<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of
earliest event reported): September 1, 1996
THE FRESH JUICE COMPANY, INC.
------------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 0-15320 11-2771046
- --------------------------------------------------------------------------------
(State or other (Commission file (IRS employer
jurisdiction of number) identification no.)
incorporation)
35 Walnut Avenue, Suite 4, Clark, New Jersey 07066
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (908) 396-1112
- --------------------------------------------------------------------------------
<PAGE> 2
Item 2 - Acquisition or Disposition of Assets
Pursuant to a Merger Agreement dated as of March 31, 1996, as
amended, The Fresh Juice Company, Inc. (the "Company") acquired by merger all of
the outstanding capital stock of Clear Springs Citrus, Inc. ("Clear Springs") in
exchange for 1,160,000 shares of the common stock, $.01 per value, of the
Company (the "Common Stock"). The acquisition of Clear Springs closed on August
29, 1996 and became effective on September 1, 1996 (the "Effective Time"). At
the Effective Time, Clear Springs was merged with and into The Fresh Juice
Company of Florida, Inc. ("Fresh Juice of Florida"), a Florida corporation and a
wholly-owned subsidiary of the Company.
The acquisition of Clear Springs by merger will be accounted for as
a purchase and as a "reorganization" under the Internal Revenue Code of 1986, as
amended. As a result of the merger with Clear Springs, Fresh Juice of Florida
succeeded to all of Clear Spring's rights, liabilities, and activities in
producing and marketing fresh squeezed citrus products. Fresh Juice of Florida
will continue to maintain its operations at the Company's Florida plant located
in Winter Haven, Florida and, after a transition period, the Company will
incorporate the operations and assets of Clear Springs maintained at leased
facilities in Winter Garden, Florida into Fresh Juice of Florida's operations at
the Winter Haven, Florida facility.
In connection with the acquisition of Clear Springs, the two
stockholders of Clear Springs, Brian Duffy and The Bogen Group, L.L.C. (which is
made up of Steven Bogen, Daniel Petry and Mark Feldman) received 300,000 and
860,000 shares of the Company's Common Stock respectively. Steven Bogen is
currently Co-Chairman of the Board, Chief Executive Officer and Secretary of the
Company, Brian Duffy is currently a director of the Company, and
2
<PAGE> 3
Mark Feldman is currently Treasurer and Chief Financial Officer of the Company.
Messrs. Bogen, Duffy, and Feldman became affiliated with the Company upon the
Company's acquisition of The Ultimate Juice Company, Inc. which was effective on
April 1, 1996. Daniel Petry was a stockholder, director and employee of The
Ultimate Juice Company, Inc. and has been employed by the Company since the
effective date of the Company's acquisition of The Ultimate Juice Company, Inc.
By agreement dated March 31, 1996, the Company entered into a Supply,
Distribution and Requirements Agreement (the "Supply Agreement") with Natural
Juice Company, an Illinois Corporation controlled by Brian Duffy. The Supply
Agreement has an initial term of five (5) years with two (2) five (5) year
renewals at Natural Juice Company's option.
Pursuant to the terms of the Merger Agreement between the Company
and Clear Springs (the "Agreement"), Clear Springs and the Clear Springs
stockholders agreed to defend, indemnify and hold the Company and Fresh Juice of
Florida, and their respective stockholders, subsidiaries, representatives and
affiliates, and persons serving as officers, directors, employees or agents
thereof, harmless from and against any damages, liabilities, losses, taxes,
fines, penalties, costs and expenses arising from the falsity or material breach
of any of the representations and warranties of Clear Springs and the Clear
Springs stockholders in the Agreement. Under certain circumstances, the
indemnification obligation of Clear Springs and the Clear Springs stockholders
for any breach of any representation, warranty or covenant of Clear Springs or
the Clear Springs stockholders is limited to the value of the consideration paid
the Clear Springs stockholders, valued as of the date of the Agreement.
3
<PAGE> 4
The Company and Fresh Juice of Florida agreed pursuant to the terms
of the Agreement to defend, indemnify and hold Clear Springs and the Clear
Springs stockholders, and their respective stockholders, subsidiaries,
representatives and affiliates, and persons serving as officers, directors,
partners, employees or agents thereof, harmless from and against any damages,
liabilities, losses, taxes, fines, penalties, costs, and expenses arising from
the falsity or material breach of any of the representations and warranties of
the Company and Fresh Juice of Florida in the Agreement. Under certain
circumstances, the indemnification obligation of the Company and Fresh Juice of
Florida for any breach of any representation, warranty or covenant of the
Company or Fresh Juice of Florida under the Agreement is limited to the value of
the consideration paid to Clear Springs stockholders valued as of the date of
the Merger Agreement.
The Agreement provided that the Company shall, as of the Effective
Time, and at all times subsequent thereto, indemnify and hold harmless Steven
Bogen and Brian Duffy against any and all liabilities and obligations arising
out of the personal guarantees which each of them had executed in favor of
South Trust Bank in connection with a loan to Clear Springs in an aggregate
original principal amount of $250,000.00. The loan to Clear Springs from South
Trust Bank has been paid in full.
Item 5 - Other Events.
A. Amendment to Certificate of Incorporation - At the Annual Meeting
of Stockholders of the Company held on August 29, 1996 (the "Annual Meeting"),
the stockholders of the Company authorized an amendment to the Company's
Certificate of Incorporation to:
(1) Increase the number of authorized shares of Common Stock from
5,000,000 to 30,000,000; and
4
<PAGE> 5
(2) Increase the number of authorized shares of preferred stock of
the Company from 200,000 to 7,000,000.
The amendment to the Certificate of Incorporation of the Company
reflecting the foregoing changes approved by the stockholders was filed with the
Secretary of State of the State of Delaware on August 29, 1996. A copy of the
Company's Certificate of Incorporation, as amended, is annexed as an exhibit to
this Report.
B. Adoption of 1996 Incentive Stock Option Plan - At the Annual
Meeting, the stockholders of the Company approved the adoption of the Company's
1996 Incentive Stock Option Plan. The number of shares of the Company's Common
Stock with respect to which grants may be made under the 1996 Incentive Stock
Option Plan is 500,000 shares, subject to adjustment in the event of stock
dividends, stock splits, combinations of shares, recapitalizations or other
changes in the outstanding Common Stock. A copy of the 1996 Incentive Stock
Option Plan is annexed as an exhibit to this Report.
Item 7 - Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
See Index to Financial Statements and Pro Forma Financial
Information beginning on Page F-1 of this Report.
(b) Pro forma financial information.
See Index to Financial Statements and Pro Forma Financial
Information beginning on Page F-1 of this Report.
5
<PAGE> 6
(c) Exhibits
EXHIBIT NO. DESCRIPTION
2(a) Merger Agreement dated March 31, 1996 among
The Fresh Juice Company, Inc., The Fresh
Juice Company of Florida, Inc., Clear
Springs Citrus, Inc., Brian Duffy and The
Bogen Group, L.L.C. is incorporated by
reference to Exhibit 2(b) to the Current
Report on Form 8-K dated March 31, 1996
filed by The Fresh Juice Company, Inc. on
April 11, 1996.
2(b) Addendum to Merger Agreement dated July 23,
1996 among The Fresh Juice Company, Inc.,
The Fresh Juice Company of Florida, Inc.,
Clear Springs Citrus, Inc., Brian Duffy and
The Bogen Group, L.L.C.
2(c) Agreement of Acknowledgment and Amendment to
Merger Agreement dated August 29, 1996 among
The Fresh Juice Company, Inc., The Fresh
Juice Company of Florida, Inc., Clear
Springs Citrus, Inc., Brian Duffy and The
Bogen Group, L.L.C.
3(i) Certificate of Incorporation of The Fresh
Juice Company, Inc., as amended.
10(a) Registration Rights Agreement dated August
29, 1996 among The Fresh Juice Company,
Inc., Steven M. Bogen, Daniel Petry, Mark
Feldman and Brian Duffy.
10(b) The Fresh Juice Company, Inc. 1996 Incentive
Stock Option Plan.
23 Consent of Withum Smith & Brown, Certified
Public Accountants and Consultants.
6
<PAGE> 7
SIGNATURE
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.
By: /s/ Steven M. Bogen
-----------------------------------------------
Steven M. Bogen, Chief Executive Officer
Dated: September 13, 1996
7
<PAGE> 8
INDEX TO FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION
Page
Financial Statements of Clear Springs Citrus, Inc. Number
- -------------------------------------------------- ------
A. Independent Auditors' Report Dated May 17, 1996 F-3
Financial Statements of Clear Springs Citrus, Inc.:
Balance Sheets, December 31, 1995 and 1994 F-4
Statements of Operations for the Years Ended
December 31, 1995 and 1994 F-5
Statements of Changes in Stockholders' Equity (Deficit)
for the Years Ended December 31, 1995 and 1994 F-6
Statements of Cash Flows for the Years Ended
December 31, 1995 and 1994 F-7
Notes to Financial Statements F-8
Financial Statements of Clear Springs Citrus, Inc.:
- ---------------------------------------------------
B. Unaudited Interim Financial Statements of Clear Springs
Citrus, Inc.:
Balance Sheet, June 30, 1996 F-15
Statements of Operations for the Six Months Ended
June 30, 1996 and 1995 F-16
Statements of Cash Flows for the Six Months Ended
June 30, 1996 and 1995 F-17
Notes to Unaudited Financial Statements F-18
F-1
<PAGE> 9
INDEX TO FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION
Page
Pro Forma Consolidated Financial Information Number
- -------------------------------------------- ------
Unaudited Pro Forma Condensed Consolidated Balance Sheet
as of May 31, 1996 F-19
Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the Twelve Months Ended November 30, 1995 F-21
Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the Six Months Ended May 31, 1996 F-22
Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements F-23
F-2
<PAGE> 10
INDEPENDENT AUDITORS' REPORT
To the Board of Directors,
Clear Springs Citrus, Inc.:
We have audited the accompanying balance sheets of Clear Springs Citrus, Inc. as
of December 31, 1995 and 1994, and the related statements of operations, changes
in stockholders' equity (deficit) and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Clear Springs Citrus, Inc. as
of December 31, 1995 and 1994, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
WITHUM, SMITH & BROWN
New Brunswick, New Jersey
May 17, 1996
F-3
<PAGE> 11
CLEAR SPRINGS CITRUS, INC.
