-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GqNszzpUueeUf3bLKy7V++LP4XQF7Dn4nrBEfVT7SfiNC6dv8utYKteJnZ4ZkGPq zx0isnbesqv/zkUzFF8cag== 0000081057-97-000003.txt : 19970520 0000081057-97-000003.hdr.sgml : 19970520 ACCESSION NUMBER: 0000081057-97-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CABLE CAR BEVERAGE CORP CENTRAL INDEX KEY: 0000081057 STANDARD INDUSTRIAL CLASSIFICATION: BOTTLED & CANNED SOFT DRINKS CARBONATED WATERS [2086] IRS NUMBER: 520880815 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14784 FILM NUMBER: 97606488 BUSINESS ADDRESS: STREET 1: 717 17TH ST STREET 2: STE 1475 CITY: DENVER STATE: CO ZIP: 80202-3314 BUSINESS PHONE: 3032989038 MAIL ADDRESS: STREET 1: 717 17TH ST STREET 2: STE 1475 CITY: DENVER STATE: CO ZIP: 80202-3314 FORMER COMPANY: FORMER CONFORMED NAME: GREAT EASTERN INTERNATIONAL INC DATE OF NAME CHANGE: 19890810 FORMER COMPANY: FORMER CONFORMED NAME: GREAT EASTERN ENERGY CORP DATE OF NAME CHANGE: 19840815 FORMER COMPANY: FORMER CONFORMED NAME: PUBLISHING COMPUTER SERVICE INC DATE OF NAME CHANGE: 19810817 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 ------------------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to -------------- ------------- Commission File Number 0-14784 ------------------------------------ CABLE CAR BEVERAGE CORPORATION --------------------------------------------------------- (Exact name of Registrant as specified in its charter) DELAWARE 52-0880815 ------------------- --------------------- (State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.) 717 17th Street, Suite 1475, Denver, CO 80202-3314 --------------------------------------------------- (Address of principal executive offices) (303) 298-9038 --------------------------------------------------- (Registrant's telephone number, including area code) --------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---------- ---------- The Registrant had 8,905,324 shares of its $.01 par value common stock outstanding as of May 12, 1997. -1- Form 10-Q 1st Quarter INDEX ----- PAGE ---- PART I - FINANCIAL INFORMATION Item 1. Consolidated Financial Statements: ---------------------------------- Consolidated balance sheet at March 31, 1997 (Unaudited) and at December 31, 1996 3 Consolidated statement of operations for the three-month periods ended March 31, 1997 and 1996 (Unaudited) 4 Consolidated statement of cash flows for the three-month periods ended March 31, 1997 and 1996 (Unaudited) 5 Notes to unaudited consolidated financial statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II - OTHER INFORMATION 8 -2- PART I - FINANCIAL INFORMATION Item 1. Consolidated Financial Statements CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES ----------------------------------------------- CONSOLIDATED BALANCE SHEET --------------------------
MARCH 31, DECEMBER 31, 1997 1996 ------------ ------------- (UNAUDITED) ASSETS ------ CURRENT ASSETS: Cash and cash equivalents $ 1,275,142 $ 1,408,729 Short-term investments 195,042 Accounts receivable, net of allowance for doubtful accounts of $118,261 at March 31, 1997 and $100,743 at December 31, 1996 2,246,966 1,336,094 Inventories, net 2,860,547 2,430,896 Prepaid expenses and other current assets 83,955 23,582 Deferred income tax assets 478,535 394,029 ---------- ---------- Total current assets 6,945,145 5,788,372 PROPERTY AND EQUIPMENT, NET Property and equipment less accumulated depreciation of $158,119 at March 31, 1997 and $144,441 at December 31, 1996 134,597 130,778 OTHER ASSETS: Goodwill and other intangibles, less accumulated amortization of $397,209 at March 31, 1997 and $387,168 at December 31, 1996 581,224 591,265 Investment in AMCON Distributing Co. 99,185 99,185 Other assets 54,524 58,603 Deferred income tax assets 439,060 473,579 -------- -------- $ 8,253,735 $ 7,141,782 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued liabilities $ 802,975 $ 231,408 Accrued income taxes 146,048 146,140 Other current liabilities 971,674 782,188 ---------- ---------- Total current liabilities 1,920,697 1,159,736 ---------- ---------- STOCKHOLDERS' EQUITY: Common Stock, $.01 par value; 25,000,000 shares authorized; 8,981,681 shares issued 89,817 89,817 Additional paid-in capital 9,822,137 9,822,137 Accumulated deficit (3,550,281) (3,901,273) Less - 76,357 common shares in treasury (28,635) (28,635) ---------- --------- 6,333,038 5,982,046 ---------- --------- $ 8,253,735 $ 7,141,782 =========== ===========
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -3- CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES ----------------------------------------------- CONSOLIDATED STATEMENT OF OPERATIONS ------------------------------------
THREE-MONTHS ENDED MARCH 31, 1997 1996 --------- --------- (UNAUDITED) REVENUE: Sales $ 5,357,864 $ 3,682,809 COST AND EXPENSES: Cost of goods sold 3,840,165 2,696,901 General and administrative 271,721 241,754 Selling and distribution 650,172 444,148 Depreciation and amortization 23,719 19,807 ----------- ----------- 4,785,777 3,402,610 ----------- ----------- INCOME FROM OPERATIONS 572,087 280,199 OTHER INCOME AND (EXPENSES): Interest income and other non- operating income 16,124 10,264 Interest expense (145) ---------- ---------- INCOME BEFORE INCOME TAXES 588,211 290,318 PROVISION FOR INCOME TAXES 237,219 116,962 ---------- ---------- NET INCOME $ 350,992 $ 173,356 ---------- ---------- EARNINGS PER COMMON SHARE: $ 0.04 $ 0.02 ========== ========== WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES 9,440,334 9,041,650 ========== ==========
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -4- CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS
