<PAGE> 1
U.S. Securities and Exchange Commission
Washington, DC 20549
Form 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE EXCHANGE ACT
For the transition period from ____to ___
Commission file number 33-62038NY
SARATOGA BEVERAGE GROUP, INC.
(Name of small business issuer in its charter)
Delaware 14-1749554
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
11 Geyser Road, Saratoga Springs, New York 12866
(Address of principal executive offices)
(518) 584-6363
(Issuer's telephone number)
Check whether issuer (1) filed all reports required to be filed by Section 13 or
15(d) for the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No ___
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Common Stock - 2,896,139 shares of Class A Common Stock,
$.01 par value, and 522,955 shares of Class B Common
Stock, $.01 par value,
were outstanding as of April 22, 1998
Traditional small business disclosure format (check one):
Yes____ No X_
This document contains 14 pages
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SARATOGA BEVERAGE GROUP, INC.
FORM 10-QSB
INDEX
<TABLE>
<CAPTION>
PAGE NUMBER
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PART I - FINANCIAL INFORMATION
<S> <C>
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 1998 (UNAUDITED) AND 1
AS OF DECEMBER 31, 1997
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT FOR THE THREE 2
MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)
CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE THREE MONTHS ENDED MARCH 31, 3
1998 AND 1997 (UNAUDITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 4-6
ITEM 2 - MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 7-10
OPERATIONS
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS 11
ITEM 2 - CHANGES IN SECURITIES 11
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES 11
ITEM 4 - SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS 11
ITEM 5 - OTHER INFORMATION 11
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 11-13
SIGNATURES 14
</TABLE>
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SARATOGA BEVERAGE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
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(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 1,607,435 $ 1,567,973
Short term investments 1,176,081 1,153,915
Accounts receivable, net of allowance for doubtful 1,548,355 689,774
accounts of $146,942 in 1998 and $150,695 in 1997
Inventories 401,831 360,670
Prepaid expenses and other current assets 34,217 29,993
------------ ------------
Total current assets 4,767,919 3,802,325
Property, plant and equipment, net 1,412,137 1,501,030
Deferred financing cost, net 74,786 83,415
Note receivable 350,000 300,000
Other assets, net 191,358 18,049
------------ ------------
TOTAL ASSETS $ 6,796,200 $ 5,704,819
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 1,298,322 $ 1,282,889
Current portion of obligation under capital lease 6,317 6,698
------------ ------------
Total current liabilities 1,304,639 1,289,587
Obligation under capital lease 1,208
5% subordinated convertible note 1,500,000 1,500,000
------------ ------------
TOTAL LIABILITIES 2,804,639 2,790,795
------------ ------------
Commitments and contingencies
Stockholders' Equity
Preferred stock, $.01 par value; 5,000,000 shares authorized,
no shares issued and outstanding
Class A common stock, $.01 par value; 50,000,000 shares
authorized; 2,896,139 and 2,407,039 shares issued and
outstanding in 1998 and 1997, respectively 28,961 24,070
Class B common stock, $.01 par value; 2,000,000 shares
authorized; 522,955 and 562,055 shares issued and
outstanding in 1998 and 1997, respectively 5,230 5,621
Paid-in capital 10,354,922 9,346,922
Treasury stock, 100,000 Class A shares at cost (162,000)
Accumulated deficit (6,235,552) (6,462,589)
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TOTAL STOCKHOLDERS' EQUITY 3,991,561 2,914,024
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,796,200 $ 5,704,819
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS.
1
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SARATOGA BEVERAGE GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
--------- ---------
1998 1997
<S> <C> <C>
Total Revenue 1,693,155 $ 1,105,773
Cost of goods sold, exclusive of depreciation,
amortization, and equipment lease expense shown separately below 1,017,492 690,697
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Gross Profit 675,663 415,076
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Operating Expenses:
Marketing and sales 128,328 78,926
General and administrative 245,135 217,350
Depreciation, amortization, and equipment lease expense 138,480 93,153
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511,943 389,429
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Operating income 163,720 25,647
Other Income (expense):
Commission income 31,684 13,796
Interest income 52,270 1,316
Interest expense (19,709) (3,197)
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Other Income (expense), net 64,245 11,915
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Income before income taxes 227,965 37,562
Provision for income taxes 928
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Net Income 227,037 37,562
Accumulated Deficit:
Beginning of period (6,462,589) (7,267,217)
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End of period $(6,235,552) $(7,229,655)
=========== ===========
Per Share Information:
Basic EPS $ 0.07 $ 0.01
Diluted EPS $ 0.07 $ 0.01
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS.
2
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SARATOGA BEVERAGE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 227,037 $ 37,562
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization 105,792 93,153
Provision for doubtful accounts 2,999 8,500
Changes in operating assets and liabilities:
Accounts receivable (861,581) (349,317)
Inventories (41,161) (5,125)
Prepaid expenses and other current assets (4,224) (1,988)
Accounts payable and accrued liabilities 15,433 199,661
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Net cash used in operating activities (555,705) (17,554)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of short term investments (22,166)
Issuance of note receivable (50,000)
Purchase of property, plant and equipment (8,159) (3,192)
Increase in other assets (173,419) (1,700)
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Net cash used in investing activities (253,744) (4,892)
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CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on revolving credit facility (300,000)
Principal reductions on capital lease obligation (1,589) (1,371)
Proceeds from issuance of Class A common stock 1,012,500
Proceeds on the exercise of stock warrants 3,000
Proceeds from the exercise of stock options 28,750
(Purchase) issuance of treasury stock, at cost (162,000) 3,990
Distribution to minority interest (7,037)
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Net cash provided by (used in) financing activities 848,911 (272,668)
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Increase (decrease) in cash and cash equivalents 39,462 (295,114)
Cash and cash equivalents at beginning of period 1,567,973 387,938
----------- -----------
Cash and cash equivalents at end of period $ 1,607,435 $ 92,824
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income taxes paid $ 3,375
=========== ===========
Interest paid $ 253 $ 3,180
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS.
3
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SARATOGA BEVERAGE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included. Operating results for the
three-month period ended March 31, 1998 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1998.
The accompanying 1997 financial statements include the Company and its
wholly-owned subsidiary, Saratoga Springs Distribution Corporation, which was
dissolved in July 1997. The accompanying 1998 financial statements include the
Company and its wholly-owned subsidiary, Rowale Corp., which was incorporated in
the State of Delaware on March 2, 1998.
PER SHARE DATA
Effective December 31, 1997, the Company implemented Financial Accounting
Standard No. 128 (FAS 128) "Earnings Per Share". In accordance with FAS 128, net
income/(loss) per share is computed using the weighted average number of shares
of Class A and Class B common stock outstanding during each year. Diluted net
income per share includes the effect of all potentially dilutive securities.
Earnings per share amounts for all periods presented have been computed in
accordance with FAS 128.
RECLASSIFICATION
Certain 1997 amounts have been reclassified to conform with the 1998
presentation.
2. EARNINGS PER SHARE
The calculation of earnings per share is as follows:
<TABLE>
<CAPTION>
1998 1997
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<S> <C> <C> <C> <C>
Numerator:
Net income $227,037 Basic $ 37,562 Basic
Impact of potential common
shares:
Interest expense on 5%
subordinated convertible
note 18,750 -
------ ----------
$245,787 Diluted $ 37,562 Diluted
======== ==========
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Denominator:
Weighted-average
outstanding shares 3,160,761 Basic 2,832,606 Basic
Impact of potential common shares:
Stock options (1) 129,801 31,960
Convertible debt 428,571 -
--------- ---------
3,719,133 Diluted 2,864,566 Diluted
========= =========
</TABLE>
(1) In 1998 outstanding warrants and options for 440,358 shares of stock were
not included in the calculation of earnings per share because they were
considered to be anti-dilutive. Outstanding warrants and options for 216,690
shares of stock were considered to be anti-dilutive at March 31, 1997.
During the three months ended March 31, 1998, Steel Partners II, L.P. purchased
275,000 shares of unregistered Class A common stock from the Company at a
purchase price of $2.25 per share. Steel Partners II, L.P., an affiliate of a
director of the Company is a private investment fund that invests in smallcap
companies.
Carl T. Wolf became co-chairman of the Board and director in February 1998. At
that time he purchased 175,000 shares of unregistered Class A common stock from
the Company at a purchase price of $2.25 per share. In connection therewith, Mr.
Wolf was issued an option to purchase 200,000 shares of Class A common stock at
an exercise price of $2.875 per share. Mr. Wolf resigned from the Board on April
17, 1998 for personal reasons and on that date, the Company repurchased 150,000
shares of unregistered Class A common stock at a price of $2.25 per share. In
connection with Mr. Wolf's resignation, the option was amended to be 75,000
shares.
The Company also repurchased 100,000 shares of unregistered Class A common stock
for $1.62 per share in a private transaction from an unaffiliated shareholder
during the three months ended March 31, 1998.
3. COMMITMENTS, CONTINGENCIES, AND RELATED PARTY TRANSACTIONS
In June 1997, the Company entered into a three-year master distribution
agreement whereby the Company was granted the exclusive right and license to act
as the master distributor of certain products in the United States until June
2000. The Company will receive a minimum commission of $1.00 per case for each
case of products sold. The Company is responsible for collecting the receivables
from customers and remitting payments to vendors. At March 31, 1998, $513,700
was included in accounts receivable and $325,200 in accounts payable and accrued
liabilities related to this agreement
At March 31, 1998 and 1997, the Company's cash, cash equivalents, and short term
investment balance includes approximately $2,698,500 and $39,000, respectively,
with Dean Witter Reynolds, Inc. A principal stockholder of the Company is an
officer of Dean Witter Reynolds, Inc.
4. INCOME TAX
The Company accounts for income taxes according to Financial Accounting Standard
No. 109 (FAS 109). FAS109 requires the use of the asset and liability method of
accounting for income taxes. Under this method, deferred taxes are recognized
for the tax consequences of temporary differences by applying enacted statutory
tax rates applicable to future years for the differences between the financial
statement and tax basis of existing assets and liabilities.
5
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In the quarter ended March 31, 1998, the Company offset substantially all income
taxes through the use of net operating loss carryforwards. A full valuation
allowance has been maintained against the Company's net deferred tax assets.
5. PROPOSED ACQUISITION
On March 31, 1998, the Company filed a Schedule 13D with the Securities and
Exchange Commission relating to The Fresh Juice Company, Inc. ("Fresh Juice") in
accordance with the Securities Exchange Act of 1934, as amended, and the rules
promulgated thereunder. The Company has entered into a Letter of Agreement dated
March 29, 1998 with Fresh Juice regarding a possible acquisition of Fresh Juice
by the Company at a cash purchase price of $3.75 per share. Pursuant to the
Letter of Agreement, Fresh Juice agreed to certain "no-shop" provisions, subject
to its fiduciary duties (the "Exclusivity Period"), through a date not later
than April 25, 1998. On April 24, 1998, the Company and Fresh Juice extended the
Exclusivity Period to the earliest to occur of (i) May 20, 1998; (ii) the
Company notifying Fresh Juice in writing that negotiations toward the possible
acquisition have been terminated; and (iii) seven business days after the date
on which Fresh Juice has provided the Company with all due diligence materials
reasonably available to Fresh Juice and reasonably requested by the Company.
Pursuant to the April 24, 1998 letter, the Company agreed not to acquire, offer
to acquire or agree to acquire, in any manner, any assets or securities of Fresh
Juice other than pursuant to the Option Agreement through the earliest to occur
of (i) the execution of a definitive agreement regarding the possible
acquisition; (ii) the termination by Fresh Juice of discussions with the Company
regarding the possible acquisition; and (iii) May 25, 1998. The Letter of
Agreement also provides for certain payments to Fresh Juice in the event that a
definitive agreement is executed and the transaction is not consummated or if
the Company is unable to obtain a fairness opinion. The proposed transaction is
subject to, among other things, due diligence, financial contingencies and the
negotiation and execution of a definitive agreement.
On March 30, 1998, the Company and Fresh Juice entered into a confidentiality
agreement governing the confidentiality of information exchanged by Fresh Juice
and the Company in pursuing the possible acquisition.
The Company and Steven Smith, a director, President and shareholder of Fresh
Juice, entered into an Option Agreement dated March 16, 1998 and executed on
March 18, 1998 whereby Mr. Smith has granted to Saratoga the option to purchase
825,000 shares of his common stock in Fresh Juice at $3.00 per share. The Option
Agreement provides for the consideration to be paid to Mr. Smith to be increased
under certain circumstances involving an acquisition of Fresh Juice at a price
in excess of $3.00 per share. Under the terms of the Letter of Agreement, the
consideration to be paid to Mr. Smith for his 825,000 shares of Fresh Juice
common stock would be equal to $3.375 per share. The option contained in the
Option Agreement will expire upon the earliest to occur of (I) the consummation
of an acquisition transaction with Fresh Juice; (ii) the termination of
negotiations toward an acquisition transaction with Fresh Juice; and (iii)
October 31, 1998.
6
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SARATOGA BEVERAGE GROUP, INC.
FORM 10-QSB
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
BUSINESS
GENERAL
The Company is primarily engaged in the bottling, marketing and distribution of
spring and mineral water products and in packaging products for others
("co-packing"). The Company's product line currently includes: sparkling spring
water, sparkling essence-flavored spring water products, non-carbonated spring
water and non-carbonated spring water with flavors. All of the Company's
products are marketed as premium domestic bottled water primarily under the
proprietary brand name "Saratoga." The Saratoga brand name has been in existence
for 125 years.
The Company's springs and bottling facilities have been operated through the
years by a number of owners, including Anheuser-Busch and, most recently, Evian
Waters of France, a division of BSN, S.A. Anheuser-Busch and Evian Waters of
France each operated the business for approximately two years. The Company was
organized and acquired the assets of its business in April 1992 from the owners
of Evian Waters of France. The Company's bottling facilities, which had been
closed since May 1991 by the previous owners, recommenced operations in May
1992. Since that time, the Company has undertaken the task of rebuilding a
distribution network and customer base for the Saratoga brand beverage products.
Since the end of the 1980s, the bottled water industry has experienced rapid
growth. The industry is divided into two distinct segments: non-carbonated water
and sparkling (carbonated) water. The Company believes that non-carbonated water
is becoming an alternative for municipal tap water and that it is perceived by
consumers as a healthy and refreshing alternative to soft drinks, coffee, and
other beverages. The Company also believes that sparkling water is perceived as
a healthy and refreshing beverage alternative to beer, liquor and wine. The
Company anticipates that sales in the bottled water industry will continue to
grow as consumer trends involving increased health and fitness consciousness,
alcohol moderation, and caffeine and sodium avoidance continue to develop and
grow. The Company believes that it is well-positioned to take advantage of the
anticipated future growth of the bottled water industry.
PRODUCTS
The main product lines sold under the Saratoga label include various types of
bottled water: sparkling spring water, sparkling lemon essence-flavored spring
water, sparkling lime essence-flavored spring water, sparkling berry
essence-flavored spring water and natural non-carbonated spring water. The
company also markets a line of flavored spring water beverages under the name
Saratoga Splash.
The Company's bottled water is sold in a variety of bottle sizes. The sparkling
spring water products are packaged in four different premium sizes: 7.7 ounce,
10 ounce (soon to be 12 ounce), 28 ounce glass bottles, and a 42.3 ounce PET
(polyethylene terephthalate) recyclable bottle. The non-carbonated water is
packaged in 0.5 liter, 1 liter, and 1.5 liter PET recyclable bottles.
On June 30, 1997, the Company entered into an agreement with Mistic Brands, Inc.
("Mistic") that granted the Company the non-exclusive right to use the
formulations and the exclusive right to use the graphic designs utilized by
Mistic in connection with beverages sold under the Saratoga Splash trademark
pursuant to the original agreement. Saratoga pays Mistic a royalty for cases
sold under the Saratoga Splash trademark.
7
<PAGE> 10
Saratoga Splash is a non-carbonated fruit flavored spring water product. It
currently is available in four flavors: Lemon Frost, Orange Twist, Strawberry
Mist, and Blueberry Burst.
In June 1997, the Company entered into a three-year master distribution
agreement whereby the Company was granted the exclusive right and license to act
as the master distributor of certain products in the United States until June
2000. The Company will receive a minimum commission of $1.00 per case for each
case of products sold. The Company is responsible for collecting the receivables
from customers and remitting payments to vendors. At March 31, 1998, $513,700
was included in accounts receivable and $325,200 in accounts payable and accrued
liabilities related to this agreement.
RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results for the three months ended March 31, 1998 and 1997.
REVENUE
Revenue for the three months ended March 31, 1998 increased 53% to $1,693,155,
an increase of $587,382 from revenue of $1,105,773, for the comparable period
ended March 31, 1997. The increase in revenue is attributable to increases in
both branded and private label product sales and co-pack revenue.
GROSS PROFIT MARGINS
Gross profit increased 62% to $675,663 for the three month period ended March
31, 1998 from $415,076 for the comparable period ended March 31, 1997. The gross
profit percentage increased two percentage points from 38% at March 31, 1997 to
40% at March 31, 1998. The increase in the gross profit percentage in 1998 is
primarily due to a decrease in fixed costs per case attributable to the increase
in the volume of cases produced during the year.
MARKETING AND SALES EXPENSES
Marketing and sales expenses were $128,328 and $78,926 for the three months
ended March 31, 1998 and 1997, respectively. As a percentage of net sales,
marketing and sales expenses increased to 7.5% in 1998 from 7.1% in 1997. The
increase in marketing and sales expenses in 1998 is primarily attributable to
the increase in customer promotions and incentive sales programs.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses were $245,135 for the three months ended
March 31, 1998, an increase of $27,785 from the $217,350 reported for the three
months ended March 31, 1997. As a percentage of total revenue, general and
administrative expenses decreased from 19.7% in 1997 to 14.4% in 1998. The
Company's general and administrative expenses are comprised primarily of fixed
costs and, as total revenue increases, they decrease as a percentage of total
revenue.
OTHER INCOME (EXPENSE)
For the three months ended March 31, 1998, the Company reported net other income
of $64,245 as compared to net other income of $11,915 reported for the three
months ended March 31, 1997. The $52,330 increase is due to a $17,888 increase
in commission income, and a $50,954 increase in interest income, offset by an
increase of $16,512 in interest expense. The commission income is primarily from
the sale of products as part of the three-year master distribution agreement
entered into June 1997. Interest income increased primarily due to income earned
on the $1,500,000 proceeds from the 5% Subordinated Convertible Note and on the
$1,012,500 proceeds from the issuance of Class A common stock. Interest expense
is accrued on the unpaid principal amount of the Note. The details of the Note
are disclosed in the Liquidity and Capital Resources section below.
8
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1998, the Company's working capital was $3,463,280 including
cash and cash equivalents of $1,607,435 and short term investments of
$1,176,081. The current ratio at March 31, 1998 was 3.6 to 1. For the three
months ended March 31, 1998 and 1997, cash flows used in operations were
$555,705 and $17,554 respectively.
The Company's debt-to-equity ratio at March 31, 1998 was 37.5%. Debt consists of
the $1,500,000 5% Subordinated Convertible Note. Current liabilities include
accounts payable and accruals of $1,298,322 and $6,317 short-term portion of
obligation under capital lease.
On January 31, 1997, the Company and Triarc entered into a Termination Agreement
whereby the Credit Agreement was terminated and as such, the Credit Facility was
terminated and the $300,000 outstanding principal balance was repaid.
On June 12, 1997, the Company entered into a Securities Purchase Agreement with
Parley International, as nominee for Maerki Baumann & Co., A.G. (Zurich)
("Purchaser"), pursuant to which Purchaser acquired $1,500,000 principal amount
of the Company's 5% Subordinated Convertible Notes due 2000 (the "Note") for an
aggregate purchase price of $1,500,000 in a private placement effected under
Section 4(2) of the Securities Act of 1933. Interest on the unpaid principal
amount accrues from the date of issuance at a rate of 5% per annum. Interest
becomes due and payable on each of the first, second and third anniversaries.
The principal amount of the Note is due and payable on the third anniversary of
the Note and is convertible at the option of the holder into shares of the
Company's Class A common stock at a conversion price of $3.50 principal amount
per share. The Note is mandatorily convertible into shares of Class A common
stock in the event that the closing price of Class A common stock exceeds $5.25
for three consecutive trading days.
Global Financial Group, Inc. acted as placement agent in connection with the
offering of the Note and, in connection therewith, received a cash commission in
the amount of $80,750 and was issued a warrant to acquire 30,000 shares of Class
A common stock for an exercise price of $3.50 per share. The commission and the
fair value of the warrant, determined to be $22,800. were recorded as deferred
financing costs and are being amortized over the life of the Note, three years.