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
ASSETS 1995 1994
---- ----
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 80,790 $ 22,627
Accounts receivable, less allowance for
doubtful accounts of $-0- in 1995 and 1994 1,037,003 600,178
Inventory 150,293 134,118
Advances to stockholders -- 3,000
Prepaid expenses and other current assets 32,479 45,440
----------- -----------
Total Current Assets 1,300,565 805,363
Property and Equipment - Net 818,049 860,125
Intangible Asset - Net 115,111 147,995
Other Assets:
Deposits 31,849 16,159
Trustee held funds 65,000 --
----------- -----------
Total Other Assets 96,849 16,159
----------- -----------
TOTAL ASSETS $ 2,330,574 $ 1,829,642
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Note payable to bank $ 250,000 $ 125,000
Current maturities of long-term debt 69,665 155,568
Current maturities of obligations under
capital lease 25,108 41,245
Accounts payable 989,153 666,771
Accrued expenses 315,138 15,418
Note payable to related party 150,000 140,000
Advances from stockholders 14,000 --
----------- -----------
Total Current Liabilities 1,813,064 1,144,002
Deferred Income Taxes Payable 34,000 51,000
Long-Term Debt 544,939 610,310
Obligations Under Capital Lease 14,905 26,266
Stockholders' Equity (Deficit):
Common stock, $.10 par value, 75,000 shares
authorized, 1,400 and 941.176 issued for
1995 and 1994, respectively; 1,000 and 541.176
outstanding in 1995 and 1994, respectively 140 94
Additional paid-in capital 544,918 544,964
Accumulated deficit (146,544) (72,146)
----------- -----------
398,514 472,912
Less treasury stock, 400 shares at cost (474,848) (474,848)
----------- -----------
Total Stockholders' Equity (Deficit) (76,334) (1,936)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $ 2,330,574 $ 1,829,642
=========== ===========
</TABLE>
The Notes to Financial Statements are an integral part of these statements
F-4
<PAGE> 12
CLEAR SPRINGS CITRUS, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Sales - Net $ 12,775,884 $ 10,148,356
Cost of Goods Sold 11,420,358 9,215,602
------------ ------------
Gross Profit 1,355,526 932,754
Selling, General and
Administrative Expenses 1,367,525 981,554
------------ ------------
Loss From Operations (11,999) (48,800)
Other (Income) Expense:
Interest expense 88,024 74,059
Gain on sale of property and
equipment (2,200) (500)
Miscellaneous (income) expense (6,425) 1,016
------------ ------------
Total Other (Income)
Expense - Net 79,399 74,575
Loss Before Provision for Income
Taxes (91,398) (123,375)
Provision (Benefit) for Income
Taxes (17,000) 51,000
------------ ------------
Net Loss $ (74,398) $ (174,375)
============ ============
Net Loss Per Share $ (74.40) $ (163.43)
============ ============
Weighted Average Shares 1,000 1,067
============ ============
</TABLE>
The Notes to Financial Statements are an integral part of these statements
F-5
<PAGE> 13
CLEAR SPRINGS CITRUS, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
Common Stock Additional Treasury Stock
-------------------- Paid-In Accumulated ---------------------
Shares Amount Capital Deficit Shares Amount Total
--------- ------ --------- --------- ------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994 941.176 $ 94 $ 544,964 $ 102,229 -- $ -- $ 647,287
Purchase of 400 Shares of
Treasury Stock on March 10,
1994 -- -- -- -- 400.00 (474,848) (474,848)
Net Loss for the Year Ended
December 31, 1994 -- -- -- (174,375) -- -- (174,375)
--------- ---- --------- --------- ------ --------- ---------
Balance at December 31, 1994 941.176 94 544,964 (72,146) 400.00 (474,848) (1,936)
Recapitalization - On August 2,
1995, the Company converted
the 541.176 outstanding shares
to 1,000.00 458.824 46 (46) -- -- -- --
Net Loss for the Year Ended
December 31, 1995 -- -- -- (74,398) -- -- (74,398)
--------- ---- --------- --------- ------ --------- ---------
Balance at December 31, 1995 1,400.00 $140 $ 544,918 $(146,544) 400.00 $(474,848) $ (76,334)
========= ==== ========= ========= ====== ========= =========
</TABLE>
The Notes to Financial Statements are an integral part of these statements
F-6
<PAGE> 14
CLEAR SPRINGS CITRUS, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Cash Flows From Operating Activities:
Net loss $ (74,398) $(174,375)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Gain on sale of property and equipment (2,200) (500)
Depreciation and amortization 262,810 231,184
Deferred income taxes (17,000) 51,000
Changes in:
Accounts receivable (436,825) 80,941
Inventory (16,175) (68,227)
Prepaid expenses and other current assets 12,961 (15,440)
Deposits (15,690) (1,276)
Accounts payable 322,382 (64,527)
Accrued expenses 299,720 5,337
--------- ---------
Net Cash Provided by Operating Activities 335,585 44,117
Cash Flows From Investing Activities:
Proceeds from sale of property and equipment 4,200 500
Purchases of property and equipment (189,850) (62,617)
Increase in trustee held funds (65,000) --
--------- ---------
Net Cash Used In Investing Activities (250,650) (62,117)
Cash Flows From Financing Activities:
Change in note payable to bank - net 125,000 125,000
Proceeds from long-term debt -- 152,841
Repayment of long-term debt (151,274) (109,270)
Repayment of obligations under capital lease (27,498) (171,062)
Change in note payable to related party 10,000 40,000
Change in advances to stockholders - net 17,000 (12,000)
--------- ---------
Net Cash (Used In) Provided By Financing
Activities (26,772) 25,509
--------- ---------
Net Increase in Cash and Cash Equivalents 58,163 7,509
Cash and Cash Equivalents at Beginning of Year 22,627 15,118
--------- ---------
Cash and Cash Equivalents at End of Year $ 80,790 $ 22,627
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 88,024 $ 74,059
Income taxes $ -- $ --
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Long-term debt and capitalized lease obligations
were incurred when the Company acquired the
following:
Fixed assets $ 13,286 $ 44,285
Covenant not to complete $ -- $ 164,439
Treasury stock $ -- $ 474,848
</TABLE>
The Notes to Financial Statements are an integral part of these statements
F-7
<PAGE> 15
CLEAR SPRINGS CITRUS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Significant accounting policies followed by the Company in the
preparation of the accompanying financial statements are summarized
below:
NATURE OF BUSINESS OPERATION
Clear Springs Citrus, Inc. was incorporated on July 22, 1985. Its
business operations include the production and distribution of juice
products to customers throughout the United States.
INVENTORY
Inventory, which consists of juice and packing products, is stated at
the lower of cost or market. Cost is determined by the first-in,
first-out method.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and
amortization charges have been made by the Company using the
straight-line or declining balance methods over the following estimated
useful lives of the assets:
Estimated
Description Life (Years)
----------- ------------
Production equipment 7
Office furniture and fixtures 5-7
Transportation equipment 5
Leasehold improvements 3-11
Expenditures for maintenance and repairs are charged to operations as
incurred. Expenditures for betterments and major renewals are
capitalized and, therefore, are included in property and equipment.
For physical properties not fully depreciated, the cost of the assets
retired or sold is credited to the asset accounts, and the related
accumulated depreciation is charged to the accumulated depreciation
accounts. The resulting gain or loss from sale or retirement of
property is reflected in income.
EQUIPMENT UNDER CAPITAL LEASE
Certain equipment is leased from third parties through lease agreements
treated as capital leases in accordance with Financial Accounting
Standards Board Statement No. 13 (see Notes 3 and 7). The Company
anticipates acquiring the equipment at the stated option prices at the
end of the respective lease terms.
INTANGIBLE ASSET
The Company's intangible asset is being amortized on a straight-line
basis over a period of five years.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
F-8
<PAGE> 16
CLEAR SPRINGS CITRUS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
INCOME TAXES
Deferred income tax assets and liabilities are recognized for the
differences between financial and income tax reporting basis of assets
and liabilities based on enacted tax rates and laws. The deferred
income tax provision or benefit generally reflects the net change in
deferred income tax assets and liabilities during the year. The current
income tax provision reflects the tax consequences of revenues and
expenses currently taxable or deductible on the Company's various
income tax returns for the year reported. The primary deferred income
tax items are the result of timing differences in the recognition of
depreciation for financial and tax reporting purposes and net operating
loss carryforwards.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand and in the bank as well
as all short-term securities held for the primary purpose of general
liquidity. Such securities normally mature within three months from the
date of acquisition.
EARNINGS PER SHARE
Earnings per share on common stock is computed on the basis of the
weighted average number of common shares outstanding during each year.
The effect of the recapitalization was retroactively applied as if it
had occurred on January 1, 1994.
CONCENTRATION OF CREDIT RISK
At times, the Company maintains cash balances at one financial
institution in excess of amounts insured by the Federal Deposit
Insurance Corporation. Management monitors the soundness of this
institution and considers the Company's risk negligible.
The Company's concentration of credit risk with respect to accounts
receivable is largely dependent on its customer mix which are
distributors and retailers throughout the United States. The Company
had 34 and 44 percent of its accounts receivable due from two related
parties as of December 31, 1995 and 1994, respectively (see Note 11).
NOTE 2 - INVENTORY:
Inventory consists of the following at December 31:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Packaging materials $ 36,817 $ 59,997
Juice products 113,476 74,121
-------- --------
Total Inventory $150,293 $134,118
======== ========
</TABLE>
F-9
<PAGE> 17
CLEAR SPRINGS CITRUS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - PROPERTY AND EQUIPMENT:
Property and equipment consists of the following at December 31:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Property and Equipment:
Production equipment $1,310,587 $1,158,098
Office furniture and fixtures 75,450 55,904
Transportation equipment 70,292 61,915
Leasehold improvements 279,052 271,615
---------- ----------
1,735,381 1,547,532
Less Accumulated Depreciation and Amortization 917,332 687,407
---------- ----------
Property and Equipment - Net $ 818,049 $ 860,125
========== ==========
</TABLE>
Assets capitalized under lease obligations and included in property and
equipment are as follows at December 31:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Production Equipment $ 97,854 $ 97,854
Office Furniture and Fixtures 26,543 13,257
Transportation Equipment 29,394 29,394
-------- --------
153,791 140,505
Less Accumulated Amortization 55,038 31,200
-------- --------
Assets Under Capital Lease Obligations - Net $ 98,753 $109,305
======== ========
</TABLE>
Depreciation and amortization of property and equipment and assets
under capital lease obligation included as a charge to operations
amounted to $229,926 and $214,740 in 1995 and 1994, respectively.
Certain property and equipment is pledged as collateral on various
corporate obligations (see Notes 6 and 7).
NOTE 4 - INTANGIBLE ASSET:
The Company's intangible asset at cost is as follows at December 31:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Covenant not to Compete $164,439 $164,439
Less Accumulated Amortization 49,328 16,444
-------- --------
Intangible Asset - Net $115,111 $147,995
======== ========
</TABLE>
Amortization included as a charge to operations amounted to $32,884 and
$16,444 in 1995 and 1994, respectively.
NOTE 5 - NOTE PAYABLE TO BANK:
Note payable to bank consists of the following at December 31:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Note payable - South Trust Bank, maximum available
$250,000, expiration date July 26, 1996, interest
at the bank's prime rate plus 1.5 percent per annum,
secured by accounts receivable of the Company $250,000 $125,000
======== ========
</TABLE>
The bank's prime rate at December 31, 1995 was 8.25 percent.
F-10
<PAGE> 18
CLEAR SPRINGS CITRUS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - LONG-TERM DEBT:
Long-term debt consists of the following at December 31:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Notes payable - Former stockholder, interest at 7
percent per annum, unsecured, due March 1999
through 2003, $350,000 is subordinated to South
Trust Bank (see Note 5) $608,865 $658,336
Note payable - South Trust Bank, secured by all
furniture, fixtures, equipment and leasehold
improvements, interest at 7.5 percent per annum,
fully paid-off in September 1995 -- 94,937
Note payable - Heintzelman's Truck Center, Inc.,
secured by vehicle, interest at 12.5 percent per
annum, due October 1996 5,739 12,605
-------- --------
Total Long-Term Debt 614,604 765,878
Less Current Maturities 69,665 155,568
-------- --------
Long-Term Debt $544,939 $610,310
======== ========
</TABLE>
Aggregate maturities of long-term debt of the Company due within the
next five years ending December 31, are as follows:
<TABLE>
<CAPTION>
Year Amount
---- --------
<S> <C>
1996 $ 69,665
1997 68,191
1998 73,128
1999 82,587
2000 and thereafter 321,033
--------
Total $614,604
========
</TABLE>
NOTE 7 - OBLIGATIONS UNDER CAPITAL LEASE:
Obligations under capital lease consists of the following at December
31:
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Capital leases - various finance companies,
secured by leased equipment, final payments
due February 1996 through December 1999,
effective rates of interest at 6 to 16.8
percent per annum $40,013 $67,511
Less Current Maturities 25,108 41,245
------- -------
Obligations Under Capital Lease $14,905 $26,266
======= =======
</TABLE>
F-11
<PAGE> 19
CLEAR SPRINGS CITRUS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - OBLIGATIONS UNDER CAPITAL LEASE (CONTINUED):
Future minimum lease payments for the next five years ending December
31, are as follows:
<TABLE>
<CAPTION>
Year Amount
---- -------
<S> <C>
1996 $30,168
1997 8,946
1998 3,826
1999 3,829
2000 and thereafter --
-------
Total Minimum Lease Payments 46,769
Less Imputed Interest 6,756
-------
Present Value of Minimum Lease Payments $40,013
=======
</TABLE>
NOTE 8 - INCOME TAXES:
The provision for income taxes consists of the following for the years
ended December 31:
<TABLE>
<CAPTION>
1995 1994
-------- -------
<S> <C> <C>
State Corporate Income Tax Expense $ -- $ --
Federal Corporate Income Tax Expense -- --
Deferred Income Taxes Expense (Benefit) (17,000) 51,000
-------- -------
Provision (Benefit) for Income Taxes $(17,000) $51,000
======== =======
</TABLE>
Income taxes were less than the statutory tax determined by applying
the federal income tax rate to earnings before income taxes due to
nondeductible expenses and the surtax exemption.
