<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 29, 1996
Commission file No. 0-15320
THE FRESH JUICE COMPANY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 11-2771046
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [x] No [ ]
The number of shares of $.01 par value Common Stock outstanding as of April 10,
1996 was 3,550,062.
<PAGE> 2
PART 1
Item 1. Financial Statements
THE FRESH JUICE COMPANY, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
February 29, 1996 and November 30, 1995
<TABLE>
<CAPTION>
Assets 1996 1995
------ ---- ----
(Unaudited)
<S> <C> <C>
Current assets:
Cash $1,635,196 1,998,063
Trade accounts receivable 770,855 591,727
Inventories 1,038,708 1,544,821
Current portion of note receivable 110,000 120,000
Other 73,825 3,747
---------- ---------
Total current assets 3,628,584 4,258,358
---------- ---------
Property, plant and equipment, at cost:
Land 30,000 30,000
Building 597,155 597,155
Equipment 2,457,605 353,794
Molds 224,333 196,338
Automobiles 103,058 103,058
Leasehold improvements 25,919 -
Construction-in-progress - 1,437,887
---------- ---------
2,438,070 2,718,232
Less accumulated depreciation and amortization 591,973 499,256
---------- ---------
Net property, plant and equipment 2,846,097 2,218,976
Note receivable, net of current portion - 20,000
Trademarks and patents, net of accumulated amortization of 10,358 10,903
$11,604 at February 29, 1996 and $11,059 at November 30, 1995 ---------- ---------
Total assets $6,485,039 6,508,237
========== =========
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of long-term debt 114,585 45,832
Accounts payable and accrued expenses 380,664 244,697
Income taxes payable 32,829 48,239
---------- ---------
Total current liabilities 528,078 338,768
Long-term debt, net of current installments 1,460,415 1,529,168
---------- ---------
Total liabilities 1,988,493 1,867,936
Shareholders' equity: ---------- ---------
Series preferred stock, par value $10. Authorized 200,000 shares; - -
none issued
Common stock, par value $.01. Authorized 5,000,000 37,620 37,620
shares; issued 3,762,000 shares; outstanding 3,550,062 shares at
February 29, 1996 and November 30, 1995
Additional paid-in capital 2,396,490 2,396,490
Retained earnings 2,345,729 2,489,484
---------- ---------
4,779,839 4,923,594
Less cost of common shares held in treasury:
211,938 at February 29, 1996 and November 30, 1995 283,293 283,293
Total shareholders' equity 4,496,546 4,640,301
Commitments and contingency ---------- ---------
Total liabilities and shareholders' equity $6,485,039 6,508,237
========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 3
THE FRESH JUICE COMPANY, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
Three months ended February 29, 1996
and February 28, 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net sales $2,212,843 2,472,296
Cost of goods sold 1,265,515 1,591,883
---------- ---------
Gross profit 947,328 880,413
Selling, general and administrative expenses 1,076,956 695,460
---------- ---------
Earnings (loss) from operations (129,628) 184,953
Interest income 13,758 20,795
Interest expense (32,642) --
Other 5,421 (3,922)
---------- ---------
Earnings (loss) before income taxes (143,091) 201,826
Income taxes 664 81,535
---------- ---------
Net earnings (loss) (143,755) 120,291
Retained earnings, beginning of period 2,489,484 2,218,441
---------- ---------
Retained earnings, end of period $2,345,729 2,338,732
========== =========
Net earnings (loss) per common share $ (.04) .03
========== =========
Weighted average number of shares outstanding 3,586,167 3,609,366
========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
THE FRESH JUICE COMPANY, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three months ended February 29, 1996
and February 28, 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ (143,755) 120,291
Adjustments to reconcile net earnings (loss) to net
cash provided by operating activities:
Depreciation and amortization 93,262 12,168
Changes in assets and liabilities:
Increase in trade accounts receivable (179,128) (61,754)
Decrease in inventories 506,113 214,443
Decrease (increase) in other current assets (70,078) 7,351
Increase (decrease) in income taxes payable 135,966 127,330
Increase in other current liabilities (15,410) 81,535
Net cash provided by operating -- 3,859
---------- ----------
activities 326,970 508,213
---------- ----------
Cash flows from investing activities:
Installments from note receivable 30,000 30,000
Increase in investments -- (819,000)
Acquisitions of property and equipment (719,937) (90,131)
--------- ----------
Net cash used in investing activities (689,837) (879,131)
--------- ----------
Net decrease in cash (362,867) (370,918)
Cash at beginning of period $1,998,063 $1,542,584
--------- ----------
Cash at end of period $1,635,196 1,171,666
Supplemental cash flow information ========== ==========
Cash paid during the period for: $ 2,000 -
Income taxes paid ========== ==========
Interest paid $ 32,642 -
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
THE FRESH JUICE COMPANY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
February 29, 1996 and November 30, 1995
(Unaudited)
(1) The consolidated financial information of The Fresh Juice Company, Inc. and
subsidiaries (the Company), included herein has been prepared by the
Company and is unaudited; however, such information reflects all
adjustments (consisting solely of normal recurring adjustments) which are,
in the opinion of management, necessary for a fair statement of the
financial position, results of operations, and cash flows for the interim
periods to which the report relates. The results of operations for the
period ended February 29, 1996 are not necessarily indicative of the
operating results which may be achieved for the full year. All material
intercompany accounts and transactions have been eliminated in
consolidation.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
consolidated financial statements be read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's November 30, 1995 consolidated financial statements.
