<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 2, 2000
---------------
ODWALLA, INC.
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(Exact name of registrant as specified in charter)
<TABLE>
<S> <C> <C>
CALIFORNIA 0-23036 77-0096788
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
</TABLE>
120 STONE PINE ROAD, HALF MOON BAY, CA 94019
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (650) 726-1888
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NONE
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(Former name or former address, if changed since last report.)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 2, 2000, Odwalla, Inc. ("Registrant") completed its acquisition
of Fresh Samantha, Inc. ("Fresh Samantha"), a privately-held company, in
accordance with the previously announced Agreement and Plan of Merger ("Merger
Agreement") dated February 2, 2000. In the merger, a wholly owned subsidiary of
Registrant was merged with and into Fresh Samantha with Fresh Samantha surviving
as a wholly owned subsidiary of Registrant. Registrant issued 3,612,122 shares
of Registrant's common stock in exchange for all outstanding stock of Fresh
Samantha. The acquisition was accounted for as a purchase. The price of
Registrant's common stock at the close of trading on May 2, 2000 was $6.375,
making the market value of the Registrant's common stock issued in consideration
for the outstanding stock of Fresh Samantha equal to approximately $23 million
as of such date.
Concurrently with the consummation of the merger, Registrant also
issued shares of Registrant's common stock to three funds managed by Wasserstein
Perella Group, Inc. (the "Wasserstein Perella Funds") and to Catterton-Simon
Partners III, L.P. (the "Catterton-Simon Partners"). Pursuant to a Stock
Purchase Agreement (the "Purchase Agreement"), dated as of February 11, 2000,
and amended as of April 25, 2000, among Registrant, U.S. Equity Partners, L.P.,
and the Catterton-Simon Partners, Registrant issued 800,641 shares of the
Registrant's common stock to the Wasserstein Perella Funds for an aggregate
purchase price of approximately $5 million. Registrant also agreed, pursuant to
the Purchase Agreement, to issue on or about May 25, 2000, an additional 160,128
shares of Registrant's common stock to Catterton-Simon Partners for an aggregate
purchase price of approximately $1 million. In addition, under a Preferred Stock
Conversion Agreement, dated as of February 11, 2000, between Registrant and
Catterton-Simon Partners, Registrant issued 1,333,333 shares of Registrant's
common stock to Catterton-Simon Partners in exchange for 1,074,666 shares of
Registrant's Series A Preferred Stock, representing all of the outstanding
shares of such stock, held by Catterton-simon Partners and cancellation of a
warrant to purchase 75,000 shares of Registrant's common stock, held by
Catterton-Simon Partners.
After completion of these transactions, including the anticipated
issuance of common stock to Catterton-Simon Partners later this month,
Registrant has 11,031,985 shares of common stock outstanding. The stock
ownership by the former Fresh Samantha shareholders, Catterton-Simon Partners
and Wasserstein Perella Funds is approximately 32.7%, 13.5% and 7.3%,
respectively.
The completion of the acquisition and the issuance of common stock,
including the reacquisition of the Series A Preferred Stock, followed approval
by Registrant's shareholders of the proposals to effect the merger and the
related transactions at the Annual Shareholders Meeting on April 25, 2000. The
following matters were voted upon at the annual meeting:
1. Approve the merger and the issuance of shares of Registrant common
stock pursuant to the Agreement and Plan of Merger, dated as of
February 2, 2000, by and among Registrant, Orange Acquisition Sub,
Inc., and Fresh Samantha, Inc. The results of the voting were as
follows:
Number of shares voted FOR 3,595,913
Number of shares voted AGAINST 25,029
Number of shares voted ABSTAINING 19,523
<PAGE> 3
2. Approve the amendment to the Certificate of Designation of the
Series A Preferred stock to permit the conversion of the shares of
Series A Preferred Stock held by Catterton-Simon Partners into
shares of Registrant's common stock based on a conversion ratio of
1.2407-to-1, rather than on the conversion ratio of 1-to-1 set
forth in the existing Certificate of Designation. The results of
the voting were as follows:
Number of shares voted FOR 3,290,089
Number of shares voted AGAINST 196,624
Number of shares voted ABSTAINING 163,752
3. Approve the adoption of an amendment to Registrant's 1997 Stock
Option/Stock Issuance Plan to increase the number of shares of
Registrant's common stock authorized for issuance thereunder from
1,648,475 shares to 2,148,475 shares. The results of the voting
were as follows:
Number of shares voted FOR 3,280,074
Number of shares voted AGAINST 201,591
Number of shares voted ABSTAINING 158,200
4. Elect six directors of Registrant to serve until the 2001 annual
meeting of shareholders or until their successors are elected and
qualified. The results of the voting were as follows:
For Withheld
--------- --------
D. Stephen C. Williamson 5,444,934 514,583
Richard Grubman 5,174,611 784,906
Ranzell Nickelson, II 5,167,625 791,892
Martin S. Gans 5,174,661 784,856
Craig H. Sakin 5,770,923 188,594
Greg A. Steltenpohl 5,792,283 167,234
5. Ratify the appointment of PricewaterhouseCoopers LLP as
independent accountants of Registrant for the fiscal year ending
September 2, 2000. The results of the voting were as follows:
Number of shares voted FOR 5,930,488
Number of shares voted AGAINST 10,566
Number of shares voted ABSTAINING 18,463
<PAGE> 4
On May 2, 2000, as provided in the Merger Agreement, the Shareholders'
Rights Agreement, dated May 2, 2000, among the Registrant, Samantha Investors,
LLC, and the shareholders of Registrant and other persons named therein, and the
Letter Agreement, dated May 1, 2000, from Bain Capital Fund VI, L.P. to
Registrant and Catterton-Simon Partners III, L.P., at the effective time of the
merger, Registrant's board of directors was increased to seven members,
directors Martin S. Gans, Ranzell Nickelson and Greg A. Steltenpohl resigned and
Andrew E. Balson, and Mark E. Nunnelly, as nominees of Bain Capital Inc.
("Bain"), and Ellis B. Jones, as nominee for Wasserstein Perella Funds, were
elected to Registrant's board of directors on May 2, 2000. The parties to the
Shareholders' Rights Agreement agreed to elect a nominee of Bain as the seventh
member of the board of directors.
On April 28, 2000, in anticipation of the May 2, 2000 closing of the
merger, Registrant completed an amendment to its existing credit agreement with
Imperial Bank. The amendment increased Registrant's line of credit from $5.0
million to $10.0 million under terms generally similar to the current credit
agreement.
A copy of the press release issued on May 3, 2000 in connection with
the above transaction is incorporated herein by reference and is attached hereto
as Exhibit 99.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The financial statements and pro forma financial information required to be
filed pursuant to Items 7(a) and 7(b) will be filed by amendment prior to July
15, 2000.
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
2.1 Amended By-Laws of Odwalla, Inc. dated May 2, 2000
10.1 Employment Agreement dated May 2, 2000 between Registrant
and Douglas L. Levin
10.2 Amendment Agreement dated April 28, 2000 between Registrant
and Imperial Bank
10.3 Stock Purchase Agreement dated February 11, 2000 between
Registrant, U.S. Equity Partners, L.P. and Catterton-Simon
Partners III, L.P.
10.4 Amendment No. 1 to the Stock Purchase Agreement dated
April 25, 2000 between Registrant, U.S. Equity Partners,
L.P., U.S. Equity Partners (Offshore), L.P.,
Catterton-Simon Partners III, L.P., and BancBoston
Investments, Inc.
10.5 Shareholders Rights Agreement dated May 2, 2000 among
Registrant, Samantha Investors, LLC, and the shareholders
of Registrant and other persons named therein.
10.6 Preferred Stock Conversion Agreement dated as of April 24,
2000, between Registrant and Catterton-Simon Partners III,
L.P.
10.7 Letter Agreement, dated May 1, 2000, from Bain Capital Fund
VI, L.P., to Registrant and Catterton-Simon Partners III,
L.P.
10.8* Agreement and Plan of Merger dated February 2, 2000
between Registrant, Fresh Samantha, Inc., and Orange
Acquisition Sub, Inc.
99 Press Release dated May 3, 2000.
</TABLE>
* Incorporated by reference to the Registrant's definitive Proxy Statement
dated March 16, 2000
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ODWALLA, INC.
DATE: May 10, 2000 By:
/s/ James R. Steichen
-------------------------
Name: James R. Steichen
Title: Senior Vice President - Finance,
and Chief Financial Officer
<PAGE> 1
EXHIBIT 2.1
AMENDED AND RESTATED
BYLAWS
OF
ODWALLA, INC.