Deferred income tax assets and liabilities are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Deferred Income Tax Asset $ -- $ --
Valuation Allowance -- --
------- -------
-- --
Deferred Income Tax Liability 34,000 51,000
------- -------
Net Deferred Income Tax Liability $34,000 $51,000
======= =======
</TABLE>
F-12
<PAGE> 20
CLEAR SPRINGS CITRUS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 9 - LEASE COMMITMENTS:
The principle types of property leased under noncancelable agreements
are premises for manufacturing, storage and office use, and
manufacturing and transportation equipment. The most significant
obligations under the lease terms are the maintenance, utilities,
insurance and real estate taxes.
Total rent relating to these lease expenses for the Company amounted
to $282,589 in 1995 and $235,051 in 1994.
The total aggregate minimum annual rental commitments, under all
noncancelable leases with terms of one year or more ending December
31, amounts to:
<TABLE>
<CAPTION>
Year Amount
---- --------
<S> <C>
1996 $114,994
1997 $ 94,264
1998 $ 83,331
1999 $ 33,794
2000 and thereafter $ 25,236
</TABLE>
NOTE 10 - REVENUE FROM MAJOR CUSTOMERS:
Sales to two major customers (see Note 11) amounted to 42 and 54
percent of total sales for the years ended December 31, 1995 and 1994,
respectively. No other single customer accounted for more than 10
percent of total sales.
NOTE 11 - RELATED PARTY TRANSACTIONS:
At December 31, the Company is obligated to the following:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Note payable - The Ultimate Juice Company, Inc.,
interest at 7 percent per annum, unsecured, due
on demand $150,000 $140,000
======== ========
</TABLE>
Interest expense relating to the above note included as a charge to
operations amounted to $9,214 and $8,847 for the years ended December
31, 1995 and 1994, respectively.
The Company's material financial transactions entered in the ordinary
course of business with related parties were as follows:
The Company had advances due to the principal stockholders of the
Company in the amount of $14,000 at December 31, 1995. The advances
were non-interest bearing and unsecured. There was no formal repayment
schedule; however, the amount is anticipated to be paid within one
year, and therefore, has been classified as a current asset.
The Company had advances due from the principal stockholders of the
Company in the amount of $3,000 at December 31, 1994. The advances
were non-interest bearing and unsecured. There was no formal repayment
schedule; however, the amounts were anticipated to be paid within one
year, and therefore, were classified as a current asset.
F-13
<PAGE> 21
CLEAR SPRINGS CITRUS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 11 - RELATED PARTY TRANSACTIONS (CONTINUED):
The Ultimate Juice Company, Inc. (A):
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Sales - net of volume discounts of $247,000
and $-0- for 1995 and 1994, respectively $3,962,970 $4,094,935
Accounts receivable at December 31 $ 175,147 $ 204,875
Management fees expense $ 116,000 $ --
Natural Juice Company, Inc. (A):
Sales - net of volume discounts of $-0- for
1995 and 1994 $1,438,748 $1,427,526
Accounts receivable at December 31 $ 105,019 $ 57,202
</TABLE>
(A) The majority stockholders of these companies are 50%
stockholders of the Company.
NOTE 12 - TRUSTEE HELD FUNDS:
The Company maintains trustee held funds with South Trust Bank of
Orlando guaranteeing the payment of citrus taxes to the State of
Florida in the amount of $65,000 and $-0- for the years ended December
31, 1995 and 1994, respectively.
NOTE 13 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:
The carrying amounts of cash and cash equivalents, trustee held funds,
accounts receivable, accounts payable and accrued expenses approximate
fair value because of the short maturity of these items. The carrying
value of notes payable and long-term debt approximate fair value
because the long-term debt is at interest rates comparable to rates
currently available to the Company for debt with similar terms and
remaining maturities.
NOTE 14 - CONTINGENCIES AND COMMITMENTS:
At December 31, 1995, the Company has certain litigation pending
against it which occurred in the ordinary course of business. In the
opinion of management, settlement of such claims and litigation will
not have a material adverse effect on the Company's financial
position.
NOTE 15 - SUBSEQUENT EVENT:
On March 31, 1996, the Company entered into an agreement to be merged
into The Fresh Juice Company of Florida, Inc. Under the terms of the
Clear Springs Merger Agreement, the stockholders of Clear Springs will
receive an aggregate of 1,160,000 shares of The Fresh Juice Company,
Inc.'s common stock, $.01 par value, in exchange for all of the issued
and outstanding common stock of Clear Springs. Consummation of the
Clear Springs merger is subject to the satisfaction of all terms and
conditions set forth in the Clear Springs Merger Agreement, including,
but not limited to, shareholder approval of an amendment to The Fresh
Juice Company, Inc.'s Certificate of Incorporation to increase the
number of authorized shares of The Fresh Juice Company, Inc. from
5,000,000 shares of common stock and 200,000 shares of preferred stock
to 20,000,000 shares of common stock and 7,000,000 shares of preferred
stock.
F-14
<PAGE> 22
CLEAR SPRINGS CITRUS, INC.
BALANCE SHEET
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 12,637
Accounts receivable, less allowance for doubtful
accounts of $-0- 772,338
Inventory 133,710
Prepaid expenses and other current assets 36,666
-----------
Total Current Assets 955,351
Property and Equipment - Net 717,796
Intangible Asset - Net 98,665
Other Assets:
Deposits 12,850
Trustee held funds 65,000
-----------
Total Other Assets 77,850
-----------
TOTAL ASSETS $ 1,849,662
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Note payable to bank $ 180,000
Current maturities of long-term debt 67,828
Current maturities of obligations under capital lease 15,675
Accounts payable 761,988
Accrued expenses 36,878
Income taxes payable 68,000
Note payable to related party 150,000
Advances from stockholders 14,000
-----------
Total Current Liabilities 1,294,369
Deferred Income Taxes Payable 18,000
Long-Term Debt 510,980
Obligations Under Capital Lease 8,319
Contingents and Contingency
Stockholders' Equity:
Common stock, $.10 par value, 75,000 shares authorized,
1,400 issued, 1,000 outstanding 140
Additional paid-in capital 544,918
Accumulated deficit (52,216)
-----------
492,842
Less treasury stock, 400 shares at cost (474,848)
-----------
Total Stockholders' Equity 17,994
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,849,662
===========
</TABLE>
See Accompanying Notes to Financial Statements
F-15
<PAGE> 23
CLEAR SPRINGS CITRUS, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Sales - Net $ 6,828,972 $ 7,397,845
Cost of Goods Sold 6,128,910 6,273,168
----------- -----------
Gross Profit 700,062 1,124,677
Selling, General and Administrative Expenses 504,380 545,513
----------- -----------
Income From Operations 195,682 579,164
Other Income (Expense):
Interest income 8 --
Interest expense (37,862) (68,540)
Miscellaneous income -- 2,444
----------- -----------
Total Other Income (Expense) - Net (37,854) (66,096)
----------- -----------
Income Before Provision for Income Taxes 157,828 513,068
Provision for Income Taxes 63,500 264,771
----------- -----------
Net Income $ 94,328 $ 248,297
=========== ===========
Net Income Per Share $ 94.33 $ 248.30
=========== ===========
Weighted Average Shares 1,000 1,000
=========== ===========
</TABLE>
See Accompanying Notes to Financial Statements
F-16
<PAGE> 24
CLEAR SPRINGS CITRUS, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 94,328 $ 248,297
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 137,254 118,272
Deferred income taxes (16,000) 37,000
Changes in:
Accounts receivable 264,665 (308,471)
Inventories 16,583 (7,144)
Prepaid expenses 14,812 29,755
Accounts payable and accrued expenses (505,425) 102,342
Income taxes payable 68,000 227,771
--------- ---------
Net Cash Provided by Operating Activities 74,217 447,822
Cash Flows Used In Investing Activities:
Purchases of property and equipment (20,555) (16,747)
Cash Flows From Financing Activities:
Repayment of note payable to bank (70,000) (92,756)
Repayment of long-term debt (35,796) (127,427)
Repayment of obligations under capital lease (16,019) (7,145)
Repayment of note payable to related party -- (40,000)
Decrease in advance from stockholders -- (29,000)
--------- ---------
Net Cash Used In Financing Activities (121,815) (296,328)
--------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents (68,153) 134,747
Cash and Cash Equivalents at Beginning of Period 80,790 22,627
--------- ---------
Cash and Cash Equivalents at End of Period $ 12,637 $ 157,374
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 33,636 $ 68,540
Income taxes $ 11,500 $ --
</TABLE>
See Accompanying Notes to Financial Statements
F-17
<PAGE> 25
CLEAR SPRINGS CITRUS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
NOTE 1:
The accompanying financial statements have been prepared by Clear Springs
Citrus, Inc. without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at June 30, 1996 and
for the six months ended June 30, 1996 and 1995 have been made.
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 financial statements
be read in conjunction with the December 31, 1995 financial statements and notes
thereto of Clear Springs Citrus, Inc. filed as part of the Form 8-K of The Fresh
Juice Company, Inc. and Subsidiaries. The results of operations for the period
ended June 30, 1996 are not necessarily indicative of operating results which
may be achieved for the full year.