(2) Inventories at February 29, 1996 and November 30, 1995 consist of the
following:
1996 1995
---- ----
Packaging materials $ 219,792 138,062
Finished goods 818,916 1,406,759
---------- ---------
$1,038,708 1,544,821
========== =========
(3) In January 1996, Fresh Pik't Natural Foods, Inc., a wholly-owned
subsidiary, 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
financial position or earnings of the Company.
(4) Effective April 1, 1996, the Company merged a newly formed wholly-owned
subsidiary with and into The Ultimate Juice Company, Inc. (Ultimate), a
privately-held company which markets and distributes fresh squeezed juice
primarily on the east coast. In exchange for all of the outstanding shares
of Ultimate, the Company issued to Ultimate 1,140,000 of previously
unissued shares of its common stock. The merger is expected to be
accounted for under the purchase method.
In addition, on March 31, 1996, the Company entered into a merger agreement
to merge Clear
<PAGE> 6
Springs Citrus, Inc. (Clear Springs), the primary producer of fresh
squeezed juice for Ultimate, with and into The Fresh Juice Company of
Florida, Inc., a wholly-owned subsidiary of the Company. Under terms of
the merger agreement, the Company will exchange 1,160,000 shares of its
common stock for all of the outstanding common stock of Clear Springs,
subject to the approval by the Company's stockholders to increase the
number of authorized shares of common stock to 20,000,000. The Company,
the Company's President and Chief Executive Officer, and Ultimate have
entered into a Voting Agreement, dated March 31, 1996, whereby each shall
vote their respective shares in favor of the increase in authorized shares
and the merger with Clear Springs. This merger is expected to be accounted
for under the purchase method.
In connection with the merger noted above, the Company entered into
employment agreements with two of its executive officers which generally
provide for, among others things, annual compensation aggregating a minimum
of $720,000, subject to annual increases, as defined, for a term of 3
years.
<PAGE> 7
Item 2. Management's Discussion and Analysis or Plan of Operation
Three months ended February 29, 1996 compared to three months ended February 28,
1995
Results of Operations
Net sales for the quarter ended February 29, 1996 decreased to $2,212,843, or
10.5% less than the corresponding quarter of the preceding year, primarily as a
result of the ceased operations of the Company's subsidiary, Fresh Pik't Natural
Foods, Inc., in August 1995.
Gross profit for the quarter ended February 29, 1996 increased to $947,328, or
42.8% from $880,413, or 35.6% in the corresponding quarter of the preceding year
as a result of the Company, in December 1995, commencing to manufacture the
juice product at its Florida facility, offset by the increase in the cost of
citrus in comparison to the cost in the corresponding quarter of the preceding
year.
Selling, general and administrative expenses for the quarter ended February 29,
1996 increased $381,496, or 54.9% over the corresponding quarter of the
preceding year, primarily due to the additional salaries and other costs
associated with the Company's commencement of manufacturing operations in
December 1995 at its Florida facility.
