UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the Quarter Ended March 31, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission File No. 1-6442
ORANGE-CO, INC.
(Exact name of registrant as specified in its charter)
FLORIDA
(State or other jurisdiction of incorporation or organization)
59-0918547
(IRS Employer Identification Number)
2020 U.S. Highway 17 South, P. O. Box 2158, Bartow, Florida 33830
(Address of principal executive offices)
(941) 533-0551
(Registrant's telephone no.)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes XX No
Number of shares outstanding of common stock, $.50 par value, as of
May 14, 1999: 10,309,975 shares
-1-
ORANGE-CO, INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
PAGE
NO.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets 3
March 31, 1999 (unaudited) and September 30,
1998 (audited)
Consolidated Statements of Operations (unaudited) 4
Six and Three Months ended March 31, 1999 and 1998
Consolidated Statements of Cash Flows (unaudited) 5
Six Months ended March 31, 1999 and 1998
Notes to Consolidated Financial Statements (unaudited) 6-9
ITEM 2.
Management's Discussion and Analysis of Results of
Operations and Financial Condition 10-16
PART II. OTHER INFORMATION
ITEM 4.
Submission of Matters to a Vote of Security Holders 17
ITEM 6.
Exhibits and Reports on Form 8-K 17
SIGNATURES 18
-2-
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ORANGE-CO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, September 30,
1999 1998
ASSETS (unaudited) (audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 508 $ 841
Receivables 12,209 8,621
Advances on fruit purchases 185 879
Inventories 75,939 50,482
Deferred income tax 2,663 2,476
Prepaid and other 331 57
--------- ---------
Total current assets 91,835 63,356
--------- ---------
Property and equipment, net 126,100 126,992
--------- ---------
Other assets:
Excess of cost over net assets of
acquired Companies 10,459 10,647
Notes receivable 1,081 1,196
Other 7,048 6,171
--------- ---------
Total other assets 18,588 18,014
--------- ---------
Total assets $236,523 $208,362
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable $ 8,000 $ -
Current installments on long-term debt 3,711 3,753
Accounts payable 6,781 5,697
Accrued liabilities 7,733 11,690
--------- ---------
Total current liabilities 26,225 21,140
Deferred income taxes 23,362 23,129
Other liabilities 1,665 1,502
Long-term debt 76,168 54,901
--------- ---------
Total liabilities 127,420 100,672
--------- ---------
Stockholders' equity:
Preferred stock, $.10 par value,
10,000,000 shares authorized; none issued - -
Common stock, $.50 par value, 30,000,000
shares authorized; 10,349,399 issued 5,175 5,175
Capital in excess of par value 71,417 71,417
Retained earnings 32,885 31,472
--------- ---------
109,477 108,064
Less:
Treasury stock, at cost: 39,424 shares
at March 31, 1999 and September 30, 1998 (374) (374)
--------- ---------
Total stockholders' equity 109,103 107,690
--------- ---------
Total liabilities and stockholders'
equity $236,523 $208,362
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
-3-
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX AND THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(unaudited)
(in thousands except for per share data)
Six Months Three Months
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Sales $65,345 $57,516 $32,350 $31,807
Cost of sales 57,746 59,041 29,764 32,296
-------- -------- -------- --------
Gross profit(loss) 7,599 (1,525) 2,586 (489)
Other costs and expenses, net:
Selling, general and administrative (3,312) (2,691) (1,737) (1,368)
Gain(loss) on disposition of
property and equipment - 122 - (14)
Other (85) (264) (56) (223)
Interest (1,884) (1,590) (1,039) (859)
------- -------- ------- --------
Income(loss)before income taxes 2,318 (5,948) (246) (2,953)
Income tax expense(benefit) 905 (2,089) (84) (1,054)
------- -------- ------- --------
Net income(loss) $1,413 $(3,859) $ (162) $(1,899)
======= ======== ======= ========
Net income(loss) per common share,
basic and diluted $ .14 $ (.37) $ (.02) $ (.18)
======= ======== ======= =======
Average number of common shares
outstanding, basic and diluted 10,310 10,310 10,310 10,310
======= ======= ======= =======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
-4-
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1999 AND 1998
(unaudited)
(in thousands)
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income(loss) $ 1,413 $ (3,859)
--------- ---------
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 3,724 3,482
Increase(decrease) in deferred income taxes 46 (2,089)
(Gain) on disposition of property and
equipment and other - (122)
Change in assets & liabilities:
(Increase) in receivables (3,588) (5,681)
Decrease in advances on fruit purchases 694 214
(Increase) in inventory (25,457) (10,792)
(Increase)decrease in prepaid and other (274) 353
Increase(decrease) in accounts payable and
accrued liabilities (2,873) 6,339
Other, net 136 192
--------- ---------
Total adjustments (27,592) (8,104)
--------- ---------
Net cash (used for) operating activities (26,179) (11,963)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property & equipment 94 753
Decrease in note & mortgage receivables 115 23
Additions to property & equipment (2,580) (4,359)
(Increase)decrease in other assets (1,008) 65
--------- ---------
Net cash (used for) investing activities (3,379) (3,518)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of treasury stock - 3
Proceeds from short-term debt 8,000 5,000
Proceeds from long-term debt 21,225 11,724
--------- ---------
Net cash provided by financing activities 29,225 16,727
--------- ---------
NET (DECREASE)INCREASE IN CASH AND CASH
EQUIVALENTS (333) 1,246
--------- ---------
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 841 1,009
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 508 $ 2,255
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
-5-
ORANGE-CO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. MANAGEMENT'S OPINION
The Consolidated Financial Statements include the accounts of
Orange-co, Inc. and Subsidiaries (the "Company"), after elimination
of material intercompany accounts and transactions.
In the opinion of the management of the Company, the
accompanying financial statements reflect adjustments, consisting
only of normal recurring adjustments unless otherwise disclosed,
which are necessary to present fairly the financial position,
results of operations and cash flows for the periods presented:
. Unaudited Consolidated Balance Sheet at March 31, 1999
. Audited Consolidated Balance Sheet at September 30, 1998
. Unaudited Consolidated Statements of Operations for the six and
three month periods ended March 31, 1999 and 1998
. Unaudited Consolidated Statements of Cash Flows for the six
month periods ended March 31, 1999 and 1998
2. NOTES PAYABLE AND LONG-TERM DEBT
As of March 31, 1999, the Company had access to a $50 million
working capital credit facility payable in April 2001. Accordingly,
the balance at March 31, 1999 was classified as long-term debt.
This facility is collateralized by substantially all of the
Company's current assets. The outstanding balance at March 31, 1999
was approximately $47,103,000 with approximately $497,000
additionally available to be borrowed under a borrowing base
calculation of this facility. The interest rate on the facility is
variable based upon the financial institution's cost of funds plus a
margin.
Additionally, as of March 31, 1999 the Company had a $10
million short-term capital revolving credit facility. As of March
31, 1999 the outstanding balance on this facility was $8 million.
The interest rate on this facility is variable based upon the
financial institution's cost of funds plus a margin.
At March 31, 1999, the Company's outstanding long-term debt
(including the $47,103,000 balance on the working capital line of
credit facility) was approximately $79,879,000, of which $3,711,000
matures in the next twelve months and the remainder matures at
various times over the subsequent ten years.
Interest paid, net of amounts capitalized, was approximately
$1,902,000 and $1,623,000 for the six months ended March 31, 1999
and 1998, respectively. Interest capitalized was approximately
$225,000 and $249,000 for the six months ended March 31, 1999 and
1998, respectively.
The Company is exposed to interest changes primarily as a
result of its variable rate credit facility and its long-term, fixed-
rate debt used to finance the Company's activities. The Company's
interest rate risk management objective is to limit any unfavorable
impact of interest rate changes on earnings and cash flows and to
lower its overall borrowing costs. To achieve its objectives, the
Company borrows at both fixed and variable rates on its long-term
debt and is currently a party to an interest rate swap agreement on
a portion of its variable rate Credit Facility, which provides for a
fixed rate of 5.07% per annum on a notional amount of $10 million.
The interest rate differential is reflected as an adjustment to
interest expense over the life of the swaps.
-6-
The following table represents information for all interest
rate swaps at March 31, 1999. The notional amount does not
necessarily represent amounts exchanged by the parties and,
therefore, is not a direct measure of the exposure of the Company.
The fair value approximates the cost to settle the outstanding
contract.
Notional Amount Fair Value Carrying Value Unrecognized Gain
$10,000,000 $95,800 $-0- $95,800
Certain mortgage agreements contain loan covenants. At March
31, 1999, the Company was out of compliance with one loan covenant
related to its debt to equity ratio. The Company received a waiver
on this covenant for a period that in management's judgment will
allow the Company to achieve compliance and, therefore, avoid early
repayment of this loan. (See Management's Discussion and Analysis -
Liquidity and Capital Resources.)
3. INVENTORIES
<TABLE>
<CAPTION>
The major components of inventory are summarized as follows (in
thousands):
March 31, September 30,
1999 1998
<S> <C> <C>
Finished goods $63,193 $35,390
Fruit-on-tree inventory 9,856 11,099
Other 2,890 3,993
------- -------
Total $75,939 $50,482
======= =======
</TABLE>
As of March 31, 1999, the Company held futures contracts as hedge
positions for frozen concentrated orange juice ("FCOJ"). The net
futures positions totaled approximately $11,223,000 with unrealized
losses of approximately $1,422,000. Exposure to off-balance sheet
risk related to these positions results from market fluctuations of
FCOJ futures prices relative to the Company's open positions. As of
March 31, 1999 cash deposits with brokers totaled $1,956,000 and
vary with market price fluctuations.
4. OTHER
Substantially all sales are to entities that market citrus and
citrus-related products. During the six and three month periods
ended March 31, 1999, the Company had two customers who individually
accounted for approximately 18.4% and 17.8%, and 18.9% and 18.5% of
total sales for the respective periods. During the six and three
month periods ended March 31, 1998, the Company had two customers
who individually accounted for approximately 19.5% and 13.3% and
17.0% and 13.7% of total sales for the respective periods.
-7-
5. INCOME TAXES
The provision for income taxes is calculated using the asset and
liability method prescribed by Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes" ("FAS No. 109").
Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
Under FAS No. 109, the effect on deferred tax assets and liabilities
of a change in tax rates or a deferred tax asset valuation reserve
is recognized in income in the period that includes the enactment or
revaluation date.