F-18
<PAGE> 26
THE FRESH JUICE COMPANY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MAY 31, 1996
<TABLE>
<CAPTION>
Historical
---------------------------------
The Fresh
Juice
Company, Inc. Clear Pro Forma
and Springs --------------------------------
Subsidiaries Citrus, Inc. Adjustments Consolidated
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 901,989 $ 12,637 $ -- $ 914,626
Trade accounts receivable 1,867,870 772,338 (110,075)(d) 2,530,133
Inventories 2,304,358 133,710 -- 2,438,068
Note receivable - Clear Springs Citrus, Inc. 150,000 -- (150,000)(b) --
Other current assets 53,519 36,666 -- 90,185
----------- ---------- ----------- -----------
Total Current Assets 5,277,736 955,351 (260,075) 5,973,012
Property, Plant and Equipment - Net of Accumulated
Depreciation 2,890,360 717,796 -- 3,608,156
Goodwill - Net of Accumulated Amortization 3,258,866 -- 2,688,669(a) 5,947,535
Intangible Assets - Net of Accumulated Amortization 121,423 98,665 -- 220,088
Other Assets 15,571 77,850 -- 93,421
----------- ---------- ----------- -----------
TOTAL ASSETS $11,563,956 $1,849,662 $ 2,428,594 $15,842,212
=========== ========== =========== ===========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
F-19
<PAGE> 27
THE FRESH JUICE COMPANY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)
AS OF MAY 31, 1996
<TABLE>
<CAPTION>
Historical
---------------------------
The Fresh
Juice
Company, Inc. Clear Pro Forma
and Springs -------------------------------
Subsidiaries Citrus, Inc. Adjustments Consolidated
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Note payable to bank $ -- $ 180,000 $ -- $ 180,000
Current installments of long-term debt 186,347 67,828 -- 254,175
Current installments of obligations under capital lease -- 15,675 -- 15,675
Accounts payable and accrued expenses 1,231,308 798,866 (110,075)(d) 1,920,099
Income taxes payable 158,893 68,000 -- 226,893
Note payable - The Fresh Juice Company, Inc. -- 150,000 (150,000)(b) --
Advances from stockholders -- 14,000 -- 14,000
----------- ----------- ------------ -----------
Total Current Liabilities 1,576,548 1,294,369 (260,075) 2,610,842
Deferred Income Taxes Payable -- 18,000 -- 18,000
Long-Term Debt, Net of Current Installments 1,388,653 510,980 -- 1,899,633
Obligations Under Capital Lease, Net of Current Installments -- 8,319 -- 8,319
----------- ----------- ------------ -----------
Total Liabilities 2,965,201 1,831,668 (260,075) 4,536,794
Commitments and Contingency
Stockholders' Equity:
Common stock 49,020 140 11,460 (a) 60,620
Additional paid-in capital 6,232,590 544,918 2,150,145 (a) 8,927,653
Retained earnings (accumulated deficit) 2,600,438 (52,216) 52,216 (a) 2,600,438
----------- ----------- ------------ -----------
8,882,048 492,842 2,213,821 11,588,711
Less cost of common shares held in treasury 283,293 474,848 (474,848)(a) 283,293
----------- ----------- ------------ -----------
Total Stockholders' Equity 8,598,755 17,994 2,688,669 11,305,418
----------- ----------- ------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,563,956 $ 1,849,662 $ 2,428,594 $15,842,212
=========== =========== ============ ===========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
F-20
<PAGE> 28
THE FRESH JUICE COMPANY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Historical
-----------------------------
The Fresh
Juice The
Company, Inc. Ultimate Clear Pro Forma
and Juice Springs ---------------------------------
Subsidiaries Company, Inc. Citrus, Inc. Adjustments Consolidated
------------- ------------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Net Sales $ 9,219,184 $ 11,967,936 $ 12,775,884 $(4,442,854)(c) $ 29,520,150
Cost of Goods Sold 6,035,483 8,311,211 11,420,358 (4,442,854)(c) 21,324,198
----------- ------------ ------------ ----------- ------------
Gross Profit 3,183,701 3,656,725 1,355,526 -- 8,195,952
Selling, General and Administrative
Expenses 2,820,356 3,326,684 1,367,525 182,766 (e,f) 7,697,331
----------- ------------ ------------ ----------- ------------
Earnings (Loss) From Operations 363,345 330,041 (11,999) (182,766) 498,621
Interest Income 104,104 23,260 -- (19,096)(b) 108,268
Interest Expense (24,355) (12,441) (88,024) 19,096 (b) (105,724)
Gain on Sale of Assets -- 27,639 2,200 -- 29,839
Miscellaneous Income (Expense), Net -- 93,511 6,425 (116,000)(e) (16,064)
----------- ------------ ------------ ----------- ------------
Income (Loss) Before Income Taxes 443,094 462,010 (91,398) (298,766) 514,940
Provision (Benefit) For Income Taxes 172,051 147,434 (17,000) -- 302,485
----------- ------------ ------------ ----------- ------------
Net Income (Loss) $ 271,043 $ 314,576 $ (74,398) $ (298,766) $ 212,455
=========== ============ ============ =========== ============
Net Income (Loss) Per Share $ .07 $ 309.01 $ (74.40) $ -- $ .03
=========== ============ ============ =========== ============
Weighted Average Shares 3,889,740 1,018 1,000 -- 6,189,740
=========== ============ ============ =========== ============
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
F-21
<PAGE> 29
THE FRESH JUICE COMPANY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 1996
<TABLE>
<CAPTION>
Historical
-----------------------------
The Fresh
Juice The
Company, Inc. Ultimate Clear Pro Forma
and Juice Springs ---------------------------------
Subsidiaries Company, Inc. Citrus, Inc. Adjustments Consolidated
------------- ------------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Net Sales $ 7,779,639 $ 3,476,776 $ 6,828,972 $(2,409,135)(c) $ 15,676,252
Cost of Goods Sold 5,649,215 2,228,759 6,128,910 (2,409,135)(c) 11,597,749
----------- ----------- ----------- ----------- ------------
Gross Profit 2,130,424 1,248,017 700,062 -- 4,078,503
Selling, General and Administrative
Expenses 1,906,123 1,318,618 504,380 41,995 (e,f) 3,771,116
----------- ----------- ----------- ----------- ------------
Earnings (Loss) From Operations 224,301 (70,601) 195,682 (41,995) 307,387
Interest Income 27,976 8,711 8 (8,093)(b) 28,602
Interest Expense (65,285) (1,804) (37,862) 8,093 (b) (96,858)
Gain on Sale of Assets 4,962 -- -- -- 4,962
Miscellaneous Income (Expense), Net -- 80,000 -- (80,000)(e) --
----------- ----------- ----------- ----------- ------------
Income (Loss) Before Income Taxes 191,954 16,306 157,828 (121,995) 244,093
Provision For Income Taxes 81,000 2,449 63,500 -- 146,949
----------- ----------- ----------- ----------- ------------
Net Income $ 110,954 $ 13,857 $ 94,328 $ (121,995) $ 97,144
=========== =========== =========== =========== ============
Net Income Per Share $ .03 $ 12.46 $ 94.33 $ -- $ .02
=========== =========== =========== =========== ============
Weighted Average Shares 3,982,231 1,112 1,000 -- 5,902,231
=========== =========== =========== =========== ============
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
F-22
<PAGE> 30
THE FRESH JUICE COMPANY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - MERGER WITH THE ULTIMATE JUICE COMPANY, INC.:
Effective April 1, 1996, the Company acquired all of the outstanding
capital stock of The Ultimate Juice Company, Inc. in exchange for
1,140,000 shares of the Company's common stock. This merger has been
accounted for as a purchase.
NOTE 2 - MERGER WITH CLEAR SPRINGS CITRUS, INC.:
Effective September 1, 1996, the Company acquired all of the
outstanding capital stock of Clear Springs Citrus, Inc. in exchange
for 1,160,000 shares of the Company's common stock. This merger has
been accounted for as a purchase.
NOTE 3 - BASIS OF PRESENTATION:
The unaudited pro forma condensed consolidated financial statements
are presented for illustrative purposes only, giving effect to the
consolidation of the Company, Ultimate and Clear Springs as accounted
for using the purchase method.
The pro forma periods are dated in terms of the Company's historical
financial reporting periods. A pro forma condensed consolidated
balance sheet is provided as of May 31, 1996, giving effect to the
Clear Springs Citrus, Inc. transaction as though it had been
consummated on that date. The historical consolidated balance sheet of
the Company as of May 31, 1996 reflects the Ultimate merger which was
effective April 1, 1996. Pro forma condensed consolidated statements
of operations are provided for the six months ended May 31, 1996 and
twelve months ended November 30, 1995 giving effect to the Clear
Springs and Ultimate transactions as though they had occurred at the
beginning of the earliest period presented. For presentation purposes,
the historical financial statements have been consolidated as follows:
<TABLE>
<CAPTION>
The Fresh
Pro Forma Condensed Juice Company, The
Consolidated Inc. and Ultimate Juice Clear Springs,
Financial Statements Subsidiaries Company, Inc. Citrus, Inc.
-------------------- -------------- -------------- --------------
<S> <C> <C> <C>
Consolidated Balance Sheet - As of As of
May 31, 1996 May 31, 1996 Not Applicable June 30, 1996
Consolidated Statement of
Operations - Six Months Four Months Six Months
Six months ended Ended Ended Ended
May 31, 1996 May 31, 1996 March 31, 1996 June 30, 1996
Consolidated Statement of
Operations - Twelve Months Year Ended
Twelve months ended Year Ended Ended December 31,
November 30, 1995 November 30, 1995 December 31, 1995 1995
</TABLE>
F-23
<PAGE> 31
THE FRESH JUICE COMPANY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - BASIS OF PRESENTATION (CONTINUED):
Because the transition plans related to the mergers are currently
being developed, transaction costs and other nonrecurring costs and
expenses expected to be incurred in connection with the integration of
the companies' business operations can only be estimated at this time
and, therefore, the following have been excluded from the pro forma
condensed consolidated statements of operations: (i) the positive
effects of potential cost savings which may be achieved upon combining
the resources of the companies; (ii) legal and miscellaneous costs
relating to the mergers, currently estimated to be $150,000 to
$250,000 and (iii) other nonrecurring costs and expenses expected to
be incurred subsequent to the mergers, including $300,000 to $500,000
in connection with the integration of the companies' operations, and
approximately $50,000 to $75,000 related to termination benefits which
may be paid to employees.
The results of operations of Ultimate for the month ended December 31,
1995 reflected net sales of $925,414 and net income of $303,304, which
are included in the pro forma condensed consolidated statements of
operations for both the six months ended May 31, 1996 and the twelve
months ended November 30, 1995.
NOTE 4 - PRO FORMA ADJUSTMENTS:
The pro forma condensed consolidated financial statements have been
adjusted for the items set forth below, the amounts of which are noted
in the adjustment column of the pro forma condensed consolidated
financial statements:
(a) Adjustment to reflect the proposed merger of Clear Springs with
Fresh Juice of Florida, a wholly owned subsidiary of the Company.
The Merger involves the exchange of 1,160,000 shares of the
Common Stock of the Company valued at $2,707,000 in exchange for
all of the outstanding capital stock of Clear Springs. The
$2,707,000 was calculated based on the average price of the
Company's Common Stock on or about September 1, 1996, the date of
the consummation of the merger. The merger will result in excess
cost over fair value of net assets acquired of $2,688,669. Such
amount reflects preliminary estimates of the fair value of the
proposed assets acquired and liabilities to be assumed.
(b) Elimination of debt between the Company and Clear Springs in the
amount of $150,000 as of May 31, 1996 and the related interest
income and expense in the amount of $5,990 and $9,214 for the six
months ended May 31, 1996 and the twelve months ended November
30, 1995, respectively. In addition, interest income and expense
between the Company and Ultimate, prior to the Ultimate merger in
the amount of $2,103 and $9,882 have been eliminated for the six
months ended May 31, 1996 and the twelve months ended November
30, 1995, respectively.
F-24
<PAGE> 32
THE FRESH JUICE COMPANY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - PRO FORMA ADJUSTMENTS (CONTINUED):
(c) Elimination of intercompany sales and related expenses between
the Company and Clear Springs in the amounts of $7,372 and $-0-
have been eliminated for the six months ended May 31, 1996 and
the twelve months ended November 30, 1995, respectively. Also,
sales between Ultimate and Clear Springs in the amounts of
$2,363,659 and $3,962,970 have been eliminated for the six months
ended May 31, 1996 and the twelve months ended November 30, 1995,
respectively. In addition, sales between Ultimate and the
Company, prior to the Ultimate merger, in the amount of $38,104
and $479,884 have been eliminated for the six months ended May
31, 1996, and the twelve months ended November 30, 1995,
respectively.
(d) Elimination of intercompany assets and liabilities resulting from
intercompany sales between Clear Springs and the Company as of
May 31, 1996.
(e) Elimination of intercompany management fees between Ultimate and
Clear Springs.
(f) Amortization of excess cost over fair value of net assets
acquired over a twenty year life. These amounts are $54,778 and
$67,217 for Ultimate and Clear Springs, respectively, for the six
months ended May 31, 1996. These amounts are $164,333 and
$134,433 for Ultimate and Clear Springs, respectively, for the
twelve months ended November 30, 1995.
(g) There is no tax benefit to be recognized from the pro forma
adjustment of recording the amortization of the excess cost over
fair value of net assets acquired resulting from the acquisitions
of Ultimate and Clear Springs by the Company.
F-25
<PAGE> 33
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
2(a) Merger Agreement dated March 31, 1996 among The Fresh Juice
Company, Inc., The Fresh Juice Company of Florida, Inc., Clear
Springs Citrus, Inc., Brian Duffy and The Bogen Group, L.L.C. is
incorporated by reference to Exhibit 2(b) to the Current Report
on Form 8-K dated March 31, 1996 filed by The Fresh Juice
Company, Inc. on April 11, 1996.
2(b) Addendum to Merger Agreement dated July 23, 1996 among The Fresh
Juice Company, Inc., The Fresh Juice Company of Florida, Inc.,
Clear Springs Citrus, Inc., Brian Duffy and The Bogen Group,
L.L.C.
2(c) Agreement of Acknowledgment and Amendment to Merger Agreement
dated August 29, 1996 among The Fresh Juice Company, Inc., The
Fresh Juice Company of Florida, Inc., Clear Springs Citrus, Inc.,
Brian Duffy and The Bogen Group, L.L.C.
3(i) Certificate of Incorporation of The Fresh Juice Company, Inc., as
amended.
10(a) Registration Rights Agreement dated August 29, 1996 among The
Fresh Juice Company, Inc., Steven M. Bogen, Daniel Petry, Mark
Feldman and Brian Duffy.
10(b) The Fresh Juice Company, Inc. 1996 Incentive Stock Option Plan.
23 Consent of Withum Smith & Brown, Certified Public Accountants and
Consultants.
<PAGE> 1
Exhibit 2(b)
ADDENDUM TO MERGER AGREEMENT
This addendum to Merger Agreement is entered into on this 23rd
day of July, 1996, among The Fresh Juice Company, Inc., The Fresh Juice Company
of Florida, Inc., Clear Springs Citrus Inc., Brian Duffy, and The Bogen Group,
L.L.C., and is binding upon the parties hereto, their heirs, successors and
assigns.
WHEREAS, all parties hereto executed that certain Merger
Agreement, dated as of March 31, 1996; and
WHEREAS, Article 1.2 of the Merger Agreement calls for the
Closing contemplated therein to occur on or before June 30, 1996 (the "Closing
Date"); and
WHEREAS, all parties hereto desire to extend the Closing Date;
NOW THEREFORE, in exchange for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. The Closing Date under the Merger Agreement, dated as of March 31,
1996, is hereby extended through to and including September 15, 1996.
2. Should any other provision of the Merger Agreement in any way
conflict with an extended Closing Date through September 15, 1996, then such
inconsistent provision of the Merger Agreement shall be deemed superseded, so as
to effectuate the intent of the parties to this Addendum.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
duly executed pursuant due authorization on the date first above written.