THREE-MONTHS ENDED MARCH 31, 1997 1996 --------- -------- (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 350,992 $ 173,356 Adjustment to reconcile net income to net cash from operating activities: Depreciation and amortization 23,719 19,807 Provision for loss on accounts receivable 17,518 9,207 Change in current assets and liabilities: Accounts receivable (928,390) (319,266) Inventories (429,651) (317,490) Prepaid expenses and other current assets (60,373) (17,227) Other assets 4,079 (6,532) Deferred income tax assets (49,987) 44,363 Accounts payable and accrued liabilities 571,567 183,963 Accrued income taxes (92) 116,998 Other current liabilities 189,486 56,213 --------- --------- NET CASH USED IN OPERATING ACTIVITIES (311,132) (56,608) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from short-term investments 195,042 Property and equipment acquis- itions and sales (17,497) (13,020) --------- --------- NET CASH FROM (USED IN) INVESTING ACTIVITIES 177,545 (13,020) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Principle payments on debt (2,164) --------- --------- NET CASH FROM USED IN FINANCING ACTIVITIES (2,164) --------- --------- NET DECREASE IN CASH AND CASH EQUIVALENTS (133,587) (71,792) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,408,729 576,191 --------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,275,142 $ 504,399 ============ ===========
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -5- CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES ----------------------------------------------- NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------------------- Note 1 - Financial Statements Presented: - ---------------------------------------- The consolidated interim financial statements of Cable Car Beverage Corporation (the "Company") at March 31, 1997 and for the three-month periods ended March 31, 1997 and 1996 are unaudited. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the consolidated financial position, results of operations and cash flows for all periods presented have been made. The Company's consolidated financial statements include the accounts of its wholly-owned subsidiaries, Old San Francisco Seltzer, Inc. and Fountain Classics, Inc. Certain information and substantially all footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company's consolidated financial statements, filed on Form 10-K for the year ended December 31, 1996. The results of operations for the period ended March 31, 1997 are not necessarily indicative of the operating results for the full year. Certain reclassifications have been reflected in the prior year financial statements to confirm to the current year presentation. Note 2 - Income Per Common Share: - --------------------------------- Net income per common and common share equivalent was computed under the treasury stock method using the weighted average number of common shares and dilutive common stock equivalent shares outstanding during the period. In February 1997, the FASB issued SFAS No. 128, "Earnings per Share," which is effective for periods ending after December 15, 1997 and requires changes in the computation, presentation and disclosure of earnings per share. Earnings per share for all prior periods must be restated to conform with computation provisions of SFAS No. 128. The Company will adopt SFAS No. 128 for the year ended December 31, 1997, but does not expect the new accounting standard to have a material impact on the Company's reported financial results. Note 3 - Inventories:
Inventories consisted of: March 31, December 31, 1997 1996 ------------ ------------- Finished Goods $ 1,329,794 $ 1,330,990 Raw Materials 1,530,753 1,099,906 ------------ ------------ $ 2,860,547 $ 2,430,896 ============ ============
-6- Item 2. Management's Discussion and Analysis of Financial Condition And Results of Operations Current Developments - -------------------- The Company continued to experience growth of its line of Stewart's brand soft drinks during the first quarter of 1997. During the first quarter of 1997, the Company entered into a long-term distribution agreement with Mr. Natural, Inc. whereby Mr. Natural has agreed to distribute the Company's entire line of Stewart's gourmet sodas in the five boroughs of New York City and in Westchester county. Mr. Natural also distributes Snapple and Gatorade in New York City. Results of Operations - --------------------- Comparison of the three-month periods ended March 31, 1997 and March 31, - ------------------------------------------------------------------------ 1996 - ---- Revenue for the three-months ended March 31, 1997 was $5,357,864 versus revenue of $3,682,809 for the three-months ended March 31, 1996. This increase of $1,675,055, or 45%, was primarily due to increased sales of Stewart's brand beverages. Stewart's sales grew in most U.S. markets and Canada during the first quarter of 1997. Pre-tax income increased $297,893, or 103%, to $588,211 for the three- months ended March 31, 1997 from $290,318 for the three-months ended March 31, 1996. This increase in pre-tax income is primarily due to increased revenues and an increase in gross margins. Cost of goods sold increased $1,143,264 in the first quarter of 1997 versus 1996, but decreased as a percentage of sales to 71.7% from 73.2%. The improved gross margin was primarily due to favorable sweetner costs throughout the U.S. during the first quarter of 1997. Net income increased by $177,636, or 102%, to $350,992 for the three- months ended March 31, 1997 from $173,356 for the three-months ended March 31, 1996. The Company's provision for income taxes reflects a 39% income tax rate for the three-months ended March 31, 1997, as opposed to a 38% income tax rate for the three-months ended March 31, 1996. General and administrative expense increased $29,967 from 1996 to 1997, and decreased as a percentage of sales from 6.6% to 5.1%. The percentage decrease was primarily attributable to increased sales and relatively constant administrative expenses. Selling expense increased $206,024 from 1996 to 1997, and remained constant as a percentage of sales at 12%. The dollar increase was due primarily to the following factors: salaries, promotional spending, delivery costs and other related