<TABLE>
<CAPTION>
Income tax expense(benefit) attributable to income for the six
and three month periods ended March 31, 1999 and 1998 consists of
the following (in thousands):
Six Months Three Months
Ended March 31, Ended March 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Current:
Federal income tax $ 723 $ - $ 170 $ -
State income tax 136 - 21 -
------ -------- ------- --------
Total $ 859 $ - $ 191 $ -
------ -------- ------- --------
Deferred:
Federal income tax(benefit) $ 42 $(1,887) $ (248) $ (953)
State income tax(benefit) 4 (202) (27) (101)
------ -------- -------- --------
Total $ 46 $(2,089) $ (275) $(1,054)
------ -------- -------- --------
Total provision for income
tax(benefit) $ 905 $(2,089) $ (84) $(1,054)
====== ======== ======== ========
</TABLE>
-8-
<TABLE>
<CAPTION>
Following is a reconciliation of the expected income tax
expense(benefit) computed at the U.S. Federal statutory rate of 34%
and the actual income tax(benefit) provisions for the six and three
month periods ended March 31, 1999 and 1998 (in thousands):
Six Months Three Months
Ended March 31, Ended March 31,
1999 1998 1999 1998
<S> <C> <C> <C>
Expected income tax(benefit) $ 788 $(2,022) $ (84) $(1,004)
Increase(decrease) resulting from:
Permanent items and other 52 45 6 (15)
State income taxes, net of
Federal tax benefit 65 (112) (6) (35)
----- -------- ------ -------
Total provision for income
tax(benefit) $ 905 $(2,089) $ (84) $(1,054)
===== ======== ======= ========
</TABLE>
6. APPLICATION OF ACCOUNTING STANDARDS
In June 1998 FASB issued SFAS No. 133 (SFAS 133), "Accounting
for Derivative Instruments and Hedging Activities". SFAS 133
requires that an entity recognize all derivatives as either assets
or liabilities in the statement of financial position and measure
those instruments at fair value. Under the comprehensive income
reporting method adopted under SFAS 130 "Reporting Comprehensive
Income", gains or losses resulting from changes in the values of
those derivatives would be accounted for depending on the use of the
derivative and whether it qualifies for hedge accounting. The key
criterion for hedge accounting is that the hedging relationship must
be highly effective in achieving offsetting changes in fair value or
cash flows. SFAS 133 is effective for interim and annual periods
beginning after June 15, 1999. The Company is currently evaluating,
and has not yet determined, the effect that the adoption of SFAS 133
will have on its financial statements.
The Financial Accounting Standards Board recently issued SFAS
131, "Disclosures about Segments of an Enterprise and Related
Information", which is effective for the Company's fiscal year
beginning October 1, 1998. Under SFAS 131 the basis for determining
an enterprise's operating segments is the manner in which management
operates the businesses. The Company plans to adopt these
disclosures as of the end of the current fiscal year as provided for
in the application requirement of SFAS 131.
-9-
ORANGE-CO, INC. AND SUBSIDIARIES
PART I - ITEM 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Fiscal 1999 versus Fiscal 1998
The following is management's discussion and analysis of
significant factors which have affected the Company's operations
during the periods included. It compares the Company's operations
for the six and three month periods ended March 31, 1999 to
operations for the six and three month periods ended March 31, 1998.
The following table reflects changes in sales, cost of sales and
gross profit by division and other changes in the Statements of
Operations through net income between the respective periods.
<TABLE>
<CAPTION>
Six Months (YTD) and Three Months (QTR) Ended March 31, 1999
Versus
Six Months (YTD) and Three Months (QTR) Ended March 31, 1998
Increases/(Decreases)
(in thousands)
Sales Cost of Sales Net Change
to Income
YTD QTR YTD QTR YTD QTR
<S> <C> <C> <C> <C> <C> <C>
Beverage Division $8,324 $ 694 $ (833) $(2,501) $ 9,157 $ 3,195
Grove Management
Division (495) (151) (462) (31) (33) (120)
------- ------- -------- -------- -------- --------
Total $7,829 $ 543 $(1,295) $(2,532) 9,124 3,075
======= ======= ======== ========
Other costs and expenses net:
Selling, general and administrative . . . . . . . . . . . (621) (369)
Gain on disposition of property and equipment . . . . . . (122) 14
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 179 167
Interest . . . . . . . . . . . . . . . . . . . . . . . . . (294) (180)
-------- --------
Income before income taxes . . . . . . . . . . . . . . . . 8,266 2,707
Income tax expense . . . . . . . . . . . . . . . . . . . . (2,994) (970)
-------- --------
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 5,272 $ 1,737
======== ========
</TABLE>
SALES
Sales for the six and three month periods ended March 31, 1999
increased approximately $7,829,000 and $543,000 respectively
compared to the same periods in the prior year. The Beverage
Division accounted for the principal increases for the six and three
month periods, with increased sales of approximately $8,324,000 and
$694,000 respectively. Grove Management Division sales decreased by
approximately $495,000 and $151,000 for the current six and three
month periods compared to the same periods in the prior year.
-10-
BEVERAGE DIVISION The increase in Beverage Division sales of
approximately $8,324,000 and $694,000 during the current six and
three month periods, respectively, compared to the same periods in
the prior year resulted from numerous increases and decreases in
sales volume, prices, or combinations thereof.
Of this increase, revenues from the sale of the Company's bulk
citrus juice products increased approximately $4,324,000 during the
current six month period as a result of offsetting increases and
decreases. Of the increase during the current six month period,
approximately $11,153,000 was due to higher prices compared to the
same period of the prior year. Partially offsetting this increase
during the current six month period, revenues from the volume of
bulk citrus juice products sold decreased approximately $6,829,000.
This decrease in sales volume was due primarily to unusually higher
shipments of bulk citrus products during the first six months of the
prior year. During the current three month period sales revenue
from the sale of bulk citrus juice products decreased by
approximately $1,100,000 compared to the same period of the prior
year. Of the decrease during the current three month period,
approximately $5,040,000 was due to a decrease in the volume of bulk
citrus juice products sold compared to the same period of the prior
year. Offsetting this decrease was an increase of approximately
$3,940,000 due to higher prices compared to the same period of the
prior year.
As the Company entered the 1998-99 season, the United States
Department of Agriculture ("USDA") announced in October 1998 an
estimated Florida orange crop approximately 190,000,000 boxes of
round oranges. This estimate, if true, represents a significant
decrease from the 1997-98 actual crop of 244,000,000 boxes of round
oranges and the 1996-97 actual crop of 226,200,000 boxes. The
anticipation of a significant decrease in the crop has had the
effect of increasing prices throughout the first two quarters of
fiscal 1999.
Sales of the Company's packaged citrus juice products increased
approximately $4,359,000 and $2,113,000 during the current six and
three month respective periods compared to the same periods in the
prior year. These increases were due primarily to increased volume
of packaged citrus juice products sold during the current six and
three month periods of approximately $4,581,000 and $1,780,000
respectively. Offsetting the increase during the six month period
was a decrease in prices which resulted in decreased revenues of
approximately $222,000. During the current three month period,
increased prices resulted in an increase of revenue of approximately
$333,000 compared to the same period of the prior year.
The Company's non-orange packaged juices and drink base product
sales decreased approximately $91,000 and $51,000 during the current
six and three month periods compared to the same periods in the
prior year. Decreased prices of these products accounted for
decreased revenues of approximately $240,000 and $26,000 during the
current six and three month periods respectively. Offsetting the
decrease during the current six month period was an increase in
volume of approximately $149,000. During the current three month
period the volume of products sold decreased by approximately
$25,000 compared to the same period in the prior year.
Revenues from the sale of the Company's citrus by-products,
including feed, pulp cells, and citrus oils, decreased approximately
$256,000 and $186,000 during the current six and three month periods
respectively compared to the same periods in the prior year.
Revenues from by-products decreased approximately $404,000 and
$484,000 during the current six and three month periods respectively
as a result of lower volumes of by-products produced and sold
compared to the same periods in the prior year. Partially
offsetting these decreases were increases in the prices of by-
products sold of approximately $148,000 and $298,000 during the
current six and three month periods respectively. The combination
of decreased volumes and increased prices for by-products during the
current periods is primarily a result of the previously mentioned
smaller crops for the current season.
-11-
Storage, handling, processing citrus for customers under
contract, and other revenues decreased approximately $12,000 and
$82,000 during the current six and three month periods compared to
the same periods in the prior year. These decreases were due
primarily to decreases in the volumes of these services performed
during the current six and three month periods compared to the same
periods in the prior year.
GROVE MANAGEMENT DIVISION Grove Management Division sales decreased
approximately $495,000 and $151,000 for the current six and three
month periods respectively compared to the same periods in the prior
year. The principal decreases in revenues of approximately $671,000
and $248,000 during the current six and three month periods resulted
principally from a reduction in harvesting and grove caretaking
services performed. However, partially offsetting these decreases
were increases during the current six and three month periods in
revenues of approximately $176,000 and $97,000 primarily as a result
of increases in the prices of fruit sold to third party packers and
processors.
GROSS PROFIT
Gross profit for the current six and three month periods ended
March 31, 1999 increased approximately $9,124,000 and approximately
$3,075,000 compared to the same periods in the prior year. The
principal increases of approximately $9,157,000 and $3,195,000
during the current six and three month periods occurred in the
Beverage Division. Gross profit for the Grove Management Division
decreased during the current six month and three month periods by
approximately $33,000 and approximately $120,000 respectively.
BEVERAGE DIVISION Gross profit of the Beverage Division increased
approximately $9,157,000 and $3,195,000 during the current six and
three month respective periods compared to the same periods in the
prior year as a result of numerous offsetting increases and
decreases in volumes, prices, costs of production and combinations
thereof. The effects of these changes are quantified as follows.
The principal components were increases during the current six
and three month respective periods of approximately $9,264,000 and
$2,495,000 from the sale of bulk citrus juice products. Of the
increases during the current six month and three month respective
periods, approximately $11,153,000 and $3,940,000 resulted from the
previously mentioned increased prices for bulk citrus juice
products. Partially offsetting these increases were decreases in
gross profit of approximately $1,889,000 and $1,445,000 during the
current six and three month periods, principally due to higher cost
of raw fruit and concentrate used in the production of bulk citrus
juice products sold compared to the same periods in the prior year.
The Company utilizes the FCOJ futures market to hedge fruit
inventory, anticipated requirements and sales commitments of FCOJ.
The effects of this hedging activity, if any, are reflected in sales
or in the cost of inventories and flow through the Consolidated
Statements of Operations as the associated products are sold. As of
March 31, 1999 the Company held contracts for FCOJ futures with
unrealized losses of approximately $1,422,000 which would have been
realized if said positions had been prematurely liquidated on that
date. These unrealized losses are based upon the closing market
prices of equivalent futures obligations and do not necessarily
represent prices at which the Company expects to sell or purchase
the FCOJ.
-12-
The table below provides information about the Company's FCOJ
futures contracts, that are sensitive to changes in commodity
prices, specifically FCOJ prices. The table presents the total
dollar contract amount by expected maturity dates. Contract amounts
are used to calculate the contractual payments of FCOJ to be
exchanged under the futures contracts. Contractual cash flows from
these derivative financial instruments, if executed at maturity,
would be as follows at March 31, 1999:
Contractual
Cash Flows
Inflows/(Outflows) Maturity Date
FCOJ Futures (Net long) $(11,223,000) May - November 1999
The contractual cash flows from the derivatives are based upon
the execution of the underlying futures contracts and do not
necessarily represent actual cash flows when the futures contracts
mature or otherwise terminate.