Liquidity
The Company had working capital of $3,100,506 at February 29, 1996 compared to
$3,919,590 at November 30, 1995. The Company requires capital to support its
capital improvements and the level of inventory required to meet current demand
as well as expected future increases in demand for its product. Additional
financing may be required to support the capital improvements and levels of
inventory. During the 1996 harvesting season, which ends in August 1996, the
Company believes it is processing sufficient product to meet its current demand.
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 current gross
profit level.
Material Subsequent Event
Effective April 1, 1996, the Company merged a newly formed wholly-owned
subsidiary with and into The Ultimate Juice Company, Inc. (Ultimate), a
privately-held company which markets and distributes fresh squeezed juice
primarily on the east coast. In exchange for all of the outstanding shares of
Ultimate, the Company issued to Ultimate 1,140,000 of previously unissued shares
of its common stock.
In addition, on March 31, 1996, the Company entered into a merger agreement to
merge Clear Springs Citrus, Inc. (Clear Springs), the primary producer of fresh
squeezed juice for Ultimate, with and into The Fresh Juice Company of Florida,
Inc., a wholly-owned subsidiary of the Company. Under terms of the merger
agreement, the Company will exchange 1,160,000 shares of its common stock for
all of the outstanding common stock of Clear Springs, subject to the approval by
the Company's stockholders to increase the number of authorized shares of common
stock to 20,000,000.
<PAGE> 8
Management of the Company anticipates after the effect of the two mergers, the
Company will have approximately $25,000,000 in annual sales.
On April 11, 1996 the Company filed a Current Report on Form 8-K regarding such
transactions.
PART II -- Other Information
Item 5. Other Information
On February 12, 1996 the Company entered into Stock Option Agreements
with Paul Ballentine, Vice President of Production and Product Development of
the Company, and Jeffrey Smith, Vice President of Strategic Development and
Investor Relations of the Company, granting such employees the option to
purchase 60,000 and 50,000 shares, respectively, of the Common Stock, $.01 par
value of the Company, at an exercise price of $3.125 per share, vesting and
exercisable in accordance with the terms of the applicable Stock Option
Agreements. Such Stock Option Agreements appear as Exhibits to this report and
are incorporated herein by reference. The foregoing summary is qualified in its
entirety by reference to such documents.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10(a) Stock Option Agreement dated as of February 12,
1996 with Paul Ballentine.
10(b) Stock Option Agreement dated as of February 12,
1996 with Jeffrey Smith.
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed in the three month period ended
February 29, 1996.
<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE FRESH JUICE COMPANY, INC.
Date: April 12, 1996
By: /s/ Steven M. Bogen
----------------------------------
Steven M. Bogen
Co-Chairman of the Board and Chief
Executive Officer
Date: April 12, 1996
By: /s/ Mark Feldman
----------------------------------
Mark Feldman
Treasurer (principal financial
officer and principal accounting
officer)
<PAGE> 10
EXHIBIT INDEX
Exhibit
10(a) Stock Option Agreement dated as of February 12, 1996 with Paul
Ballentine.
10(b) Stock Option Agreement dated as of February 12, 1996 with Jeffrey Smith.
27 Financial Data Schedule
<PAGE> 1
Exhibit 10(a)
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is dated as of the 12th
day of February, 1996, by and between THE FRESH JUICE COMPANY, INC., a Delaware
corporation (the "Corporation") and PAUL BALLENTINE (the "Employee").
W I T N E S S E T H
WHEREAS, as of the date hereof the Corporation grants to the Employee,
effective as of such date (for purposes of such grant, the "Award Date"), a
stock option (the "Option") to purchase shares of the Common Stock, $.01 par
value, of the Corporation (the "Common Stock") upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants
made herein and the mutual benefits to be derived herefrom, the parties hereto
agree as follows:
1. Grant of Option: Vesting of Options. (a) The Corporation has
granted to the Employee as a matter of separate inducement and agreement in
connection with the Employee's employment with, or other services to, the
Corporation, but not in lieu of any salary or other compensation for such
services, the right and option to purchase on the terms and conditions
hereinafter set forth, all or any part of an aggregate of 60,000 shares of
Common Stock, subject to vesting as set forth in Section 1(b) below, at the
price of $3.125 per share (the "Price") (such Price being 125% of the closing
per share bid price of the Common Stock as reported on the NASDAQ-Small Cap
System as of the date hereof), exercisable from time to time subject to the
provisions of this Agreement prior to the third anniversary of the date of
vesting of such options (the "Expiration Date").