selling expenses associated with expanding distribution. Liquidity and Capital Resources - ------------------------------- The Company's current ratio at March 31, 1997 was 3.6 as compared to 5.0 at December 31, 1996. Working capital at March 31, 1997 was $5,024,448 -7- as compared to $4,628,636 at December 31, 1996. For the three-months ended March 31, 1997, cash decreased by approximately $133,587. The principal use of cash during the quarter was for operating activities. Inventories and accounts receivables increased significantly as a result of increased sales. Net income adjusted for depreciation, amortization and other provisions generated approximately $392,000 in cash. Accounts receivable and inventories increased by a total of roughly $1,358,000, and accounts payable increased roughly $572,000. Investing activities provided cash of approximately $178,000, primarily from the proceeds from short-term investments. The Company intends to utilize cash from operations to meet its ongoing obligations. The Company also maintains a bank line of credit in the amount of $500,000 which it may utilize from time to time to meet seasonal cash needs. Management does not expect liquidity problems during 1997 assuming the Company can maintain or exceed its current sales volume, and expenses as a percentage of sales remain relatively constant. Forward Looking Statements - -------------------------- This Quarterly Report of Form 10-Q contains certain statements, including statements under "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations," that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results of the Company to be materially different from any future results implied by such forward-looking statements. Such factors include, but are not limited to general economic and business conditions; the costs of raw materials, the ability of the Company to maintain margins; continued or new relationships with distributors and brand support, changes in consumer preferences; government regulations and other factors. The Company under- takes no obligation to revise any forward looking statements in order to reflect events or circumstances that may arise after the date of this report. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a.) Exhibits (10)-U Distribution Agreement - Mr. Natural (b.) Reports on Form 8-K No reports on Form 8-K were filed with the Commission for the quarter ended March 31, 1996. (c.) Financial Data Schedule -8- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. (Registrant) CABLE CAR BEVERAGE CORPORATION (Date) May 12, 1997 By:(Signature) /s/Samuel M. Simpson (Name and Title) Samuel M. Simpson President By:(Signature) /s/Myron D. Stadler (name and Title Myron D. Stadler Chief Accounting Officer -9- EX-10 2 Exhibit (10)-U STEWART'S BRANDS DISTRIBUTING AGREEMENT THIS AGREEMENT ("Agreement"), is entered into by and between Cable Car Beverage Corporation (hereinafter "CCBC"), a Delaware Corporation and Mr. Natural, Inc., a Delaware Corporation (hereinafter the "DISTRIBUTOR"). RECITALS -------- A.CCBC has been duly appointed as an exclusive licensee of Stewart's Restaurants, Inc. for the purpose of making and selling soft drinks identified by the trademark STEWART'S (the "Trademark"), as well as for the purpose of sublicensing the use of the trademark for such goods in strict compliance with the quality standards of Stewart's Restaurants, Inc. CCBC is the owner of the trademark FOUNTAIN CLASSICS (hereinafter the "FOUNTAIN CLASSICS Trademark") used in connection with the sale and marketing of Stewart's brand soft drinks. B.STEWART'S RESTAURANTS, INC., a New Jersey corporation, having a principal address at 114 West Atlantic Avenue, Clementon, New Jersey 08021, is the owner of all right, title, and interest in and to the trademark STEWART'S for use in connection with soft drinks and concentrates and syrups for preparing the same, as evidenced by its ownership of U.S. Trademark Reg. No. 933,646 - STEWART'S, dated May 9, 1972 and Reg. No. 274,949 - STEWART'S & Design, dated September 9, 1930, which registrations are valid and subsisting. C.CCBC desires to appoint DISTRIBUTOR as a distributor for Stewart's brand soft drinks packaged in bottles and cans (the "Beverages"). This Agreement does not cover Stewart's post-mix syrup or premix beverages for fountain soft drinks. D.DISTRIBUTOR is engaged in the business of distributing soft drinks and desires to purchase the Beverages from CCBC for the purpose of distributing the Beverages in the Territory (as defined herein), on the terms and conditions set forth herein. -1- E.DISTRIBUTOR is a subsidiary of Snapple Beverage Corp. and is currently vested of rights to distribute Snapple brand beverages in the Territory of the five (5) boroughs of New York City and the County of Westchester. F.DISTRIBUTOR distributes Beverage products in the five (5) boroughs of New York City and the County of Westchester through independent third-party distributors who are not parties to this Agreement, and through whom DISTRIBUTOR will rely upon to distribute the Beverages. NOW, THEREFORE, in consideration of the mutual covenants herein, the parties agree as follows: I.Appointment of Distributor. Subject to the terms and conditions of --------------------------- this Agreement, CCBC hereby grants to DISTRIBUTOR an exclusive appointment to distribute and sell the Beverages in the following territory ("the Territory"): All five (5) boroughs of the City of New York (Manhattan; Bronx; Brooklyn; Queens; and Staten Island) and the County of Westchester in the State of New York. Notwithstanding any provision contained herein to the contrary, CCBC reserves the right to sell the Beverages directly (or indirectly through another wholesaler) to any "restaurant chain customer" (as defined herein) located within the Territory. For purposes of this section, the term "restaurant chain customer" shall be defined as a restaurant operator having twenty (20) or