THE FRESH JUICE COMPANY, INC.
By: /s/ Steven Bogen
-------------------------------------------
Its: Chief Executive Officer
THE FRESH JUICE COMPANY OF FLORIDA, INC.
By: /s/ Steven Smith
-------------------------------------------
Its: Chief Executive Officer
CLEAR SPRINGS CITRUS, INC.
By: /s/ Brian Duffy
-------------------------------------------
Brian Duffy, President
THE BOGEN GROUP, L.L.C.
By: /s/ Steven M. Bogen
-------------------------------------------
Steven M. Bogen, Managing Member
/s/ Brian Duffy
----------------------------------------------
Brian Duffy, Individually
<PAGE> 1
Exhibit 2(c)
AGREEMENT OF ACKNOWLEDGMENT AND AMENDMENT TO MERGER AGREEMENT.
This Agreement of Acknowledgment and Amendment to Merger Agreement (the
"Amendment Agreement") is dated this 29th day of August, 1996 and amends that
certain "Merger Agreement" dated as of March 31, 1996 among The Fresh Juice
Company, Inc. ("Fresh Juice"), The Fresh Juice Company of Florida, Inc. ("Fresh
Juice of Florida"), Clear Springs Citrus, Inc. ("Clear Springs"), Brian Duffy
("Duffy") and The Bogen Group, L.L.C. (the "Bogen Group").
The Merger Agreement was executed on March 31, 1996 and the
transactions contemplated therein will close on August 29, 1996. During the six
month period between execution of the Merger Agreement and closing of the
transactions contemplated therein, the parties have continued to conduct their
respective businesses and in doing so have caused or allowed certain events to
occur, on the mutual consent of the parties, which did not conform or comply
with the express terms or covenants of the Merger Agreement.
The parties hereto wish to disclose and confirm their mutual consent to
all such matters, as well as agree to all other amendments which must be made to
the Merger Agreement.
WHEREFORE, the parties hereto hereby amend the Merger Agreement as set
forth below:
1. Page one, first paragraph, fifth line - quotation marks shall be inserted
prior to the sixth word, i.e. Selling.
2. Section 1.1, fourth line - the words "Clear Springs Citrus, Inc." shall be
deleted and replaced with "The Fresh Juice of Florida, Inc."
3. Section 1.2, The parties hereto acknowledge that the Closing Date of June
30, 1996 has been extended to September 15, 1996, by Addendum to Merger
Agreement dated July 23, 1996.
4. Section 1.5(c): The parties hereto acknowledge that Steven Smith, Steven M.
Bogen, Brian Duffy and Jeff Smith are already the directors of the
Surviving Corporation (Fresh Juice of Florida) and shall remain so
following closing, until their successors are duly elected and qualified.
The parties also acknowledge that the individuals set forth on Schedule
1.5(c) have already been named by Fresh Juice of Florida's Board to the
office appearing next to their respective names and that the resignations
of those individuals previously holding such offices shall be delivered at
closing.
<PAGE> 2
5. Section 3.10, Line 7 - the word "of" shall be inserted as the fourteenth
word in Line 7 between "use," and "its."
6. Section 3.22, Line 6 - the third word, "of", shall be deleted and replaced
with "or."
7. Section 3.25, Line 5 - the fourth and fifth words, "or is", shall be
deleted and replaced with "nor is it."
8. Section 3.26, Line 7 - the seventh word, "have", shall be deleted and
replaced with "has."
9. Section 4.9, Line 8 - the ninth and tenth words, "their respective", shall
be deleted and replaced with "its."
10. Section 4.12, Line 2 - the last word "them" shall be deleted and replaced
with "it."
11. Section 4.18, Line 8 - the last word, "Springs", shall be deleted.
12. Section 4.21, Line 7 - the third word, "of", shall be deleted and replaced
with "or."
13. Section 4.24, Line 5 - the words "or is", at the beginning of the line,
shall be deleted and replaced with "nor is it."
14. Section 5.2 shall be deleted and replaced with
"5.2 Capitalization. Fresh Juice has an authorized capitalization of
37,000,000 shares of capital stock, consisting of 30,000,000 shares of
Fresh Juice Common and 7,000,000 shares of preferred stock, par value $10
per share; there are 4,690,062 shares of Fresh Juice Common issued and
outstanding and there are no shares of such preferred stock issued and
outstanding. All such shares of issued and outstanding Fresh Juice Common
have been duly authorized, validly issued and are fully paid and
non-assessable. There are 200,000 treasury shares of Fresh Juice Common."
15. Section 5.6: The last two sentences shall be deleted and replaced with
"Other than the Voting Agreement, dated as of the date hereof, among Craig
Lessner, Fresh Juice and the Stockholders named therein, there are no
voting trusts or other agreements or understandings with respect to the
voting of the shares of the capital stock of Fresh Juice, and the shares of
the capital stock of Fresh Juice are not subject to any preemptive rights,
right of first refusal or similar rights.
16. Section 5.7, Line 5 - the date at the beginning of the line, "27, 1996",
shall be deleted and replaced with "29, 1996."
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<PAGE> 3
17. Section 5.9, Line 8 - the ninth word, "their", shall be deleted and
replaced with "its."
18. Section 5.12, Line 3 - the fifth word, following the date at the beginning
of the line, "them", shall be deleted and replaced with "it."
19. Section 5.19, Line 7 - the ninth word, "practice", shall be deleted and
replaced with "practices."
20. Section 5.25, Line 5 - the sixth and seventh words, "or is", shall be
deleted and replaced with "nor is it."
21. Section 6.1(d), Line 3 - shall be deleted and replaced with "of State's
office in the State of Florida."
22. Section 6.2(c): The parties hereto acknowledge and agree that Fresh Juice
obtained stockholder approval to amend its Certificate of Incorporation to
authorize 30,000,000 shares of common stock instead of 20,000,000 and that
the authorization of the additional shares is not a default hereunder.
23. Section 7.3: The parties hereto acknowledge that Fresh Juice or Merger Sub,
as the case may be, caused or allowed the following events to occur after
March 31, 1996, on the mutual consent of the parties, which did not conform
or comply with the express covenants (as contained in the Merger Agreement
at Article 7), and the parties hereto hereby disclose and confirm their
mutual consent to the following matters:
(a) Fresh Juice of Florida amended its by-laws to be identical to those
of Fresh Juice.
(b) Fresh Juice granted 100,000 warrants to Ladenburg Thalmann & Co.
("Ladenburg") in connection with the Financial Advisory services
being provided by Ladenburg.
(c) Fresh Juice granted stock options to Jeffrey Smith and Paul
Ballentine to replace those options granted in February 1996, and
subsequently terminated because they were erroneously issued not
pursuant to an incentive stock option plan. The options issued to
replace those terminated were of identical amount and exercise
price.
(d) Fresh Juice's board adopted the 1996 Incentive Stock Option Plan
(making available up to 500,000 shares for such plan) and the 1996
Incentive Stock Option Plan was approved by Fresh Juice
Stockholders at its recently completed annual meeting.
(e) Fresh Juice of Florida has purchased $600,000 in additional
equipment for the Winter Haven Plant to accommodate all of Clear
Springs' production.
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<PAGE> 4
(f) Fresh Juice completed The Ultimate Juice Company, merger
transaction effective April 1, 1996.
(g) Fresh Juice has entered into employment contracts with Steven
Smith, Steven M. Bogen and Daniel Petry.
(h) A settlement has been reached with James Coyle in connection with
terminating his employment relationship with Fresh Juice.
24. Section 7.4(a), Line 8 - the third word, "except", shall be deleted and
replaced with "excepted."
25. Section 8.1(b) shall be deleted and replaced with "Other than as provided
by law, this Section 8 contains the sole remedies of the parties hereto
with respect to claims arising from the subject matter of this Section 8."
26. Section 8.2(b), Line 1 - delete number "9" and replace with "8."
27. Section 8.2(c), Line 4 - last word, "Shareholders" shall be deleted and
replaced with "Stockholders."
28. Section 8.2(c), Last Line, the reference to "Section 9.1" shall be deleted
and replaced with "Section 7.1."
29. Section 10.2 - the parties hereby acknowledge and consent to all press
releases made prior to the date hereof relating to the Clear Springs Merger
Agreement.
30. Section 10.4 - The notice address for The Fresh Juice Company, Inc. shall
be 35 Walnut Avenue, Clark, New Jersey 07066, Attn: Steven Bogen, Fax No.
(908) 388-2954.
31. Section 10.4 - The address for Clear Springs Counsel shall be Greenburg,
Traurig, 111 North Orange Avenue, Suite 2050, Orlando, Florida 32801, Attn:
David Oliver, Esq., Fax No. (407) 420-5909.
32. Section 10.13, Line 5 - The date June 30, 1996 shall be deleted and
replaced with August 29, 1996, and the survival of the representations and
warranties made in the Compliance Certificates shall be in accordance with
the provisions of Section 10.13.
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<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement
to be executed pursuant to due authorization on the date first written above.
Witness or Attest: The Fresh Juice Company, Inc.
/s/ Steven M. Bogen By: /s/ Steven Smith
- --------------------------------- ---------------------------------------
Steven M. Bogen, Secretary Steven Smith, President
The Fresh Juice Company of Florida, Inc.
/s/ Steven M. Bogen By: /s/ Steven Smith
- --------------------------------- ---------------------------------------
Steven M. Bogen, Secretary Steven Smith, President
Clear Springs Citrus, Inc.
/s/ Steven M. Bogen By: /s/ Brian Duffy
- --------------------------------- ---------------------------------------
Steven M. Bogen, Secretary Brian Duffy, President
The Bogen Group, L.L.C.
By: /s/ Steven M. Bogen
- --------------------------------- ---------------------------------------
Steven M. Bogen, Managing Member
/s/ Brian Duffy
- --------------------------------- ---------------------------------------
Brian Duffy
5
<PAGE> 1
Exhibit 3(i)
CERTIFICATE OF INCORPORATION
OF
THE FRESH JUICE COMPANY, INC.
(as amended August 29, 1996)
-----------------
FIRST: The name of the corporation is
THE FRESH JUICE COMPANY, INC.
SECOND: Its registered office is to be located at 229 South State
Street, in the City of Dover, in the County of Kent, in the State of Delaware.
The name of its registered agent at that address is the United States
Corporation Company.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The total number of shares of all classes of stock which the
corporation is authorized to issue is thirty-seven million (37,000,000). All
such shares are to have a par value and are classified as seven million
(7,000,000) shares of Preferred stock and the par value of each share of such
class is ten dollars ($10.00) and thirty million (30,000,000) shares of Common
stock and the par value of each share of such class is one cent ($.01).
FIFTH: The name and address of the single incorporator are
Paul S. Allersmeyer 70 Pine Street, New York, NY 10270
SIXTH: The board of directors may authorize the issuance from time to
time of the Series Preferred Stock in one or more series with such designations,
preferences, qualifications, limitations, restrictions and optional or other
special rights (which may differ with respect to
<PAGE> 2
each series) as the board may fix by resolution. Without limiting the foregoing,
the board of directors is authorized to fix with respect to each series:
(1) the number of shares which shall constitute the series and the name
of the series;
(2) the rate and times at which, and the preferences and conditions
under which, dividends shall be payable on shares of the series, and the status
of such dividends as cumulative or non-cumulative and as participating or
non-participating;
(3) the prices, times and terms, if any, at or upon which shares of the
series shall be subject to redemption;
(4) the rights, if any, of holders of shares of the series to convert
such shares into, or to exchange such shares for, shares of any other class of
stock of the Corporation;
(5) the terms of the sinking fund or redemption or purchase account, if
any, to be provided for shares of the series;
(6) the rights and preferences, if any, of the holders of shares of the
series upon any liquidation, dissolution or winding up of the affairs of, or
upon any distribution of the assets of, the Corporation;
(7) the limitations, if any, applicable while such series is
outstanding, on the payment of dividends or making of distributions on, or the
acquisition of, or the acquisition of, the common stock or any other class of
stock which does not rank senior to the shares of the series;
(8) the voting rights, if any, to be provided for shares of the series.