(b) The Option shall vest as follows: (i) upon the execution and
delivery of this Agreement with respect to 10,000 shares of Common Stock and
(ii) thereafter, on the anniversary date of this Agreement, 1/10 of the
remaining shares of Common Stock exercisable under the Option.
2. Exercisability of Option. Except as otherwise provided in this
Agreement, the Option may be exercised from time to time and in whole or in
part up to the full number of shares covered hereby. The Option may be
exercised only as to whole
<PAGE> 2
shares; fractional share interests shall be disregarded except that they may
be accumulated.
3. Method of Exercise and Payment.
(a) Exercise of Option. Each exercise of the Option shall be by
means of written notice of exercise duly delivered to the Secretary of the
Corporation, specifying the number of whole shares with respect to which the
Option is being exercised, together with any written statements required
pursuant hereunder and payment of the Price in full in cash or by check payable
to the order of the Corporation. At the option of the Corporation, the Employee
may also deliver in payment of a portion or all of the Price, certificates for
Common Stock, which shall be valued at the Fair Market Value of such Common
Stock, on the date of exercise of the Option. At the option of the Corporation,
the Employee may pay for all or a portion of the Price by means of a promissory
note to the Corporation, on such terms and conditions as the Corporation may
determine.
4. No Right to Employment. Nothing contained in this Agreement shall
confer upon the Employee any right to continue in the employ of, or to continue
rendering services to, the Corporation or constitute any contract or agreement
of engagement or employment. The Employee acknowledges that the Corporation has
the right to terminate the Employee's employment or services at will except as
may be otherwise provided by separate agreement. Nothing contained in this
Agreement shall interfere in any way with the right of the Corporation to (i)
terminate the employment or services of the Employee at any time for any reason
whatsoever, with or without cause, or (ii) reduce the compensation received by
the Employee from the rate in existence on the Award Date.
5. Effect of Termination of Relationship. The Option and all other
rights hereunder, to the extent such rights shall not have been exercised prior
to the date Employee ceases to be employed by the Corporation, shall terminate
and become null and void; provided, however, that the Employee may, to the
extent the Option shall have become exercisable prior to such date, exercise
the Option at any time up to three months after termination of employment other
than termination for malfeasance, gross negligence or conviction of a felony
("Discharge for Cause"). During the period after death, the Option may,
regardless of whether it was exercisable on the date of death (or earlier
termination) be exercised by the person or persons to which the Employee's
rights under this Agreement shall pass by will or by the applicable laws of
descent and distribution. No part of the Option shall be exercisable after the
effective date of Discharge for Cause. Unless sooner terminated, the Option
shall expire at the end of the applicable period specified above, to the extent
not exercised within that period. In no event may the Option be exercised by
any person after the Expiration Date.
2
<PAGE> 3
6. Non-Assignability of Option. Interests in the Option shall not be
subject to sale, transfer, pledge, assignment or alienation other than by will
or the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Code, regardless of any community property or
other interest therein of the Employee's spouse or such spouse's successor in
interest. In the event that the spouse of the Employee shall have acquired a
community property interest in the Option the Employee, or such transferees,
may exercise it on behalf of the spouse of the Employee or such spouse's
successor in interest.
7. Adjustments Upon Specified Changes. Upon the occurrence of certain
events relating to the Corporation's stock, such as stock splits, combinations,
extraordinary cash dividends, or mergers in which the Corporation is not the
surviving corporation, adjustments will be made in the number and kind of shares
that may be issuable under, or in the consideration payable with respect to
the Option.
8. Employee Not a Stockholder. Neither the Employee nor any other
person entitled to exercise the Option shall have any of the rights or
privileges of a stockholder of the Corporation as to any of the shares of
Common Stock not actually issued and delivered to him. No adjustment will be
made for dividends or other rights for which the record date is prior to the
date on which such stock certificate or certificates are issued even if such
record date is subsequent to the date upon which notice of exercise was
delivered and the tender of payment was accepted.