more locations in North America. By way of illustration and not limitation, the term "restaurant chain customer" shall include Einstein Brothers' Bagels and Cracker Barrel Old Country Store restaurants. II.Sale of Beverages. Subject to the terms and conditions contained herein, CCBC agrees to sell to DISTRIBUTOR, and DISTRIBUTOR agrees to buy from CCBC, a sufficient quantity of Beverages to enable DISTRIBUTOR to continuously, adequately and efficiently service and supply the demand for the Beverages in the Territory. DISTRIBUTOR agrees not to knowingly sell, either directly or indirectly, the Beverages outside the Territory. CCBC will supply to the DISTRIBUTOR such quantities of the Beverages as shall be required by the DISTRIBUTOR to perform the conditions of this Agreement, and the same shall be shipped on order from the DISTRIBUTOR consistent with the production schedules of CCBC. CCBC shall be DISTRIBUTOR'S exclusive supplier for the Beverages and, without CCBC'S written consent, DISTRIBUTOR agrees not to purchase, or attempt to purchase, the Beverages from any other source. During any time in which demand -2- exceeds supply of the Beverages, CCBC may restrict the availability of the Beverages to DISTRIBUTOR in accordance with any commercially reasonable allocation program specified by CCBC. CCBC reserves the right to discontinue one or more of the Beverages so long as said Beverages are discontinued throughout CCBC'S entire distribution system in the Northeastern region of the United States. III.Purchase Price and Payment. Sales of the Beverages by CCBC to --------------------------- DISTRIBUTOR shall be at such prices and on such terms as CCBC shall specify from time to time not to exceed the price offered to any distributor distributing Beverages in any adjacent Territory to distributor. CCBC agrees to provide DISTRIBUTOR 30 days advance notice of any price increases. The amount and terms of credit extended by CCBC to DISTRIBUTOR shall be in the sole discretion of CCBC. IV.Proprietary Rights, Confidentiality and Transfer Restrictions ------------------------------------------------------------- A.DISTRIBUTOR hereby acknowledges that Stewart's Restaurants, Inc. is the proprietor and rightful owner of the Trademark and that CCBC has been appointed as its exclusive licensee for purposes of selling the Beverages. DISTRIBUTOR covenants not to do or permit to be done any act calculated to prejudice, affect, impair, or destroy the title and interest of Stewart's Restaurants, Inc., or of CCBC as its licensee, in and to said Trademark. If it shall come to the notice of the DISTRIBUTOR that any person, firm or corporation is infringing said Trademark, DISTRIBUTOR will promptly notify CCBC. B.DISTRIBUTOR hereby acknowledges that CCBC is the proprietor and rightful owner of the FOUNTAIN CLASSICS Trademark. DISTRIBUTOR covenants not to do, or permit to be done, any act calculated to prejudice, affect, impair, or destroy the title and interest of CCBC in and to said FOUNTAIN CLASSICS Trademark. If it shall come to the notice of the DISTRIBUTOR that any person, firm or corporation is infringing said FOUNTAIN CLASSICS Trademark, DISTRIBUTOR will promptly notify CCBC. C.Without CCBC'S prior written consent, DISTRIBUTOR will make no use of the Trademark or the FOUNTAIN CLASSICS Trademark, including, but not limited to, use as part of DISTRIBUTOR'S trade style or corporate title, or in any directory listings or in any advertising; provided however, that DISTRIBUTOR may use point of sale materials and merchandise obtained by or through CCBC bearing the Trademark or the FOUNTAIN CLASSICS Trademark for normal sales and marketing purposes, and may use same on DISTRIBUTOR'S vehicles in a commercially reasonable manner. -3- D.DISTRIBUTOR hereby acknowledges and agrees that Stewart's Restaurants, Inc. has all proprietary right in and title to the formulations on which the Beverages are based and that the formulation and production of the Beverages are based upon valuable and proprietary confidential information of Stewart's Restaurants, Inc. E.DISTRIBUTOR agrees that Stewart's Restaurant's, Inc. is a third party beneficiary under this Agreement. V.Product Quality; Replacement of Unacceptable Products; Recall. A.CCBC hereby represents and warrants to the DISTRIBUTOR that all Beverages at the time and place of delivery to the DISTRIBUTOR: (1) shall be pure and wholesome, fit for the purpose intended, merchantable, and free from all defects; (2) shall, in all instances, comply with all federal, state or local laws and regulations relating to product quality, labeling, identity, quantity, packaging and in every other manner, including returnable container or deposit laws; (3) shall not be adulterated or misbranded within the meaning of those terms under the Federal Food, Drug and Cosmetic Act, as amended, and shall not be an article or articles which may not, under the provision of said Act, be introduced into interstate commerce; and (4) shall not be adulterated or misbranded within the meaning of the United States Insecticide, Fungicide, and Rodenticide Act, the United States Hazardous Substances Act, or any applicable State Pure Foods Act or any other applicable United States federal, state, or local law or regulation. B.If the Beverages sold by CCBC to DISTRIBUTOR are determined to be spoiled, deficient, or otherwise unfit for sale, CCBC agrees to replace such Beverages. DISTRIBUTOR shall immediately notify CCBC upon the discovery of spoiled, deficient, or non-saleable Beverages. C.If any governmental agency determines that any Beverages are not fit for human consumption, is contaminated in excess of acceptable levels by such contaminants, constitutes a human health hazard, or is otherwise not saleable, or if CCBC determines any Beverages are not saleable or for any reason should be recalled, CCBC shall repurchase the Beverages from DISTRIBUTOR at DISTRIBUTOR'S cost for such Beverages, plus actual