SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
/x/ Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934 (Fee required)
For the fiscal year ended November 30, 1995
/ / Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 (No fee required)
For the transition period from _________ to _________.
Commission file number 0-15320
THE FRESH JUICE COMPANY, INC.
(Name of Small Business Issuer in Its charter)
Delaware 11-2771046
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
350 Northern Boulevard, Great Neck, New York 11021
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number including area code: (516) 482-5190
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
(Title of class)
--------------
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes X No_____
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $9,219,184.
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was
sold, or the average bid and asked prices of such stock as of a specified
date within the past 60 days (See definition of affiliate in Rule 12b-2 of
the Exchange Act): $5,297,040 (based on the average of the closing bid and
asked prices ($2.52) of the Common Stock of the Company quoted on the
NASDAQ System on February 21, 1996).
State the number of shares outstanding of each of the issuer's
class of common equity as of the latest practicable date: 3,550,062 (as of
February 21, 1996).
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
Page
----
PART I
Item 1 - Description of Business . . . . . . . . . . . . . . . .
Item 2 - Description of Property . . . . . . . . . . . . . . . .
Item 3 - Legal Proceedings . . . . . . . . . . . . . . . . . . .
Item 4 - Submission of Matters to a Vote of Security-Holders . .
PART II
Item 5 - Market for Common Equity and Related
Stockholder Matters . . . . . . . . . . . . . . . . .
Item 6 - Management's Discussion and Analysis or Plan
of Operation . . . . . . . . . . . . . . . . . . . . .
Item 7 - Financial Statements . . . . . . . . . . . . . . . . .
Item 8 - Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . .
PART III
Item 9 - Directors, Executive Officers, Promoters
and Control Persons; Compliance with Section 16(a)
of the Exchange Act . . . . . . . . . . . . . . . . .
Item 10 - Executive Compensation . . . . . . . . . . . . . . . .
Item 11 - Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . .
Item 12 - Certain Relationships and Related Transactions . . . .
Item 13 - Exhibits, Lists and Reports on Form 8-K . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Introduction
The Fresh Juice Company, Inc. (the "Company") was
incorporated in the State of New York on July 5, 1985. Immediately
prior to the closing of the Company's initial public offering on
November 19, 1986, the Company was merged into its wholly-owned
Delaware subsidiary so as to relocate its state of incorporation.
The Company produces, markets and sells fresh and frozen
"fresh squeezed" Florida orange juice, grapefruit juice, fresh
pressed apple juice and other non-carbonated beverages under the
brand names "Just Pik't(R), "Fresh Pik't(R)" and "Florida Pik't(R)".
The majority of the juice produced by the Company is orange juice.
The organization of the Company followed two years of research and
development on a molded plastic bottle with a tamper resistant
safety seal, and a process that would allow freshly squeezed juice
to be frozen and sold inside the bottle. Market research performed
by the Company indicated that there was a market for "superpremium"
orange juice and that consumers prefer the taste of Just Pik't(R)
compared to juice that has been pasteurized or is sold in
concentrate form.
The Company owns a plant in Winter Haven, Florida to
produce and bottle juice beverages (the "Florida Plant"). The
Company also has an agreement with a major juice processing
facility in Florida to produce and bottle juice. In April,
1986 the Company began to market Just Pik't(R) in the New York
metropolitan area; it and other products are presently being sold
in numerous supermarket chains and to other food distributors
throughout the United States. The Company also markets its
products internationally, principally in Canada.
The Florida Plant
On August 3, 1995, the Company acquired the Florida
Plant, a vacant 70,000 square foot warehouse formerly utilized as
a flavor processing facility. The Company acquired such facility
from Universal Flavors, Inc. for an aggregate purchase price of
$625,000, of which $150,000 was paid in cash on August 3, 1995 and
the remaining $475,000 is payable pursuant to a mortgage note
having a three year maturity and bearing interest at the rate of
seven per cent per annum. The mortgage note is secured by a
purchase money mortgage on the Florida Plant, which mortgage is
held by the seller of the Florida Plant.
The budgeted cost of renovating and equipping the Florida
Plant is approximately $2,300,000. As of the date hereof the
Florida Plant is fully operational while certain remaining
renovations and capital expenditures are being completed. As of
November 30, 1995, $1,437,887 had been expended on the Florida
Plant. Upon completion, the Company will have financed approximately
$1,200,000 of such cost from working capital. In September, 1995,
The Fresh Juice Company of Florida, Inc. (the "Fresh Juice Company of
Florida"), a wholly-owned subsidiary of the Company, which operates
and maintains the Florida Plant, entered into a loan agreement with
Chemical Bank in the aggregate principal amount of $1,100,000 (the
"Chemical Loan") to finance the remaining cost of renovating and
equipping the Florida Plant. Of the aggregate $1,100,000 borrowed
under the Chemical Loan, approximately $250,000 was used to finance
certain leasehold improvements to the Florida Plant and approximately
$850,000 was used to finance the purchase of machinery and equipment.
The Chemical Loan accrues interest at a rate equal to the prime
lending rate offered by Chemical Bank plus 1/2 of 1%. Principal on
the Chemical Loan is payable in 48 equal monthly installments
commencing on October 31, 1996. Prior to such date only monthly
payments of interest are due and payable. The Chemical Loan shall
mature on September 30, 2000. The Chemical Loan may be prepaid, in
whole or in part, at any time without penalty. The Chemical Loan
contains certain restrictions regarding the ability of the Company and
the Fresh Juice Company of Florida to, among other things, incur
additional indebtedness, grant liens, make capital expenditures in
excess of $200,000 in any year (other than with respect to the Florida
Plant), sell or transfer its assets, consolidate or merge with another
corporation, and declare or pay dividends. In addition, the Chemical
Loan provides that the Company and its subsidiaries must maintain
certain minimum debt service and leverage ratios, and a certain
minimum tangible net worth. The Chemical Loan is secured by a first
priority security interest in all equipment, including, but not
limited to, machinery and furniture and fixtures of the Company and
Fresh Juice Company of Florida. In addition, the Company has
guaranteed the repayment of all amounts due Chemical Bank under the
Chemical Loan.
The Company designed the Florida Plant to be capable of
producing fresh squeezed juice, fresh frozen juice and pasteurized
juice, in addition to other juice-based beverages should the
Company, if ever, decide to produce additional juice beverages.
All processing in the Florida Plant is performed under refrigerated
and sanitary conditions. The Company believes that the Florida
Plant is one of the first facilities capable of producing such
variety of juices under completely refrigerated conditions. Each
segment of the production process is separate and distinct with
separate extraction rooms, filling rooms, blending room and a
separate spiral freeze system for the fresh frozen juice.
The Company believes that one of the most critical
elements of producing quality fresh squeezed juice is the proper
sorting of fruit to eliminate any fruit that would create
impurities in such juice. The Company believes that the Florida
Plant is one of the first facilities equipped with a pre- and post-
screening system designed to eliminate impure fruit from reaching
the extraction process. The Florida Plant is equipped with a
laboratory designed to provide an additional measure of quality
control to assist in the Company's goal of providing optimal flavor
and shelf life for its customers.
The Market
Processed orange juice generates sales in the United
States in excess of three billion dollars per year. The market is
currently divided principally between chilled pasteurized orange
juice (which constitutes a majority of the market) and frozen
concentrate. The Company believes that a superpremium fresh
squeezed juice can obtain a profitable market share by virtue
primarily of the taste of fresh squeezed juice.
A number of companies produce chilled pasteurized orange
juice, including "Tropicana(R)", which is marketed as a premium
product. Although certain products, such as milk, require
pasteurization to destroy any harmful bacteria, citrus juices do
not contain such bacteria. Pasteurization is used instead to
increase shelf life, since chilled juices will ferment between
seven to fourteen days after bottling. However, because
pasteurization involves cooking or heating the juice, the natural
flavor and aroma of the juice is adversely affected. Further, as
a nutritional matter, pasteurizing orange juice destroys valuable
nutrients, and when sold in cartons, the juice loses its Vitamin C
value while it is awaiting sale and in the consumer's refrigerator.
The production of frozen concentrate also involves
cooking or heating, resulting in an adverse effect on the natural
flavor and aroma of the juice. In addition, concentration involves
the removal of water, resulting in a product containing a large
percentage of sugar, thereby making it difficult to freeze
completely. In order to eliminate this freezing problem, a natural
element in the juice, pectinesterase (an enzyme which produces
pectin), is eliminated, and when the concentrate is reconstituted
there is a watery texture.
While in the past refrigerated fresh squeezed juice, which
was neither frozen nor pasteurized, was produced in relatively small
quantities in Florida, such juice usually became unsalable within
10 days of production, or sooner if not kept under optimum
conditions. Therefore, prohibitively rapid distribution and
consumption was required. Further, during the non-harvesting
months of the year, the taste quality of the juice usually declined
because of the inaccessibility of quality oranges.
As a result of the consumer demand for fresh squeezed
orange juice remaining unsatisfied, certain retail food stores
attempt to squeeze and bottle their own juice. Typically, such
endeavors fail to produce a consistent result as it is difficult
for such stores either to obtain quality juice oranges or to
monitor the quality of the oranges they receive. In addition, the
juice machines often squeeze the rind, resulting in a bitter, oily
taste.
The Company has overcome this problem in the past by
squeezing juice only during the harvesting season and freezing
enough juice to meet demand for the entire year. The Company
engages in this procedure with respect to its "Just Pik't(R)" line
of juices, but for its "Fresh Pik't(R)" line of non-frozen juices
the Company believes that it can place Florida fruit in cold
storage allowing for a completely Florida fresh juice product year
round. The Company's standards for frozen fresh squeezed juice
require the use of a mature fruit containing a lower acid factor
(the percentage of natural fructose sugar compared to the percentage
of acid) and a higher solid content (everything except water
contained in the fruit).
The Product
"Just Pik't(R)", which is non-pasteurized and frozen shortly
after squeezing, retains the aroma, taste and texture of freshly
squeezed juice, as well as its nutritional value for an indefinite
period. In addition, frozen juice can be stored so that fruit does
not need to be squeezed during the non-maturing months or when the
fruit does not meet the Company's standards.
A key factor in the ability to produce a commercially
viable frozen juice product is the container. The bottle and
process have been patented by the Company and are designed to
permit the bottle to expand when the contents are frozen and to
contract when the contents are thawed. For marketing purposes, the
bottle is designed so that it will not bulge when frozen and so
that it is attractive enough to be sold at retail. The Company
also believes that its packaging is attractive to consumers because
it may be considered to be "environmentally friendly" in contrast
with conventional fruit juice packaging. "Just Pik't(R)" containers
are made of no. 2 high-density polyethylene plastic which may be
recycled by commonly used plastic recycling systems, in contrast to
conventional retail citrus juice packaging, which usually consists
of a multi-element paper carton that is not recyclable by commonly
used systems.
As a result of the acquisition of the Florida Plant, the
Company has recently created various new line extensions to its
existing product base. Recently, various of the Company's existing
customers have begun to request a line of organic juices. As a
result, the Company has recently begun to sell organic fresh
squeezed frozen juices produced at the Florida Plant under the
"Florida Pik't(R)" label. In addition the Company is in the process
of preparing to market organic pasteurized juices under the
"Florida Pik't(R)" label, which the Company believes will be one of
the few organic not from concentrate juices currently being sold in
the market place. The Company believes that the Florida Plant is
one of the few facilities capable of producing organic pasteurized
juices. For its food service customers for whom shelf life is not
a concern due to rapid turnover of product, the Company provides
fresh non-frozen juices under the "Fresh Pik't(R)" label as well as
fresh squeezed lemon and lime juices.
The Company presently sells frozen fresh squeezed juice
in the one liter size as well as a single serve size citrus juice
in 1/4 liter (8.45 fluid ounce) and 1/3 liter (11.26 fluid ounce)
sizes. Non-frozen juices are sold in gallons, half gallons, quarts
and 12 ounce sizes. The Company has expanded its product line to
also include single serve containers of other non-carbonated
beverages.
In addition to its current product line, the Company is
preparing to produce and market antioxidant, vitamin enriched and
banana-based 100% juice products. The Company is also developing
bar mix drinks such as daiquiri mix, margarita mix and pina colada
mix. No assurances can be given as to when or which products the
Company may ultimately choose to produce and market, if ever.
Marketing and Advertising
"Just Pik't(R)" is currently sold in numerous supermarket
chains in the New York area and other major markets throughout the
United States. The Company's marketing of "Just Pik't(R)" and its
other products are intended to emphasize their taste and
nutritional value. The Company is developing brand recognition for
"Just Pik't(R)" as a superpremium fresh squeezed juice, and is
utilizing its brand recognition to market other frozen juices as
well as other product line extensions.
Distribution
Prior to the acquisition of the Florida Plant, "Just
Pik't(R)" was shipped by the Company from its Florida processor using
unaffiliated trucking companies to independent distributors
throughout the United States. As a result of the acquisition of
the Florida Plant, more shipping will originate out of such
facility thereby providing for increased control and flexibility
over the distribution process.
The Company sells "Just Pik't(R)" directly to either
supermarket-owned or independent warehouse distributors that
distribute to supermarkets, institutions or retail outlets. No
customer accounts for more than 10% of the Company's total
revenues.
In 1995, the Company ceased operations of its subsidiary,
Fresh Pik't Natural Foods, Inc., which, among other things, sold and
distributed certain organic produce.
National Accounts
Following the acquisition of the Florida Plant, the
Company will seek to develop national account relationships.
In December 1995, the Company entered into a manufacturing
and distribution agreement with Sun Orchard, Inc., a
privately-held Arizona based fresh juice company. The agreement
calls for the Company to produce, market, and distribute, on
behalf of Sun Orchard, Inc., fresh juices to currently
designated customers, such as Marriott Hotels and Starbucks
Coffee Company locations, with others possibly in the future.
The Company intends to develop additional national
accounts either alone or in conjunction with a joint venture
partner. No assurances, however, can be given as to when, if ever,
or with which customers the Company may be able to obtain
additional nation accounts.
Production
As of January 1996, the Company's production of product is
taking place at the Florida Plant. In addition, the Company has
entered into a four year co-packing agreement with a major juice
processing plant located in Florida. Such co-packing agreement may be
renewed or cancelled by either party after notice. Charges under such
agreement are based upon the seasonal costs of juice solids of
comparable orange juice in Florida plus a charge for processing. The
bottling machinery located at the co-packer is owned by the Company.
Seasonality
Generally, the Company does not believe that its business
is seasonal in terms of the consumer's demand for orange juice.
However, there is a harvest season in Florida which typically
extends for five to six months during which the quality of oranges
that the Company uses in its juice are available. After that
period, the Company had not processed additional fruit until the
next season and the Company needed to project the expected demand
for its products during the harvesting season.
While the harvest season for the "Just Pik't(R)" line of
frozen fresh squeezed juice extends for five to six months, the
Florida Plant is expected to operate year round. The extra
capacity of the Florida Plant during the months when such plant is
not producing "Just Pik't(R)" will be utilized to continue producing
"Fresh Pik't(R)" non-frozen juices by placing Florida fruit in cold
storage therefore allowing for fresh squeezed juice to be squeezed
year round. In addition, the Company plans to produce lemon and
lime juices, antioxidants, vitamin enriched and banana-based
drinks, and bar mix drinks during the non-harvesting season. The
Company will further seek to maximize the use of the Florida Plant
by extracting pasteurized products into drums during the harvesting
season and packing such pasteurized juice during the non-harvesting
season. This procedure would be performed for the Company's
"Florida Pik't(R)" line extension of organic pasteurized juices, as
well as other pasteurized juices in the event the Company
determines in the future to produce such other juices.
Although it can give no assurances, the Company expects
the 1996 orange crop to be of exceptional flavor and in sufficient
supply to meet its orders.
Government Regulations
The Company and its co-packer in Florida are subject to
certain regulations of federal, state and local government
authorities regarding distribution and sale of food products.
Although the Company believes that it currently has all material
government permits, licenses, qualifications and approvals for its
operations, there can be no assurance that the Company will be able
to continue to comply with or maintain the same.
The State of Florida and the United States Department of
Agriculture undertake an extensive inspection and sampling program
of Florida citrus fruit before and during processing in an effort
to maintain the quality and good name of Florida citrus products.
The Company believes that this program provides it with an
excellent means of quality control for its product.
The Company believes that it is in compliance with all
environmental regulations affecting its operations.
Competition
The market for orange juice is highly competitive and is
dominated by major companies such as The Coca Cola Company ("Minute
Maid(R)") and Seagram of Canada ("Tropicana(R)"), although presently
the major orange juice companies are primarily involved in the
production of chilled pasteurized juice and frozen concentrate.