(ADOPTED ON DECEMBER 15, 1993)
(AS AMENDED THROUGH MAY 2, 2000)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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Page
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Article I. Offices............................................................................................. 1
Section 1. Principal Office................................................................ 1
Section 2. Other Offices................................................................... 1
Article II. Corporate Seal..................................................................................... 1
Section 3. Corporate Seal.................................................................. 1
Article III. Shareholders' Meetings and Voting Rights.......................................................... 1
Section 4. Place of Meetings............................................................... 1
Section 5. Annual Meetings................................................................. 1
Section 6. Postponement of Annual Meeting.................................................. 2
Section 7. Special Meetings................................................................ 2
Section 8. Notice of Meetings.............................................................. 2
Section 9. Manner of Giving Notice......................................................... 3
Section 10. Quorum and Transaction of Business.............................................. 4
Section 11. Adjournment and Notice of Adjourned Meetings.................................... 4
Section 12. Waiver of Notice, Consent to Meeting or Approval of Minutes..................... 4
Section 13. Action by Written Consent Without a Meeting..................................... 5
Section 14. Voting.......................................................................... 6
Section 15. Persons Entitled to Vote or Consent............................................. 6
Section 16. Proxies......................................................................... 7
Section 17. Inspectors of Election.......................................................... 7
Article IV. Board of Directors ................................................................................ 8
Section 18. Powers.......................................................................... 8
Section 19. Number of Directors............................................................. 8
Section 20. Election of Directors, Term, Qualifications..................................... 9
Section 21. Resignations.................................................................... 9
Section 22. Removal......................................................................... 9
Section 23. Vacancies....................................................................... 9
Section 24. Regular Meetings................................................................ 9
Section 25. Participation by Telephone...................................................... 10
Section 26. Special Meetings................................................................ 10
Section 27. Notice of Meetings.............................................................. 10
Section 28. Place of Meetings............................................................... 10
Section 29. Action by Written Consent Without a Meeting..................................... 10
Section 30. Quorum and Transaction of Business.............................................. 10
Section 31. Adjournment..................................................................... 11
Section 32. Organization.................................................................... 11
Section 33. Compensation.................................................................... 11
Section 34. Committees...................................................................... 11
</TABLE>
<PAGE> 3
<TABLE>
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Article V. Officers............................................................................................ 12
Section 35. Officers.......................................................................... 12
Section 36. Appointment....................................................................... 12
Section 37. Inability to Act.................................................................. 12
Section 38. Resignations...................................................................... 12
Section 39. Removal........................................................................... 12
Section 40. Vacancies......................................................................... 13
Section 41. Chairman of the Board............................................................. 13
Section 42. Chief Executive Officer........................................................... 13
Section 43. President......................................................................... 13
Section 44. Vice Presidents............. ..................................................... 13
Section 45. Secretary......................................................................... 14
Section 46. Chief Financial Officer........................................................... 14
Section 47. Compensation...................................................................... 15
Article VI. Contracts, Loans, Bank Accounts, Checks and Drafts................................................. 15
Section 48. Execution of Contracts and Other Instruments..................................... 15
Section 49. Loans............................................................................ 15
Section 50. Bank Accounts.................................................................... 16
Section 51. Checks, Drafts, Etc.............................................................. 16
Article VII. Certificates For Shares and Their Transfer........................................................ 16
Section 52. Certificate for Shares........................................................... 16
Section 53. Transfer on the Books............................................................ 16
Section 54. Lost, Destroyed and Stolen Certificates.......................................... 17
Section 55. Issuance, Transfer and Registration of Shares.................................... 17
Article VIII. Inspection Of Corporate Records.................................................................. 17
Section 56. Inspection by Directors.......................................................... 17
Section 57. Inspection by Shareholders....................................................... 17
Section 58. Written Form..................................................................... 18
Article IX. Miscellaneous...................................................................................... 19
Section 59. Fiscal Year...................................................................... 19
Section 60. Annual Report.................................................................... 19
Section 61. Record Date...................................................................... 19
Section 62. Bylaw Amendments................................................................. 20
Section 63. Construction and Definition...................................................... 20
Article X. Indemnification..................................................................................... 20
Section 64. Indemnification of Directors, Officers, Employees And
Other Agents................................................................... 20
Article XI. Loans of Officers and Others....................................................................... 24
Section 65. Certain Corporate Loans and Guarantees.......................................... 24
</TABLE>
<PAGE> 4
BYLAWS
OF
ODWALLA, INC.
(ADOPTED ON DECEMBER 15, 1993)
(AS AMENDED THROUGH MAY 2, 2000)
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. The principal executive office of the
corporation shall be located at such place as the Board of Directors may from
time to time authorize. If the principal executive office is located outside
this state, and the corporation has one or more business offices in this state,
the Board of Directors shall fix and designate a principal business office in
the State of California.
SECTION 2. OTHER OFFICES. Additional offices of the corporation shall be
located at such place or places, within or outside the State of California, as
the Board of Directors may from time to time authorize.
ARTICLE II
CORPORATE SEAL
SECTION 3. CORPORATE SEAL. If the Board of Directors adopts a corporate
seal such seal shall have inscribed thereon the name of the corporation and the
state and date of its incorporation. If and when a seal is adopted by the Board
of Directors, such seal may be engraved, lithographed, printed, stamped,
impressed upon, or affixed to any contract, conveyance, certificate for shares
or other instrument executed by the corporation.
ARTICLE III
SHAREHOLDERS' MEETINGS AND VOTING RIGHTS
SECTION 4. PLACE OF MEETINGS. Meetings of shareholders shall be held at
the principal executive office of the corporation, or at any other place, within
or outside the State of California, which may be fixed either by the Board of
Directors or by the written consent of all persons entitled to vote at such
meeting, given either before or after the meeting and filed with the Secretary
of the corporation.
SECTION 5. ANNUAL MEETINGS. The annual meeting of the shareholders of
the corporation shall be held at the hour of nine o'clock a.m. local time, on
the second Friday in December in each year if such date is not a legal holiday
observed by the corporation at its principal executive office, and if it is such
a legal holiday, then on the next succeeding full business day at the same time.
At such annual meeting directors shall be elected and any other business may be
transacted which may properly come before the meeting.
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SECTION 6. POSTPONEMENT OF ANNUAL MEETING. The Board of Directors and
the President shall each have authority to hold at an earlier date and/or time,
or to postpone to a later date and/or time, the annual meeting of shareholders.
SECTION 7. SPECIAL MEETINGS.
(a) Special meetings of the shareholders, for any purpose or
purposes, may be called by the Board of Directors, the Chairman of the Board of
Directors, the President, or the holders of shares entitled to cast not less
than ten percent (10%) of the votes at the meeting.
(b) Upon written request to the Chairman of the Board of Directors,
the President, any vice president or the Secretary of the corporation by any
person or persons (other than the Board of Directors) entitled to call a special
meeting of the shareholders, such officer forthwith shall cause notice to be
given to the shareholders entitled to vote, that a meeting will be held at a
time requested by the person or persons calling the meeting, such time to be not
less than thirty-five (35) nor more than sixty (60) days after receipt of such
request. If such notice is not given within twenty (20) days after receipt of
such request, the person or persons calling the meeting may give notice thereof
in the manner provided by law or in these bylaws. Nothing contained in this
Section 7 shall be construed as limiting, fixing or affecting the time or date
when a meeting of shareholders called by action of the Board of Directors may be
held.
SECTION 8. NOTICE OF MEETINGS. Except as otherwise may be required by
law and subject to subsection 7(b) above, written notice of each meeting of
shareholders shall be given to each shareholder entitled to vote at that meeting
(see Section 15 below), by the Secretary, assistant secretary or other person
charged with that duty, not less than ten (10) (or, if sent by third class mail,
thirty (30)) nor more than sixty (60) days before such meeting.
Notice of any meeting of shareholders shall state the date, place and
hour of the meeting and,
(a) in the case of a special meeting, the general nature of the
business to be transacted, and no other business may be transacted at such
meeting;
(b) in the case of an annual meeting, the general nature of
matters which the Board of Directors, at the time the notice is given, intends
to present for action by the shareholders;
(c) in the case of any meeting at which directors are to be
elected, the names of the nominees intended at the time of the notice to be
presented by management for election; and
(d) in the case of any meeting, if action is to be taken on any
of the following proposals, the general nature of such proposal:
(1) a proposal to approve a transaction within the provisions
of California Corporations Code, Section 310 (relating to certain transactions
in which a director has a direct or indirect financial interest);
2
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(2) a proposal to approve a transaction within the provisions
of California Corporations Code, Section 902 (relating to amending the Articles
of Incorporation of the corporation);
(3) a proposal to approve a transaction within the provisions
of California Corporations Code, Sections 181 and 1201 (relating to
reorganization);
(4) a proposal to approve a transaction within the provisions
of California Corporations Code, Section 1900 (winding up and dissolution);
(5) a proposal to approve a plan of distribution within the
provisions of California Corporations Code, Section 2007 (relating to certain
plans providing for distribution not in accordance with the liquidation rights
of preferred shares, if any).
At a special meeting, notice of which has been given in accordance
with this Section 8, action may not be taken with respect to business, the
general nature of which has not been stated in such notice. At an annual
meeting, action may be taken with respect to business stated in the notice of
such meeting, given in accordance with this Section 8, and, subject to
subsection 8(d) above, with respect to any other business as may properly come
before the meeting.
SECTION 9. MANNER OF GIVING NOTICE. Notice of any meeting of
shareholders shall be given either personally or by first-class mail, or, if the
corporation has outstanding shares held of record by 500 or more persons
(determined as provided in California Corporations Code Section 605) on the
record date for such meeting, third-class mail, or telegraphic or other written
communication, addressed to the shareholder at the address of that shareholder
appearing on the books of the corporation or given by the shareholder to the
corporation for the purpose of notice. If no such address appears on the
corporation's books or is given, notice shall be deemed to have been given if
sent to that shareholder by first-class mail or telegraphic or other written
communication to the corporation's principal executive office, or if published
at least once in a newspaper of general circulation in the county where that
office is located. Notice shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by telegram or other means
of written communication.
If any notice addressed to a shareholder at the address of that
shareholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the shareholder
at that address, all future notices shall be deemed to have been duly given
without further mailing if these shall be available to the shareholder on
written demand by the shareholder at the principal executive office of the
corporation for a period of one year from the date of the giving of the notice.