SEVENTH: The corporation shall be required, to the fullest extent a
corporation is empowered by Section 145 of the Delaware General Corporation Law,
as the same may be amended and supplemented, to indemnify any and all directors
and officers of the corporation,
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<PAGE> 3
and the indemnification provided for herein shall not be deemed exclusive of any
other rights to which those hereby indemnified may be entitled under or by
by-law, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office. To assure indemnification under this provision of all
such persons who are or were "fiduciaries" of an employee benefit plan governed
by the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended
from time to time, Section 145 shall, for the purposes of this Article SEVENTH
be interpreted as follows: an "other enterprise" shall be deemed to have
requested a person to serve an employee benefit plan where the performance by
him of his duties to the corporation also imposes duties on, or otherwise
involves services by, him to the plan or participants or beneficiaries of the
Plan; excise taxes assessed on a person with respect to an employee benefit plan
pursuant to ERISA shall be deemed "fines"; and action taken or omitted by a
person with respect to an employee benefit plan in the performance of his duties
for a purpose reasonably believed by him to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interest of the corporation.
EIGHTH: The By-Laws of the corporation may be made, altered, amended,
changed, added to or replaced by the Board of Directors without the assent or
vote of the stockholders. Elections of directors need not be by ballot unless
the By-Laws so provide.
NINTH: To the extent permitted by Section 102(b)(7) of the Delaware
General Corporation Law, as the same may be supplemented and amended, no
director of the corporation shall be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director;
provided the foregoing shall not eliminate or limit the liability
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<PAGE> 4
of such director (i) for any breach of such directors's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law, or (iv) for any transaction from
which such director derived an improper personal benefit.
TENTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate in the manner now or
hereafter prescribed by law, and all rights and powers conferred herein on
stockholders, directors and officers are subject to this reserved power.
ELEVENTH: The books of the corporation may (subject to any statutory
requirements) be kept outside the State of Delaware as may be designated by the
Board of Directors or in the by-laws of the corporation.
4
<PAGE> 1
Exhibit 10(a)
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement"), dated as of
August 29, 1996, among The Fresh Juice Company, Inc., a Delaware corporation
(the "Company"), Steven M. Bogen, Daniel Petry, Mark Feldman, and Brian Duffy
(individually, a "Selling Stockholder", and collectively, the "Selling
Stockholders").
This Agreement is in connection with the Merger Agreement, dated as
of the date hereof, among the Company, The Fresh Juice Company of Florida, Inc.,
Clear Springs Citrus, Inc., Brian Duffy and The Bogen Group, L.L.C. (the "Merger
Agreement") pursuant to which the Company agreed to provide to the Selling
Stockholders certain piggy-back registration rights in respect of 1,160,000
shares of the Company's common stock, par value $.01 per share (the "Common
Stock") issued in connection with such Merger Agreement. Such rights are set
forth exclusively in this Agreement.
The parties hereto hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms not
otherwise defined herein shall have the following meanings:
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Losses: See Section 8 hereof.
Piggyback Registration: See Section 3 hereof.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus
<PAGE> 2
filed as part of an effective registration statement in reliance upon Rule
430A), as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of any portion of the Registrable Common covered by
such Registration Statement and all other amendments and supplements to the
Prospectus, including pre- and post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference in such
Prospectus.
Registrable Common: Four percent of the Common Stock issued to, and
directly held by, each Selling Stockholder pursuant to the terms of the Merger
Agreement.
Registration Expenses: See Section 7 hereof.
Registration Statement: Any registration statement (including any
preliminary or "red herring" registration statement or prospectus) of the
Company, filed with the SEC or any state securities regulatory agency, which
covers any of the Registrable Common pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including pre- and post-effective amendments, all
exhibits and all material incorporated by reference or deemed to be incorporated
by reference in such registration statement.
Restricted Securities: The Registrable Common upon original issuance
thereof and at all times subsequent thereto until in the case of any such
security, (i) it has been effectively registered under the Securities Act and
disposed of in accordance with the Registration Statement covering it or (ii) it
is sold or distributed to the public pursuant to Rule 144 (or any similar
provisions then in force) under the Securities Act.
2
<PAGE> 3
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
Underwritten registration or underwritten offering: A registration
in which securities of the Company are sold to an underwriter for reoffering to
the public.
2. Securities Subject to this Agreement
(a) Registrable Common Securities. The securities entitled to
the benefits of this Agreement are the Registrable Common.
(b) Holders of Registrable Common. The Selling Stockholders
and the successors and assigns set forth in Section 10(d) hereof shall be deemed
the only holders of Registrable Common.
3. Piggyback Registration
(a) Right to Piggyback. Subject to the provisions of this
Section 3, if at any time the Company proposes to file a registration statement
under the Securities Act with respect to an offering by the Company of its
Common Stock (other than a registration statement (a) on Form S-8 or any
successor form to such Form or (b) filed in connection with an exchange offer or
an offering of its common stock made solely to its existing stockholders in
connection with a rights offering or solely to employees of the Company), for
its own account, then the Company shall give written notice of such proposed
filing to the holders of Registrable Common at least 30 days before the
anticipated filing date. Such notice shall offer such holders the opportunity to
register such amount of Registrable Common as each such holder may request
3
<PAGE> 4
("Piggyback Registration"). Subject to the provisions of this Section 3, the
Company shall include in each such Piggyback Registration all Registrable Common
requested to be included in the registration for such offering. If any holder of
Registrable Common desires to have shares of Registrable Common so registered,
such holder shall so advise the Company in writing within 10 days after the date
of the Company's notice of the anticipated filing date, setting forth the number
of shares of Registrable Common for which registration is so requested. The
holders of Registrable Common shall be permitted to withdraw all or part of the
Registrable Common from a Piggyback Registration at any time prior to the
effective date of such Piggyback Registration.
(b) Priority on Piggyback Registrations. The Company shall
cause the managing underwriter or underwriters of a proposed underwritten
offering to permit holders of Registrable Common requested to be included in the
registration for such offering to include all such Registrable Common on the
same terms and conditions as the Common Stock of the Company included therein.
Notwithstanding the foregoing, if the managing underwriter or underwriters of
such offering deliver(s) a written notice to the holders of Registrable Common
that the total amount of securities which such holders, the Company and any
other persons or entities having rights to participate in such registration,
intend to include in such offering is such as to materially and adversely affect
the success of such offering, then the amount of securities to be offered for
the account of holders of Registrable Common, as the case may be, shall be
reduced (to zero if necessary) or limited pro rata in proportion to their
respective dollar amounts of Registrable Common requested to be registered to
the extent necessary to reduce the total
4
<PAGE> 5
amount of securities to be included in such offering to the amount recommended
by such managing underwriter or underwriters.
(c) Conditions to Piggyback Registration. The rights of
holders of Registrable Common to have any shares of Registrable Common included
in a Registration statement shall be subject to the following conditions:
(i) Holders of Registrable Common shall furnish the
Company in a timely manner with all information required by the applicable rules
and regulations of the SEC or any applicable state securities regulatory agency
concerning the proposed method of sale or other disposition of the Registrable
Common, the identity of and compensation to be paid to any proposed
underwriter(s) to be employed in connection therewith, and such other
information as may be reasonably required by the Company properly to prepare and
file such Registration Statement in accordance with applicable provisions of the
Securities Act and the rules and regulations of any applicable state securities
regulatory agency;
(ii) if holders of Registrable Common desire to sell and
distribute any shares of Common Stock over a period of time, or from time to
time, at then prevailing market prices, then holders of Registrable Common shall
execute and deliver to the Company such written undertakings as the Company and
its counsel may reasonably require in order to assure full compliance with
relevant provisions of the Securities Act, the Exchange Act or the rules and
regulations of any applicable state securities regulatory agency;
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<PAGE> 6
(iii) in the case of an underwritten offering on behalf
of holders of Registrable Common in connection with a Piggyback Registration,
the managing underwriter(s) thereof shall be subject to the approval of the
Company, such approval not to be unreasonably withheld; and
(iv) the offering price of any share of Registrable
Common subject to Piggyback Registration shall be no less than the offering
price for any share of Common Stock then to be registered for sale for the
account of the Company or other security holder of the Company, unless such
shares of Registrable Common are to be offered from time to time based on the
then prevailing market price.
(d) Termination of Piggyback Registration Rights. The
obligations of the Company to any holder of Registrable Common with respect to
Piggyback Registration provided for in this Section 3:
(i) shall continue until such time as counsel to the
Company is of the opinion and has so advised the Company and the holder of
Registrable Common that such holder has no further obligations to comply with
the registration requirements of the Securities Act or to deliver a prospectus
meeting the requirements of Section 10(a)(3) of the Securities Act in connection
with further sales by such holder of Registrable Common;
(ii) shall not apply to any proposed sale(s) or other
disposition(s) or offer(s) for any shares of Registrable Common with respect to
which counsel for the Company is of the opinion and has so advised the Company
and the holder of Registrable Common that
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<PAGE> 7
such holder has no obligation to comply with the registration requirements of
the Securities Act or to deliver a prospectus meeting the requirements of
Section 10(a)(3) of the Securities Act;
(iii) shall not apply with respect to any holder of
Registrable Common who beneficially owns, at the time a request for Piggyback
Registration is made pursuant to Section 3(a) hereof, less than 20,000 shares of
Common Stock;
(iv) shall terminate with respect to any holder of
Registrable Common who has exercised Piggyback Registration before pursuant to
Section 3(a) hereof and the Registration Statement related thereto registering
the full number of shares of Registrable Common requested by such holder to be
so registered was declared effective by the SEC; and
(v) shall terminate on the second anniversary of the
date of this Agreement.
4. Registration of Securities Other than Registrable Common. The
Company is under no obligation to the Selling Stockholders or any of their
respective affiliates to register, or grant a right of registration with respect
to, any securities of the Company (other than the Registrable Common) under the
Securities Act or any state securities laws or regulations.
5. Hold-Back Agreements;
(a) Restrictions on Public Sale by Holders of Registrable
Common. Each holder of Registrable Common whose Registrable Common are covered
by a Registration Statement filed pursuant to Section 3 hereof, agrees, if
requested by the managing underwriter or underwriters in an underwritten
offering, not to effect any public sale or distribution of any of the Company's
securities, including a sale pursuant to Rule 144 under the Securities Act
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<PAGE> 8
(except as part of such underwritten registration), during the 10-day period
prior to, and during the 90-day period beginning on, the closing date of each
underwritten offering made pursuant to such Registration Statement, to the
extent timely notified in writing by the Company or the managing-underwriters.