The Company has received a patent on its container and on the
functional process of selling a frozen container with frozen
freshly squeezed juice. The Company believes that it competes
effectively with its competitors on the basis of quality.
Patents and Proprietary Protection
The Company was granted U.S. Patent No. 4,816,273 on
March 28, 1989 related to a process for preparing a frozen whole
juice product which upon defrosting has the taste and nutritional
content of freshly squeezed whole juice, the process including
filling a self-supporting bottle-like container with the whole
juice. The U.S. Patent and Trademark Office recently reissued this
patent with a broader claim coverage under RE 35038. The
trademarks "Just Pik't(R)", "Fresh Pik't(R)" and "Florida Pik't(R)"
have been registered by the Company in the U.S. Patent and Trademark
Office and with appropriate agencies in various foreign countries.
Raw Material
The only ingredient used to produce "Just Pik't(R)", "Fresh
Pik't(R)" and "Florida Pik't(R)" orange and grapefruit juice is fresh
Florida citrus fruit. A lack of availability of quality fruit and
higher cost of citrus would hamper the Company's ability to
maintain its rate of growth and its gross margin. The Company has
expanded its product line to other non-carbonated beverages which
to some extent will provide the Company with flexibility in the
event that the price of a certain fruit should be dramatically
increased.
Although it can give no assurances, in 1996 the Company
expects to expand its product line to other food products in order
to lessen its reliance on citrus fruits.
The Company's containers are made of plastic and are
manufactured by a major "blow molding" manufacturer. The Company
owns the molds that are used to make the bottles and the machines
that fill the bottles and apply the tamper evident caps. As there
are several major independent plastic bottle manufacturers, the
Company does not believe that it is dependent upon this
manufacturer for the production of the bottles.
Employees and Consultants
The Company currently has ten full-time and three part-
time employees at its headquarters in Great Neck, New York, and 40
employees at the Florida Plant, some of whom are seasonal workers.
The Company believes that this number of employees is sufficient to
operate the Company, because the Company engages independent
contractors for production, distribution and marketing services.
The Company's employees are not represented by a labor union.
ITEM 2. DESCRIPTION OF PROPERTY.
The Company leases approximately 1,000 square feet of
office space for its New York headquarters located at 350 Northern
Boulevard, Great Neck, New York for an aggregate current yearly
rental of approximately $22,496. The lease terminates in November,
1997. Such lease may be terminated by the Company on six months
notice.
The Florida Plant, located at 1000 American Superior
Boulevard, Winter Haven, Florida, consists of a 70,000 square foot
facility on four acres; 20,000 square feet of which consists of
either chilled or freezer space. The Florida Plant contains the
first spiral quick freeze systems in the citrus industry. For
additional information regarding the Florida Plant, see "Item 1 -
Description of Business -- The Florida Plant".
The Company believes that it has adequate insurance for
its office space in Great Neck, New York and the Florida Plant.
The Company does not, and has no intent to, make
investments in real estate mortgages or securities of, or interests
in, persons primarily engaged in real estate activities. The
acquisition and renovation of the Florida Plant was for the purpose
of facilitating the operations of the business. The Company does
not, and has no intent to, invest in real estate solely for
investment purposes.
ITEM 3. LEGAL PROCEEDINGS.
There are no material legal proceedings to which the
Company is a party or to which any of its property is subject.
ITEM 4. SUBMISSION OF MATTERS TO
A VOTE OF SECURITY-HOLDERS.
No matters have been submitted to a vote of security-
holders during the fourth quarter of the 1995 fiscal year.
PART II
ITEM 5. MARKET FOR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock, $.01 par value, is traded in
the over-the-counter market under the symbol "FRSH". Price
quotations are available through the NASDAQ system. The following
tabulation sets forth the high and low bid price quotations by
quarter as reported by the National Quotation Bureau, Inc. The
prices shown in the tabulation reflect inter-dealer prices, do not
include retail mark-up, mark-down or commission and do not
necessarily represent actual transactions.
CLOSING BID CLOSING ASK
1995 High Low High Low
- ---- ---- --- ---- ---
Fourth fiscal quarter $2-3/4 $1-1/2 $3.00 $1-11/16
Third fiscal quarter $3-1/2 $2-3/8 $3-3/4 $2-3/4
Second fiscal quarter $2-7/16 $1-7/8 $2-3/4 $2.00
First fiscal quarter $2.00 $1-3/4 $2-1/8 $1-15/16
CLOSING BID CLOSING ASK
1994 High Low High Low
- ---- ---- --- ---- ---
Fourth fiscal quarter $2-5/8 $1-1/8 $2-7/8 $1-13/16
Third fiscal quarter $3-3/16 $2-1/6 $3-7/16 $2-1/2
Second fiscal quarter $3-7/8 $2-1/2 $4-1/8 $3-4/16
First fiscal quarter $4-5/16 $3-3/8 $4-1/2 $3-5/8
The Company does not pay any dividends on its Common Stock
and does not anticipate paying any cash dividends in the foreseeable
future. The Company plans to retain its future earnings, if any,
to finance the growth and development of its operations.
On February 21, 1996, the closing bid quotation as
reported on the NASDAQ system was $2-15/32. As of February 21,
1996, there were approximately 154 holders of record of the
Company's common stock.
During fiscal year ended November 30, 1995, the Company
purchased 4,800 shares of its common stock for its treasury. The
Company may purchase additional shares during the remainder of the
1996 fiscal year.
ITEM 6. MANAGEMENT'S DISCUSSION
AND ANALYSIS OR PLAN OF OPERATION.
The following discussion and analysis should be read in
conjunction with the Financial Statements and Notes thereto
appearing elsewhere in this report.
Year Ended November 30, 1995 Compared to Year Ended November 30, 1994
Net sales increased from $8,171,803 in 1994 to $9,219,184 in
1995 primarily as a result of the distribution of organic
produce by the Company during 1995.
Gross profit increased from $3,007,997 in 1994 to $3,183,701 in
1995 as a result of the increase in sales volume. The decrease
in gross margin from 36.8% in 1994 to 34.5% in 1995 is
attributable to increases in cost of product, as well as the
distribution of organic produce during 1995, which generates
lower margins than the Company's juice products.
Selling, general and administrative expenses increased from
$2,451,055 in 1994 to $2,820,356 in 1995 primarily due to the
salary and other operating expenses associated with the sales
of organic produce by the Company during 1995 offset by a
reduction in professional fees.
Year Ended November 30, 1994 Compared to Year Ended November 30, 1993
Net sales decreased from $8,265,588 in 1993 to $8,171,803 in 1994,
which management believes is resultant from lower levels of
promotional activities.
Gross profit decreased from $3,625,848 in 1993 to $3,007,997 in
1994 as a result of the decrease in sales volume and decrease
in gross margin. The gross margin has decreased from 43.8% to
36.8% primarily due to an increase in the cost of product.
Selling, general and administrative expenses increased from
$2,367,523 in 1993 to $2,451,055 in 1994 primarily due to
increased trucking, warehouse, advertising and promotional
costs.
Liquidity and Capital Resources
The Company had working capital of $3,919,590 at November 30, 1995
compared to $4,112,211 at November 30, 1994. The Company
requires capital to support the level of inventory required to
meet current demand as well as expected future increases in
demand for its product. The Company believes it processed
sufficient product to meet its current demand during the 1995
harvesting season, which ended August 1995. A lack of
availability of quality fruit and higher cost of citrus would
hamper the Company's ability to maintain its rate of growth and
its gross margin.
In August 1995, the Company purchased land and a vacant building in
the amount of $625,000 for the purpose of manufacturing juice
products. The Company financed $475,000 of the purchase
through a mortgage note, secured by the land and building,
maturing in August 1998 and bearing interest at 7.0% per annum.
The remaining $150,000 was paid from available working capital.
The Company began refurbishment of the building with total
contract costs estimated at $2,300,000 of which $1,437,887 has
been expended as of November 30, 1995. The Company entered
into a term loan for $1,100,000 with a bank to finance certain
leasehold improvements and purchases of machinery and
equipment. The term loan bears interest at the bank's prime
rate plus 1/2 of 1% and matures on September 30, 2000. This
term loan is secured by all equipment of the Company.
In addition, the Company maintains a $1,500,000 line of credit with
Chemical Bank which expires on May 31, 1996. As of the date
hereof, the Company has not borrowed any amounts under such
line of credit.
Inflation
The Company believes that its business is not affected by inflation
to any extent greater than that of the general economy.
Recent Accounting Pronouncements
The Financial Accounting Standards Board (FASB) has issued
Statement No.121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of (Statement
121), in March 1995. Under Statement 121, the Company is
required to assess the recoverability and carrying amount of
long-lived assets, certain identifiable intangible assets and
goodwill related to those assets, whenever events or changes in
circumstances indicate impairment. Statement 121 provides the
methodology for the measurement of such impairment to be
recognized in the financial statements. The provisions of
Statement 121 are effective for financial statements for fiscal
years beginning after December 15, 1995 and earlier adoption is
permitted. The provisions of Statement 121 must be implemented
by the Company no later than fiscal year 1997. The effect of
initially applying these provisions shall be reported in the
period in which the recognition criteria are first applied and
met or in the case of long-lived assets held for disposal, as
the cumulative effect of a change in accounting principle at
the date of adoption. The Company believes that the
implementation will not have a material impact on the Company's
consolidated financial position.
The FASB has issued Statement No.123, Accounting for Stock-Based
Compensation (Statement 123), in October 1995. Under Statement
123, the Company is required to choose either the new fair
value method or the current intrinsic value method of
accounting for its stock-based compensation arrangements. Using
the fair value method, the Company would measure the
compensation cost recognized in the consolidated financial
statements based upon the estimated fair value of the
stock-based compensation arrangements as of the date they are
granted. The intrinsic value method, under APB Opinion No.25,
Accounting for Stock Issued to Employees (APB 25), requires the
recognition of compensation cost only if the exercise price of
options is less than the market value of the underlying stock
on the measurement date. The Company will continue to account
for all employee stock-based compensation plans under APB 25
and adopt the provisions of Statement 123, as required, for all
stock-based arrangements issued to nonemployees. Even though
the Company has opted not to change its method of accounting,
Statement 123 requires pro forma disclosures of net earnings
and earnings per share computed as if the fair value method had
been applied. The accounting requirements of Statement 123 are
effective for transactions entered into in fiscal years
beginning after December 15, 1995 and the disclosure, including
pro forma, requirements are effective for financial statements
for fiscal years beginning after December 15, 1995.
Accordingly, the provisions of Statement 123 must be
implemented by the Company no later than fiscal year 1997.
ITEM 7. FINANCIAL STATEMENTS.
See the financial statements following Item 13 of this
Annual Report on Form 10-KSB.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS
(a) Set forth below is certain information concerning
the directors of the Company:
Year First
Name Age Position Elected
- ---- --- -------- ----------
Steven Smith 48 Chairman of the Board, 1985
President and Chief Executive
Officer
Kathy Siegel 48 Treasurer and Chief Financial 1987
Officer
Carol Smith 49 Secretary 1987
Directors serve until the next annual meeting of shareholders
and until their respective successors are elected.
(b) Set forth below is certain information concerning
the executive officers and significant employees of the Company and
its subsidiaries:
Year First
Name Age Position Elected
- ---- --- -------- ----------
Steven Smith 48 Chairman of the Board, 1985
President and Chief Executive
Officer
Kathy Siegel 48 Treasurer and Chief Financial 1987
Officer
Carol Smith 49 Secretary 1987
Jeffrey Smith 24 Vice President-Strategic 1996
Planning and Investor Relations
Paul Ballentine 34 Vice President-Production 1995
and Product Development
Executive officers serve until the next annual meeting of
the Company's Board of Directors and until their respective
successors are elected.
Steven Smith is a founder of the Company and has been
Chairman of the Board, President and Chief Executive Officer of the
Company since its organization in July, 1985. Mr. Smith has been
involved for more than 27 years of his business career in the
marketing and distribution of various food products for major food
companies. From 1969 to 1983 he was Executive Vice President and
a significant shareholder of Calip Dairies, participating from its
inception in the marketing of Frusen Gladje ice cream. From 1983
to 1985, Mr. Smith was General Manager of Elmhurst Milk & Cream, a
major dairy operating in the New York City metropolitan area.
Kathy Siegel was employed as a part-time bookkeeper for
Merit Farms, Inc. from March, 1986 until October, 1986. Effective
in September, 1986, Mrs. Siegel, while an independent contractor,
became the Company's Treasurer and Chief Financial Officer, and
effective in October, 1986, Mrs. Siegel became an employee of the
Company. Prior to March, 1986, Mrs. Siegel held several voluntary
positions involving financial responsibilities.
Carol Smith has been Secretary and a member of the Board
since December 1987. Mrs. Smith is a licensed real estate broker
with Better Homes and Gardens Realtors, Great Neck, New York. She
became an employee of the Company as of January 1, 1993. Mrs.
Smith is the wife of the founder of the Company, Steven Smith.
Jeffrey Smith has been Vice President-Strategic Planning
and Investor Relations since January 1996. Prior to joining the
Company, Mr. Smith was employed by LSG Advisors, the mergers and
acquisitions division of Societe General since August 1994. Prior
to such time, Mr. Smith was a student at the Wharton School of
Business at the University of Pennsylvania from which he graduated
in May 1994. Mr. Jeffrey Smith is the son of the founder of the
Company, Steven Smith.
Paul Ballentine has been Vice President-Production and
Product Development since August 1995. Prior to joining the
Company, Mr. Ballentine was Plant Manager at Winter Garden Citrus
Products Coop since November 1993. From October 1989 through
October 1993, Mr. Ballentine was Director of Plant Operations for
Indian River Foods, Inc.
ITEM 10. EXECUTIVE COMPENSATION.
(a) The following table sets forth the cash compensation
in each of the last three completed fiscal years to the Company's
chief executive officer and one significant employee. The table
omits other executive officers employed by the Company on November
30, 1995 because neither of those officers received 1995 cash
compensation in excess of $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
Other
Annual Long-Term Other
Name and Compensation Compensation Compensation
Principal Position Year Salary($)(1) Bonus($) ($) ($) ($)
- ------------------ ---- ------------ -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Steven Smith, 1995 355,000 -- -- -- --
Chairman, President 1994 348,700
and Chief Executive 1993 348,398 -- -- --
Officer
Paul Ballentine, 1995 125,000 -- -- --
Vice President 1994 12,500 -- -- -- --
1993 -- -- -- --
</TABLE>
- ----------
(1) This amount does not include perquisites and other personal
benefits, securities or property because the aggregate amount
thereof in each fiscal year did not exceed $50,000 or 10% of the
total annual salary and bonus reported for the named executive
officer or significant employee.
During the last three completed fiscal years, the Company
granted no restricted stock awards, stock options or stock
appreciation rights (whether freestanding or in tandem with stock
options). In December, 1993, however, pursuant to the Company's
Incentive Stock Option Plan, Mr. Smith was granted options to
purchase 60,000 shares of the Common Stock of the Company,
presently exercisable at $3.50 per share.
(b) Aggregate Option Exercises
The following table shows stock options exercised by the
Company's executive officers during 1995, including the aggregate
value of any gains on the date of exercise. In addition, this
table includes the number of shares covered by both exercisable and
non-exercisable stock options as of November 30, 1995. Also
reported are values for "in-the-money" options which represent the
positive spread between the exercise price of outstanding stock
options and the year-end price of Company common stock. Values for
"out-of-the-money" options are not reported.
<TABLE>
<CAPTION>
1995 FISCAL YEAR END OPTIONS
No. of Shares Covered by Value of In-the-Money
Unexercised Options at Unexercised Stock Options
Options at 11/30/95 at 12/31/95 ($) (2)
------------------------- -------------------------
Shares
Acquired on Value Exercisable Not Exercisable Not
Name Exercise Realized (1) Exercisable (1) Exercisable
- ---- ----------- -------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Steven Smith -- -- 160,000 -- 114,500 --
</TABLE>
- ------------
(1) Includes options to purchase 100,000 shares of Common Stock
exercisable at $1.375 per share and 60,000 shares of Common Stock
exercisable at $3.50 per share.
(2) Amounts reflect valuation of options to purchase 100,000 shares
of Common Stock at $2.52 the February 21, 1996 average of the
closing bid and asked prices of Company Common Stock as quoted on
the NASDAQ System.
(c) Employment Agreements. In August 1994, the Company
entered into a three-year employment agreement with Mr. Smith
providing for an annual salary of $350,000, subject to upward
adjustments for increases in the consumer price index. Such
employment agreement provides for three renewal periods of three
years each.
