providing the cooler the FRANCHISES agrees to
purchase a minimum of one hundred and fifty six (156) cases of
PRODUCTS each consecutive year for a three year period from the DCP
commencing with the delivery date of such cooler to the FRANCHISES.
Within thirty (30) days after a maximum of 36 consecutive months the
cooler may be purchased directly by the FRANCHISES for $1.00 or the
cooler will at the discretion of SWISS NATURAL, remain the property of
SWISS NATURAL.
III. Provided however the FRANCHISES does not comply with the minimum
purchase requirements and SWISS NATURAL executes its right to remove the
cooler, the cooler may be offered for purchase to the FRANCHISES at the
option of SWISS NATURAL for the amount due to the nearest calculated
applicable numbered month such month to be determined by dividing the total
amount of PRODUCT in cases purchased by the specific FRANCHISES, by twenty
(20), thereby indicating the applicable numbered month and the
corresponding payment required as stipulated in Exhibit B applicable to a
single door cooler and Exhibit C applicable to a counter top cooler both
schedules titled Cooler Termination Cost.
6. The DCP and FRANCHISES selling any PRODUCTS shall have the right to use the
name SWISS NATURAL and any trademark of SWISS NATURAL solely in connection
with selling the PRODUCTS provided that (1) SWISS NATURAL shall have
approved any such use in writing each time the DCP or any Dunkin Donut
FRANCHISES proposes to use such trademarks; (2) the DCP and each Dunkin
Donut FRANCHISES agrees that the name SWISS NATURAL and the trademarks
shall remain the sole property of SWISS NATURAL; and (3) upon termination
of this Agreement, the DCP and each Dunkin Donut FRANCHISES shall
immediately cease and desist from any further use of the name SWISS NATURAL
and any trademark of SWISS NATURAL. The DCP agrees that neither it nor any
FRANCHISES shall alter or remove any trademarks on any PRODUCTS received
pursuant to this Agreement or do anything which might impair SWISS NATURAL
right, title or interest in any trademark and that neither will attempt to
acquire any right, title or interest thereto.
<PAGE>
7. The DCP and SWISS NATURAL acknowledge that any information or data
disclosed to the DCP by SWISS NATURAL concerning the PRODUCTS or general
business policies of SWISS NATURAL which is not generally available in the
public domain constitutes valuable trade secrets of Swiss Natural. DCP
agrees to hold such information in trust and confidence, and not to
disclose such information to any third party and the DCP further agrees to
take all additional steps necessary to protect such information and only
disclose such information to those of its employees required to have such
knowledge in order to fulfill their obligations hereunder and subject to
agreement with each such person to maintain the confidentiality of such
information. DCP acknowledges that the use of such information in a matter
contrary to the provisions hereof would cause irreparable harm to SWISS
NATURAL for which monetary damages would be inadequate and, therefore, the
DCP agrees that, in addition to damages and reasonable attorney's fees,
SWISS NATURAL shall be entitled to enjoin any such breach in a competent
court. Upon expiration of this Agreement, DCP shall deliver to SWISS
NATURAL all copies of any such confidential information furnished to it.
The DCP and SWISS NATURAL acknowledge that any information or data
disclosed to SWISS NATURAL by the DCP concerning the DCP or general
business policies of the DCP which is not generally available in the public
domain constitutes valuable trade secrets of the DCP. SWISS NATURAL agrees
to hold such information in trust and confidence, and not to disclose such
information to any third party and SWISS NATURAL further agrees to take all
additional steps necessary to protect such information and only disclose
such information to those of its employees required to have such knowledge
in order to fulfill their obligations hereunder and subject to agreement
with each such person to maintain the confidentiality of such information.
SWISS NATURAL acknowledges that the use of such information in a matter
contrary to the provisions hereof would cause irreparable harm to DCP for
which monetary damages would be inadequate and, therefore, SWISS NATURAL
agrees that, in addition to damages and reasonable attorney's fees, DCP
shall be entitled to enjoin any such breach in a competent court. Upon
expiration of this Agreement, SWISS NATURAL shall deliver to DCP all copies
of any such confidential information furnished to it.
8. Neither party hereto shall be liable to the other party hereto, except by
reason of acts or omissions in contravention of this Agreement or due to
gross negligence. Each party hereto shall defend, indemnify and hold the
other party hereto harmless from and against any and all losses,
liabilities, damages, costs and expenses (including, but not limited to,
reasonable attorney's fees) to which such entity could be subject, arising
out of or in connection with any acts or omissions by the other party
hereto in contravention of this Agreement or due to the other party's gross
negligence.
9. SWISS NATURAL shall not be liable for any delay or failure on its part to
perform hereunder, in whole or in part, if such delay or failure is caused
by the occurrence of any contingency beyond the control of SWISS NATURAL
including, by the way of illustration, but not limitation, war, sabotage,
insurrection, riot or other act of disobedience, act of public enemy,
failure or delay in transportation, act of any government or any agency of
subdivision thereof, judicial action, labor dispute, accident, fire, flood,
explosion, storm or other act of God or shortage of labor, raw material,
fuel or machinery.
<PAGE>
10. The relationship of the parties hereto during the term of this Agreement
shall be that of separate legal parties and neither is the agent or
employee of the other. The DCP shall not have, and shall not represent that
it has, any right or authority to bind SWISS NATURAL, or to assume or
create any obligation or responsibility, express or implied on behalf of
SWISS NATURAL.
11. SWISS NATURAL may terminate this Agreement, (a) at will upon notification
(b) immediately without notice to DCP if (1) DCP fails to perform any of
its duties under this Agreement or (2) DCP becomes bankrupt or insolvent or
commences or suffers the commencement of a reorganization or insolvency
proceeding. If this Agreement terminates pursuant to the provisions of this
paragraph, SWISS NATURAL may, in its sole discretion, exercise any or all
of its remedies under law including, but not limited to, acceleration of
all outstanding invoices due to SWISS NATURAL, stoppage of shipments in
transit and repossession of Products not paid for which are in the
possession of DCP.
12. All statements made herein by the party's hereto, and their respective
obligations to be performed pursuant to the terms hereof, shall survive the
date hereof, notwithstanding any examination by or on behalf of any party
hereto, notwithstanding any notice of a breach or a failure to perform not
waived in writing and notwithstanding the consummation of the transactions
hereby contemplated with knowledge of such breach or failure.
13. All communications hereunder shall be in writing and shall be sent by
registered or certified mail, return receipt required, if intended for
SWISS NATURAL shall be addressed to SWISS NATURAL, attention Herbert Paul
at 1031 Route 9W, Grandview, New York 10960 or such address which SWISS
NATURAL shall have given to the DCP. And if intended for the DCP, shall be
addressed to the DCP, attention General Manager at Swedesboro, New Jersey
or such other address which the DCP shall have given to Swiss Natural for
the purpose of notice to SWISS NATURAL. All notices shall be considered
given as of the date received.
14. This Agreement constitutes the entire understanding as to the subject
matter hereof among the parties hereto and no waiver or modification of the
terms hereof shall be valid unless in writing signed by the party to be
charged.
15. This Agreement shall be binding upon and inure to the benefit of the
parties hereto, their respective successors and permitted assigns.
16. This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original and all of which taken together shall
constitute a single agreement.
<PAGE>
17. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be
performed solely within said state without giving effect to conflict of law
or principles thereof.
18. In the event that any one or more of the provisions contained herein or the
application thereof in circumstances, is held to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality, and
enforceability of any such provision in every other respect and the
remaining provisions of this agreement shall not be in any way impaired or
affected.
19. The failure of any PARTY to exercise any of its rights under this Agreement
or to require performance of any term or provision of this Agreement, or
the waiver by any party of such breach of this Agreement, shall not prevent
a subsequent exercise or enforcement of such rights or be deemed a waiver
of any subsequent breach of the same or any other term or provision of this
Agreement. Any waiver of performance of any of the terms or conditions of
this Agreement shall be effective only if in writing and signed by the
party against which such waiver is to be enforced.
IN WITNESS WHEREOF, each of the undersigned have executed this Agreement on the
date first written above.
Accepted and agreed this 29 day of Accepted and agreed this 31 day of
March,1999 March, 1999
MIDATLANTIC DCP SWISS NATURAL, FOODS INC.
/s/ Craig V. Sitter /s/ Ralph M. Ferrante
- -------------------------------- --------------------------------
By: Craig V. Sitter By: Ralph M. Ferrante
Title: Vice President/General
Manager Title: CEO
<PAGE>
EXHIBIT 10.15
AGENCY AGREEMENT
This AGENCY AGREEMENT made and effective as of the 5th day of May 1998,
by and between Swiss Natural Foods, Inc., a Delaware corporation (the "Company")
and Bentonville Associates Ventures, LLC, and Arkansas limited liability company
(the "Agent").
Witness the following:
WHEREAS, the Company, which is in the business of making and selling,
among other things, fruit juice and drink products, is in need of certain sales
and marketing services that the Agent is uniquely qualified to provide; and
WHEREAS, the Agent has agreed to provide such services in consideration
for certain payments upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and promises contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
mutually agree as follows:
1. APPOINTMENT OF AGENT. The Company hereby appoints the Agent as
its marketing agent for those matters set forth herein:
1.1 During the term of this Agreement, the Agent shall promote the sale
of those products manufactured by the Company and identified on EXHIBIT A
attached hereto and made a part hereof (the "Products") and shall transmit to
the Company each offer, order or expression of interest received by the Agent
from a person, firm or corporation wishing to purchase Products (a "Customer").
The Agent shall have no authority to make contracts by or on behalf of or in any
other way to bind the Company. The Agent and the Company hereby agree and
acknowledge that the list of Products may be expanded to include other mutually
acceptable products that the Company manufactures. In such event, the Agent and
the Company agree that Exhibit A to this Agreement shall be amended to reflect
any such mutually agreeable additional products.
1.2 During the term of this Agreement, the Agent shall act as the
Company's exclusive marketing representative with regard to certain accounts as
from time to time agreed to by the parties (the "Exclusive Accounts"). An
initial list of the Exclusive Accounts is set forth on EXHIBIT B attached
hereto. With respect to the Exclusive Accounts, the Agent shall have the
exclusive right to appoint other representatives or brokers who shall agree in
writing to be bound by the terms and provisions of this Agreement. At any time
after the date hereof, the Agent may add Customers to the list of Exclusive
Accounts in accordance with the following procedure: the Agent shall contact the
President of the Company in writing and shall propose the name of a potential
Customer (any such potential Customer being hereinafter referred to as a
"Potential Customer"), provided the Company shall accept a new Potential
Customer. If the Company has no existing relationship with said Potential
Customer, then the Potential Customer shall become
<PAGE>
An Exclusive Account provided the Company shall accept the new Potential
Customer, and the Agent shall send a letter to the Company confirming as such,
which letter the Company shall execute with any revisions as the Company shall
deem necessary and shall return to the Agent. Any such Potential Customer so
agreed upon shall be added to the list of Exclusive Accounts as specified in
Exhibit B attached hereto as if the same had been inscribed thereon.
1.3 In addition to the Exclusive Accounts, the Agent shall also promote
sales of Products to other Customers (hereinafter referred to as the
"Non-Exclusive Accounts"). The Company and the Agent hereby agree and
acknowledge that, subject to the terms hereof, the Company may retain agents
other than the Agent for the purpose of promoting the sales of Products to the
Non-Exclusive Accounts.
1.4 The Agent shall receive a commission of ten percent (10%) of all
amounts received on account of sales of Products to Customers (the "Standard
Commission"). Any commissions payable to any sub-brokers or other Sales and
Marketing Identities utilized by the Agent shall be the responsibility of the
Agent for payments. Commissions shall be calculated on the net invoiced price
after deduction of any promotions, discounts, returns, shipping and storage.
Commissions are payable 15 days after full payment has been made by the Customer
to the Company in settlement of the account. The Company shall send the Agent a
quarterly report showing all sales and the amount of commissions due together
with payment of all accounts so shown.
(a) The Agent and the Company hereby agree that for the first twelve
(12) months during which this Agreement is in effect, the Company shall
reimburse the Agent for one half of the Agent's out-of-pocket expenses incurred
in connection with the development, creation, promotion, marketing and
merchandising of the Products both domestically and internationally, provided
all expenses are authorized via facsimile by the Company. Such reimbursement
shall be delivered by the Company to the Agent within five (5) days of the
Company's receipt of the invoice.