transportation expenses and all commercially reasonable costs incurred in handling, retrieving, transporting, reclaiming and destroying or otherwise disposing of Beverages subject to such determination or recall. CCBC shall have the right to inspect any spoiled or deficient Beverages prior to being destroyed by DISTRIBUTOR. -4- VI.Distribution and Warehousing. ----------------------------- A.DISTRIBUTOR agrees to use its best efforts to sell, distribute, supply and promote the Beverages, in all of the packages made available to DISTRIBUTOR by CCBC, within the Territory and to vigorously merchandise the Beverages, in the various packages, and make them available. The DISTRIBUTOR will supply, with reasonable promptness, the demand for the Beverages in the Territory. B.DISTRIBUTOR agrees to maintain a trained sales staff reasonably adequate to sell and promote the Beverages through commercially reasonable contact with existing customers located in the Territory, and to make commercially reasonable efforts to seek sales of the Beverages to potential customers located within the Territory. C.DISTRIBUTOR may not, without CCBC'S prior written consent, sell the Beverages to any Warehouse Purchaser (as defined herein). For purposes of this Agreement, the term Warehouse Purchaser means exclusively a wholesale business (or division) that is owned or controlled by the retailer or retailers to whom said wholesale business (or division) sells its products. By way of illustration and not of limitation, the Wakefern cooperative affiliated with Shoprite Stores would be a Warehouse Purchaser under the terms of this Agreement. D.DISTRIBUTOR agrees to maintain an inventory of the Beverages equal to a minimum of five (5) times DISTRIBUTOR'S average daily sales of the Beverages. E.DISTRIBUTOR agrees to the minimum case sales requirements as set forth in Exhibit A attached hereto. F.DISTRIBUTOR also agrees: 1.To comply with standards established by CCBC to promote quality and uniformity of the Beverages through the strict adherence to CCBC'S inventory rotation policies; 2.To comply with all applicable laws and regulations regarding the warehousing, sale and distribution of beverage products; 3.To cooperate with CCBC in effectuating CCBC'S promotions and merchandising programs in the Territory. 4.To afford CCBC reasonable opportunities to meet with DISTRIBUTOR'S personnel regarding the sale and distribution of the Beverages. -5- 5.To maintain and operate sufficient delivery vehicles and delivery staff for the proper distribution of the Beverages and to maintain prompt delivery service compatible with good business practices and the reasonable requirements of its customers. VII.Sales and Information Reports. DISTRIBUTOR agrees to provide ------------------------------------- CCBC with the following reports and information: A.within 10 days following the end of each month, a depletion report specifying, by package, DISTRIBUTOR'S sales of the Beverages for the month; and any other Beverage sales information available to DISTRIBUTOR requested by CCBC. VIII.Sale of Competitive Products. DISTRIBUTOR agrees that it will ----------------------------- not sell or distribute any other root beer or cream soda packaged in amber glass bottles or any carbonated orange and cream flavored beverage. Notwithstanding the foregoing, DISTRIBUTOR may distribute any products now offered, or offered in the future, by or through Snapple Beverages or the Quaker Oats Company and DISTRIBUTOR may also distribute Orange Crush. IX.Commercial Sale. DISTRIBUTOR shall begin the commercial sale of ---------------- the Beverages within 30 days from the effective date of this Agreement. In the event that DISTRIBUTOR shall not begin the commercial sale of Beverages within such time period, CCBC, at its sole option and discretion, shall have the right to terminate this agreement by giving written notice thereof, with such termination to take effect immediately. X.Access. DISTRIBUTOR agrees to allow CCBC reasonable access, ------- during normal business hours, to DISTRIBUTOR'S warehouse facilities for the purpose of taking inventories of the Beverages and confirming that proper warehouse conditions and product rotation policies are being adhered to by DISTRIBUTOR. XI.Indemnification and Insurance. ------------------------------ A.CCBC shall indemnify and hold DISTRIBUTOR and its officers, directors, shareholders, employees, agents and contractors (each a "DISTRIBUTOR Party") harmless from and against any and all claims, suits, demands, actions, costs, liabilities, losses and expenses of any kind whatsoever, including, but not limited to, injury to person (including death) or property, including reasonable attorney's fees, except to the extent that they arise from the unauthorized and independent negligent, reckless, wanton or malicious acts of a DISTRIBUTOR Party, arising out of, resulting from or otherwise connected with any allegation of: (1) harm, injury, damage or loss arising out of or in connection with consumer use or consumption of the Beverages; (2) the defective manufacture, bottling or -6- packaging of the Beverages; (3) any negligent act, misfeasance or nonfeasance by CCBC relating to or arising out of this Agreement; (4) any breach by CCBC of any agreement, representation or warranty contained in this Agreement; (5) any wrongful or misleading claim, advertising or representation by CCBC regarding the Beverages; (6) any claim or action by a person or entity not a party to this Agreement with respect to DISTRIBUTOR'S authorized use of any Trademark or any authorized advertising or promotional material; (7) any claim by any person or entity (other than a DISTRIBUTOR Party) including, but not limited to, any prior distributor or representative of CCBC or the Beverages anywhere in the Territory that such person or entity has any right, claim or color of right granted or allowed by CCBC or any of its Affiliates to purchase, sell, market