In December 1994, the Company entered into an employment
agreement for an undefined term with Mr. Ballentine providing for
an annual salary of $125,000.
(d) Directors' fees. Directors do not receive any
compensation for serving on the Board.
(e) Incentive Stock Option Plan. In October, 1988, the
Company's Board of Directors adopted The Fresh Juice Company, Inc.
Incentive Stock Option Plan (the "Plan"). Pursuant to the Plan,
options covering a maximum of 175,000 shares of the Company's
Common Stock may be offered to key employees of the Company. At
the date hereof, the Company has issued the full amount of such
options. The exercise price of any stock option issued under the
Plan is equal to at least 100% of the fair market value of the
Company's Common Stock at the time the option is granted. All
options granted expire 10 years from the date of the grant. The
Board of Directors has appointed a Stock Option Plan Committee to
recommend to the Board the key employees to receive options and the
number of shares subject to such options. At February 21, 1996,
options to buy 160,000 shares of Common Stock had been granted to
Steven Smith. Of such amount, options to buy 100,000 shares of
Common Stock at the price of $1.375 per share are exercisable until
October 15, 1998 and options to buy 60,000 such shares at a price
of $3.50 per share are exercisable until December 1998. In
addition, options to buy 15,000 such shares at the price of $1.25,
exercisable until 1998 have been granted to Kathy Siegel. Neither
Mr. Smith nor Ms. Siegel have exercised any of their options as of
the date hereof.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth as of February 21, 1996,
information concerning (a) the shares held by each person or group
known to the Company to be the beneficial owner of more than 5% of
the outstanding shares of common stock, (b) the shares of common
stock held by each director, and (c) the shares of common stock
owned by all directors and officers as a group. Each person named
or included in a group has sole voting and investment power with
respect to his shares.
Name and Address of Beneficial Number of Shares Percent
Owner or Identity of Group Beneficially Owned of Class
------------------------------ ------------------ --------
Steven Smith 1,660,000 46.76%
c/o The Fresh Juice Company, Inc.
350 Northern Boulevard
Great Neck, New York 11021
All directors and officers 1,660,000 46.76%
as a group (5 in number)
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
For a description of grants to Steven Smith of options to
purchase an aggregate amount of 160,000 shares of the Company's
Common Stock and Kathy Siegel of an aggregate amount of 15,000 such
shares, each pursuant to the Company's Incentive Stock Option Plan,
see Item 10, "Executive Compensation - Incentive Stock Option
Plan."
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
3.1 Certificate of Incorporation -- incorporated by reference
to Exhibit 3.1 to the Company's Registration Statement,
SEC File No. 33-8878-NY on Form S-18 (the "Registration
Statement").
3.2 By-laws -- incorporated by reference to Exhibit 3.2 of
the Registration Statement.
10. Incentive Stock Option Plan -- incorporated by reference
to Exhibit 10 of the Company's 1988 Annual Report on Form
10-K, SEC File No. 0-15320.
10.1 Employment Agreement between the Company and Steven
Smith -- incorporated by reference to Exhibit 10 of the
Company's 1994 Annual Report on Form 10-KSB.
10.2 Loan Agreement, dated as of January 24, 1994, between The
Ultimate Juice Company, Inc. and the Company --
incorporated by reference to Exhibit 1 of the Company's
Current Report on Form 8-K dated February 14, 1994, SEC
File No. 0-15320.
10.3 Option Agreement, dated as of January 24, 1994, among the
Company, Steven Smith, Albert Rountree, Daniel Petry,
Steven Bogen, The Ultimate Juice Company, Inc. and Clear
Springs Citrus, Inc. -- incorporated by reference to
Exhibit 2 of the Company's Current Report on Form 8-K
dated February 14, 1994, SEC File No. 0-15320.
10.4 Loan Agreement and Rider thereto, dated as of September
11, 1995, between Fresh Juice of Florida and Chemical
Bank.
10.5 Employment Agreement between the Company and Paul
Ballentine
10.6 Purchase Money Mortgage between the Company and Fantasy-
BlankeBaer Corporation
10.7 Promissory Note in favor of Fantasy-BlankeBaer
Corporation made by the Company
27 Financial Data Schedule
(b) Reports on Form 8-K.
No Current Reports on Form 8-K were filed by the Company
during the last quarter of 1995. However, the Company filed a
Current Report on Form 8-K dated August 3, 1995, with respect to
the acquisition of the Florida Plant. See Item 1, "Description of
Business" and Item 2, "Description of Property" above.
THE FRESH JUICE COMPANY, INC.
AND SUBSIDIARIES
Consolidated Financial Statements
November 30, 1995 and 1994
(With Independent Auditors' Report Thereon)
KPMG Peat Marwick LLP
One Jericho Plaza
Jericho, New York 11753
Independent Auditors' Report
The Board of Directors
The Fresh Juice Company, Inc.
and subsidiaries:
We have audited the accompanying consolidated balance sheets of The
Fresh Juice Company, Inc. and subsidiaries as of November 30, 1995 and
1994, and the related consolidated statements of earnings,
shareholders' equity, and cash flows for each of the years in the
three-year period ended November 30, 1995. These consolidated
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of The Fresh Juice Company, Inc. and subsidiaries as of November 30,
1995 and 1994, and the results of their operations and their cash
flows for each of the years in the three-year period ended November
30, 1995 in conformity with generally accepted accounting principles.
Jericho, New York
January 12, 1996
<TABLE>
<CAPTION>
THE FRESH JUICE COMPANY, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
November 30, 1995 and 1994
1995 1994
---- ----
<S> <C> <C>
Assets
Current assets:
Cash $1,998,063 1,542,584
Short-term investments (note 2) -- 789,116
Trade accounts receivable 591,727 679,392
Inventories (note 3) 1,544,821 1,373,712
Current portion of note receivable (note 4) 120,000 120,000
Income taxes receivable -- 70,494
Other 3,747 16,521
---------- ----------
Total current assets 4,258,358 4,591,819
---------- ----------
Property, plant and equipment, at cost (note 6):
Land 30,000 --
Building 597,155 --
Equipment 353,794 307,226
Molds 196,338 169,048
Automobiles 103,058 81,065
Construction-in-progress 1,437,887 --
---------- ----------
2,718,232 557,339
Less accumulated depreciation 499,256 433,429
---------- ----------
Net property, plant and equipment 2,218,976 123,910
Note receivable, net of current portion (note 4) 20,000 140,000
Trademarks and patents, net of accumulated amortization
of $11,059 and $43,781 in 1995 and 1994, respectively 10,903 3,070
---------- ----------
Total assets $6,508,237 4,858,799
========== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of long-term debt (note 6) 45,832 --
Accounts payable and accrued expenses (note 5) 244,697 479,608
Income taxes payable 48,239 --
---------- ----------
Total current liabilities 338,768 479,608
Long-term debt, net of current installments (note 6) 1,529,168 --
---------- ----------
Total liabilities 1,867,936 479,608
---------- ----------
Shareholders' equity (note 8):
Series preferred stock, par value $10. Authorized 200,000 shares;
none issued (note 10) -- --
Common stock, par value $.01. Authorized 5,000,000 shares; issued
3,762,000 shares; outstanding 3,550,062 amd 3,554,862 shares in
1995 and 1994, respectively 37,620 37,620
Additional paid-in capital 2,396,490 2,396,490
Retained earnings 2,489,484 2,218,441
---------- ----------
4,923,594 4,652,551
Less cost of common shares held in treasury:
211,938 and 207,138 shares in 1995 and 1994, respectively 283,293 273,360
---------- ----------
Total shareholders' equity 4,640,301 4,379,191
---------- ----------
Commitments and Contingency (note 9)
Total liabilities and shareholders' equity $6,508,237 4,858,799
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
<CAPTION>
THE FRESH JUICE COMPANY, INC.
AND SUBSIDIARIES
Consolidated Statements of Earnings
Years ended November 30, 1995, 1994 and 1993
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net sales $ 9,219,184 8,171,803 8,265,588
Cost of goods sold 6,035,483 5,163,806 4,639,740
----------- ----------- -----------
3,183,701 3,007,997 3,625,848
Selling, general and administrative expenses 2,820,356 2,451,055 2,367,523
----------- ----------- -----------
Earnings from operations 363,345 556,942 1,258,325
Interest income 104,104 88,292 87,360
Interest expense (24,355) -- --
----------- ----------- -----------
Earnings before provision for income taxes 443,094 645,234 1,345,685
Provision for income taxes (note 7) 172,051 256,396 549,193
----------- ----------- -----------
Net earnings $ 271,043 388,838 796,492
=========== =========== ===========
Net earnings per common share $ .07 .11 .22
=========== =========== ===========
Weighted average number of common and
common equivalent shares outstanding 3,889,740 3,612,679 3,602,383
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
<CAPTION>
THE FRESH JUICE COMPANY, INC.
AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
Years ended November 30, 1995, 1994 and 1993
Common stock Additional Total
------------ paid-in Retained Treasury shareholders'
Shares Amount capital earnings stock equity
------ ------ ------- -------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Balance at November 30, 1992 3,762,000 $ 37,620 2,396,490 1,033,111 (76,280) 3,390,941
Purchase of 106,988 shares of treasury stock -- -- -- -- (197,080) (197,080)
Net earnings for the year ended November 30, 1993 -- -- -- 796,492 -- 796,492
---------- ---------- ---------- ---------- ---------- ----------
Balance at November 30, 1993 3,762,000 37,620 2,396,490 1,829,603 (273,360) 3,990,353
Net earnings for the year ended November 30, 1994 -- -- -- 388,838 -- 388,838
---------- ---------- ---------- ---------- ---------- ----------
Balance at November 30, 1994 3,762,000 37,620 2,396,490 2,218,441 (273,360) 4,379,191
Purchase of 4,800 shares of treasury stock -- -- -- -- (9,933) (9,933)
Net earnings for the year ended November 30, 1995 -- -- -- 271,043 -- 271,043
---------- ---------- ---------- ---------- ---------- ----------
Balance at November 30, 1995 3,762,000 $ 37,620 2,396,490 2,489,484 (283,293) 4,640,301
========== ========== ========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
<CAPTION>
THE FRESH JUICE COMPANY, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended November 30, 1995, 1994 and 1993
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 271,043 388,838 796,492
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Depreciation and amortization 68,101 52,727 60,048
Gain on sale of property and equipment -- -- (2,594)
Changes in assets and liabilities:
Decrease (increase) in trade accounts receivable 87,665 11,513 (243,418)
Increase in inventories (171,109) (140,359) (175,978)
Decrease (increase) in income taxes receivable 70,494 (70,494) --
Decrease (increase) in other current assets 12,774 (799) (11,901)
Increase in other assets (10,107) -- --
Increase (decrease) in accounts payable
and accrued expenses (234,911) 77,290 237,015
Increase (decrease) in income taxes payable 48,239 (380,510) 294,037
----------- ----------- -----------
Net cash provided by (used in)
operating activities 142,189 (61,794) 953,701
----------- ----------- -----------
Cash flows from investing activities:
Increase in note receivable -- (300,000) --
Installments from note receivable 120,000 40,000 --
Decrease in short-term investments 789,116 208,207 488,786
Proceeds on sale of assets -- -- 5,137
Acquisitions of property, building and equipment (2,160,893) (84,468) (43,635)
----------- ----------- -----------
Net cash provided by (used in)
investing activities (1,251,777) (136,261) 450,288
----------- ----------- -----------
Cash flows from financing activities:
Purchase of treasury stock (9,933) -- (197,080)
Proceeds from long-term debt 1,575,000 -- --
----------- ----------- -----------
Net cash provided by (used in)
financing activities 1,565,067 -- (197,080)
----------- ----------- -----------
Net increase (decrease) in cash 455,479 (198,055) 1,206,909
Cash at beginning of year 1,542,584 1,740,639 533,730
----------- ----------- -----------
Cash at end of year $ 1,998,063 1,542,584 1,740,639
=========== =========== ===========
Supplemental cash flow information
Income taxes paid $ 53,318 706,900 255,155
=========== =========== ===========
Interest paid $ 16,542 -- --
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
THE FRESH JUICE COMPANY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
November 30, 1995 and 1994
(1) Summary of Significant Accounting Policies
(a) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
The Fresh Juice Company, Inc. and its subsidiaries, Fresh Pik't
Natural Foods, Inc. (Fresh Pik't), The Fresh Juice Company of Florida,
Inc. and Minalba Foods of North America, Inc. (Minalba), (collectively
referred to as the Company). All material intercompany accounts and
transactions have been eliminated.
(b) Organization
The Fresh Juice Company, Inc. markets and distributes frozen
fresh-squeezed fruit juices through supermarket chains and other
retail outlets throughout the United States. The Company also markets
its products internationally. In August 1995, the Company ceased the
operations of Fresh Pik't, which sold and distributed organic produce,
and sold certain of its assets to an unrelated party. The gain on sale
of such assets was not material to the operations of the Company in
1995. In 1995 and 1994, included in the Company's net sales were
$2,004,437 and $313,819 from the operations of Fresh Pik't,
respectively. Included in net earnings were ($66,278) and $4,227
representing the results of operations for Fresh Pik't in 1995 and
1994, respectively.
In September 1995, the Company, through its wholly-owned subsidiary The
Fresh Juice Company of Florida, Inc., began the renovation and
refurbishment of a plant (the Florida Plant) for the purpose of
processing fruit juices. The Fresh Juice Company of Florida, Inc. will
be responsible for the maintenance of the plant and the operations of
the fruit juice processing. The Company anticipates total
refurbishment costs to be $2,300,000 of which $1,437,887 has been
expended as of November 30, 1995.
For the three year period ended November 30, 1995, there were no operations
of Minalba.
(c) Short-Term Investments
Effective December 1, 1994, the Company adopted the provisions of Statement
of Financial Accounting Standards No.115, Accounting for Certain
Investments in Debt and Equity Securities (Statement 115), which was
issued by the Financial Accounting Standards Board (FASB) in May 1993.
Statement 115 generally requires that debt and equity securities that
have readily determinable fair values be carried at fair value unless
they are classified as held-to-maturity. Securities classified as
held-to-maturity are carried at amortized cost only if the reporting
entity has the intent and ability to hold those securities to
maturity. Securities classified as trading are principally held for
the purpose of selling them in the near term. If not classified as
held-to-maturity or trading, such securities are classified as
available-for-sale. There was no material effect of adopting the
provisions of Statement 115 on the consolidated financial statements
in 1995.
Prior to December 1, 1994, short-term investments were valued at the lower
of cost or market.
(d) Inventories
Inventories are stated at the lower of cost or market, with cost determined
by using the first-in, first-out (FIFO) method.
(e) Depreciation
Depreciation is provided over the estimated useful lives of the respective
assets: seven years for the equipment and molds and five years for the
automobiles using accelerated methods and thirty-nine years for the
building using the straight-line method.
(f) Net Earnings Per Common Share
Net earnings per common share is based on the weighted average number of
common and common equivalent shares outstanding, using the treasury
stock method. In 1995, 1994 and 1993 common share equivalents used in
the computation of earnings per share represent the options granted to
key employees under the Company's Incentive Stock Option Plan if their
exercise would have had a dilutive effect on net earnings per common
share.
In 1995, 1994 and 1993, net earnings per common share assuming full
dilution has not been presented since the average market price for
each period exceeded the market price of the Company's stock at the
end of each period.
(g) Income Taxes
Effective December 1, 1993, the Company adopted the provisions of Statement
of Financial Accounting Standards No.109, Accounting for Income Taxes
(Statement 109). Under the asset and liability method of Statement
109, 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 Statement 109, the effect on deferred
taxes of a change in tax rates is recognized in income in the period
that includes the enactment date. There was no material effect of
applying Statement 109 on net earnings for the year ended November 30,
1994 and there was no cumulative effect of a change in accounting
principles as of December 1, 1993.
Pursuant to the deferred method under APB Opinion No.11, which was applied
in 1993, deferred income taxes were recognized for income and expense
items that are reported in different years for financial reporting
purposes and income tax purposes using the tax rate applicable for the
year of the calculation. Under the deferred method, deferred taxes are
not adjusted for subsequent changes in tax rates.
(h) Reclassifications
Certain reclassifications were made to the prior year balances to conform
to the presentation adopted in the current year.
(2) Short-Term Investments
At November 30, 1995, the Company has no short-term investments. Proceeds
from the sale of short-term investments were $804,051 and net realized
gains included in earnings were $14,935 in 1995.
At November 30, 1994, short-term investments were composed of
certificates of deposit, government bonds and equity securities.