On December 23, 1997 the Company and Onyx Management Services, LLC ("Onyx")
entered into a loan agreement whereby the Company has agreed to loan Onyx up to
$800,000 (the "Loan") for working capital and general business purposes. As of
March 31, 1998, the Company had loaned and advanced to Onyx a sum of $350,000.
The loan is collateralized by all assets of Onyx.
Onyx agreed to pay interest on the principal amount of the Secured Promissory
Note at a per annum rate equal to the greater of (I) eight percent (8%) or (ii)
the prime rate plus one percent (1%) as in effect on the first day of the
calendar quarter for which such interest shall accrue. Such interest shall be
payable in arrears quarterly on the first day of each calendar quarter,
beginning on April 1, 1998. The effective rate of interest for the quarter ended
March 31, 1998 was 9.5% and interest receivable has been recorded in the amount
of $8,260.
Any unpaid principal amount in excess of $300,000 is payable in full on December
23, 2000. The remaining unpaid principal amount outstanding under this Note
shall become due and payable on December 23, 2001. In addition, the Company
acquired a ten year warrant to purchase 35% of outstanding stock of Onyx. The
warrant may be exercised by issuance of 100,000 shares of the Company's Class A
common stock.
The Company is upgrading its bottling lines in 1998. In December 1997, the
Company entered into a seven year operating lease for production equipment. At
March 31, 1998, an equipment payable in the amount of $188,294 is reflected in
cash and current liabilities and represents the balance payable on the
production equipment which is in the process of being installed. The lease
contains a purchase option after 72 months.
9
<PAGE> 12
PROPOSED ACQUISITION
On March 31, 1998, the Company filed a Schedule 13D with the Securities and
Exchange Commission relating to The Fresh Juice Company, Inc. ("Fresh Juice") in
accordance with the Securities Exchange Act of 1934, as amended, and the rules
promulgated thereunder. The Company has entered into a Letter of Agreement dated
March 29, 1998 with Fresh Juice regarding a possible acquisition of Fresh Juice
by the Company at a cash purchase price of $3.75 per share. Pursuant to the
Letter of Agreement, Fresh Juice agreed to certain "no-shop" provisions, subject
to its fiduciary duties (the "Exclusivity Period"), through a date not later
than April 25, 1998. On April 24, 1998, the Company and Fresh Juice extended the
Exclusivity Period to the earliest to occur of (i) May 20, 1998; (ii) the
Company notifying Fresh Juice in writing that negotiations toward the possible
acquisition have been terminated; and (iii) seven business days after the date
on which Fresh Juice has provided the Company with all due diligence materials
reasonably available to Fresh Juice and reasonably requested by the Company.
Pursuant to the April 24, 1998 letter, the Company agreed not to acquire, offer
to acquire or agree to acquire, in any manner, any assets or securities of Fresh
Juice other than pursuant to the Option Agreement through the earliest to occur
of (i) the execution of a definitive agreement regarding the possible
acquisition; (ii) the termination by Fresh Juice of discussions with the Company
regarding the possible acquisition; and (iii) May 25, 1998. The Letter of
Agreement also provides for certain payments to Fresh Juice in the event that a
definitive agreement is executed and the transaction is not consummated or if
the Company is unable to obtain a fairness opinion. The proposed transaction is
subject to, among other things, due diligence, financial contingencies and the
negotiation and execution of a definitive agreement.
On March 30, 1998, the Company and Fresh Juice entered into a confidentiality
agreement governing the confidentiality of information exchanged by Fresh Juice
and the Company in pursuing the possible acquisition.
The Company and Steven Smith, a director, President and shareholder of Fresh
Juice, entered into an Option Agreement dated March 16, 1998 and executed on
March 18, 1998 whereby Mr. Smith has granted to Saratoga the option to purchase
825,000 shares of his common stock in Fresh Juice at $3.00 per share. The Option
Agreement provides for the consideration to be paid to Mr. Smith to be increased
under certain circumstances involving an acquisition of Fresh Juice at a price
in excess of $3.00 per share. Under the terms of the Letter of Agreement, the
consideration to be paid to Mr. Smith for his 825,000 shares of Fresh Juice
common stock would be equal to $3.375 per share. The option contained in the
Option Agreement will expire upon the earliest to occur of (I) the consummation
of an acquisition transaction with Fresh Juice; (ii) the termination of
negotiations toward an acquisition transaction with Fresh Juice; and (iii)
October 31, 1998.
10
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
NONE.
ITEM 2 - CHANGES IN SECURITIES
NONE.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
NONE.
ITEM 4 - SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE.
ITEM 5 - OTHER INFORMATION
NONE.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. Exhibits included herein:
a) Exhibits and Index
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<S> <C>
2.1* (P) Agreement and Plan of Merger
3.1* (P)Restated Certificate of Incorporation of the Company
3.2* (P)By-Laws of the Company
4.1* (P)Specimen of Class A Stock Certificate
4.2*** (P)Non-Callable Warrant A dated December 13, 1995 by the
Company to Triarc Companies, Inc. ("Triarc") to purchase 25%
of the number of shares of Class A Common Stock of Saratoga
then issued and outstanding on a fully-diluted basis
4.3*** (P)Non-Callable Warrant B dated December 13, 1995 by the
Company to Triarc to purchase 26% of the number of shares of
Class A Common Stock of Saratoga then issued and outstanding
on a fully-diluted basis
4.4* (P)Form of Underwriter's Warrant
4.5* (P)Form of Escrow Agreement entered into by the current
stockholders of the Company and the Underwriter
9.1* (P)Agreement, dated as of August 12, 1992, by and between
Anthony Malatino and Robin Prever, as amended by Amendment No.
1 thereto dated as of April 30, 1993
10.1* (P)Asset Purchase Agreement, dated as of March 31, 1992, by
and between Saratoga Springs Mineral Water Company and Mineral
Springs Acquisition Group, Inc.
10.2* (P)General Assignment and Bill of Sale, dated April 3, 1992,
by Saratoga Springs Mineral Water Company to Mineral Springs
Acquisition Group, Inc.
10.3* (P)Assignment and Assumption Agreement, dated April 3, 1992,
by and between Saratoga Springs Mineral Water Company and
Mineral Springs Acquisition Group, Inc.
10.4* (P) Assignment, dated April 3, 1992, by Saratoga Springs
Mineral Water Company to Mineral Springs Acquisition Group,
Inc.
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
<S> <C>
10.5* (P) Assignment, dated April 3, 1992, by Saratoga Springs
Mineral Water Company to Mineral Springs Acquisition Group,
Inc.
10.6* (P) Letter Agreement, dated as of May 1, 1993, by and between
the Company and Mark Wiggins
10.7**+ (P) Employment Agreement entered into by the Registrant and
Robin Prever
10.8* (P) Form of the Saratoga Spring Water Company 1993 Stock
Option Plan
10.9**+ (P) Consulting Agreement entered into by the Company and
Leonard Toboroff
10.10* (P) Form of Consulting Agreement entered into by the Company
and D.H. Blair & Co. (the "Underwriter")
10.11* (P) Note, dated August 31, 1992, from the Company to Fleet
Bank of New York, including guarantees
10.12* (P) Letter from Fleet Bank of New York to the Company
regarding waiver of defaults
10.13* (P) Letter Agreement between the Company and Owens-Brockway
Glass Containers
10.14* (P) Form of Mergers and Acquisitions Agreement entered into by
the Company and the Underwriter
10.15** (P) Partnership Agreement, dated July 21, 1993, by and between
JNJ Distributors, Inc. and Saratoga Springs Distribution
Corp., as amended by Amendment of Partnership Agreement hereto
dated November 9, 1993
10.16** (P) Stock Agreement, dated July 21, 1993, by and between JNJ
Distributors, Inc. and Saratoga Spring Water Company
10.17** (P) Distribution Agreement, dated March 25, 1993, by and
between Joseph Victori Wines, Inc. and JNJ Distributors, Inc.
10.18A*** (P)Credit Agreement, dated as of July 13, 1995, between the
Company and Triarc
10.18B# Termination Agreement dated as of January 31, 1997 between the
Company and Triarc
10.19*** (P)Amendment, Waiver and Acknowledgment Agreement dated as of
December 13, 1995 by and between the Company and Triarc
10.20*** (P) Sales and Marketing Services Agreement dated as of May 1,
1995 between the Company and RCC
10.21*** (P) Cott Co-pack Agreement dated as of June 8, 1995
10.22**** Manufacturing and Distribution Agreement, dated as of July 23,
1996, by and between the Company and Mistic Brands, Inc.
10.23## Bottling Agreement, dated April 16, 1997, by and among the
Company, Hype Corporation, Hype Beverage Corporation, World
Wide Beverage Inc., Hype Water Company, Inc., Hyperholics
Inc., R.J. Barry Cox and Nigel Spiro
10.24##+ Line of Credit dated as of April 10, 1997 to the Company from
Robin Prever and Anthony Malatino
10.25### Saratoga Splash Agreement, dated as of June 30, 1997, by and
between the Company and Mistic Brands, Inc.
10.26### The Master Distribution Agreement dated as of June 16, 1997 by
and among Saratoga Beverage Group, Inc., Hype Corporation,
World Wide Beverage Inc., Global Brands AG, Hype Water
Company, Inc. and Hyperholics Inc.
10.27#### Loan Agreement, Securities Purchase Agreement, Secured
Promissory Note, and Warrants for Messrs. Holliday, Merhi and
Barr in connection with the loan to Onyx Management Services,
LLC
10.28x Stock Option Agreement with Carl T. Wolf dated February 4,
1998
10.29x Securities Purchase Agreement with Carl T. Wolf dated February
12, 1998
10.30x Stock Option Agreement with Steel Partners II, L.P. dated
February 25, 1998
10.31x Securities Purchase Agreement with Carl T. Wolf dated February
25, 1998
10.32x Option Agreement with Steven Smith dated March 16, 1998
10.33x Letter of Agreement with Fresh Juice dated March 29, 1998
10.34x Amended and Restated Stock Option Agreement with Carl T. Wolf
dated April 17, 1998
10.35x Fresh Juice Extension dated April 24, 1998
22** (P) Subsidiaries
24*** (P) Power of attorney
</TABLE>
(*) Incorporated herein by reference to the Company's Registration
Statement on Form SB-2 filed with the Commission on June 16,
1993 (Registration No. 33-62038NY).
12
<PAGE> 15
(**) Incorporated herein by reference to the Company's form 10-KSB
filed with the Commission on March 30, 1994.
(***) Incorporated herein by reference to the Company's form 10-KSB
filed with the Commission on March 29, 1996.
(****) Incorporated herein by reference to the Company's form 10-QSB
filed with the Commission on November 12, 1996.
(#) Incorporated herein by reference to the Company's form 10-KSB
filed with the Commission on April 15, 1997.
(##) Incorporated herein by reference to the Company's form 10-QSB
filed with the Commission on May 13, 1997.
(###) Incorporated herein by reference to the Company's form 10-QSB
filed with the Commission on August 8, 1997.
(####) Incorporated herein by reference to the Company's form 10-KSB
filed with the Commission on March 20, 1998.
(x) Incorporated herewith
(+) Management Agreement
(b) Reports on From 8-K: No reports on form 8-K were filed in the quarter ended
March 31, 1998.
13
<PAGE> 16
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereinto duly
authorized.
SARATOGA BEVERAGE GROUP, INC.
(REGISTRANT)
DATE: May 8, 1998 BY: /S/ ROBIN PREVER
-----------------------------------------
ROBIN PREVER
CHIEF EXECUTIVE OFFICER
DATE: May 8, 1998 BY: /S/ GAYLE HENDERSON
-----------------------------------------
GAYLE HENDERSON
CHIEF FINANCIAL OFFICER
14
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO.
- ------- ---
<S> <C>
Stock Option Agreement with Carl T. Wolf dated February 4, 1998 ............................10.28
Securities Purchase Agreement with Carl T. Wolf dated February 12, 1998 .....................10.29
Stock Option Agreement with Steel Partners II, L.P. dated February 25, 1998 .................10.30
Securities Purchase Agreement with Carl T. Wolf dated February 25, 1998 .....................10.31
Option Agreement with Steven Smith dated March 16, 1998 .....................................10.32
Letter of Agreement with Fresh Juice dated March 29, 1998 ...................................10.33
Amended and Restated Stock Option Agreement
with Carl T. Wolf dated April 17, 1998...................................................10.34
Fresh Juice Extension dated April 24, 1998...................................................10.35
</TABLE>
<PAGE> 1
EXHIBIT 10.28
STOCK OPTION AGREEMENT WITH CARL T. WOLF DATED FEBRUARY 4, 1998
<PAGE> 2
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement") is made and entered into as of the
4th day of February, 1998, by and between Saratoga Beverage Group, Inc. (the
"Company"), a Delaware corporation, and Carl T. Wolf (the "Optionee"), residing
at 627 Inwood Lane, South Orange, New Jersey 07079.
The Board of Directors (the "Board") of the Company adopted on February 4, 1998
(the "Grant Date") a resolution granting the Optionee a stock option (the
"Option") to purchase 200,000 shares (the "Shares") of the Company's Class A
common stock, par value $.01 per share (the "Common Stock"), for the price, on
the terms and subject to the conditions set forth in this Agreement. The Option
was not granted under the Company's 1993 Stock Option Plan. In connection with
the grant of the Option, the Optionee waived his rights to receive stock options
under the Company's 1993 Stock Option Plan.
The Option is not intended to satisfy the requirements for an incentive stock
option (an "ISO") under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). The Company makes no representations or warranties as to
the income, estate or other tax consequences to the Optionee of the grant or
exercise of the Option or the sale or other disposition of the Shares acquired
pursuant to the exercise thereof.
1. (a) The price at which the Optionee shall have the right to purchase
the Shares under this Agreement is $2.875 per Share, subject to
adjustment as provided in Paragraph 4 below.
(b) Unless the Option is previously terminated or accelerated pursuant
to this Agreement, the Option shall be exercisable in installments of
100,000 Shares on each of February 4, 1998 and February 4, 1999;
provided, however, that the February 4, 1999 installment shall not be
exercisable if the Optionee is not serving as Chairman of the Board or
co-Chairman of the Board on such date. In no event shall any Shares be
purchasable under this Agreement after February 3, 2008 (the
"Expiration Date"). The Option shall cease to be exercisable three (3)
months (or such longer period which may at such time be provided for
directors under the Company's 1993 Stock Option Plan) after the date
the Optionee no longer serves as a director of the Company.
2. Nothing contained herein shall be construed to confer on the Optionee
any right to continue as a director of the Company or to derogate from
any right of the Board or stockholders of the Company, free from
liability, to remove the Optionee as a director at any time, with or
without cause.
3. (a) Subject to Section 422 of the Code, neither the Option nor any
right under the Option shall be assignable, alienable, saleable or
transferable by the Optionee otherwise than by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations
order as defined in the Code or Title I of the Employee Retirement
Income Security Act, or the rules thereunder; provided, however, that,
if so determined by the Board or a committee thereof, the Optionee may,
in the manner established by the Board or a committee thereof in its
sole discretion, designate a beneficiary or beneficiaries to exercise
the rights of the Optionee, and to receive any property distributable,
with respect to any Option upon the death of the Optionee.
(b) The Option shall not be pledged, alienated, attached, or otherwise
encumbered or transferred in any manner except to the extent that the
Option may be exercised by an executor or administrator or beneficiary
as provided in subparagraph 3(a) above, and any purported pledge,
alienation, attachment, encumbrance, or transfer thereof shall be void
and unenforceable against the Company. The Option may be exercised,
during the lifetime of the Optionee, only by the Optionee or his duly
appointed guardian or legal representative.
4. (a) In the event that the Board or a committee thereof shall determine
that the outstanding shares of Common Stock are affected by any (i)
subdivision or consolidation of shares, (ii)
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<PAGE> 3
dividend or other distribution (whether in the form of cash, Shares,
other securities, or other property) or (iii) recapitalization or other
capital adjustment of the Company, such that an adjustment is
determined to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made
available hereunder, then the Board or a committee thereof shall, in
such manner as it may deem necessary to prevent dilution or enlargement
of the benefits or potential benefits intended to be made hereunder,
adjust any or all of (x) the number and type of Shares which may be
subject to the Option, (y) the number and type of Shares subject to the
unexercised portion of the Option, and (z) the exercise price per Share
with respect to the Option; provided, however, that the exercise price
per Share shall not be adjusted below the par value per Share of the
Common Stock. In computing any adjustment under this paragraph, any
fractional share shall be eliminated.
(b) In the event of the dissolution or liquidation of the Company, or
in the event of a Change in Control (as defined in the Company's 1983
Stock Option Plan), the Optionee shall have the right, immediately
prior to the record date for the determination of stockholders entitled
to participate in such dissolution, liquidation or Change in Control,
to exercise the Option, in whole or in part, without regard to any
installment provisions contained in subparagraph 1(b). In such event,
the Company will mail or cause to be mailed to the Optionee a notice
specifying the date of such dissolution, liquidation or Change in
Control. Such notice shall be mailed at least ten (10) days prior to
the date therein specified to the address of the Optionee specified on
page 1 of this Agreement or to such other address as the Optionee
delivers or transmits by registered or certified mail to the Secretary
of the Company at its principal office.
5. The Option shall be exercised when written notice of such exercise,
signed by the person entitled to exercise the Option, has been
delivered or transmitted by registered or certified mail, to the
Secretary of the Company at its principal office. Said written notice
shall specify the number of Shares purchasable under the Option which
such person then wishes to purchase and shall be accompanied by such
documentation, if any, as may be required by the Company as provided in
Paragraph 7 below and be accompanied by payment of the aggregate Option
price. Such payment of the aggregate Option price shall be, without
limitation, in the form of (i) cash, Shares, outstanding Options or
other consideration, or any combination thereof, having a Fair Market
Value on the exercise date equal to the exercise price of the Option or
portion thereof being exercised or (ii) a broker- assisted cashless
exercise program established by the Board or a committee thereof.
Delivery of said notice and such documentation shall constitute an
irrevocable election to purchase the Shares specified in said notice
and the date on which the Company receives said notice and
documentation shall, subject to the provisions of Paragraph 7, be the
date as of which the Shares so purchased shall be deemed to have been
issued. The person entitled to exercise the Option shall not have the
right or status as a holder of the Shares to which such exercise
relates prior to receipt by the Company of such payment, notice and
documentation. For purposes of this Agreement, "Fair Market Value"
shall mean, with respect to Shares or other securities, (i) the closing
price per Share of the Shares on the principal exchange on which the
Shares are then trading, if any, on such date, or, if the Shares were
not traded on such date, then on the next preceding trading day during
which a sale occurred; or (ii) if the Shares are not traded on an
exchange but are quoted on Nasdaq or a successor quotation system, (1)
the last sales price (if the Shares are then listed on the Nasdaq
National Market) or (2) the mean between the closing representative bid
and asked prices (in all other cases) for the Shares on such date as
reported by Nasdaq or such successor quotation system; or (iii) if the
Shares are not publicly traded on an exchange and not quoted on Nasdaq
or a successor quotation system, the mean between the closing bid and
asked prices for the Shares on such date as determined in good faith by
the Committee; or (iv) if the Shares are not publicly traded, the fair
market value established by the Committee acting in good faith.
6. (a) In combination with or in substitution for cash withholding or any
other legal method of satisfying federal and state withholding tax
liability, the Optionee may elect to have Shares withheld by the
Company in order to satisfy federal and state withholding tax liability
(a "share withholding election"); provided, however, that (i) the Board
or a committee thereof shall not
-2-
<PAGE> 4
have revoked its advance approval of the Optionee's share withholding
election; and (ii) the share withholding election is made on or prior
to the date on which the amount of withholding tax liability is
determined (the "Tax Date"). If the Optionee elects within thirty (30)
days of the date of exercise to be subject to withholding tax on the
exercise date pursuant to the provisions of Section 83(b) of the Code,
then the share withholding election may be made during such thirty (30)
day period. Notwithstanding the foregoing, the Optionee may make a
share withholding election only if the following additional conditions
are met: (i) the share withholding election is made no sooner than six
(6) months after the date of grant of the Option; and (ii) the share
withholding election is made (x) at least six (6) months prior to the
Tax Date, or (y) during the period beginning on the third business day
following the date of release of the Company's quarterly or annual
financial results and ending on the twelfth business day following such
date.
(b) A share withholding election shall be deemed made when written
notice of such election, signed by the Optionee, has been delivered or
transmitted by registered or certified mail to the Secretary of the
Company at its principal office. Delivery of such notice shall
constitute an irrevocable election to have Shares withheld.