Gross profit on sales of packaged citrus juice products decreased
approximately $903,000 and $23,000 during the current six and three
month respective periods compared to the same periods in the prior
year. Lower prices during the current six month period accounted
for decreases in gross profit of approximately $222,000 while higher
prices during the current three month period resulted in an increase
in gross profit of $333,000 compared to the same period in the prior
year. Additionally, gross profit decreased approximately $681,000
and $356,000 during the current six and three month periods
principally as a result of higher cost of production of packaged
citrus juices sold.
Gross profit from the sale of the Company's non-orange packaged
juices and drink base products increased approximately $815,000 and
$547,000 during the current six and three month periods compared to
the same periods in the prior year. Of these increases lower
production costs, primarily ingredients, resulted in increases in
gross profit of approximately $1,286,000 and $623,000 during the
current periods. Decreases in the volume of sales of these products
resulted in decreases in gross profit of approximately $231,000 and
$51,000. Additionally, decreases during the current six and three
month periods of $240,000 and $25,000 resulted from decreased
prices.
Gross profit from citrus by-products, including feed, pulp cells,
and citrus oils, increased approximately $355,000 and $284,000
during the current six and three month respective periods compared
to the same periods in the prior year. Of these increases
approximately $148,000 and $298,000 resulted from the previously
mentioned higher prices for by-products sold compared to the same
periods in the prior year. Partially offsetting the increase in the
current three month period was a decrease in gross profit of
approximately $14,000 due principally to higher production costs.
Additionally, during the current six month period gross profit
increased approximately $207,000 due primarily to lower production
costs as compared to the same period in the prior year.
Gross profit from storage, handling, and other activities
decreased by approximately $24,000 and $108,000 during the current
six and three month periods respectively principally due to
fluctuations in the volume of these services provided compared to
the same periods in the prior year.
During the current six month period gross profit decreased by
approximately $350,000 principally as a result of the partial
settlement of an insurance claim related to the recovery of
operating expenses in the first quarter of the prior year which were
incurred as a result of an involuntary conversion of certain
inventory. In July 1997, a storm containing strong winds damaged a
product storage warehouse and some inventory. There was no
comparable payment in the current period.
-13-
GROVE MANAGEMENT DIVISION Grove Management Division gross profit
decreased approximately $33,000 and $120,000 during the current six
and three month periods respectively compared to the same periods in
the prior year. The primary decreases of approximately $212,000 and
$138,000 in gross profit during the current six and three month
periods resulted from the combination of a reduction in the volume
of caretaking and harvesting services along with higher costs to
provide these services. However, partially offsetting these
decreases were increases in gross profit of approximately $179,000
and $18,000 during the current six and three month periods resulting
from an increase in the price of fruit sold to third party packers
and processors.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased
approximately $621,000 and $369,000 for the current six and three
month respective periods compared to the same periods in the prior
year. Of the increase in the current six month period,
approximately $272,000 was due to an increase in salary and benefit
costs, and $349,000 resulted from an increase in other costs. In
the current three month period an increase of approximately $143,000
was due to an increase in salary and benefit costs and an increase
of approximately $226,000 resulted from an increase in other costs.
GAIN/(LOSS) ON DISPOSITION OF PROPERTY AND EQUIPMENT
The decreased gain on the disposition of property and equipment
of approximately $122,000 for the six month period ending March 31,
1999 compared to the same period in the prior year was principally
due to the gain from insurance proceeds on damage to the product
storage warehouse in the prior year for which there was no
comparable event in the same period of fiscal year 1999. The
decreased loss on the disposition of property and equipment of
approximately $14,000 for the three month period ending March 31,
1999 compared to the same period of the prior year resulted from
differences in losses on the sales of commercial properties not
utilized in citrus production or processing.
OTHER EXPENSE
Other expense decreased approximately $179,000 and $167,000 for
the current six and three month periods respectively as compared to
the same periods in the prior year. The principal component for
both periods was an increase in the provision for uncollectible
notes receivable in the prior year for which there was no comparable
activity in fiscal year 1999.
INTEREST EXPENSE
Interest expense increased approximately $294,000 and
approximately $180,000 during the current six and three month
periods respectively compared to the same periods in the prior year.
The primary increases of approximately $332,000 and $257,000 were
due to an increase in the average outstanding debt. Offsetting
these increases were decreases of approximately $82,000 and $154,000
for the current six and three month periods that resulted from a
decrease in interest rates. Additionally, increases of
approximately $25,000 and $28,000 during the current six and three
month periods were due to decreases in capitalized interest. Also
during the current six and three month periods, increases of $19,000
and $49,000 were due to changes in interest income and other
interest charges.
-14-
LIQUIDITY AND CAPITAL RESOURCES
The Company's Bartow processing plant normally operates from
early November through late May or June. While the plant is in
operation, the inventory of processed juice increases to a level
which will cover anticipated sales until the following November when
the plant begins operation again. The Company's working capital
credit facility is generally utilized to finance these inventories.
Borrowings under this credit facility normally peak in late May or
June. The Company began processing activities for the 1998-99
season in November.
The Company's ability to generate cash adequate to meet its
needs, including the financing of its inventories and trade
receivables, has been supported primarily by cash flow from
operations and periodic borrowings under its primary $50 million
credit facility. This facility is principally secured by
substantially all of the Company's current assets. The outstanding
balance at March 31, 1999 was approximately $47,103,000 and
approximately $497,000 of additional borrowings were available under
a borrowing base calculation of this facility. The interest rate is
variable based upon the financial institution's cost of funds plus a
margin. The terms of the agreement call for repayment of the
principal amount in April 2001; accordingly, it is classified as
long-term debt. The Company anticipates that the working capital
facility will be adequately serviced with cash proceeds from
operations.
Additionally, as of March 31, 1999 the Company had a $10 million
short-term capital revolving credit facility. As of March 31, 1999
the outstanding balance on this facility was $8 million. The
interest rate on this facility is variable based upon the financial
institution's cost of funds plus a margin.
Current assets increased approximately $28,479,000 as of March
31, 1999 compared to September 30, 1998. The principal component of
this was an increase in inventories of approximately $25,457,000 in
the first six months of the current year due to the seasonal
accumulation of inventories. The Company's accounts receivable
balance increased approximately $3,588,000 during the six months
ending March 31, 1999. Offsetting these increases was a decrease in
cash and cash equivalents of approximately $333,000. Additionally,
advances on fruit purchases decreased approximately $694,000 as the
Company began processing the purchased fruit and collecting these
advances.
Current liabilities increased approximately $5,085,000 during the
first six months of fiscal 1999 compared to September 30, 1998.
This increase was due principally to an increase in a note payable
of approximately $8,000,000. Also, accounts payable increased
approximately $1,084,000. Offsetting these increases were decreases
of $42,000 and $3,957,000 in the current portion of long-term debt
and accrued liabilities, respectively.
At March 31, 1999 the Company's outstanding long-term debt was
approximately $76,168,000 which includes the working capital facility
of approximately $47,103,000. In addition, current installments of
long-term debt were approximately $3,711,000 with the remaining
amounts due on various dates over the subsequent ten years. The
Company anticipates that amounts due over the next twelve months
will be paid out of working capital or will be refinanced through
extending current mortgages. At March 31, 1999 the Company was out
of compliance with a loan covenant related to the debt to equity
ratio as a result of high seasonal working capital requirements.
The lender has waived these requirements for a period that, in
management's judgment, will allow the Company to achieve compliance
and, therefore, avoid early repayment of this loan. Management
believes its relationships with its lenders are good.
During the first six months of the current fiscal year, capital
expenditures of approximately $125,000 were made for the
installation of new irrigation systems on 2,265 acres of Company-
owned groves. Also, the cost of caring for newly planted citrus
trees in the amount of approximately $1,111,000 were capitalized and
expenditures of approximately $494,000 were made for grove
operations equipment. Additionally, expenditures of approximately
$515,000 were made
-15-
during the same period primarily for the purpose
of improving the efficiency of the Bartow processing facility. Also
during the current six month period, expenditures of approximately
$335,000 were made to support the Company's juice and coffee
dispenser programs. The Company anticipates that these improvements
will be financed principally by working capital or by securing
additional funds under existing mortgages.
OTHER SIGNIFICANT EVENTS
In October 1998 the United States Department of Agriculture
("USDA") announced a Florida crop estimate of approximately
190,000,000 boxes of round oranges for the 1998-99 season, which, if
true, would be a significant decrease from the 1997-98 Florida crop
of 244,000,000 boxes. This estimate was most recently revised in
May 1999 to approximately 188,000,000 boxes.
The inability of computers, software and other equipment
utilizing microprocessors to recognize and properly process date
fields containing a two-digit year is commonly referred to as the
Year 2000 Compliance issue. As the year 2000 approaches, such
systems may be unable to accurately process certain date-based
information.
During the past four fiscal years, the Company has been making
capital expenditures to improve and update its computer systems to
enhance the efficiency of its production, processing, marketing,
sales and management systems. It has concurrently addressed the
"Year 2000" issue. Management believes that the new systems will be
completed in fiscal 1999 and that the Company's systems will then
also be in compliance with "Year 2000" issues. While the Company is
communicating with certain key suppliers and customers to determine
their Year 2000 readiness, there can be no assurance that the
failure of such third parties to adequately address their respective
Year 2000 issues will not have a material adverse effect on the
Company's business, financial condition and results of operations.
The total cost to the Company of these Year 2000 Compliance
activities has not been estimated since they have been addressed
concurrently with the computer updating effort which has been in
process for four years. It is, therefore, not considered to be
material to the Company's financial position or results of
operations in any given year. These costs and the date on which the
Company plans to complete the Year 2000 modification and testing
processes are based on management's best estimates, which were
derived utilizing numerous assumptions of future events, including
the continued availability of certain resources, third-party
modification plans and other factors. However, there can be no
guarantee that these estimates will be achieved, and actual results
could differ from those plans.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company engages in the use of FCOJ futures and interest
rate swaps for other than trading purposes. For information
about the market risk associated with FCOJ futures see "Management's
Discussion and Analysis - Gross Profit" and "Notes to the Consolidated
Financial Statements - Note 3". For information about market risk on
the Company's interest rate swap see Notes to the Consolidated
Financial Statements - Note 2".
-16-
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
<TABLE>
<CAPTION>
At the Annual Meeting of Stockholders on February 18, 1999, the
stockholders of the Company elected directors. The results of these
votes were as follows:
DIRECTOR NOMINEES FOR AUTHORITY
WITHHELD
<S> <C> <C>
Richard A. Coonrod 8,725,089 55,650
Paul E. Coury, MD 8,725,367 55,372
Ben Hill Griffin, III 8,726,466 54,273
George W. Harris, Jr. 8,727,588 53,151
Dr. W. Bernard Lester 8,727,598 53,141
Bobby F. McKown 8,727,598 53,141
Gene Mooney 8,727,598 53,141
C. B. Myers, Jr. 8,725,381 55,358
Thomas H. Taylor 8,727,588 53,151
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibit EXHIBIT Page
No. No.