9. Application of Securities Laws.
(a) No shares of Common Stock may be purchased pursuant to the
Option unless and until any then applicable requirements of the Securities and
Exchange Commission, and any other regulatory agencies, including any other
state securities agencies having jurisdiction over the Corporation or such
issuance, and any exchanges upon which the Common Stock may be listed, shall
have been fully satisfied. The Employee hereby represents, agrees and
certifies that:
(1) The Employee (A) can bear the economic risk of losing the
Employee's entire investment; and (B) has adequate means of providing for the
Employee's current needs and possible personal contingencies.
(2) The Employee has had an opportunity to ask questions of and receive
answers from the Corporation's Chief Financial Officer and President concerning
the terms and conditions of this investment.
3
<PAGE> 4
(3) The Employee understands that the Option and the Shares issuable
upon exercise of the Option have not been registered under the Securities Act
of 1933 (the "Act") or any state securities act in reliance on available
exemptions and that the Corporation is relying upon the Employee's
representations and warranties herein in availing itself of said exemptions.
(4) The Option hereby granted to the Employee is being acquired solely
for the Employee's own account for investment purposes, and is not being
purchased with a view to or for the purposes of the resale, transfer or other
distribution thereof; and the Employee has no present plans to enter into any
contract, undertaking, agreement or arrangement for such resale, transfer or
distribution and the Employee further agrees that the Option and Common Stock
acquired pursuant to the Option will not be transferred or distributed without
(a) first having presented to the Corporation a written opinion of legal
counsel in form and substance to the Corporation's counsel indicating the
proposed transfer will not be in violation of any of the provisions of the Act
and applicable state securities laws and the rules and regulations promulgated
thereunder, or (b) a registration statement covering the resale of such Common
Stock being effective. Finally, the Employee recognizes that a legend reading
substantially as follows shall be placed on all certificates representing the
Common Stock as well as on the Option issued pursuant hereto and a stop order
shall be placed against a transfer of same in accordance with the following
legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.
(5) (a) The Employee either has a preexisting personal or business
relationship with the Corporation or any of its officers, directors or
controlling persons, or by reason of the Employee's business or financial
experience can be reasonably assumed to have the capacity to protect the
Employee's own interests in connection with acquisition of the Option and
exercise thereof. The foregoing representations and warranties are true and
accurate as of the Award Date and Employee shall confirm that such
representations and warranties, as well as any other representations and
warranties reasonably requested by the Company, are true and correct as of the
date of delivery of certificates representing the Common Stock acquired
pursuant to the Option and shall
4
<PAGE> 5
survive such delivery. If, in any respect, such representations and warranties
shall not be true and accurate as of any of the foregoing dates, the Employee
shall give written notice of such fact to the Corporation specifying which
representations and warranties are not true and accurate and the reasons
therefor. Any person or persons entitled to exercise the Option under the
provisions of Section 6 above shall be bound by and obligated under the
provisions of this Section 9 to the same extent as is the Employee.
(b) The Corporation may impose such conditions on the Option
or on its exercise or acceleration or on the payment of any withholding
obligation (including, without limitation, restricting the time of exercise to
specified periods) as may be required to satisfy applicable regulatory
requirements, including, without limitation, Rule 16b-3 (or any successor rule)
promulgated by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended.
10. Notices. Any notice to be given to the Corporation under the terms
of the Agreement shall be in writing and addressed to the Secretary of the
Corporation at The Fresh Juice Company, Inc., 350 Northern Boulevard, Great
Neck, New York 11201 and any notice to be given to the Employee shall be sent
to the address appearing beneath the Employee's signature hereto, or at such
other address as either party may hereafter designate in writing to the other
party. Any such notice shall be deemed to have been duly given on the date of
delivery, if delivered by hand, or five days after deposit into U.S. mails or a
notice sent by registered or certified mail (postage and registry or
certification fee prepaid).
11. Effect of Agreement. The Agreement shall be assumed by, be binding
upon and inure to the benefit of any successor or successors of the Corporation.
12. Tax Withholding. The exercise of the Option as well as the
Corporation's right to condition a transfer of Common Stock shall be subject to
the Company's compliance with the applicable withholding requirements of
federal, state and local authorities. No Common Stock acquired pursuant to an
exercise of the Option may be transferred until the Corporation has withheld,
or has received payment from the Employee of, all amounts the Corporation is
required to withhold.