(c) If the Optionee has made a share withholding election pursuant to
this Section 6; and (i) within thirty (30) days of the date of exercise
of the Option, the Optionee elects pursuant to the provisions of
Section 83(b) of the Code to be subject to withholding tax on the date
of exercise of the Option, then the Optionee will be unconditionally
obligated to immediately tender back to the Company the number of
Shares having an aggregate Fair Market Value equal to the amount of tax
required to be withheld plus cash for any fractional amount, together
with written notice to the Company informing the Company of the
Optionee's election pursuant to Section 83(b) of the Code; or (ii) if
the Optionee has not made an election pursuant to the provisions of
Section 83(b) of the Code, then on the Tax Date, such Optionee will be
unconditionally obligated to tender back to the Company the number of
Shares having an aggregate Fair Market Value equal to the amount of tax
required to be withheld plus cash for any fractional amount.
7. The Board or a committee thereof may require as a condition to the
right to exercise the Option hereunder that the Company receive from
the person exercising the Option, representations, warranties and
agreements, at the time of any such exercise, to the effect that the
Shares are being purchased for investment only and without any present
intention to sell or otherwise distribute such Shares and that the
Shares will not be disposed of in transactions which, in the opinion of
counsel to the Company, would violate the registration provisions of
the Securities Act of 1933, as then amended (the "Securities Act"), and
the rules and regulations thereunder. The certificate issued to
evidence such Shares shall bear appropriate legends summarizing such
restrictions on the disposition thereof.
8. (a) If, at any time, the Company proposes to file a registration
statement on Form S-8 under the Securities Act with respect to an
offering for its own account or for the account of others of any class
of equity security, then the Company shall give written notice of such
proposed filing to the Optionee at least twenty-five (25) days before
the anticipated filing date, and such notice shall offer the Optionee
the opportunity to register such Shares (whether or not vested under
the installment provisions of subparagraph 1(b) at such time) as such
Optionee may request in writing to the Company within fifteen (15) days
after the date such Optionee first received notice of such registration
(a "Piggyback Registration"); provided, however, that the Company shall
have no obligation to register any Shares of the Optionee pursuant to
this Section 8(a) unless the Optionee shall request that 50% or more
(or all outstanding Shares, if less than 50% of the initial aggregate
number of Shares) of the initial aggregate number of Shares be
registered.
(b) The Optionee may not participate in any registration initiated as a
Piggyback Registration which is underwritten for the benefit of the
Company unless the Optionee (i) agrees to sell his Shares on the basis
provided in any underwriting agreements approved by the Company; (ii)
completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting agreements and which are
customary with industry practice; and (iii) agrees that if an
underwriter advises the Company in writing that the number of shares
proposed to be sold by
-3-
<PAGE> 5
the Company and/or the Optionee is greater than the number of shares of
Common Stock which the underwriter believes is feasible to sell at that
time, at the price and in the terms approved by the Company, then the
underwriter may exclude some or all of the Shares from such Piggyback
Registration. The Company shall advise the Optionee of the limitation,
and that the number of shares of Shares to be offered by the Optionee
will be reduced to the number recommended by the underwriter.
(c) In any registration initiated as a Piggyback Registration, whether
or not the registration statement becomes effective, the Company will
pay or cause to be paid all costs, fees and expenses in connection
therewith, including, without limitation, the Company's legal and
accounting fees, printing expenses and "blue sky" fees and expenses,
except that the Company shall not pay for (i) underwriting discounts
and commissions, (ii) state transfer taxes, (iii) brokerage
commissions, (iv) fees and expenses of counsel and accountants for the
Optionee and (v) blue sky fees and expenses in jurisdictions where the
Company is not currently registered or qualified.
(d) To the extent not inconsistent with applicable law, the Optionee
agrees not to effect any public sale or distribution of Common Stock,
including a sale pursuant to Rule 144 or in reliance on any other
exemption from registration under the Securities Act, during the
fourteen (14) days prior to, and during the ninety (90) days beginning
on, the effective date of a registration statement that includes Shares
(except as part of such registration), but only if and to the extent
requested in writing (with reasonable prior written notice) by the
underwriter(s) in the case of an underwritten public offering by the
Company of securities similar to the Shares.
(e) The Company and the Optionee agree to indemnify and hold harmless
each other (and, in the case of the Company, its directors and officers
and each person who controls the Company (within the meaning of the
Securities Act)) against all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation) (collectively,
"Losses") arising out of or based upon any untrue or alleged untrue
statement of material fact contained in any registration statement with
respect to a Piggyback Registration, any amendment or supplement
thereto, any 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,
provided, however, that the Optionee shall not be indemnified for
Losses insofar as such Losses arise out of or are based upon any such
untrue statement or omission based upon information furnished in
writing to the Company by or on behalf of the Optionee (in his
individual capacity) expressly for use therein; provided further,
however, that in the event the prospectus shall have been amended or
supplemented and copies thereof, as so amended or supplemented, shall
have been furnished to the Optionee prior to the confirmation of any
sales of Registrable Securities, such indemnity with respect to the
prospectus shall not inure to the benefit of the Optionee if the person
asserting such Loss did not, at or prior to the confirmation of the
sale of the Registrable Securities to such person, receive a copy of
the prospectus, as so amended or supplemented, and the untrue statement
or omission of a material fact contained in the prospectus was
corrected in the prospectus, as so amended or supplemented.
9. The Option shall be exercisable in accordance with the terms hereof
even if (i) any ISO to purchase Common Stock in the Company, in any
parent or subsidiary of the Company or in any predecessor corporation
of such corporations, was granted to the Optionee and (ii) such
previously granted ISO remains outstanding. For purposes of this
Paragraph, an ISO shall be treated as outstanding until such option is
exercised in full or expires by reason of lapse of time.
10. All certificates for Shares delivered pursuant to any Option or the
exercise thereof shall be subject to such stop transfer orders and
other restrictions as the Board or a committee thereof may deem
advisable under the rules, regulations, and other restrictions of the
Securities and Exchange Commission, any stock exchange upon which such
Shares or other securities are then listed, and any applicable federal
or state securities laws, and the Board or a committee thereof
-4-
<PAGE> 6
may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
11. This Agreement shall be construed and enforced in accordance with the
laws of the State of Delaware and applicable federal law. Subject to
subparagraph 3(a) hereof, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors or assigns, as the case may
be.
IN WITNESS WHEREOF, the parties have witnessed this Agreement to be
duly executed and delivered as of the date first above written.
SARATOGA BEVERAGE GROUP, INC.
By: /s/ Carl T. Wolf By: /s/ Robin Prever
-------------------------- ---------------------------
Carl T. Wolf Robin Prever
President and Chief
Executive Officer
-5-
<PAGE> 1
EXHIBIT 10.29
SECURITIES PURCHASE AGREEMENT WITH CARL T. WOLF DATED FEBRUARY 12, 1998
<PAGE> 2
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of February 12, 1998 by and between Saratoga Beverage Group,
Inc., a Delaware corporation (the "Company"), and Carl T. Wolf, a resident of
South Orange, New Jersey (the "Purchaser").
WHEREAS, the Company is desirous of selling, and the Purchaser is
desirous of acquiring, 150,000 shares of the Company's Class A common stock,
$.01 par value per share (the "Class A Common Stock"), for a per share purchase
price of $2.25 per share of Class A Common Stock (in the aggregate, the
"Purchase Price");
WHEREAS, on February 4, 1998, the Board of Directors appointed the
Purchaser to be a director of the Company and, as such, to act as co-Chairman of
the Board pursuant to which the Purchaser shall spend approximately 15% of his
business time;
WHEREAS, on February 4, 1998, in connection with the Purchaser's
appointment as a director, the Purchaser waived his right to receive options
under the Company's 1993 Stock Option Plan (the "1993 Plan") and was granted
options (the "Options") outside of the 1993 Plan to purchase an aggregate of
200,000 shares of Class A Common Stock at a per share purchase price of $2.875;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Purchaser hereby agree as follows:
-1-
<PAGE> 3
Purchase And Sale.
Purchase and Sale of Securities.
The Company agrees to sell to the Purchaser, and upon
and subject to the terms and conditions hereof and, in reliance upon the
representations and warranties of the Company, the Purchaser agrees to purchase
from the Company, the Shares for the Purchase Price.
The Purchaser hereby acknowledges receipt of the
Option, a copy of which is annexed hereto as Exhibit A.
Closing. The sale of the Shares by the Company to the
Purchase shall take place at a closing (the "Closing"), to be held
simultaneously with the execution of this Agreement (the "Closing Date"). On the
Closing Date, the Company shall deliver to the Purchaser the Shares, free and
clear of any pledge, lien, security interest, mortgage, charge, adverse claim of
ownership or use, or other encumbrance of any kind (each, an "Encumbrances"),
against payment of the Purchase Price. The Company shall cause a certificate
evidencing the Shares to be issued to the Purchaser as soon as practicable after
the Closing.
Representations and Warranties of the Company.
The Company represents and warrants to the Purchaser as follows:
Organization and Qualification. The Company is a corporation
duly incorporated, organized, validly existing and in good standing under the
laws of the State of Delaware, and the Company has the requisite corporate power
and authority to own its properties and carry on its business as now being
conducted. The Company is duly qualified as a foreign corporation to do
business, and is in good standing, in each other jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except to the extent that any
such failure so to qualify is not reasonably likely, individually or in the
aggregate, to have a change in, or effect on, the business of the Company, as it
is currently conducted, that is or is reasonably likely to be materially adverse
to the business, prospects, property, condition (financial or otherwise) or
operations of the Company (a "Material Adverse Effect").
Authorized Capital. The authorized capital stock of the
Company consists of 50,000,000 shares of Class A Common Stock, 2,000,000 shares
of the Company's Class B common stock, $.01 par value per share ("Class B Common
Stock") and 5,000,000 shares of preferred stock, $.01 par value, of the Company.
As of February 9, 1998, 2,407,039 shares of Class A Common Stock, 562,055 shares
of Class B Common Stock and no shares of preferred stock of the Company were
issued and outstanding. As of February 9, 1998, options and warrants exercisable
to purchase 670,841 and 167,680 shares of Class A Common Stock, respectively,
were outstanding, and a promissory note convertible into 428,571 shares of Class
A Common Stock was outstanding.
Authority. The Company has all necessary corporate power and
authority to enter into this Agreement and the Option, to carry out its
obligations hereunder and to consummate the transactions contemplated hereby and
thereby. The Company has taken all
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necessary corporate action to appoint the Purchaser, effective February 4, 1998,
as a director of the Company and, as such, as co-Chairman of the Board. The
Company has taken all necessary corporate action to authorize the execution,
delivery and performance by it of this Agreement, the Option and all other
documents or instruments required to consummate the transactions contemplated
hereby and thereby. This Agreement and the Option have been duly executed and
delivered by the Company and, assuming due authorization, execution and delivery
of this Agreement by the Purchaser, this Agreement and the Option constitute the
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with their respective terms, subject to the effect of any
applicable bankruptcy, reorganization, insolvency (including, without
limitation, all laws relating to fraudulent transfers), moratorium or similar
laws affecting creditors' rights and remedies generally, subject, as to
enforceability, to the effect of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and subject to the effect of applicable securities laws as to rights to
indemnification.
Consents; Compliance.
Other than in connection with or in compliance with
the rules of the Nasdaq SmallCap Market applicable to the listing of shares of
Class A Common Stock, the execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
require any consent, approval, authorization or other action by, or filing with
or notification to, any governmental or regulatory authority, except where
failure to obtain such consent, approval, authorization or action, or to make
such filing or notification, would not prevent the Company from performing any
of its material obligations under this Agreement and would not have a Material
Adverse Effect.
The execution, delivery and performance of this
Agreement by the Company do not (i) conflict with or violate the charter or
by-laws of the Company, or (ii) except as would not prevent the Company from
performing any of its material obligations under this Agreement and would not
have a Material Adverse Effect, (A) conflict with or violate any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
applicable to the Company, or (B) result in any breach of, or constitute a
default (or event which with the giving of notice or lapse of time, or both,
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
Encumbrance on any of the assets or properties of the Company pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument relating to such assets or properties to which the
Company is a party or by which any of such assets or properties is bound.
Commission Filings. The Company has filed all required forms,
reports and other documents with the Securities and Exchange Commission (the
"Commission") for periods from and after January 1, 1996 (collectively, the
"Commission Filings"), each of which has complied in all material respects with
all applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities Exchange Act of 1934, as amended. The
Company has heretofore made available to the Purchaser all of the Commission
Filings, including the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996, and the Company's Quarterly Reports on Form 10-QSB for the
quarterly periods ended March 31, 1997, June 30, 1997 and September 30, 1997. As
of their respective dates, the Commission Filings (including all exhibits and
schedules thereto and documents incorporated by reference therein) did not
contain any untrue statement of a
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<PAGE> 5
material fact or omit to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and unaudited
consolidated interim financial statements of the Company and its subsidiaries
included or incorporated by reference in such Commission Filings have been
prepared in accordance with general accepted accounting principles in the United
States consistently applied ("GAAP") (except as may be indicated in the notes
thereto or, in the case of the unaudited statements, as permitted by Form
10-QSB), complied as of their respective dates in all material respects with
applicable accounting requirements and the published rules and regulations of
the Commission with respect thereto, and fairly present the consolidated
financial position of the Company and its subsidiaries as of the dates thereof
and the consolidated income and retained earnings and sources and applications
of funds for the periods then ended (subject, in the case of any unaudited
interim financial statements, to the absence of footnotes required by GAAP and
normal year-end adjustments). Since September 30, 1997, except as described in
the Commission Filings, there has not been any event which has had or would be
expected to have a Material Adverse Effect.
Extent of Offering. Subject in part to the truth and accuracy
of the Purchaser's representations set forth in Article 3 of this Agreement, the
offer, sale and issuance of the Shares as contemplated by this Agreement are
exempt from the registration requirements of the Securities Act and of each
state where the Shares are offered or sold, and neither the Company nor, to the
best of the Company's knowledge, any agent acting on its behalf, will take any
action hereafter that would cause the loss of such exemption.
Absence of Litigation. No claim, action, proceeding or
investigation is pending, or to the best knowledge of the Company, threatened,
which seeks to delay or prevent the consummation of the transactions
contemplated hereby or which would be reasonably likely to adversely affect or
restrict the Company's ability to consummate the transactions contemplated
hereby.
No Other Representations. Except as set forth in this
Agreement and the Option, the Company is not making any representation,
warranty, covenant or agreement, oral or written, with respect to the matters
contained herein and therein.
No Brokers. The Company has not entered into any contract,
arrangement or understanding with any individual, corporation, partnership,
joint venture, person, trust, estate, association or other entity (each, a
"Person") which could result in the obligation of any Person to pay any finder's
fees, brokerage or agent's commissions or other like payments in connection with
this Agreement.
Representations and Warranties of the Purchaser.
The Purchaser represents and warrants to the Company as follows:
Authority. The Purchaser has all necessary power and authority
to enter into this Agreement, to carry out the Purchaser's obligations hereunder
and thereunder and to consummate the transactions contemplated hereby. The
Purchaser has taken all necessary action to authorize the execution, delivery
and performance by the Purchaser of this Agreement and all other documents or
instruments required to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Purchaser and, assuming
due authorization, execution and delivery by the Company, this Agreement
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<PAGE> 6
constitutes a legal, valid and binding obligation of the Purchaser enforceable
against the Purchaser in accordance with its terms, subject to the effect of any
applicable bankruptcy, reorganization, insolvency (including, without
limitation, all laws relating to fraudulent transfers), moratorium or similar
laws affecting creditors' rights and remedies generally, subject, as to
enforceability, to the effect of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and subject to the effect of applicable securities laws as to rights of
indemnification.
Consents and Approvals; No Conflict.
The execution and delivery of this Agreement do not,
and the performance of this Agreement by the Purchaser will not, require any
consent, approval, authorization or other action by, or filing with or
notification to, any governmental or regulatory authority, except where failure
to obtain such consent, approval, authorization or action, or to make such
filing or notification, would not prevent the Purchaser from performing any of
its material obligations under this Agreement.
The execution, delivery and performance of this
Agreement by the Purchaser do not, except as would not have a material adverse
effect on the ability of the Purchaser to consummate the transactions
contemplated by this Agreement, conflict with or violate any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
applicable to the Purchaser.
Absence of Litigation. No claim, action, proceeding or
investigation is pending, or to the best knowledge of the Purchaser, threatened,
which seeks to delay or prevent the consummation of the transactions
contemplated hereby or which would be reasonably likely to adversely affect or
restrict the Purchaser's ability to consummate the transactions contemplated
hereby.
Investment Purpose; Private Placement.
The Purchaser made his or its decision to purchase
the Shares based solely on (i) an analysis of the representations and warranties
of the Company set forth in this Agreement and (ii) a review of the Commission
Filings (which the Purchaser hereby acknowledges having received and reviewed).
The Purchaser has sufficient knowledge and experience
in financial and business matters to be capable of evaluating the merits and
risks of an unregistered, non-liquid, high-risk investment such as an investment
in the Company's securities and has evaluated the merits and risks of such an
investment. The Purchaser's overall commitment to investments which are not
readily marketable is not disproportionate to the Purchaser's net worth, and the
Purchaser's acquisition of the Shares will not cause such overall commitment to
become excessive.
The Purchaser is acquiring the Shares solely for the
purpose of investment and not with a view to, or for offer or sale in connection
with, any distribution thereof in violation of the Securities Act. The Purchaser
acknowledges that the Shares are not registered under the Securities Act and
that the Shares may not be transferred or sold except pursuant to the
registration provisions of the Securities Act or pursuant to an applicable
exemption therefrom and subject to state securities laws and regulations, as
applicable. The
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<PAGE> 7
Purchaser agrees that the following legend shall be placed on any certificate or
other instrument evidencing the Shares:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). NO SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION OF THE SHARES OF COMMON STOCK REPRESENTED BY
THIS CERTIFICATE OR ANY INTEREST HEREIN MAY BE MADE UNLESS
THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
UNLESS SARATOGA BEVERAGE GROUP, INC. HAS RECEIVED A
SATISFACTORY OPINION OF COUNSEL THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION DOES NOT REQUIRE REGISTRATION
UNDER THE ACT."
The Company and any transfer agent acting on its behalf may maintain on the
Company's register appropriate "stop transfer" notations.
The Purchaser further understands that the offer and
sale of the Shares have not been approved or disapproved by the Commission, or
any other federal or state office or agency.
The Purchaser acknowledges that an investment in the
Shares involves a great deal of risk. The Purchaser is able to (i) bear the
economic risk of the investment in the Company, (ii) afford a complete loss of
such investment, and (iii) hold indefinitely the Shares. In reaching an informed
decision to invest in the Company, the Purchaser has obtained sufficient
information to evaluate the merits and risks of an investment in the securities
of the Company. In that connection, representatives of the Company have (x)
fully and satisfactorily answered any questions which the Purchaser desired to
ask concerning the Company, and (y) furnished the Purchaser with any additional
information or documents requested to verify the accuracy of or supplement any
information previously delivered to or discussed with the Purchaser.
The Purchaser has not construed the contents of the
Agreement or any additional agreement with respect to the proposed investment in
the Shares or any prior or subsequent communications from the Company, or any of
its officers, employees or representatives, as investment, tax or legal advice
or as information necessarily applicable to such Purchaser's particular
financial situation. The Purchaser has consulted his own financial advisor, tax
advisor, legal counsel and accountant, as necessary or desirable, as to matters
concerning his investment in the Shares.
Accredited Investor. The Purchaser is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated under the Securities
Act.
No Other Representations. Except as set forth in this
Agreement, the Purchaser is not making any representation, warranty, covenant or
agreement, oral or written, with respect to the matters contained herein and
therein.
No Brokers. The Purchaser has not entered into any contract,
arrangement or understanding with any Person which could result in the
obligation of any Person to pay any
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<PAGE> 8
finder's fees, brokerage or agent's commissions or other like payments in
connection with this Agreement.
Piggyback Registration.
Piggyback Registration.
(a) If, at any time, the Company proposes to file a
registration statement on either Form S-1, Form S-2 or Form S-3 (or any
successor forms) under the Securities Act with respect to an offering for its
own account or for the account of others of any class of equity security, then
the Company shall give written notice of such proposed filing to the Purchaser
at least twenty-five (25) days before the anticipated filing date, and such
notice shall offer the Purchaser the opportunity to register such Shares
(whether or not vested under the installment provisions of subparagraph 1(b) at
such time) as such Purchaser may request in writing to the Company within
fifteen (15) days after the date such Purchaser first received notice of such
registration (a "Piggyback Registration"); provided, however, that the Company
shall have no obligation to register any Shares of the Purchaser pursuant to
this Section 4.1(a) unless the Purchaser shall request that 50% or more (or all
outstanding Shares, if less than 50% of the initial aggregate number of Shares)
of the initial aggregate number of Shares be registered.