1.5 The Company shall provide the Agent with copies of all paperwork,
orders, invoices and other communications passing between the Company and any
Customer.
1.6 The Company reserves the right to reject any order submitted by the
Agent or by a Customer. Likewise, the Company reserves the right to suspend
sales of some particular items, or replace them with others, according to the
Company's needs and market conditions.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to and agrees with the Agent as follows:
2.1 ORGANIZATION AND AUTHORITY. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has the full corporate power, authority and legal right to
own, lease or otherwise hold its properties and to carry on its business as now
being conducted.
<PAGE>
2.2 AUTHORITY RELATIVE TO AGREEMENTS. The Company has the full power
and authority to execute, deliver and perform this Agreement and to consummate
the transactions contemplated on its part hereby. All corporate actions on the
part of the Company, its shareholders or directors necessary to authorize the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby have been taken and the same have been approved and have not
been rescinded of the date hereof. The Agreement and any other agreement
referred to herein to be executed and delivered by the Company in connection
herewith have been duly executed and delivered by the Company and constitute
valid and legally binding agreements of the Company, enforceable in accordance
with their terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
2.3 NO VIOLATION OF OTHER AGREEMENTS. Neither (i) the execution and
delivery of this Agreement by the Company, nor (ii) the performance and
compliance by the Company with all of the provisions of this Agreement and the
consummation of the transactions contemplated hereby, conflicts with, or results
in any material breach of any of the provisions of, or constitutes a material
default (or an occurrence which, the lapse of time, the giving of notice or
both, would constitute a breach or default) under any material loan agreement,
indenture, mortgage, deed of trust or other agreement or instrument to which the
Company is a party or by which the Company is bound or to which any of its
properties or assets are subject, which will have a material adverse affect on
the financial condition or business of the Company or conflicts with, or results
in a material breach of any of the provisions of, or constitutes a material
default under the articles of incorporation or bylaws of the Company or any law,
judgment, order, writ, injunction decree, rule arbitration award or regulation
or results in the creation or imposition of any material lien, charge, pledge,
security interest or other encumbrance upon any of the assets of the Company
which will have material adverse affect on the financial condition or business
of the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE AGENT. The Agent represents
and warrants to and agrees with the Company as follows:
3.1 ORGANIZATION AND AUTHORITY. The Agent is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Arkansas. The Agent has the full corporate power, authority and
legal right to own, lease or otherwise hold its properties and to carry on its
business as now being conducted.
3.2 AUTHORITY RELATIVE TO AGREEMENTS. The Agent has the full power and
authority to execute, deliver and perform the Agreement and to consummate the
transactions contemplated on its part hereby. All actions on the part of the
Agent, its members or directors necessary to authorize the execution and
delivery of the Agreement or the consummation of the transactions contemplated
hereby have been taken and the same have been approved and have not been
rescinded of the date hereof. The Agreement and any other agreement referred to
herein to be executed and delivered by the Agent in connection herewith have
been duly executed and delivered by the Agent and constitute valid and legally
binding agreements of the Agent, enforceable in accordance with their terms,
subject, as to enforcement, to bankruptcy, insolvency,
<PAGE>
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
3.3 NO VIOLATION OF OTHER AGREEMENTS. Neither (i) the execution and
delivery of this Agreement by the Agent, nor (ii) the performance and compliance
by the Agent with all of the provisions of this Agreement and the consummation
of the transactions contemplated hereby, conflicts with, or results in any
breach of any of the provisions of, or constitutes a default (or an occurrence
which, the lapse of time, the giving of notice or both, would constitute a
breach or default) under any loan agreement, indenture, mortgage, deed of trust
or other agreement or instrument to which the Agent is a party or by which the
Agent is bound or to which any of its properties or assets are subject, or
conflicts with, or results in a breach of any of the provisions of, or
constitutes a default under the articles of organization or bylaws of the Agent
or any law, judgment, order, writ, injunction, decree, rule, arbitration award
or regulation or results in the creation or imposition of any lien, charge,
pledge, security interest or other encumbrance upon any of the assets of the
Agent.
4. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their heirs, personal representatives,
successors and assigns, and other legal representatives.
5. ENTIRE AGREEMENT; MODIFICATION. This Agreement contains the entire
understanding and agreement among the parties with respect to the subject matter
hereof, and it may not be amended, modified or supplemented in any respect
except by subsequent written agreement entered into by all parties.
6. WAIVERS. No waiver of any provision of this Agreement shall be valid
unless in a writing signed by the person(s) against whom such waiver is sought
to be enforced. The failure of any party at any time to insist upon strict
performance of any of the terms or conditions hereof shall not be construed as
waiver or relinquishment of the right to insist upon strict performance of the
same at a future time.
7. TERM.
7.1 This Agreement may be terminated:
(a) By the Agent, upon 90 days' written notice;
(b) By the Company upon 90 days written notice following a default by
the Agent in any of the Agent's duties, obligations, or failure to comply with
the minimum dollar sales volume standards as stipulated in Exhibit C hereunder,
which default is not cured within thirty (30) days of the Agent's receipt of
notice thereof.
<PAGE>
7.2 (a) Upon any termination by the Agent of the Company the Agent
shall be entitled to receive and the Company shall be required to pay the
Standard Commissions applicable to all offers submitted by the Agent and
accepted by the Company through the date of any such notice of termination
hereunder.
(b) Provided any termination by the Company of the Agent due to a
default by the Agent in any of the Agent's duties or failure to comply with the
minimum dollar sales volume standards stipulated in Schedule C, attached hereto,
the Agent shall be entitled to receive and the Company shall be required to pay,
a Standard Commission of only five percent (5%), on sales of Products provided
to Exclusive Accounts beyond the date of any such notice of termination
hereunder for a period of five (5) years[, only up to a maximum Standard
Commission equal to five percent (5%) of the sales volume level attained by the
Agent for the trailing consecutive twelve (12) month period prior to the notice
of termination].
8. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Arkansas.
(a) Headings are included solely for convenience of reference and are
not to be considered part of this Agreement.
(b) This is an agreement between separate legal parties and neither is
the agent or employee of the other for any purpose whatsoever. The parties do
not intend to create a partnership or joint venture between themselves. None of
the parties hereto shall have the right to bind the other to any agreement with
a third party or to incur any obligation or liability on behalf of the other
party, except as expressly provided herein.
(c) The failure of any party to exercise any of its rights under this
Agreement or to require the performance of any term or provision of this
Agreement, or the waiver by any party of such breach of this Agreement, shall
not prevent a subsequent exercise or enforcement of such rights or be deemed a
waiver of any subsequent breach of the same or any other term or provision of
this Agreement. Any waiver of the performance of any of the terms or conditions
of this Agreement shall be effective only if in writing and signed by the party
against which such waiver is to be enforced.
(d) If any of the terms and provisions of this Agreement are invalid or
unenforceable, such term or provisions shall not invalidate the rest of this
Agreement, which shall remain in full force and effect as if such invalidated or
unenforceable terms and provisions had not been made a part of this Agreement.
(e) The validity of this Agreement and the rights, obligations and
relatins of the parties hereunder shall be construed and determined under and in
accordance with the laws of the State of Arkansas without giving effect to the
conflict of laws, rules of such State. ANY CLAIM OR CONTROVERSY PERTAINING TO OR
ARISING UNDER THIS AGREEMENT OR THE RELATIONSHIP BETWEEN
<PAGE>
THE PARTIES SHALL BE SETTLED BY A SINGLE ARBITRATOR BEFORE THE AMERICAN
ARBITRATION ASSOCIATION IN ARKANSAS. THE COSTS OF WHICH SHALL BE BORNE BY THE
PARTY SUBMITTING SUCH CLAIM OR CONTROVERSY, UNLESS THE ARBITRATOR OTHERWISE
DETERMINES. ALL PARTIES HEREBY SUBMIT TO THE JURISDICTION OF THE STATE OR
ARKANSAS IN CONNECTION WITH THE FOREGOING.
(f) This Agreement may be executed in counterparts, each of which shall
be an original, but all of which together shall constitute one instrument.
IN WITNESS WHEREOF, the Company and the Agent have executed this Agency
Agreement as of the day and year first above written.
Swiss Natural Foods, Inc.
By: /s/ Herbert Paul
---------------------
Herbert Paul
President
- ----------------------
Witness
BENTONVILLE ASSOCIATES
VENTURES, LLC
By: /s/ Colon Washburn
---------------------
Colon Washburn
Managing Partner
- ----------------------
Witness
<PAGE>
EXHIBIT 10.16
VENDOR AGREEMENT
WAL-MART STORES, INC.
Corporate Office
Bentonville, AR 72716
(501) 273-4000
THIS AGREEMENT IS A LEGALLY BINDING DOCUMENT AND THE PARTIES HERETO AGREE TO BE
BOUND BY ALL TERMS AND CONDITIONS HEREIN; HOWEVER, THIS VENDOR AGREEMENT AND
OTHER TERMS, CONDITIONS AND STANDARDS INCORPORATED HEREIN DO NOT CREATE AN
OBLIGATION FOR PURCHASER TO PURCHASER MERCHANDISE OR OTHER GOODS.
- -------------------------------------------------------------------------------
TO BE COMPLETED BY PURCHASER: Effective Date _________________
[ ] WAL-MART [ ] ROYALTY [ ] EXISTING VENDOR [ ] PURCHASE / MDSE
[ ] SAM'S CLUB [ ] OTHER [ ] NEW VENDOR [ ] EXPENSE &
[ ] SUPERCENTER [ ] UPDATE Type__________
[ ] GROCERY DIVISION [ ] NEW SEQ.
VENDOR NO. DEPT. SEQ.
[ ][ ][ ][ ][ ][ ][ ][ ][ ][ ]
CATEGORY _______________________________________________
DEPARTMENT _____________________________________________
BUYER ___________________________ EXT. _________________
- -------------------------------------------------------------------------------
GENERAL VENDOR INFORMATION
COMPANY CLASSIFICATION: (PLEASE DISREGARD THIS SECTION IF YOU ARE NOT A MINORITY
OWNED BUSINESS)
Minority Owned? ________ Woman-Owned? ________
B ________ Black P ________ Asian-Pacific American I ________ Asian Indian
N ________ Eskimo H ________ Hispanic N ________ American Indian
N ________ Aleut N ________ Native Hawaiian
IF YOUR COMPANY FALLS WITHIN ANY OF THE ABOVE MINORITY CLASSES, AND HAS BEEN
CERTIFIED AS MINORITY-OWNED BY A GOVERNMENT AGENCY OR PURCHASING COUNCIL, YOU
ARE QUALIFIED FOR THE FIRST STEP IN THE WAL-MART MINORITY OWNED BUSINESS
DEVELOPMENT PROGRAM. A COPY OF YOUR CERTIFICATION MUST BE ATTACHED TO QUALIFY.
- -------------------------------------------------------------------------------
Enter the Federal Taxpayer Identification Number (TIN) of the Payee Named Below.
If a "TIN" has not been issued, enter the Employer's Social Security Number.
[1][3] -- [3][7][6][2][5][6][2] OR [ ][ ][ ] -- [ ][ ] -- [ ][ ][ ][ ]
TYPE OF PAYEE (CHECK ONLY ONE): ______ Individual/Sole Proprietorship
[X] Corporation ______ Partnership ______ Other
PURCHASER RESERVES THE RIGHT TO REMIT TO THE PARTY TO WHOM THE PURCHASE ORDER IS
ISSUED.
<TABLE>
<S> <C>
ADDRESS TO MAIL PAYMENT: ADDRESS TO SEND PURCHASE ORDERS:
Vendor Name: Swiss Natural Foods Inc. Vendor Name: Swiss Natural Foods Inc.
Address: 1031 Route 9W Attention: Larry Ackerman
City: Grandview State: N.Y. Zip: 10960 Address: 1031 Route 9W
Factor Name: None City: Grandview State: N.Y. Zip: 10960
Vendor Also Doing Business As: (Attach a list to Street Address for use by delivery services other than the
this Agreement if space below is insufficient) U.S. Mail, If not already shown in the Purchase Order address above.