An affidavit of mailing of any notice or report in accordance with
the provisions of this Section 9, executed by the Secretary, Assistant Secretary
or any transfer agent, shall be prima facie evidence of the giving of the
notice.
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SECTION 10. QUORUM AND TRANSACTION OF BUSINESS.
(a) At any meeting of the shareholders, a majority of the shares
entitled to vote, represented in person or by proxy, shall constitute a quorum.
If a quorum is present, the affirmative vote of the majority of shares
represented at the meeting and entitled to vote on any matter shall be the act
of the shareholders, unless the vote of a greater number or voting by classes is
required by law or by the Articles of Incorporation, and except as provided in
subsection (b) below.
(b) The shareholders present at a duly called or held meeting of
the shareholders at which a quorum is present may continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave less
than a quorum, provided that any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.
(c) In the absence of a quorum, no business other than
adjournment may be transacted, except as described in subsection (b) above.
SECTION 11. ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS. Any meeting of
shareholders may be adjourned from time to time, whether or not a quorum is
present, by the affirmative vote of a majority of shares represented at such
meeting either in person or by proxy and entitled to vote at such meeting.
In the event any meeting is adjourned, it shall not be necessary to
give notice of the time and place of such adjourned meeting pursuant to Sections
8 and 9 of these bylaws; provided that if any of the following three events
occur, such notice must be given:
(a) announcement of the adjourned meeting's time and place is not
made at the original meeting which it continues or
(b) such meeting is adjourned for more than forty-five (45) days
from the date set for the original meeting or
(c) a new record date is fixed for the adjourned meeting.
At the adjourned meeting, the corporation may transact any business
that might have been transacted at the original meeting.
SECTION 12. WAIVER OF NOTICE, CONSENT TO MEETING OR APPROVAL OF MINUTES.
(a) Subject to subsection (b) of this Section, the transactions
of any meeting of shareholders, however called and noticed, and wherever held,
shall be as valid as though made at a meeting duly held after regular call and
notice, if a quorum is present either in person or by proxy, and if, either
before or after the meeting, each of the persons entitled to vote but not
present in person or by proxy signs a written waiver of notice or a consent to
holding of the meeting or an approval of the minutes thereof.
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<PAGE> 8
(b) A waiver of notice, consent to the holding of a meeting or
approval of the minutes thereof need not specify the business to be transacted
or transacted at nor the purpose of the meeting; provided that in the case of
proposals described in subsection (d) of Section 8 of these bylaws, the general
nature of such proposals must be described in any such waiver of notice and such
proposals can only be approved by waiver of notice, not by consent to holding of
the meeting or approval of the minutes.
(c) All waivers, consents and approvals shall be filed with the
corporate records or made a part of the minutes of the meeting.
(d) A person's attendance at a meeting shall constitute waiver of
notice of and presence at such meeting, except when such person objects at the
beginning of the meeting to transaction of any business because the meeting is
not lawfully called or convened and except that attendance at a meeting is not a
waiver of any right to object to the consideration of matters that are required
by law or these bylaws to be in such notice (including those matters described
in subsection (d) of Section 8 of these bylaws), but are not so included if such
person expressly objects to consideration of such matter or matters at any time
during the meeting.
SECTION 13. ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Any action that
may be taken at any meeting of shareholders may be taken without a meeting and
without prior notice if written consents setting forth the action so taken are
signed by the holders of the outstanding shares having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Directors may not be elected by written consent except by unanimous
written consent of all shares entitled to vote for the election of directors;
provided that any vacancy on the Board of Directors (other than a vacancy
created by removal) which has not been filled by the board of directors may be
filled by the written consent of a majority of outstanding shares entitled to
vote for the election of directors.
Any written consent may be revoked pursuant to California
Corporations Code Section 603(c) prior to the time that written consents of the
number of shares required to authorize the proposed action have been filed with
the Secretary. Such revocation must be in writing and will be effective upon its
receipt by the Secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing, and if the unanimous written consent of all such
shareholders shall not have been received, the Secretary shall give prompt
notice of any corporate action approved by the shareholders without a meeting to
those shareholders entitled to vote on such matters who have not consented
thereto in writing. This notice shall be given in the manner specified in
Section 9 of these bylaws. In the case of approval of (i) a transaction within
the provisions of California Corporations Code, Section 310 (relating to certain
transactions in which a director has an interest), (ii) a transaction within the
provisions of California Corporations Code, Section 317 (relating to
indemnification of agents of the corporation), (iii) a transaction within the
provisions of California Corporations Code, Sections 181 and 1201 (relating to
reorganization), and (iv) a plan of distribution within the provisions of
California Corporations Code, Section 2007 (relating to certain plans providing
for distribution not in accordance with the liquidation rights of preferred
shares, if any), the notice shall be given at least ten (10) days before the
consummation of any action authorized by that approval.
5
<PAGE> 9
SECTION 14. VOTING. The shareholders entitled to vote at any meeting of
shareholders shall be determined in accordance with the provisions of Section 15
of these bylaws, subject to the provisions of Sections 702 through 704 of the
California Corporations Code (relating to voting shares held by a fiduciary, in
the name of a corporation, or in joint ownership). Voting at any meeting of
shareholders need not be by ballot; provided, however, that elections for
directors must be by ballot if balloting is demanded by a shareholder at the
meeting and before the voting begins.
Until such time as this corporation becomes a listed corporation
within the meaning of Section 301.5 of the California Corporations Code, every
person entitled to vote at an election for directors may cumulate the votes to
which such person is entitled, i.e., such person may cast a total number of
votes equal to the number of directors to be elected multiplied by the number of
votes to which such person's shares are entitled, and may cast said total number
of votes for one or more candidates in such proportions as such person thinks
fit; provided, however, no shareholder shall be entitled to so cumulate such
shareholder's votes unless the candidates for which such shareholder is voting
have been placed in nomination prior to the voting and a shareholder has given
notice at the meeting, prior to the vote, of an intention to cumulate votes. In
any election of directors, the candidates receiving the highest number of votes,
up to the number of directors to be elected, are elected.
Except as may be otherwise provided in the Articles of Incorporation
or by law, and subject to the foregoing provisions regarding the accumulation of
votes, each shareholder shall be entitled to one vote for each share held;
provided, however, that the right to cumulative voting provided for above shall
be eliminated at such time as this corporation becomes a listed corporation
within the meaning of Section 301.5 of the California Corporations Code.
Any shareholder may vote part of such shareholder's shares in favor
of a proposal and refrain from voting the remaining shares or vote them against
the proposal, other than elections to office, but, if the shareholder fails to
specify the number of shares such shareholder is voting affirmatively, it will
be conclusively presumed that the shareholder's approving vote is with respect
to all shares such shareholder is entitled to vote.
No shareholder approval, other than unanimous approval of those
entitled to vote, will be valid as to proposals described in subsection 8(d) of
these bylaws unless the general nature of such business was stated in the notice
of meeting or in any written waiver of notice.
SECTION 15. PERSONS ENTITLED TO VOTE OR CONSENT. The Board of Directors
may fix a record date pursuant to Section 61 of these bylaws to determine which
shareholders are entitled to notice of and to vote at a meeting or consent to
corporate actions, as provided in Sections 13 and 14 of these bylaws. Only
persons in whose name shares otherwise entitled to vote stand on the stock
records of the corporation on such date shall be entitled to vote or consent.
6
<PAGE> 10
If no record date is fixed:
(a) The record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the business day next preceding the day notice is given or, if
notice is waived, at the close of business on the business day next preceding
the day on which the meeting is held;
(b) The record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting, when no prior action
by the Board of Directors has been taken, shall be the day on which the first
written consent is given;
(c) The record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto, or the sixtieth (60th) day
prior to the date of such other action, whichever is later.
A determination of shareholders of record entitled to notice of or to
vote at a meeting of shareholders shall apply to any adjournment of the meeting
unless the Board of Directors fixes a new record date for the adjourned meeting;
provided, however, that the Board of Directors shall fix a new record date if
the meeting is adjourned for more than forty-five (45) days from the date set
for the original meeting.
Shares of the corporation held by its subsidiary or subsidiaries (as
defined in California Corporations Code, Section 189(b)) are not entitled to
vote in any matter.
SECTION 16. PROXIES. Every person entitled to vote or execute consents
may do so either in person or by one or more agents authorized to act by a
written proxy executed by the person or such person's duly authorized agent and
filed with the Secretary of the corporation; provided that no such proxy shall
be valid after the expiration of eleven (11) months from the date of its
execution unless otherwise provided in the proxy. The manner of execution,
suspension, revocation, exercise and effect of proxies is governed by law.
SECTION 17. INSPECTORS OF ELECTION. Before any meeting of shareholders,
the Board of Directors may appoint any persons, other than nominees for office,
to act as inspectors of election at the meeting or its adjournment. If no
inspectors of election are so appointed, the chairman of the meeting may, and on
the request of any shareholder or a shareholder's proxy shall, appoint
inspectors of election at the meeting. The number of inspectors shall be either
one (1) or three (3). If inspectors are appointed at a meeting on the request of
one or more shareholders or proxies, the majority of shares represented in
person or by proxy shall determine whether one (1) or three (3) inspectors are
to be appointed. If any person appointed as inspector fails to appear or fails
or refuses to act, the chairman of the meeting may, and upon the request of any
shareholder or a shareholder's proxy shall, appoint a person to fill that
vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the voting
power of each, the shares represented at the meeting, the existence of a quorum,
and the authenticity, validity, and effect of proxies;
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(b) Receive votes, ballots, or consents;
(c) Hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election
or vote with fairness to all shareholders.