or distribute the Beverages in the Territory; or (8) CCBC'S failure to comply with any other provisions of this Agreement. B.CCBC shall obtain and maintain, and will continue to maintain at all times during the term of this Agreement, at its own expense, comprehensive general liability insurance and product liability insurance in an amount not less than $1,000,000 per occurrence for bodily injury and $1,000,000 per occurrence for property damage and excess liability insurance (Umbrella Policy) in an amount not less than $7,000,000 per occurrence. CCBC agrees to provide the DISTRIBUTOR with a certificate of insurance evidencing such insurance coverage. Such certificate shall provide that such insurance coverage may be terminated or materially modified only upon at least thirty (30) days' prior written notice by the insurance carrier to DISTRIBUTOR. CCBC at its own expense shall add the DISTRIBUTOR as an additional insured to such policies. C.DISTRIBUTOR shall indemnify and hold CCBC and its officers, directors, shareholders, employees, agents and contractors (each a "CCBC Party") harmless from and against any and all claims, suits, demands, actions, costs, liabilities, losses and expenses of any kind whatsoever, including, but not limited to, injury to person (including death) or property, including reasonable attorney's fees, except to the extent that they arise from the unauthorized and independent negligent, reckless, wanton or malicious acts of a CCBC Party, arising out of, resulting from or otherwise connected with any allegation of: (1) any breach by DISTRIBUTOR of any agreement, representation or warranty contained in this Agreement; (2) any negligent act, misfeasance or nonfeasance of DISTRIBUTOR relating to or arising out of this Agreement; (3) any wrongful or misleading claim, advertising or representation by DISTRIBUTOR regarding the Beverages unless the basis for such claim or advertising was caused by or approved by CCBC; (4) any claim or action by a person or entity not a party to this Agreement with respect to DISTRIBUTOR'S unauthorized use of any Trademark; or (5) DISTRIBUTOR'S failure to comply with any other provisions of this Agreement. -7- D.If any legal proceedings shall be instituted or any claim is asserted by any third party in respect of which a DISTRIBUTOR Party on the one hand, or a CCBC Party on the other hand, may be entitled to indemnity hereunder, the party asserting such right to indemnity shall give the party from whom indemnity is sought written notice thereof. A delay in giving notice shall only relieve the recipient of liability to the extent the recipient suffers actual prejudice because of the delay. The party from whom indemnity is sought shall have the rights, at is option and expense, to participate in the defense of such a proceeding or claim, but not to control the defense, negotiation or settlement thereof, which control shall at all times rest with the party asserting such right to indemnity, unless the party from whom indemnity is sought: (1) irrevocably acknowledges in writing complete responsibility for and agrees to indemnify the party asserting such right to indemnity, and (2) furnishes satisfactory evidence of the financial ability to indemnify the party asserting such right to indemnity, in which case the party from whom indemnity is sought may assume such control through counsel of its choice and at its expense, but the party asserting such right to indemnity shall continue to have the right to be represented, at is own expense, by counsel of its choice in connection with the defense of such a proceeding or claim. If the party from whom indemnity is sought does not assume control of the defense of such a proceeding or claim, the entire defense of the proceeding or claim by the party asserting such right to indemnity, any settlement made by the party asserting such right to indemnity, and any judgment entered in the proceeding or claim shall be deemed to have been consented to by, and shall be binding on, the party from whom indemnity is sought as fully as though it alone had assumed the defense thereof and a judgment had been entered in the proceeding or claim in the amount of such settlement or agreement, except that the right of the party from whom indemnity is sought to contest the right of the other party to indemnification under this Agreement with respect to the proceeding or claim shall not be extinguished. If the party from whom indemnity is sought does assume control of the defense of such a proceeding or claim, it will not, without the prior written consent of the party asserting such right to indemnity, settle the proceeding or claim or consent to entry of any judgment relating thereto which does not include as an unconditional term thereof the giving by the claimant to the party asserting such right to indemnity a release from all liability in respect of the proceeding or claim. The parties hereto agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such proceeding or claim and the party assuming control of the defense shall, upon request, provide the other party with information regarding the status of said defense. E.The provisions of this Paragraph 11 shall survive any termination of this Agreement. -8- XII.Term. The term of this Agreement shall be for five years from ----- the date hereof ("Primary Term") and shall be automatically renewed thereafter for successive one year terms ("Renewal Term(s)") unless terminated pursuant to Section 13 below, or unless either party gives written notice to the other party thirty (30) days prior to the end of the Primary Term (or Renewal Term(s)) of this Agreement of its election not to renew this Agreement. In the event either party so elects not to renew this Agreement, then this Agreement will automatically terminate at the end of the Primary Term (or Renewal Term(s)). In the event CCBC elects not to renew this Agreement, and provided DISTRIBUTOR is in full compliance with