(b) The Purchaser may not participate in any
registration initiated as a Piggyback Registration which is underwritten for the
benefit of the Company or its stockholders unless the Purchaser (i) agrees to
sell his Shares on the basis provided in any underwriting agreements approved by
the Company; (ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting agreements and which are customary with
industry practice; and (iii) agrees that if an underwriter advises the Company
in writing that the number of shares proposed to be sold by the Company and/or
the Purchaser is greater than the number of shares of Class A Common Stock which
the underwriter believes is feasible to sell at that time, at the price and
under the terms approved by the Company, then the underwriter may exclude some
or all of the Shares from such Piggyback Registration to the extent necessary to
reduce the total number of shares of Class A Common Stock recommended by the
underwriter. Such reduction or limitation by the underwriter shall be made in
the manner set forth in the immediately following sentence. Any reduction or
limitation of Shares by the underwriter shall be made on a pro rata basis in
proportion to the relative number of Shares then held by the Purchaser and the
number of shares of Class A Common Stock requested to be underwritten on behalf
of the Company or its stockholders. The Company shall advise the Purchaser of
any such reduction or limitation, and that the number of shares of Shares to be
offered by the Purchaser will be reduced or limited to the number calculated
pursuant to the immediately preceding sentence.
(c) In any registration initiated as a Piggyback
Registration, whether or not the registration statement becomes effective, the
Company will pay or cause to be paid all costs, fees and expenses in connection
therewith, including, without limitation, the Company's legal and accounting
fees, printing expenses and "blue sky" fees and expenses, except that the
Company shall not pay for (i) underwriting discounts and commissions, (ii) state
transfer taxes, (iii) brokerage commissions, (iv) fees and expenses of counsel
and accountants for the Purchaser and (v) blue sky fees and expenses in
jurisdictions where the Company is not currently registered or qualified.
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<PAGE> 9
(d) To the extent not inconsistent with applicable
law, the Purchaser agrees not to effect any public sale or distribution of Class
A Common Stock, including a sale pursuant to Rule 144 or in reliance on any
other exemption from registration under the Securities Act, during the fourteen
(14) days prior to, and during the ninety (90) days beginning on, the effective
date of a registration statement that includes Shares (except as part of such
registration), but only if and to the extent requested in writing (with
reasonable prior written notice) by the underwriter(s) in the case of an
underwritten public offering by the Company of securities similar to the Shares.
(e) The Company and the Purchaser agree to indemnify
and hold harmless each other (and, in the case of the Company, its directors and
officers and each person who controls the Company (within the meaning of the
Securities Act)) against all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) (collectively, "Losses") arising
out of or based upon any untrue or alleged untrue statement of material fact
contained in any registration statement with respect to a Piggyback
Registration, any amendment or supplement thereto, any 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, provided, however, that the Purchaser shall not be indemnified for
Losses insofar as such Losses arise out of or are based upon any such untrue
statement or omission based upon information furnished in writing to the Company
by or on behalf of the Purchaser (in his individual capacity) expressly for use
therein; provided further, however, that in the event the prospectus shall have
been amended or supplemented and copies thereof, as so amended or supplemented,
shall have been furnished to the Purchaser prior to the confirmation of any
sales of registered Shares, such indemnity with respect to the prospectus shall
not inure to the benefit of the Purchaser if the person asserting such Loss did
not, at or prior to the confirmation of the sale of the registered Shares to
such person, receive a copy of the prospectus, as so amended or supplemented,
and the untrue statement or omission of a material fact contained in the
prospectus was corrected in the prospectus, as so amended or supplemented.
Termination and Waiver.
Termination. This Agreement may be terminated at any time
prior to the Closing only by the written consent of the Company and the
Purchaser.
Waiver. At any time prior to the Closing, each of the parties
hereto may (a) extend the time for the performance of any of the obligations or
other acts of any other party hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (c) waive compliance with any of the agreements or conditions
contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party to be bound thereby. Any waiver of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of the same or any other provision of this Agreement.
Miscellaneous.
Notices. Any notice, demand, request, waiver, or other
communication under this Agreement shall be in writing (including facsimile or
similar writing) and shall be deemed to have been duly given (i) on the date of
service if personally served, (ii) on the third day after mailing if mailed to
the party to whom notice is to be given, by first class mail, registered, return
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<PAGE> 10
receipt requested, postage prepaid or (iii) on the date sent if sent by
facsimile, to the parties at the following addresses or facsimile numbers with a
copy sent by mail as aforesaid on the same date (or at such other address or
facsimile number for a party as shall be specified by like notice):
if to the Company:
Saratoga Beverage Group, Inc.
11 Geyser Road
Saratoga Springs, New York 12866
Attention: Gayle Henderson
Fax No.: (518) 584-0380
with a copy to:
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
Attention: Charles I. Weissman, Esq.
Fax No.: (212) 758-9526
if to the Purchaser:
Carl T. Wolf
627 Inwood Lane
South Orange, New Jersey 07079
Fax No.: (973) 763-7888
with a copy to:
Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, New York 10022
Attention: Robert H. Friedman, Esq.
Fax No.: (212) 755-1467
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<PAGE> 11
Expenses. The Purchaser hereby agrees that all fees and
expenses incurred by the Purchaser in connection with this Agreement shall be
borne by the Purchaser, and the Company hereby agrees that all fees and expenses
incurred by the Company shall be borne by the Company, in each case including
without limitation all fees and expenses of such party's counsel and
accountants.
Headings. Section headings contained in this Agreement are
included for convenience only and shall not affect the interpretation of any
provisions of this Agreement.
Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of, this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.
Entire Agreement. This Agreement and the Option set forth the
entire understanding and agreement of the parties with respect to their subject
matter and supersede any and all prior understandings, negotiations or
agreements among the parties hereto, both written and oral, with respect to such
subject matter.
No Third-Party Beneficiaries. This Agreement is for the sole
benefit of and binding upon the parties hereto and their permitted successors
and assigns and nothing herein, express or implied, is intended to or shall
confer upon any other Person any legal or equitable right, benefit or remedy of
any nature whatsoever under or by reason of this Agreement.
Amendment. This Agreement may be amended or modified only by
an instrument in writing signed by the Company and the Purchaser.
Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which,
when taken together, shall constitute one and the same agreement.
Gender and Number. Whenever used in this Agreement, the
singular number shall include the plural, the plural the singular, and the use
of any gender shall be applicable to all genders.
Governing Law. This Agreement shall be construed in accordance
with, and governed by, the internal laws of the State of New York, without
giving effect to the principles of conflict of laws thereof. The parties agree
that any dispute arising out of or relating to this Agreement shall be resolved
by binding arbitration in the City of Albany, State of New York, under the
Commercial Arbitration Rules of the American Arbitration Association. Each of
the parties hereto consents, for itself and in respect of its property, to the
jurisdiction and venue of the City of Albany, State of New York for purposes of
this Section 6.10 and hereby irrevocably waives any objection, including any
objection to the laying of venue or based on the grounds of forum non conveniens
which it may now or hereafter have to the bringing of any dispute in
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<PAGE> 12
the City of Albany, State of New York, under the Commercial Arbitration Rules of
the American Arbitration Association, in respect of this Agreement or any
documents related thereto. Each of the parties hereto waives personal service of
any summons, complaint or other process, which may be made by any other means
permitted under New York law.
IN WITNESS WHEREOF, the Purchaser and the Company have caused this
Agreement to be executed as of the date first written above in their individual
capacities or by their respective representatives thereunto duly authorized, as
applicable.
SARATOGA BEVERAGE GROUP, INC.
By: /S/ Carl T, Wolf By: /S/ Robin Prever
-------------------------- --------------------------------
Carl T. Wolf Robin Prever
Chief Executive Officer
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<PAGE> 13
EXHIBIT A STOCK
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement") is made and entered into
as of the 4th day of February, 1998, by and between Saratoga Beverage Group,
Inc. (the "Company"), a Delaware corporation, and Carl T. Wolf (the "Optionee"),
residing at 627 Inwood Lane, South Orange, New Jersey 07079.
The Board of Directors (the "Board") of the Company adopted on February
4, 1998 (the "Grant Date") a resolution granting the Optionee a stock option
(the "Option") to purchase 200,000 shares (the "Shares") of the Company's Class
A common stock, par value $.01 per share (the "Common Stock"), for the price, on
the terms and subject to the conditions set forth in this Agreement. The Option
was not granted under the Company's 1993 Stock Option Plan. In connection with
the grant of the Option, the Optionee waived his rights to receive stock options
under the Company's 1993 Stock Option Plan.
The Option is not intended to satisfy the requirements for an incentive
stock option (an "ISO") under Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"). The Company makes no representations or warranties as
to the income, estate or other tax consequences to the Optionee of the grant or
exercise of the Option or the sale or other disposition of the Shares acquired
pursuant to the exercise thereof.
1. (a) The price at which the Optionee shall have the right to purchase
the Shares under this Agreement is $2.875 per Share, subject to adjustment as
provided in Paragraph 4 below.
(b) Unless the Option is previously terminated or accelerated
pursuant to this Agreement, the Option shall be exercisable in installments of
100,000 Shares on each of February 4, 1998 and February 4, 1999; provided,
however, that the February 4, 1999 installment shall not be exercisable if the
Optionee is not serving as Chairman of the Board or co-Chairman of the Board on
such date. In no event shall any Shares be purchasable under this Agreement
after February 3, 2008 (the "Expiration Date"). The Option shall cease to be
exercisable three (3) months (or such longer period which may at such time be
provided for directors under the Company's 1993 Stock Option Plan) after the
date the Optionee no longer serves as a director of the Company.
2. Nothing contained herein shall be construed to confer on the
Optionee any right to continue as a director of the Company or to derogate from
any right of the Board or stockholders of the Company, free from liability, to
remove the Optionee as a director at any time, with or without cause.
3. (a) Subject to Section 422 of the Code, neither the Option nor any
right under the Option shall be assignable, alienable, saleable or transferable
by the Optionee otherwise than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined in
the Code or Title I of the Employee Retirement Income Security Act, or the rules
thereunder; provided, however, that, if so determined by the Board or a
committee thereof, the Optionee may, in the manner established by the Board or a
committee thereof in its sole discretion, designate a beneficiary or
beneficiaries to exercise the
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<PAGE> 14
rights of the Optionee, and to receive any property distributable, with respect
to any Option upon the death of the Optionee.
(b) The Option shall not be pledged, alienated, attached, or
otherwise encumbered or transferred in any manner except to the extent that the
Option may be exercised by an executor or administrator or beneficiary as
provided in subparagraph 3(a) above, and any purported pledge, alienation,
attachment, encumbrance, or transfer thereof shall be void and unenforceable
against the Company. The Option may be exercised, during the lifetime of the
Optionee, only by the Optionee or his duly appointed guardian or legal
representative.
4. (a) In the event that the Board or a committee thereof shall
determine that the outstanding shares of Common Stock are affected by any (i)
subdivision or consolidation of shares, (ii) dividend or other distribution
(whether in the form of cash, Shares, other securities, or other property) or
(iii) recapitalization or other capital adjustment of the Company, such that an
adjustment is determined to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
hereunder, then the Board or a committee thereof shall, in such manner as it may
deem necessary to prevent dilution or enlargement of the benefits or potential
benefits intended to be made hereunder, adjust any or all of (x) the number and
type of Shares which may be subject to the Option, (y) the number and type of
Shares subject to the unexercised portion of the Option, and (z) the exercise
price per Share with respect to the Option; provided, however, that the exercise
price per Share shall not be adjusted below the par value per Share of the
Common Stock. In computing any adjustment under this paragraph, any fractional
share shall be eliminated.
(b) In the event of the dissolution or liquidation of the
Company, or in the event of a Change in Control (as defined in the Company's
1983 Stock Option Plan), the Optionee shall have the right, immediately prior to
the record date for the determination of stockholders entitled to participate in
such dissolution, liquidation or Change in Control, to exercise the Option, in
whole or in part, without regard to any installment provisions contained in
subparagraph 1(b). In such event, the Company will mail or cause to be mailed to
the Optionee a notice specifying the date of such dissolution, liquidation or
Change in Control. Such notice shall be mailed at least ten (10) days prior to
the date therein specified to the address of the Optionee specified on page 1 of
this Agreement or to such other address as the Optionee delivers or transmits by
registered or certified mail to the Secretary of the Company at its principal
office.
5. The Option shall be exercised when written notice of such exercise,
signed by the person entitled to exercise the Option, has been delivered or
transmitted by registered or certified mail, to the Secretary of the Company at
its principal office. Said written notice shall specify the number of Shares
purchasable under the Option which such person then wishes to purchase and shall
be accompanied by such documentation, if any, as may be required by the Company
as provided in Paragraph 7 below and be accompanied by payment of the aggregate
Option price. Such payment of the aggregate Option price shall be, without
limitation, in the form of (i) cash, Shares, outstanding Options or other
consideration, or any combination thereof, having a Fair Market Value on the
exercise date equal to the exercise price of the Option or portion thereof being
exercised or (ii) a broker-assisted cashless exercise program established by the
Board or a committee thereof. Delivery of said notice and such documentation
shall constitute an irrevocable election to purchase the Shares specified in
said notice and the date on which the Company receives said notice and
documentation shall,
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<PAGE> 15
subject to the provisions of Paragraph 7, be the date as of which the Shares so
purchased shall be deemed to have been issued. The person entitled to exercise
the Option shall not have the right or status as a holder of the Shares to which
such exercise relates prior to receipt by the Company of such payment, notice
and documentation. For purposes of this Agreement, "Fair Market Value" shall
mean, with respect to Shares or other securities, (i) the closing price per
Share of the Shares on the principal exchange on which the Shares are then
trading, if any, on such date, or, if the Shares were not traded on such date,
then on the next preceding trading day during which a sale occurred; or (ii) if
the Shares are not traded on an exchange but are quoted on Nasdaq or a successor
quotation system, (1) the last sales price (if the Shares are then listed on the
Nasdaq National Market) or (2) the mean between the closing representative bid
and asked prices (in all other cases) for the Shares on such date as reported by
Nasdaq or such successor quotation system; or (iii) if the Shares are not
publicly traded on an exchange and not quoted on Nasdaq or a successor quotation
system, the mean between the closing bid and asked prices for the Shares on such
date as determined in good faith by the Committee; or (iv) if the Shares are not
publicly traded, the fair market value established by the Committee acting in
good faith.
6. (a) In combination with or in substitution for cash withholding or
any other legal method of satisfying federal and state withholding tax
liability, the Optionee may elect to have Shares withheld by the Company in
order to satisfy federal and state withholding tax liability (a "share
withholding election"); provided, however, that (i) the Board or a committee
thereof shall not have revoked its advance approval of the Optionee's share
withholding election; and (ii) the share withholding election is made on or
prior to the date on which the amount of withholding tax liability is determined
(the "Tax Date"). If the Optionee elects within thirty (30) days of the date of
exercise to be subject to withholding tax on the exercise date pursuant to the
provisions of Section 83(b) of the Code, then the share withholding election may
be made during such thirty (30) day period. Notwithstanding the foregoing, the
Optionee may make a share withholding election only if the following additional
conditions are met: (i) the share withholding election is made no sooner than
six (6) months after the date of grant of the Option; and (ii) the share
withholding election is made (x) at least six (6) months prior to the Tax Date,
or (y) during the period beginning on the third business day following the date
of release of the Company's quarterly or annual financial results and ending on
the twelfth business day following such date.
(b) A share withholding election shall be deemed made when
written notice of such election, signed by the Optionee, has been delivered or
transmitted by registered or certified mail to the Secretary of the Company at
its principal office. Delivery of such notice shall constitute an irrevocable
election to have Shares withheld.
(c) If the Optionee has made a share withholding election
pursuant to this Section 6; and (i) within thirty (30) days of the date of
exercise of the Option, the Optionee elects pursuant to the provisions of
Section 83(b) of the Code to be subject to withholding tax on the date of
exercise of the Option, then the Optionee will be unconditionally obligated to
immediately tender back to the Company the number of Shares having an aggregate
Fair Market Value equal to the amount of tax required to be withheld plus cash
for any fractional amount, together with written notice to the Company informing
the Company of the Optionee's election pursuant to Section 83(b) of the Code; or
(ii) if the Optionee has not made an election pursuant to the provisions of
Section 83(b) of the Code, then on the Tax Date, such Optionee will be
unconditionally obligated to tender back to the Company the number of Shares
having
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<PAGE> 16
an aggregate Fair Market Value equal to the amount of tax required to be
withheld plus cash for any fractional amount.
7. The Board or a committee thereof may require as a condition to the
right to exercise the Option hereunder that the Company receive from the person
exercising the Option, representations, warranties and agreements, at the time
of any such exercise, to the effect that the Shares are being purchased for
investment only and without any present intention to sell or otherwise
distribute such Shares and that the Shares will not be disposed of in
transactions which, in the opinion of counsel to the Company, would violate the
registration provisions of the Securities Act of 1933, as then amended (the
"Securities Act"), and the rules and regulations thereunder. The certificate
issued to evidence such Shares shall bear appropriate legends summarizing such
restrictions on the disposition thereof.
8. (a) If, at any time, the Company proposes to file a registration
statement on Form S-8 under the Securities Act with respect to an offering for
its own account or for the account of others of any class of equity security,
then the Company shall give written notice of such proposed filing to the
Optionee at least twenty-five (25) days before the anticipated filing date, and
such notice shall offer the Optionee the opportunity to register such Shares
(whether or not vested under the installment provisions of subparagraph 1(b) at
such time) as such Optionee may request in writing to the Company within fifteen
(15) days after the date such Optionee first received notice of such
registration (a "Piggyback Registration"); provided, however, that the Company
shall have no obligation to register any Shares of the Optionee pursuant to this
Section 8(a) unless the Optionee shall request that 50% or more (or all
outstanding Shares, if less than 50% of the initial aggregate number of Shares)
of the initial aggregate number of Shares be registered.
(b) The Optionee may not participate in any registration
initiated as a Piggyback Registration which is underwritten for the benefit of
the Company unless the Optionee (i) agrees to sell his Shares on the basis
provided in any underwriting agreements approved by the Company; (ii) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting agreements and which are customary with industry practice; and
(iii) agrees that if an underwriter advises the Company in writing that the
number of shares proposed to be sold by the Company and/or the Optionee is
greater than the number of shares of Common Stock which the underwriter believes
is feasible to sell at that time, at the price and in the terms approved by the
Company, then the underwriter may exclude some or all of the Shares from such
Piggyback Registration. The Company shall advise the Optionee of the limitation,
and that the number of shares of Shares to be offered by the Optionee will be
reduced to the number recommended by the underwriter.
(c) In any registration initiated as a Piggyback Registration,
whether or not the registration statement becomes effective, the Company will
pay or cause to be paid all costs, fees and expenses in connection therewith,
including, without limitation, the Company's legal and accounting fees, printing
expenses and "blue sky" fees and expenses, except that the Company shall not pay
for (i) underwriting discounts and commissions, (ii) state transfer taxes, (iii)
brokerage commissions, (iv) fees and expenses of counsel and accountants for the
Optionee and (v) blue sky fees and expenses in jurisdictions where the Company
is not currently registered or qualified.
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<PAGE> 17
(d) To the extent not inconsistent with applicable law, the
Optionee agrees not to effect any public sale or distribution of Common Stock,
including a sale pursuant to Rule 144 or in reliance on any other exemption from
registration under the Securities Act, during the fourteen (14) days prior to,
and during the ninety (90) days beginning on, the effective date of a
registration statement that includes Shares (except as part of such
registration), but only if and to the extent requested in writing (with
reasonable prior written notice) by the underwriter(s) in the case of an
underwritten public offering by the Company of securities similar to the Shares.
(e) The Company and the Optionee agree to indemnify and hold
harmless each other (and, in the case of the Company, its directors and officers
and each person who controls the Company (within the meaning of the Securities
Act)) against all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation) (collectively, "Losses") arising out of or
based upon any untrue or alleged untrue statement of material fact contained in
any registration statement with respect to a Piggyback Registration, any
amendment or supplement thereto, any 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,
provided, however, that the Optionee shall not be indemnified for Losses insofar
as such Losses arise out of or are based upon any such untrue statement or
omission based upon information furnished in writing to the Company by or on
behalf of the Optionee (in his individual capacity) expressly for use therein;
provided further, however, that in the event the prospectus shall have been
amended or supplemented and copies thereof, as so amended or supplemented, shall
have been furnished to the Optionee prior to the confirmation of any sales of
Registrable Securities, such indemnity with respect to the prospectus shall not
inure to the benefit of the Optionee if the person asserting such Loss did not,
at or prior to the confirmation of the sale of the Registrable Securities to
such person, receive a copy of the prospectus, as so amended or supplemented,
and the untrue statement or omission of a material fact contained in the
prospectus was corrected in the prospectus, as so amended or supplemented.