________________________________________ Room _______________
_________________________ Vendor #______________ Expedite Orders: Phone __________ -- __________ -- __________
ADDRESS TO MAIL CLAIM DOCUMENTATION:
Attention: Larry Ackerman ADDRESS TO SEND PRICING TICKETS:
Address: 1031 Route 9W Vendor Name: Swiss Natural Foods Inc.
City: Grandview State: N.Y. Zip: 10960 Attention: Larry Ackerman
Accounting Phone Number: 914 -- 358 -- 1212 Address: 1031 Route 9W
Toll Free Number 888 -- 44 -- SWISS (79477) City: Grandview State: N.Y. Zip: 10960
Fax Number 914-358-2828
</TABLE>
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
SHIPPING TERMS
FREIGHT TERMS MINIMUM FOR PREPAID FREIGHT TERMS:
[ ] COLLECT - FOB VENDOR [X] PREPAID -- FOB PURCHASER _______ POUNDS 2,160 UNITS $13,500 WHOLE DOLLARS
[ ] PREPAID TO CONSOLIDATOR -- FOB PURCHASER'S CONSOLIDATOR
</TABLE>
- -------------------------------------------------------------------------------
CONDITION OF SALE Attach Details of Available Programs. Programs that are
accepted will become an addendum to Agreement.
[X] Guaranteed Sale [ ] Consignment [ ] Preticketing [ ] Prepricing
[ ] Stock Balancing [ ] Shelf Labels
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STANDARD PURCHASE ORDER ALLOWANCE
- ------------------------------------------------------------------------------------------------------------------------
DISC HOW PAID WHEN PAID
CODE ALLOWANCE % MEMO EACH INV. OTHER
OI CM CK EI M Q S A
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SA New Store/Club Discount N/A ___ ___ ___ ___ ___ ___ ___ ___
(% Applied to each line item for each new
store P.O.
OL New Store/Club Discount N/A ___ ___ ___ ___ ___ ___ ___ ___
(% Represents contribution of total business to
New Store Program)
NW New Distribution Center N/A ___ ___ ___ ___ ___ ___ ___ ___
WA Warehouse Allowance N/A ___ ___ ___ ___ ___ ___ ___ ___
QD Warehouse Distribution Allowance N/A ___ ___ ___ ___ ___ ___ ___ ___
(Order type 33 only)
DM Defective/Returned Mdse. Allowance N/A ___ ___ ___ ___ ___ ___ ___ ___
(when selected must mark option 3 under
warranty policy)
SD Soft Goods Defective Allow. N/A ___ ___ ___ ___ ___ ___ ___ ___
PA Promotional Allowance N/A ___ ___ ___ ___ ___ ___ ___ ___
VD Volume Discount N/A ___ ___ ___ ___ ___ ___ ___ ___
FA Freight Allowance N/A ___ ___ ___ ___ ___ ___ ___ ___
AA Advertising Allowance N/A ___ ___ ___ ___ ___ ___ ___ ___
TR TV/Radio Media Allowance N/A ___ ___ ___ ___ ___ ___ ___ ___
DA Display/Endcap Allowance N/A ___ ___ ___ ___ ___ ___ ___ ___
EB Early Buy Allowance N/A ___ ___ ___ ___ ___ ___ ___ ___
HA Handling Allowance N/A ___ ___ ___ ___ ___ ___ ___ ___
</TABLE>
<PAGE>
PAYMENT TERMS
ALL DATING SHALL BEGIN AT THE DATE OF RECEIPT OF THE GOODS AT PURCHASER'S DOCK.
ON ALL E.O.M. (END OF MONTH) DATINGS, GOODS RECEIVED AFTER THE 24TH OF ANY MONTH
SHALL BE PAYABLE AS IF RECEIVED IN THE FOLLOWING MONTH. INVOICES SHOULD BE
MAILED OR ELECTRONICALLY TRANSMITTED ON THE SAME DAY GOODS ARE SHIPPED AND SHALL
DATE FROM PURCHASER'S RECEIPT OF THE GOODS. CASH DISCOUNT WILL BE CALCULATED ON
THE GROSS AMOUNT OF VENDOR'S INVOICE.
- ---------------------
| --- | --- | 0 | 1. Cash Discount
- ---------------------
| --- | --- | 0 | Cash Discount Days Available
- ------------------------------------------------------------------------------
- ---------------------
| --- | 1 | 5 | 2. Net Payment Days Available (must be
at least one day more than Cash Discount
Days Available)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Yes _____ No [X] 3. E.O.M.
NEW STORE/CLUB/WHSE TERMS IF DIFFERENT THAN
REGULAR TERMS
___________________________________________
___________________________________________
___________________________________________
Alaska, Hawaii, and Puerto Rico, defective merchandise programs will be
negotiated separately.
- -------------------------------------------------------------------------------
CONDITION OF MERCHANDISE
Vendor agrees to only ship goods which comply with the "Warranties and
Guarantees" section of the "Purchaser Order Terms and Conditions" which is
attached hereto and incorporated herein.
- -------------------------------------------------------------------------------
PRICE GUARANTEE AND NOTICE OF PRICE INCREASES
Prices are guaranteed by Vendor against manufacturer's or Vendor's own price
decline and against legitimate competition until date of shipment with
Purchaser's owned inventories price protected by credit memo. In the event that
prior to the final shipment under any order Vendor sells or offers to others
goods substantially of the same kind as ordered at lower prices and or on terms
more favorable to a third party than those stated on the purchase order, the
prices and or terms shall be deemed automatically revised to equal the lowest
prices and most favorable terms at which Vendor shall have sold or shall have
offered such goods and payment shall be made accordingly. In the event Purchaser
shall become entitled to such lower prices, but shall have made payment at any
prices in excess thereof, Vendor shall promptly refund the difference in price
to Purchaser. In the event that a court or regulatory agency or body finds that
the prices on an order are in excess of that allowed by any law or regulation of
any governmental agency, the prices shall be automatically revised to equal a
price which is not in violation of said law or regulations. If Purchaser shall
have made payment before it is determined that there has been a violation,
Vendor shall promptly refund an amount of money equal to the difference between
the price paid for the goods and the price which is not in violation of said
regulations. In the event of a price increase, Vendor shall give Wal-Mart
written notice of any such increase at least sixty (60) days prior to the
effective date of the increase.
- -------------------------------------------------------------------------------
DEBIT BALANCES
If Vendor has a Debit Balance with Purchaser, the amount owed Purchaser will be
deducted from the next remittance or a check from Vendor to clear this amount
will be paid within 30 days at the option of Purchaser. Purchaser reserves the
right to charge the Vendor penalties and interest for any Debit Balances not
paid within 30 days.
- -------------------------------------------------------------------------------
**IMPORTANT NOTICE** ALL PAYMENTS OF MONIES MUST BE MAILED TO THE ADDRESS
INDICATED BELOW:
[ ] P.O. BOX 889, LOWELL, AR 72745
[ ] P.O. BOX 500646, ST. LOUIS, MO 63150-0646 (Allowance Checks)
[ ] P.O. BOX 18045 B, ST. LOUIS, MO 63160
[X] P.O. BOX 50067, ST. LOUIS, MO 63150-0787 (SAM'S)
- -------------------------------------------------------------------------------
WARRANTY POLICY
- -------------------------------------------------------------------------------
VENDOR MUST CHECK OPTIONS BELOW AND COMPLETE INFORMATION BEFORE AGREEMENT CAN BE
APPROVED
- -------------------------------------------------------------------------------
Vendor will be charged current costs plus a 10% handling charge for all returned
merchandise except where a Defective/Returned Merchandise Allowance is given by
the vendor. Returned merchandise will be shipped with return freight charges
billed back to the vendor. Returns are F.O.B. Purchaser.
[X] VENDOR OPTION #1: VENDOR WANTS RETURNED MERCHANDISE SENT TO THEM:
[ ] Returned merchandise will be sent to the vendor direct from each store.
Permanent return authorization #_________, if required for shipment. If
automatic return is not possible, an 800 number should be provided or the
vendor must accept purchaser's collect calls to secure return authorization
over the phone.
[ ] Phone 914-358-1212 Contact: Larry Ackerman
Returned merchandise will be sent from store locations to the return center
and sent to the vendor.
Permanent return authorization #_________, if required for shipment. The
practice of requesting a separate return authorization number for each
return claim (shipment will be discontinued.
ADDRESS TO SHIP RETURNS TO: COMMENTS:
ASA Apple Shipments made to this address or as
100 Middlesex Avenue specifically designated by
Carteret, New Jersey 07008 Swiss Natural.
<PAGE>
[ ] VENDOR OPTION #2: VENDOR DOES NOT WANT RETURNED
MERCHANDISE SENT TO THEM
[ ] Returned merchandise will be sent from store locations to the Return Center
for disposal.
[ ] Return Center may dispose of returned merchandise through salvage outlets
[ ] Return Center must destroy returned merchandise.
[ ] Returned merchandise must be disposed of by the individual store.
COMMENTS:
_________________________________________________
_________________________________________________
_________________________________________________
[ ] VENDOR OPTION #3: DEFECTIVE/RETURNED MERCHANDISE ALLOWANCE:
Vendor will allow the Defective/Returned Merchandise Allowance shown on the
reverse side of this agreement. The percentage must be adequate to cover all
defective/returned merchandise or additional claims will be filed by the Return
Center at our fiscal year end.
[ ] Return Center may dispose of returned merchandise through salvage outlets.
[ ] Return Center must destroy returned merchandise.
[ ] Returned merchandise will be sent from store locations to the Return Center
and sent to the vendor. If vendor requests the returned merchandise be sent
to them, they will be charged a 10% handling charge and the merchandise will
be shipped with return freight charges billed back to the vendor.
ADDRESS TO SHIP RETURNS TO: COMMENTS:
- --------------------------------------- ------------------------------------
- --------------------------------------- ------------------------------------
- --------------------------------------- ------------------------------------
- -------------------------------------------------------------------------------
SHIPPER LOAD AND COUNT RESPONSIBILITIES
The Vendor who is shipping collect ot Wal-Mart/Sam's a full truckload, will be
responsible for monitoring their shipping process including closing the trailer
and sealing it with a vendor provided seal. This seal number MUST be referenced
and identified as the seal number on all copies of the Bill of Lading, if the
Vendor fails to seal the trailer the driver will seal the trailer on the
vendor's behalf. The driver will the document that seal number on the Bill of
Lading before providing the Vendor with his/her copy. If the load is properly
sealed and a shortage does occur, Vendor shall be liable for said shortage.
- -------------------------------------------------------------------------------
VENDOR FINANCIAL INFORMATION
Vendor shall furnish to Purchaser, when submitting this completed agreement, a
complete set of current financial statements. If such statements are not
available, a current Dun & Bradstreet financial report shall be provided by
vendor. Publicly-held companies shall provide to Purchaser its most recent
Annual Report to Shareholders and Management Proxy Information. In the event
that Purchaser's purchases from Vendor constitutes twenty percent (20%) or more
of Vendor's gross annual sales, Vendor agrees to notify Purchaser of this fact,
in writing, within thirty (30) days of said event.
- -------------------------------------------------------------------------------
NOTICE REGARDING ASSIGNMENT OF ACCOUNTS
The Vendor shall provide Purchaser written notice of an assignment,
factoring, or other transfer of its right to receive payments arising under this
agreement 30 dayse prior to such assignment, factoring, or other transfer taking
legal effect. Such written notice shall include the name and address of
assignee/transferee, date assignment is to begin, and terms of the assignment,
and shall be considered delivered upon receipt of such written notice by the
Vendor Master Clerk. Vendor shall be allowed to have only one assignment,
factoring or transfer legally effective at any one point in time. No multiple
assignments, factorings or transfers by the Vendor shall be permitted.
Purchaser shall have the right to take deduction or other set-offs against
any payment assigned, or factored by the Vendor and Vendor shall indemnify
Purchaser against and hold Purchaser harmless from any and all lawsuits, claims,
actions, damages (including reasonable attorney fees, court costs, obligations,
liabialities or liens) arising or imposed in connection with the such deductions
or set-offs or with the assignment or transfer or factoring of any account or
right arising thereunder. Vendor also releases and waives any right, claim or
action against Purchaser for amounts due and owing under this Agreement where
Vendor has not complied with the notice requirements of this provision. Such
notices shall be mailed directly to:
INVOICE CONTROL DEPT.