13. Inclusion in a Plan; Terms of the Plan Govern. The Corporation
covenants to adopt and seek stockholder ratification of an incentive stock
option plan (the "Plan") under which the Award would be deemed granted. Except
with respect to terms specifically set forth in this Agreement, the Award and
this Agreement are subject to, and the Corporation and the Employee agree to be
bound by, all of the terms and conditions of the any Plan. The rights of the
Employee are subject to limitations, adjustments, modifications, suspension and
termination in certain circumstances and upon the occurrence of certain
conditions set forth such Plan.
5
<PAGE> 6
14. Laws Applicable to Construction. The interpretation, performance
and enforcement of the Award and this Agreement shall be governed by the laws
of the State of New York, without regards to the conflict of laws principles
thereof.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed on its behalf by a duly authorized officer and the Employee has
hereunto set his or her hand as of the date and year first above written.
THE FRESH JUICE COMPANY, INC.
By: /s/ STEVE SMITH
----------------------------------------
Name: Steve Smith
Title: President
EMPLOYEE
/s/ PAUL BALLENTINE
-------------------------------------------
Paul Ballentine
6316 PINE LANE
-------------------------------------------
(Address)
LAKELAND, FL 33813
-------------------------------------------
(City, State, Zip Code)
###-##-####
-------------------------------------------
(Social Security Number)
6
<PAGE> 1
Exhibit 10(b)
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is dated as of the 12th
day of February, 1996, by and between THE FRESH JUICE COMPANY, INC., a Delaware
corporation (the "Corporation") and JEFFREY SMITH (the "Employee").
WITNESSETH
WHEREAS, as of the date hereof the Corporation grants to the Employee,
effective as of such date (for purposes of such grant, the "Award Date"), a
stock option (the "Option") to purchase shares of the Common Stock, $.01 par
value, of the Corporation (the "Common Stock") upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants
made herein and the mutual benefits to be derived herefrom, the parties hereto
agree as follows:
1. Grant of Option. The Corporation has granted to the Employee as a
matter of separate inducement and agreement in connection with the Employee's
employment with, or other services to, the Corporation, but not in lieu of any
salary or other compensation for such services, the right and option to
purchase on the terms and conditions hereinafter set forth, all or any part of
an aggregate of 50,000 shares of Common Stock at the price of $3.125 per share
(the "Price") (such Price being 125% of the closing per share bid price of the
Common Stock as reported on the NASDAQ-Small Cap System as of the date hereof),
exercisable from time to time subject to the provisions of this Agreement prior
to the close of business on the fifth anniversary of the date of this Agreement
(the "Expiration Date").
2. Exercisability of Option. Except as otherwise provided in this
Agreement, the Option may be exercised from time to time and in whole or in
part up to the full number of shares covered hereby. The Option may be
exercised only as to whole shares; fractional share interests shall be
disregarded except that they may be accumulated.
3. Method of Exercise and Payment.
(a) Exercise of Option. Each exercise of the Option shall be by
means of written notice of exercise duly delivered to the Secretary of the
Corporation, specifying
<PAGE> 2
the number of whole shares with respect to which the Option is being exercised,
together with any written statements required pursuant hereunder and payment of
the Price in full in cash or by check payable to the order of the Corporation.
At the option of the Corporation, the Employee may also deliver in payment of a
portion or all of the Price, certificates for Common Stock, which shall be
valued at the Fair Market Value of such Common Stock, on the date of exercise
of the Option. At the option of the Corporation, the Employee may pay for all
or a portion of the Price by means of a promissory note to the Corporation, on
such terms and conditions as the Corporation may determine.
4. No Right to Employment. Nothing contained in this Agreement shall
confer upon the Employee any right to continue in the employ of, or to continue
rendering services to, the Corporation or constitute any contract or agreement
of engagement or employment. The Employee acknowledges that the Corporation has
the right to terminate the Employee's employment or services at will except as
may be otherwise provided by separate agreement. Nothing contained in this
Agreement shall interfere in any way with the right of the Corporation to (i)
terminate the employment or services of the Employee at any time for any reason
whatsoever, with or without cause, or (ii) reduce the compensation received by
the Employee from the rate in existence on the Award Date.