the terms of this Agreement, then CCBC shall purchase DISTRIBUTOR'S distribution rights in accordance with the terms set forth in Section 16, below. Notwithstanding any provision contained herein to the contrary, this Agreement will automatically terminate in the event CCBC exercises its purchase rights pursuant to Section 16 below. XIII.Termination. This Agreement shall be subject to termination ------------ upon any of the following events (each event individually referred to hereinafter as an "Event of Default" or "Default"). A.Either party defaults in the performance of any of its obligations required under this Agreement which constitutes a material breach of the same; B.DISTRIBUTOR fails to commence the commercial sale of the Beverages in accordance with Section 9 hereof; C.An attempt by DISTRIBUTOR to reformulate, duplicate, or modify the Beverages; D.DISTRIBUTOR commences with the distribution or sale of another product fitting the description contained in Section 8 herein without the written consent of CCBC; E.DISTRIBUTOR purports to assign its rights under this Agreement, or the control of DISTRIBUTOR is sold, replaced or otherwise transferred, including, but not limited to, transfer by succession, descent or distribution, or DISTRIBUTOR sells or transfers a material portion of its total physical assets; F.The discontinuance of the selling of the Beverages by DISTRIBUTOR for a period of thirty (30) days, provided such discontinuance is due to factors reasonably within DISTRIBUTOR'S control; G.DISTRIBUTOR fails to pay any monies due CCBC in accordance with terms established by CCBC within ten (10) days after receiving written demand for payment from CCBC; -9- H.DISTRIBUTOR fails to meet either the minimum case sales requirements as set forth in Section 6(e), above; I.The insolvency of the DISTRIBUTOR; or an assignment by DISTRIBUTOR for the benefit of creditors; or the filing of a voluntary bankruptcy or reorganization petition by DISTRIBUTOR; or failure of DISTRIBUTOR to vacate an involuntary bankruptcy or reorganization petition filed against DISTRIBUTOR within sixty (60) days from the date of such appointment; or J.Notwithstanding any provision herein to the contrary, this Agreement shall automatically terminate in the event CCBC'S rights to bottle and sell the Beverages are terminated pursuant to CCBC'S licensing agreement with Stewart's Restaurants, Inc. XIV.Termination Procedures. In the event of the occurrence of ----------------------- an Event of Default, the nondefaulting party shall give notice of such default in writing to the defaulting party in accordance with Section 23 hereof. The defaulting party shall thereafter have 30 days in which to correct such Default, and failing the satisfactory cure thereof, this Agreement shall automatically terminate; provided, however, if such Default is due to causes beyond the control of the defaulting party, said defaulting party shall make all reasonable efforts to cure such Default as soon as possible. Notwithstanding any provisions herein to the contrary, in the event of the occurrence of an Event of Default described in Sections 13(c), 13(e), 13(g), 13(h), 13(i), or 13(j) above, this Agreement will automatically terminate immediately upon written notice by CCBC and no time period to cure shall be allowed. Upon the occurrence of an Event of Default, CCBC shall have the right to discontinue supplying DISTRIBUTOR with Beverages until such time as such Default has been cured, without thereby canceling or terminating this Agreement and without thereby prejudicing CCBC'S other rights and remedies including the right to terminate this Agreement for the same cause or any one or more other causes. XV.Effect of Termination. On termination of this Agreement for ---------------------- any reason: A.DISTRIBUTOR will not after the date of termination use in any manner whatsoever the Trademark, the FOUNTAIN CLASSICS Trademark, or any other of the trademarks, marks, names, symbols, emblems, insignia, or other designs of CCBC, and DISTRIBUTOR shall immediately cease selling the Beverages supplied by or on behalf of CCBC, except as may be sold pursuant to Section 15 (b), below. B.CCBC shall have the right to elect to purchase from DISTRIBUTOR, and DISTRIBUTOR will upon such election by CCBC sell to CCBC, any part or all of the Beverages, at the DISTRIBUTOR'S cost price for said -10- Beverages. Should CCBC elect not to purchase said Beverages, DISTRIBUTOR shall be free to advertise and sell in its former Territory, at any price, said Beverages, provided, however, that said Beverages may not be sold if they do not meet the quality standards as established from time to time by CCBC or if the shelf life of the Beverages, as established by CCBC, has expired. Any advertising and promotional material used by DISTRIBUTOR in connection with the sale of Beverages pursuant to this subsection (b) must be of a type previously approved by CCBC. XVI.Purchase of Distribution Rights. Notwithstanding any other -------------------------------- provision in this Agreement, CCBC, in its sole discretion, may elect at any time, on ninety (90) days written notice to DISTRIBUTOR, to purchase all of DISTRIBUTOR'S distribution rights for the Beverages. In the event of such an election by CCBC, DISTRIBUTOR hereby agrees to sell said rights and the parties mutually agree that the purchase price for said rights shall be an amount to be mutually agreed upon or established through arbitration as set forth below (the "Purchase Price"). In the event CCBC and DISTRIBUTOR are unable to agree to a Purchase Price, then the parties agree to have the Purchase Price established through arbitration in accordance with the rules and regulations of the American Arbitration Association. In consideration of payment of the Purchase Price, DISTRIBUTOR agrees not to replace or attempt to replace the Beverages in DISTRIBUTOR'S accounts with other products for at least 90 days following