(3) Inventories
Inventories at November 30, 1995 and 1994 consist of the following:
1995 1994
---- ----
Packaging materials $ 138,062 50,755
Finished goods 1,406,759 1,322,957
---------- ---------
$1,544,821 1,373,712
========== =========
(4) Note Receivable
In January 1994, the Company and The Ultimate Juice Company Inc. (Ultimate)
entered into a loan agreement pursuant to which the Company loaned
Ultimate $300,000. The loan bears interest at a rate of 5% per annum,
payable monthly, which commenced in July 1994. The principal amount of
the loan shall be repaid in 30 equal monthly installments of $10,000
per month which commenced in August 1994. At November 30, 1995 and
1994, the amount receivable was $20,000 and $140,000, each net of a
current portion of $120,000.
In partial consideration for the loan, the Company was granted an option
to purchase outstanding capital stock of Ultimate and its affiliate,
Clear Springs Citrus, Inc., which are privately owned companies
engaged in the production and distribution of orange juice products.
In 1994, the option agreement expired by its terms without the Company
exercising its option.
(5) Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consist of the following at November
30, 1995 and 1994:
1995 1994
---- ----
Accounts payable $ 82,859 219,700
Compensation 57,560 80,000
Sales and marketing 65,703 74,000
Legal and accounting 25,000 97,500
Other 13,575 8,408
-------- -------
$244,697 479,608
======== =======
(6) Long-Term Debt
Long-term debt at November 30, 1995 consists of a term loan for $1,054,168,
net of current installments of $45,832 and a mortgage note of
$475,000. There was no long-term debt outstanding at November 30,
1994.
On October 3, 1995, the Company entered into a term loan for $1,100,000
with a bank to finance certain leasehold improvements and purchases of
machinery and equipment. The loan bears interest, payable monthly, at
the bank's prime rate plus 1/2 of 1% (8.75% at November 30, 1995).
Principal payments on the loan are due monthly, commencing on October
31, 1996 through the maturity date of September 30, 2000. The loan
contains restrictions regarding the ability of the Company and the
Fresh Juice Company of Florida, Inc. to, among others, incur
additional indebtedness, grant liens, make capital expenditures in
excess of $200,000 in any year (other than with respect to the Florida
Plant), sell or transfer its assets, consolidate or merge with another
corporation, and declare or pay dividends. Additionally, this loan
contains various financial covenants including among others, the
maintenance of debt coverage and leverage ratios and a minimum level
of tangible net worth. This loan is secured by all equipment of the
Company.
On August 3, 1995, the Company executed a mortgage note for $475,000 plus
interest at a rate of 7.0% per annum. The Company is required to make
monthly payments of interest of $2,771 from September 1, 1995 through
February 1, 1997 and monthly payments of principal and interest of
$3,683 from March 1, 1997 through maturity when the remaining
outstanding principal is due. The proceeds of the note plus $150,000
in cash were used to acquire the land and vacant building to be used
by The Fresh Juice Company of Florida, Inc. The seller holds the
mortgage note which is secured by the land and building.
At November 30, 1995 and 1994, the Company has available a line of credit
for $1,500,000 with a bank which expires on May 31, 1996. There were
no outstanding amounts under this line of credit at November 30, 1995
and 1994.
The aggregate annual maturities of long-term debt for each of the next
five years ended November 30 are as follows: 1996, $45,832; 1997,
$283,199; 1998, $741,785; 1999, $274,992; and 2000, $229,192.
(7) Income Taxes
Components of income tax expense are as follows:
1995 1994 1993
---- ---- ----
Federal $139,266 184,721 407,971
State 32,785 71,675 141,222
-------- ------- -------
$172,051 256,396 549,193
======== ======= =======
The reconciliation of the Company's effective income tax rate and the
Federal statutory rate is as follows:
1995 1994 1993
---- ---- ----
Federal statutory rate 34% 34% 34%
State taxes, net of Federal benefit 5 7 7
Other, net - (1) -
-- -- --
39% 40% 41%
== == ==
(8) Incentive Stock Options
At November 30, 1995, there were stock options outstanding entitling key
employees to purchase 100,000 shares and 15,000 shares of common stock
at $1.375 and $1.25, respectively, per share. These options are
exercisable until October 15, 1998. Additionally, there were stock
options, exercisable until December 1998, to purchase 60,000 shares of
common stock at $3.50 per share. At November 30, 1995, no options have
been exercised and the Company has reserved 175,000 shares of common
stock for the potential exercise of such options.
In October 1995, Statement of Financial Accounting Standards No.123,
Accounting for Stock-Based Compensation (Statement 123), was issued.
Under Statement 123, the Company is required to choose either the new
fair value method or the current intrinsic value method of accounting
for its stock-based compensation arrangements. Using the fair value
method, the Company would measure the compensation cost recognized in
the consolidated financial statements based upon the estimated fair
value of the stock-based compensation arrangements as of the date they
are granted. The intrinsic value method, under APB Opinion No.25,
Accounting for Stock Issued to Employees (APB 25), requires the
recognition of compensation cost only if the exercise price of options
is less than the market value of the underlying stock on the
measurement date. The Company will continue to account for all
employee stock-based compensation plans under APB 25 and adopt the
provisions of Statement 123, as required, for all stock-based
arrangements issued to nonemployees. Even though the Company has opted
not to change its method of accounting, Statement 123 requires pro
forma disclosures of net earnings and earnings per share computed as
if the fair value method had been applied. The accounting requirements
of Statement 123 are effective for transactions entered into in fiscal
years beginning after December 15, 1995 and the disclosure, including
pro forma, requirements are effective for financial statements for
fiscal years beginning after December 15, 1995. Accordingly, the
provisions of Statement 123 must be implemented by the Company no
later than fiscal year 1997.
(9) Commitments and Contingency
The Company is obligated under various operating leases covering its
office space, warehouse and automobiles. Rent expense for the years
ended November 30, 1995, 1994 and 1993 was $102,944, $79,449 and
$80,597, respectively. The aggregate future minimum lease commitments
under these leases for the year ending November 30, 1996 amounts to
$12,745.
The Company has an employment agreement with an officer that called for
annual base payments of $240,000, subject to upward adjustment for
increases in the consumer price index. The agreement was renewed in
1994 increasing the annual base payment to $350,000, subject to upward
adjustment for increases in the consumer price index through 2006.
Additionally, the Company has an employment agreement with a
significant employee of The Fresh Juice Company of Florida, Inc.,
which calls for annual compensation of $125,000.
In January 1996, Fresh Pik't was named as a defendant in a legal matter
which seeks damages in excess of $250,000. Management of the Company
believes that the ultimate resolution of this matter will not have a
material impact on the financial position of the Company.
(10) Series Preferred Stock
The Company's Board of Directors may, without further action by the
Company's shareholders, from time to time direct the issuance of
preferred stock in series and, at the time of issuance, determine the
rights, preferences and limitations of each series. Satisfaction of
any dividend preferences of outstanding preferred stock would reduce
the amount of funds available for the payment of dividends on common
stock. Also, holders of preferred stock would normally be entitled to
receive a preference payment in the event of any liquidation,
dissolution or winding-up of the Company before any payment is made to
the holders of common stock.
(11) Pension Plan
The Company maintains a simplified employee pension (S.E.P.) plan covering
all of its employees. Contributions to the plan, which are
discretionary, cannot exceed 15% of the covered employee's salary.
Pension expense for the years ended November 30, 1995, 1994 and 1993
was $46,358, $45,889 and $43,286, respectively.
(12) Business and Credit Concentrations
None of the Company's customers accounted for more than ten percent of the
net sales in 1995, 1994 and 1993. The Company estimates an allowance
for doubtful accounts based on the credit worthiness of its customers
as well as general economic conditions. The Company as a policy, does
not require collateral from its customers.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange
Act, the registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
THE FRESH JUICE COMPANY, INC.
By: /s/ Steven Smith
Steven Smith
Chairman of the Board,
President and Chief
Executive Officer
February 27, 1996
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated:
Signatures Title Date
---------- ----- ----
/s/ Steven Smith Chairman of the Board and February 27, 1996
Steven Smith President (principal executive
officer)
/s/ Carol Smith Secretary and Director February 27, 1996
Carol Smith
/s/ Kathy Siegel Treasurer and Director (principal February 27, 1996
Kathy Siegel financial officer and principal
accounting officer)
EXHIBIT INDEX
Sequentially
Exhibit Numbered Page
- ------- -------------
3.1 Certificate of Incorporation --
incorporated by reference to Exhibit
3.1 to the Company's Registration
Statement, SEC File No. 33-8878-NY on
Form S-18 (the "Registration
Statement").
3.2 By-laws -- incorporated by reference
to Exhibit 3.2 of the Registration
Statement.
10. Incentive Stock Option Plan --
incorporated by reference to Exhibit
10 of the Company's 1988 Annual Report
on Form 10-K, SEC File No. 0-15320.
10.1 Employment Agreement between the
Company and Steven Smith -- incorporated
by reference to Exhibit 10.1 of the
Company's 1994 Annual Report on Form
10-KSB.
10.2 Loan Agreement, dated as of January
24, 1994, between The Ultimate Juice
Company, Inc. and the Company --
incorporated by reference to Exhibit 1
of the Company's Current Report on
Form 8-K dated February 14, 1994, SEC
File No. 0-15320.
10.3 Option Agreement, dated as of January
24, 1994, among the Company, Steven
Smith, Albert Rountree, Daniel Petry,
Steven Bogen, The Ultimate Juice
Company, Inc. and Clear Springs
Citrus, Inc. -- incorporated by
reference to Exhibit 2 of the
Company's Current Report on Form 8-K
dated February 14, 1994, SEC File No.
0-15320.
10.4 Loan Agreement and Rider thereto,
dated as of September 11, 1995,
between Chemical Bank and the Company.
10.5 Employment Agreement between the
Company and Paul Ballentine
10.6 Purchase Money Mortgage between the
Company and Fantasy-BlankeBaer
Corporation
10.7 Promissory Note in favor of Fantasy-
BlankeBaer Corporation made by the
Company
27 Financial Data Schedule
EXHIBIT 10.4
SHORT TERM LOAN AGREEMENT
Loan Agreement dated October 3, 1995, among The Fresh Juice Company of
Florida, Inc. a Florida corporation (having its principal place of business)
(residing at) 1000 American Superior Blv. Winterhaven, Florida ("Borrower") and
guarantor(s) identified by their execution below ("Borrower" and "Guarantor(s)"
collectively referred to hereafter as "the Obligors") and Chemical Bank, a New
York banking corporation ("the Bank"). Borrower has applied to the Bank for a
loan in the principal amount of $1,100,000 the proceeds of which shall be used
for the purpose as outlined in the preamble to the Rider ("the Loan"). The Bank
has made the Loan upon the following terms and conditions: attached hereto.
(1) The Note: Rate of Interest Manner of Repayment.*
*Refer to Rider attached hereto.
(2) Representations and Warranties.
In order to induce the Bank to enter into this Agreement and
to make the Loan, each Obligor represents and warrants to the
Bank that:
a. (As to each Obligor that is not an individual) it:
(i) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of
its incorporation or formation;
(ii) is duly qualified and in good standing in every
jurisdiction in which it presently engages in
business and in which such qualification is
required;
(iii) has the power, authority and legal right to
own, or lease and enjoy undisturbed, the
assets of the business and engage in business
as now conducted;
(iv) has the power, authority and legal right to
enter into and execute this Agreement, the
Note, the Guaranty and any Security Agreement,
Pledge Agreememt, General Loan and Collateral
Agreement or other agreements furnished in
connection with the Loan; and
(v) such Obligor has no subsidiaries or affiliates
except those listed on Exhibit B hereof and in
each instance it owns all of the outstanding
stock of such subsidiaries.
Financial Statements b. All financial statements of such Obligor previously
Accurate No Change delivered to the Bank, whether or not in connection
with this Loan, are complete, correct, present fairly
the financial condition of that entity, reflect every
liability (whether direct or contingent) and there has
been no material adverse change in the financial
condition of such Obligor since financial statements
dated 8/1/95 (as to Borrower) and 5/31/95 (as to
Guarantor);
Other Agreements c. This Agreement will not violate any other indenture or
other agreement nor any law, order, rule or regulation
of any government instrumentality applicable to such
Obligor or by which its property is bound nor will it
result in the creation or imposition of any other
lien, except for those being created by any Security
Agreement related hereto;
First Lien d. Any security interests created as Collateral for the
Loan constitute valid, first and prior perfected
liens in favor of the Bank;
Litigation e. There are no suits or proceedings pending or
threatened against such Obligor or affecting any of
its properties (of which such Obligor has any
knowledge) except those disclosed and explained by
letter of counsel annexed hereto as Exhibit C; whether
or not a letter of Borrower's counsel is required for
this purpose, the Bank shall have received, on or
immediately prior to the date of tis Agreement, the
favorable written opinion of Borrower's counsel
addressed to the Bank confirming the accuracy of the
representations and warranties set forth in Sections
2(a), (c) and (d) hereof;
Taxes f. Federal Income Tax returns of such Obligor have been
audited through N/A (as to
_________________________ Borrower)
and 11/30/92 (as to Guarantor) and deficiencies (if
any) resulting from such examinations have been
reserved against or discharged. Additionally, such
Obligor has filed all required Federal, state and
local returns, including those for corporate franchise
taxes, and has paid all taxes or assessments due
thereon;
ERISA g. Such Obligor, if required, is in compliance in every
material respect with the applicable provisions of the
Employee Retirement Income Security Act of 1974
("ERISA") and regulations or published interpretations
thereof and has not had a Reportable Event occur with
respect to any Plan as defined in ERISA; and
Federal Reserve h. Such Obligor is not engaged principally in nor has an
Regulations important activity in the business of extending credit
for the purpose of purchasing or carrying "margin
stock" (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) nor will any
part of the proceeds of this Loan be used, now or
ultimately, to purchase or carry such stock or extend
such credit or violate in any way Regulations G, T, U
or X of such Board of Governors.
*Refer to Rider attached hereto for Additional
Representations and Warranties.
(3) Affirmative Covenants.
Each Corporate Obligor (that is not an individual) covenants
and agrees that, from the date hereof until the full
satisfaction of the obligations under this Agreement and
the Note:
Corporate a. It shall preserve, protect, renew and keep in full
Existence force and effect its existence, rights, licenses,
and Properties permits, patents, trademarks, trade names and
franchises; comply with all laws and regulations
applicable to it; not materially alter the nature or
scope of business as presently conducted by it and
preserve, repair and maintain all property utilized
in the conduct of its business;
Insurance b. Maintain insurance with financially sound insurers on
its properties against such risks as fire, public
liability, lack of fidelity by its employees all as
is customary with companies in similar businesses or
as reasonably required by the Bank and name the Bank.
Financial Statements c. Furnish to the Bank the following financial
information: *"loss payee" with respect to any
. insurance covering the Collateral.
*Refer to Rider attached hereto.
Access to d. Upon written request, the Bank's representatives shall
Premises and Records be permitted access to any or all of such Obligor's
properties and financial records, to make extracts
from such records and to discuss the business,
finances and affairs with its officers;
Notices e. It shall promptly give written notice to the Bank of:
ERISA (i) the details of any Reportable Event as defined
in ERISA which has occurred;
Events of Default (ii) the occurrence of any event which alone or with
notice, the passage of time or both, would
constitute an Event of Default;
Litigation (iii) the commencement of any proceeding or litigation
which, if adversely determined, would adversely
affect its financial condition or ability to
conduct business; or
Additional (iv) Refer to Rider attached hereto.
Guarantors
*Refer to Rider attached hereto for Additional
Affirmative Covenants.
(4) Negative Covenants.
Each Obligor that is not an individual covenants and agrees
that, from the date hereof until the full satisfaction of
obligations under this Agreement and the Note, it will not
without the Bank's prior written consent:
Indebtedness a. Create, incur or assume any indebtedness for borrowed
money other than:
(i) that provided under this Agreement or otherwise
consented to by the Bank;
(ii) that owing on the date hereof and scheduled on
Exhibit D; and
(iii) *that which is subordinated to indebtedness due
the Bank on terms satisfactory to the Bank
("Approved Subordinated Debt").
*Refer to Rider attached hereto.
Liens b. Create, incur or permit to exist against any of its
properties or assets, real or personal, tangible or
intangible, now owned or hereafter acquired, any
mortgage or other lien or encumberance, except:
(i) deposits or pledges relating to the payment of
Workman's Compensation, Unemployment Insurance,
old age pension or other Social Security;
(ii) deposits or pledges relating to the performance
of bids, tenders, contracts or leases;
(iii) deposits or pledges relating to statutory
obligations and surety or appeal bonds
necessary to the continuance of the business
in the ordinary course;
(iv) liens for taxes not delinquent or being
contested in good faith and by appropriate
proceedings; and
*Refer to Rider attached hereto.