5. Effect of Termination of Relationship. The Option and all other
rights hereunder, to the extent such rights shall not have been exercised prior
to the date Employee ceases to be employed by the Corporation, shall terminate
and become null and void; provided, however, that the Employee may, to the
extent the Option shall have become exercisable prior to such date, exercise
the Option at any time up to three months after termination of employment other
than termination for malfeasance, gross negligence or conviction of a felony
("Discharge for Cause"). During the period after death, the Option may,
regardless of whether it was exercisable on the date of death (or earlier
termination) be exercised by the person or persons to which the Employee's
rights under this Agreement shall pass by will or by the applicable laws of
descent and distribution. No part of the Option shall be exercisable after the
effective date of Discharge for Cause. Unless sooner terminated, the Option
shall expire at the end of the applicable period specified above, to the extent
not exercised within that period. In no event may the Option be exercised by
any person after the Expiration Date.
6. Non-Assignability of Option. Interest in the Option shall not be
subject to sale, transfer, pledge, assignment or alienation other than by will
or the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Code, regardless of any community property or
other interest therein of the Employee's spouse or such spouse's successor in
interest. In the event that the spouse of the Employee shall have acquired a
community property interest in the Option the Employee,
2
<PAGE> 3
or such transferees, may exercise it on behalf of the spouse of the Employee or
such spouse's successor in interest.
7. Adjustments Upon Specified Changes. Upon the occurrence of certain
events relating to the Corporation's stock, such as stock splits, combinations,
extraordinary cash dividends, or mergers in which the Corporation is not the
surviving corporation, adjustments will be made in the number and kind of
shares that may be issuable under, or in the consideration payable with respect
to the Option.
8. Employee Not a Stockholder. Neither the Employee nor any other
person entitled to exercise the Option shall have any of the rights or
privileges of a stockholder of the Corporation as to any of the shares of
Common Stock not actually issued and delivered to him. No adjustment will be
made for dividends or other rights for which the record date is prior to the
date on which such stock certificate or certificates are issued even if such
record date is subsequent to the date upon which notice of exercise was
delivered and the tender of payment was accepted.
9. Application of Securities Laws.
(a) No shares of Common stock may be purchased pursuant to the
Option unless and until any then applicable requirements of the Securities and
Exchange Commission, and any other regulatory agencies, including any other
state securities agencies having jurisdiction over the Corporation or such
issuance, and any exchanges upon which the Common Stock may be listed, shall
have been fully satisfied. The Employee hereby represents, agrees and
certifies that:
(1) The Employee (A) can bear the economic risk of losing the
Employee's entire investment; and (B) has adequate means of providing for the
Employee's current needs and possible personal contingencies.
(2) The Employee has had an opportunity to ask questions of and
receive answers from the Corporation's Chief Financial Officer and President
concerning the terms and conditions of this investment.
(3) The Employee understands that the Option and the Shares issuable
upon exercise of the Option have not been registered under the Securities Act
of 1933 (the "Act") or any state securities act in reliance on available
exemptions and that the Corporation is relying upon the Employee's
representations and warranties herein in availing itself of said exemptions.
3
<PAGE> 4
(4) The Option hereby granted to the Employee is being acquired solely
for the Employee's own account for investment purposes, and is not being
purchased with a view to or for the purposes of the resale, transfer or other
distribution thereof; and the Employee has no present plans to enter into any
contract, undertaking, agreement or arrangement for such resale, transfer or
distribution and the Employee further agrees that the Option and Common Stock
acquired pursuant to the Option will not be transferred or distributed without
(a) first having presented to the Corporation a written opinion of legal
counsel in form and substance satisfactory to the Corporation's counsel
indicating the proposed transfer will not be in violation of any of the
provisions of the Act and applicable state securities laws and the rules and
regulations promulgated thereunder, or (b) a registration statement covering
the resale of such Common Stock being effective. Finally, the Employee
recognizes that a legend reading substantially as follows shall be placed on
all certificates representing the Common Stock as well as on the Option issued
pursuant hereto and a stop order shall be placed against a transfer of same in
accordance with the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.