CCBC'S purchase of the distribution rights. XVII.Force Majeure. Neither DISTRIBUTOR nor CCBC shall -------------- be held liable for any failure to comply with any of the terms of this Agreement caused solely by fire, strike, war, insurrection, government restrictions, force majeure, or other causes beyond its control and without its fault, but the party in default shall use all reasonable endeavors to cure such default and comply with the terms of this Agreement as quickly as possible. XVIII.Entire Agreement. This Agreement expresses fully the ----------------- understanding between DISTRIBUTOR and CCBC with regard to the distribution of the Beverages and into which all prior negotiations and agreements are merged. The terms of this Agreement may not be changed or modified except by an instrument in writing signed by both parties. XIX.Enforcement and Remedies. Failure by CCBC or DISTRIBUTOR to ------------------------- enforce at any time, or for any period of time, any one or more of the terms or conditions of this Agreement shall not be a waiver of such terms or conditions or of the rights of CCBC or DISTRIBUTOR thereafter to enforce each and every term and condition of this Agreement including, but not limited to, terms and conditions relating to termination. XX.Severability. Any provisions of this Agreement which may ------------- be held to be illegal, invalid or unenforceable for any reason, shall be ineffective to the extent of such illegality, invalidity, or unenforceability, without affecting, impairing or invalidating the remaining provisions which shall remain in full force and effect. -11- XXI.Attorney's Fees. In the event legal proceedings arise from ---------------- this Agreement initiated by either party, the prevailing party shall be entitled to reimbursement from the other party for expenses and costs, including reasonable attorneys' fees incurred in connection therewith. XXII.Assignments. It is acknowledged by DISTRIBUTOR that ------------ a substantial reason for CCBC'S willingness to enter into this Agreement with DISTRIBUTOR is CCBC'S present perception of the character, ability, financial responsibility and integrity of the principal owners, managers and operators of DISTRIBUTOR'S business. DISTRIBUTOR accordingly agrees that its rights under this Agreement shall not be assignable and this Agreement is terminable in accordance with Section 13(e) if without the prior written consent of CCBC: A.there is any change in the identity of the person or entity who is the principal owner of DISTRIBUTOR on the date of this Agreement or if, B.the control or management of DISTRIBUTOR is sold or otherwise transferred, including, but not limited to, sales of stock or assets. CCBC shall not withhold its consent unreasonably to such changes in the identity of the principal owner, or such assignment, sale or other transfer of the management or control, but in granting or withholding such consent CCBC may take into account, among other matters, the character, ability, financial responsibility, and integrity of the proposed new principal owners and operators of any proposed assignee, purchaser or other transferee of DISTRIBUTOR'S rights or business. XXIII.Notices. All notices and communications with respect to -------- this Agreement shall be in writing and shall be deemed to have been duly given on receipt if delivered personally, or within three days if sent by certified or registered United States mail, return receipt requested, postage prepaid, to the addresses set forth below, or such other addresses hereafter specified in accordance with this provision: CCBC: Cable Car Beverage Corporation 717th Street, Suite 1475 Denver, CO 80202-3314 DISTRIBUTOR: Mr. Natural, Inc. 212 Wolcott Street Brooklyn, NY 11201 XXIV.No Partnership or Agency Relationship. Nothing contained -------------------------------------- herein shall be deemed to create a joint venture or partnership between CCBC and DISTRIBUTOR. DISTRIBUTOR is not an agent of CCBC and DISTRIBUTOR -12- shall not represent or be deemed to have any authority to bind CCBC in any manner whatsoever. CCBC is not an agent of DISTRIBUTOR and CCBC shall not represent or be deemed to have any authority to bind DISTRIBUTOR in any manner whatsoever. XXV.Governing Law. This Agreement shall be governed by and -------------- construed in accordance with the laws of the State of New York. XXVI.Paragraph Headings. The paragraph numbers and headings ------------------- are for convenience only and do not constitute a part of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the ______ day of ________________________, 19_____. Cable Car Beverage Corporation By:______________________________________ Its: ______________________________________ "DISTRIBUTOR" By:______________________________________ Its: ______________________________________ -13- EXHIBIT A Minimum Sales Requirements -------------------------- Pursuant to Section 6(e) of this Agreement, DISTRIBUTOR and CCBC hereby establish and agree upon the following minimum sales requirements: PERIOD NO. OF CASES ------ ------------ Calendar year 1997: 110,000 Calendar year 1998: 165,000 For calendar year 1998 and each year thereafter, throughout the Primary Term (or Renewal Term(s) of this Agreement, the minimum sales requirements shall be the prior year's minimum sales requirement plus 5%. A case shall be defined as 24/12oz. Bottles; 24/12oz. Cans; 24/16oz. Bottles; or 12/32oz. Bottles. Cable Car Beverage Corporation By: ______________________________________ Its: ______________________________________ "DISTRIBUTOR" By: ______________________________________ Its: ______________________________________ -14- EX-27 3
5 3-MOS DEC-31-1996 MAR-31-1997 1,257,142 0 0 118,261 2,365,227 6,945,145 292,716 134,597 8,253,735 1,920,697 0 0 0 8,981,681 0 8,253,735 5,357,864 5,357,864 3,840,165 4,785,777 0 0 0 588,211 237,219 0 0 0 0 350,992 .04 .04
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