Contingent c. Assume, guarantee, endorse or otherwise become
Obligations directly or contingently liable for the obligations of
any other person execept for the Guaranty in
connection with this Agreement and the endorsement of
negotiable instruments for deposit or collection in
the ordinary course of business;
Leases d. Create, incur or assume any obligations for the
rental, hire or lease of real or personal property if
the aggregate of such, payable in any one fiscal year,
would exceed $250,000;
Capital Expenditures e. Refer to Rider attached hereto.
f. Intentionally omitted.
Asset Sale g. Refer to Rider attached hereto.
Merger h. Refer to Rider attached hereto.
Notes/Accounts i. Sell, assign, discount or otherwise dispose of any of
Sale its notes or accounts receivable except for collection
in the ordinary course of business;
Loans j. Make loans or advances to any other Person (except a
Guarantor);
Investments k. Purchase or make any investment in the stock,
securities or evidences of indebtedness of any other
Person except:
(i) a Guarantor;
(ii) the United States Government and its agencies;
and
(iii) Certificates of Deposit of domestic banks having
capital and surplus in excess of $100,000,000.00
*Refer to Rider attached hereto.
Dividends l. Refer to Rider attached hereto.
*Refer to Rider attached hereto for Additional
Negative Covenants.
(5) Intentionally omitted.
(6) Events of Default.
In case of the happening of any of the following events
("Events of Default");
a. any representation or warranty made herein, in any
Security Agreement, Pledge Agreement or General Loan
and Collateral Agreement or in any other instrument,
agreement or certificate furnished in connection with
any of the foregoing shall prove false or misleading
in any material respect;
b. any occurrence delineated in the Note as an Event of
Default;
c. any occurrence delineated in the Security Agreement;
or any other Loan Document as an Event of Default;
d. Any Obligor shall default in the due observance or
performance of any negative covenant contained in
this Agreement or any Security Agreement or any
other Loan Document;
e. Any Obligor shall default in the due observance or
performance of any covenant, condition or agreement
(other than those referred to in sections (b) and
(d) immediately above) contained in this Agreement
or any Security Agreement to which it is a party and
such default shall continue unremedied for 10 days
after notice from the Bank of such default demanding
that it be cured;
f. A Reportable Event shall have occurred with respect
to any Plan as defined in ERISA and (i) the Bank has
notified the affected Obligor in writing that it has
determined that such Reportable Event constitutes
reasonable grounds for termination of such Plan by
the Pension Benefit Guaranty Corporation or the
appointment of a trustee, to administer the Plan, by
an appropriate U.S. District Court or (ii) such
termination proceedings are commenced or such
appointment occurs;
then, the Note shall be immediately due and payable in
full, both as to principal and interest, without
presentment, demand, protest or notice of any kind, all
of which are hereby expressly waived, anything contained
herein, in the Note, in the Security Agreement or
elsewhere to the contrary notwithstanding.
*Refer to Rider attached hereto for Additional Events
of Default.
(7) Miscellaneous
Expenses a. The Borrower will pay all out of pocket losses, costs
and expenses incurred by the Bank in connection with the
Loan hereunder, the enforcement of any provision of this
Agreement, or any Note or the collection of any amount
due hereunder or thereunder including but not limited
to, the reasonable fees and disbursements of counsel to
the Bank incurred in the course of so enforcing such
rights.
No Waiver b. No failure or delay by the Bank in exercising any right,
power or remedy hereunder upon a breach hereof shall
constitute a waiver of any such term, condition,
covenant, agreement, right, power of Bank from
exercising any such rights, power or remedy at any later
time or times.
Additional c. The Rider annexed hereto shall constitute an integral
Provisions part of this Short Form Term Loan Agreement.
Conditions of d. Refer to Exhibit F attached hereto and made a part hereof.
Closing
Amendments e. The Bank shall not be deemed to have waived any of the
terms, agreements, conditions and covenants hereof,
except by a writing signed by an officer of the Bank and
delivered to the Borrower. This Agreement may be amended
by a supplemental Agreement setting forth such amendment
or amendments when properly executed by all the parties
to this Agreement.
GAAP f. All accounting terms used herein shall have the meaning
assigned to them by generally accepted accounting
principles, unless otherwise defined.
Law Governing g. This Agreement and all rights hereunder, shall be
governed by the laws of the State of New York and
applicable laws of the United States and shall be
binding upon the Obligors, their heirs, executors,
administrators, successors and assigns and shall inure
to the benefit of the Bank, its successors and assigns.
The obligations and conditions of this Agreement shall
continue until all indebtedness and liability of the
Obligors to the Bank hereunder has been paid and
satisfied in full.
The Fresh Juice Company, Inc. (as Guarantor) The Fresh Juice Company of
Florida, Inc.
By: /s/ Steven Smith By: /s/ Steven Smith
---------------------- -------------------------
Name: Steven Smith Name: Steven Smith
Title: President Title: Secretary
Accepted:
Chemical Bank
By: /s/
---------------------------
THE RIDER DATED OCTOBER 3, 1995 TO SHORT FORM TERM LOAN AGREEMENT (the
"Loan Agreement") dated October 3, 1995 among THE FRESH JUICE COMPANY OF
FLORIDA, INC., a Florida corporation, having its principal place of business at
1000 American Superior Blvd., Winterhaven, Florida (the "Borrower") and THE
FRESH JUICE COMPANY, INC., a Delaware corporation, having its principal place
of business at 350 Northern Blvd., Great Neck, New York, (individually, a
"Guarantor" and collectively with any future guarantors, the "Guarantors") (the
Borrower and the Guarantor(s) collectively, the "Obligors") and CHEMICAL BANK,
a New York banking corporation, having an office at 50 Charles Lindbergh Blvd.,
Uniondale, New York 11553 (the "Bank"). The Borrower has applied to the Bank
for a $1,100,000 secured term loan (the "Loan" or the "Term Loan"), the
proceeds of which shall be used for the purpose of (i) partially financing
leasehold improvements of $250,000 (the "Leasehold Improvements") to be made to
the Borrower's 68,000 square foot leased facility located at 1000 American
Superior Blvd., Winterhaven, Florida (the "Leased Facility") in connection with
developing a citrus juice processing plant (the "Processing Plant") in the
Leased Facility and (ii) financing the purchase of machinery and equipment of
$850,000 (the "Capital Equipment") to be used in the Processing Plant.
I. THE NOTES: RATE OF INTEREST AND MANNER OF REPAYMENT.
SECTION A. THE TERM LOAN; TERM NOTE; INTEREST ON TERM LOAN.
(1) The Loan shall be in an aggregate principal amount of $1,100,000.
Principal amounts outstanding pursuant to the Term Loan shall
bear interest at either the Fixed Rate (the "Fixed Rate Loan") or
the Prime Rate plus 1/2 of 1% (the "Prime Rate Loan") at the
Borrower's election on October 3, 1995 (the "Closing Date"), or
in the case of the Fixed Rate Loan, three (3) business days prior
to the Closing Date, in accordance with the following provisions.
The interest rate that is selected shall be for the period from
the Closing Date to and including the Maturity Date (as defined
in (2) below).
(2) The Prime Rate Loan shall be in the principal amount of
$1,100,000 and shall bear interest for the duration of the Term
Loan on the unpaid principal amount from the date of such Loan,
until the Maturity Date, at the Prime Rate plus 1/2 of 1% per
annum, such interest to be payable on the last business day of
each month, in arrears, commencing October 31, 1995 and on the
Maturity Date. The Fixed Rate Loan shall be in the principal
amount of $1,100,000 and shall bear interest for the duration of
the Term Loan on the unpaid principal amount from the date of
such Loan, until the Maturity Date, at the Fixed Rate, such
interest to be payable on the last business day of each month,
in arrears, commencing on October 31, 1995 and on the Maturity
Date. The Maturity Date shall be September 30, 2000.
(3) The Term Loan shall be evidenced by a promissory note duly
executed by the Borrower in substantially the same form of
Exhibit A attached hereto (the "Note" or the "Term Note").
Principal on the Note shall be payable in forty-eight (48)
substantially equal consecutive monthly installments. Principal
payments on the Note shall be payable on the last business day of
each month, commencing on October 31, 1996, and ending on the
Maturity Date.
(4) Interest shall be payable on any overdue principal and/or
interest on the Term Loan (whether at the due date or as a
result of acceleration or otherwise) at a fluctuating rate per
annum of 2% in excess of the rate in effect from time to time on
such Term Loan, but in no event higher than the maximum rate
permitted under applicable law. The Borrower irrevocably and
unconditionally authorizes the Bank to charge any account of the
Borrower maintained with the Bank for interest and principal due
and payable on the Term Loan.
SECTION B. DEFINITIONS OF INTEREST RATES ON LOANS.
(1) The "Prime Rate" is such rate of interest as is publicly
announced from time to time by the Bank at its principal office
as its prime rate calculated on a 360-day basis for the actual
number of days elapsed. Each change in the Prime Rate shall be
effective on the date such change is announced; and
(2) The "Fixed Rate" is a fixed rate of interest to be determined by
the Bank at its sole discretion (subject to availability) by
reference to such factors and considerations as the Bank shall
deem relevant and offered by the Bank to the Borrower, and
calculated on a 360-day basis.
SECTION C. PREPAYMENT OF LOANS.
(1) The Borrower shall have the right at any time from time to time
to prepay the Prime Rate Loan, in whole or in part, without
premium or penalty, upon at least one business day's prior
written, telephonic (immediately confirmed in writing) or
facsimile notice to the Bank; provided, however, that each such
partial prepayment shall be in the minimum principal amount of
$100,000. All partial prepayments of the Prime Rate Loan shall
be applied to installments of principal thereof in the inverse
order of maturity and accompanied by accrued interest on the
amount of such prepayment to the date thereof. Each notice of
prepayment shall specify the prepayment date and the principal
amount of the Loan to be prepaid, shall be irrevocable and shall
commit the Borrower to prepay such Loan by the amount stated
therein on the date stated therein. Each prepayment of the Prime
Rate Loan shall be permanent.
(2) The Fixed Rate Loan may be prepaid at the Borrower's option in
whole or in part in minimum amounts of $100,000 upon not less
than three (3) business days' prior irrevocable written,
telephonic (immediately confirmed in writing) or facsimile
notice to the Bank accompanied by payment of a prepayment
premium equal to the difference between the rate on the Fixed
Rate Loan and, if lower than the rate on said Loan, the rate
equal to the average yield on United States Treasury Securities
maturing nearest to the Maturity Date for such Fixed Rate Loan
(each rate computed per annum on the basis of a year of 360 days)
multiplied by the product of the remaining number of years, or
fraction thereof, until the Maturity Date with respect to such
Fixed Rate Loan and the principal amount being prepaid. Each
prepayment of the Fixed Rate Loan shall be applied to the
installments thereof in the inverse order of maturity and
accompanied by accrued interest on the amount of such prepayment
to the date thereof. If the rate based on such United States
Treasury Securities shall be higher than the rate on the Fixed
Rate Loan, no prepayment premium shall be assessed. Each notice
of prepayment shall specify the prepayment date and the
principal amount of the Loan to be prepaid, shall be irrevocable
and shall commit the Borrower to prepay such Loan by the amount
stated therein on the date stated therein. Each prepayment of the
Fixed Rate Loan shall be permanent.
SECTION D. Increased Costs. If either (i) the introduction of or any
change in or in the interpretation of any law or regulation or (ii) the
compliance by the Bank with any other guideline or request from any central
bank or other governmental authority shall result in any increase in the cost to
the Bank of making, funding or maintaining the Fixed Rate Loan, then the
Borrower shall from time to time, upon demand by the Bank, pay to the Bank
additional amounts sufficient to indemnify the Bank against such increased cost.
A certificate as to the amount of such increased cost shall be submitted to the
Borrower by the Bank and shall be conclusive absent manifest error.
SECTION E. Exhibits. The Term Note is attached hereto as Exhibit A,
and its definitions, terms and conditions are expressly incorporated herein by
reference.
SECTION F. Funds; Manner of Payment. Unless otherwise specified
herein, each payment and prepayment of principal of and interest on the Term
Note shall be made by the Borrower not later than 12:00 noon, New York City
time, on the date on which it is payable, in Federal or other immediately
available funds.
II. ADDITIONAL REPRESENTATIONS AND WARRANTIES
Fresh Pik't
Natural Foods, Inc. (2)i. All of the operating assets (other than the
accounts receivable and the machinery and
equipment of Fresh Pik't Natural Foods, Inc.
which were transferred to Fresh Juice) shown
on the financial statement of Fresh Pik't
Natural Foods, Inc. for the fiscal period
ended May 31, 1995 have been sold to Corganics
Inc. pursuant to an asset purchase agreement
dated August 21, 1995 between Fresh Pik't
Natural Foods, Inc. and Corganics Inc. (the
"Asset Purchase Agreement").
(2)j. Fresh Pik't Natural Foods, Inc. ("Fresh Pik't")
is a Maryland corporation with nominal assets
and is in the process of being dissolved.
Minalba Foods, Inc. (2)k. Minalba Foods, Inc. ("Minalba") is a New York
corporation with nominal assets.
III. ADDITIONAL AFFIRMATIVE COVENANTS
Financial Statements: (3)c. Furnish to the Bank the following financial
information:
(i) as soon as available, but in any event not
later than ninety (90) days after the end of
each fiscal year of The Fresh Juice Company,
Inc. ("Fresh Juice"), (y) the audited
consolidated financial statements of Fresh
Juice and its subsidiaries, including balance
sheets, income statements and statements of
cash flow, prepared in accordance with generally
accepted accounting principles ("GAAP")
consistently applied by independent certified
public accountants acceptable to the Bank
accompanied by the unqualified opinion of such
independent certified public accountants and (z)
the unaudited consolidating financial statements
of Fresh Juice and its subsidiaries, including
balance sheets, income statements and statements
of cash flow, prepared in accordance with GAAP
consistently applied by the chief financial
officer of Fresh Juice;
(ii) as soon as available, but in any event not
later than forty-five (45) days after the end of
the second fiscal quarter of each fiscal year of
Fresh Juice, the management prepared
consolidated and consolidating financial
statements of Fresh Juice and its subsidiaries,
including balance sheets, income statements and
statements of cash flow, their accuracy
certified in a manner satisfactory to the Bank
by the chief financial officer of Fresh Juice;
(iii) as soon as available, but in any event not
later than forty-five (45) days after the end of
each of the first and third fiscal quarters of
each fiscal year of Fresh Juice, the
management prepared consolidated financial
statements of Fresh Juice and its subsidiaries,
including balance sheets, income statements and
statements of cash flow, their accuracy
certified in a manner satisfactory to the Bank
by the chief financial officer of Fresh Juice;
(iv) with each delivery of financial statements
required by (i), (ii) and (iii) above, a
certificate signed by the chief financial
officer of the Borrower and the Guarantor(s) as
to whether or not, as of the close of such
preceding period and at all times during such
preceding period, the Borrower and the
Guarantor(s) were and currently are, to his
knowledge, in compliance with all the provisions
of the Loan Agreement, showing computation of
the financial covenants and, if the chief
financial officer shall have obtained knowledge
of any default or Event of Default, he shall
disclose in such certificate such defaults or
Events of Default or notice thereof and the
nature thereof;
(v) promptly, from time to time, such other
information regarding the operations, business
affairs and financial condition of the Borrower
and the Guarantor(s) as the Bank may reasonably
request;
Additional Guarantors; (3)c. (iv) the formation of any subsidiary or
affiliate (other than any affiliate of the
Borrower or any Guarantor which does not have
any transactions with the Borrower or such
Guarantor (except transactions in the ordinary
course of business and so long as such
transactions are not less favorable to the
Borrower or such Guarantor than would be
obtained in a comparable arm's length
transaction with a person that is not an
affiliate)) of the Borrower or any Guarantor
after the date of this Loan Agreement, which
notice shall be accompanied by the resolution of
the Board of Directors of such subsidiary or
affiliate authorizing such entity to execute
this Loan Agreement as an additional Guarantor
together with such execution by Amendment and
such Guaranty.
Notwithstanding the foregoing, (a) if Fresh
Pik't is not dissolved within one hundred eighty
(180) days after the Closing Date, Fresh Juice
shall cause Fresh Pik't to become a Guarantor of
all indebtedness and other obligations of the
Borrower under this Loan Agreement and (b) if
(i) the total assets of Minalba represent more
than 10% of Consolidated Total Assets or (ii)
the net income of Minalba represents more than
10% of Consolidated Net Income, Fresh Juice
shall cause Minalba to become a Guarantor of
all indebtedness and other obligations of the
Borrower under this Loan Agreement.