9. The Option shall be exercisable in accordance with the terms hereof
even if (i) any ISO to purchase Common Stock in the Company, in any parent or
subsidiary of the Company or in any predecessor corporation of such
corporations, was granted to the Optionee and (ii) such previously granted ISO
remains outstanding. For purposes of this Paragraph, an ISO shall be treated as
outstanding until such option is exercised in full or expires by reason of lapse
of time.
10. All certificates for Shares delivered pursuant to any Option or the
exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Board or a committee thereof may deem advisable under the
rules, regulations, and other restrictions of the Securities and Exchange
Commission, any stock exchange upon which such Shares or other securities are
then listed, and any applicable federal or state securities laws, and the Board
or a committee thereof may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
11. This Agreement shall be construed and enforced in accordance with
the laws of the State of Delaware and applicable federal law. Subject to
subparagraph 3(a) hereof, this Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective heirs, personal
representatives, successors or assigns, as the case may be.
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<PAGE> 18
IN WITNESS WHEREOF, the parties have witnessed this Agreement to be
duly executed and delivered as of the date first above written.
SARATOGA BEVERAGE GROUP, INC.
By: /S/ Carl T. Wolf By: /S/ Robin Prever
------------------------- -------------------------------------
Carl T. Wolf Robin Prever
President and Chief
Executive Officer
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<PAGE> 1
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of February 25, 1998 by and between Saratoga Beverage Group, Inc., a Delaware
corporation (the "Company"), and Steel Partners II, L.P., a Delaware limited
partnership (the "Purchaser").
WHEREAS, the Company is desirous of selling, and the Purchaser is desirous of
acquiring, 275,000 shares of the Company's Class A common stock, $.01 par value
per share (the "Class A Common Stock"), for a per share purchase price of $2.25
per share of Class A Common Stock (in the aggregate, the "Purchase Price");
NOW, THEREFORE, in consideration of the premises and of the mutual agreements
and covenants hereinafter set forth, and for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and
the Purchaser hereby agree as follows:
1. Purchase And Sale.
1.1 Purchase and Sale of Securities. The Company agrees to sell to the
Purchaser, and upon and subject to the terms and conditions hereof and,
in reliance upon the representations and warranties of the Company, the
Purchaser agrees to purchase from the Company, the Shares for the
Purchase Price.
1.2 Closing. The sale of the Shares by the Company to the Purchase shall
take place at a closing (the "Closing"), to be held simultaneously with
the execution of this Agreement (the "Closing Date"). On the Closing
Date, the Company shall deliver to the Purchaser the Shares, free and
clear of any pledge, lien, security interest, mortgage, charge, adverse
claim of ownership or use, or other encumbrance of any kind (each, an
"Encumbrances"), against payment of the Purchase Price. The Company
shall cause a certificate evidencing the Shares to be issued to the
Purchaser as soon as practicable after the Closing.
2. Representations and Warranties of the Company.
The Company represents and warrants to the Purchaser as follows:
2.1 Organization and Qualification. The Company is a corporation duly
incorporated, organized, validly existing and in good standing under
the laws of the State of Delaware, and the Company has the requisite
corporate power and authority to own its properties and carry on its
business as now being conducted. The Company is duly qualified as a
foreign corporation to do business, and is in good standing, in each
other jurisdiction where the character of its properties owned or held
under lease or the nature of its activities makes
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<PAGE> 2
such qualification necessary, except to the extent that any such
failure so to qualify is not reasonably likely, individually or in the
aggregate, to have a change in, or effect on, the business of the
Company, as it is currently conducted, that is or is reasonably likely
to be materially adverse to the business, prospects, property,
condition (financial or otherwise) or operations of the Company (a
"Material Adverse Effect").
2.2 Authorized Capital. The authorized capital stock of the Company
consists of 50,000,000 shares of Class A Common Stock, 2,000,000 shares
of the Company's Class B common stock, $.01 par value per share ("Class
B Common Stock") and 5,000,000 shares of preferred stock, $.01 par
value, of the Company. As of February 9, 1998, 2,407,039 shares of
Class A Common Stock, 562,055 shares of Class B Common Stock and no
shares of preferred stock of the Company were issued and outstanding.
As of February 9, 1998, options and warrants exercisable to purchase
670,841 and 167,680 shares of Class A Common Stock, respectively, were
outstanding, and a promissory note convertible into 428,571 shares of
Class A Common Stock was outstanding.
2.3 Authority. The Company has all necessary corporate power and authority
to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. The Company has
taken all necessary corporate action to authorize the execution,
delivery and performance by it of this Agreement and all other
documents or instruments required to consummate the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming due authorization, execution and
delivery of this Agreement by the Purchaser, this Agreement constitutes
the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, subject to the effect
of any applicable bankruptcy, reorganization, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
moratorium or similar laws affecting creditors' rights and remedies
generally, subject, as to enforceability, to the effect of general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and subject to the
effect of applicable securities laws as to rights to indemnification.
2.4 Consents; Compliance.
(a) Other than in connection with or in compliance with the rules of
the Nasdaq SmallCap Market applicable to the listing of shares of
Class A Common Stock, the execution and delivery of this Agreement
by the Company do not, and the performance of this Agreement by
the Company will not, require any consent, approval, authorization
or other action by, or filing with or notification to, any
governmental or regulatory authority, except where failure to
obtain such consent, approval, authorization or action, or to make
such filing or notification, would not prevent the Company from
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<PAGE> 3
performing any of its material obligations under this Agreement
and would not have a Material Adverse Effect.
(b) The execution, delivery and performance of this Agreement by the
Company do not (i) conflict with or violate the charter or by-laws
of the Company, or (ii) except as would not prevent the Company
from performing any of its material obligations under this
Agreement and would not have a Material Adverse Effect, (A)
conflict with or violate any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award applicable to
the Company, or (B) result in any breach of, or constitute a
default (or event which with the giving of notice or lapse of
time, or both, would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation
of, or result in the creation of any Encumbrance on any of the
assets or properties of the Company pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument relating to such assets or
properties to which the Company is a party or by which any of such
assets or properties is bound.
2.5 Commission Filings. The Company has filed all required forms, reports
and other documents with the Securities and Exchange Commission (the
"Commission") for periods from and after January 1, 1996 (collectively,
the "Commission Filings"), each of which has complied in all material
respects with all applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the Securities Exchange
Act of 1934, as amended. The Company has heretofore made available to
the Purchaser all of the Commission Filings, including the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1996, and
the Company's Quarterly Reports on Form 10-QSB for the quarterly
periods ended March 31, 1997, June 30, 1997 and September 30, 1997. As
of their respective dates, the Commission Filings (including all
exhibits and schedules thereto and documents incorporated by reference
therein) did not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
made, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and unaudited
consolidated interim financial statements of the Company and its
subsidiaries included or incorporated by reference in such Commission
Filings have been prepared in accordance with general accepted
accounting principles in the United States consistently applied
("GAAP") (except as may be indicated in the notes thereto or, in the
case of the unaudited statements, as permitted by Form 10-QSB),
complied as of their respective dates in all material respects with
applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto, and fairly present
the consolidated financial position of the Company and its subsidiaries
as of the dates thereof and the consolidated income and retained
earnings and sources and applications of funds for the periods then
ended (subject, in the case of any unaudited interim financial
statements, to the absence of footnotes required by GAAP and normal
year-end adjustments).
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<PAGE> 4
Since September 30, 1997, except as described in the Commission
Filings, there has not been any event which has had or would be
expected to have a Material Adverse Effect.
2.6 Extent of Offering. Subject in part to the truth and accuracy of the
Purchaser's representations set forth in Article 3 of this Agreement,
the offer, sale and issuance of the Shares as contemplated by this
Agreement are exempt from the registration requirements of the
Securities Act and of each state where the Shares are offered or sold,
and neither the Company nor, to the best of the Company's knowledge,
any agent acting on its behalf, will take any action hereafter that
would cause the loss of such exemption.
2.7 Absence of Litigation. No claim, action, proceeding or investigation is
pending, or to the best knowledge of the Company, threatened, which
seeks to delay or prevent the consummation of the transactions
contemplated hereby or which would be reasonably likely to adversely
affect or restrict the Company's ability to consummate the transactions
contemplated hereby.
2.8 No Other Representations. Except as set forth in this Agreement, the
Company is not making any representation, warranty, covenant or
agreement, oral or written, with respect to the matters contained
herein and therein.
2.9 No Brokers. The Company has not entered into any contract, arrangement
or understanding with any individual, corporation, partnership, joint
venture, person, trust, estate, association or other entity (each, a
"Person") which could result in the obligation of any Person to pay any
finder's fees, brokerage or agent's commissions or other like payments
in connection with this Agreement.
3. Representations and Warranties of the Purchaser.
The Purchaser represents and warrants to the Company as follows:
3.1 Authority. The Purchaser has all necessary power and authority to enter
into this Agreement, to carry out the Purchaser's obligations hereunder
and thereunder and to consummate the transactions contemplated hereby.
The Purchaser has taken all necessary action to authorize the
execution, delivery and performance by the Purchaser of this Agreement
and all other documents or instruments required to consummate the
transactions contemplated hereby. This Agreement has been duly executed
and delivered by the Purchaser and, assuming due authorization,
execution and delivery by the Company, this Agreement constitutes a
legal, valid and binding obligation of the Purchaser enforceable
against the Purchaser in accordance with its terms, subject to the
effect of any applicable bankruptcy, reorganization, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), moratorium or similar laws affecting creditors' rights and
remedies generally, subject, as to enforceability, to the effect of
general principles of equity (regardless of whether
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<PAGE> 5
such enforceability is considered in a proceeding in equity or at law)
and subject to the effect of applicable securities laws as to rights of
indemnification.
3.2 Consents and Approvals; No Conflict.
(a) The execution and delivery of this Agreement do not, and the
performance of this Agreement by the Purchaser will not, require
any consent, approval, authorization or other action by, or filing
with or notification to, any governmental or regulatory authority,
except where failure to obtain such consent, approval,
authorization or action, or to make such filing or notification,
would not prevent the Purchaser from performing any of its
material obligations under this Agreement.
(b) The execution, delivery and performance of this Agreement by the
Purchaser do not, except as would not have a material adverse
effect on the ability of the Purchaser to consummate the
transactions contemplated by this Agreement, conflict with or
violate any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award applicable to the
Purchaser.
3.3 Absence of Litigation. No claim, action, proceeding or investigation is
pending, or to the best knowledge of the Purchaser, threatened, which
seeks to delay or prevent the consummation of the transactions
contemplated hereby or which would be reasonably likely to adversely
affect or restrict the Purchaser's ability to consummate the
transactions contemplated hereby.
3.4 Investment Purpose; Private Placement.
(a) The Purchaser made its decision to purchase the Shares based
solely on (i) an analysis of the representations and warranties of
the Company set forth in this Agreement and (ii) a review of the
Commission Filings (which the Purchaser hereby acknowledges having
received and reviewed).
(b) The Purchaser has sufficient knowledge and experience in financial
and business matters to be capable of evaluating the merits and
risks of an unregistered, non-liquid, high-risk investment such as
an investment in the Company's securities and has evaluated the
merits and risks of such an investment. The Purchaser's overall
commitment to investments which are not readily marketable is not
disproportionate to the Purchaser's net worth, and the Purchaser's
acquisition of the Shares will not cause such overall commitment
to become excessive.
(c) The Purchaser is acquiring the Shares solely for the purpose of
investment and not with a view to, or for offer or sale in
connection with, any distribution thereof in violation of the
Securities Act. The Purchaser acknowledges that the Shares are not
registered under the Securities Act and that the Shares may not be
transferred or sold except pursuant to the registration provisions
of the Securities Act or pursuant to an applicable exemption
therefrom and subject to state securities laws and regulations, as
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<PAGE> 6
applicable. The Purchaser agrees that the following legend shall
be placed on any certificate or other instrument evidencing the
Shares:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"). NO SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION OF THE
SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE OR ANY
INTEREST HEREIN MAY BE MADE UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR UNLESS SARATOGA BEVERAGE
GROUP, INC. HAS RECEIVED A SATISFACTORY OPINION OF COUNSEL THAT
SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION DOES NOT REQUIRE
REGISTRATION UNDER THE ACT."
The Company and any transfer agent acting on its behalf may maintain on the
Company's register appropriate "stop transfer" notations.
(d) The Purchaser further understands that the offer and sale of the Shares
have not been approved or disapproved by the Commission, or any other
federal or state office or agency.
(e) The Purchaser acknowledges that an investment in the Shares involves a
great deal of risk. The Purchaser is able to (i) bear the economic risk
of the investment in the Company, (ii) afford a complete loss of such
investment, and (iii) hold indefinitely the Shares. In reaching an
informed decision to invest in the Company, the Purchaser or its
representatives has obtained sufficient information to evaluate the
merits and risks of an investment in the securities of the Company. In
that connection, representatives of the Company have (x) fully and
satisfactorily answered any questions which the Purchaser or its
representatives desired to ask concerning the Company, and (y)
furnished the Purchaser or its representatives with any additional
information or documents requested to verify the accuracy of or
supplement any information previously delivered to or discussed with
the Purchaser or its representatives.
(f) The Purchaser has not construed the contents of the Agreement or any
additional agreement with respect to the proposed investment in the
Shares or any prior or subsequent communications from the Company, or
any of its officers, employees or representatives, as investment, tax
or legal advice or as information necessarily applicable to such
Purchaser's particular financial situation. The Purchaser has consulted
its own financial advisor, tax advisor, legal counsel and accountant,
as necessary or desirable, as to matters concerning its investment in
the Shares.
3.5 Accredited Investor. The Purchaser is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated under
the Securities Act.
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<PAGE> 7
3.6 No Other Representations. Except as set forth in this Agreement,
the Purchaser is not making any representation, warranty, covenant
or agreement, oral or written, with respect to the matters
contained herein and therein.
3.7 No Brokers. The Purchaser has not entered into any contract,
arrangement or understanding with any Person which could result in
the obligation of any Person to pay any finder's fees, brokerage
or agent's commissions or other like payments in connection with
this Agreement.
4. Piggyback Registration.
4.1 Piggyback Registration.
(a) If, at any time, the Company proposes to file a registration
statement on either Form S-1, Form S-2 or Form S-3 (or any
successor forms) under the Securities Act with respect to an
offering for its own account or for the account of others of any
class of equity security, then the Company shall give written
notice of such proposed filing to the Purchaser at least
twenty-five (25) days before the anticipated filing date, and such
notice shall offer the Purchaser the opportunity to register such
Shares (whether or not vested under the installment provisions of
subparagraph 1(b) at such time) as such Purchaser may request in
writing to the Company within fifteen (15) days after the date
such Purchaser first received notice of such registration (a
"Piggyback Registration"); provided, however, that the Company
shall have no obligation to register any Shares of the Purchaser
pursuant to this Section 4.1(a) unless the Purchaser shall
request that 50% or more (or all outstanding Shares, if less than
50% of the initial aggregate number of Shares) of the initial
aggregate number of Shares be registered.
(b) The Purchaser may not participate in any registration initiated as
a Piggyback Registration which is underwritten for the benefit of
the Company or its stockholders unless the Purchaser (i) agrees to
sell its Shares on the basis provided in any underwriting
agreements approved by the Company; (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms
of such underwriting agreements and which are customary with
industry practice; and (iii) agrees that if an underwriter advises
the Company in writing that the number of shares proposed to be
sold by the Company and/or the Purchaser is greater than the
number of shares of Class A Common Stock which the underwriter
believes is feasible to sell at that time, at the price and under
the terms approved by the Company, then the underwriter may
exclude some or all of the Shares from such Piggyback Registration
to the extent necessary to reduce the total number of shares of
Class A Common Stock recommended by the underwriter. Such
reduction or limitation by the underwriter shall be made in the
manner set forth in the immediately following sentence. Any
reduction or limitation of Shares by the underwriter shall be made
on a pro rata basis
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<PAGE> 8
in proportion to the relative number of Shares then held by the
Purchaser and the number of shares of Class A Common Stock
requested to be underwritten on behalf of the Company or its
stockholders. The Company shall advise the Purchaser of any such
reduction or limitation, and that the number of shares of Shares
to be offered by the Purchaser will be reduced or limited to the
number calculated pursuant to the immediately preceding sentence.
(c) In any registration initiated as a Piggyback Registration, whether
or not the registration statement becomes effective, the Company
will pay or cause to be paid all costs, fees and expenses in
connection therewith, including, without limitation, the Company's
legal and accounting fees, printing expenses and "blue sky" fees
and expenses, except that the Company shall not pay for (i)
underwriting discounts and commissions, (ii) state transfer taxes,
(iii) brokerage commissions, (iv) fees and expenses of counsel and
accountants for the Purchaser and (v) blue sky fees and expenses
in jurisdictions where the Company is not currently registered or
qualified.
(d) To the extent not inconsistent with applicable law, the Purchaser
agrees not to effect any public sale or distribution of Class A
Common Stock, including a sale pursuant to Rule 144 or in reliance
on any other exemption from registration under the Securities Act,
during the fourteen (14) days prior to, and during the ninety (90)
days beginning on, the effective date of a registration statement
that includes Shares (except as part of such registration), but
only if and to the extent requested in writing (with reasonable
prior written notice) by the underwriter(s) in the case of an
underwritten public offering by the Company of securities similar
to the Shares.
(e) The Company and the Purchaser agree to indemnify and hold harmless
each other (and, in the case of the Company, its directors and
officers and each person who controls the Company (within the
meaning of the Securities Act)) against all losses, claims,
damages, liabilities and expenses (including reasonable costs of
investigation) (collectively, "Losses") arising out of or based
upon any untrue or alleged untrue statement of material fact
contained in any registration statement with respect to a
Piggyback Registration, any amendment or supplement thereto, any
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, provided, however, that the Purchaser shall not be
indemnified for Losses insofar as such Losses arise out of or are
based upon any such untrue statement or omission based upon
information furnished in writing to the Company by or on behalf of
the Purchaser expressly for use therein; provided further,
however, that in the event the prospectus shall have been amended
or supplemented and copies thereof, as so amended or supplemented,
shall have been furnished to the Purchaser prior to the
confirmation of any sales of registered Shares, such indemnity
with respect to the prospectus shall not inure to the benefit of
the Purchaser if the person asserting such Loss did not, at or
prior to the confirmation of the sale of the registered Shares to
such person, receive a copy of the prospectus, as so amended or
supplemented, and the untrue statement or omission of a material
fact contained in the prospectus was corrected in the prospectus,
as so amended or supplemented.
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<PAGE> 9
5. Termination and Waiver.
5.1 Termination. This Agreement may be terminated at any time prior to the
Closing only by the written consent of the Company and the Purchaser.
5.2 Waiver. At any time prior to the Closing, each of the parties hereto
may (a) extend the time for the performance of any of the obligations
or other acts of any other party hereto, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document
delivered pursuant hereto or (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the
party to be bound thereby. Any waiver of any provision of this
Agreement shall not operate or be construed as a waiver of any
subsequent breach of the same or any other provision of this Agreement.
6. Miscellaneous.
6.1 Notices. Any notice, demand, request, waiver, or other communication
under this Agreement shall be in writing (including facsimile or
similar writing) and shall be deemed to have been duly given (i) on the
date of service if personally served, (ii) on the third day after
mailing if mailed to the party to whom notice is to be given, by first
class mail, registered, return receipt requested, postage prepaid or
(iii) on the date sent if sent by facsimile, to the parties at the
following addresses or facsimile numbers with a copy sent by mail as
aforesaid on the same date (or at such other address or facsimile
number for a party as shall be specified by like notice):
(a) if to the Company:
Saratoga Beverage Group, Inc.
11 Geyser Road
Saratoga Springs, New York 12866
Attention: Gayle Henderson
Fax No.: (518) 584-0380
with a copy to:
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
Attention: Charles I. Weissman, Esq.
Fax No.: (212) 758-9526
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<PAGE> 10
(b) if to the Purchaser:
750 Lexington Avenue, 27th Floor
New York, New York 10022
Attention: Warren Lichtenstein, Esq.
Fax No.: (212) 446-5244
with a copy to:
Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, New York 10022
Attention: Steven Wolosky, Esq.
Fax No.: (212) 755-1467
6.2 Expenses. The Purchaser hereby agrees that all fees and expenses
incurred by the Purchaser in connection with this Agreement shall be
borne by the Purchaser, and the Company hereby agrees that all fees and
expenses incurred by the Company shall be borne by the Company, in each
case including without limitation all fees and expenses of such party's
counsel and accountants.