ARTICLE IV
BOARD OF DIRECTORS
SECTION 18. POWERS. Subject to the provisions of law or any limitations
in the Articles of Incorporation or these bylaws, as to action required to be
approved by the shareholders or by the outstanding shares, the business and
affairs of the corporation shall be managed and all corporate powers shall be
exercised, by or under the direction of the Board of Directors. The Board of
Directors may delegate the management of the day-to-day operation of the
business of the corporation to a management company or other person, provided
that the business and affairs of the corporation shall be managed and all
corporate powers shall be exercised under the ultimate direction of the Board of
Directors.
SECTION 19. NUMBER OF DIRECTORS. The authorized number of directors of
the corporation shall be not less than a minimum of five (5) nor more than a
maximum of nine (9) (which maximum number in no case shall be greater than two
times said minimum, minus one) and the number of directors presently authorized
is seven (7). The exact number of directors shall be set within these limits
from time to time (a) by approval of the Board of Directors, or (b) by the
affirmative vote of a majority of the shares represented and voting at a duly
held meeting at which a quorum is present (which shares voting affirmatively
also constitute at least a majority of the required quorum) or by the written
consent of shareholders pursuant to Section 13 hereinabove.
Any amendment of these bylaws changing the maximum or minimum number
of directors may be adopted only by the affirmative vote of a majority of the
outstanding shares entitled to vote; provided, an amendment reducing the minimum
number of directors to less than five (5), cannot be adopted if votes cast
against its adoption at a meeting or the shares not consenting to it in the case
of action by written consent are equal to more than 16-2/3 percent of the
outstanding shares entitled to vote.
No reduction of the authorized number of directors shall remove any
director prior to the expiration of such director's term of office.
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SECTION 20. ELECTION OF DIRECTORS, TERM, QUALIFICATIONS. The directors
shall be elected at each annual meeting of shareholders to hold office until the
next annual meeting. Each director, including a director elected or appointed to
fill a vacancy, shall hold office either until the expiration of the term for
which elected or appointed and until a successor has been elected and qualified,
or until his death, resignation or removal. Directors need not be shareholders
of the corporation.
SECTION 21. RESIGNATIONS. Any director of the corporation may resign
effective upon giving written notice to the Chairman of the Board, the
President, the Secretary or the Board of Directors of the corporation, unless
the notice specifies a later time for the effectiveness of such resignation. If
the resignation specifies effectiveness at a future time, a successor may be
elected pursuant to Section 23 of these bylaws to take office on the date that
the resignation becomes effective.
SECTION 22. REMOVAL. The Board of Directors may declare vacant the
office of a director who has been declared of unsound mind by an order of court
or who has been convicted of a felony.
The entire Board of Directors or any individual director may be
removed from office without cause by the affirmative vote of a majority of the
outstanding shares entitled to vote on such removal; provided, however, that
unless the entire Board is removed, no individual director may be removed when
the votes cast against such director's removal, or not consenting in writing to
such removal, would be sufficient to elect that director if voted cumulatively
at an election at which the same total number of votes cast were cast (or, if
such action is taken by written consent, all shares entitled to vote were voted)
and the entire number of directors authorized at the time of such director's
most recent election were then being elected.
SECTION 23. VACANCIES. A vacancy or vacancies on the Board of Directors
shall be deemed to exist in case of the death, resignation or removal of any
director, or upon increase in the authorized number of directors or if
shareholders fail to elect the full authorized number of directors at an annual
meeting of shareholders or if, for whatever reason, there are fewer directors on
the Board of Directors than the full number authorized. Such vacancy or
vacancies may be filled by a majority of the remaining directors, though less
than a quorum, or by a sole remaining director. The shareholders may elect a
director at any time to fill any vacancy not filled by the directors. Any such
election by written consent, other than to fill a vacancy created by removal,
requires the consent of a majority of the outstanding shares entitled to vote.
Any such election by written consent to fill a vacancy created by removal
requires the consent of all of the outstanding shares entitled to vote.
If, after the filling of any vacancy by the directors, the directors
then in office who have been elected by the shareholders constitute less than a
majority of the directors then in office, any holder or holders of an aggregate
of five percent (5%) or more of the shares outstanding at that time and having
the right to vote for such directors may call a special meeting of shareholders
to be held to elect the entire Board of Directors. The term of office of any
director shall terminate upon such election of a successor.
SECTION 24. REGULAR MEETINGS. Immediately after each annual meeting of
shareholders, and at such place fixed by the Board of Directors, or if no such
place is fixed, at the place of the annual meeting, the Board of Directors shall
hold a regular meeting for the purposes
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of organization, the appointment of officers and the transaction of other
business. Other regular meetings of the Board of Directors shall be held at such
times, places and dates as fixed in these bylaws or by the Board of Directors;
provided, however, that if the date for such a meeting falls on a legal holiday,
then the meeting shall be held at the same time on the next succeeding full
business day. Regular meetings of the Board of Directors held pursuant to this
Section 24 may be held without notice.
SECTION 25. PARTICIPATION BY TELEPHONE. Members of the Board of
Directors may participate in a meeting through use of conference telephone or
similar communications equipment, so long as all members participating in such
meeting can hear one another. Such participation constitutes presence in person
at such meeting.
SECTION 26. SPECIAL MEETINGS. Special meetings of the Board of Directors
for any purpose may be called by the Chairman of the Board or the President or
any vice president or the Secretary of the corporation or any two (2) directors.
SECTION 27. NOTICE OF MEETINGS. Notice of the date, time and place of
all meetings of the Board of Directors, other than regular meetings held
pursuant to Section 24 above, shall be delivered personally, orally or in
writing, or by telephone or telegraph to each director, at least forty-eight
(48) hours before the meeting, or sent in writing to each director by
first-class mail, charges prepaid, at least four (4) days before the meeting.
Such notice may be given by the Secretary of the corporation or by the person or
persons who called a meeting. Such notice need not specify the purpose of the
meeting. Notice of any meeting of the Board of Directors need not be given to
any director who signs a waiver of notice of such meeting, or a consent to
holding the meeting or an approval of the minutes thereof, either before or
after the meeting, or who attends the meeting without protesting prior thereto
or at its commencement such director's lack of notice. All such waivers,
consents and approvals shall be filed with the corporate records or made a part
of the minutes of the meeting.
SECTION 28. PLACE OF MEETINGS. Meetings of the Board of Directors may be
held at any place within or without the state which has been designated in the
notice of the meeting or, if not stated in the notice or there is no notice,
designated in the bylaws or by resolution of the Board of Directors.
SECTION 29. ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Any action
required or permitted to be taken by the Board of Directors may be taken without
a meeting, if all members of the Board of Directors individually or collectively
consent in writing to such action. Such written consent or consents shall be
filed with the minutes of the proceedings of the Board of Directors. Such action
by written consent shall have the same force and effect as a unanimous vote of
such directors.
SECTION 30. QUORUM AND TRANSACTION OF BUSINESS. A majority of the
authorized number of directors shall constitute a quorum for the transaction of
business. Every act or decision done or made by a majority of the authorized
number of directors present at a meeting duly held at which a quorum is present
shall be the act of the Board of Directors, unless the law, the Articles of
Incorporation or these bylaws specifically require a greater number. A meeting
at which a quorum is initially present may continue to transact business,
notwithstanding withdrawal of directors, if any action taken is approved by at
least a majority of the number of directors constituting a quorum for such
meeting. In the absence of a quorum at any meeting of
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the Board of Directors, a majority of the directors present may adjourn the
meeting, as provided in Section 31 of these bylaws.
SECTION 31. ADJOURNMENT. Any meeting of the Board of Directors, whether
or not a quorum is present, may be adjourned to another time and place by the
affirmative vote of a majority of the directors present. If the meeting is
adjourned for more than twenty-four (24) hours, notice of such adjournment to
another time or place shall be given prior to the time of the adjourned meeting
to the directors who were not present at the time of the adjournment.
SECTION 32. ORGANIZATION. The Chairman of the Board shall preside at
every meeting of the Board of Directors, if present. If there is no Chairman of
the Board or if the Chairman is not present, a Chairman chosen by a majority of
the directors present shall act as chairman. The Secretary of the corporation
or, in the absence of the Secretary, any person appointed by the Chairman shall
act as secretary of the meeting.
SECTION 33. COMPENSATION. Directors and members of committees may
receive such compensation, if any, for their services, and such reimbursement
for expenses, as may be fixed or determined by the Board of Directors.
SECTION 34. COMMITTEES. The Board of Directors may, by resolution
adopted by a majority of the authorized number of directors, designate one or
more committees, each consisting of two (2) or more directors, to serve at the
pleasure of the Board of Directors. The Board of Directors, by a vote of the
majority of authorized directors, may designate one or more directors as
alternate members of any committee, to replace any absent member at any meeting
of such committee. Any such committee shall have authority to act in the manner
and to the extent provided in the resolution of the Board of Directors, and may
have all the authority of the Board of Directors in the management of the
business and affairs of the corporation, except with respect to:
(a) the approval of any action for which shareholders' approval
or approval of the outstanding shares also is required by the California
Corporations Code;
(b) the filling of vacancies on the Board of Directors or any of
its committees;
(c) the fixing of compensation of directors for serving on the
Board of Directors or any of its committees;
(d) the adoption, amendment or repeal of these bylaws;
(e) the amendment or repeal of any resolution of the Board of
Directors which by its express terms is not so amendable or repealable;
(f) a distribution to shareholders, except at a rate or in a
periodic amount or within a price range determined by the Board of Directors; or
(g) the appointment of other committees of the Board of Directors
or the members thereof.