"Consolidated Total Assets" shall mean, at a
particular date, the aggregate amount which
would, in conformity with generally accepted
accounting principles, be included under total
assets on a consolidated balance sheet of Fresh
Juice and its subsidiaries as at such date.
"Consolidated Net Income" shall mean, at a
particular date, the aggregate amount which
would, in accordance with generally accepted
accounting principles, be classified as
consolidated net income, after taxes, in a
consolidated income statement of Fresh Juice
and its subsidiaries as at such date.
Dissolution: (3)f. Within one hundred twenty (120) days after
filing, a copy of the certificate of dissolution
for Fresh Pik't Natural Foods, Inc.
Notwithstanding the above, such certificate of
dissolution shall not be required if Fresh Pik't
shall become a Guarantor pursuant to the section
herein entitled "Additional Guarantors".
Taxes: (3)g. It shall promptly (i) pay all indebtedness and
obligations as and when due and payable (other
than trade payables incurred in the ordinary
course of business which are contested in good
faith) and (ii) pay and discharge all taxes,
assessments and government charges which, if
unpaid, might become a lien or charge upon any
of its properties.
IV. ADDITIONAL NEGATIVE COVENANTS
Indebtedness: (4)a. (iv) indebtedness owing to the Bank;
(v) trade payables incurred in the ordinary
course of business; and
(vi) indebtedness owing from the Borrower to any
Guarantor or from any Guarantor to the Borrower
or another Guarantor.
Liens: (4)b. (v) liens granted to the Bank; and
(vi) liens existing on the date hereof and
scheduled satisfactory to the Bank on Exhibit E,
such liens not be renewed or rescheduled.
Capital Expenditures: (4)e. Make any capital expenditures (excluding capital
expenditures related to equipping the Processing
Plant during the fiscal years ending November
30, 1995, and November 30, 1996, provided, that
such expenditures do not exceed $2,300,000 in
in the aggregate) if, after giving effect
thereto, the aggregate amount of such
expenditures by Fresh Juice and its subsidiaries
would exceed $200,000 during any fiscal year.
Asset Sale: (4)g. Sell, transfer,or otherwise dispose of its
assets, except in the normal course of business,
or sell and thereafter enter into an arrangement
with the buyer to rent or lease back all or any
substantial part of its properties or assets.
Merger: (4)h. Consolidate with or merge into any other
corporation, or permit another corporation to
merger into it or acquire all or substantially
all of the properties, shares or assets of any
other Person (defined below) provided, however
that Fresh Juice shall be permitted to acquire
all or substantially all of the capital stock or
assets of any other Person if: (i) the aggregate
Consideration (as hereinafter defined) for such
acquisition is not in excess of $500,000 per
acquisition transaction; (ii) the acquiree (or
the assets being acquired) is in (or are to be
used in, in the case of acquired assets)
substantially the same business as operated by
the Borrower or the Guarantor(s) as of the
Closing Date; (iii) such acquisition transaction
shall be "non-hostile" (i.e.: with the consent
of the Board of Directors of the acquiree);
(iv) there shall exist no default or Event of
Default hereunder either immediately preceding
or immediately succeeding such acquisition
transaction (an acquisition transaction which is
consummated in accordance with (i) through (iv)
above shall be defined as a "Permitted
Acquisition"); and (v) the aggregate
Consideration for all such Permitted
Acquisitions shall not exceed $750,000 during
the term hereof.
Notwithstanding the foregoing, the limitations
on Consideration set forth in Section 4(h)(i)
above shall not apply to acquisitions financed
(wholly or partially) by the issuance of capital
stock of Fresh Juice so long as (a) the Borrower
or any Guarantor does not contribute more than
$500,000 (in the aggregate) to "fund" such
acquisition (by means of cash, cash equivalents,
transaction costs, guarantees, assumed
liabilities, fees, any deferred portions of the
purchase price or any other costs paid in
connection with the acquisition) and (b) such
acquisition does not detrimentally impact the
Borrower or any Guarantor's financial condition
(determined in the Bank's reasonable judgment
upon review of contingent obligations,
litigation, environmental exposure or other
relevant issues with respect to the proposed
acquiree or the proposed assets being acquired).
"Person" shall mean any natural person,
corporation, business trust, joint venture,
association, company, partnership or government,
or any agency or political subdivision thereof.
"Consideration" shall mean, collectively, cash,
cash equivalents, transaction costs, guarantees
and other contingent obligations, assumed
liabilities, fees, any deferred portions of the
purchase price or any other costs paid in
connection with the acquisition.
Investments: (4)k. (iv) money market funds with assets of
$2,500,000,000 or more; and (v) Permitted
Acquisitions.
Dividends: (4)l. Declare or pay any dividends or make any other
distribution, whether in cash, property,
securities or any combination thereof, with
respect to any shares of capital stock or
redeem, purchase, or retire any shares of any
class of capital stock or set apart any sum for
such purposes if immediately prior to or
immediately following such proposed dividends,
distributions, purchases, redemption or
retirement, there shall exist a default or Event
of Default under this Loan Agreement.
Debt Service
Coverage Ratio: (4)m Permit the Consolidated Debt Service Coverage
Ratio of Fresh Juice and its subsidiaries to be
less than 1.25 to 1.00 at any time.
"Consolidated Debt Service Coverage Ratio" shall
be defined as the ratio of (i) net income
(excluding extraordinary gains) plus
depreciation, plus amortization of intangibles,
plus interest expense, minus unfunded capital
expenditures minus cash dividends, distributions
and withdrawals to (ii) interest expense plus
the current portion of long term indebtedness of
Fresh Juice and its subsidiaries. All categories
of the Consolidated Debt Service Coverage Ratio
shall be measured over the prior four (4) fiscal
quarters with the exception of the current
portion of long term indebtedness which shall be
measured over the future four (4) fiscal
quarters, and all such categories shall be
measured on a consolidated basis incorporating
Fresh Juice and its subsidiaries.
Leverage: (4)n Permit the ratio of (i) Consolidated Total
Unsubordinated Liabilities to (ii) Consolidated
Tangible Net Worth plus Subordinated Debt to be
greater than 1.0 to 1.0 at any time.
"Total Unsubordinated Liabilities" shall be
defined as all of the liabilities of Fresh Juice
and its subsidiaries on a consolidated basis
which would properly appear on the liability
side of the consolidated balance sheet of Fresh
Juice and its subsidiaries, other than capital
stock, capital surplus, treasury stock, retained
earnings and Subordinated Debt, under generally
accepted accounting principles.
"Subordinated Debt" shall be defined as
indebtedness of the Borrower and its
subsidiaries on a consolidated basis which is
subordinated, on terms satisfactory to the Bank,
to indebtedness of the Borrower owing to the
Bank.
"Tangible Net Worth" shall be defined as (i) the
aggregate amount at which all assets of Fresh
Juice and its subsidiaries on a consolidated
basis would be shown on the consolidated balance
sheet of Fresh Juice and its subsidiaries after
deducting capitalized research and development
costs, capitalized interest, debt discount and
expense, goodwill, patents, trademarks,
copyrights, franchises, licenses and such other
assets as are properly classified as "intangible
assets" minus (ii) Total Liabilities (meaning,
Total Unsubordinated Liabilities plus
Subordinated Debt).
Tangible Net Worth: (4)o. Permit Consolidated Tangible Net Worth of Fresh
Juice and its subsidiaries ("TNW") at any time
to be less than:
Period Amount
------ ------
From the date hereof
through 11/29/96 $4,000,000
11/30/96 through 11/29/97 $4,100,000
11/30/97 through 11/29/98 $4,300,000
11/30/98 through 11/29/99 $4,600,000
11/30/96 and thereafter $4,900,000
Fiscal Year End: (4)p. Change its fiscal year end from
November 30th.
Prepayment of
Outstanding Debt: (4)q. Pay, in whole or in part, any outstanding debt
(other than debt owing to the Bank and trade
payables incurred in the ordinary course of
business) of the Borrower or any Guarantor
which, by its terms, is not yet due and payable.
Modification to Other
Credit Agreements: (4)r. Modify or amend the terms, convenants,
conditions and provisions of (i) the purchase
money mortgage entered into on August 1, 1995
by The Fresh Juice Company, Inc. (as mortgagor)
in favor of Fantasy-BlankeBaer Corporation (as
mortgagee) (the "Purchase Money Mortgage") as
evidenced by a promissory note dated August 1,
1995 made by The Fresh Juice Company, Inc. in
favor of Fantasy-BlankeBaer Corporation in the
original principal amount of $475,000 (the
"Promissory Note") or (ii) any other credit
agreement or other indebtedness for borrowed
money of the Borrower or any Guarantor.
Transactions with
Affiliates: (4)s. Enter into any transaction, including, without
limitation, the purchase, sale or exchange of
any property or the rendering of any service
with any affiliate, except in the ordinary
course of business and so long as such
transactions are not less favorable to the
Borrower or any Guarantor than would be obtained
in a comparable arm's length transaction with a
person that is not an affiliate.
V. ADDITIONAL EVENTS OF DEFAULT
(6)g. The Borrower or any other Obligor or any
subsidiary thereof shall (i) voluntarily
commence any proceeding or file any petition
seeking relief under Title 11 of the United
States Internal Revenue Code of 1986 (the
"Code") or any other Federal, state or foreign
bankruptcy, insolvency liquidation or similar
law, (ii) consent to the institution of, or
fail to contravene in a timely and appropriate
manner, any such proceeding or the filing of any
such petition, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian,
sequestrator or similar official for the
Borrower or such Obligor or such subsidiary
thereof or for a substantial part of its
property or assets, (iv) file an answer
admitting the material allegations of a petition
filed against it in any such proceeding, (v)
make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing
its inability or fail generally to pay its debts
as they become due or (vii) take corporate
action for the purpose of effecting any of the
foregoing;
(6)h. An involuntary proceeding shall be commenced or
any involuntary petition shall be filed in a
court of competent jurisdiction seeking (i)
relief in respect of the Borrower or any other
Obligor or any subsidiary thereof, or of a
substantial part of the property or assets of
the Borrower or any other Obligor or any
subsidiary thereof, under Title 11 of the Code
or any other Federal, state or foreign
bankruptcy, insolvency, receivership or similar
law; (ii) the appointment of a receiver,
trustee, custodian, sequestrator or similar
official for the Borrower or any other Obligor
or any subsidiary thereof or for a substantial
part of the property of the Borrower or any
other Obligor or any subsidiary thereof or (iii)
the winding-up or liquidation of the Borrower or
any other Obligor or any subsidiary thereof and
such proceeding or petition shall continue
undismissed for 60 days or any order or decree
approving or ordering any of the foregoing shall
continue unstayed and if effect for 60 days;
(6)i. Default with respect to any indebtedness for
borrowed money or capitalized leases (other than
the Term Note) of the Borrower or any Guarantor
in excess of $10,000 in the aggregate or default
with respect to the performance of any other
obligation of the Borrower or any Guarantor
incurred in connection with any indebtedness
for borrowed money or capitalized leases if the
effect of such default is to accelerate the
maturity of such indebtedness or capitalized
lease, or to permit the holder thereof to cause
such indebtedness or capitalized leases to
become due prior to its stated maturity (with or
without the passage of time, giving of notice,
or both), or any such indebtedness or
capitalized leases shall not be paid when due
(Cross Default);
(6)j. The Loan Agreement, the Note or any other Loan
Document shall for any reason cease to be, or
shall be asserted by the Borrower or any
Guarantor not to be, a legal, valid and binding
obligation of the Borrower or such Guarantor,
as applicable, enforceable in accordance with
its terms, or the security interest or lien
purported to be created by any Loan Document
shall for any reason cease to be, or be asserted
by the Borrower or such Guarantor not to be, a
valid, first priority perfected security
interest in any of the collateral covered
thereby;
(6)k. Mr. Steve Smith (y) shall cease in the Bank's
opinion to manage or operate or be actively
involved in the day to day operations of the
Borrower, Fresh Juice or any other Guarantor or
(z) shall cease to be chairman and chief
executive officer of Fresh Juice;
(6)l. Any Person or two or more Persons, other than
any officer of Fresh Juice on the date hereof,
acting in concert, shall own directly or
indirectly, beneficially (within the meaning of
Rule 13d-3 of the Securities and Exchange
Commission under the Securities and Exchange Act
of 1934, as amended) or of record, a majority of
such classes of voting stock of Fresh Juice such
as would enable the holder(s) thereof to elect a
majority of the members of the Board of
Directors of Fresh Juice; or
(6)m. Fresh Juice shall cease to own 100% of the
outstanding voting stock of the Borrower.
VI. MISCELLANEOUS/ADDITIONAL PROVISIONS
Miscellaneous: (a) The Borrower and each of the Guarantors covenant and
agree that, from the date hereof until the full satisfaction of the obligations
hereunder and under the Term Note: It shall comply with the requirements of all
Federal, state and local laws, ordinances, rules, regulations or policies
governing the use, storage, treatment, transportation, manufacture, refinement,
handling, production or disposal of hazardous materials, provide to the Bank all
documentation in connection with such compliance that the Bank may reasonably
request, and defend, indemnify, and hold harmless the Bank, its employees,
agents, officers, and directors, from and against any claims, demands,
penalties, fines, liabilities, settlements, damages, costs, or expenses of
whatever kind or nature, known or unknown, contingent or otherwise, arising out
of, or in any way related to, (i) the presence, disposal, release, or threatened
release of any hazardous materials on any property at any time owned or occupied
by the Borrower, its subsidiaries or any Guarantor; (ii) any personal injury
(including wrongful death) or property damage (real or personal) arising out of
or related to such hazardous materials; (iii) any lawsuit brought or threatened,
settlement reached, or governmental order relating to such hazardous materials,
and/or (iv) any violation of laws, orders, regulations, requirements, or demands
of government authorities, or any policies or requirements of the Bank, which
are based upon or in any way related to such hazardous materials including,
without limitation, attorney and consultant fees, investigation and laboratory
fees, court costs, and litigation expenses. (b) The Borrower and each of the
Guarantors represent and warrant that, as of the date hereof, each is in full
compliance with all of the above described laws, ordinances, rules, regulations
and policies.
Notices: Notices, consents and other communications provided for herein
shall be in writing and may be either mailed or delivered (which shall include
telex or facsimile communication). Any notice shall be conclusively deemed to
have been received by a party hereto and to be effective on the day on which
delivered (either by hand or by telex, telecopier or other telegraphic
communications equipment, with receipt confirmed) to such party at its address
set forth below (or at such other address as such party shall specify to the
other parties hereto in writing) or, if sent by registered mail, on the fifth
business day after the day on which mailed, addressed to such party at such
address: (i) if to the Borrower, at 350 Northern Boulevard, Great Neck, New York
11021, (ii) if to the Guarantor(s), at 350 Northern Boulevard, Great Neck, New
York 11021, and (iii) if to the Bank, at Chemical Bank, 50 Charles Lindbergh
Boulevard, Uniondale, New York 11553, Attention: The Fresh Juice Company of
Florida, Inc. Relationship Manager.
THE FRESH JUICE COMPANY OF FLORIDA, INC.
By: /s/ Steven Smith Secy & CEO
----------------------------
Name: Steven Smith
Title: Secretary & CEO
THE FRESH JUICE COMPANY, INC. (as a Guarantor)
By: /s/ Steven Smith President
----------------------------
Name: Steven Smith
Title: President
CHEMICAL BANK
By: /s/
----------------------------
Title: Vice President
EXHIBIT B
SUBSIDIARIES AND AFFILIATES
(to be completed by the Borrower and the Guarantor(s))
Minalba Foods of North America
Fresh Pik't Natural Foods
EXHIBIT C
LITIGATION
(to be completed by the Borrower and the Guarantor(s))
None
EXHIBIT D
INDEBTEDNESS
(to be completed by the Borrower and the Guarantor(s))
$475,000 Fantasy-BlankeBaer Corp. for Bldg.
1000 American Superior Blvd.
Winterhaven FLA.
EXHIBIT E
LIENS
(to be completed by the Borrower and the Guarantor(s))
None
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement"), dated as of the of
November, 1994, between THE FRESH JUICE COMPANY, INC., a Delaware
corporation (the "Company"), and Paul Ballentine, an individual resident
of the State of Florida (the "Executive").
WHEREAS, the Company desires to employ the Executive upon the terms
and conditions set forth below; and
WHEREAS, the Executive desires to accept such employment upon the
terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, intending to be legally bound thereby, the parties hereto agree
as follows:
1. Employment, Duties and Acceptance.
1.1. Employment. (a) The Company hereby employs the Executive to
serve as its Vice President of Production and Product Development, with
such power and duties as the Board of Directors of the Company shall
assign or vest in him at any time and from time to time.