10.32 Eighth Amendment to Loan Agreement By 19
and Among Orange-co, Inc., Orange-co of
Florida, Inc. and SunTrust Bank, Central
Florida, National Association, dated
March 8, 1999.
10.33 Ninth Amendment to Loan Agreement By and 25
Among Orange-co, Inc., Orange-co of
Florida, Inc. and SunTrust Bank, Central
Florida, National Association, dated
April 30, 1999.
27 Financial Data Schedule (Electronic
Filing Only)
99.4 Orange-co, Inc. 1998 Incentive Equity
Plan dated February 18, 1999. 32
B. Reports on Form 8-K: None
-17-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934 the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ORANGE-CO, INC.
(Registrant)
Date: May 17, 1999 By: /s/Gene Mooney
------------------------
Gene Mooney
President and
Chief Operating Officer
Date: May 17, 1999 By: /s/Dale A. Bruwelheide
---------------------------
Dale A. Bruwelheide
Vice President and
Chief Financial Officer, and
Principal Accounting Officer
-18-
EXHIBIT 10-32
EIGHTH AMENDMENT TO LOAN AGREEMENT
THIS EIGHTH AMENDMENT TO LOAN AGREEMENT dated as of March 8,
1999, by and between:
ORANGE-CO, INC., a Florida corporation and
ORANGE-CO OF FLORIDA, INC., a Florida
corporation, 2020 Highway 17 South, Bartow,
Florida 33830 (hereinafter collectively
referred to as the "Borrowers");
and
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL
ASSOCIATION, a national banking association,
200 South Orange Avenue, Post Office Box
3833, Orlando, Florida 32897 (hereinafter
referred to as the "Bank").
W I T N E S S E T H:
WHEREAS, pursuant to the Loan Agreement, dated June 16,
1993, as amended, by and among the Bank and the Borrowers, the
Bank agreed to extend to the Borrowers a working capital line of
credit loan in the maximum principal amount of $45,000,000.00
(the "Working Capital Loan") and a revolving line of credit loan
in the maximum principal amount of $10,000,000.00 (the "Revolving
Loan"); and
WHEREAS, the Borrowers have requested the Bank to increase
the commitment amount under the Working Capital Loan from
$45,000,000.00 to $50,000,000.00; and
WHEREAS, the Bank has agreed to the foregoing subject to the
terms and conditions hereof and the other Loan Documents.
NOW, THEREFORE, for and in consideration of the above
premises, and the mutual covenants and agreements contained
herein, the Borrowers and the Bank do hereby agree as follows:
1. Amendments to Loan Agreement. The Loan Agreement is
hereby amended as follows:
(a) The definition of "Working Capital Loan" is hereby
deleted and, in lieu thereof, there is substituted the following:
"Working Capital Loan" shall mean the loan or
loans up to but not exceeding the principal amount
of $50,000,000.00 made to the Borrowers
-19-
by the Bank pursuant to and in accordance with the terms
of this Agreement."
(b) Section 2.01 of the Loan Agreement is hereby
deleted and, in lieu thereof, there is substituted the following:
"SECTION 2.01. The Loans. The Bank agrees from
time to time during the applicable Revolving
Period to lend to the Borrowers, upon the request
of either Borrower, or pursuant to the Cash
Management Agreement, on the terms and conditions
set forth herein, up to the maximum principal
amount of $10,000,000.00 with respect to the
Revolving Loan and up to the lesser of (i)
$50,000,000.00 or (ii) the amount of the Borrowing
Base with respect to the Working Capital Loan.
During the Revolving Period, the Borrowers shall
be entitled to receive the entire proceeds of the
Loans in one or more Advances pursuant to Section
2.02 hereof, except as otherwise specifically set
forth in this Agreement. Advances under the
Revolving Loan and the Working Capital Loan shall
be evidenced by the Revolving Note and the Working
Capital Note, respectively, payable as provided in
Section 2.08 hereof. After the expiration of the
Revolving Period, the Borrowers shall not be
entitled to receive any Subsequent Advance. The
Working Capital Loan and Revolving Loan may
revolve during the Revolving Period; accordingly,
during the Revolving Period, the Borrowers may
borrow up to the maximum principal amount of said
Working Capital Loan and Revolving Loan, repay all
or any portion of such principal amount of said
Loans, and reborrow up to such maximum principal
amount, subject to the terms and conditions set
forth herein. If at any time the principal amount
outstanding under the Working Capital Loan exceeds
the amount of the Borrowing Base, the Borrowers
shall immediately reduce the excess principal
balance of the Working Capital Loan.
(c) Section 4.01(a) of the Loan Agreement is hereby
deleted and, in lieu thereof, there is substituted the following:
"(a) Accounting; Financial Statement; Etc. The
Borrowers will deliver or cause to be delivered to
the Bank copies of each of the following:
(i) as soon as practicable and in any event
within forty-five (45) days after the end of
each quarter in each fiscal year, internally
generated financial statements of the
Borrowers and their Subsidiaries for the
period from the beginning of the current
fiscal year to the end of such quarter, in
reasonable detail and certified by an
authorized financial officer of the
Borrowers, subject to changes resulting from
year-end adjustments;
(ii) as soon as practicable and in any event
within ninety (90) days after the end of each
fiscal year, an audited consolidated profit
and loss statement, reconciliation of surplus
statement, and source and application of
funds statement of the Borrowers
-20-
and their Subsidiaries for such year, and an audited
consolidated balance sheet of the Borrowers
and their Subsidiaries as at the end of such
year, setting forth in each case in
comparative form corresponding consolidated
figures from the preceding annual audit and
certified to the Borrowers by independent
certified public accountants of recognized
standing selected by the Borrowers whose
certificate shall be in scope and substance
satisfactory to the Bank;
(iii) promptly upon transmission thereof,
copies of all such financial statements,
proxy statements, notices, and reports as it
shall send to all stockholders and of all
registration statements (without exhibits)
and all reports which either Borrower is or
may be required to file with the Securities
and Exchange Commission or any governmental
body or agency succeeding to the functions of
such Commission;
(iv) promptly upon receipt thereof, a copy of
each other report submitted to the Borrower
by independent accountants in connection with
any annual, interim, or special audit made by
them of the books of the Borrowers;
(v) Simultaneously with the delivery of each
set of annual and quarterly financial
statements prior to April 1, 1999, a
statement of the Borrower's chief executive
officer, chief financial/accounting officer
or chief technology officer to the effect
that nothing has come to his/her attention to
cause him/her to believe that the Y2K Plan
milestones have not been met in a manner such
that the Borrower's and its Subsidiaries'
hardware and software systems will not be
Year 2000 Compliant and Ready on or before
March 31, 1999.
(vi) on a monthly basis, a Borrowing Base
Certificate; and
(vii) with reasonable promptness,
information regarding the hedging activities
of the Borrowers and their Subsidiaries
including a summary of all futures long and
short positions and such other data and
information as from time to time may be
required by the Bank.`
Together with each delivery of financial
statement required by clause (ii) above, the
Borrowers shall deliver to the Bank a
certificate of said accountants stating that,
in making the audit necessary to have the
certificate of such financial statements,
they have obtained no knowledge of an Event
of Default or Default, or, if any such Event
of Default or Default exists, specifying the
nature and period of existence thereof. Such
accountants, however, shall not be liable to
anyone by reason of their failure to obtain
knowledge of any such Event of Default or
Default which would not be disclosed in the
course of an audit conducted in accordance
with GAAP. The Borrowers also covenant that
forthwith upon any officer of the
-21-
Borrowers obtaining knowledge of any Event of Default
or Default under this Agreement or any other
obligation of the Borrowers, it shall deliver
to the Bank an Officer's Certificate
specifying the nature thereof, the period of
existence thereof, and what action the
Borrowers proposes to take with respect
thereto."
(d) Article Four of the Loan Agreement is hereby
amended by adding Section 4.01(t) as follows:
"(t) Year 2000 Compliance. Each Borrower has
developed a comprehensive working plan (the "Y2K
Plan") to insure that each Borrower's and each
Subsidiary's software and hardware systems which
impact or affect in any material way the business
operations of either Borrower and their
Subsidiaries will be Year 2000 Compliant and Ready
(defined below) by no later than March 31, 1999.
Upon the request of the Bank, each Borrower will
promptly deliver to the Bank a copy of such Y2K
Plan and a copy of any third party assessment of
the Y2K Plan (if available). Each Borrower and
their Subsidiaries have met all previous Y2K Plan
milestones and will hereafter meet all future Y2K
Plan milestones so that all hardware and software
systems will be Year 2000 Compliant and Ready in
accordance with the Y2K Plan, except where the
failure to meet such milestones has not had, or
would not have, a material adverse effect on the
business, operations, assets or condition
(financial or otherwise) of either Borrower or
their Subsidiaries on a consolidated basis. As
used herein, "Year 2000 Compliant and Ready" means
that each Borrower's and their Subsidiary's
hardware and software systems with respect to the
operation of their business and their general
business plan will: (i) handle date information
involving any and all dates before, during and/or
after January 1, 2000, including accepting input,
providing output and performing date calculations
in whole or in part; (ii) operate accurately
without interruption on and in respect of any and
all dates before, during and/or after January 1,
2000 and without any change in performance, (iii)
respond to and process two digit year input
without creating any ambiguity as to the century,
and (iv) store and provide date input information
without creating any ambiguity as to the century."
2. Capitalized Terms. All capitalized terms contained
herein shall have the meanings assigned to them in the applicable
Loan Documents (as defined in the Loan Agreement) unless the
context herein otherwise dictates or unless different meanings
are specifically assigned to such terms herein.
3. Representations and Warranties. Each of the Borrowers
represents and warrants as follows:
(a) The execution, delivery and performance of this
Eighth Amendment to Loan Agreement and the other loan documents
provided to the Bank in connection therewith has been duly
authorized by all requisite action of the Borrowers; and
-22-
(b) The Loan Documents are valid, legal binding
obligations of the Borrowers enforceable in accordance with their
terms. There are no defenses, counterclaims, rights of setoff or
recoupment thereunder.
4. Miscellaneous. The Borrowers hereby confirm the terms
conditions, representations and warranties of the Loan Agreement.
The Loan Agreement, as amended hereby, shall remain in full force
and effect and this Eighth Amendment to Loan Agreement shall not
be deemed to be a novation.
5. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties
hereto may execute this Agreement by signing any such
counterpart.
IN WITNESS WHEREOF, the parties have executed the Eighth
Amendment to Loan Agreement as of the day and year first above
written.