6. Registration Procedures
In connection with the Company's registration obligations
pursuant to Section 1 hereof, the Company shall effect such registrations to
permit the sale of such Registrable Common in accordance with the intended
method or methods of disposition thereof, and pursuant thereto the Company shall
(and, in the case of Section 4(n) hereof, the Company shall):
(a) prepare and file with the SEC a Registration Statement on
any appropriate form under the Securities Act, which form shall be available for
the sale of the Registrable Common by the holders thereof in accordance with the
intended method or methods of distribution thereof, and cause each such
Registration Statement to become effective and remain effective as provided
herein; provided, however, that before filing a Registration Statement or
prospectus or any amendments or supplements thereto (including documents which
would be incorporated or deemed to be incorporated therein by reference) the
Company shall furnish to the holders of the Registrable Common covered by such
Registration Statement and the managing underwriters, if any, copies of all such
documents proposed to be filed, which documents will be subject to the review of
such holders and such underwriters, and the Company shall not file any such
Registration Statement or amendment thereto or any Prospectus or any
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<PAGE> 9
supplement thereto (including such documents which, upon filing, would be or
would be deemed to be incorporated by reference therein) to which the holders of
a majority of the Registrable Common covered by such Registration Statement or
the managing underwriter, if any, shall reasonably object on a timely basis;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement continuously as may be
necessary to keep such Registration Statement effective for the applicable
period; cause the related Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force) under the Securities Act; and comply
with the provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable period
in accordance with the intended methods of disposition by the sellers thereof
set forth in such Registration Statement as so amended or to such Prospectus as
so supplemented;
(c) notify the selling holders of Registrable Common and the
managing underwriters, if any, promptly, and (if requested by any such person)
confirm such notice in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment related to such Registrable Common has
been filed, and, with respect to a Registration Statement or any post-effective
amendment related to such Registrable Common, when the same has become
effective, (ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related Prospectus or for additional information,
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of a Registration Statement or the initiation of any
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<PAGE> 10
proceedings for that purpose, (iv) if at any time the representations and
warranties of the Company and the Company contained in any agreement (including
any underwriting agreement) contemplated by paragraph (n) below cease to be true
and correct, (v) of the receipt by the Company of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Registrable Common for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (vi) of the happening of any
event which makes any statement made in such Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue or which requires the making of any changes in a Registration
Statement or related Prospectus so that such documents will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (vii) of the
Company's reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate;
(d) use every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement, or the
lifting of any suspension of the qualification (or exemption from qualification)
of any of the Registrable Common for sale in any jurisdiction, at the earliest
possible moment;
(e) if requested by the managing underwriters or any holder of
Registrable Common being sold in connection with an underwritten offering, (i)
immediately incorporate in a Prospectus supplement or post-effective amendment
such information as the managing underwriters and such holder agree should be
included therein as may be required by
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<PAGE> 11
applicable law, (ii) make all required filings of such Prospectus supplement or
such post-effective amendment as soon as the Company has received notification
of the matters to be incorporated in such Prospectus supplement or
post-effective amendment, and (iii) supplement or make amendments to any
Registration Statement if requested by any holder of Registrable Common covered
by such Registration Statement or any underwriter of such Registrable Common;
(f) furnish to each selling holder of Registrable Common and
each managing underwriter, if any, without charge, at least one signed copy of
the Registration Statement or Statements and any post-effective amendment
thereto, including financial statements and schedules, all documents
incorporated therein by reference or deemed incorporated therein by reference
and all exhibits (including those previously furnished or incorporated by
reference) at the earliest practicable time under the circumstances before the
filing of such documents with the SEC;
(g) deliver to each selling holder of Registrable Common and
the underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each preliminary prospectus) and any amendment or
supplement thereto as such persons may reasonably request; the Company consents
to the use of such Prospectus or any amendment or supplement thereto by each of
the selling holders of Registrable Common and the underwriters, if any, in
connection with the offering and sale of the Registrable Common covered by such
Prospectus or any amendment or supplement thereto;
(h) prior to any public offering of Registrable Common, to
register or qualify or cooperate with the selling holders of Registrable Common,
the underwriters, if any,
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<PAGE> 12
and their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Common for offer and sale under the securities or Blue Sky laws of
such jurisdictions as any seller or underwriter reasonably requests in writing;
keep each such registration or qualification (or exemption therefrom) effective
during the period such Registration Statement is required to be kept effective
and do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Common covered by the
applicable Registration Statement; provided, however, that the Company will not
be required to (A) qualify generally to do business in any jurisdiction where it
is not then so qualified or (B) take any action which would subject it to
general service of process in any such jurisdiction where it is not then so
subject;
(i) cooperate with the selling holders of Registrable Common
and the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Common to be sold, which
certificates shall not bear any restrictive legends; and enable such Registrable
Common to be in such denominations and registered in such names as the managing
underwriters may request at least two business days prior to any sale of
Registrable Common to the underwriters;
(j) cause the Registrable Common covered by the applicable
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the seller or
sellers thereof or the underwriters, if any, to consummate the disposition of
such Registrable Common;
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<PAGE> 13
(k) upon the occurrence of any event contemplated by Section
6(c)(vi) or 6(c)(vii) above, prepare a supplement or post-effective amendment to
the applicable Registration Statement or a supplement to the related Prospectus
or any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the Registrable
Common being sold thereunder, such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(l) cause all Registrable Common covered by such Registration
Statement to be (i) listed on each securities exchange, if any, on which similar
securities issued by the Company are then listed, or (ii) authorized to be
quoted on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or the National Market System of NASDAQ if the securities so
qualify; in each case, if requested by the holders of a majority of the
Registrable Common covered by such Registration Statement or the managing
underwriter;
(m) provide CUSIP numbers for the Registrable Common not later
than the effective date of the Registration Statement; and
(n) furnish to the holders of Registrable Common a copy, if so
prepared, of the so-called "cold comfort" letter signed by the independent
public accountants who have certified the Company's financial statements include
in the Registration Statement, covering substantially the same matters with
respect to such Registration Statement (and the Prospectus included thereunder)
and, with respect to events subsequent to the date of such financial
13
<PAGE> 14
statements, as are customarily covered, and subject to such qualifications,
limitations and disclaimers as are customarily included in accountants' letters
delivered to underwriters in connection with underwritten public offerings of
securities.
The Company may require each seller of Registrable Common as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such Registrable Common as the Company
may from time to time reasonably request in writing.
Each holder of Registrable Common agrees by acquisition of such
Registrable Common that, upon receipt of any notice from The Company of the
happening of any event of the kind described in Section 6(c)(ii), 6(c)(iii),
6(c)(v), 6(c)(vi) or 6(c)(vii) hereof, such holder will forthwith discontinue
disposition of such Registrable Common covered by such Registration Statement or
Prospectus until such holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 6(k) hereof, or until it is advised
in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and has received copies of any additional or
supplemental filings which are incorporated or deemed to be incorporated by
reference in such Prospectus.
7. Registration Expenses
(a) The following fees and expenses incident to the
preparation of the Registration Statement shall be borne by the Company: (i) all
registration and filing fees, including fees and expenses relating to the
Company's securities and the Registrable Common (A) with respect to filings
required to be made with the National Association of Securities
14
<PAGE> 15
Dealers, Inc. and (B) compliance with securities or Blue Sky laws (fees and
disbursements in connection with Blue Sky qualifications of Registrable Common
in such states where the Company and the managing underwriter do not intend to
distribute the Company's securities pursuant to the Registration Statement shall
be borne by the holders of Registrable Common), (ii) printing expenses of the
Registration Statement requested by the managing underwriter, (iii) fees and
disbursements of counsel for the Company, (iv) fees and disbursements of the
Company's independent certified public accountants, (v) underwriter's fees and
expenses (excluding discounts, commissions or fees of underwriters, selling
brokers, dealer managers or similar securities industry professionals relating
to the distribution of the Registrable Common or legal expenses of any person
other than the Company and the underwriters) (but including the fees and
expenses of any "qualified independent underwriter" or other independent
appraiser participating in an offering pursuant to Section 3 of Schedule E to
the By-laws of the National Association of Securities Dealers, Inc.), (vi)
Securities Act liability insurance if the Company so desires such insurance, and
(vii) fees and expenses of all other persons retained by the Company and not
specifically required as a result of the registration of any Registrable Common
(all such expenses being herein called "Registration Expenses") shall be borne
the Company whether or not any of the Registration Statements become effective.
The Company shall, in any event, pay its internal expenses (including, without
limitation, all salaries and expenses of their respective officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the securities to
be registered on any securities exchange on which similar securities issued by
the Company are then
15
<PAGE> 16
listed and rating agency fees and the fees and expenses of any person, including
special experts, retained by the Company which is not related to the
registration of Registrable Common.
8. Indemnification
(a) Indemnification by the Company. The Company shall
indemnify and hold harmless, to the full extent permitted by law, each holder of
Registrable Common registered pursuant to this Agreement from and against all
losses, claims, damages, liabilities and costs including, without limitation,
reasonable costs of preparation and attorneys' fees and expenses (collectively,
"Losses"), as incurred, arising out of or based upon (i) any violation of any
law, rule or regulation promulgated under the Securities Act, the Exchange Act
or by any state securities regulatory agency applicable to any of the
transactions contemplated hereby or (ii) any untrue or alleged untrue statement
of a material fact contained in any Registration Statement, Prospectus or
preliminary prospectus or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are based solely upon
information furnished in writing to the Company by such holder expressly for use
therein.
(b) Indemnification by Holders of Registrable Common. In
connection with any Registration Statement in which a holder of Registrable
Common is participating, such holder of Registrable Common shall furnish to the
Company in writing such information as the Company requests for use in
connection with any Registration Statement or Prospectus and agrees to
indemnify, to the full extent permitted by law the Company, its directors and
officers, agents and employees, each person who controls the Company (within the
meaning of Section
16
<PAGE> 17
15 of the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling persons, from and against all
Losses arising out of or based upon (i) any violation of any law, rule or
regulation promulgated under the Securities Act, the Exchange Act or by any
state securities regulatory agency applicable to any of the transactions
contemplated hereby or (ii) any untrue statement of a material fact or any
omission of a material fact required to be stated in any Registration Statement
or Prospectus or preliminary prospectus or necessary to make the statements
therein not misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in any information so furnished in writing by
such holder to the Company expressly for use in such Registration Statement or
Prospectus and that such information was solely relied upon by the Company in
preparation of such Registration Statement, Prospectus or preliminary
prospectus. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution to the same extent as provided
above with respect to information so furnished in writing by such persons
expressly for use in any Prospectus or Registration Statement.
(c) Conduct of Indemnification Proceedings. If any action or
proceeding (including any governmental investigation or inquiry) shall be
brought or any claim shall be asserted against any person or entity entitled to
indemnity hereunder (an "Indemnified Party"), such Indemnified Party shall
promptly notify the party from which such indemnity is sought (the "Indemnifying
Party") in writing, and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified
17
<PAGE> 18
Party and the payment of all fees and expenses incurred in connection with the
defense thereof. All such fees and expenses (including any fees and expenses
incurred in connection with investigating or preparing to defend such action or
proceeding) shall be paid to the Indemnified Party, as incurred, within five
days of written notice thereof to the Indemnifying Party (regardless of whether
it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder). Any such Indemnified Party shall have the right to
employ separate counsel in any such action, claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be the expenses of such Indemnified Party unless (a) the Indemnifying
Party has agreed to pay such fees and expenses or (b) the Indemnifying Party
shall have failed to promptly assume the defense of such action, claim or
proceeding and to employ counsel reasonably satisfactory to the Indemnified
Party in any such action, claim or proceeding or (c) the named parties to any
such action, claim or proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense of such action, claim or proceeding on behalf of
such Indemnified Party, it being understood, however, that the Indemnifying
Party shall not, in connection with any one such action, claim or proceeding or
separate but substantially similar or related actions, claims or proceedings in
the same jurisdiction arising out of the same general
18
<PAGE> 19
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel) at any
time for all such Indemnified Parties, unless in the reasonable judgment of any
such Indemnified Party a conflict of interest may exist between such Indemnified
Party and any other of such Indemnified Parties with respect to such action,
claim or proceeding, in which event the Indemnifying Party shall be obligated to
pay the fees and expenses of such additional counsel or counsels).
(d) Contribution. If the indemnification provided for in this
Section 8 is unavailable to an Indemnified Party under Section 8(a) or 8(b)
hereof (other than by reason of exceptions provided in such sections) in respect
of any Losses, then each applicable Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall, jointly and severally, contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions, statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and Indemnified
Party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken
or made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in Section 8(c)
hereof, any
19
<PAGE> 20
legal or other fees or expenses reasonably incurred by such party in connection
with any investigation or proceeding.
(e) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
(f)
(g)
9. Selection of Investment Bankers and Underwriters
(a) The Company shall have the exclusive right to select the
investment banker or investment bankers and managers to administer any public or
private offering of its securities. No person may participate in any
underwritten registration hereunder unless such person (a) agrees to sell such
Person's Registrable Common on the basis provided in any underwriting
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
10. Miscellaneous
(a) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and
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<PAGE> 21
waivers or consents to departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of holders of a majority in
number of the then outstanding Registrable Common, if the rights of such holders
would be adversely affected.
(b) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail or over-night courier service:
(i) If to a holder of Registrable Common, at the most
current address given by such holder to the Company in accordance
with the provisions of this Section 10(d); and
(ii) If to the Company at such other address, notice of
which is given in accordance with the provisions of this Section
10(d).
(iii) All such notices and communications shall be
deemed to have been duly given when delivered by hand, if personally
delivered; two business days after being deposited in the mail,
postage prepaid, if mailed, or one business day after being sent by
next-day air courier.
(c) Owner of Registrable Common. The Company will maintain, or
will cause its registrar and transfer agent to maintain, a stock book with
respect to the Common Stock, in which all transfers of Registrable Common of
which the Company has received notice will be recorded. The Company may deem and
treat the person in whose name Registrable Common are registered in the stock
book of the Company as the owner thereof for all purposes, including, without
limitation, the giving of notices under this Agreement.
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<PAGE> 22
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, excluding any subsequent transferee of Registrable Common other than
(i) transfers to, or for the benefit of, immediate family members of a Selling
Stockholders or (ii) transfers to a trust or similar vehicle whose beneficiaries
are a Selling Stockholder and/or one or more immediate family members of such
selling Stockholder and which is under the control of a Selling Stockholder.
(e) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing Law. This Agreement shall be governed by ad
construed in accordance with the laws of the State of New York, without regard
to principles of conflict of law
(h) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or
22
<PAGE> 23
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such which may be hereafter declared
invalid, void or unenforceable.