ATTN: VENDOR MASTER CLERK
BENTONVILLE, AR 72716-8009
- -------------------------------------------------------------------------------
VENDOR ELECTRONIC DATA INTERCHANGE RESPONSIBILITIES
Vendor agrees to receive orders and send Wal-Mart Invoices VIA EDI (electronic
transmission) unless specifically waived by Purchaser.
1. Vendor will establish a user I.D. to identify its company. The presence of
this user I.D. in the EDI interchange will be sufficient to verify the source
of the data and the authenticity of the document.
2. Documents containing the user I.D. will constitute a signed writing and
neither party shall contest the validity or enforceability of the document on
this basis.
3. EDI documents or printout thereof shall constitute an original when
maintained in the normal course of business.
If purchaser agrees to waive the EDI requirements of vendor, Purchase orders
will be sent via overnight mail at vendor's expense. G.M.M. WAIVER_____________
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COMPLIANCE WITH STANDARDS FOR VENDORS
Vendor agrees to comply with the obligations expressed in the "WAL-MART STORES,
INC. STANDARDS FOR VENDORS: which is incorporated herein as part of this Vendor
Agreement. Wal-Mart reserves the right to cancel any outstanding order, refuse
any shipments and otherwise cease to do business with Vendor in the event Vendor
fails to comply with all terms of said Standards or if Wal-Mart has reason to
believe Vendor has failed to comply with said Standards.
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INDEMNIFICATION: Vendor shall protect, defend, hold harmless and indemnify
Purchaser from and against any and all claims, actions liabilities, losses,
costs and expenses, including reasonable attorney fees and costs, even if such
claims are groundless, fraudulent or false, arising out of any actual or alleged
infringement of any patent, trademark, tradedress or copyright by any
merchandise sold to the Purchaser hereunder, or arising out of any actual or
alleged death of or injury to any person, damage to any property, or any other
damage or loss, by whomsoever suffered, resulting or claimed to result in whole
or in part from any actual or alleged defect in such merchandise, whether latent
or patent, including actual or alleged improper construction or design of said
merchandise or the failure of said merchandise to comply with specifications or
with any express or implied warranties of Vendor, or arising out of any actual
or alleged violation by such merchandise, or its manufacturer, possession or use
or sales, of any law, statute or ordinance of any governmental administrative
order, rule or regulation arising out of Vendor's installation of merchandise
covered by this agreement. The duties and obligations of Vendor created hereby
shall not be affected or limited in any way by Purchaser's extension of express
or implied warranties to its customers, except to the extent that any such
warranties expressly extend beyond the scope of Vendor's warranties, express or
implied, to Purchaser. It is further agreed that all duties and obligations of
Vendor set forth in this paragraph shall extend in full force and effect to the
pallets or other transport or display provided by or at the direction of Vendor.
- -------------------------------------------------------------------------------
ALL PURCHASES MADE BY PURCHASER SHALL BE CONTROLLED BY THE PURCHASER'S PURCHASE
ORDER "TERMS AND CONDITIONS", WHICH IS ATTACHED AS A PART OF THIS AGREEMENT, AND
INCLUDED WITH EACH MANUALLY TRANSMITTED ORDER. THIS AGREEMENT AND ALL DISPUTES
ARISING HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF ARKANSAS. THE PARTIES AGREE THAT THE EXCLUSIVE JURISDICTION OF
ANY DISPUTE ARISING IN CONNECTION WITH THIS AGREEMENT OR ANY DISPUTE RELATING TO
THE SERVICES OR GOODS PROVIDED HEREUNDER SHALL BE IN THE STATE AND FEDERAL
COURTS OF THE COUNTIES OF BENTON OR WASHINGTON, STATE OF ARKANSAS. ANY LEGAL
ACTION BROUGHT BY VENDOR AGAINST PURCHASER WITH RESPECT TO THIS AGREEMENT SHALL
BE FILLED IN ONE OF THE ABOVE REFERENCED JURISDICTIONS WITHIN TWO (2) YEARS
AFTER THE CAUSE ACTION ARISES. THE PARTIES ACKNOWLEDGE THAT THEY HAVE READ AND
UNDERSTAND THIS CLAUSE AND AGREE WILLING TO ITS TERMS. LIMITATION OF DAMAGES: IN
NO EVENT SHALL WAL-MART BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES,
INCLUDING WITHOUT LIMITATION, LOSS OF PROFITS OR BUSINESS, OR OTHER
CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT LIMITED TO DAMAGES ARISING OUT OF
WAL-MART'S CANCELLATION OF ORDERS OR THE TERMINATION OF BUSINESS RELATIONS WITH
VENDOR), EVEN IF WAL-MART HAS BEEN ADVISED BY VENDOR OF THE POSSIBILITY OF SUCH
DAMAGES.
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<PAGE>
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INSURANCE REQUIREMENTS
A copy of your current Certificate of Insurance with the following
requirements must be attached to this Vendor Agreement. Certificate
Holder should read:
WAL-MART STORES, INC. ITS SUBSIDIARIES & ITS AFFILIATES
702 SW 8th Street
Bentonville, AR 72716-9078
Attn: Risk Management
1. COMMERCIAL GENERAL LIABILITY Including Contractual:
Products and Completed Operations with certificate holder named
As Additional Insured as evidenced by attached endorsement.
LIMITS: $2,000,000 *Per Occurrence
2. WORKERS' COMPENSATION required provided vendor will be entering
Wal-Mart premises:
Workers' Compensation STATUTORY
EMPLOYERS' LIABILITY $1,000,000.
Waiver of Subrogation where permitted by law.
3. Notice of Cancellation must be for 30 days.
*$5,000,000. If determined by Wal-Mart as a high risk vendor.
4. Existing Vendors, your Vendor number needs to be stated on certificate
of insurance. Vendor number for new vendors will be assigned upon
receipt of vendor agreement.
5. Renewals of certificates of insurance must be submitted prior to
expiration of insurance with vendor number stated.
6. Please direct any questions regarding your insurance to Risk Management
at (501) 273-6516.
7. If certificate of insurance does not comply with requests, vendor
agreement will be returned until compliances are met.
8. CONTACT FOR PRODUCT LIABILITY CLAIMS:
NAME: Herb Paul
ADDRESS: 370 Lexington Avenue
CITY: New York STATE: N.Y. ZIP: 10017
ATTN: Herb Paul PHONE: 212-752-37XXXXXX
FAX: 212-697-663XXXXX
INSURING COMPANY: The Lewis Agency, LTD.
PHONE: (516) 593-6000
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WARRANTY POLICY - FOR GROCERY ONLY
- -------------------------------------------------------------------------------
VENDOR MUST CHECK ONE OF THE BOXES BELOW AND COMPLETE INFORMATION BEFORE
AGREEMENT CAN BE APPROVED
- -------------------------------------------------------------------------------
Vendor will be charged current costs plus a 18% handling charge for all
defectives. All seasonal non-perishable merchandise may be returned to vendor
with or without cause.
Defective merchandise will be shipped "Prepaid" with return freight charges
billed to the vendor. Returns are F.O.B. purchaser. Vendor will allow automatic
Return Authorization for defectives.
YES ______ NO X
Permanent RA ____________. If automatic return is not possible, the Purchaser
must be able to secure return authorization over the phone. An RA number should
be provided in the space below or the vendor must accept purchasers collect
calls.
Defectives will be returned to the vendor direct from each individual
location. ____-____-____.
Defectives will be disposed of by the individual location.
Vendor will allow the spoil invoice allowance, which will be deducted from
each invoice before payment is made. The percentage of each invoice must
be adequate to cover all defectives or additional claims will be filed by
the Return Center. Defectives will be disposed of by the Return Center.
Return Center may dispose of through salvage outlets. YES____ NO X.
Defectives will be returned from locations to the Return Center and returned
to the vendor.
ADDRESS FOR STORES TO SHIP RETURNS TO:
______________________________________________
______________________________________________
______________________________________________
Attn:_________________ Phone____-____-________
ADDRESS FOR RETURN CENTER TO SHIP RETURNS TO:
ASA Apple
100 Middlesex Avenue
Carteret, New Jersey 07008
Attn: Janet Phone 732-969-2900
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FOR GROCERY ONLY STANDARD PURCHASE ORDER ALLOWANCE
- -------------------------------------------------------------------------------
CODE ALLOWANCE % AMOUNT CONTROL TYPE INVOICE
OI BB EI Q
PUA Backhaul Or Pick Up N/A ___ ___ ___ ___
Allowance (This will
be applied when the
whse backhauls a PPD
item
SWA Swell Allowance N/A ___ ___ ___ ___
VAA Other Vendor Allowance N/A ___ ___ ___ ___
(To be deducted or
billed back on every
P.O. or invoice)
- -------------------------------------------------------------------------------
OI - Off Invoice BB - Bill Back EI - Each Invoice Q - Quarterly
- -------------------------------------------------------------------------------
PURCHASE COST AND CONDITIONS
Invoice and ship in accordance to the conditions, costs, and allowances
reflected on each purchase order unless otherwise communicated and approved by
the purchaser confirming differences in writing. If Cost/UPC/Terms are not
correct on P.O., vendor must give 24 hour notice.
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Signatures Required for all Divisions
- -------------------------------------------------------------------------------
By the execution of this Vendor Merchandise Agreement, Vendor agrees to the
representations stated above, and on the following pages. Vendor further agrees
that Purchaser may rely on these representations in placing any purchase orders
pursuant to information contained in this Agreement. Any changes to this
Agreement must be in writing and executed by both parties.
By the execution of this Agreement, the parties hereto agree that this
Agreement, the Purchase Order Terms and Conditions and the Standards for
Vendors, which are incorporated herein, constitute the full understanding of the
parties, a complete allocation of risks between them and a complete and
exclusive statement of the terms and conditions of their agreement; and all
prior agreements, negotiations, dealings and understandings, whether written or
oral, regarding the subject matter hereof, are superseded by and merged into
this Agreement. Any changes in this Agreement shall be in writing and executed
by both parties. Furthermore, in the event of a conflict of terms between the
Vendor Agreement and a Purchase Order, the Vendor Agreement shall be the
controlling document.
SELLER:
By: /s/ Herbert Paul DATE 8/26/98
(Principal of the company)
(Signature needed on all 4 copies)
Title Chief Financial Officer
PURCHASER
By: __________________________________ DATE _____________________
(Buyer)
By: __________________________________ DATE _____________________
(Division Merchandise Manager)
Salesman: ________________________________________________________
Address: _________________________________________________________
_________________________________________________________
Phone Number: ____--____--____________
Sales Mgr. or V.P. Sales Mark Poleway
Address: 1031 Route 9W
Grandview, New York 10960
Phone Number: 914-358-1212
Pres. Name: Ralph Ferrante
Address: 1031 Route 9W
Grandview, New York 10960
<PAGE>
Vendor No. ________________ Department No. ________________
Effective Date ___/___/___
SHIPPING INSTRUCTIONS
Each purchase order will show a routing which is determined by the Purchaser's
Traffic Department. The vendor is liable for the excess transportation cost if
the designated routing is not followed. If a vendor should question the routing
selected, the vendor must call the Purchaser's Traffic Department before
releasing the shipment. Call the number indicated:
[ ] (501) 273-6359 [ ] (501) 452-2060 "HUTCHESON SHOE"
INDICATE ALL YOUR SHIPPING POINTS TO EACH OF THESE DESTINATIONS. NOTE: Warehouse
locations for Sam's Club are listed as a separate attachment.