BORROWERS:
ORANGE-CO, INC., a Florida
corporation
By: /s/ Dale A. Bruwelheide
-----------------------------------
Dale A. Bruwelheide, Vice President
(CORPORATE SEAL)
ORANGE-CO OF FLORIDA, INC., a
Florida corporation
By: /s/ Dale A. Bruwelheide
-----------------------------------
Dale A. Bruwelheide, Vice President
(CORPORATE SEAL)
-23-
BANK:
SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION
By: /s/ William A. Mang
-------------------------------------
William A. Mang, First Vice President
-24-
EXHIBIT 10-33
NINTH AMENDMENT TO LOAN AGREEMENT
THIS NINTH AMENDMENT TO LOAN AGREEMENT dated as of April 30,
1999, by and between:
ORANGE-CO, INC., a Florida corporation and
ORANGE-CO OF FLORIDA, INC., a Florida
corporation, 2020 Highway 17 South, Bartow,
Florida 33830 (hereinafter collectively
referred to as the "Borrowers");
and
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL
ASSOCIATION, a national banking association,
200 South Orange Avenue, Post Office Box
3833, Orlando, Florida 32897 (hereinafter
referred to as the "Bank").
W I T N E S S E T H:
WHEREAS, pursuant to the Loan Agreement, dated June 16,
1993, as amended, by and among the Bank and the Borrowers, the
Bank agreed to extend to the Borrowers a working capital line of
credit loan in the maximum principal amount of $50,000,000.00
(the "Working Capital Loan") and a revolving line of credit loan
in the maximum principal amount of $10,000,000.00 (the "Revolving
Loan"); and
WHEREAS, the Borrowers have requested the Bank to renew the
commitments under the Working Capital Loan and Revolving Loan and
to otherwise modify certain terms and conditions related thereto;
and
WHEREAS, the Bank has agreed to the foregoing subject to the
terms and conditions hereof and the other Loan Documents.
NOW, THEREFORE, for and in consideration of the above
premises, and the mutual covenants and agreements contained
herein, the Borrowers and the Bank do hereby agree as follows:
1. Amendments to Loan Agreement. The Loan Agreement is
hereby amended as follows:
2.
(a) Article One of the Loan Agreement is hereby
amended by replacing the definition of "Debt Service" with the
following:
(b)
"'Debt Service' shall mean the
sum of interest payments and regularly
scheduled principal payments made by the
-25-
Borrowers during the most recent twelve
(12) month period."
(a) A definition of "Revolving Loan Maturity Date" is
hereby added to the Loan Agreement to read as follows:
(b)
"'Revolving Loan Maturity
Date' shall mean the earlier occurrence
of (i) an Event of Default hereunder or
(ii) April 30, 2000."
(a) Article One of the Loan Agreement is hereby
amended by replacing the definition of "Revolving Period" with
the following:
(b)
"'Revolving Period' shall mean
the periods during which Advances are
available to the Borrowers under the
Revolving Loan and Working Capital Loan,
respectively, which shall commence on
the satisfaction of each of the
conditions precedent set forth in
Article Five hereof and end on the
Revolving Loan Maturity Date and Working
Capital Loan Maturity Date, respectively."
(a) A definition of "Working Capital Loan Maturity
Date" is hereby added to the Loan Agreement to read as follows:
(b)
"'Working Capital Loan
Maturity Date" shall mean the earlier
occurrence of (i) an Event of Default
hereunder or (ii) April 30, 2001."
(a) Article Four of the Loan Agreement is hereby
amended by replacing Section 4.01(a) of the Loan Agreement as
follows:
(b)
"(a) Accounting;
Financial Statement; Etc. The
Borrowers will deliver or cause to be
delivered to the Bank copies of each of
the following:
(i) as soon as practicable and in
any event within forty-five (45)
days after the end of each quarter
in each fiscal year, internally
generated financial statements of
the Borrowers and their
Subsidiaries for the period from
the beginning of the current fiscal
year to the end of such quarter, in
reasonable detail and certified by
an authorized financial officer of
the Borrowers, subject to changes
resulting from year-end
adjustments;
(ii) as soon as practicable and in
any event within
-26-
ninety (90) days after the end of each
fiscal year, an audited consolidated profit
and loss statement, reconciliation of
surplus statement, and source and
application of funds statement of
the Borrowers and their
Subsidiaries for such year, and an
audited consolidated balance sheet
of the Borrowers and their
Subsidiaries as at the end of such
year, setting forth in each case in
comparative form corresponding
consolidated figures from the
preceding annual audit and
certified to the Borrowers by
independent certified public
accountants of recognized standing
selected by the Borrowers whose
certificate shall be in scope and
substance satisfactory to the Bank;
(iii) promptly upon
transmission thereof, copies of all
such financial statements, proxy
statements, notices, and reports as
it shall send to all stockholders
and of all registration statements
(without exhibits) and all reports
which either Borrower is or may be
required to file with the
Securities and Exchange Commission
or any governmental body or agency
succeeding to the functions of such
Commission;
(iv) promptly upon receipt thereof,
a copy of each other report
submitted to the Borrower by
independent accountants in
connection with any annual,
interim, or special audit made by
them of the books of the Borrowers;
(v) Simultaneously with the
delivery of each set of annual and
quarterly financial statements, a
statement of the Borrower's chief
executive officer, chief
financial/accounting officer or
chief technology officer to the
effect that nothing has come to
his/her attention to cause him/her
to believe that the Y2K Plan
milestones have not been met in a
manner such that the Borrower's and
its Subsidiaries' hardware and
software systems are not Year 2000
Compliant and Ready;
(vi) on a monthly basis, a
Borrowing Base Certificate; and
(vii) with reasonable
promptness, information regarding
the hedging activities of the
Borrowers and their Subsidiaries
including a summary of all futures
-27-
long and short positions and such
other data and information as from
time to time may be required by the
Bank.`
Together with each delivery of
financial statement required by
clause (ii) above, the Borrowers
shall deliver to the Bank a
certificate of said accountants
stating that, in making the audit
necessary to have the certificate
of such financial statements, they
have obtained no knowledge of an
Event of Default or Default, or, if
any such Event of Default or
Default exists, specifying the
nature and period of existence
thereof. Such accountants,
however, shall not be liable to
anyone by reason of their failure
to obtain knowledge of any such
Event of Default or Default which
would not be disclosed in the
course of an audit conducted in
accordance with GAAP. The
Borrowers also covenant that
forthwith upon any officer of the
Borrowers obtaining knowledge of
any Event of Default or Default
under this Agreement or any other
obligation of the Borrowers, it
shall deliver to the Bank and
Officer's Certificate specifying
the nature thereof, the period of
existence thereof, and what action
the Borrowers purposes to take with
respect thereto."
(a) Article Four of the Loan Agreement is hereby
amended by replacing Section 4.01(q) as follows:
(q) Current Ratio. As
at the end of each fiscal quarter,
the Borrowers' Current Ratio shall
equal to or exceed 1.0:1.0.
(a) Article Four of the Loan Agreement is hereby
amended by replacing Section 4.01(r) as follows:
(b)
(r) Debt Service
Coverage Ratio. As at the end of
each fiscal quarter, calculated on
a rolling four quarter basis the
ratio of the Borrowers' Cash Flow
Before Debt Service to its Debt
Service shall be 1.25:1.0.
(a) Article Four of the Loan Agreement is hereby
amended by replacing Section 4.01(s) as follows:
(b)
(s) Minimum Debt to Net
Worth. As at the end of each fiscal
quarter, the ratio of the
Borrowers' Liabilities to
-28-
Net Worth shall be less than 1.2:1.0.
(a) Article Four of the Loan Agreement is hereby
amended by replacing Section 4.01(t) as follows:
(b)
(t) Minimum Net Worth.
As at the end of each fiscal
quarter, the Borrowers' Net Worth
shall be greater than
$90,000,000.00.
(a) Article Four of the Loan Agreement is hereby
amended by adding Section 4.01(w) as follows:
(b)
(w) Year 2000
Compliance. Each Borrower has
developed a comprehensive working
plan (the "Y2K Plan") to insure
that each Borrower's and each
Subsidiary's software and hardware
systems which impact or affect in
any material way the business
operations of either Borrower or
their Subsidiaries are Year 2000
Compliant and Ready (defined
below). Upon the request of the
Bank, each Borrower will promptly
deliver to the Bank a copy of such
Y2K Plan and a copy of any third
party assessment of the Y2K Plan
(if available). Each Borrower and
their Subsidiaries have met all
previous Y2K Plan milestones and
will hereafter meet all future Y2K
Plan milestones so that all
hardware and software systems will
be Year 2000 Compliant and Ready in
accordance with the Y2K Plan,
except where the failure to meet
such milestones has not had, or
would not have, a material adverse
effect on the business, operations,
assets or condition (financial or
otherwise) of either Borrower or
their Subsidiaries on a
consolidated basis. As used
herein, "Year 2000 Compliant and
Ready" means that each Borrower's
and their Subsidiary's hardware and
software systems with respect to
the operation of their business and
their general business plan will:
(i) handle date information
involving any and all dates before,
during and/or after January 1,
2000, including accepting input,
providing output and performing
date calculations in whole or in
part; (ii) operate accurately
without interruption on and in
respect of any and all dates
before, during and/or after January
1, 2000 and without any change in
performance, (iii) respond to and
process two digit year input
without creating any ambiguity as
to the century, and (iv)
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store and provide date input information
without creating any ambiguity as
to the century."
2. Capitalized Terms. All capitalized terms contained
herein shall have the meanings assigned to them in the applicable
Loan Documents (as defined in the Loan Agreement) unless the
context herein otherwise dictates or unless different meanings
are specifically assigned to such terms herein.
3. Representations and Warranties. Each of the Borrowers
represents and warrants as follows:
(a) The execution, delivery and performance of this
Ninth Amendment to Loan Agreement and the other loan documents
provided to the Bank in connection therewith has been duly
authorized by all requisite action of the Borrowers; and
(b) The Loan Documents are valid, legal binding
obligations of the Borrowers enforceable in accordance with their
terms. There are no defenses, counterclaims, rights of setoff or
recoupment thereunder.
4. Miscellaneous. The Borrowers hereby confirm the terms
conditions, representations and warranties of the Loan Agreement.
The Loan Agreement, as amended hereby, shall remain in full force
and effect and this Ninth Amendment to Loan Agreement shall not
be deemed to be a novation.
5. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties
hereto may execute this Agreement by signing any such
counterpart.
IN WITNESS WHEREOF, the parties have executed the Ninth
Amendment to Loan Agreement as of the day and year first above
written.
BORROWERS:
ORANGE-CO, INC., a Florida corporation
By:/s/ Dale A. Bruwelheide
-----------------------------------
Dale A. Bruwelheide, Vice President
(CORPORATE SEAL)
ORANGE-CO OF FLORIDA, INC., a Florida
corporation
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By:/s/ Dale A. Bruwelheide
-----------------------------------
Dale A. Bruwelheide, Vice President
(CORPORATE SEAL)
BANK:
SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION
By: /s/ William A. Mang
-------------------------------------
William A. Mang, First Vice President
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EXHIBIT 99.4
Effective Date: December 3, 1998
ORANGE-CO, INC., INC.