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Any committee may from time to time provide by resolution for regular
meetings at specified times and places. If the date of such a meeting falls on a
legal holiday, then the meeting shall be held at the same time on the next
succeeding full business day. No notice of such a meeting need be given. Such
regular meetings need not be held if the committee shall so determine at any
time before or after the time when such meeting would otherwise have taken
place. Special meetings may be called at any time in the same manner and by the
same persons as stated in Sections 26 and 27 of these bylaws for meetings of the
Board of Directors. The provisions of Sections 25, 28, 29, 30, 31 and 32 of
these bylaws shall apply to committees, committee members and committee meetings
as if the words "committee" and "committee member" were substituted for the word
"Board of Directors", and "director", respectively, throughout such sections.
ARTICLE V
OFFICERS
SECTION 35. OFFICERS. The corporation shall have a Chairman of the
Board, a Chief Executive Officer, a President, a Secretary, a Chief Financial
Officer and such other officers with such titles and duties as the Board of
Directors may determine. Any two or more offices may be held by the same person.
The Board of Directors, in its discretion, may appoint more than one person to
any office, in which case each such person individually shall have the duties
and powers of such office, unless the Board of Directors has specified a
different arrangement.
SECTION 36. APPOINTMENT. All officers shall be chosen and appointed by
the Board of Directors; provided, however, the Board of Directors may empower
the Chief Executive Officer of the corporation to appoint such officers, other
than Chairman of the Board, President, Secretary or Chief Financial Officer, as
the business of the corporation may require. All officers shall serve at the
pleasure of the Board of Directors, subject to the rights, if any, of an officer
under a contract of employment.
SECTION 37. INABILITY TO ACT. In the case of absence or inability to act
of any officer of the corporation or of any person authorized by these bylaws to
act in such officer's place, the Board of Directors may from time to time
delegate the powers or duties of such officer to any other officer, or any
director or other person whom it may select, for such period of time as the
Board of Directors deems necessary.
SECTION 38. RESIGNATIONS. Any officer may resign at any time upon
written notice to the corporation, without prejudice to the rights, if any, of
the corporation under any contract to which such officer is a party. Such
resignation shall be effective upon its receipt by the Chairman of the Board,
the Chief Executive Officer, the President, the Secretary or the Board of
Directors, unless a different time is specified in the notice for effectiveness
of such resignation. The acceptance of any such resignation shall not be
necessary to make it effective unless otherwise specified in such notice.
SECTION 39. REMOVAL. Any officer may be removed from office at any time,
with or without cause, but subject to the rights, if any, of such officer under
any contract of employment, by the Board of Directors or by any committee to
whom such power of removal has been duly delegated, or, with regard to any
officer who has been appointed by the Chief Executive Officer
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pursuant to Section 36 above, by the Chief Executive Officer or any other
officer upon whom such power of removal may be conferred by the Board of
Directors.
SECTION 40. VACANCIES. A vacancy occurring in any office for any cause
may be filled by the Board of Directors, in the manner prescribed by this
Article V for initial appointment to such office.
SECTION 41. CHAIRMAN OF THE BOARD. The Chairman of the Board, if there
be such an officer, shall, if present, preside at all meetings of the Board of
Directors and shall exercise and perform such other powers and duties as may be
assigned from time to time by the Board of Directors or prescribed by these
bylaws. If neither a President nor a Chief Executive Officer is appointed, the
Chairman of the Board is the general manager and chief executive officer of the
corporation, and shall exercise all powers of the Chief Executive Officer
described in Section 42 below.
SECTION 42. CHIEF EXECUTIVE OFFICER. Subject to such supervisory powers,
if any, as may be given by the Board of Directors to the Chairman of the Board,
if there be such an officer, the Chief Executive Officer shall, subject to the
control of the Board of Directors, have general supervision, direction and
control of the business, strategic direction and affairs of the corporation. The
Chief Executive Officer may sign and execute, in the name of the corporation,
any instrument authorized by the Board of Directors, except when the signing and
execution thereof shall have been expressly delegated by the Board of Directors
or by these bylaws to some other officer or agent of the corporation. The Chief
Executive Officer shall have all the general powers and duties of management
usually vested in the chief executive officer of a corporation, and shall have
such other powers and duties as may be prescribed from time to time by the Board
of Directors or these bylaws. The Chief Executive Officer shall have discretion
to prescribe the duties of other officers and employees of the corporation in a
manner not inconsistent with the provisions of these bylaws and the directions
of the Board of Directors.
SECTION 43. PRESIDENT. The President shall, subject to the control of
the Board of Directors, report to the Chief Executive Officer and have general
supervision, direction and control of the business and departmental officers of
the corporation. The President may sign and execute, in the name of the
corporation, any instrument authorized by the Board of Directors, except when
the signing and execution thereof shall have been expressly delegated by the
Board of Directors or by these bylaws to some other officer or agent of the
corporation. The President shaft have all the general powers and duties of
management usually vested in the president of a corporation, and shall have such
other powers and duties as may be prescribed from time to time by the Board of
Directors, the Chief Executive Officer or these bylaws. The President shall have
discretion to prescribe the duties of other departmental officers and employees
of the corporation in a manner not inconsistent with the provisions of these
bylaws and the directions of the Board of Directors or the Chief Executive
Officer.
SECTION 44. VICE PRESIDENTS. In the absence or disability of the
President, in the event of a vacancy in the office of President, or in the event
such officer refuses to act, the Vice President shall perform all the duties of
the President and, when so acting, shall have all the powers of, and be subject
to all the restrictions on, the President. If at any such time the corporation
has more than one vice president, the duties and powers of the President shall
pass to each vice president in order of such vice president's rank as fixed by
the Board of Directors or, if the vice presidents are not so ranked, to the vice
president designated by the Board of Directors.
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The vice presidents shall have such other powers and perform such other duties
as may be prescribed for them from time to time by the Board of Directors or
pursuant to Sections 35 and 36 of these bylaws or otherwise pursuant to these
bylaws.
SECTION 45. SECRETARY. The Secretary shall:
(a) Keep, or cause to be kept, minutes of all meetings of the
corporation's shareholders, Board of Directors, and committees of the Board of
Directors, if any. Such minutes shall be kept in written form.
(b) Keep, or cause to be kept, at the principal executive office
of the corporation, or at the office of its transfer agent or registrar, if any,
a record of the corporation's shareholders, showing the names and addresses of
all shareholders, and the number and classes of shares held by each. Such
records shall be kept in written form or any other form capable of being
converted into written form.
(c) Keep, or cause to be kept, at the principal executive office
of the corporation, or if the principal executive office is not in California,
at its principal business office in California, an original or copy of these
bylaws, as amended.
(d) Give, or cause to be given, notice of all meetings of
shareholders, directors and committees of the Board of Directors, as required by
law or by these bylaws.
(e) Keep the seal of the corporation, if any, in safe custody.
(f) Exercise such powers and perform such duties as are usually
vested in the office of secretary of a corporation, and exercise such other
powers and perform such other duties as may be prescribed from time to time by
the Board of Directors or these bylaws.
If any assistant secretaries are appointed, the assistant secretary,
or one of the assistant secretaries in the order of their rank as fixed by the
Board of Directors or, if they are not so ranked, the assistant secretary
designated by the Board of Directors, in the absence or disability of the
Secretary or in the event of such officer's refusal to act or if a vacancy
exists in the office of Secretary, shall perform the duties and exercise the
powers of the Secretary and discharge such duties as may be assigned from time
to time pursuant to these bylaws or by the Board of Directors.
SECTION 46. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall:
(a) Be responsible for all functions and duties of the treasurer
of the corporation.
(b) Keep and maintain, or cause to be kept and maintained,
adequate and correct books and records of account for the corporation.
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(c) Receive or be responsible for receipt of all monies due and
payable to the corporation from any source whatsoever; have charge and custody
of, and be responsible for, all monies and other valuables of the corporation
and be responsible for deposit of all such monies in the name and to the credit
of the corporation with such depositories as may be designated by the Board of
Directors or a duly appointed and authorized committee of the Board of
Directors.
(d) Disburse or be responsible for the disbursement of the funds
of the corporation as may be ordered by the Board of Directors or a duly
appointed and authorized committee of the Board of Directors.
(e) Render to the Chief Executive Officer and the Board of
Directors a statement of the financial condition of the corporation if called
upon to do so.
(f) Exercise such powers and perform such duties as are usually
vested in the office of chief financial officer of a corporation, and exercise
such other powers and perform such other duties as may be prescribed by the
Board of Directors or these bylaws.
If any assistant financial officer is appointed, the assistant
financial officer, or one of the assistant financial officers, if there are more
than one, in the order of their rank as fixed by the Board of Directors or, if
they are not so ranked, the assistant financial officer designated by the Board
of Directors, shall, in the absence or disability of the Chief Financial Officer
or in the event of such officer's refusal to act, perform the duties and
exercise the powers of the Chief Financial Officer, and shall have such powers
and discharge such duties as may be assigned from time to time pursuant to these
bylaws or by the Board of Directors.
SECTION 47. COMPENSATION. The compensation of the officers shall be
fixed from time to time by the Board of Directors, and no officer shall be
prevented from receiving such compensation by reason of the fact that such
officer is also a director of the corporation.