(b) The Executive's services hereunder will be rendered at the
Company's production facilities in Florida, or such other place as the
parties may agree to at any time and from time to time. It is understood
and agreed, however, that during the Term (as defined in Section 2
below) the Executive's duties may require reasonable periods of travel
from time to time at such times as the Company may reasonably request.
1.2. Acceptance of Employment. (a) The Executive hereby accepts
such employment and agrees to serve as described in Section 1.1 hereof.
(b) The Executive shall report to the Board of Directors of the
Company.
(c) The Executive shall not, during the term, actively engage in any
other business activity unless the Executive has previously advised the
Board of Directors of the Company in writing of such proposed business
activity and the Board of Directors of the Company specifically advises
the Executive in writing that it consents thereto.
(d) The Executive further agrees to accept election and to serve
during all or any part of the Term as an officer and director of any one
or more direct or indirect subsidiaries of the Company (each, a
"Subsidiary"), without any additional compensation therefor other than
that specified in this Agreement, if elected or appointed to any such
position by the stockholders or Board of Directors of the Company or of
any Subsidiary; provided, however, that if for any reason this Agreement
or the Executive's employment hereunder is terminated, the Executive
will forthwith resign from and will not thereafter act as an officer,
director or executive of, or consultant to, the Company or any
Subsidiary.
2. Term of Employment.
Subject to the provisions of Section 4 hereof, the term of this Agreement
(the "Term") shall commence on the date hereof.
3. Compensation.
3.1. Salary, Bonus. As compensation for all services to be tendered to or
at the request of the Company by the Executive pursuant to this Agreement, the
Company agrees to pay the Executive an annual salary of $125,000.
Salary shall be payable in equal bi-weekly installments.
3.2. Benefits. (a) During the Term, the executive shall be entitled to
participate in and enjoy the benefits of any profit sharing, health insurance or
other similar plan or plans which may be instituted by the Company for the
benefit of its executive officers or employees generally, upon such term as may
be therein provided.
3.3. Expenses. The Company shall provide the Executive with a corporate
American Express Card for use by the Executive for all reasonable expenses
actually incurred by him during the Term in connection with the performance of
his services under this Agreement. In addition, the Company shall reimburse the
Executive for all reasonable expenses actually paid by him during the Term in
connection with the performance of his services under this Agreement upon
presentation of expense statements or vouchers or such other supporting
information, in writing, as may be required by law to support the deductability
of such expenses for United States federal income tax purposes or as the Board
of Directors of the Company may require.
3.4. Automobile. During the Term, the Executive shall be entitled to the
use of a Company automobile.
3.5. Vacation; Sick Days. The Executive shall be entitled to as many
holidays, vacation days, sick days and personal days as are in accordance with
the Company's policy then in effect for its executive officers.
3.6. Relocation. The Executive shall be reimbursed for $25,000 of
relocation expenses. If the Executive leaves the Company's employ before one
year's time, the $25,000 will be repaid to the Company.
4. Termination.
This Agreement and all the obligations of each of the parties thereunder
shall terminate earlier than the stated term in the following circumstances:
4.1. Death. In the event of the Executive's death, this Agreement shall
terminate on the date of death.
4.2. Disability. If during the term the Executive shall become ill or is
injured or otherwise disabled and such illness, injury or disability shall be of
such nature as to prevent him from performing the services to be performed by
him hereunder for a period of six consecutive months.
4.3. Retirement. The Executive retires or resigns voluntarily.
4.4. Good Reason. The Company may terminate the Executive for Good
Reason. "Good Reason" shall mean (i) the willful and continued failure by the
Executive to perform substantially his duties to the Company, (ii) any material
breach of the Agreement by the Executive, (iii) any willful, intentional,
reckless or negligent act by the Executive having the effect of materially
injuring the business, financial condition or prospects of the Company or the
reputation of the business or injuring any customer, supplier, employee or other
business relationships of the Company or its Subsidiaries, (iv) the conviction
of the Executive of a felony, or (v) conviction of the Executive for a crime
involving moral turpitude or larceny. If the Company terminates the Executive,
he will receive compensation for up to one year. If he finds other employment
before the year expires, compensation shall cease. The Executive shall give 5
months notice if he wants to leave the Company's employ.
6.4. Descriptive Headings. The section headings contained herein are for
reference purposes only and shall not in any way effect the meaning or
interptetation of this Agreement.
6.5. Entire Agreement. This Agreement, including any exhibits hereto,
sets forth the entire agreement and understanding of the parties relating to the
subject matter hereof and thereof and supersedes all prior agreements,
arrangements and understandings, written or oral, relating to the subject
matter hereof and thereof.
6.6. No Third Party Contract Rights. This Agreement is intended solely
for the benefit of the parties hereto. Nothing herein shall be construed or
deemed to create any rights or benefits to any third parties or third party
beneficiaries.
6.7. Severability. The invalidity of all or any part of any section of
this Agreement shall not render invalid the remainder of this Agreement or the
remainder of such section. If any provision of this Agreement is so broad as to
be unenforceable, such provision shall be interpreted to be only so broad as is
enforceable.
6.8. No Conflict. The Executive represents and warrants to the Company
that he is subject to no presently-existing written or oral employment agreement
or non-competition agreement, that he has made no commitment of any kind
inconsistent with the provisions of this Agreement and his duties hereunder,
and that he is under no disability of any kind to enter into this Agreement and
to perform all of his obligations hereunder.
6.9. Acts of the Company. The Executive agrees that the Executive may
not, as an officer, director or shareholder of the Company, take any action on
behalf of the Company with respect to this Agreement and the matters of the
business of the Company which relate to the Executive personally or to his
family without approval of the Board.
6.10. No Other Inducement. No representation, promise or inducement has
been made by either party that is not embodied in this Agreement, and neither
party shall be bound by or liable for any alleged representation, promise or
inducement not so set forth.
6.11. Assignment. The Agreement, and the Executive's rights and
obligations hereunder, may not be assigned by the Executive. The Company may
assign its rights, together with its obligations, hereunder in connection with
any sale, transfer or other disposition of all or substantially all of its
business and assets, or any merger or consolidation, if the purchaser or
transferee, or the surviving entity in any such merger or consolidation, agrees
in writing to assume all of the Company's obligations hereunder.
6.12. Amendments; Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms or convenants hereof
may be waived, only by a written instrument executed by both of the parties
hereto, or in the case of a waiver, by the party waiving compliance. The failure
of either party at any time or times to require performance of any provision
hereof shall in no manner affect the right at a later time to enforce the same.
No waiver by either party of the breach of any term or convenant contained in
this Agreement, whether by conduct or otherwise, in any one or more instances,
shall be deemed to be, or construed as, a further or continuing waiver of any
such breach, or a waiver of the breach of any other term or convenant contained
in this Agreement, or shall affect the validity of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this as of the date
first above written.
THE FRESH JUICE COMPANY, INC.
By:
--------------------------
Name: Steven Smith
Title: Chief Executive Officer
Paul Ballentine
------------------------------
EXHIBIT 10.6
THIS INSTRUMENT PREPARED BY
AND SHOULD BE RETURNED TO:
Stephen C. Raymonds
Division Counsel
Universal Foods Corporation
433 East Michigan Street
Milwaukee, WI 53202
(414) 347-3835
For Recording Purposes Only
PURCHASE MONEY MORTGAGE
THIS PURCHASE MONEY MORTGAGE (this "Mortgage") is made and entered into
this 1st day of August, 1995, by The Fresh Juice Company (the "Mortgagor"),
whose address is 350 Northern Blvd., Great Neck, NY 11021, in favor of
Fantasy-BlankeBaer Corporation ("Mortgagee"), whose address is 433 East
Michigan Street, Milwaukee, WI 53202.
W I T N E S S E T H:
1. MORTGAGE. In consideration of Ten Dollars ($10.00) and other valuable
consideration received by Mortgagor, the receipt and sufficiency of which are
hereby acknowledged, Mortgagor hereby grants, bargains, sells, assigns,
transfers, conveys and mortgages to Mortgagee, its successors and assigns, to
its own proper use and benefit forever, subject to the terms and conditions of
this Mortgage, the following:
(a) Land. All that certain real property located in Polk County,
Florida, more particularly described as follows, to wit:
See Attached
Exhibit B (the "Property")
(b) Appurtenances. The benefit of all easements and other rights of
any nature whatsoever, if any, appurtenant to the Property or the Improvements,
or both, the benefit of all rights-of-way, drainage rights, sanitary sewer and
potable water rights, stormwater drainage rights, rights of ingress and egress
to the Property and any improvements of Mortgagor now or hereafter located on
any of such real property interests, whether now existing or hereafter arising,
together with the reversions, remainders, rents, issues, incomes and profits of
any of the foregoing (the "Appurtenances").
(c) Improvements. All buildings, structures, fixtures and improvements
of any nature now or to be hereafter located in whole or in part upon the
Property or on the Appurtenances, regardless of whether physically affixed
thereto or severed or capable of severance therefrom (the "Improvements").
(d) Proceeds. All proceeds of the conversion, voluntary or
involuntary, of any of the property encumbered by this Mortgage into cash or
other liquidated claims, or that are otherwise payable for injury to or the
taking or requisitioning of any such property, including all judgments,
settlements and insurance and condemnation proceeds as provided in this
Mortgage.
The Property, Appurtenances and Improvements are collectively
referred to as the "Mortgaged Property" in this Mortgage.
2. DEBT. Mortgagor shall pay to Mortgagee the indebtedness (the "Debt") as
evidenced by that certain Promissory Note of even date herewith made by
Mortgagor in favor of Mortgagee in the principal amount of Four Hundred
Seventy-Five Thousand & 00/100 ($475,000.00), which Note, together with any and
all renewals, replacements, extensions or modifications is herein called the
"Note". Mortgagor's obligations described herein and in the Note are secured,
among other things, by the collateral described in this Mortgage, which term
includes any and all amendments, extensions, renewals, replacements,
substitutions, modifications and consolidations of this Mortgage, and may also
from time to time be secured by other collateral described in written documents.
3. COSTS. All costs, expenses, losses, damages and other charges sustained
or incurred by Mortgagee because of: (i) Mortgagor's default in payment or
performance, as the case may be, of any provision contained in the Note and this
Mortgage; (ii) defense of actions instituted by Mortgagor or a third party
against Mortgagee arising out of or related to the Loan, or in the realizing
upon, protecting, perfecting, defending, or (iii) actions brought or defended by
Mortgagee enforcing Mortgagee's security interest in the Mortgaged Property. All
of these costs and expenses include reasonable attorneys' fees, paralegals'
fees, or legal assistants' fees, whether incurred with respect to collection,
litigation, bankruptcy proceedings, interpretation, dispute, negotiation, trial,
appeal, defense of actions instituted by a third party against Mortgagee, or
enforcement of any judgment based on the Note and this Mortgage, whether or not
suit is brought to collect such amounts or to enforce such rights or, if
brought, is prosecuted to judgment.
4. TITLE WARRANTIES. Subject to the Permitted Encumbrances (as hereinafter
defined), Mortgagor covenants with Mortgagee that: (i) Mortgagor is indefeasibly
seized of the Property and Improvements in fee simple, has good and marketable
title to the Mortgaged Property and has full power, lawful right and authority
to convey the same in fee simple and to grant Mortgagee a perfected first lien
security interest in the Mortgaged Property, and (ii) the Mortgaged Property is
free and clear of all liens, encumbrances, restrictions, and security interests
of any nature and except for those permitted encumbrances which Mortgagee has
previously approved, as set out in Exhibit "A" attached hereto and incorporated
herein by reference, which are referred to as "Permitted Encumbrances" in this
Mortgage.
5. LIENS. Mortgagor will not create or permit to be created, or to remain,
and will promptly discharge at Mortgagor's expense any and all liens or
encumbrances upon, or security interests in, the Mortgaged Property, or any
combination thereof, whether consensual, common law, statutory, voluntary,
involuntary, or arising by operation of law, except the Permitted Encumbrances.
6. REPRESENTATIONS AND WARRANTIES. The Mortgagor hereby represents and
warrants to Mortgagee as follows:
(a) That Mortgagor will pay all and singular the principal, interest
and the other various and sundry sums of money payable under and by virtue of
the Note and this Mortgage promptly at the time or times that the same shall
severally become due.
(b) That Mortgagor will permit, commit, or suffer no waste,
impairment, or deterioration of the Property or any part thereof during the term
of this Mortgage.
(c) That Mortgagor will pay all and singular the costs, charges and
expenses, including reasonable attorneys' fees and costs of abstracts of title,
incurred or paid at any time by the Mortgagee because of the failure on the part
of the Mortgagor promptly and fully to perform these agreements and covenants of
the Note and this Mortgage, and said costs, charges and expenses, together with
interest thereon at the highest rate allowed by law, shall be immediately due
and payable on demand therefor by the Mortgagee and shall be secured by the lien
of this Mortgage.
7. TAXES AND OTHER IMPOSITIONS. Mortgagor will pay or cause to be paid,
when due (i) all property taxes, assessments, water, sewer, utility and other
rents, rates and charges, including all excises, taxes, levies, license fees,
permit fees, impact fees, connection fees, and other fees and charges, whether
general or special, ordinary or extraordinary, foreseen or unforeseen, that may
be assessed, levied or imposed upon the Mortgaged Property, or otherwise arising
with respect to the occupancy, use, possession or disposition thereof, whether
or not the failure to pay the same might result in the creation of a lien upon
the Mortgaged Property, or any combination thereof; (ii) all franchise, excise
and other taxes, fees and charges assessed, levied or imposed with respect to
Mortgagor's right to do business in the State of Florida and the political
subdivisions thereof; (iii) all taxes and fees (except for Mortgagee's state and
federal income taxes) that may be levied by the United States of America or any
state or political subdivision thereof, upon Mortgagee or Mortgagor in
connection with or upon the Note and this Mortgage, or the Debt or its payment,
or collection, or any combination thereof (including all documentary stamp taxes
and intangible taxes plus any penalties and interest charged for the late
payment of any such taxes); and (iv) all lawful claims and demands of
contractors, subcontractors, mechanics, laborers, materialmen and other lienors
which, if unpaid, might result in the creation of a lien upon the Mortgaged
Property. The sums payable under this paragraph are called "Impositions".
8. CONDEMNATION. If all or any part of the Mortgaged Property, or any
interest therein or right accruing thereto, is taken as a result of, or in lieu
or in anticipation of, the exercise of the right of condemnation or eminent
domain, by any government or any other party entitled to exercise such powers by
law, all proceeds payable with respect to any such action are assigned to
Mortgagee and shall be paid to Mortgagee. Mortgagee shall be under no obligation
to question the amount of any such award or compensation and may accept the same
in the amount in which the same shall be paid. The proceeds of any award or
compensation so received shall, at the option of the Mortgagee, either be
applied to the payment of the Debt or be paid over to the Mortgagor for the
restoration of the Improvement. Mortgagor, immediately upon obtaining knowledge
of the institution or threatened institution, of any proceedings for the
Mortgaged Property, or any part thereof, by condemnation or eminent domain, will
notify the Mortgagee of the pending of such proceedings. Mortgagee shall have
the right to intervene and participate in any proceedings for and in connection
with any taking referred to in this section. Mortgagor shall not enter into any
agreement for the taking of the Mortgaged Property or any part thereof.
9. INSURANCE. That Mortgagor will keep all Improvements hereafter erected
on the Property insured against loss by fire and other hazards, casualties and
contingencies to the extent of the full insurable value for replacement cost
thereof from time to time. Mortgagor will pay promptly when due any premiums on
such insurance and in default thereof the Mortgagee may itself pay the same, and
all such sums so paid by Mortgagee, together with interest thereon at the
highest rate allowed by law, shall be immediately due and payable upon demand of
Mortgagee and shall be secured by the lien of this Mortgage. All insurance shall
be carried by companies approved by Mortgagee and the original or certified
copies of policies and renewals thereof, together with evidence of the payment
of the premiums therefor, shall be provided to the Mortgagee. All such
insurance policies and renewals thereof shall contain standard form
non-contributing mortgagee loss payable clauses in favor of the Mortgagee, and
shall provide that no less than ten (10) days' written notice will be given the
Mortgagee before any cancellation or expiration thereof. In event of loss,
Mortgagor will give immediate notice by mail to Mortgagee and Mortgagee may make
proof of loss if not made promptly by Mortgagor, and each insurance company
concerned is hereby authorized and directed to make payment for such loss
directly to Mortgagee, instead of to Mortgagor and Mortgagee jointly, and the
insurance proceeds, or any part thereof, may be applied by Mortgagee at its
option either to the reduction of the indebtedness hereby secured or to the
restoration or repair of the Property.