1998 INCENTIVE EQUITY PLAN
----------------
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
(a) "Affiliate" 1
(b) "Agreement" 1
(c) "Board" 1
(d) "Code" 1
(e) "Company" 1
(f) "Director" 1
(g) "Employee" 1
(h) "Employer" 1
(i) "Fair Market Value" 1
(j) "ISO" 2
(k) "1934 Act" 2
(l) "Officer" 2
(m) "Option" 2
(n) "Optionee" 2
(o) "Option Price" 2
(p) "Parent" 3
(q) "Participant" 3
(r) "Plan" 3
(s) "Purchasable" 3
(t) "Reload Option" 3
(u) "Restriction Period" 3
(v) "Restricted Stock" 3
(w) "SAR" 3
(x) "Stock" 3
(y) "Stock Appreciation Right" 3
(z) "Stock Option Agreement" 4
(aa) "Subsidiary" 4
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ARTICLE II THE PLAN 4
Section 2.l Name 4
Section 2.2 Purpose 4
Section 2.3 Effective Date 4
Section 2.4 Termination Date 4
ARTICLE III ELIGIBILITY 5
ARTICLE IV ADMINISTRATION 5
Section 4.1 Duties and Powers of the Board 5
Section 4.2 Interpretation; Rules 5
Section 4.3 No Liability 5
Section 4.4 Company Assistance 5
ARTICLE V SHARES OF STOCK SUBJECT TO PLAN 6
Section 5.1 Limitations 6
Section 5.2 Antidilution 6
ARTICLE VI OPTIONS 7
Section 6.1 Types of Options Granted 7
Section 6.2 Option Grant and Agreement 7
Section 6.3 Optionee Limitations 7
Section 6.4 $100,000 Limitation 8
Section 6.5 Option Price 8
Section 6.6 Exercise Period 8
Section 6.7 Option Exercise 9
Section 6.8 Nontransferability of Option 9
Section 6.9 Termination of Employment 10
Section 6.10 Employment Rights 10
Section 6.11 Certain Successor Options 10
ARTICLE VII STOCK APPRECIATION RIGHTS 10
Section 7.1 Grant and Exercise 10
Section 7.2 Terms and Conditions 11
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ARTICLE VIII AWARDS OF RESTRICTED STOCK 12
Section 8.1 Administration 12
Section 8.2 Restrictions and Conditions 12
ARTICLE IX CONDITIONS TO ISSUING STOCK,
SAR OR RESTRICTED STOCK AWARD 14
ARTICLE X TERMINATION, AMENDMENT AND
MODIFICATION OF PLAN 14
ARTICLE XI MISCELLANEOUS 15
Section 11.1 Replacement Grants 15
Section 11.2 Forfeiture for Competition 15
Section 11.3 Plan Binding on Successors 15
Section 11.4 Gender 15
Section 11.5 Headings No Part of Plan 15
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ORANGE-CO, INC.
1998 INCENTIVE EQUITY PLAN
ARTICLE I
DEFINITIONS
As used herein, the following terms have the meanings
hereinafter set forth unless the context clearly indicates to the
contrary:
(a) "Affiliate" shall mean any entity other than the
Company and its Subsidiaries which the Board designates as an
"Affiliate" for purposes of this Plan.
(b) "Agreement" shall mean an agreement between the
company and a Participant pursuant to which the terms and
conditions of any Options, SARs or Restricted Stock granted to
such Participant are specified.
(c) "Board" shall mean the Board of Directors of the
Company.
(d) "Code" shall mean the United States Internal
Revenue Code of 1986, as amended, including effective date and
transition rules (whether or not codified). Any reference herein
to a specific section or sections of the Code shall be deemed to
include a reference to any corresponding provision of future law.
(e) "Company" shall mean Orange-co, Inc., a Florida
corporation, and any successor to it.
(f) "Director" shall mean a member of the Board.
(g) "Employee" shall mean any employee of the Company
or any Subsidiary of the Company, and any Director who also
serves as an Officer and whose duties as such involve a
significant time commitment beyond that associated with
preparation for and attendance at meetings of the Board and
committees thereof.
(h) "Employer" shall mean the corporation that employs
an Optionee.
(i) "Fair Market Value" of the shares of Stock on any
date shall mean:
(i) the closing sales price,
regular way, or in the absence thereof, the
mean of the last reported bid and asked
quotations, on such date on the exchange
having the greatest volume of trading in the
shares during the thirty-day period preceding
such date (or if such exchange was not open
for trading on such date, the next preceding
date on which it was open); or
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(ii) if there is no price as
specified in (i), the final reported sales
price, or if not reported, in the following
manner, the mean of the closing high bid and
low asked prices, in the over-the-counter
market for the shares as reported by The
Nasdaq National Market or, if such
organization is not in existence, by an
organization providing similar services, on
such date (or if such date is not a date for
which such system or organization generally
provides reports, then on the next preceding
date for which it does so); or
(iii) if there also is no price
as specified in (ii), the price determined by
the Board by reference to bid-and-asked
quotations for the shares provided by members
of an association of brokers and dealers
registered pursuant to subsection 15(b) of
the 1934 Act, which members make a market in
the shares, for such recent dates as the
Board shall determine to be appropriate for
fairly determining current market value; or
(iv) if there also is no price as
specified in (iii), the amount determined in
good faith by the Board based on such
relevant facts, which may include opinions of
independent experts, as may be available to
the Board.
(j) "ISO" shall mean an Option that complies with and
is subject to the terms, limitations and conditions of Code
section 422 and any regulations promulgated with respect thereto.
(k) "1934 Act" shall mean the Securities Exchange Act
of 1934, as the same may be amended from time to time.
(l) "Officer" shall mean a person who constitutes an
officer of the Company for the purposes of Section 16 of the 1934
Act, as determined by reference to such Section 16 and to the
rules, regulations, judicial decisions, and interpretative or "no-
action" positions with respect thereto of the Securities and
Exchange Commission, as the same may be in effect or set forth
from time to time.
(m) "Option" shall mean a contractual right to
purchase Stock granted pursuant to the provisions of Article VI
hereof.
(n) "Optionee" shall mean a person to whom an Option
has been granted hereunder.
(o) "Option Price" shall mean the price at which an
Optionee may purchase a share of Stock pursuant to an Option.
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(p) "Parent" shall mean any corporation (other than
the corporation with respect to which the determination is being
made) in an unbroken chain of corporations ending with the
corporation with respect to which the determination is being made
if, at the time of the grant (or modification) of the Option,
each of the corporations other than the corporation with respect
to which the determination is being made owns stock possessing
50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
(q) "Participant" shall mean a person to whom an
Option, SAR or Stock Appreciation Right has been granted
hereunder.
(r) "Plan" shall mean the Orange-co, Inc., 1998
Incentive Equity Plan as set forth herein and as amended from
time to time.
(s) "Purchasable," when used to describe Stock, shall
refer to Stock that may be purchased by an Optionee under the
terms of this Plan on or after a certain date specified in the
applicable Stock Option Agreement.
(t) "Reload Option" shall mean an Option that is
granted, without further action of the Board, (i) to an Optionee
who surrenders or authorizes the withholding of shares of Stock
in payment of amounts specified in paragraphs 6.7(c) or 6.7(d)
hereof, (ii) for the same number of shares as is so paid, (iii)
as of the date of such payment and at an Option Price equal to
the Fair Market Value of the Stock on such date, and (iv)
otherwise on the same terms and conditions as the Option whose
exercise has occasioned such payment, subject to such
contingencies, conditions or other terms as the Board shall
specify at the time such exercised Option is granted.
(u) "Restriction Period" shall mean the period of time
during which shares of Stock awarded to a Participant pursuant to
Article VIII remain subject to the restrictions referred to in
Section 8.2.
(v) "Restricted Stock" shall mean an award of shares
of stock that is subject to restrictions under Article VIII.
(w) "SAR" shall mean stock appreciation right.
(x) "Stock" shall mean the $0.50 par value common
stock of the Company or, in the event that the outstanding shares
of such stock are hereafter changed into or exchanged for shares
of a different class of stock or securities of the Company or
some other corporation, such other stock or securities.
(y) "Stock Appreciation Right" shall mean the rights
granted under Article VIII to surrender to the Company all or a
portion of a Stock Option in exchange for a payment in cash or
Stock.
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(z) "Stock Option Agreement" shall mean an agreement
between the Company and an Optionee setting forth the terms of an
Option.
(aa) "Subsidiary" shall mean any corporation (other
than the corporation with respect to which the determination is
being made) in an unbroken chain of corporations beginning with
the corporation with respect to which the determination is being
made if, at the time of the grant (or modification) of the
Option, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the
other corporations in such chain.
ARTICLE II
THE PLAN
2.l Name. This plan shall be known as the "Orange-co,
Inc., 1998 Incentive Equity Plan."
2.2 Purpose. The purpose of the Plan is to advance the
interests of the Company, its stockholders, and any Subsidiary of
the Company, by offering certain Participants an opportunity to
acquire or increase their proprietary interests in the Company by
granting such persons Options, Stock Appreciation Rights and/or
Restricted Stock. These grants will promote the growth and
profitability of the Company, and any Subsidiary of the Company,
because Participants will be provided with an additional
incentive to achieve the Company's objectives through
participation in its success and growth.
2.3 Effective Date. The Plan shall become effective on
February 18, 1999 (the "Effective Date"). No Option, SAR
or Restricted Stock granted under the Plan shall become
exercisable or vested, however, until the Plan is approved by the
affirmative vote of the holders of a majority of the shares of
common stock represented at a stockholders meeting at which a
quorum is present and grants under the Plan prior to such
approval shall be conditioned on and subject to such approval.
Subject to this limitation, Options, SARs and Restricted Stock
may be granted under the Plan at any time after the Effective
Date and before termination of the Plan.
2.4 Termination Date. No further Options, SARs and/or
Restricted Stock shall be granted hereunder on or after
February 18, 2009, but all Options, SARs and/or Restricted Stock
granted prior to that time shall remain in effect in accordance
with their terms; provided, however, that the Plan shall
terminate, and all Options, SARs and Restricted Stock theretofore
granted shall become void and may not be exercised, on
February 18, 1999 if the stockholders of the Company shall not
by that date have approved the Plan's adoption.
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ARTICLE III
ELIGIBILITY
The persons eligible to participate in this Plan shall
consist only of those individuals, Board members and Employees
whose participation the Board determines is in the best interests
of the Company.
ARTICLE IV
ADMINISTRATION
4.1 Duties and Powers of the Board in Administering the
Plan. The Plan shall be administered by the Board. In
administering the Plan, the Board's actions and determinations
shall be binding on all interested parties. The Board shall have
the power to grant Options, SARs and/or Restricted Stock in
accordance with the provisions of the Plan. Subject to the
provisions of the Plan, the Board shall have the discretion and
authority to determine those individuals to whom Options, SARs
and/or Restricted Stock will be granted and in the case of
Options whether such Options shall be accompanied by the right to
receive Reload Options, the number of shares of Stock subject to
each Option, SAR or Restricted Stock, such other matters as are
specified herein, and any other terms and conditions of the
Agreement applicable thereto. To the extent not inconsistent
with the provisions of the Plan, the Board shall have the
authority to amend or modify an outstanding Agreement relative to
an Option, SAR or Restricted Stock, or to waive any provision
thereof, provided that the Participant consents to such action.