ARTICLE VI
CONTRACTS, LOANS, BANK ACCOUNTS, CHECKS AND DRAFTS
SECTION 48. EXECUTION OF CONTRACTS AND OTHER INSTRUMENTS. Except as
these bylaws may otherwise provide, the Board of Directors or its duly appointed
and authorized committee may authorize any officer or officers, agent or agents,
to enter into any contract or execute and deliver any instrument in the name of
and on behalf of the corporation, and such authorization may be general or
confined to specific instances. Except as so authorized or otherwise expressly
provided in these bylaws, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or in any amount.
SECTION 49. LOANS. No loans shall be contracted on behalf of the
corporation and no negotiable paper shall be issued in its name, unless and
except as authorized by the Board of Directors or its duly appointed and
authorized committee. When so authorized by the Board of Directors or such
committee, any officer or agent of the corporation may effect loans and advances
at any time for the corporation from any bank, trust company or other
institution, or from any firm, corporation or individual, and for such loans and
advances may make, execute
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and deliver promissory notes, bonds or other evidences of indebtedness of the
corporation and, when authorized as aforesaid, may mortgage, pledge, hypothecate
or transfer any and all stocks, securities and other property, real or personal,
at any time held by the corporation, and to that end endorse, assign and deliver
the same as security for the payment of any and all loans, advances,
indebtedness, and liabilities of the corporation. Such authorization may be
general or confined to specific instances.
SECTION 50. BANK ACCOUNTS. The Board of Directors or its duly appointed
and authorized committee from time to time may authorize the opening and keeping
of general and/or special bank accounts with such banks, trust companies or
other depositories as may be selected by the Board of Directors, its duly
appointed and authorized committee or by any officer or officers, agent or
agents, of the corporation to whom such power may be delegated from time to time
by the Board of Directors. The Board of Directors or its duly appointed and
authorized committee may make such rules and regulations with respect to said
bank accounts, not inconsistent with the provisions of these bylaws, as are
deemed advisable.
SECTION 51. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes, acceptances or other evidences of indebtedness
issued in the name of the corporation shall be signed by such officer or
officers, agent or agents, of the corporation, and in such manner, as shall be
determined from time to time by resolution of the Board of Directors or its duly
appointed and authorized committee. Endorsements for deposit to the credit of
the corporation in any of its duly authorized depositories may be made, without
countersignature, by the Chief Executive Officer or the President or any vice
president or the Chief Financial Officer or any assistant financial officer or
by any other officer or agent of the corporation to whom the Board of Directors
or its duly appointed and authorized committee, by resolution, shall have
delegated such power or by hand-stamped impression in the name of the
corporation.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 52. CERTIFICATE FOR SHARES. Every holder of shares in the
corporation shall be entitled to have a certificate signed in the name of the
corporation by the Chairman or Vice Chairman of the Board or the President or a
Vice President and by the Chief Financial Officer or an assistant financial
officer or by the Secretary or an assistant secretary, certifying the number of
shares and the class or series of shares owned by the shareholder. Any or all of
the signatures on the certificate may be facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if such person were an officer, transfer
agent or registrar at the date of issue.
In the event that the corporation shall issue any shares as only
partly paid, the certificate issued to represent such partly paid shares shall
have stated thereon the total consideration to be paid for such shares and the
amount paid thereon.
SECTION 53. TRANSFER ON THE BOOKS. Upon surrender to the Secretary or
transfer agent (if any) of the corporation of a certificate for shares of the
corporation duly endorsed, with reasonable assurance that the endorsement is
genuine and effective, or accompanied by proper
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evidence of succession, assignment or authority to transfer and upon compliance
with applicable federal and state securities laws and if the corporation has no
statutory duty to inquire into adverse claims or has discharged any such duty
and if any applicable law relating to the collection of taxes has been complied
with, it shall be the duty of the corporation, by its Secretary or transfer
agent, to cancel the old certificate, to issue a new certificate to the person
entitled thereto and to record the transaction on the books of the corporation.
SECTION 54. LOST, DESTROYED AND STOLEN CERTIFICATES. The holder of any
certificate for shares of the corporation alleged to have been lost, destroyed
or stolen shall notify the corporation by making a written affidavit or
affirmation of such fact. Upon receipt of said affidavit or affirmation, the
Board of Directors, or its duly appointed and authorized committee or any
officer or officers authorized by the Board so to do, may order the issuance of
a new certificate for shares in the place of any certificate previously issued
by the corporation and which is alleged to have been lost, destroyed or stolen.
However, the Board of Directors or such authorized committee, officer or
officers may require the owner of the allegedly lost, destroyed or stolen
certificate, or such owner's legal representative, to give the corporation a
bond or other adequate security sufficient to indemnify the corporation and its
transfer agent and/or registrar, if any, against any claim that may be made
against it or them on account of such allegedly lost, destroyed or stolen
certificate or the replacement thereof. Said bond or other security shall be in
such amount, on such terms and conditions and, in the case of a bond, with such
surety or sureties as may be acceptable to the Board of Directors or to its duly
appointed and authorized committee or any officer or officers authorized by the
Board of Directors to determine the sufficiency thereof. The requirement of a
bond or other security may be waived in particular cases at the discretion of
the Board of Directors or its duly appointed and authorized committee or any
officer or officers authorized by the Board of Directors so to do.
SECTION 55. ISSUANCE, TRANSFER AND REGISTRATION OF SHARES. The Board of
Directors may make such rules and regulations, not inconsistent with law or with
these bylaws, as it may deem advisable concerning the issuance, transfer and
registration of certificates for shares of the capital stock of the corporation.
The Board of Directors may appoint a transfer agent or registrar of transfers,
or both, and may require all certificates for shares of the corporation to bear
the signature of either or both.
ARTICLE VIII
INSPECTION OF CORPORATE RECORDS
SECTION 56. INSPECTION BY DIRECTORS. Every director shall have the
absolute right at any reasonable time to inspect and copy all books, records,
and documents of every kind of the corporation and any of its subsidiaries and
to inspect the physical properties of the corporation and any of its
subsidiaries. Such inspection may be made by the director in person or by agent
or attorney, and the right of inspection includes the right to copy and make
extracts.
SECTION 57. INSPECTION BY SHAREHOLDERS.
(a) INSPECTION OF CORPORATE RECORDS.
(1) A shareholder or shareholders holding at least five (5%)
percent in the aggregate of the outstanding voting shares of the corporation or
who hold at least
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one percent of such voting shares and have filed a Schedule 14B with the United
States Securities and Exchange Commission relating to the election of directors
of the corporation shall have an absolute right to do either or both of the
following:
(i) Inspect and copy the record of shareholders' names
and addresses and shareholdings during usual business hours upon five (5)
business days' prior written demand upon the corporation; or
(ii) Obtain from the transfer agent, if any, for the
corporation, upon five business days' prior written demand and upon the tender
of its usual charges for such a list (the amount of which charges shall be
stated to the shareholder by the transfer agent upon request), a list of the
shareholders' names and addresses who are entitled to vote for the election of
directors and their shareholdings, as of the most recent record date for which
it has been compiled or as of a date specified by the shareholder subsequent to
the date of demand.
(2) The record of shareholders shall also be open to
inspection and copying by any shareholder or holder of a voting trust
certificate at any time during usual business hours upon written demand on the
corporation, for a purpose reasonably related to such holder's interest as a
shareholder or holder of a voting trust certificate.
(3) The accounting books and records and minutes of
proceedings of the shareholders and the Board of Directors and of any committees
of the Board of Directors of the corporation and of each of its subsidiaries
shall be open to inspection, copying and making extracts upon written demand on
the corporation of any shareholder or holder of a voting trust certificate at
any reasonable time during usual business hours, for a purpose reasonably
related to such holder's interests as a shareholder or as a holder of such
voting trust certificate.
(4) Any inspection, copying and making of extracts under this
subsection (a) may be done in person or by agent or attorney.
(b) INSPECTION OF BYLAWS. The original or a copy of these bylaws
shall be kept as provided in Section 45 of these bylaws and shall be open to
inspection by the shareholders at all reasonable times during office hours. If
the principal executive office of the corporation is not in California, and the
corporation has no principal business office in the state of California, a
current copy of these bylaws shall be furnished to any shareholder upon written
request.
SECTION 58. WRITTEN FORM. If any record subject to inspection pursuant
to Section 57 above is not maintained in written form, a request for inspection
is not complied with unless and until the corporation at its expense makes such
record available in written form.
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ARTICLE IX
MISCELLANEOUS
SECTION 59. FISCAL YEAR. Unless otherwise fixed by resolution of the
Board of Directors, the fiscal year of the corporation shall end on the 31st day
of August in each calendar year.
SECTION 60. ANNUAL REPORT.
(a) Subject to the provisions of Section 60(b) below, the Board
of Directors shall cause an annual report to be sent to each shareholder of the
corporation in the manner provided in Section 9 of these bylaws not later than
one hundred twenty (120) days after the close of the corporation's fiscal year.
Such report shall include a balance sheet as of the end of such fiscal year and
an income statement and statement of changes in financial position for such
fiscal year, accompanied by any report thereon of independent accountants or, if
there is no such report, the certificate of an authorized officer of the
corporation that such statements were prepared without audit from the books and
records of the corporation. When there are more than 100 shareholders of record
of the corporation's shares, as determined by Section 605 of the California
Corporations Code, additional information as required by Section 1501(b) of the
California Corporations Code shall also be contained in such report, provided
that if the corporation has a class of securities registered under Section 12 of
the United States Securities Exchange Act of 1934, that Act shall take
precedence. Such report shall be sent to shareholders at least fifteen (15) (or,
if sent by third-class mail, thirty-five (35)) days prior to the next annual
meeting of shareholders after the end of the fiscal year to which it relates.