WHSE # WHSE #
00 __________________________________ 30 ________________________________
(Ship & Bill) (Raymond, NH 09/96 - RDC)
01 __________________________________ 32 ________________________________
(Bentonville, AR - Pharmacy) (Hanford, CA - Pharmacy)
02 __________________________________ 34 ________________________________
(Bentonville, AR - RDC/Return Center) (Statesboro, GA - Shoe Division)
03 __________________________________ 35 ________________________________
(Searcy, AR - Supercenter Storage) (Ottawa, KS - RDC)
04 __________________________________ 36 ________________________________
(Bentonville, AR - RDC) (Palestine, TX - RDC)
05 __________________________________ 38 ________________________________
(Palestine, TX - WPM/Shoe) (Marcy, NY - RDC)
06 __________________________________ 41 ________________________________
(Cullman, AL - RDC) (Sharon Springs, NY - WPM)
07 __________________________________ 44 ________________________________
(Ft. Smith, AR - Shoe Division) (Crawfordsville, IN - Optical)
08 __________________________________ 45 ________________________________
(Bentonville, AR - WPM) (Bentonville, AR - Pharmacy)
09 __________________________________ 46 ________________________________
(Mt. Pleasant, IA - RDC) (Williamsport, MD - Pharmacy)
10 __________________________________ 50 ________________________________
(Douglas, GA - RDC) (Laredo, TX - Import MX)
11 __________________________________ 51 ________________________________
(Brookhaven, MS - RDC) (Bentonville, AR - Jewelry)
12 __________________________________ 52 ________________________________
(Plainview, TX - RDC) (Auburn, WA - Export)
13 __________________________________ 53 ________________________________
(Tifton, GA - Pharmacy) (Miami, FL - Export)
14 __________________________________ 54 ________________________________
(Laurens, SC - WPM) (Dallas, TX - Optical)
15 __________________________________ 58 ________________________________
(Laurens, SC - RDC) (Edmond, OK - Import)
16 __________________________________ 60 ________________________________
(New Braunfels, TX - RDC) (Buckeye, AZ - Import Storage)
17 __________________________________ 61 ________________________________
(Seymour, IN - RDC) (Statesboro, GA - Import Storage)
18 __________________________________ 62 ________________________________
(Searcy, AR - RDC) (Tucson, AZ - Import/Export)
19 __________________________________ 63 ________________________________
(Loveland, CO - RDC) (DSL Southgate, CA - Import/Export)
GROCERY ONLY
20 __________________________________ *59 ________________________________
(Brooksville, FL - RDC) (Olney, IL - Grocery)
21 __________________________________ *71 ________________________________
(Porterville, CA - RDC) (Winter Haven, FL - Grocery 09/96)
22 __________________________________ *72 ________________________________
(Greencastle, IN - WPM) (New Albany, MS - Grocery 09/96)
23 __________________________________ *73 ________________________________
(Sutherland, VA - RDC) (Pageland, SC - Grocery)
24 __________________________________ *82 ________________________________
(Grove City, OH - RDC) (Clarksville, AR - Grocery)
25 __________________________________ *83 ________________________________
(Menomonie, WI - RDC) (Temple, TX - Grocery)
26 __________________________________ *97 ________________________________
(Red Bluff, CA - RDC) (London, KY - Grocery)
27 __________________________________ ________________________________
(Woodland, PA - RDC)
28 __________________________________ Each Purchase Order will show a
(Crawfordsville, IN - Pharmacy) routing which is determined by the
Wal-Mart Supercenter Traffic
29 __________________________________ Department. The Vendor is liable for
(Hurricane, UT - WPM/Shoe/Spec) the excess transportation cost if the
designated routing is not followed. If
a Vendor should question the routing
selected, the Vendor must call the
Wal-Mart Supercenter Traffic
Department before releasing the
shipment.
<PAGE>
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PURCHASE ORDER TERMS AND CONDITIONS
1. Definitions: As used in these Terms and Conditions, "order" shall
mean this Purchase Order and all its attachments, instructions and exhibits;
"goods" shall mean any materials, machinery, equipment, article, item or work
provided for in this order; "Seller" shall mean the person, firm or corporation
named on the label hereof to whom this order is issued; and "Purchaser" shall
mean the person, firm or corporation named on the face hereof by whom this order
is issued.
2. Agreement: This order sets forth the entire agreement between Seller
and Purchaser with respect to the sale and purchase of the goods, and it is not
valid unless signed or initialed by an authorized buyer for Purchaser.
Acceptance of this order may be made only by shipment of the goods in accordance
herewith and ACCEPTANCE IS EXPRESSLY LIMITED TO ALL OF THE TERMS AND CONDITIONS
OF THIS ORDER, INCLUDING ALL ATTACHMENTS AND SUPPLEMENTAL INSTRUCTIONS DELIVERED
HEREWITH AND TO CURRENT SHIPPING, BILLING AND ROUTING INSTRUCTIONS OF PURCHASE
SHIPMENTS MADE CONTRARY TO PURCHASER'S ROUTING INSTRUCTIONS WILL BE CONSIDERED
F.O.B. DESTINATION. (EITHER STORE OR WAREHOUSE.) Seller's invoice, confirmation
memorandum or other writing may not vary the terms of this order. Seller's
failure to comply with each and every term of this order shall constitute an
event of default and shall be grounds for the exercise by Purchaser of any of
the remedies provided for in these Terms and Conditions.
3. Warranties and Guarantees: By acceptance of this order, Seller
warrants and guarantees that (a) the goods will comply with all specifications
contained in this order and will be of comparable quality as all samples
delivered to Purchase; (b) the goods are not adulterated, misbranded, falsely
labeled or advertised, falsely invoiced within the meaning of any local, state
or federal laws and amendments thereof now in force, (c) the goods have been
labeled, advertised and invoiced in accordance with the requirements (if
applicable) of the Wool Products Labeling Act of 1939, the Fur Products Labeling
Act and the Textile Fiber Products identification Act and any and any all other
governmental laws and the respective rules and regulations thereunder, (d)
reasonable and representative tests made in accordance with the requirements of
the Flammable Fabrics Act (if applicable) show that the goods are not so highly
flammable as to be dangerous when worn by individuals, (e) the goods are
properly labeled as to content as required by applicable Federal Trade
Commission Trade Practice Rules, the Fair Labor Standards Act, the Federal Food,
Drug and Cosmetics Act and similar laws, rules and regulations; (f) the goods
ordered herein shall be delivered in good and undamaged condition and shall,
when delivered, be merchantable and fit and safe for purposes for which the same
are intended to be used, including without limitation, consumer use; (g) the
goods do not infringe upon or violate any patent, copyright, trademark, trade
name or, without limitation, any other right belonging to others; (h) all
weight, measures, sizes, legends or descriptions printed, stamped attached or
otherwise indicated with regard to the goods are true and correct, and conform
and comply with all laws, rules, regulations, ordinances, codes and or standards
relating to said goods of federal, state and local governments, and (I) the
goods are not in violation of any other laws, ordinances, statutes, rules or
regulations of the United States or any state or local government or any
subdivision or agency thereof. It shall be within the sole discretion of
Purchaser to determine when the above mentioned warranties and guarantees have
been breached. In addition to the other guarantees and warranties contained in
this paragraph, the warranties of the Uniform Commercial Code are specifically
incorporated herein. Nothing contained in this order shall be deemed a waiver of
warranties implied by law.
4. PROHIBITION AGAINST FORCED LABOR, CHILD LABOR AND TRANS-SHIPMENTS:
VENDOR CERTIFIES, REPRESENTS AND WARRANTS THAT THE GOODS PURCHASED PURSUANT TO
THIS AGREEMENT ARE NOT MINED, PRODUCED, MANUFACTURED, ASSEMBLED OR PACKAGED BY
THE USE OF FORCED LABOR, PRISON LABOR OR FORCED OR ILLEGAL CHILD LABOR AND THAT
THE GOODS WERE NOT TRANS-SHIPPED FOR THE PURPOSE OF MISLABELING, EVADING QUOTA
OR COUNTRY OF ORIGINAL RESTRICTIONS OR FOR THE PURPOSE OF AVOIDING COMPLIANCE
WITH FORCED LABOR, PRISON LABOR OR CHILD LABOR LAWS.
5. Remedies on Breach or Default: Failure to comply with each and every
term of this order and each guarantee or warranty herein shall be grounds for
the exercise by Purchaser of any one or more of the following remedies:
(a) Cancellation of all or any part of this order without notice,
including without limitations the balance of any order received on installment,
and
(b) Rejection of all or any part of any shipment by Purchaser,
which may return the goods or hold them at Seller's risk and expense.
Purchaser's right to reject and return or hold goods at Seller's expense and
risk shall extend to goods covered by this order which are returned by
Purchaser's customers for any reason entitling Purchaser to reject. Purchaser
may, at its option, require Seller to grant a full refund or credit to Purchaser
of the price actually paid by any customer of Purchaser for such item in lieu of
replacement with respect to any item which Purchaser is entitled to reject
hereunder. Purchaser shall be under no duty to inspect the goods before resale
thereof, and notice of rejection shall be deemed given within a reasonable time
if given within a reasonable time after notice of defects or deficiencies has
been given to purchaser by its customers. In respect of any goods rightfully
rejected by Purchaser, there shall be charged to Seller all expenses incurred by
Purchaser in (I) unpacking, examining, repacking and storing such goods (it
being agreed that in the absence of proof of a high expense that the purchaser
shall claim and allowance for each rejection at the rate of 10% of the price for
each rejection made by Purchaser) and (ii) landing and reshipping such goods.
When Purchaser has exercised any of the above remedies, Seller shall not have
the right to make a conforming delivery within [the] contract time. In addition
to Purchaser's remedies provided above, the buyer's remedies of the Uniform
Commercial Code are specifically incorporated in the agreement.
6. Indemnification: Vendor shall protect, defend, hold harmless and
indemnify Purchaser from and against any and all claims, actions, liabilities,
losses, costs and expenses, including reasonable attorney fees and costs, even
if such claims are groundless, fraudulent or false, arising out of any actual or
alleged infringement of any patent, trademark, tradedress or copyright by any
merchandise sold to the Purchaser hereunder, or arising out of any actual or
alleged death of or injury to any person, damage to any property, or any other
damage or loss, by whomsoever suffered, resulting or claimed to result in whole
or in part from any actual or alleged defect in such merchandise, whether latent
or patent, including actual or alleged improper construction or design of said
merchandise or the failure of said merchandise to comply with specifications or
with any express or implied warranties of Vendor, or arising out of any actual
or alleged violation by such merchandise, or its manufacturer, possession or use
or sales, of any law, statute or ordinance of any governmental administrative
order, rule or regulation arising out of Vendor's installation of merchandise
covered by this agreement. The duties and obligations of Vendor created hereby
shall not be affected or limited in any way by Purchaser's extension of express
or implied warranties to its customers, except to the extent that any such
warranties expressly extend beyond the scope of Vendor's warranties, express or
implied, to Purchaser. It is further agreed that all duties and obligations of
Vendor set forth in this paragraph shall extend in full force and effect to the
pallets or other transport or display provided by or at the direction of Vendor.
7. DELIVERY TIME: THE SPECIFIED HEREIN FOR SHIPMENT OF GOODS IS OF THE
ESSENCE OF THIS AGREEMENT AND IF SHIPMENT IS NOT EFFECTED WITHIN THE TIME
SPECIFIED, PURCHASER RESERVES THE RIGHT, AT ITS OPTION AND WITHOUT LIMITATIONS,
TO CANCEL THE ORDER OR REJECT ANY GOODS DELIVERED AFTER THE TIME SPECIFIED and
to hold Seller liable for damages sustained by Purchaser as a result of Seller's
failure. Notwithstanding Purchaser's right to cancel and or reject goods, Seller
agrees to inform Purchaser immediately of any failure to ship any part of this
order or the exact goods called for on this order on the shipment date
specified. Acceptance of any goods shipped after the specified shipment date
shall not be construed as a waiver of any of Purchaser's rights resulting from
the late shipment.
8. Price Guarantees: Prices herein are guaranteed by Seller against
manufacturer's or Seller's own price decline and against legitimate competition
until date of shipment. In the event that prior to final shipment under this
order Seller sells or offer to sell to others goods substantially of the same
kind as ordered herein at lower prices and or on terms more favorable to a third
party than those stated in this order, the prices and or terms herein shall be
deemed automatically revised to equal the lowest prices and or most favorable
terms at which Seller shall have sold or shall have offered such goods and
payments shall be made accordingly. In the event Purchaser shall become entitled
to such lower prices, but shall have made payment at any price in excess
thereof, Seller shall promptly refund the difference in price to Purchaser.