10. ADVANCES. If Mortgagor defaults in the observance or performance of any
of the provisions of the Note and this Mortgage, including but not limited to
obtaining and maintaining insurance pursuant to Paragraph 9 and paying
Impositions pursuant to Paragraph 7, then Mortgagee, without waiving or
otherwise impairing any other of its rights or remedies, at its sole option and
without obligation to do so, and without demand upon Mortgagor, may make any
such payment or take such action as Mortgagee deems necessary or appropriate to
correct such Default, or to protect the security of the Mortgaged Property
encumbered by the Note and this Mortgage. All payments so made, together with
all costs and expenses so incurred, will be added to the principal amount due
under the Note and thereafter will bear interest at the rate then payable as
provided for in the Note, and will be secured by the lien and security interest
granted by the Mortgage.
11. DEFAULT. The occurrence of any of the following (time being of the
essence as to this Mortgage and all of its provisions) constitutes a "Default"
by Mortgagor, at the option of Mortgagee, under the other Note and this
Mortgage:
(a) Scheduled Payment. Mortgagor's failure to make any payment
required by the Note when due.
(b) Monetary Default. Mortgagor's failure to make any other payment
required by this Mortgage or the Note when due, within ten (10) days after
written demand therefor from Mortgagee to Mortgagor.
(c) Other. Mortgagor's failure to perform any other obligation imposed
upon Mortgagor by this Mortgage or the Note, within thirty (30) days after
written demand by Mortgagee to Mortgagor.
(d) Representation. Any representation or warranty of Mortgagor
contained in this Mortgage or in any other instrument or statement furnished in
connection herewith, proves to be incorrect or misleading in any adverse respect
as of the time when the same shall have been made.
(e) Bankruptcy. Mortgagor (i) files a voluntary petition in bankruptcy
or a petition or answer seeking or acquiescing in any reorganization or for an
arrangement, composition, readjustment, liquidation, dissolution, or similar
relief for itself pursuant to the United States Bankruptcy Code or any similar
law or regulation, federal or state relating to any relief for debtors, now or
hereafter in effect; or (ii) makes an assignment for the benefit of creditors or
admits in writing its inability to pay or fails to pay its debts as they become
due; or (iii) suspends payment of its obligations or takes any action in
furtherance of the foregoing; or (iv) consents to or acquiesces in the
appointment of a receiver, trustee, custodian, conservator, liquidator or other
similar official of Mortgagor, a general partner of Mortgagor, or any guarantor,
for all or any part of the Mortgaged Property or other assets of such party, or
either; or (v) has filed against it an involuntary petition, arrangement,
composition, readjustment, liquidation, dissolution, or an answer proposing an
adjudication of it as a bankrupt or insolvent, or is subject to a reorganization
pursuant to the United States Bankruptcy Code, an action seeking to appoint a
trustee, receiver, custodian, or conservator or liquidator, or any similar law,
federal or state, now or hereafter in effect, and such action is approved by any
court of competent jurisdiction and the order approving the same shall not be
vacated or stayed within thirty (30) days from entry; or (vi) consents to the
filing of any such petition or answer, or shall fail to deny the material
allegations of the same in a timely manner.
(f) Judgments. (1) A final judgment, other than a final judgment in
connection with any condemnation, is entered against Mortgagor that (i)
adversely affects the value, use or operation of the Mortgaged Property, or (ii)
adversely affects, or reasonably may adversely affect, the validity,
enforceability or priority of the lien or security interest created by this
Mortgage or the other Note and this Mortgage, or both; or (2) execution or other
final process issues thereon with respect to the Mortgaged Property; and (3)
Mortgagor does not discharge the same or provide for its discharge in accordance
with its terms, or procure a stay of execution thereon, in any event within
thirty (30) days from entry.
(g) Liens. Any federal, state or local tax lien or any claim of lien
for labor or materials or any other lien or encumbrance of any nature whatsoever
is recorded against Mortgagor or the Mortgaged Property and is not removed by
payment or transferred to substitute security in the manner provided by law,
within ten (10) days after it is recorded in accordance with applicable law.
(h) Transfer of Property Ownership. Any sale, conveyance, transfer,
assignment, or other disposition of all or any part of the Mortgaged Property or
any ownership interest in Mortgagor (whether legal or beneficial) or possession
or use of the Mortgaged Property.
12. REMEDIES. Upon the occurrence and continuance, if applicable, of any
Default, Mortgagee may exercise any one or more of the following rights and
remedies, in addition to all other rights and remedies otherwise available at
law or in equity:
(a) Other Documents. To pursue any right or remedy provided by the
Note.
(b) Acceleration. To declare the entire unpaid amount of the Debt
together with all accrued and unpaid interest thereon immediately due and
payable with interest to be due thereon at the Default Rate set forth in the
Note.
(c) Foreclosure. To foreclose the lien of this Mortgage and obtain
possession of the Mortgaged Property, by any lawful procedure.
(d) Appointment of Receiver. That the Mortgagee may, without notice
to the Mortgagor, at any time pending a suit upon this Mortgage, apply to the
Court having jurisdiction thereof for the appointment of a receiver, and such
Court shall forthwith appoint a receiver of the Property and such receiver shall
have all the broad and effective functions and powers in anywise entrusted by a
Court to a receiver, and such appointment shall be made by such Court as an
admitted equity and a matter of absolute right to said Mortgagee, and without
reference to the adequacy of inadequacy of the value of the Property or to the
solvency or insolvency of Mortgagor or the other defendants in such proceeding,
if any, and that the rents, issues, income, revenues, profits and proceeds of
the Property shall be applied by such receiver according to the lien of this
Mortgage and the practice of such Court.
(e) Other Security. To proceed to realize upon any and all other
security for the Debt in such order as Mortgagee may elect; no such action,
suit, proceeding, judgment, levy, execution or other process will constitute an
election of remedies by Mortgagee or will in any manner alter, diminish or
impair the lien and security interest created by this Mortgage unless and until
the Debt is paid in full.
(f) Advances. To advance such monies and take such other action as is
authorized by Paragraphs 3, 7, 9 and 10 herein.
13. CUMULATIVE RIGHTS AND NON-WAIVER. No right or remedy conferred upon or
reserved to Mortgagee by this Mortgage or the Note is intended to be exclusive
of any other right or remedy; and each and every right and remedy is cumulative
and in addition to any other right or remedy otherwise available. Every right,
power, privilege and remedy granted Mortgagee by this Mortgage or the Note, or
both, or otherwise available at law or in equity may be exercised by Mortgagee
from time to time as often as Mortgagee deems expedient until the Debt is paid
in full. Mortgagee's failure to insist at any time upon the strict observance or
performance by Mortgagor of any of the provisions of this Mortgage or in the
Note, or to exercise any right or remedy provided for in this Mortgage or in the
Note will not impair any such right or remedy or be construed as a waiver or
relinquishment thereof for the future. Receipt by Mortgagee of any payment
required to be made pursuant to the Note and this Mortgage with knowledge of the
breach of any provision of the Note and this Mortgage will not constitute a
waiver of such breach. In addition to all other remedies provided in this
Mortgage, Mortgagee will be entitled, to the extent permitted by applicable law,
to injunctive relief in the case of a violation or attempted or threatened
violation of any of the provisions of the Note and this Mortgage or to a decree
ordering performance of any of the provisions of any of the foregoing.
14. NOTICES. Any notice or demand that must or may be given or made in
connection with this Mortgage must be in writing and, unless receipt is
expressly required, will be deemed given, delivered or made, as the case may be,
when delivered by personal delivery or when mailed by Express Mail, by overnight
delivery service of a nationally-recognized company, or by certified or
registered mail, return receipt requested, in any event, with sufficient postage
affixed, and addressed to the parties at the addresses written on the first page
of this Mortgage or on the signature pages of this Mortgage. Such addresses may
be changed by notice pursuant to this paragraph. Notice of change of address is
effective only upon receipt. All of the persons executing this Mortgage as
Mortgagor severally agree that a single notice to Mortgagor in the manner
provided in this paragraph will be effective to bind each such person for all
purposes.
15. TRANSFER. Mortgagor may not sell, convey, assign, transfer or
otherwise dispose of any interest in all or any portion of the Mortgaged
Property, or any ownership interest in Mortgagor without Mortgagee's prior
written consent, which consent may be withheld in Mortgagee's sole discretion.
Whether such transfer is voluntary or involuntary, or by operation of law (other
than in connection with the death, disability or incompetency of any individual
Mortgagor), any such transfer will be void as to Mortgagee, and constitute an
immediate Default under this Mortgage, without notice, in the sole discretion of
Mortgagee. Mortgagee's consent to any transfer, sale, or conveyance hereunder
shall not be deemed a consent to any subsequent transfer, sale, or conveyance
for which Mortgagee's prior written approval has not been obtained.
16. SUCCESSORS AND ASSIGNS. The provisions of this Mortgage inure to the
benefit of Mortgagee and its successors and assigns, and bind all persons
executing this Mortgage as Mortgagor and their respective heirs, legal
representatives, successors and assigns.
17. CHOICE OF LAW. The provisions of this Mortgage are to be interpreted,
construed, applied and enforced in accordance with the laws of the State of
Florida, regardless of where this Mortgage is executed, delivered or breached,
or where any payment or other performance required by this Mortgage is made,
where any action or other proceeding involving this Mortgage is instituted, or
whether the laws of the State of Florida otherwise would apply the laws of
another jurisdiction; the foregoing choice of law provisions will apply to the
Note and this Mortgage.
18. SEVERABILITY. The provisions of the Note and this Mortgage are
severable at Mortgagee's option so that if any provision is declared by a court
of competent jurisdiction to be invalid or unenforceable, no other provision
will be affected by such invalidity or unenforceability, but will remain in
force and effect according to its original terms, if Mortgagee so elects.
19. TERMS. Wherever used in this Mortgage or the other Note and this
Mortgage, or both, and unless expressly provided otherwise: (i) use of the
singular includes the plural, and vice versa; (ii) use of one gender includes
all genders; (iii) use of the term "include" or "including" is always without
limitation; (iv) use of the words, "should," "must" and "will" has the same
legal effect as the use of the word "shall"; (v) the term "day" means a banking
day which shall be a day on which Mortgagee and other banks are open for
the transaction of business, excluding any national holidays, and any
performance which would otherwise be required on a day other than a banking day
shall be timely performed in such instance, if performed on the next succeeding
banking day; (vi) any definition herein incorporating one or more documents or
items shall refer to such items "singularly and collectively", and (vii)
"person" means any natural person or artificial entity having legal capacity.
20. HEADINGS. Paragraph headings and subheadings are for indexing purposes
only and are not to be used to interpret, construe, apply or enforce the
provisions of this Mortgage.
21. TIME OF THE ESSENCE. Time is of the essence with respect to each and
every covenant, agreement, and obligation of Mortgagor under this Mortgage and
the Note.
22. ORAL MODIFICATION INEFFECTIVE. No term of this Mortgage or any other of
the Note and this Mortgage, or such documents, may be waived, changed, modified,
discharged, or terminated except by an instrument in writing signed by the party
against which enforcement of the waiver, change, modification, discharge, or
termination is sought.
IN WITNESS WHEREOF, Mortgagor has executed and delivered this Mortgage as
of the date stated above.
Signed, sealed and delivered MORTGAGOR: THE FRESH JUICE COMPANY
in the presence of:
/s/ Guy V. Gabriel /s/ Steven Smith
Type/Print: Guy V. Gabriel By: Steven Smith
Title: President
/s/ Marie Watson
Type/Print: Marie Watson
STATE OF New York
COUNTY OF Kings
The foregoing instrument was acknowledged before me this 31st day of July,
1995, by Steven Smith, the President of Fresh Juice Company, a Delaware
corporation and who is (x) known to me or ( ) produced as
identification.
/s/ David Silberzweig
-----------------------
Notary Public
(Notarial Seal)
DAVID SILBERZWEIG David Silberzweig
Notary Public, State of New York Type or Print Name
No. 90-8995435
Qualified in Nassau County
Commission expires on Sept. 30, 1996 September 30, 1996
My Commission expires
EXHIBIT "A"
PERMITTED ENCUMBRANCES
1. Ad valorem real property taxes for the year of closing and subsequent years;
EXHIBIT B
Starting at the most Southerly corner of Lot 3A of Polk Packing Association
Subdivision as recorded in Plat Book 30, Page 42, of the public records of Polk
County, Florida, run thence South 37 degrees 46' East along the Northeast
Right-of-Way of the Eloise Loop Road a distance of 612.7 feet, thence North 48
degrees 37' East a distance of 381.44 feet to the Northerly Right-of-Way
boundary of the S.A.L.R.R. for the point of Beginning; run thence North 48
degrees 37' East a distance of 470 feet more or less to the center of the
Wahneta Drainage District Canal from Lake Lulu, thence Southerly along the
center of said canal to its intersection with the Northerly Right-of-Way
boundary of the S.A.L.R.R., thence Northwesterly along said R.R.
Right-of-Way to the Point of Beginning; the above described property being a
part of Lots 17 and 19 of Wahneta Farms Subdivision as reported in Plat Book 1,
Pages 82A and 82B, of the public records of Polk County, Florida.
EXHIBIT 10.7
PROMISSORY NOTE
August 1, 1995 $475,000.00
The undersigned ("Maker") promises to pay to the order of
Fantasy-BlankeBaer Corporation ("Lender") at 433 East Michigan Street,
Milwaukee, WI 53202, Attention: Stephen C. Raymonds, the principal amount of
Four Hundred Seventy-Five Thousand Dollars ($475,000) plus interest at the rate
of seven percentage points (7.0%) per annum.
Maker shall repay this Note as follows:
(1) Monthly payments of interest in the amount of $2,770.83 each
commencing on 9/1/95 and on the first day of each month thereafter to
and including 2/1/97;
(2) Monthly payments of principal and interest in the amount of $3,682.67
each commencing on 3/1/97 and on the first day of each month thereafter
to and including 7/1/98;
(3) A final payment of all outstanding principal and accrued but unpaid
interest on 8/1/98.
If any payment is not paid within five days after it becomes due and after
five (5) days written demand therefore by Lender to Maker, or if there is an
Event of Default (as defined in the Real Estate Mortgage of even date executed
by Maker in favor of Lender) (in either case, an "Event of Default"), the unpaid
balance shall, at the option of the Lender and without further notice, mature
and immediately become due and payable.
This Note is secured by all existing and future security agreements,
assignments, collateral pledge agreements and mortgages between the Lender and
Maker, and the lien in any credit balance or other money now or hereafter owed
Maker by Lender, and, in addition, Maker agrees that Lender may at any time
after an occurrence of an Event of Default without notice or demand, set off
against such credit balance or other money any amount unpaid under this Note.
Without affecting the liability of Maker, the Lender may without notice
renew or extend the time for payment, accept partial payments, release or impair
any collateral security for the payment of this Note or agree not to sue any
party liable on it.
Maker agrees to pay all costs of collection, including reasonable attorneys
fees, and waive presentment, protest, demand and notice of dishonor.
This Note may be prepaid in full or in part at any time without penalty. In
the event of partial payments, such amounts shall be applied to principal
installments in the inverse order in which they are due and shall not defer any
succeeding installments or principal or interest unless Lender agrees otherwise
in writing.
Maker shall pay a late fee equal to two percent (2%) of any payment not
made within five days after it becomes due.
This Note shall be construed and enforced in accordance with the laws of
the State of Wisconsin.
This Note is the Note referred to in the Real Estate Mortgage. Reference is
made to the Real Estate Mortgage for terms and conditions bearing on this Note.
THE FRESH JUICE COMPANY
By: /s/ Steven Smith
----------------------------
Title: President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated financial statements and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<CASH> 1,998,063
<SECURITIES> 0
<RECEIVABLES> 591,727
<ALLOWANCES> 0
<INVENTORY> 1,544,821
<CURRENT-ASSETS> 4,258,358
<PP&E> 2,718,232
<DEPRECIATION> 499,256
<TOTAL-ASSETS> 6,508,237
<CURRENT-LIABILITIES> 338,768
<BONDS> 1,529,168
0
0
<COMMON> 37,620
<OTHER-SE> 4,602,681
<TOTAL-LIABILITY-AND-EQUITY> 6,508,237
<SALES> 9,219,184
<TOTAL-REVENUES> 9,219,184
<CGS> 6,035,483
<TOTAL-COSTS> 6,035,483
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,355
<INCOME-PRETAX> 443,094
<INCOME-TAX> 172,051
<INCOME-CONTINUING> 271,043
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 271,043
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
</TABLE>