(b) If and so long as there are fewer than 100 holders of record
of the corporation's shares, the requirement of sending of an annual report to
the shareholders of the corporation is hereby expressly waived.
SECTION 61. RECORD DATE. The Board of Directors may fix a time in the
future as a record date for the determination of the shareholders entitled to
notice of or to vote at any meeting or entitled to receive payment of any
dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any change, conversion or exchange of shares
or entitled to exercise any rights in respect of any other lawful action. The
record date so fixed shall not be more than sixty (60) days nor less than ten
(10) days prior to the date of the meeting nor more than sixty (60) days prior
to any other action or event for the purpose of which it is fixed. If no record
date is fixed, the provisions of Section 15 of these bylaws shall apply with
respect to notice of meetings, votes and consents and the record date for
determining shareholders for any other purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolutions relating
thereto, or the sixtieth (60th) day prior to the date of such other action or
event, whichever is later.
Only shareholders of record at the close of business on the record
date shall be entitled to notice and to vote or to receive the dividend,
distribution or allotment of rights or to exercise the rights, as the case may
be, notwithstanding any transfer of any shares on the books of the corporation
after the record date, except as otherwise provided in the Articles of
Incorporation, by agreement or by law.
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SECTION 62. BYLAW AMENDMENTS. Except as otherwise provided by law or
Section 19 of these bylaws, these bylaws may be amended or repealed by the Board
of Directors or by the affirmative vote of a majority of the outstanding shares
entitled to vote, including, if applicable, the affirmative vote of a majority
of the outstanding shares of each class or series entitled by law or the
Articles of Incorporation to vote as a class or series on the amendment or
repeal or adoption of any bylaw or bylaws; provided, however, after issuance of
shares, a bylaw specifying or changing a fixed number of directors or the
maximum or minimum number or changing from a fixed to a variable board or vice
versa may only be adopted by approval of the outstanding shares as provided
herein.
SECTION 63. CONSTRUCTION AND DEFINITION. Unless the context requires
otherwise, the general provisions, rules of construction, and definitions
contained in the California Corporations Code shall govern the construction of
these bylaws.
Without limiting the foregoing, "shall" is mandatory and "may" is
permissive.
ARTICLE X
INDEMNIFICATION
SECTION 64. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER
AGENTS.
(a) DIRECTORS AND EXECUTIVE OFFICERS. The corporation shall
indemnify its directors and executive officers to the fullest extent not
prohibited by the California General Corporation Law; provided, however, that
the corporation may limit the extent of such indemnification by individual
contracts with its directors and executive officers; and, provided, further,
that the corporation shall not be required to indemnify any director or
executive officer in connection with any proceeding (or part thereof) initiated
by such person or any proceeding by such person against the corporation or its
directors, officers, employees or other agents unless (i) such indemnification
is expressly required to be made by law, (ii) the proceeding was authorized by
the board of directors of the corporation or (iii) such indemnification is
provided by the corporation, in its sole discretion, pursuant to the powers
vested in the corporation under the California General Corporation Law.
(b) OTHER OFFICERS, EMPLOYEES AND OTHER AGENTS. The corporation
shall have the power to indemnify its other officers, employees and other agents
as set forth in the California General Corporation Law.
(c) DETERMINATION BY THE CORPORATION. Promptly after receipt of a
request for indemnification hereunder (and in any event within 90 days thereof)
a reasonable, good faith determination as to whether indemnification of the
director or executive officer is proper under the circumstances because such
director or executive officer has met the applicable standard of care shall be
made by:
(1) a majority vote of a quorum consisting of directors who
are not parties to such proceeding;
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(2) if such quorum is not obtainable, by independent legal
counsel in a written opinion; or
(3) approval or ratification by the affirmative vote of a
majority of the shares of this corporation represented and voting at a duly held
meeting at which a quorum is present (which shares voting affirmatively also
constitute at least a majority of the required quorum) or by written consent of
a majority of the outstanding shares entitled to vote; where in each case the
shares owned by the person to be indemnified shall not be considered entitled to
vote thereon.
(d) GOOD FAITH.
(1) For purposes of any determination under this bylaw, a
director or executive officer shall be deemed to have acted in good faith and in
a manner he reasonably believed to be in the best interests of the corporation
and its shareholders, and, with respect to any criminal action or proceeding, to
have had no reasonable cause to believe that his conduct was unlawful, if his
action is based on information, opinions, reports and statements, including
financial statements and other financial data, in each case prepared or
presented by:
(i) one or more officers or employees of the corporation
whom the director or executive officer believed to be reliable and competent in
the matters presented;
(ii) counsel, independent accountants or other persons
as to matters which the director or executive officer believed to be within such
person's professional competence; and
(iii) with respect to a director, a committee of the
Board upon which such director does not serve, as to matters within such
committee's designated authority, which committee the director believes to merit
confidence; so long as, in each case, the director or executive officer acts
without knowledge that would cause such reliance to be unwarranted.
(2) The termination of any proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent shall
not, of itself, create a presumption that the person did not act in good faith
and in a manner which he reasonably believed to be in the best interests of the
corporation and its shareholders or that he had reasonable cause to believe that
his conduct was unlawful.
(3) The provisions of this paragraph (d) shall not be deemed
to be exclusive or to limit in any way the circumstances in which a person may
be deemed to have met the applicable standard of conduct set forth by the
California General Corporation Law.
(e) EXPENSES. The corporation shall advance, prior to the final
disposition of any proceeding, promptly following request therefor, all expenses
incurred by any director or executive officer in connection with such proceeding
upon receipt of an undertaking by or on behalf of such person to repay said
amounts if it shall be determined ultimately that such person is not entitled to
be indemnified under this bylaw or otherwise.
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Notwithstanding the foregoing, unless otherwise determined pursuant
to paragraph (f) of this bylaw, no advance shall be made by the corporation if a
determination is reasonably and promptly made by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to the
proceeding (or, if no such quorum exists, by independent legal counsel in a
written opinion) that the facts known to the decision-making party at the time
such determination is made demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in the
best interests of the corporation and its shareholders.
(f) ENFORCEMENT. Without the necessity of entering into an
express contract, all rights to indemnification and advances to directors and
executive officers under this bylaw shall be deemed to be contractual rights and
be effective to the same extent and as if provided for in a contract between the
corporation and the director or executive officer. Any right to indemnification
or advances granted by this bylaw to a director or executive officer shall be
enforceable by or on behalf of the person holding such right in the forum in
which the proceeding is or was pending or, if such forum is not available or a
determination is made that such forum is not convenient, in any court of
competent jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part, or (ii) no disposition of such claim is made within
ninety (90) days of request therefor. The claimant in such enforcement action,
if successful in whole or in part, shall be entitled to be paid also the expense
of prosecuting his claim. The corporation shall be entitled to raise as a
defense to any such action that the claimant has not met the standards of
conduct that make it permissible under the California General Corporation Law
for the corporation to indemnify the claimant for the amount claimed. Neither
the failure of the corporation (including its board of directors, independent
legal counsel or its shareholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in the California General Corporation Law, nor an actual determination by
the corporation (including its board of directors, independent legal counsel or
its shareholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that claimant
has not met the applicable standard of conduct.
(g) NON-EXCLUSIVITY OF RIGHTS. To the fullest extent permitted by
the corporation's Articles of Incorporation and the California General
Corporation Law, the rights conferred on any person by this bylaw shall not be
exclusive of any other right that such person may have or hereafter acquire
under any statute, provision of the Articles of Incorporation, bylaws,
agreement, vote of shareholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding office. The corporation is specifically authorized to enter into
individual contracts with any or all of its directors, officers, employees or
agents respecting indemnification and advances, to the fullest extent permitted
by the California General Corporation Law and the corporation's Articles of
Incorporation.
(h) SURVIVAL OF RIGHTS. The rights conferred on any person by
this bylaw shall continue as to a person who has ceased to be a director or
executive officer and shall inure to the benefit of the heirs, executors and
administrators of such a person.
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(i) INSURANCE. The corporation, upon approval by the board of
directors, may purchase insurance on behalf of any person required or permitted
to be indemnified pursuant to this bylaw.
(j) AMENDMENTS. Any repeal or modification of this bylaw shall
only be prospective and shall not affect the rights under this bylaw in effect
at the time of the alleged occurrence of any action or omission to act that is
the cause of any proceeding against any agent of the corporation.
(k) EMPLOYEE BENEFIT PLANS. The corporation shall indemnify the
directors and officers of the corporation who serve at the request of the
corporation as trustees, investment managers or other fiduciaries of employee
benefit plans to the fullest extent permitted by the California General
Corporation Law.
(l) SAVING CLAUSE. If this bylaw or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director and executive officer to
the fullest extent permitted by any applicable portion of this bylaw that shall
not have been invalidated, or by any other applicable law.
(m) CERTAIN DEFINITIONS. For the purposes of this bylaw, the
following definitions shall apply:
(1) The term "PROCEEDING" shall be broadly construed and
shall include, without limitation, the investigation, preparation, prosecution,
defense, settlement and appeal of any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative, arbitrative or
investigative.
(2) The term "EXPENSES" shall be broadly construed and shall
include, without limitation, court costs, attorneys' fees, witness fees, fines,
amounts paid in settlement or judgment and any other costs and expenses of any
nature or kind incurred in connection with any proceeding, including expenses of
establishing a right to indemnification under this bylaw or any applicable law.