Seller agrees to meet the price of legitimate competition. The prices to
Purchaser set forth in this order include all taxes whether or not set forth
separately. If any manufacturer's excise or other similar or different taxes are
paid on the goods described in this order and if such tax, or any part thereof,
is refunded to Seller, then Seller shall immediately pay Purchaser the amount of
such refund. In the event that a court or regulatory agency or body finds that
the prices herein are in excess of that allowed by any law or regulation of any
governmental agency, the prices herein shall be automatically revised to equal a
price which is not in violation of said law or regulations. If Purchaser shall
have made payment before it is determined that there has been a violation,
Seller shall promptly refund an amount of money equal to the difference between
the price paid for the goods and a price which is not in violation of said
regulations.
9. DATING: ALL DATING SHALL BEGIN AT THE DATE OF RECEIPT OF THE GOODS
BY PURCHASER, ON ALL E.O.M. DATINGS, GOODS RECEIVED AFTER THE 24TH OF ANY MONTH
SHALL BE PAYABLE AS IF RECEIVED IN THE FOLLOWING MONTH. INVOICES SHOULD BE
MAILED ON THE SAME DAY GOODS ARE SHIPPED AND SHALL DATE FROM PURCHASER'S RECEIPT
OF THE GOODS. CASH DISCOUNT WILL BE CALCULATED ON THE GROSS AMOUNT OF VENDOR'S
INVOICE.
10. PURCHASER RESERVES THE RIGHT TO TAKE ANTICIPATION, AT PREVAILING
RATE, ON ANY INVOICES PAID BEFORE DUE DATE.
11. Cancellation: Purchaser may cancel all or any part of this order at
any time prior to shipment. In addition, in the event any place of business or
other premises of Purchaser shall be affected by lockouts, strikes, riots, war,
fire, civil insurrection, flood, earthquake, or any other casualty or cause
beyond Purchaser's control, which might reasonable tend to impede or delay the
reception, handling, inspecting, processing or marketing of the goods covered by
this order by Purchaser, its agents or employees, Purchaser may, at its option,
cancel all or any part of the undelivered order hereunder by giving written
notice to Seller which notice shall be effective upon mailing.
12. Set-off: Purchaser may set off against amounts payable under this
order all present and future indebtedness of the Seller to Purchaser arising
from this or any other transaction whether or not related thereto.
13. Assignment: Seller shall not assign the obligation to perform this
order or any part hereof, and Purchaser shall not be obligated to accept a
tender of performance by any assignee, unless Purchaser shall have previously
expressly consented in writing to such an assignment.
14. Publicity: Seller shall not refer to Purchaser or any company
affiliated with Purchaser in publication form in connection with goods or
services rendered to Seller without the prior written approval of Purchaser.
15. Validity: No finding that a part of this order is invalid or
unenforceable shall affect the validity of any other part hereof.
16. Seller agrees that any credit balance will be paid in cash to
Purchaser upon written request.
<PAGE>
Vendor No. ______________ Department No. ____________
Effective Date ________
WAL-MART STORES, INC.
STANDARDS FOR "VENDORS"
Wal-Mart Stores, Inc. ("Wal-Mart") has enjoyed success by adhering to three
basic principles since its founding in 1962. The FIRST PRINCIPLE is the concept
of providing value and service to our customers by offering quality merchandise
at low prices every day. Wal-Mart has built the relationship with its customers
on this basis, and we believe it is a fundamental reason for the Company's rapid
growth and success. The SECOND PRINCIPLE is corporate dedication to a
partnership between the Company's associates (employees), ownership and
management. This concept is extended to Wal-Mart's Vendors who have increased
their business as Wal-Mart has grown. The THIRD PRINCIPLE is a commitment by
Wal-Mart to the communities in which stores and distribution centers are
located.
Wal-Mart strives to conduct its business in a manner that reflects these three
basic principles and the resultant fundamental values. Each of our Vendors,
including our Vendors outside the United States, are expected to conform to
those principles and values and to assure compliance in all contracting,
subcontracting or other relationships.
Since Wal-Mart believes that the conduct of its Vendors can be transferred to
Wal-Mart and affect its reputation, Wal-Mart requires that the Vendors conform
to standards of business practices which are consistent with the three
principles described above. More specifically, Wal-Mart requires conformity from
its Vendors with the following standards, and hereby reserves the right to make
periodic, unannounced inspections of Vendor's facilities to satisfy itself of
Vendor's compliance with these standards:
1. COMPLIANCE WITH APPLICABLE LAWS
All Vendors shall comply with the legal requirements and standards of
their industry under the national laws of the countries in which the
Vendors are doing business, including the labor and employment laws of
those countries, and any applicable U.S. laws. Should the legal
requirements and standards of the industry conflict, Vendors must, at a
minimum, be in compliance with the legal requirements of the country in
which the products are manufactured. If, however, the industry
standards exceed the country's legal requirements, Wal-Mart will favor
Vendors who meet such industry standards. Vendors shall comply with all
requirements of all applicable governmental agencies. Necessary
invoices and required documentation must be provided in compliance with
the applicable law. Vendors shall warrant to Wal-Mart that no
merchandise sold to Wal-Mart infringes the patents, trademarks or
copyrights of others and shall provide to Wal-Mart all necessary
licenses for selling merchandise sold to Wal-Mart which is under
license from a third party. All merchandise shall be accurately marked
or labeled with its country of origin in compliance with applicable
laws and including those of the country of manufacture. All shipments
of merchandise will be accompanied by the requisite documentation
issued by the proper governmental authorities, including but not
limited to Form A's, import licenses, quota allocations and visas and
shall comply with orderly marketing agreements, voluntary restraint
agreements and other such agreements in accordance with applicable law.
The commercial invoice shall, in English and in any other language
deemed appropriate, accurately describe all the merchandise contained
in the shipment, identify the country of origin of each article
contained in the shipment, and shall list all payments, whether direct
or indirect, to be made for the merchandise, including, but not limited
to any assists, selling commissions or royalty payments. Backup
documentation, and any Wal-Mart required changes to any documentation,
will be provided by Vendors promptly. Failure to supply complete and
accurate information may result in cancellation or rejection of the
goods.
2. EMPLOYMENT
Wal-Mart is a success because its associates are considered "partners"
and a strong level of teamwork has developed within the Company.
Wal-Mart expects the spirit of its commitment to be reflected by its
"Vendors' with respect to their employees. At a minimum, Wal-Mart
expects its "Vendors" to meet the following terms and conditions of
employment:
COMPENSATION
"Vendors" shall fairly compensate their employees by providing
wages and benefits which are in compliance with the national laws
of the countries in which the "Vendors" are doing business or
which are consistent with the prevailing local standards in the
countries in which the "Vendors" are doing business, if the
prevailing local standards are higher. Vendors shall fully comply
with the wage and hour provisions of the Fair Labor Standards Act,
if applicable, and shall use only subcontractors who comply with
this law, if applicable.
HOURS OF LABOR
"Vendors" shall maintain reasonable employee work hours in
compliance with local standards and applicable national laws of
the countries in which the Vendors are doing business. Employees
shall not work more hours in one week than allowable under
applicable law, and shall be properly compensated for overtime
work. We favor "Vendors" who comply with the statutory
requirements for working hours for employees and we will not use
suppliers who, on a regularly scheduled basis, require employees
to work in excess of the statutory requirements without proper
compensation as required by applicable law. Employees should be
permitted reasonable days off (which we see as at least one day
off for every seven-day period) and leave privileges.
FORCED LABOR/PRISON LABOR
Forced or prison labor will not be tolerated by Wal-Mart. Vendors
shall maintain employment on a voluntary basis. Wal-Mart will not
accept products from Vendors who utilize in any manner forced
labor or prison labor in the manufacture or in their contracting,
subcontracting or other relationships for the manufacture of their
products.
CHILD LABOR
Wal-Mart will not tolerate the use of child labor in the
manufacture of products it sells. Wal-Mart will not accept
products from Vendors that utilize in any manner child labor in
their contracting, subcontracting or other relationships for the
manufacture of their products. No person shall be employed at an
age younger than 15 (or 14 where the law of the country of
manufacture allows) or younger than the age for completing
compulsory education in the country of manufacture where such age
is higher than 15.
DISCRIMINATION/HUMAN RIGHTS.
Wal-Mart recognizes that cultural differences exist and different
standards apply in various countries, however, we believe that all
terms and conditions of employment should be based on an
individual's ability to do the job, not on the basis of personal
characteristics or beliefs. Wal-Mart favors Vendors who have a
social and political commitment to basic principles of human
rights and who do not discriminate against their employees in
hiring practices or any other term or condition or work, on the
basis of race, color, national origin, gender, religion,
disability, or other similar factors.
<PAGE>
3. WORKPLACE ENVIRONMENT
Wal-Mart maintains a safe, clean, healthy and productive environment
for its associates and expects the same from its Vendors. Vendors shall
furnish employees with safe and healthy working conditions. Factories
working on Wal-Mart merchandise shall provide adequate medical
facilities, fire exits and safety equipment, well lighted and
comfortable workstations, clean restrooms, and adequate living quarters
where necessary. Workers should be adequately trained to perform their
jobs safely. Wal-Mart will not do business with any "Vendor" that
provides an unhealthy or hazardous work environment or which utilizes
mental or physical disciplinary practices.
4. CONCERN FOR THE ENVIRONMENT
We believe it is our role to be a leader in protecting our environment.
We encourage our customers and associates to always Reduce, Reuse, and
Recycle. We also encourage our Vendors to reduce excess packaging and
to use recycled and non-toxic materials whenever possible. We will
favor Vendors who share our commitment to the environment.
5. "BUY AMERICAN" COMMITMENT
Wal-Mart has a strong commitment to buy as much merchandise made in the
United States as feasible. Vendors are encouraged to buy as many
materials and components from United States sources as possible and
communicate this information to Wal-Mart. Further, Vendors are
encouraged to establish U.S. manufacturing operations.
6. REGULAR INSPECTION AND CERTIFICATION BY VENDOR
Vendor shall designate, on a copy of Wal-Mart Vendor Inspection and
Certification Form, one or more of its officers to inspect each of its
facilities which produces merchandise sold to Wal-Mart. Such
inspections shall be done on at least a quarterly basis to insure
compliance with the standards, terms and conditions set forth herein.
The Vendor Officer designated to perform such inspections shall certify
to Wal-Mart following each inspection (I) that he or she performed such
inspection and (ii) that the results reflected on such compliance
inspection form are true and correct.
All charges related to the inspection and certification of such
facilities shall be paid fully by the Vendor. Vendor shall maintain the
completed inspection and Certification Forms on file at each facility
and shall make the forms readily accessible to Wal-Mart, its agent or
employees when requested. Any Vendor which fails or refuses to comply
with these standards is subject to immediate cancellation of any and
all outstanding orders, refusal or return of any shipment, and
termination of its business relationship with Wal-Mart.
7. RIGHT OF INSPECTION
To further assure proper implementation of and compliance with the
standards set forth herein, Wal-Mart or a third party designated by
Wal-Mart will undertake affirmative measures, such as on-site
inspection of production facilities, to implement and monitor said
standards. Any Vendor which fails or refuses to comply with these
standards is subject to immediate cancellation of any and all its
outstanding orders, refuse or return any shipment, and otherwise cease
doing business with Wal-Mart.
8. CONFIDENTIALITY
Vendor shall not at any time, during or after the term of this
Agreement, disclose to others and will not take or use for its own
purposes or the purpose of others any trade secrets, confidential
information, knowledge, designs, data, know-how, or any other
information considered logically as "confidential." Vendor recognizes
that this obligation applies not only to technical information, designs
and marketing, but also to any business information that Wal-Mart
treats as confidential. Any information that is not readily available
to the public shall be considered to be a trade secret and
confidential. Upon termination of this Agreement, for any cause, Vendor
shall return all items belonging to Wal-Mart and all copies of
documents containing Wal-Mart's trade secrets, confidential
information, knowledge, data or know-how in Vendor's possession or
under Vendor's control.
9. WAL-MART GIFT AND GRATUITY POLICY
Wal-Mart Stores, Inc. has a very strict policy which forbids and
prohibits the solicitation, offering or acceptance of any gifts,
gratuities or any form of "pay-off" or facilitation fee as a condition
of doing business with Wal-Mart; as a form of gratitude, or as an
attempt to gain favor or accept merchandise or services at a lesser
degree than what was agreed. Wal-Mart believes in delivering and
receiving only the total quantity agreed.