6.3 Headings. Section headings contained in this Agreement are included for
convenience only and shall not affect the interpretation of any
provisions of this Agreement.
6.4 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other conditions and provisions of, this Agreement
shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is
not affected in any manner adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as
originally contemplated to the greatest extent possible.
6.5 Entire Agreement. This Agreement sets forth the entire understanding
and agreement of the parties with respect to their subject matter and
supersedes any and all prior understandings, negotiations or agreements
among the parties hereto, both written and oral, with respect to such
subject matter.
6.6 No Third-Party Beneficiaries. This Agreement is for the sole benefit of
and binding upon the parties hereto and their permitted successors and
assigns and nothing herein, express or implied, is intended to or shall
confer upon any other
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<PAGE> 11
Person any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
6.7 Amendment. This Agreement may be amended or modified only by an
instrument in writing signed by the Company and the Purchaser.
6.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all
of which, when taken together, shall constitute one and the same
agreement.
6.9 Gender and Number. Whenever used in this Agreement, the singular number
shall include the plural, the plural the singular, and the use of any
gender shall be applicable to all genders.
6.10 Governing Law. This Agreement shall be construed in accordance with,
and governed by, the internal laws of the State of New York, without
giving effect to the principles of conflict of laws thereof. The
parties agree that any dispute arising out of or relating to this
Agreement shall be resolved by binding arbitration in the City of
Albany, State of New York, under the Commercial Arbitration Rules of
the American Arbitration Association. Each of the parties hereto
consents, for itself and in respect of its property, to the
jurisdiction and venue of the City of Albany, State of New York for
purposes of this Section 6.10 and hereby irrevocably waives any
objection, including any objection to the laying of venue or based on
the grounds of forum non conveniens which it may now or hereafter have
to the bringing of any dispute in the City of Albany, State of New
York, under the Commercial Arbitration Rules of the American
Arbitration Association, in respect of this Agreement or any documents
related thereto. Each of the parties hereto waives personal service of
any summons, complaint or other process, which may be made by any other
means permitted under New York law.
IN WITNESS WHEREOF, the Purchaser and the Company have caused this Agreement to
be executed as of the date first written above in their individual capacities or
by their respective representatives thereunto duly authorized, as applicable.
SARATOGA BEVERAGE GROUP, INC.
By: /s/ Robin Prever
----------------------------
Robin Prever
Chief Executive Officer
STEEL PARTNERS II, L.P.
By: /s/ Warren Lichtenstein
----------------------------
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<PAGE> 1
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of February 25, 1998 by and between Saratoga Beverage Group, Inc., a Delaware
corporation (the "Company"), and Carl T. Wolf, a resident of South Orange, New
Jersey (the "Purchaser").
WHEREAS, the Company is desirous of selling, and the Purchaser is desirous of
acquiring, 25,000 shares of the Company's Class A common stock, $.01 par value
per share (the "Class A Common Stock"), for a per share purchase price of $2.25
per share of Class A Common Stock (in the aggregate, the "Purchase Price");
NOW, THEREFORE, in consideration of the premises and of the mutual agreements
and covenants hereinafter set forth, and for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and
the Purchaser hereby agree as follows:
1. Purchase And Sale.
1.1 Purchase and Sale of Securities. The Company agrees to sell to the
Purchaser, and upon and subject to the terms and conditions hereof and,
in reliance upon the representations and warranties of the Company, the
Purchaser agrees to purchase from the Company, the Shares for the
Purchase Price.
1.2 Closing. The sale of the Shares by the Company to the Purchase shall
take place at a closing (the "Closing"), to be held simultaneously with
the execution of this Agreement (the "Closing Date"). On the Closing
Date, the Company shall deliver to the Purchaser the Shares, free and
clear of any pledge, lien, security interest, mortgage, charge, adverse
claim of ownership or use, or other encumbrance of any kind (each, an
"Encumbrances"), against payment of the Purchase Price. The Company
shall cause a certificate evidencing the Shares to be issued to the
Purchaser as soon as practicable after the Closing.
2. Representations and Warranties of the Company.
The Company represents and warrants to the Purchaser as follows:
2.1 Organization and Qualification. The Company is a corporation duly
incorporated, organized, validly existing and in good standing under
the laws of the State of Delaware, and the Company has the requisite
corporate power and authority to own its properties and carry on its
business as now being conducted. The Company is duly qualified as a
foreign corporation to do business, and is in good standing, in each
other jurisdiction where the character of its properties owned or held
under lease or the nature of its activities makes
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<PAGE> 2
such qualification necessary, except to the extent that any such
failure so to qualify is not reasonably likely, individually or in the
aggregate, to have a change in, or effect on, the business of the
Company, as it is currently conducted, that is or is reasonably likely
to be materially adverse to the business, prospects, property,
condition (financial or otherwise) or operations of the Company (a
"Material Adverse Effect").
2.2 Authorized Capital. The authorized capital stock of the Company
consists of 50,000,000 shares of Class A Common Stock, 2,000,000 shares
of the Company's Class B common stock, $.01 par value per share ("Class
B Common Stock") and 5,000,000 shares of preferred stock, $.01 par
value, of the Company. As of February 9, 1998, 2,407,039 shares of
Class A Common Stock, 562,055 shares of Class B Common Stock and no
shares of preferred stock of the Company were issued and outstanding.
As of February 9, 1998, options and warrants exercisable to purchase
670,841 and 167,680 shares of Class A Common Stock, respectively, were
outstanding, and a promissory note convertible into 428,571 shares of
Class A Common Stock was outstanding.
2.3 Authority. The Company has all necessary corporate power and authority
to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. The Company has
taken all necessary corporate action to authorize the execution,
delivery and performance by it of this Agreement and all other
documents or instruments required to consummate the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming due authorization, execution and
delivery of this Agreement by the Purchaser, this Agreement constitutes
the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, subject to the effect
of any applicable bankruptcy, reorganization, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
moratorium or similar laws affecting creditors' rights and remedies
generally, subject, as to enforceability, to the effect of general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and subject to the
effect of applicable securities laws as to rights to indemnification.
2.4 Consents; Compliance.
(a) Other than in connection with or in compliance with the rules of
the Nasdaq SmallCap Market applicable to the listing of shares of
Class A Common Stock, the execution and delivery of this Agreement
by the Company do not, and the performance of this Agreement by
the Company will not, require any consent, approval, authorization
or other action by, or filing with or notification to, any
governmental or regulatory authority, except where failure to
obtain such consent, approval, authorization or action, or to make
such filing or notification, would not prevent the Company from
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<PAGE> 3
performing any of its material obligations under this Agreement
and would not have a Material Adverse Effect.
(b) The execution, delivery and performance of this Agreement by the
Company do not (i) conflict with or violate the charter or by-laws
of the Company, or (ii) except as would not prevent the Company
from performing any of its material obligations under this
Agreement and would not have a Material Adverse Effect, (A)
conflict with or violate any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award applicable to
the Company, or (B) result in any breach of, or constitute a
default (or event which with the giving of notice or lapse of
time, or both, would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation
of, or result in the creation of any Encumbrance on any of the
assets or properties of the Company pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument relating to such assets or
properties to which the Company is a party or by which any of such
assets or properties is bound.
2.5 Commission Filings. The Company has filed all required forms, reports
and other documents with the Securities and Exchange Commission (the
"Commission") for periods from and after January 1, 1996 (collectively,
the "Commission Filings"), each of which has complied in all material
respects with all applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the Securities Exchange
Act of 1934, as amended. The Company has heretofore made available to
the Purchaser all of the Commission Filings, including the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1996, and
the Company's Quarterly Reports on Form 10-QSB for the quarterly
periods ended March 31, 1997, June 30, 1997 and September 30, 1997. As
of their respective dates, the Commission Filings (including all
exhibits and schedules thereto and documents incorporated by reference
therein) did not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
made, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and unaudited
consolidated interim financial statements of the Company and its
subsidiaries included or incorporated by reference in such Commission
Filings have been prepared in accordance with general accepted
accounting principles in the United States consistently applied
("GAAP") (except as may be indicated in the notes thereto or, in the
case of the unaudited statements, as permitted by Form 10-QSB),
complied as of their respective dates in all material respects with
applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto, and fairly present
the consolidated financial position of the Company and its subsidiaries
as of the dates thereof and the consolidated income and retained
earnings and sources and applications of funds for the periods then
ended (subject, in the case of any unaudited interim financial
statements, to the absence of footnotes required by GAAP and normal
year-end adjustments).
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<PAGE> 4
Since September 30, 1997, except as described in the Commission
Filings, there has not been any event which has had or would be
expected to have a Material Adverse Effect.
2.6 Extent of Offering. Subject in part to the truth and accuracy of the
Purchaser's representations set forth in Article 3 of this Agreement,
the offer, sale and issuance of the Shares as contemplated by this
Agreement are exempt from the registration requirements of the
Securities Act and of each state where the Shares are offered or sold,
and neither the Company nor, to the best of the Company's knowledge,
any agent acting on its behalf, will take any action hereafter that
would cause the loss of such exemption.
2.7 Absence of Litigation. No claim, action, proceeding or investigation is
pending, or to the best knowledge of the Company, threatened, which
seeks to delay or prevent the consummation of the transactions
contemplated hereby or which would be reasonably likely to adversely
affect or restrict the Company's ability to consummate the transactions
contemplated hereby.
2.8 No Other Representations. Except as set forth in this Agreement, the
Company is not making any representation, warranty, covenant or
agreement, oral or written, with respect to the matters contained
herein and therein.
2.9 No Brokers. The Company has not entered into any contract, arrangement
or understanding with any individual, corporation, partnership, joint
venture, person, trust, estate, association or other entity (each, a
"Person") which could result in the obligation of any Person to pay any
finder's fees, brokerage or agent's commissions or other like payments
in connection with this Agreement.
3. Representations and Warranties of the Purchaser.
The Purchaser represents and warrants to the Company as follows:
3.1 Authority. The Purchaser has all necessary power and authority to enter
into this Agreement, to carry out the Purchaser's obligations hereunder
and thereunder and to consummate the transactions contemplated hereby.
The Purchaser has taken all necessary action to authorize the
execution, delivery and performance by the Purchaser of this Agreement
and all other documents or instruments required to consummate the
transactions contemplated hereby. This Agreement has been duly executed
and delivered by the Purchaser and, assuming due authorization,
execution and delivery by the Company, this Agreement constitutes a
legal, valid and binding obligation of the Purchaser enforceable
against the Purchaser in accordance with its terms, subject to the
effect of any applicable bankruptcy, reorganization, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), moratorium or similar laws affecting creditors' rights and
remedies generally, subject, as to enforceability, to the effect of
general principles of equity (regardless of whether
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<PAGE> 5
such enforceability is considered in a proceeding in equity or at law)
and subject to the effect of applicable securities laws as to rights of
indemnification.
3.2 Consents and Approvals; No Conflict.
(a) The execution and delivery of this Agreement do not, and the
performance of this Agreement by the Purchaser will not, require
any consent, approval, authorization or other action by, or filing
with or notification to, any governmental or regulatory authority,
except where failure to obtain such consent, approval,
authorization or action, or to make such filing or notification,
would not prevent the Purchaser from performing any of its
material obligations under this Agreement.
(b) The execution, delivery and performance of this Agreement by the
Purchaser do not, except as would not have a material adverse
effect on the ability of the Purchaser to consummate the
transactions contemplated by this Agreement, conflict with or
violate any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award applicable to the
Purchaser.
3.3 Absence of Litigation. No claim, action, proceeding or investigation is
pending, or to the best knowledge of the Purchaser, threatened, which
seeks to delay or prevent the consummation of the transactions
contemplated hereby or which would be reasonably likely to adversely
affect or restrict the Purchaser's ability to consummate the
transactions contemplated hereby.
3.4 Investment Purpose; Private Placement.
(a) The Purchaser made his or its decision to purchase the Shares
based solely on (i) an analysis of the representations and
warranties of the Company set forth in this Agreement and (ii) a
review of the Commission Filings (which the Purchaser hereby
acknowledges having received and reviewed).
(b) The Purchaser has sufficient knowledge and experience in financial
and business matters to be capable of evaluating the merits and
risks of an unregistered, non-liquid, high-risk investment such as
an investment in the Company's securities and has evaluated the
merits and risks of such an investment. The Purchaser's overall
commitment to investments which are not readily marketable is not
disproportionate to the Purchaser's net worth, and the Purchaser's
acquisition of the Shares will not cause such overall commitment
to become excessive.
(c) The Purchaser is acquiring the Shares solely for the purpose of
investment and not with a view to, or for offer or sale in
connection with, any distribution thereof in violation of the
Securities Act. The Purchaser acknowledges that the Shares are not
registered under the Securities Act and that the Shares may not be
transferred or sold except pursuant to the registration provisions
of the Securities Act or pursuant to an applicable exemption
therefrom and subject to state securities laws and regulations, as
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<PAGE> 6
applicable. The Purchaser agrees that the following legend shall
be placed on any certificate or other instrument evidencing the
Shares:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). NO
SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION OF THE SHARES OF COMMON STOCK
REPRESENTED BY THIS CERTIFICATE OR ANY INTEREST HEREIN MAY BE MADE UNLESS
THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR UNLESS
SARATOGA BEVERAGE GROUP, INC. HAS RECEIVED A SATISFACTORY OPINION OF
COUNSEL THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION DOES NOT
REQUIRE REGISTRATION UNDER THE ACT."
The Company and any transfer agent acting on its behalf may maintain on the
Company's register appropriate "stop transfer" notations.
(d) The Purchaser further understands that the offer and sale of the Shares
have not been approved or disapproved by the Commission, or any other
federal or state office or agency.
(e) The Purchaser acknowledges that an investment in the Shares involves a
great deal of risk. The Purchaser is able to (i) bear the economic risk
of the investment in the Company, (ii) afford a complete loss of such
investment, and (iii) hold indefinitely the Shares. In reaching an
informed decision to invest in the Company, the Purchaser has obtained
sufficient information to evaluate the merits and risks of an
investment in the securities of the Company. In that connection,
representatives of the Company have (x) fully and satisfactorily
answered any questions which the Purchaser desired to ask concerning
the Company, and (y) furnished the Purchaser with any additional
information or documents requested to verify the accuracy of or
supplement any information previously delivered to or discussed with
the Purchaser.
(f) The Purchaser has not construed the contents of the Agreement or any
additional agreement with respect to the proposed investment in the
Shares or any prior or subsequent communications from the Company, or
any of its officers, employees or representatives, as investment, tax
or legal advice or as information necessarily applicable to such
Purchaser's particular financial situation. The Purchaser has consulted
his own financial advisor, tax advisor, legal counsel and accountant,
as necessary or desirable, as to matters concerning his investment in
the Shares.
3.5 Accredited Investor. The Purchaser is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated under
the Securities Act.
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<PAGE> 7
3.6 No Other Representations. Except as set forth in this Agreement,
the Purchaser is not making any representation, warranty, covenant
or agreement, oral or written, with respect to the matters
contained herein and therein.
3.7 No Brokers. The Purchaser has not entered into any contract,
arrangement or understanding with any Person which could result in
the obligation of any Person to pay any finder's fees, brokerage
or agent's commissions or other like payments in connection with
this Agreement.
4. Piggyback Registration.
4.1 Piggyback Registration.
(a) If, at any time, the Company proposes to file a registration
statement on either Form S-1, Form S-2 or Form S-3 (or any
successor forms) under the Securities Act with respect to an
offering for its own account or for the account of others of any
class of equity security, then the Company shall give written
notice of such proposed filing to the Purchaser at least
twenty-five (25) days before the anticipated filing date, and such
notice shall offer the Purchaser the opportunity to register such
Shares (whether or not vested under the installment provisions of
subparagraph 1(b) at such time) as such Purchaser may request in
writing to the Company within fifteen (15) days after the date
such Purchaser first received notice of such registration (a
"Piggyback Registration"); provided, however, that the Company
shall have no obligation to register any Shares of the Purchaser
pursuant to this Section 4.1(a) unless the Purchaser shall request
that 50% or more (or all outstanding Shares, if less than 50% of
the initial aggregate number of Shares) of the initial aggregate
number of Shares be registered.
(b) The Purchaser may not participate in any registration initiated as
a Piggyback Registration which is underwritten for the benefit of
the Company or its stockholders unless the Purchaser (i) agrees to
sell his Shares on the basis provided in any underwriting
agreements approved by the Company; (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms
of such underwriting agreements and which are customary with
industry practice; and (iii) agrees that if an underwriter advises
the Company in writing that the number of shares proposed to be
sold by the Company and/or the Purchaser is greater than the
number of shares of Class A Common Stock which the underwriter
believes is feasible to sell at that time, at the price and under
the terms approved by the Company, then the underwriter may
exclude some or all of the Shares from such Piggyback Registration
to the extent necessary to reduce the total number of shares of
Class A Common Stock recommended by the underwriter. Such
reduction or limitation by the underwriter shall be made in the
manner set forth in the immediately following sentence. Any
reduction or limitation of Shares by the underwriter shall be made
on a pro rata basis
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<PAGE> 8
in proportion to the relative number of Shares then held by the
Purchaser and the number of shares of Class A Common Stock
requested to be underwritten on behalf of the Company or its
stockholders. The Company shall advise the Purchaser of any such
reduction or limitation, and that the number of shares of Shares
to be offered by the Purchaser will be reduced or limited to the
number calculated pursuant to the immediately preceding sentence.
(c) In any registration initiated as a Piggyback Registration, whether
or not the registration statement becomes effective, the Company
will pay or cause to be paid all costs, fees and expenses in
connection therewith, including, without limitation, the Company's
legal and accounting fees, printing expenses and "blue sky" fees
and expenses, except that the Company shall not pay for (i)
underwriting discounts and commissions, (ii) state transfer taxes,
(iii) brokerage commissions, (iv) fees and expenses of counsel and
accountants for the Purchaser and (v) blue sky fees and expenses
in jurisdictions where the Company is not currently registered or
qualified.
(d) To the extent not inconsistent with applicable law, the Purchaser
agrees not to effect any public sale or distribution of Class A
Common Stock, including a sale pursuant to Rule 144 or in reliance
on any other exemption from registration under the Securities Act,
during the fourteen (14) days prior to, and during the ninety (90)
days beginning on, the effective date of a registration statement
that includes Shares (except as part of such registration), but
only if and to the extent requested in writing (with reasonable
prior written notice) by the underwriter(s) in the case of an
underwritten public offering by the Company of securities similar
to the Shares.
(e) The Company and the Purchaser agree to indemnify and hold harmless
each other (and, in the case of the Company, its directors and
officers and each person who controls the Company (within the
meaning of the Securities Act)) against all losses, claims,
damages, liabilities and expenses (including reasonable costs of
investigation) (collectively, "Losses") arising out of or based
upon any untrue or alleged untrue statement of material fact
contained in any registration statement with respect to a
Piggyback Registration, any amendment or supplement thereto, any
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, provided, however, that the Purchaser shall not be
indemnified for Losses insofar as such Losses arise out of or are
based upon any such untrue statement or omission based upon
information furnished in writing to the Company by or on behalf of
the Purchaser (in his individual capacity) expressly for use
therein; provided further, however, that in the event the
prospectus shall have been amended or supplemented and copies
thereof, as so amended or supplemented, shall have been furnished
to the Purchaser prior to the confirmation of any sales of
registered Shares, such indemnity with respect to the prospectus
shall not inure to the benefit of the Purchaser if the person
asserting such Loss did not, at or prior to the confirmation of
the sale of the registered Shares to such person, receive a copy
of the prospectus, as so amended or
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<PAGE> 9
supplemented, and the untrue statement or omission of a material
fact contained in the prospectus was corrected in the prospectus,
as so amended or supplemented.
5. Termination and Waiver.
5.1 Termination. This Agreement may be terminated at any time prior to the
Closing only by the written consent of the Company and the Purchaser.
5.2 Waiver. At any time prior to the Closing, each of the parties hereto
may (a) extend the time for the performance of any of the obligations
or other acts of any other party hereto, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document
delivered pursuant hereto or (C) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the
party to be bound thereby. Any waiver of any provision of this
Agreement shall not operate or be construed as a waiver of any
subsequent breach of the same or any other provision of this Agreement.
6. Miscellaneous.
6.1 Notices. Any notice, demand, request, waiver, or other communication
under this Agreement shall be in writing (including facsimile or
similar writing) and shall be deemed to have been duly given (i) on the
date of service if personally served, (ii) on the third day after
mailing if mailed to the party to whom notice is to be given, by first
class mail, registered, return receipt requested, postage prepaid or
(iii) on the date sent if sent by facsimile, to the parties at the
following addresses or facsimile numbers with a copy sent by mail as
aforesaid on the same date (or at such other address or facsimile
number for a party as shall be specified by like notice):
(a) if to the Company:
Saratoga Beverage Group, Inc.