4.2 Interpretation; Rules. Subject to the express
provisions of the Plan, the Board also shall have complete
authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to it, to determine the details
and provisions of each Agreement, and to make all other
determinations necessary or advisable in the administration of
the Plan, including, without limitation, the amending or altering
of any Options, SARs or Restricted Stock granted hereunder as may
be required to comply with or to conform to any federal, state or
local laws or regulations.
4.3 No Liability. No member of the Board shall be liable
to any person for any act or determination made in good faith
with respect to the Plan or any Option, SAR or Restricted Stock
granted hereunder.
4.4 Company Assistance. The Company shall supply full and
timely information to the Board on all matters relating to
eligible persons, their employment, death, retirement, disability
or other termination of employment, and such other pertinent
facts as the Board may require. The Company shall furnish the
Board with such clerical and other assistance as is necessary in
the performance of its duties.
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ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 Limitations. Subject to any antidilution adjustment
pursuant to the provisions of Section 5.2 hereof, the maximum
number of shares of Stock that may be issued and sold hereunder
shall be 750,000 shares. Shares subject to an Option or issued
pursuant to a Restricted Stock grant may be either authorized and
unissued shares or shares issued and later acquired by the
Company; provided, however, that shares of Stock with respect to
which an Option has been exercised or Restricted Stock which has
become vested shall not again be available for issuance
hereunder. The shares covered by (i) any unexercised portion of
an Option that has terminated for any reason, or (ii) any
Restricted Stock which has been forfeited, may again be granted
under this Plan, and such shares shall not be considered as
having been optioned or issued in computing the number of shares
of Stock remaining available for grant hereunder.
5.2 Antidilution.
(a) In the event that the outstanding shares of Stock
are changed into or exchanged for a different number or kind of
shares or other securities of the Company by reason of merger,
consolidation, reorganization, recapitalization, reclassification,
combination or exchange of shares, stock split or stock dividend,
or in the event that any spin-off, spin-out or other distribution
of assets materially affects the price of the Company's stock:
(i) The aggregate number and kind
of shares of Stock for which Options, SARs
and/or Restricted Stock may be granted
hereunder shall be adjusted proportionately
by the Board; and
(ii) The rights of Participants
(concerning the number of shares subject to
Options and SARs and the Option Price) under
outstanding Options and SARs shall be
adjusted proportionately by the Board.
(b) If the Company shall be a party to any
reorganization in which it does not survive, involving merger,
consolidation, or acquisition of the stock or substantially all
the assets of the Company, the Board, in its discretion, may:
(i) declare that all Options and
SARs granted under the Plan shall become
exercisable immediately and that all
Restricted Stock shall become vested
notwithstanding the provisions of the
respective Agreements regarding
exercisability or vesting, and that all such
Options and SARs shall terminate 30 days
after the Board gives written notice of the
immediate right to exercise all such Options
and SARs and of the decision to terminate all
Options and SARs not exercised within such 30-
day period; or
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(ii) notify all Participants that
all Options and SARs granted under the Plan
and all Restricted Stock Agreements shall be
assumed by the successor corporation or
substituted with Options, SARs or Restricted
Stock issued by such successor corporation.
(c) If the Company is to be liquidated or dissolved in
connection with a reorganization described in paragraph 5.2(b),
the provisions of such paragraph shall apply. In all other
instances, the adoption of a plan of dissolution or liquidation
of the Company shall cause (i) every Option and SAR outstanding
under the Plan to terminate to the extent not exercised prior to
the adoption of the plan of dissolution or liquidation by the
stockholders, provided that the Board in its discretion may
declare all Options and SARs granted under the Plan to be
exercisable at any time on or before the fifth business day
following such adoption notwithstanding the provisions of the
respective Agreements regarding exercisability and (ii) every
share of Restricted Stock to vest. The Board's actions under
this provision and the Participant's exercise of Options and
SAR's under this provision shall be subject, however, to the
limitations set forth in Articles VI and Article VII hereof.
(d) The adjustments described in paragraphs (a)
through (c) of this Section 5.2, and the manner of their
application, shall be determined solely by the Board, and any
such adjustment may provide for the elimination of fractional
share interests. The adjustments required under this Article V
shall apply to any successors of the Company and shall be made
regardless of the number or type of successive events requiring
such adjustments.
ARTICLE VI
OPTIONS
6.1 Types of Options Granted. Within the limitations
provided herein, Options may be granted to one Participant at one
or several times or to different Participants at the same time or
at different times, in either case under different terms and
conditions, as long as the terms and conditions of each Option
are consistent with the provisions of the Plan. Without
limitation of the foregoing, Options may be granted subject to
conditions based on the financial performance of the Company or
any other factor the Board deems relevant.
6.2 Option Grant and Agreement. Each Option granted or
modified hereunder shall be evidenced (a) by either minutes of a
meeting or a written consent of the Board, and (b) by a written
Stock Option Agreement executed by the Company and the
Participant. The terms of the Option, including the Option's
duration, time or times of exercise, exercise price, whether the
Option is intended to be an ISO, and whether the Option is to be
accompanied by the right to receive a Reload Option, shall be
stated in the Stock Option Agreement. Separate Stock Option
Agreements shall be used for Options intended to be ISO's and
those not so intended.
6.3 Optionee Limitations. The Board shall not grant an ISO
to any person who, at the time the ISO would be granted:
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(a) is not an Employee; or
(b) owns or is considered to own stock possessing more
than 10% of the total combined voting power of all classes of
stock of the Employer, or any Parent or Subsidiary of the
Employer; provided, however, that this limitation shall not apply
if at the time an ISO is granted the Option Price is at least
110% of the Fair Market Value of the Stock subject to such Option
and such Option by its terms would not be exercisable after the
expiration of five years from the date on which the Option is
granted. For the purpose of this paragraph (b), a person shall
be considered to own (i) the stock owned, directly or indirectly,
by or for his brothers and sisters (whether by the whole or half
blood), spouse, ancestors and lineal descendants, (ii) the stock
owned, directly or indirectly, by or for a corporation,
partnership, estate, or trust in proportion to such person's
stock interest, partnership interest or beneficial interest
therein, and (iii) the stock which such person may purchase under
any outstanding options of the Employer or of any Parent or
Subsidiary of the Employer.
6.4 $100,000 Limitation. Except as provided below, the
Board shall not grant an ISO to, or modify the exercise
provisions of outstanding ISO's held by, any person who, at the
time the ISO is granted (or modified), would thereby receive or
hold any incentive stock options (as described in Code section
422) of the Employer and any Parent or Subsidiary of the
Employer, such that the aggregate Fair Market Value (determined
as of the respective dates of grant or modification of each
option) of the stock with respect to which such incentive stock
options are exercisable for the first time during any calendar
year is in excess of $100,000; provided, that the foregoing
restriction on modification of outstanding ISO's shall not
preclude the Board from modifying an outstanding ISO if, as a
result of such modification and with the consent of the Optionee,
such Option no longer constitutes an ISO; and provided that, if
the $100,000 limitation described in this Section 6.4 is
exceeded, an Option that otherwise qualifies as an ISO shall be
treated as an ISO up to the limitation and the excess shall be
treated as an Option not qualifying as an ISO. The preceding
sentence shall be applied by taking options intended to be ISO's
into account in the order in which they were granted.
6.5 Option Price. The Option Price under each Option shall
be determined by the Board. However, the Option Price shall not
be less than 50% of the Fair Market Value of the Stock, or in the
case of an ISO less than the Fair Market Value of the Stock, in
each case on the date that the Option is granted (or, in the case
of an ISO that is subsequently modified, on the date of such
modification).
6.6 Exercise Period. The period for the exercise of each
Option granted hereunder shall be determined by the Board, but
the Stock Option Agreement with respect to each Option intended
to be an ISO shall provide that such Option shall not be
exercisable after the expiration of ten years from the date of
grant (or modification) of the Option. In addition, no Option
granted to an Participant who is also an Officer or Director
shall be exercisable prior to the expiration of six months from
the date such Option is granted, other than in the case of the
death or disability of such Participant.
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6.7 Option Exercise.
(a) Unless otherwise provided in the Stock Option
Agreement, an Option may be exercised at any time or from time to
time during the term of the Option as to any or all whole shares
that have become Purchasable under the provisions of the Option,
but not at any time as to less than 100 shares unless the
remaining shares that have become so Purchasable are less than
100 shares. The Board shall have the authority to prescribe in
any Stock Option Agreement that the Option may be exercised only
in accordance with a vesting schedule during the term of the
Option.
(b) An Option shall be exercised by (i) delivery to
the Treasurer of the Company at its principal office of written
notice of exercise with respect to a specified number of shares
of Stock, and (ii) payment to the Company at that office of the
full amount of the Option Price for such number of shares.
(c) The Option Price shall be paid in full upon the
exercise of the Option; provided, however, that the Board may
provide in a Stock Option Agreement that, in lieu of cash, all or
any portion of the Option Price may be paid by tendering to the
Company shares of Stock duly endorsed for transfer and owned by
the Optionee, to be credited against the Option Price at the Fair
Market Value of such shares on the date of exercise (however, no
fractional shares may be so transferred, and the Company shall
not be obligated to make any cash payments in consideration of
any excess of the aggregate Fair Market Value of shares
transferred over the aggregate option price).
(d) In addition to and at the time of payment of the
Option Price, the Optionee shall pay to the Company in cash the
full amount of any federal, state and local income, employment or
other taxes required to be withheld from the income of such
Optionee as a result of such exercise; provided, however, that in
the discretion of the Board any Stock Option Agreement may
provide that all or any portion of such tax obligations, together
with additional taxes not exceeding the actual additional taxes
to be owed by the Optionee as a result of such exercise, may,
upon the irrevocable election of the Optionee, be paid by
tendering to the Company whole shares of Stock duly endorsed for
transfer and owned by the Optionee, or by authorization to the
Company to withhold shares of Stock otherwise issuable upon
exercise of the Option, in either case in that number of shares
having a Fair Market Value on the date of exercise equal to the
amount of such taxes thereby being paid, and subject to such
restrictions as to the approval and timing of any such election
as the Board may from time to time determine to be necessary or
appropriate to satisfy the conditions of the exemption set forth
in Rule 16b-3 under the 1934 Act.
(e) The holder of an Option shall not have any of the
rights of a stockholder with respect to the shares of Stock
subject to the Option until such shares have been issued and
transferred to him upon the exercise of the Option.
6.8 Nontransferability of Option. No Option or any rights
therein shall be transferable by an Optionee otherwise than by
will or the laws of descent and distribution. During the lifetime
-43-
of an Optionee, an Option granted to that Optionee shall
be exercisable only by such Optionee (or by such Optionee's
guardian or other legal representative, should one be appointed).
6.9 Termination of Employment. The Board shall have the
power to specify, with respect to the Options granted to any
particular Optionee, the effect upon such Optionee's right to
exercise an Option of the termination of such Optionee's
employment under various circumstances, including but not limited
to the death or disability of the Optionee which effect may
include immediate or deferred termination of such Optionee's
rights under an Option, or acceleration of the date at which an
Option may be exercised in full.