Any Vendor, factory or manufacturer who violates such policy by
offering or accepting any form of gift or gratuity to any associate,
employee, agent or affiliate of Wal-Mart Stores, Inc. will be subject
to all loss of existing and future business, regardless of whether the
gift or gratuity was accepted. In addition, a Vendor, factory or
manufacturer who violates such policy, will be reported to the
appropriate governmental authorities of the Vendor's respective and
affiliated countries.
Failure to report such information will result in severe action against
such Vendor, trading company or factory including but not limited to
termination of all existing and future business relationships and
monetary damages.
A COPY OF THESE STANDARDS FOR VENDORS SHALL BE POSTED IN A LOCATION VISIBLE TO
ALL EMPLOYEES AT ALL FACILITIES THAT MANUFACTURE PRODUCTS FOR WAL-MART STORES,
INC.
ANY PERSON WITH KNOWLEDGE OF A VIOLATION OF ANY OF THESE STANDARDS BY A VENDOR
OR A WAL-MART ASSOCIATE SHOULD CALL 1-800-WM-ETHIC (1-800-963-8442) (IN
COUNTRIES OTHER THAN THE UNITED STATES, DIAL AT&T'S U.S.A. DIRECT NUMBER FIRST)
OR WRITE TO: WAL-MART STORES, INC., BUSINESS ETHICS COMMITTEE, 702 SW 8TH ST.,
BENTONVILLE, AR 72716-8095.
As an officer of Swiss Natural Foods, a Vendor of Wal-Mart, I have read the
principles and terms described in this document and understand my company's
business relationship with Wal-Mart is based upon said company being in full
compliance with these principles and terms. I further understand that failure by
a Vendor to abide by any of the terms and conditions stated herein may result in
the immediate cancellation by Wal-Mart of all outstanding orders with that
Vendor and refusal by Wal-Mart to continue to do business in any manner with
said Vendor. I am signing this statement, as a corporate representative of Swiss
Natural Foods to acknowledge, accept and agree to abide by the standards, terms
and conditions set forth in this Memorandum of Understanding between may company
and Wal-Mart. I hereby affirm that all actions, legal and corporate, to make
this Agreement binding and enforceable against Sam's Clubs have been completed.
VENDOR COMPANY NAME,
ADDRESS, TELEPHONE AND FAX NUMBER
Swiss Natural Goods Inc. Signature:
1031 Route 9W /s/ Herbert Paul
Grandview, New York 10960 Typed Name: Herb Paul
Tel: (914)-358-1212 Title: Chief Financial Officer
Fax: (914)-358-2828
<PAGE>
Exhibit 10.17
Comprehensive Capital Corporation
Page 1
Swiss Natural Foods, Inc.
1031 Route 9W
Grandview, New York 10960
Comprehensive Capital Corporation , 1999
1600 Stewart Avenue, Suite 405
Westbury, New York 11590
Gentlemen:
In connection with an initial public offering ("IPO") of Swiss Natural
Foods, Inc. (the "Company"), which offering is being underwritten by
Comprehensive Capital Corporation ("Comprehensive") the following sets forth our
understanding with respect to Comprehensive providing financial advisory
services for the Company.
1. For a period of two (2) year commencing on the date hereof,
Comprehensive will render financial consulting services to the Company as such
services shall be required but in no event shall such services require more than
two business days per month. Your services shall include the following:
(a) to advise and assist in matters pertaining to the
financial requirements of our corporation and to assist, as and when required,
in formulating plans and methods of financing;
(b) to prepare and present financial reports required by us
and to analyze proposals relating to obtaining funds for our business, mergers
and/or acquisitions;
(c) to assist in our general relationship with the financial
community including brokers, stockholders, financial analysts, investment
bankers, and institutions; and
(d) to assist in obtaining financial management, and technical
and advisory services, and financial and corporate public relations, as may be
requested or advisable.
2. All services required to be performed hereunder shall be requested
by the Company in writing and upon not less than seven business days notice,
unless such notice is waived by you. Such notice shall be to the address
specified above or to such other place as you shall designate to us in writing.
3. For Comprehensive's services to be performed hereunder, and for
Comprehensive's continued availability to perform such services, the Company
will pay Comprehensive a fee in an amount equal to two (2%) percent of the gross
proceeds of this offering (including the Over-Allotment Option) for services for
two (2) years from the date hereof which sum is payable in full in advance on
the closing date of the IPO.
<PAGE>
Comprehensive Capital Corporation
Page 2
Further, we will reimburse Comprehensive for such reasonable out-of-pocket
expenses as may be incurred by Comprehensive on the Company's behalf, but only
to the extent authorized by the Company.
4. This Agreement has been duly approved by the Company's Board of
Directors.
5. Comprehensive shall have no authority to bind the Company to any
contract or commitment, inasmuch as Comprehensive's services hereunder are
advisory in nature.
6. Comprehensive will maintain in confidence all proprietary,
non-published information obtained by you with respect to the Company during the
course of the performance of your services hereunder and Comprehensive shall not
use any of the same for your own benefit or disclose any of the same to any
third party, without the Company's prior written consent, both during and after
the term of this Agreement.
7. This Agreement shall not be assignable by either party without the
other party's prior written consent.
8. This Agreement shall be binding upon, and shall inure to the benefit
of the Company's and Comprehensive's respective successors and permitted
assigns.
9. The foregoing represents the sole and entire agreement between us
with respect to the subject matter hereof and supersedes any prior agreements
between us with respect thereto. This Agreement may not be modified, amended or
waived except by a written instrument signed by the party to be charged. This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York, without regard to the principles of conflicts of
laws of such State.
Please signify your agreement to the foregoing by signing and returning
to us the enclosed copy of this Agreement which will thereupon constitute an
agreement between us.
Very truly yours,
SWISS NATURAL FOODS, INC.
BY__________________________
Herbert Paul, President
Agreed and Consented to:
COMPREHENSIVE CAPITAL CORPORATION
BY____________________________________
Olga Scoppa, President
<PAGE>
Exhibit 10.18
WARRANT EXERCISE FEE AGREEMENT
AGREEMENT dated this day of , 1999, by and
among Comprehensive Capital Corporation, Swiss Natural Foods, Inc. (the
"Company") and (the "Warrant Agent").
W I T N E S S E T H:
WHEREAS, in connection with a public offering of shares of Common
Stock, and Common Stock Purchase Warrants (the "Warrants") of the Company, the
Company intends to issue and sell up to 1,320,000 Warrants in accordance with an
agreement dated , 1999 by and between the Company and the Warrant
Agent (the "Warrant Agreement"); and
WHEREAS, the parties hereto wish to provide Comprehensive, a member of
the National Association of Securities Dealers, Inc. ("NASD") with certain
rights on an exclusive basis in connection with the exercise of the Warrants.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
Section 1. Description of the Warrants. The Company's Warrants may be
exercised after , 2000 and expire at 5:00 p.m. New York
City time on 2003 (the "Expiration Date"), subject to the
Company's right to extend the Expiration Date, at which time all rights
evidenced by the Warrants shall cease and the Warrants shall become void. In
accordance with the provisions of the Warrant Agreement, the holder of each
Warrant shall have the right to purchase from the Company, and the Company shall
issue and sell to such holders of Warrants, one fully paid and non-assessable
share of the Company's Common Stock for every Warrant exercised at an exercise
price of $6.25, subject to adjustment as provided in the Warrant Agreement (the
"Exercise Price").
Section 2. Notification of Exercise. Within five (5) days of the last
day of each month commencing , 2000 (one year from the effective date of the
Company's Registration Statement), the Warrant Agent will notify Comprehensive
of each Warrant certificate which has been properly completed and delivered for
exercise by holders of Warrants during each such month, if any, the
determination of the proper completion to be in the sole and absolute reasonable
discretion of the Company and the Warrant Agent. The Warrant Agent will provide
Comprehensive with such information, in connection with the exercise of each
Warrant, as Comprehensive shall reasonably request.
Section 3. Payment to Comprehensive. The Company hereby agrees to pay
to Comprehensive upon solicitation of the exercise of any Warrant by
Comprehensive or any other member of the NASD an amount equal to five (5%)
percent of the Exercise Price (i.e.
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$.3125 per share based on the initial Exercise Price of the Warrants) for each
Warrant exercised (the "Exercise Fee") a portion of which may be allowed by
Comprehensive to the dealer who solicited the exercise (which may also be
Comprehensive) provided that:
(a) such Warrant is exercised on or after , 2000,
which represents one year from the effective date of the Company's Registration
Statement;
(b) at the time of exercise, the market price of the Company's Common
Stock is higher than the applicable Exercise Price of the Warrant being
exercised;
(c) the holders of Warrants being exercised have indicated in writing,
either in the Form of Election contained on the specimen Warrant Certificates
attached hereto as Exhibits A, or by written documents signed and dated by the
holders and specifically stating that the exercise of such Warrants were
solicited by Comprehensive or another member of the NASD;
(d) Solicitation of the exercise was in compliance with NASD Notice to
Members 81-38; and
(e) Comprehensive and/or the member of the NASD which solicited the
exercise of Warrants delivers a certificate to the Company within five (5)
business days of receipt of information relating to such exercised Warrants from
the Warrant Agent in the form attached hereto as Exhibit B, stating that:
(1) the Warrants exercised were not held in a discretionary
account or, if held in a discretionary account, prior specific written approval
for such exercise has been received from the related customer;
(2) Comprehensive and the member of the NASD which solicited
the exercise of Warrants did not, within the applicable number of business days
under Regulation M (unless granted an exemption by the Securities and Exchange
Commission from the provisions thereof), immediately preceding the date of
exercise of the Warrant bid for or purchase the Common Stock of the Company or
any securities of the Company immediately convertible into or exchangeable for
the Common Stock (including Warrants) or otherwise engage in any activity that
would be prohibited by Regulation M under the Securities Exchange Act of 1934,
as amended, with one engaged in a distribution of the Company's securities;
(3) in connection with the solicitation, it disclosed the
compensation it would receive as part of the original offering and upon exercise
of the Warrant; and
(4) in connection with the solicitation, it complied with NASD
Notice to Members 81-38.
Section 4. Payment of the Exercise Fee. The Company hereby agrees to
pay over to Comprehensive within two (2) business days after receipt by the
Company of the
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certificate described in Section 3(e) above, but in no event later than
simultaneously with the distribution of proceeds to the Company from such
exercise of Warrant the Exercise Fee out of the proceeds it received from the
applicable Exercise Price paid for the Warrants to which the certificate
relates.
Section 5. Inspection of Records. Comprehensive may at any time during
business hours and upon reasonable prior written notice, , at its expense,
examine the records of the Company and the Warrant Agent which relate to the
exercise of the Warrants.
Section 6. Termination. Comprehensive shall be entitled to terminate
this Agreement prior to the exercise of all Warrants at any time upon five (5)
business days' prior written notice to the Company and the Warrant Agent.
Notwithstanding any such termination notice, Comprehensive shall be entitled to
receive an Exercise Fee for the exercise of any Warrant for which it has already
delivered to the Company prior to any such termination the certificate required
by Section 3(e) of this Agreement and shall be entitled to receive such Exercise
Fee simultaneously with the distribution of such proceeds to the Company.
Section 7. Notices. Any notice or other communication required or
permitted to be given pursuant to this Agreement shall be in writing and shall
be deemed sufficiently given if sent by first class certified mail, return
receipt requested, postage prepaid, addressed as follows: if to the Company at
1031 Route 9W, Grandview, New York 10960; if to Comprehensive at 1600 Stewart
Avenue, Suite 405, Westbury, New York 11590; and if to the Warrant Agent at , or
such other address as such party shall have given notice to the other parties
hereto in accordance with this Section. All such notices or other communications
shall be deemed given three (3) business days after mailing, as aforesaid.
Section 8. Supplements and Amendments. The Company, the Warrant Agent
and Comprehensive may from time-to-time supplement or amend this Agreement by a
written instrument signed by the party to be charged, without the approval of
any holders of Warrants in order to cure any ambiguity or to correct or
supplement any provisions contained herein or to make any other provisions in
regard to matters or questions arising hereunder which the Company, the Warrant
Agent and Comprehensive may deem necessary or desirable and which do not
adversely affect the interests of the holders of Warrants.