(5)(a) The Employee either has a preexisting personal or business
relationship with the Corporation or any of its officers, directors or
controlling persons, or by reason of the Employee's business or financial
experience can be reasonably assumed to have the capacity to protect the
Employee's own interests in connection with acquisition of the Option and
exercise thereof. The foregoing representations and warranties are true and
accurate as of the Award Date and Employee shall confirm that such
representations and warranties, as well as any other representations and
warranties reasonably requested by the Company, are true and correct as of the
date of delivery of certificates representing the Common Stock acquired pursuant
to the Option and shall survive such delivery. If, in any respect, such
representations and warranties shall not be true and accurate as of any of the
foregoing dates, the Employee shall give written notice of such fact to the
Corporation specifying which representations and warranties are not true and
accurate and the reasons therefor. Any person or persons entitled to exercise
the Option under the provisions of Section 6 above shall be bound by and
obligated under the provisions of this Section 9 to the same extent as is the
Employee.
4
<PAGE> 5
(b) The Corporation may impose such conditions on the Option or on
its exercise or acceleration or on the payment of any withholding obligation
(including, without limitation, restricting the time of exercise to specified
periods) as may be required to satisfy applicable regulatory requirements,
including, without limitation, Rule 16b-3 (or any successor rule) promulgated by
the Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934, as amended.
10. Notices. Any notice to be given to the Corporation under the
terms of the Agreement shall be in writing and addressed to the Secretary of
the Corporation at The Fresh Juice Company, Inc., 350 Northern Boulevard, Great
Neck, New York 11201 and any notice to be given to the Employee shall be sent
to the address appearing beneath the Employee's signature hereto, or at such
other address as either party may hereafter designate in writing to the other
party. Any such notice shall be deemed to have been duly given on the date of
delivery, if delivered by hand, or five days after deposit into U.S. mails of a
notice sent by registered or certified mail (postage and registry or
certification fee prepaid).
11. Effect of Agreement. The Agreement shall be assumed by, be
binding upon and inure to the benefit of any successor or successors of the
Corporation.
12. Tax Withholding. The exercise of the Option as well as the
Corporation's right to condition a transfer of Common Stock shall be subject to
the Company's compliance with the applicable withholding requirements of
federal, state and local authorities. No Common Stock acquired pursuant to an
exercise of the Option may be transferred until the Corporation has withheld,
or has received payment from the Employee of, all amounts the Corporation is
required to withhold.
13. Inclusion in a Plan; Terms of the Plan Govern. The Corporation
covenants to adopt and seek stockholder ratification of an incentive stock
option plan (the "Plan") under which the Award would be deemed granted. Except
with respect to terms specifically set forth in this Agreement, the Award and
this Agreement are subject to, and the Corporation and the Employee agree to be
bound by, all of the terms and conditions of the any Plan. The rights of the
Employee are subject to limitations, adjustments, modifications, suspension and
termination in certain circumstances and upon the occurrence of certain
conditions set forth such Plan.
14. Laws Applicable to Construction. The interpretation, performance
and enforcement of the Award and this Agreement shall be governed by the laws
of the State of New York, without regards to the conflict of laws principles
thereof.
5
<PAGE> 6
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed on its behalf by a duly authorized officer and the Employee has
hereunto set his or her hand as of the date and year first above written.
THE FRESH JUICE COMPANY, INC.
By: /S/ STEVE SMITH
----------------------------------------
Name: Steve Smith
Title: President
EMPLOYEE
/S/ JEFFREY SMITH, V.P.
-------------------------------------------
Jeffrey Smith
300 Mercer St. Apt. 3A
-------------------------------------------
(Address)
New York, N.Y. 10003
-------------------------------------------
(City, State, Zip Code)
###-##-####
-------------------------------------------
(Social Security Number)
6
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> FEB-29-1996
<CASH> 1635196
<SECURITIES> 0
<RECEIVABLES> 770855
<ALLOWANCES> 0
<INVENTORY> 1038708
<CURRENT-ASSETS> 3628584
<PP&E> 2438070
<DEPRECIATION> 591973
<TOTAL-ASSETS> 6485039
<CURRENT-LIABILITIES> 528078
<BONDS> 1460415
0
0
<COMMON> 37620
<OTHER-SE> 4458926
<TOTAL-LIABILITY-AND-EQUITY> 6485039
<SALES> 2212843
<TOTAL-REVENUES> 2213843
<CGS> 1265515
<TOTAL-COSTS> 1265515
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32642
<INCOME-PRETAX> (143091)
<INCOME-TAX> 664
<INCOME-CONTINUING> (143755)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (143755)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