6.10 Employment Rights. Options granted under the Plan
shall not be affected by any change of employment so long as the
Optionee continues to be an employee or Board Member. Nothing in
the Plan or in any Stock Option Agreement shall confer on any
person any right to continue in the employ of the Company or any
Subsidiary of the Company, or shall interfere in any way with the
right of the Company or any such Subsidiary to terminate such
person's employment at any time.
6.11 Certain Successor Options. To the extent not
inconsistent with the terms, limitations and conditions of Code
section 422, and any regulations promulgated with respect
thereto, an Option issued in respect of an option held by an
Employee to acquire stock of any entity acquired, by merger or
otherwise, by the Company (or any Subsidiary of the Company) may
contain terms that differ from those stated in this Article VI,
but solely to the extent necessary to preserve for any such
employee the rights and benefits contained in such predecessor
option, or to satisfy the requirements of Code section 425(a).
ARTICLE VII
STOCK APPRECIATION RIGHTS
7.1 Grant and Exercise. Stock Appreciation Rights may
be granted in conjunction with all or part of any Stock Option
granted under the Plan. In the case of a Non-Qualified Stock
Option, such rights may be granted either at or after the time of
the grant of such Stock Option. In the case of an Incentive
Stock Option, such rights may be granted only at the time of the
grant of such Stock Option.
A Stock Appreciation Right or applicable portion thereof
granted with respect to a given Stock Option shall terminate and
no longer be exercisable upon the termination or exercise of the
related Stock Option, except that, unless otherwise determined by
the Board at the time of grant, a Stock Appreciation Right
granted with respect to less than the full number of shares
covered by a related Stock Option shall not be reduced until the
number of shares covered by an exercise or termination of the
related Stock Option exceeds the number of shares not covered by
the Stock Appreciation Right.
A Stock Appreciation Right may be exercised by a
Participant, in accordance with Section
-44-
7.2, by surrendering the applicable portion of the related Stock
Option in accordance with procedures established by the Board for
such purposes. Upon such exercise and surrender, the Participant
shall be entitled to receive an amount determined in a manner
prescribed in Section 7.1. Stock Options which have been so
surrendered shall no longer be exercisable to the extent the
related Stock Appreciation Rights have been exercised.
7.2 Terms and Conditions. Stock Appreciation Rights
shall be subject to such terms and conditions, not inconsistent
with the provisions of the Plan, as shall be determined from time
to time by the Board, including the following:
(i) Stock Appreciation Rights
shall be exercisable only at such time or
times and to the extent that the Stock
Options to which they relate are exercisable,
in accordance with the provisions of Article
VI and Article VII of the Plan.
(ii) Upon the exercise of a Stock
Appreciation Right, a Participant shall be
entitled to receive an amount in cash and/or
shares of Stock in the aggregate equal in
value to the excess of the Fair Market Value
of one share of Stock over the option price
per share specified in the related Stock
Option multiplied by the number of shares in
respect of which the Stock Appreciation Right
shall have been exercised, with the Board
having the right to determine the form of
payment.
(iii) Stock Appreciation Rights
shall be transferable only when and to the
extent that the underlying Stock Option would
be transferable under Article VI of the Plan.
(iv) Upon the exercise of a Stock
Appreciation Right, the Stock Option or part
thereof to which Stock Appreciation Right is
related shall be deemed to have been
exercised for the purpose of the limitation
set forth in Article V of the Plan on the
number of shares of Stock to be issued under
the Plan, but only to the extent of the
number of shares of Stock issued under the
Stock Appreciation Right based on the value
of the Stock Appreciation Right.
(v) The Board may provide, at the
time of grant, that such Stock Appreciation
Right can be exercised only in the event of a
Change in Control and/or a Potential Change
in Control, subject to such terms and
conditions as the Board may specify at grant.
(vi) The Board may also provide
that, in the event of a Change in Control
and/or a Potential Change in Control, the
amount to be paid upon the exercise of a
Stock Appreciation Right shall be based on
the Change in Control Price, subject to such
terms and conditions as
-45-
the Board may specify at grant.
ARTICLE VIII
AWARDS OF RESTRICTED STOCK
8.1 Administration. Shares of Restricted Stock may be
issued either alone or in addition to other awards granted under
the Plan. The Board shall determine Participants to whom, and
the time or times at which, such grants will be made, the number
of shares to be awarded, the price (if any) to be paid under
Section 8.2(i) by the recipient of a Restricted Stock Award, the
time or times within which such awards may be subject to
forfeiture, and all other conditions of the awards.
The Board may condition grants of Restricted Stock upon the
attainment of specified performance goals or such other factors
or criteria as the Board may determine.
The provisions of Restricted Stock Awards need not be the
same with respect to each recipient.
8.2 Restrictions and Conditions. Restricted Stock
Awards shall be subject to the following restrictions and
conditions:
(i) The purchase price for shares
of Restricted Stock may be equal to or less
than their par value and may be zero.
(ii) Awards of Restricted Stock
must be accepted within a period of 60 days
(or such shorter periods as the Board may
specify at grant) after the award date, by
executing a Restricted Stock Agreement and
paying whatever price (if any) is required
under Section 8.2(i).
The prospective recipient of a
Restricted Stock Award shall not have any
rights with respect to such award, unless and
until such recipient has executed an
agreement evidencing the award and has
delivered a fully executed copy thereof to
the Company, and has otherwise complied with
the applicable terms and conditions of such
award.
(iii) Each Participant
receiving a Restricted Stock Award shall be
issued a stock certificate in respect of such
shares of Restricted Stock. Such certificate
shall be registered in the name of such
Participant, and shall bear an appropriate
legend referring to the terms, conditions,
and restrictions applicable to such award,
substantially in the following form:
"The transferability of this
certificate and the shares of stock
represented hereby are subject to the terms
and conditions (including forfeiture) of the
Orange-co, Inc. 1998 Incentive Equity Plan and an
-46-
Agreement entered into between the
registered owner and Orange-co, Inc. Copies
of such Plan and Agreement are on file in the
offices of Orange-co, Inc., Bartow, Florida.
The Board may require that the
stock certificates evidencing such shares be
held in custody by the Company until the
restrictions thereon shall have lapsed, and
that, as a condition of any Restricted Stock
Award, the participant shall have delivered a
stock power, endorsed in blank, relating to
the Stock covered by such award.
(iv) Subject to the provisions of
this Plan and the applicable award agreement,
during a period set by the Board commencing
with the date of such award (the "Restriction
Period"), the Participant shall not be
permitted to sell, transfer, pledge, assign
or otherwise encumber shares of Restricted
Stock awarded under the Plan.
Based on service, performance and/or such
other factors or criteria as the Board may
determine, the Board may, however, at or
after grant provide for the lapse of such
restrictions in installments and/or may
accelerate or waive such restrictions in
whole or in part.
(v) Except as provided in this
Section 8.2, unless otherwise determined by
the Board the recipient shall have, with
respect to the shares of Restricted Stock
covered by any award, all of the rights of a
stockholder of the Company, including the
right to vote the shares, and the right to
receive any dividends.
(vi) Except as otherwise provided
in this Section 8.2 and in the applicable
award agreement, upon termination of a
participant's employment with the Company or
any Subsidiary or Affiliate for any reason
during the Restriction Period for a given
award, all shares still subject to
restriction shall be forfeited by the
participant, provided, however, the Board may
provide for waiver of the restrictions in the
event of termination of employment due to
death, disability or retirement.
(vii) In the event of hardship
or other special circumstances of a
participant whose employment with the Company
or any Subsidiary or Affiliate is
involuntarily terminated, the Board may waive
in whole or in part any or all remaining
restrictions with respect to any or all of
the Participant's Restricted Stock, based on
such factors and criteria as the Board may
deem appropriate.
(viii) If and when the Restriction
Period expires without a prior forfeiture
-47-
of the Restricted Stock subject to
such Restriction Period, unrestricted
certificates for such shares shall be
delivered to the participant.
ARTICLE IX
CONDITIONS TO ISSUING STOCK,
SAR OR RESTRICTED STOCK AWARD
The Company shall not be required to issue or deliver any
Stock purchased (i) pursuant to any Restricted Stock Award or
(ii) upon the full or partial exercise of any Option or SAR
granted hereunder prior to fulfillment of all of the following
conditions:
(a) The admission of such shares to listing on all
stock exchanges on which the Stock is then listed;
(b) The completion of any registration or other
qualification of such shares that the Company shall determine to
be necessary or advisable under any federal or state law or under
the rulings or regulations of the Securities and Exchange
Commission or any other governmental regulatory body, or the
Company's determination that an exemption is available from such
registration or qualification;
(c) The obtaining of any approval or other clearance
from any federal or state governmental agency that the Company
shall determine to be necessary or advisable; and
(d) The lapse of such reasonable period of time
following exercise as shall be appropriate for reasons of
administrative convenience.
Unless the shares of Stock covered by the Plan shall be the
subject of an effective registration statement under the
Securities Act of 1933, as amended, stock certificates issued and
delivered to Participants shall bear such restrictive legends as
the Company shall deem necessary or advisable pursuant to
applicable federal and state securities laws.
ARTICLE X
TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
The Board may at any time, (i) cause the Board to cease
granting Options or Restricted Stock Awards, (ii) terminate the
Plan, or (iii) in any respect amend or modify the Plan; provided,
however, that the Board (unless its actions are approved or
ratified by the stockholders of the Company within twelve months
of the date the Board amends the Plan) may not amend the Plan to:
(a) Increase the number of shares of Stock subject to
the Plan beyond the amount previously approved or ratified by the
stockholders; or
-48-
(b) Change or modify the class of persons that may
participate in the Plan.
No termination, amendment or modification of the Plan shall
affect adversely the rights of a Participant under any
outstanding Option, SAR or Restricted Stock Award without the
consent of the Participant or his legal representative.
ARTICLE XI
MISCELLANEOUS
11.1 Replacement Grants. At the sole discretion of the
Board, a Participant may be given an election to surrender an
Option, SAR or Restricted Stock Award in exchange for a new
Option, SAR or Restricted Stock Award.
11.2 Forfeiture for Competition. If a Participant provides
services to a competitor of the Company or any of its
Subsidiaries, whether as an employee, officer, director,
independent contractor, consultant, agent or otherwise, such
services being of a nature that can reasonably be expected to
involve the skills and experience used or developed by the
Participant while an employee or Board member, then that
Participant's rights under any Options, SARs or Restricted Stock
Awards outstanding hereunder shall be forfeited and terminated,
subject to a determination to the contrary by the Board.
11.3 Plan Binding on Successors. The Plan shall be binding
upon the successors of the Company.
11.4 Gender. Whenever used herein, the masculine pronoun
shall include the feminine gender.
11.5 Headings No Part of Plan. Headings of Articles and
Sections hereof are inserted for convenience and reference, and
do not constitute a part of the Plan.
-49-
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