11 Geyser Road
Saratoga Springs, New York 12866
Attention: Gayle Henderson
Fax No.: (518) 584-0380
with a copy to:
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
Attention: Charles I. Weissman, Esq.
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<PAGE> 10
Fax No.: (212) 758-9526
(b) if to the Purchaser:
Carl T. Wolf
627 Inwood Lane
South Orange, New Jersey 07079
Fax No.: (973) 763-7888
with a copy to:
Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, New York 10022
Attention: Robert H. Friedman, Esq.
Fax No.: (212) 755-1467
6.2 Expenses. The Purchaser hereby agrees that all fees and expenses
incurred by the Purchaser in connection with this Agreement shall be
borne by the Purchaser, and the Company hereby agrees that all fees and
expenses incurred by the Company shall be borne by the Company, in each
case including without limitation all fees and expenses of such party's
counsel and accountants.
6.3 Headings. Section headings contained in this Agreement are included for
convenience only and shall not affect the interpretation of any
provisions of this Agreement.
6.4 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other conditions and provisions of, this Agreement
shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is
not affected in any manner adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as
originally contemplated to the greatest extent possible.
6.5 Entire Agreement. This Agreement sets forth the entire understanding
and agreement of the parties with respect to their subject matter and
supersede any and all prior understandings, negotiations or agreements
among the parties hereto, both written and oral, with respect to such
subject matter.
6.6 No Third-Party Beneficiaries. This Agreement is for the sole benefit of
and binding upon the parties hereto and their permitted successors and
assigns and
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<PAGE> 11
nothing herein, express or implied, is intended to or shall confer upon
any other Person any legal or equitable right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
6.7 Amendment. This Agreement may be amended or modified only by an
instrument in writing signed by the Company and the Purchaser.
6.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all
of which, when taken together, shall constitute one and the same
agreement.
6.9 Gender and Number. Whenever used in this Agreement, the singular number
shall include the plural, the plural the singular, and the use of any
gender shall be applicable to all genders.
6.10 Governing Law. This Agreement shall be construed in accordance with,
and governed by, the internal laws of the State of New York, without
giving effect to the principles of conflict of laws thereof. The
parties agree that any dispute arising out of or relating to this
Agreement shall be resolved by binding arbitration in the City of
Albany, State of New York, under the Commercial Arbitration Rules of
the American Arbitration Association. Each of the parties hereto
consents, for itself and in respect of its property, to the
jurisdiction and venue of the City of Albany, State of New York for
purposes of this Section 6.10 and hereby irrevocably waives any
objection, including any objection to the laying of venue or based on
the grounds of forum non conveniens which it may now or hereafter have
to the bringing of any dispute in the City of Albany, State of New
York, under the Commercial Arbitration Rules of the American
Arbitration Association, in respect of this Agreement or any documents
related thereto. Each of the parties hereto waives personal service of
any summons, complaint or other process, which may be made by any other
means permitted under New York law.
IN WITNESS WHEREOF, the Purchaser and the Company have caused this Agreement to
be executed as of the date first written above in their individual capacities or
by their respective representatives thereunto duly authorized, as applicable.
SARATOGA BEVERAGE GROUP, INC.
By: /s/ Robin Prever
-------------------------
Robin Prever
Chief Executive Officer
By: /s/ Carl T. Wolf
-------------------------
Carl T. Wolf
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<PAGE> 1
OPTION AGREEMENT
This Option Agreement (the "Agreement") is made and entered into as of the 16th
day of March, 1998, by and between Steven Smith (collectively, the "Optionor"),
residing at 5 Lawson Lane, Great Neck, New York, and Saratoga Beverage Group,
Inc., a Delaware company whose principal executive offices are located at 11
Geyser Road, Saratoga Springs, New York (the "Optionee").
W I T N E S S E T H :
WHEREAS, the Optionor is the beneficial owner of 1,361,248 shares of common
stock, par value $0.01 per share (the "Common Stock"), of The Fresh Juice
Company, Inc., a Delaware corporation (the "Company"), representing
approximately 21% of the issued and outstanding shares of Common Stock of the
Company (based on 6,467,731 shares of Common Stock issued and outstanding as of
February 26, 1998); and
WHEREAS, the Optionor desires to grant to the Optionee options (the "Option") to
purchase 825,000 shares (the "Shares") of Common Stock of the Company, for the
price, on the terms and subject to the conditions set forth in this Agreement.
I. NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration (including
One Dollar ($1.00) in cash), the adequacy and receipt of which are hereby
acknowledged, the parties agree as follows:
II. Grant of Options; Exercise Price; Term of Options.
(a) Grant of Options. The Optionor hereby grants to the Optionee the
option to purchase 825,000 Shares, representing 12.8% of the
issued and outstanding shares of Common Stock (based on 6,467,731
shares of Common Stock issued and outstanding as of February 26,
1998), pursuant to the Option. Exercise Price.
(b) The price at which the Optionee shall have the right to purchase
the Shares from the Optionor under this Agreement is Three Dollars
($3.00) per Share, subject to adjustment as provided in Paragraph
4 below.
(c) In the event that the Optionee has exercised the Option, the
Optionor shall be entitled to the Upside Rights (as hereinafter
defined) in the event that the Company consummates a Business
Combination or executes a written agreement, instrument, letter of
intent, or understanding within one (1) year from the date of this
agreement and consummates the Business Combination under the terms
set forth in such written agreement, instrument, letter of intent,
or understanding, or with a third party within one hundred twenty
(120) days after the exercise by the Optionee of the Option. For
purposes of this Agreement, "Upside Rights" shall mean that (A),
the right of the Optionee to purchase the Shares underlying the
Option at a price equal to the sum of (1) Three Dollars ($3.00),
and (2) Fifty Percent (50%) of the purchase price per Share in
such Business Combination in excess of Three Dollars ($3.00); or
(B) the right of the Optionor to a payment from the Optionee in an
amount equal to Fifty Percent (50%) of the purchase price per
Share paid to the Optionee in such Business Combination in excess
of Three Dollars ($3.00).
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<PAGE> 2
(2) Term of Option. The Option shall be exercisable during the period from
(i) the earlier to occur of (x) April 1, 1998 or (y) the waiver by
parties to the Company's shareholder's agreement of any and all
restrictions imposed by such agreement on the ability of the Optionor
to sell the Shares to the Optionee or other third party (the earlier of
(x) or (y) is hereby referred to as the "Initial Exercise Date")
through (ii) April 30, 1998; provided, however, that, in the event that
prior to April 30, 1998 the Optionee and the Company execute a written
agreement, instrument, letter of intent, or understanding in which the
Company agrees to enter into a Business Combination with the Optionee
or an affiliate or subsidiary of the Optionee, the Option shall be
exercisable during the period from the Initial Exercise Date through
the earliest to occur of (A) the consummation of such Business
Combination, (B) the termination of all agreements relating to such
Business Combination or (C) October 31, 1998.
(3) Term of Agreement. Except as expressly set forth in this Agreement,
this Agreement shall terminate upon the earliest to occur of (i) the
exercise of the Option, (ii) the termination of the period for
exercisability of the Option and (iii) such date as may be mutually
agreed by the Optionee and the Optionor.
III. Representations and Warranties of the Optionor. The Optionor represents and
warrants to the Optionee as follows:
(1) Ownership of Shares. The Optionor owns 1,361,248 shares of Common Stock
(the "Owned Shares"), free and clear of any pledge, lien, security
interest, mortgage, charge, adverse claim of ownership or use, or other
encumbrance of any kind (each, an "Encumbrance"). No other person has
any right or option to acquire, or any direct or indirect interest in,
or any right or claim against, any of the Owned Shares as of the date
hereof. Prior to the termination of this Agreement, except in
accordance with the terms of this Agreement, the Optionor shall not
sell or agree to sell the 825,000 Owned Shares underlying this option,
during such time as this Agreement is in effect, or any direct or
indirect interest in, or any right or claim against any of the Owned
Shares owned by the Optionor as of the date hereof.
(2) Authority. This Agreement has been duly executed and delivered by the
Optionor and, assuming due authorization, execution and delivery of
this Agreement by the Optionee, this Agreement constitutes the legal,
valid and binding obligation of the Optionor enforceable against the
Optionor in accordance with its terms, subject to the effect of any
applicable bankruptcy, reorganization, insolvency (including, without
limitation, all laws relating to fraudulent transfers), moratorium or
similar laws affecting creditors' rights and remedies generally,
subject, as to enforceability, to the effect of general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law) and subject to the effect of applicable
securities laws as to rights to indemnification.
(3) Consents; Compliance. The execution and delivery of this Agreement by
the Optionor do not, and the performance of this Agreement by
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<PAGE> 3
the Optionor will not, require any consent, approval, authorization or
other action by, or filing with or notification to, any governmental or
regulatory authority, except filing with the Securities and Exchange
Commission, where failure to obtain such consent, approval,
authorization or action, or to make such filing or notification, would
not prevent the Optionor from performing any of their material
obligations under this Agreement. The execution, delivery and
performance of this Agreement by the Optionor do not (i) conflict with
or violate the charter or by-laws of the Company, or (ii) except as
would not prevent the Optionor from performing any of their material
obligations under this Agreement, (A) conflict with or violate any law,
rule, regulation, order, writ, judgment, injunction, decree,
determination or award applicable to the Optionor, or (B) result in any
breach of, or constitute a default (or event which with the giving of
notice or lapse of time, or both, would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any Encumbrance on any of
the assets or properties of the Optionor pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument relating to such assets or properties to
which the Optionor is a party or by which any of such assets or
properties is bound.
(4) Absence of Litigation. No claim, action, proceeding or investigation is
pending, or to the best knowledge of the Optionor, threatened, which
seeks to delay or prevent the consummation of the transactions
contemplated hereby or which would be reasonably likely to adversely
affect or restrict the Optionor's ability to consummate the
transactions contemplated hereby.
No Brokers. The Optionor has not entered into any contract,
arrangement or understanding with any individual, corporation, partnership,
joint venture, person, trust, estate, association or other entity (each, a
"Person") which could result in the obligation of any Person to pay any finder's
fees, brokerage or agent's commissions or other like payments in connection with
this Agreement.
I. Representations and Warranties of the Optionee. The Optionee represents and
warrants to the Optionor as follows:
(1) Authority. The Optionee has all necessary corporate power and authority
to enter into this Agreement, to carry out the Optionee's obligations
hereunder and thereunder and to consummate the transactions
contemplated hereby. The Optionee has taken all necessary action to
authorize the execution, delivery and performance by the Optionee of
this Agreement and all other documents or instruments required to
consummate the transactions contemplated hereby. This Agreement has
been duly executed and delivered by the Optionee and, assuming due
authorization, execution and delivery by the Optionor, this Agreement
constitutes a legal, valid and binding obligation of the Optionee
enforceable against the Optionee in accordance with its terms, subject
to the effect of any applicable bankruptcy, reorganization, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), moratorium or similar laws affecting creditors' rights and
remedies generally, subject, as to
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<PAGE> 4
enforceability, to the effect of general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and subject to the effect of applicable
securities laws as to rights of indemnification.
(2) Consents and Approvals; No Conflict. The execution and delivery of this
Agreement do not, and the performance of this Agreement by the Optionee
will not, require any consent, approval, authorization or other action
by, or filing with or notification to, any governmental or regulatory
authority, except where failure to obtain such consent, approval,
authorization or action, or to make such filing or notification, would
not prevent the Optionee from performing any of its material
obligations under this Agreement. The execution, delivery and
performance of this Agreement by the Optionee do not, except as would
not have a material adverse effect on the ability of the Optionee to
consummate the transactions contemplated by this Agreement, conflict
with or violate any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award applicable to the Optionee.
(3) Absence of Litigation. No claim, action, proceeding or investigation is
pending, or to the best knowledge of the Optionee, threatened, which
seeks to delay or prevent the consummation of the transactions
contemplated hereby or which would be reasonably likely to adversely
affect or restrict the Optionee's ability to consummate the
transactions contemplated hereby.
(4) Ownership of Shares. As of the date hereof, the Optionee and its
directors collectively beneficially own less than 25,000 Shares.
(5) No Other Representations. Except as set forth in this Agreement, the
Optionee is not making any representation, warranty, covenant or
agreement, oral or written, with respect to the matters contained
herein and therein.
(6) No Brokers. The Optionee has not entered into any contract, arrangement
or understanding with any Person which could result in the obligation
of any Person to pay any finder's fees, brokerage or agent's
commissions or other like payments in connection with this Agreement.
II. Adjustments. In the event that the Board of Directors of the Company or a
committee thereof shall determine that the outstanding shares of Common
Stock are affected by any (i) subdivision or consolidation of shares, (ii)
dividend or other distribution (whether in the form of cash, shares, other
securities, or other property) or (iii) recapitalization or other capital
adjustment of the Company, such that an adjustment is determined to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available hereunder, then (x) the
number and type of Shares which may be subject to the Option, (y) the
number and type of Shares subject to the unexercised portion of the Option,
and (z) the exercise price per Share with respect to the Option shall be
automatically adjusted to prevent dilution or enlargement of the benefits
or potential benefits intended to be made hereunder; provided, however,
that the exercise price per Share shall not be adjusted below the par value
per Share of the Common Stock.
III. Exercise of Options. The Option shall be exercised when written notice of
such exercise, signed by a duly authorized officer of the Optionee, has
been delivered or
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<PAGE> 5
transmitted by facsimile or registered or certified mail, to the Optionor.
Said written notice shall be accompanied by payment of the aggregate Option
price in cash. Delivery of said payment and notice shall constitute an
irrevocable election to purchase the Shares specified in said notice. The
person entitled to exercise the Option shall not have the right or status
as a holder of the Shares to which such exercise relates (including without
limitation voting rights) prior to receipt by the Optionor of such payment
and notice. The options are exercisable in whole and not in part.
IV. Taxes; Expenses, and Indemnification. The Optionor shall pay all
documentary and other transfer taxes, if any, due as a result of the sale
of the Shares in accordance with this Agreement. Except as set forth in the
first sentence of this Paragraph 6, the Optionee hereby agrees that all
fees and expenses incurred by the Optionee in connection with this
Agreement shall be borne by the Optionee, and the Optionor hereby agrees
that all fees and expenses incurred by the Optionor shall be borne by the
Optionor, in each case including without limitation all fees and expenses
of such party's counsel and accountants; provided, however, that, upon
presentation of invoices therefor, the Optionee shall reimburse the
Optionor for the reasonable fees and expenses of Optionor's counsel
incurred in connection with this Agreement, up to an aggregate of Ten
Thousand Dollars ($10,000). This Paragraph 6 shall survive any termination
of this Agreement.
V. The Optionee agrees to indemnify and hold harmless the Optionor against all
losses, claims, damages, liabilities and expenses including reasonable
costs of investigation arising out of or in connection with any third party
claim asserted or commenced against the Optionor as a result of the grant
of the option to the Optionee pursuant to the terms of this Agreement and
the actions taken or required to be taken by the Optionee in connection
therewith: provided, however, that the Optionor shall not be entitled to
any indemnification hereunder for any claim which is determined by a court
to have resulted from the gross negligence or willful misconduct of the
Optionor; provided further, however, that the Optionor shall not be
entitled to indemnification hereunder for any actions taken by the Optionor
in his capacity as an Officer or Director of the Company.
VI. In addition to the foregoing indemnification, it is understood and agreed
that in the event that the Optionee consummates a business combination with
the Company, the Optionee shall cause the surviving corporation from the
business combination to (and the surviving corporation shall) for four (4)
years after the date of consummation of the business combination, indemnify
and hold harmless the Optionor and Jeff Smith, in their capacity as a
director, officer, employee and agent of the Company and/or any of its
subsidiaries, against all losses, claims, damages, liabilities or expenses
arising out of actions or omissions occurring at or prior to that date of
consummation, to the extent as the Optionor is currently indemnified under
Delaware Law and the charter or by-laws of the Company and its subsidiaries
in effect on the date hereof.
VII. Confidentiality. The parties agree that (i) no public release or
announcement (excluding for this purpose filings with the Securities and
Exchange Commission or other federal or state securities agencies)
concerning the transactions contemplated hereby shall be issued by any
party and (ii) neither party will disclose the existence of this Agreement
or the intention of such party to consummate the transactions contemplated
hereby to any other party, other than the Company, without in either case
the prior written consent of the other party,
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<PAGE> 6
except as required by law or applicable regulations. This Paragraph 7 shall
survive any termination of this Agreement.
VIII.Headings. Section headings contained in this Agreement are included for
convenience only and shall not affect the interpretation of any provisions
of this Agreement.
IX. Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy,
all other conditions and provisions of, this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance
of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a
mutually acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the greatest extent
possible.
X. Entire Agreement. This Agreement sets forth the entire understanding and
agreement of the parties with respect to their subject matter and
supersedes any and all prior understandings, negotiations or agreements
among the parties hereto, both written and oral, with respect to such
subject matter.
XI. No Third-Party Beneficiaries. This Agreement is for the sole benefit of and
binding upon the parties hereto and their successors and assigns and
nothing herein, express or implied, is intended to or shall confer upon any
other Person any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
XII. Amendment. This Agreement may be amended or modified only by an instrument
in writing signed by the Optionee and the Optionor.
XIII.Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which, when
taken together, shall constitute one and the same agreement.
XIV. Gender and Number. Whenever used in this Agreement, the singular number
shall include the plural, the plural the singular, and the use of any
gender shall be applicable to all genders.
XV. Governing Law. This Agreement shall be construed and enforced in accordance
with the laws of the State of New York and applicable federal law. The
parties agree that any dispute arising in connection with this Option
Agreement or the interpretation or construction hereof will be submitted to
binding arbitration in the City of Albany, New York, under the Commercial
Arbitration Rules of the American Arbitration Association.
XVI. IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
OPTIONOR: OPTIONEE:
SARATOGA BEVERAGE GROUP INC.
/s/ Steven Smith By: /s/ Robin Prever
- ---------------------------- --------------------------
Steven Smith Robin Prever
President and Chief Executive Officer
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<PAGE> 1
SARATOGA BEVERAGE GROUP, INC.
11 Geyser Road
Saratoga Springs, New York 12866
March 29, 1998
The Fresh Juice Company, Inc.
280 Wilson Avenue
Newark, New Jersey 07105
Attention: Jeffrey Heavirland
Re: Proposed Acquisition of The Fresh Juice Company, Inc
by Saratoga Beverage Group, Inc. (the "Acquisition")
Ladies and Gentlemen:
This letter agreement shall confirm our agreement with respect to several
aspects of the proposed Acquisition of The Fresh Juice Company, Inc. ("you" or
the "Company") by Saratoga Beverage Group, Inc. (the "Buyer") at a purchase
price of not less than $3.75 per share payable in cash. The Company acknowledges
and agrees that the Buyer will expend significant time, expense and effort in
negotiating, analyzing, documenting and completing the Acquisition. Accordingly,
you agree that during the Exclusivity Period (as hereinafter defined), except to
the extent that the performance by the Company's directors of their fiduciary
duties otherwise requires, neither the Company, any of its subsidiaries nor any
of their respective directors, officers, employees, representatives, agents and
advisors or other persons controlled by the Company shall solicit or hold
discussions or negotiations with, or assist or provide any information to, any
person, entity, or group (other than the Buyer and its affiliates and
representatives) concerning any merger, business combination, disposition of a
significant portion of its assets, or acquisition of a significant portion of
its capital stock or similar transaction involving the Company; provided,
however, that the Board of Directors of the Company may furnish or cause to be
furnished such information to, and may participate in such discussions or
negotiations with, persons or entities who have made a bona fide proposal if the
Board of Directors of the Company believes, in good faith, after consultation
with its financial and legal advisors, that such bona fide proposal represents a
transaction which is more favorable to the Company's stockholders from a
financial point of view and is subject only to reasonable conditions of closing
which shall include financing terms reasonably satisfactory to the Company and,
in the opinion of counsel to the Board of Directors of the Company, the
fiduciary duty of the Board of Directors under applicable law requires it to
furnish or cause to be furnished such information and/or participate in such
discussions or negotiations (a
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<PAGE> 2
"Superior Offer"). The Company will promptly communicate to the Buyer the terms
of any proposal, discussion, negotiation, or inquiry relating to a merger or
disposition of a significant portion of its capital stock or assets or similar
transaction involving the Company and the identity of the party making such
proposal or inquiry, which it may receive with respect to any such transaction.