Section 9. Assignment. This Agreement may not be assigned by any party
without the express written approval of all other parties, except that
Comprehensive may assign this Agreement to its successors.
Section 10. Governing Law. This Agreement will be deemed made under the
laws of the State of New York with respect to matters of contract law and for
all purposes shall be governed by and construed in accordance with the internal
laws of said State, without regard to the conflicts of laws provisions thereof.
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<PAGE>
Section 11. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give any person or corporation other than the Company, the
Warrant Agent and Comprehensive any legal or equitable right, remedy or claim
under this Agreement; and this Agreement shall be for the sole and exclusive
benefit of, and be binding upon, the Company, the Warrant Agent and
Comprehensive and their respective successors and permitted assigns.
Section 12. Descriptive Headings. The descriptive headings of the
sections of this Agreement are inserted for convenience only and shall not
control or affect the meanings or construction of any of the provisions hereof.
Section 13. Superseding Agreement. This Agreement supersedes any and
all prior agreements between the parties with respect to the subject matter
hereof.
Section 14. Exclusive Agreement. It is understood that this agreement
is on an exclusive basis to solicit the exercise of the Warrants and that the
Company may not engage other broker-dealers to solicit the exercise of Warrants
without the consent of Comprehensive.
Section 15. Conflict with Warrant Agreement. Any conflict between any
term hereof and any term of the Warrant Agreement shall be resolved in favor of
such provision contained in the Warrant Agreement except that nothing contained
in the Warrant Agreement shall be construed to modify the amount of compensation
payable to Comprehensive.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SWISS NATURAL FOODS, INC.
By:
Herbert Paul, President
COMPREHENSIVE CAPITAL CORPORATION
By:
Olga Scoppa, President
By:
CERTIFICATE
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<PAGE>
The undersigned, being the ________________ of Comprehensive Capital Corporation
("Comprehensive") pursuant to Section 3(e) of the Warrant Exercise Fee Agreement
relating to the exercise of Warrants dated , 1999 between Swiss Natural Foods,
Inc. (the "Company") and (the "Warrant Agent") hereby certifies that:
1. The Company or the Warrant Agent has notified Comprehensive that
______________ Warrants (as defined in the Agreement) have been exercised during
_____________, 200__.
2. The exercise of ______________ of such Warrants was solicited
by _______________________.
3. Such Warrants were not held in a discretionary account or, if held
in a discretionary account, prior specific written approval for such exercise
has been received from the related customer.
4. ______________ did not, within _____ business days immediately
preceding _______________ 200_, bid for or purchase the Common Stock of the
Company or any securities of the Company immediately convertible into or
exchangeable for the Common Stock (including Warrants) or otherwise engage in
any activity that would be prohibited by Regulation M under the Securities
Exchange Act of 1934, as amended, with one engaged in a distribution of the
Company's securities.
5. In connection with the solicitation of the exercise of the Warrants,
_____________ disclosed the compensation it will receive to holders of the
Warrants as part of the original offering and upon exercise of the Warrants.
6. In connection with the solicitation of the exercise of the Warrants,
____ complied with NASD Notice to Members 81-38.
DATED: , 200__
COMPREHENSIVE CAPITAL CORPORATION
By:
Soliciting Broker-Dealer
By:
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<PAGE>
EXHIBIT 10.19
INDEMNITY AGREEMENT
AGREEMENT, dated as of July 1, 1999 between SWISS NATURAL FOODS, INC.
(the "Corporation"), a Delaware corporation, and
("Indemnitee").
W I T N E S S E T H :
WHEREAS:
1. currently serves and performs valuable services for the
Corporation as a director, and as such, may be the subject of claims, actions,
suits or proceedings arising as a result of such service.
2. In order to induce Indemnitee to continue to serve as
director, the Corporation has determined that it is in its best interests to
enter into this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
FIRST: Indemnification. The Corporation shall hold harmless and
indemnify Indemnitee against any judgments, fines, claims, obligations,
liabilities, amounts paid in settlement and expenses, including attorneys' fees,
incurred directly or indirectly in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
<PAGE>
investigative (collectively, "Action"), whether or not such Action is by or in
the right of the Corporation to procure a judgment in its favor, including an
Action by or in the right of any other corporation of any type or kind, domestic
or foreign, or any partnership, joint venture, trust, employee benefit plan or
other enterprise (collectively, an "Enterprise") for which Indemnitee served in
any capacity at the request of the Corporation, to which Indemnitee is, was or
at any time becomes a party, or is threatened to be made a party, or as a result
of or in connection with any appeal thereof, by reason of the fact that
Indemnitee is, was or at any time becomes a director or officer of the
Corporation, or is or was serving or at any time serves such other Enterprise in
any capacity, whether arising out of any breach of Indemnitee's duty as a
director or officer of the Corporation or as a director, officer, employee or
agent of such other Enterprise under any state or federal law or otherwise;
provided, however, that no indemnity pursuant to this Article FIRST shall be
paid by the Corporation (1) except to the extent the aggregate amount of losses
to be indemnified exceeds the amount of such losses for which Indemnitee is
actually paid pursuant to any policy or policies of insurance that may be
maintained by the Corporation covering certain liabilities which may be incurred
by its directors and officers in the performance of their services for the
Corporation; (2) if a judgment or other final adjudication adverse to Indemnitee
establishes that Indemnitee's acts were committed in bad faith or were the
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<PAGE>
result of active and deliberate dishonesty and were material to the cause of
action so adjudicated, or that Indemnitee personally gained in fact a financial
profit or other advantage to which Indemnitee was not legally entitled; or (3)
if a final judgment by a court having jurisdiction in the matter shall determine
that such indemnification is not lawful. The termination of any Action by
judgment, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not in itself create a presumption that Indemnitee acted in
bad faith or that Indemnitee's acts were the result of active and deliberate
dishonesty. For purposes of this Agreement, the Corporation shall be deemed to
have requested a person to serve an employee benefit plan where the performance
by such person of his duties to the Corporation also imposes duties on, or
otherwise involves services by, such person to the plan or participants or
beneficiaries of the plan; excise taxes assessed on a person with respect to an
employee benefit plan pursuant to applicable law shall be considered fines; and
action taken or omitted by a person with respect to an employee benefit plan in
the performance of such person's duties for a purpose reasonably believed by
such person to be either in the interest of the Corporation or in the interest
of the participants and beneficiaries of the plan shall not be deemed to be in
bad faith or the result of active and deliberate dishonesty.
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<PAGE>
SECOND: Continuation of Indemnity. All agreements and obligations of
the Corporation contained herein shall continue during the period Indemnitee
shall serve as a director or officer of the Corporation and thereafter so long
as Indemnitee shall be subject to any possible claim or threatened, pending or
completed Action, by reason of the fact that Indemnitee was a director or
officer of the Corporation or served at the request of the Corporation in any
capacity for any other Enterprise.
THIRD: Notification and Defense of Action. Indemnitee will promptly
notify the Corporation of any threatened or pending Action if a claim in respect
thereof is to be made under this Agreement; provided, however, that the omission
so to notify the Corporation will not relieve it from any liability which it may
have to Indemnitee otherwise than under this Agreement. With respect to any
Action as to which such notice is provided:
A. The Corporation will be entitled to participate therein at its own
expense; and,
B. Except as otherwise provided below, the Corporation jointly with any
other indemnifying party similarly notified may elect by notice to Indemnitee to
assume the defense of any Action, with counsel reasonably satisfactory to
Indemnitee. The Corporation will not be liable under this Agreement for any
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<PAGE>
legal or other expenses incurred by Indemnitee subsequent to Indemnitee's
receipt of such notice in connection with the defense thereof other than
reasonable costs of investigation or unless (1) the employment of separate
counsel by Indemnitee has been authorized by the Corporation, (2) Indemnitee
reasonably concludes that there may be a conflict of interest between the
Corporation and Indemnitee in the defense of such Action, or (3) the Corporation
does not in fact employ counsel to assume the defense of such Action. The
Corporation shall not be liable for the expenses of more than one counsel for
Indemnitee in connection with any Action or separate but similar or related
Actions in the same jurisdiction arising out of the same general allegations or
circumstances. The Corporation shall not be entitled to assume the defense of
any Action as to which Indemnitee shall have reached the conclusion provided for
in clause (2) above.
C. Anything in this Agreement to the contrary notwithstanding, the
Corporation shall not be required to indemnify Indemnitee under this Agreement
for any amounts paid to settle any Action without its written consent. The
Corporation shall not settle any Action in any manner which would impose any
penalty or limitation on Indemnitee without Indemnitee's written consent.
Neither the Corporation nor Indemnitee will unreasonably withhold their consent
to any proposed settlement.
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FOURTH: Advancement and Repayment of Expenses. The Corporation shall
pay expenses incurred by Indemnitee in defending any Action which may give rise
to a right of indemnification hereunder, in advance of the final disposition
thereof, upon receipt of (1) a written request by Indemnitee accompanied by a
copy of the statement paid or to be paid by Indemnitee and (2) an undertaking by
or on behalf of Indemnitee to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by the Corporation
hereunder.
FIFTH: Enforcement.
A. The Corporation represents to Indemnitee that it has entered into
this Agreement to induce Indemnitee to continue as a director or officer of the
Corporation and acknowledges that Indemnitee is relying upon this Agreement in
continuing in such capacity.
B. If Indemnitee is required to bring any action to enforce its rights
under this Agreement that is successful, the Corporation shall reimburse
Indemnitee for all costs and expenses, including reasonable attorneys' fees,
incurred by Indemnitee in connection with such action.
6
<PAGE>
SIXTH: Indemnification Hereunder Not Exclusive. The rights to
indemnification and advancement of expenses granted to Indemnitee under this
Agreement shall not be deemed exclusive of, or in limitation of, any other
rights to which Indemnitee may now or hereinafter be entitled under the State
Statute, the Corporation's Certificate of Incorporation, as amended, or By-Laws,
as now in effect or as hereafter amended, any agreement, any vote of
shareholders or directors, any applicable law, or otherwise.
SEVENTH: Miscellaneous.
A. All communications hereunder shall be in writing and shall be sent
by registered or certified mail, return receipt requested; if intended for the
Corporation, shall be addressed to it, at 1031 Route 9W, Upper Grandview, New
York 10960, Attention: Herbert M. Paul, President, or at such other address of
which the Company shall have given notice to Indemnitee in the manner herein
provided; and if intended for Indemnitee shall be addressed to Indemnitee at ,
or at such other address of which Indemnitee shall have given notice to the
Corporation in the manner herein provided.
B. If any provision of this Agreement or part thereof is invalid,
illegal or unenforceable, the balance of this Agreement or such provision shall
7
<PAGE>
remain in effect, and if any provision is inapplicable to any party or
circumstance, it shall nevertheless remain applicable to all other parties and
circumstances.
C. This Agreement constitutes the entire understanding among the
parties with respect to the subject matter hereof and no waiver or modification
of the terms hereof shall be valid unless in writing signed by the party to be
charged and only to the extent therein set forth.
D. This Agreement shall be binding upon and shall inure to the benefit
of Indemnitee and his or her heirs and legal representatives and the Corporation
and its successors and assigns.
E. The captions appearing in this Agreement are inserted only as a
matter of convenience and for reference and in no way define, limit or describe
the scope and intent of this Agreement or any of the provisions hereto.
F. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York applicable to
8
<PAGE>
contracts made and to be performed wholly within said State without giving
effect to conflict of laws principles thereof.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement the day year first above written.
SWISS NATURAL FOODS, INC.
By:
Name:
Title:
Date:
Date:
9
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITOR'S CONSENT
To the Stockholders of
Swiss Natural Foods, Inc.
We hereby consent to the use in the Prospectus constituting part of the
Registration Statement on Form SB-2 of our report dated April 7, 1999, except
for Note 13 as to which the date is August 18, 1999; on the financial statements
of Swiss Natural Foods, Inc., which appear in such Prospectus. We also consent
to the reference to our Firm under the captions "Experts" and "Summary of
Financial Data" in such Prospectus.
GOLDSTEIN GOLUB KESSLER LLP
New York, New York
August 19, 1999
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<FISCAL-YEAR-END> FEB-28-1999
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