(i) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement, and is intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
THE FRESH JUICE COMPANY, INC.
By: /s/ Steven Smith, President
-----------------------------------
Name: Steven Smith
---------------------------------
Title: President
--------------------------------
/s/ Steven M. Bogen
--------------------------------------
Steven M. Bogen
/s/ Brian Duffy
--------------------------------------
Brian Duffy
/s/ Daniel Petry
--------------------------------------
Daniel Petry
/s/ Mark Feldman
--------------------------------------
Mark Feldman
23
<PAGE> 1
Exhibit 10(b)
THE FRESH JUICE COMPANY, INC.
INCENTIVE STOCK OPTION PLAN
The purpose of this Incentive Stock Option Plan (the "Plan") is to
assist The Fresh Juice Company, Inc. (the "Company") in retaining and attracting
key employees by enabling them to acquire Common Stock of the Company and thus
providing incentive for them to expend maximum effort for the success of the
Company's business.
1. Amount and Source of Stock. The aggregate number and class of
shares which may be subject to options granted pursuant to the Plan is Five
Hundred Thousand 500,000 shares of Common Stock of the Company of the par value
of $.01 per share, subject to adjustment as provided in Section 9 of the Plan.
Such shares may be authorized but unissued shares of Common Stock of the Company
or may be shares held in or acquired for the treasury of the Company. Any shares
of stock reserved for issuance or transfer under an option which for any reason
terminates unexercised as to such shares may be reserved for issuance or
transfer under another option granted under the Plan. The aggregate fair market
value (determined at the time options are granted) of shares of Common Stock
with respect to which incentive stock options are exercisable for the first time
by an employee during a calendar year (under the Plan or any other incentive
stock option plan of the Company or any parent or subsidiary of the Company)
shall not exceed $100,000.
2. Administration of the Plan.
(a) The Board of Directors of the Company shall appoint a Stock
Option Plan Committee (the "Committee") consisting of not less than three
members. The Committee shall recommend to the Board of Directors the names of
those key employees who are to receive options under the Plan and the number of
shares of Common Stock to be subject to such options. Options granted under the
Plan shall, subject to the provisions of Section 5 hereof, be in such form as
determined by the Committee and approved by the Board of Directors. The
Committee shall interpret the Plan, prescribe amend and rescind rules and
regulations, forms, notices and agreements relating to it and make all
determinations necessary or advisable for its administration in a manner
consistent with the intention that all options granted pursuant to the Plan
qualify as Incentive Stock Options pursuant to Section 422(b) of the Internal
Revenue Code of 1986, all such actions as approved by the Board of Directors to
be final and conclusive.
(b) The Board of Directors may from time to time appoint members of
the Committee in addition to or in substitution for members previously appointed
and may fill any vacancies in the Committee. The Committee shall elect one of
its members as Chairman, and may appoint a secretary, who need not be a member
of the Committee, to keep minutes of its meetings. Meetings of the Committee
shall be held at such times and places as it shall deem advisable. A majority of
the members of the Committee shall constitute a quorum. All action
<PAGE> 2
of the Committee shall be by a majority of its members. Any action may be taken
by unanimous written consent setting forth the action taken, signed by all of
the members of the Committee, and action so taken shall have the same effect as
if it had been taken by unanimous vote at a meeting duly held and called. The
Committee shall report its action at meetings or by unanimous written consent to
the Board of Directors.
(c) At any time prior to the appointment of the Committee and at any
time thereafter when the Committee shall not be duly constituted, the Board of
Directors shall exercise all the functions of the Committee under the Plan.
3. Effective Date and Term of Plan. The Plan shall become effective
when adopted by the Board of Directors of the Company, except that unless the
Plan is authorized by the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock within 12 months after its adoption by the
Board of Directors, the Plan and all options outstanding under the Plan shall
terminate at the expiration of that 12 month period. Options may be granted
under the Plan within 10 years from the date of its adoption by the Board of
Directors, but not thereafter.
4. Eligible Participants. Only the key employees of the Company and
any subsidiaries of the Company shall be eligible to receive options under the
Plan. A key employee who is also a director of the Company or of one of its
subsidiaries shall be eligible to participate under the Plan. Except as provided
in Section 5(e), no option shall be granted to an individual who, immediately
before the granting of the option, owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or any of its
subsidiaries.
5. Grant and Terms of Options. The Board of Directors may grant
options at any time or from time to time prior to the termination of the Plan,
and except as hereinafter provided, such options shall be subject to the
following terms and conditions and shall in all respects qualify as Incentive
Stock Options pursuant to Section 422(b) of the Internal Revenue Code of 1986.
(a) Purchase Price. The purchase price provided for in each option
granted pursuant to the Plan shall be determined by the Board of Directors,
provided that in no instance shall such price be less than the fair market value
of the shares subject to the option on the date on which the option is granted.
(b) Duration of Option. Each option granted pursuant to the Plan
will terminate no later than ten years from the date on which it is granted,
unless it is terminated earlier under Section 7 or 8.
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<PAGE> 3
(c) Transferability of Option. No option shall be transferable by
the employee in whole or in part other than by will or the laws of descent and
distribution, and each option shall be exercisable, during the lifetime of the
employee, only by him or her.
(d) Exercise of Option. Subject to the provisions of this Section 5,
the Board of Directors shall have absolute discretion in determining whether any
option granted hereunder shall be exercisable in whole at one time or in part
from time to time and, if in part from time to time, the rate at which such
option shall be exercisable on a cumulative or non-cumulative basis. Except, as
provided in Sections 7 and 8 or unless the Board of Directors shall otherwise
determine, no option may be exercised at a time when the optionee is not an
employee of the Company or one of its subsidiaries.
(e) Special Ten Percent Shareholder Rule. Sections 4, 5(a) and (b)
notwithstanding, an option may be granted to an individual, who immediately
before the granting of the option owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or any of its
subsidiaries, if at the time such option is granted, (i) the option price is at
least 110% of the fair market value of the stock subject to the option, and (ii)
such option by its terms may not be exercised after the expiration of five years
from the date on which it was granted.
6. Manner of Exercise of Options. Unless the Board of Directors shall
otherwise determine, an option, to the extent exercisable under the Plan, may be
exercised by delivery to the Secretary of the Company, at its principal office,
of a written notice, signed by the person entitled to exercise the option,
specifying the number of shares purchasable under the option which the optionee
then wishes to purchase, together with a certified or bank cashier's check
payable to the order of the Company, in the amount of the aggregate option price
for such number of shares. Unless the shares to be acquired upon exercise of an
option may, at the time of such acquisition, be lawfully resold in accordance
with a then currently effective registration statement or post-effective
amendment under the Securities Act of 1933, the Board of Directors may provide,
as a condition to the delivery of any shares to be purchased upon exercise of
the option, that the Company receive appropriate evidence that the optionee is
acquiring the shares for investment and not with a view to the distribution or
public offering of the shares, or any interest in the shares, and a
representation to the effect that the optionee shall make no sale or other
disposition of the shares unless (a) the Company shall have received an opinion
of counsel satisfactory to it in form and substance that the sale or other
disposition may be made without registration under the then applicable
provisions of the Securities Act of 1933 and the related rules and regulations
of the Securities and Exchange Commission, or (b) the shares shall be included
in a currently effective registration statement or post-effective amendment
under the Securities Act of 1933. In no event shall stock be issued or
certificates be delivered until full payment shall have been received by the
Company, nor shall the optionee have any right or status as a stockholder prior
to such payment.
3
<PAGE> 4
7. Termination of Employment. Unless the Board of Directors shall
otherwise determine, in the event that the employment of an optionee by the
Company or one of its subsidiaries shall be terminated other than for cause or
by reason of the death or permanent disability of the optionee, the option may
be exercised by the optionee to the extent that he or she was entitled to do so
at the termination of his or her employment, at any time within three months
after such termination, but in no event may an option be exercised after its
stated expiration date. In the event that the employment of an employee shall be
terminated for cause, any option held by the employee under the Plan, to the
extent not previously exercised, shall forthwith terminate. Normal retirement or
early retirement with the consent of the Company pursuant to any retirement plan
shall not constitute a termination of employment for cause, but shall be
considered for this purpose to be a termination other than for cause. Nothing in
the Plan or in any option granted pursuant to the Plan shall confer on any
individual any right to continue in the employ of the Company or any of its
subsidiaries or interfere in any way with the right of the Company or any of its
subsidiaries to terminate his or her employment at any time.
8. Death or Disability of an Optionee. Unless the Board of Directors
shall otherwise determine, if an optionee shall die while employed by the
Company, the option may be exercised (a) to the extent that the employee was
entitled to do so at the date of his or her death, and (b) to the additional
extent that the employee would have been entitled to do so had the option been
exercisable with respect to the full number of shares covered by the option, by
a legatee or legatees of the optionee under his or her last will or by his or
her personal representative or distributees at any time within one year after
the date of death, but in no event may the option be exercised after its stated
expiration date.
Unless the Board of Directors shall otherwise determine, if an
optionee shall die within three months after the involuntary termination, other
than for cause, of his or her employment by the Company or any of its
subsidiaries, the option may be exercised, to the extent that the employee was
entitled to do so at the date of his or her death, by a legatee or legatees of
the optionee under his or her last will or by his or her personal
representatives or distributees at any time within one year after the date of
death, but in no event may the option be exercised after its stated expiration
date.
Unless the Board of Directors shall otherwise determine, if an
optionee shall become permanently disabled (within the meaning of section
105(d)(4) of the Internal Revenue Code of 1986) while employed by the Company,
the option may be exercised by the optionee to the extent that he or she was
entitled to do so at the termination of his or her employment, at any time
within one year after such termination, but in no event may an option be
exercised after its stated expiration date.
9. Adjustment of Number and Price of Shares Subject to Options. If
the outstanding shares of the Common Stock of the Company are subdivided,
consolidated, increased, decreased, changed into or exchanged for a different
number or kind of shares or
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securities of the Company through reorganization, merger, recapitalization,
reclassification, capital adjustment or otherwise, or if the Company shall issue
Common Stock as a dividend or upon a stock split, then the number and kind of
shares available for purposes of the Plan and all shares subject to the
unexercised portion of any options previously granted and the exercise price of
those options shall be appropriately adjusted. However, no such adjustment shall
change the total exercise price applicable to the unexercised portion of any
outstanding option.
Adjustments under this Section 9 shall be made by the Board of
Directors, whose determination as to what adjustments shall be made shall be
final and binding. In computing any adjustment under this Section 9, any
fractional share which might otherwise become subject to an option shall be
eliminated.
10. Amendment or Discontinuance of Plan. The Board of Directors may
alter, suspend or discontinue the Plan at any time, except that no action of the
Board may, without appropriate stockholder action, increase the maximum number
of shares subject to the Plan, alter the class of employees eligible for the
grant of options, or change the manner of determining the price of options
granted under the Plan; and, without the consent of the optionee, no such action
shall alter the terms of, or impair the rights of the optionee under, any option
previously granted pursuant to the Plan.
11. (a) Subsidiary. As used herein the term "subsidiary" means any
"subsidiary corporation" within the meaning of Section 424(f) of the Internal
Revenue Code of 1986.
(b) Governing Law. The Plan shall be governed by the laws of
the State of Delaware.
(c) Regulatory Approvals. If at any time the Committee shall
determine in its discretion that the listing, registration or qualification of
shares of Common Stock upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the sale or
purchase of shares of Common Stock under the Plan, no option may be exercised
unless and until such listing registration, qualification, consent, or approval
shall have been effected or obtained, or otherwise provided for, free of any
conditions not acceptable to the Committee.
12. Option Agreement Required. Each grant made pursuant to the Plan
shall be evidenced by an Option Agreement (the "Agreement"). No person shall
have any rights under any option granted under the Plan unless and until the
person to whom such option shall be granted shall have executed and delivered an
Agreement to the Company. The Committee shall prescribe the form of all
Agreements. A fully executed counterpart of the Agreement shall be provided to
both the Company and the recipient of the grant.
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Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of The Fresh Juice Company, Inc. and Subsidiaries:
As independent public accountants, we hereby consent to the inclusion of our
report dated May 17, 1996 on the financial statements of Clear Springs Citrus,
Inc. as of December 31, 1995 and 1994 and for the years then ended included in
this Form 8-K.
WITHUM, SMITH & BROWN
New Brunswick, New Jersey
September 11, 1996