As used herein, Exclusivity Period shall mean the period commencing on the date
hereof and ending on the earlier of (i) April 25, 1998 and (ii) the Buyer
notifying you in writing that negotiations toward the Acquisition are
terminated.
In addition, you agree that in the event that (A) we enter into a definitive
purchase agreement with respect to the Acquisition, and the Acquisition is not
consummated for reasons other than as a result of (i) the Buyer being unable to
obtain financing, or (ii) any failure on the part of Buyer to comply with its
obligations set forth in the definitive purchase agreement or (B) a Superior
Offer is accepted by the Company within three (3) months after the termination
of the Exclusivity Period, the Company shall pay the Buyer an amount equal to
$750,000 inclusive of out-of-pocket expenses in connection with the Acquisition.
Notwithstanding anything to the contrary contained herein, in the event that the
Acquisition is not consummated because the Company is unable to obtain a
fairness opinion from its investment banker and a Superior Offer is not accepted
in accordance with the terms outlined in (B) above, then the Company's only
obligation hereunder shall be to reimburse the Buyer for its documented,
out-of-pocket expenses in connection with the Acquisition, not to exceed
$250,000.
You agree that any breach or threatened breach of the covenants contained in the
first paragraph of this letter agreement would irreparably injure the Buyer.
Accordingly, you hereby agree that, in such event, the Buyer shall be entitled,
without the necessity of proving damages, and notwithstanding any election by
the Buyer to claim damages, to obtain a temporary and/or permanent injunction to
restrain any such breach or threatened breach or to obtain specific performance
of any such provisions, all without prejudice to any and all other remedies
which the Buyer may have at law or in equity.
The prevailing party in any action to enforce its rights under this letter
agreement, whether through the institution of legal proceedings or otherwise,
shall be entitled to the reimbursement of all fees and expenses (including
reasonable fees of counsel) incurred by such prevailing party in connection with
such action.
You hereby represent and warrant that (i) all necessary action has been taken to
authorize the execution of this letter agreement, (ii) the person executing this
letter agreement has been duly authorized to do so, and (iii) upon execution,
this letter agreement shall be the legal, valid and binding obligation of the
Company, binding against it in accordance with its terms.
This letter agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, without giving effect to the principles of
conflicts of law thereof.
This letter agreement may be executed in counterparts each of which shall be
deemed an original, but all of which together constitute one and the same
instrument.
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<PAGE> 3
SARATOGA BEVERAGE GROUP, INC.
By: /s/ Robin Prever
-------------------------
Name: Robin Prever
Title: CEO
Acknowledged and Agreed:
THE FRESH JUICE COMPANY, INC.
By:/s/ Jeffrey Heavirland
----------------------------
Name: Jeffrey Heavirland
Title: Vice President of Sales and Marketing
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<PAGE> 1
AMENDED AND RESTATED STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement") is made and entered into as of the
4th day of February, 1998, and amended and restated as of April 17, 1998, by and
between Saratoga Beverage Group, Inc. (the "Company"), a Delaware corporation,
and Carl T. Wolf (the "Optionee"), residing at 627 Inwood Lane, South Orange,
New Jersey 07079.
The Board of Directors (the "Board") of the Company adopted on February 4, 1998
(the "Grant Date") a resolution granting the Optionee a stock option (the
"Option") to purchase 200,000 shares (the "Shares") of the Company's Class A
common stock, par value $.01 per share (the "Common Stock"), for the price, on
the terms and subject to the conditions set forth in this Agreement. The Option
was not granted under the Company's 1993 Stock Option Plan. In connection with
the grant of the Option, the Optionee waived his rights to receive stock options
under the Company's 1993 Stock Option Plan.
On April 17, 1998, the Company and the Optionee entered into a letter agreement
whereby the Optionee and the Company agreed (i) to reduce the number of Shares
subject to the Option from 200,000 to 75,000, all of which shall be vested
immediately, (ii) to change the Expiration Date (as hereinafter defined) to
February 3, 2003 from February 3, 2008, (iii) to delete the requirement that the
Optionee continue to be a director in order to exercise the Option and to delete
references to the Optionee continuing as a director of the Company and (iv) to
change the requirements for Piggyback Registration (as hereinafter defined).
This Agreement reflects the above changes.
The Option is not intended to satisfy the requirements for an incentive stock
option (an "ISO") under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). The Company makes no representations or warranties as to
the income, estate or other tax consequences to the Optionee of the grant or
exercise of the Option or the sale or other disposition of the Shares acquired
pursuant to the exercise thereof.
1. (a) The price at which the Optionee shall have the right to purchase
the 75,000 Shares under this Agreement is $2.875 per Share, subject to
adjustment as provided in Paragraph 4 below.
(b) The entire Option shall be exercisable immediately. In no event
shall any Shares be purchasable under this Agreement after February 3,
2003 (the "Expiration Date").
2. [Intentionally deleted]
3. (a) Subject to Section 422 of the Code, neither the Option nor any
right under the Option shall be assignable, alienable, saleable or
transferable by the Optionee otherwise than by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations
order as defined in the Code or Title I of the Employee Retirement
Income Security Act, or the rules thereunder; provided, however, that,
if so determined by the Board or a committee thereof,
-1-
<PAGE> 2
the Optionee may, in the manner established by the Board or a committee
thereof in its sole discretion, designate a beneficiary or
beneficiaries to exercise the rights of the Optionee, and to receive
any property distributable, with respect to any Option upon the death
of the Optionee.
(b) The Option shall not be pledged, alienated, attached, or otherwise
encumbered or transferred in any manner except to the extent that the
Option may be exercised by an executor or administrator or beneficiary
as provided in subparagraph 3(a) above, and any purported pledge,
alienation, attachment, encumbrance, or transfer thereof shall be void
and unenforceable against the Company. The Option may be exercised,
during the lifetime of the Optionee, only by the Optionee or his duly
appointed guardian or legal representative.
4. (a) In the event that the Board or a committee thereof shall determine
that the outstanding shares of Common Stock are affected by any (i)
subdivision or consolidation of shares, (ii) dividend or other
distribution (whether in the form of cash, Shares, other securities, or
other property) or (iii) recapitalization or other capital adjustment
of the Company, such that an adjustment is determined to be appropriate
in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available hereunder, then the
Board or a committee thereof shall, in such manner as it may deem
necessary to prevent dilution or enlargement of the benefits or
potential benefits intended to be made hereunder, adjust any or all of
(x) the number and type of Shares which may be subject to the Option,
(y) the number and type of Shares subject to the unexercised portion of
the Option, and (z) the exercise price per Share with respect to the
Option; provided, however, that the exercise price per Share shall not
be adjusted below the par value per Share of the Common Stock. In
computing any adjustment under this paragraph, any fractional share
shall be eliminated.
(b) In the event of the dissolution or liquidation of the Company, or
in the event of a Change in Control (as defined in the Company's 1983
Stock Option Plan), the Optionee shall have the right, immediately
prior to the record date for the determination of stockholders entitled
to participate in such dissolution, liquidation or Change in Control,
to exercise the Option, in whole or in part, without regard to any
installment provisions contained in subparagraph 1(b). In such event,
the Company will mail or cause to be mailed to the Optionee a notice
specifying the date of such dissolution, liquidation or Change in
Control. Such notice shall be mailed at least ten (10) days prior to
the date therein specified to the address of the Optionee specified on
page 1 of this Agreement or to such other address as the Optionee
delivers or transmits by registered or certified mail to the Secretary
of the Company at its principal office.
5. The Option shall be exercised when written notice of such exercise,
signed by the person entitled to exercise the Option, has been
delivered or transmitted by registered or certified mail, to the
Secretary of the Company at its principal office. Said written notice
shall specify the number of Shares purchasable under
-2-
<PAGE> 3
the Option which such person then wishes to purchase and shall be
accompanied by such documentation, if any, as may be required by the
Company as provided in Paragraph 7 below and be accompanied by payment
of the aggregate Option price. Such payment of the aggregate Option
price shall be, without limitation, in the form of (i) cash, Shares,
outstanding Options or other consideration, or any combination thereof,
having a Fair Market Value on the exercise date equal to the exercise
price of the Option or portion thereof being exercised or (ii) a
broker-assisted cashless exercise program established by the Board or a
committee thereof. Delivery of said notice and such documentation shall
constitute an irrevocable election to purchase the Shares specified in
said notice and the date on which the Company receives said notice and
documentation shall, subject to the provisions of Paragraph 7, be the
date as of which the Shares so purchased shall be deemed to have been
issued. The person entitled to exercise the Option shall not have the
right or status as a holder of the Shares to which such exercise
relates prior to receipt by the Company of such payment, notice and
documentation. For purposes of this Agreement, "Fair Market Value"
shall mean, with respect to Shares or other securities, (i) the closing
price per Share of the Shares on the principal exchange on which the
Shares are then trading, if any, on such date, or, if the Shares were
not traded on such date, then on the next preceding trading day during
which a sale occurred; or (ii) if the Shares are not traded on an
exchange but are quoted on Nasdaq or a successor quotation system, (1)
the last sales price (if the Shares are then listed on the Nasdaq
National Market) or (2) the mean between the closing representative bid
and asked prices (in all other cases) for the Shares on such date as
reported by Nasdaq or such successor quotation system; or (iii) if the
Shares are not publicly traded on an exchange and not quoted on Nasdaq
or a successor quotation system, the mean between the closing bid and
asked prices for the Shares on such date as determined in good faith by
the Committee; or (iv) if the Shares are not publicly traded, the fair
market value established by the Committee acting in good faith.
6. (a) In combination with or in substitution for cash withholding or any
other legal method of satisfying federal and state withholding tax
liability, the Optionee may elect to have Shares withheld by the
Company in order to satisfy federal and state withholding tax liability
(a "share withholding election"); provided, however, that (i) the Board
or a committee thereof shall not have revoked its advance approval of
the Optionee's share withholding election; and (ii) the share
withholding election is made on or prior to the date on which the
amount of withholding tax liability is determined (the "Tax Date"). If
the Optionee elects within thirty (30) days of the date of exercise to
be subject to withholding tax on the exercise date pursuant to the
provisions of Section 83(b) of the Code, then the share withholding
election may be made during such thirty (30) day period.
Notwithstanding the foregoing, the Optionee may make a share
withholding election only if the following additional conditions are
met: (i) the share withholding election is made no sooner than six (6)
months after the date of grant of the Option; and (ii) the share
withholding election is made (x) at least six
-3-
<PAGE> 4
(6) months prior to the Tax Date, or (y) during the period beginning on
the third business day following the date of release of the Company's
quarterly or annual financial results and ending on the twelfth
business day following such date.
(b) A share withholding election shall be deemed made when written
notice of such election, signed by the Optionee, has been
delivered or transmitted by registered or certified mail to the
Secretary of the Company at its principal office. Delivery of such
notice shall constitute an irrevocable election to have Shares
withheld.
(c) If the Optionee has made a share withholding election pursuant to
this Section 6; and (i) within thirty (30) days of the date of
exercise of the Option, the Optionee elects pursuant to the
provisions of Section 83(b) of the Code to be subject to
withholding tax on the date of exercise of the Option, then the
Optionee will be unconditionally obligated to immediately tender
back to the Company the number of Shares having an aggregate Fair
Market Value equal to the amount of tax required to be withheld
plus cash for any fractional amount, together with written notice
to the Company informing the Company of the Optionee's election
pursuant to Section 83(b) of the Code; or (ii) if the Optionee has
not made an election pursuant to the provisions of Section 83(b)
of the Code, then on the Tax Date, such Optionee will be
unconditionally obligated to tender back to the Company the number
of Shares having an aggregate Fair Market Value equal to the
amount of tax required to be withheld plus cash for any fractional
amount.
7. The Board or a committee thereof may require as a condition to the
right to exercise the Option hereunder that the Company receive from
the person exercising the Option, representations, warranties and
agreements, at the time of any such exercise, to the effect that the
Shares are being purchased for investment only and without any present
intention to sell or otherwise distribute such Shares and that the
Shares will not be disposed of in transactions which, in the opinion of
counsel to the Company, would violate the registration provisions of
the Securities Act of 1933, as then amended (the "Securities Act"), and
the rules and regulations thereunder. The certificate issued to
evidence such Shares shall bear appropriate legends summarizing such
restrictions on the disposition thereof.
8. (a) The Company shall, in connection with its presently contemplated
registration statement on Form S-8 under the Securities Act, cause to
register all 75,000 Shares which are the subject of the Option (the
"Piggyback Registration"), which Piggyback Registration shall be
effected prior to July 15, 1998.
(b) The Optionee may not participate in any registration initiated as a
Piggyback Registration which is underwritten for the benefit of the
Company unless the Optionee (i) agrees to sell his Shares on the basis
provided in any underwriting agreements approved by the Company; (ii)
completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting agreements and which are
customary with industry practice;
-4-
<PAGE> 5
and (iii) agrees that if an underwriter advises the Company in writing
that the number of shares proposed to be sold by the Company and/or the
Optionee is greater than the number of shares of Common Stock which the
underwriter believes is feasible to sell at that time, at the price and
in the terms approved by the Company, then the underwriter may exclude
some or all of the Shares from such Piggyback Registration. The Company
shall advise the Optionee of the limitation, and that the number of
shares of Shares to be offered by the Optionee will be reduced to the
number recommended by the underwriter.
(c) In any registration initiated as a Piggyback Registration, whether
or not the registration statement becomes effective, the Company will
pay or cause to be paid all costs, fees and expenses in connection
therewith, including, without limitation, the Company's legal and
accounting fees, printing expenses and "blue sky" fees and expenses,
except that the Company shall not pay for (i) underwriting discounts
and commissions, (ii) state transfer taxes, (iii) brokerage
commissions, (iv) fees and expenses of counsel and accountants for the
Optionee and (v) blue sky fees and expenses in jurisdictions where the
Company is not currently registered or qualified.
(d) To the extent not inconsistent with applicable law, the Optionee
agrees not to effect any public sale or distribution of Common Stock,
including a sale pursuant to Rule 144 or in reliance on any other
exemption from registration under the Securities Act, during the
fourteen (14) days prior to, and during the ninety (90) days beginning
on, the effective date of a registration statement that includes Shares
(except as part of such registration), but only if and to the extent
requested in writing (with reasonable prior written notice) by the
underwriter(s) in the case of an underwritten public offering by the
Company of securities similar to the Shares.
(e) The Company and the Optionee agree to indemnify and hold harmless
each other (and, in the case of the Company, its directors and officers
and each person who controls the Company (within the meaning of the
Securities Act)) against all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation) (collectively,
"Losses") arising out of or based upon any untrue or alleged untrue
statement of material fact contained in any registration statement with
respect to a Piggyback Registration, any amendment or supplement
thereto, any 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,
provided, however, that the Optionee shall not be indemnified for
Losses insofar as such Losses arise out of or are based upon any such
untrue statement or omission based upon information furnished in
writing to the Company by or on behalf of the Optionee (in his
individual capacity) expressly for use therein; provided further,
however, that in the event the prospectus shall have been amended or
supplemented and copies thereof, as so amended or supplemented, shall
have been furnished to the Optionee prior to the confirmation of any
sales of Registrable Securities, such indemnity with respect to the
prospectus shall not inure to the benefit of the Optionee if the person
asserting such Loss did not, at or prior to the confirmation of the
sale of the Registrable Securities to such person, receive a copy of
the prospectus, as so amended or supplemented, and the untrue statement
or omission of a material fact contained in the prospectus was
corrected in the prospectus, as so amended or supplemented.
-5-
<PAGE> 6
9. The Option shall be exercisable in accordance with the terms hereof
even if (i) any ISO to purchase Common Stock in the Company, in any
parent or subsidiary of the Company or in any predecessor corporation
of such corporations, was granted to the Optionee and (ii) such
previously granted ISO remains outstanding. For purposes of this
Paragraph, an ISO shall be treated as outstanding until such option is
exercised in full or expires by reason of lapse of time.
10. All certificates for Shares delivered pursuant to any Option or the
exercise thereof shall be subject to such stop transfer orders and
other restrictions as the Board or a committee thereof may deem
advisable under the rules, regulations, and other restrictions of the
Securities and Exchange Commission, any stock exchange upon which such
Shares or other securities are then listed, and any applicable federal
or state securities laws, and the Board or a committee thereof may
cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
11. This Agreement shall be construed and enforced in accordance with the
laws of the State of Delaware and applicable federal law. Subject to
subparagraph 3(a) hereof, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors or assigns, as the case may
be.
IN WITNESS WHEREOF, the parties have witnessed this Agreement to be
duly executed and delivered as of the date first above written.
SARATOGA BEVERAGE GROUP, INC.
/s/ Carl T. Wolf By: /s/ Robin Prever
- ------------------------ ---------------------
Carl T. Wolf Robin Prever
President and Chief Executive
Officer
-6-
<PAGE> 1
THE FRESH JUICE COMPANY
35 Walnut Avenue, Suite 4
Clark, NJ 07066
April 24, 1998
Ms. Robin Prever
Saratoga Beverage Group, Inc.
11 Geyser Road
Saratoga Springs, New York 12866
Re: Proposed Acquisition of The Fresh Juice Company, Inc.
by Saratoga Beverage Group, Inc. (the "Acquisition")
Dear Ms. Prever:
This letter shall serve to confirm that The Fresh
Juice Company, Inc. ("Fresh Juice") and Saratoga Beverage Group, Inc.
("Saratoga") have agreed that the Exclusivity Period, as that term is
defined in that certain "Letter Agreement" from Saratoga to Fresh Juice
dated March 29, 1998 and relating to the Acquisition, is hereby
extended to the date falling on the earliest to occur of (I) May 20,
1998; (ii) Saratoga notifying Fresh Juice in writing that negotiations
towards the Acquisition are terminated; of (iii) seven business days
after the date on which Fresh Juice has provided Saratoga with all due
diligence materials reasonably available to Fresh Juice and reasonably
requested by Saratoga. Except as modified herein, all other terms of
the Letter Agreement shall remain in full force and effect.
This letter will further serve to confirm that Saratoga hereby
agrees, that for a period ending on the earliest to occur of (i) the
execution of a definitive agreement, regarding the Acquisition, (ii)
the termination by Fresh Juice of discussions with Saratoga relating to
the Acquisition or (iii) May 25, 1998, without the prior written
consent of Fresh Juice, Saratoga will not (by itself or with others)
(a) acquire, offer to acquire or agree to acquire, directly or
indirectly in any manner, any assets or voting securities of Fresh
Juice other than pursuant to that certain "Option Agreement" between
Steven Smith and Saratoga dated March 16, 1998 or (b) announce or
publicly propose any transaction involving securities or any assets of
Fresh Juice, provided, however, that Saratoga may make all federal
securities law filings required.
Saratoga and Fresh Juice further agree that all references to
April 25, 1998 in that certain letter agreement dated March 30, 1998
from Fresh Juice to Saratoga (re: "Confidentiality Agreement") shall be
and hereby are modified to be May 20, 1998. Except as modified herein,
all other terms of the Confidentiality Agreement shall remain in full
force and effect.
-1-
<PAGE> 2
If you are in agreement with foregoing, please sign and return
one copy of this letter agreement, which will constitute our entire
agreement with respect to the subject matter hereof.
Very truly yours,
/s/ Jeffrey Heavirland
-----------------------------------
Jeffrey Heavirland
HG:glo
CONSENTED AND AGREED TO THIS 24TH DAY OF APRIL, 1998
SARATOGA BEVERAGE GROUP, INC.
By: /s/ Robin Prever
-------------------------------------
Robin Prever
Chief Executive Officer
-2-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1998 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,607,435
<SECURITIES> 1,176,081
<RECEIVABLES> 1,548,355
<ALLOWANCES> 146,842
<INVENTORY> 104,831
<CURRENT-ASSETS> 4,767,919
<PP&E> 3,229,206
<DEPRECIATION> 1,817,069
<TOTAL-ASSETS> 6,796,200
<CURRENT-LIABILITIES> 1,304,839
<BONDS> 1,500,000
0
0
<COMMON> 34,191
<OTHER-SE> 3,957,370
<TOTAL-LIABILITY-AND-EQUITY> 6,796,200
<SALES> 1,693,155
<TOTAL-REVENUES> 1,777,109
<CGS> 1,017,492
<TOTAL-COSTS> 1,145,820
<OTHER-EXPENSES> 383,615
<LOSS-PROVISION> 2,999
<INTEREST-EXPENSE> 19,709
<INCOME-PRETAX> 227,965
<INCOME-TAX> 928
<INCOME-CONTINUING> 227,037
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 227,037
<EPS-PRIMARY> 0.07<F1>
<EPS-DILUTED> 0.07
<FN>
<F1>The amount is reported as EPS basic and not EPS primary.
</FN>
</TABLE>