(3) The term the "CORPORATION" shall include, in addition to
the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its directors, officers, employees or agents, so that any person who
is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
the provisions of this bylaw with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(4) References to a "DIRECTOR," "OFFICER," "EMPLOYEE" or
"AGENT" of the corporation shall include, without limitation, situations where
such person is or was serving at the request of the corporation as a director,
officer, employee, trustee or agent of another corporation, partnership, joint
venture, trust or other enterprise.
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ARTICLE XI
LOANS OF OFFICERS AND OTHERS
SECTION 65. CERTAIN CORPORATE LOANS AND GUARANTIES. If the corporation
has outstanding shares held of record by 100 or more persons on the date of
approval by the Board of Directors, the corporation may make loans of money or
property to, or guarantee the obligations of, any officer of the corporation or
its parent or any subsidiary, whether or not a director of the corporation or
its parent or any subsidiary, or adopt an employee benefit plan or plans
authorizing such loans or guaranties, upon the approval of the Board of
Directors alone, by a vote sufficient without counting the vote of any
interested director or directors, if the Board of Directors determines that such
a loan or guaranty or plan may reasonably be expected to benefit the
corporation. Notwithstanding the foregoing, the corporation shall have the power
to make loans permitted by the California Corporations Code.
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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
TABLE OF CONTENTS
1. Period of Employment
2. Position and Responsibilities
3. Compensation and Benefits
4. Termination of Employment
5. Proprietary Information
6. Arbitration
7. Notices
8. Action by Odwalla
9. Integration
10. Amendments; Waivers
11. Assignment; Successors and Assigns
12. Severability
13. Attorneys' Fees
14. Injunctive Relief
15. Governing Law
16. Interpretation
17. Employee Acknowledgment
This Agreement, dated as of May 2, 2000, is between Odwalla, Inc., a
California corporation ("Odwalla"), and Douglas K. Levin ("Levin").
RECITALS
Odwalla and Levin wish to enter into their employment relationship on the
following terms and conditions.
Odwalla recognizes and acknowledges that Levin has been valuable and
instrumental in developing Fresh Samantha's business and good will.
Levin acknowledges the compensation conferred upon him by this employment
agreement, consisting of additional salary, health benefits, and option vesting
provisions in the event Levin is terminated without Cause or is Involuntarily
Terminated following a Change in Control or Corporate Transaction, as provided
below.
Odwalla has spent significant time, effort, and money to develop certain
Proprietary Information (as defined below), which Odwalla considers vital to its
business and goodwill.
The Proprietary Information will necessarily be communicated to or acquired by
Levin in the course of his employment with Odwalla, and Odwalla wishes to
continue its employment relationship with Levin only if, in doing so, it can
protect its Proprietary Information and goodwill.
<PAGE> 2
ACCORDINGLY, the parties agree as follows:
1. Period of Employment.
(a) Basic Term. Odwalla shall continue to employ Levin to render services to
Odwalla in the position and with the duties and responsibilities described in
Section 2 for the period (the "Period of Employment") commencing on the date of
this Agreement and ending upon the earlier of (i) December 21, 2002, as, and to
the extent, extended under Section 1(b); or (ii) the date upon which the Period
of Employment is terminated in accordance with Section 4.
(b) Renewal. Subject to Section 4, Levin's employment will be renewed
automatically for an additional one (1) year period (without any action by
either party) on December 21, 2002 and on each anniversary thereof, unless one
party gives to the other written notice sixty (60) days in advance of the
beginning of any one-year renewal period that the Period of Employment is to be
terminated. In no event shall the Period of Employment under this Agreement
extend or be renewed beyond December 21, 2005. Either party may elect not to
renew this Agreement with or without cause, in which case this Section 1(b)
shall govern Levin's termination and not Section 4 (except for Levin's
termination obligations set forth in Section 4(h), which shall remain in
effect). Nothing stated in this Agreement or represented orally or in writing to
either party shall create an obligation to renew this Agreement.
2. Position and Responsibilities.
(a) Position. Levin accepts employment with Odwalla as President and shall
perform all services appropriate to that position, as well as such other
services as may be assigned by Odwalla. Levin shall devote his best efforts and
full-time attention to the performance of his duties. Levin shall be subject to
the direction of Odwalla, which shall retain full control of the means and
methods by which he performs the above services and of the place(s) at which all
services are rendered. Levin shall be expected to travel if necessary or
advisable in order to meet the obligations of his position.
(b) Other Activity. Except upon the prior written consent of Odwalla, Levin
(during the Period of Employment) shall not (i) accept any other employment; or
(ii) engage, directly or indirectly, in any other business, commercial, or
professional activity (whether or not pursued for pecuniary advantage) that is
or may be competitive with Odwalla, that might create a conflict of interest
with Odwalla, or that otherwise might interfere with the business of Odwalla, or
any Affiliate. An "Affiliate" shall mean any person or entity that directly or
indirectly controls, is controlled by, or is under common control with Odwalla.
So that Odwalla may be aware of the extent of any other demands upon Levin's
time and attention, Levin shall disclose in confidence to Odwalla the nature and
scope of any other business activity in which he is or becomes engaged during
the Period of Employment.
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3. Compensation and Benefits.
(a) Compensation. In consideration of the services to be rendered under this
Agreement, Odwalla shall pay Levin One Hundred Ninety Thousand Dollars
($190,000) per year, payable bi-weekly, pursuant to the procedures regularly
established, and as they may be amended, by Odwalla in its sole discretion,
during the Period of Employment. Odwalla shall review annually Levin's
compensation and shall determine, in its sole discretion, whether and how much
the existing compensation shall be adjusted, without regard to any policy or
practice Odwalla may have for adjusting salaries. All compensation and
comparable payments to be paid to Levin under this Agreement shall be less
withholdings required by law.
(b) Benefits. Pursuant to the Compensation Committee's decision of June 14,
1999, regarding Senior Executive Officer vacation policy, Levin will not accrue
vacation leave. Levin shall have the right to participate in and to receive
benefits from all present and future benefit plans specified in Odwalla's
policies and generally made available to similarly situated employees of
Odwalla. The amount and extent of benefits to which Levin is entitled shall be
governed by the specific benefit plan, as amended. Levin also shall be entitled
to any benefits or compensation tied to termination as described in Section 4.
Odwalla reserves the ability, in its sole discretion, to adjust Levin's benefits
provided under this Agreement. No statement concerning benefits or compensation
to which Levin is entitled shall alter in any way the term of this Agreement,
any renewal thereof, or its termination.
(c) Expenses. Odwalla shall reimburse Levin for reasonable travel and other
business expenses incurred by Levin in the performance of his duties, in
accordance with Odwalla's policies, as they may be amended in Odwalla's sole
discretion.
(d) Options. At the first meeting of the Board of Directors Compensation
Committee ("Compensation Committee") scheduled after the date of this Agreement,
Odwalla's Chief Executive Officer will recommend that the Compensation Committee
award Levin options to purchase one hundred thirty thousand (130,000) shares of
Odwalla common stock under the 1997 Stock Option/Stock Issuance Plan, as
amended. The terms recommended to the Compensation Committee are as follows:
vesting, forty-eight (48) months with one-forty-eighth (1/48) of the award
vesting monthly; option price, closing price quoted on NASDAQ as of the date of
the award; vesting start date, the date of this Agreement.
(e) Temporary Housing. As provided in Exhibit A to this Agreement.
4. Termination of Employment.
(a) By Death. The Period of Employment shall terminate automatically upon the
death of Levin. Odwalla shall pay to Levin's beneficiaries or estate, as
appropriate, any compensation then due and owing, if any. Thereafter, all
obligations of Odwalla under this Agreement shall cease. Any stock option
outstanding at the time of Levin's death
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shall remain exercisable by the personal representative of Levin's estate or by
the person or persons to whom the option is transferred pursuant to Levin's will
or in accordance with the laws of descent and distribution and may be exercised
as provided by the relevant Stock Option Agreement. Nothing in this Section
shall affect any entitlement of Levin's heirs to the benefits of any life
insurance plan or other applicable benefits.
(b) By Disability. If, by reason of any physical or mental incapacity, Levin
cannot perform his duties under this Agreement for six (6) consecutive months,
then, to the extent permitted by law, Levin's Period of Employment will be
automatically terminated. Odwalla shall supplement any benefits Levin receives
under Odwalla's disability plans to the extent necessary to make Levin's net
compensation whole and shall provide applicable benefits to which he is entitled
up through the last business day on which the Period of Employment was
terminated; thereafter, all obligations of Odwalla under this Agreement shall
cease. Nothing in this Section shall affect Levin's rights under any applicable
Odwalla disability plan.
(c) By Employer Not For Cause. At any time, Odwalla may terminate Levin without
Cause (as defined below) by providing Levin sixty (60) days' advance written
notice, provided Odwalla:
(i) pays Levin all compensation due to Levin through December 21, 2002,
or the relevant anniversary thereof, if this Agreement has been
automatically renewed as provided by Section 1(b). The compensation due
to Levin during this period will be based on Levin's salary as of the
effective date of termination and will be payable on a bi-weekly basis;
(ii) reimburses Levin for the cost of acquiring health benefits, through
COBRA or, to the extent Levin's eligibility for COBRA ends prior to the
fulfillment of this obligation, through the independent purchase of
comparable health benefits, through December 21, 2002, or the relevant
anniversary thereof, if this Agreement has been automatically renewed as
provided by Section 1(b); and
(iii) automatically accelerates each outstanding stock option so that
each such option shall, at the time Levin's termination becomes
effective, become fully exercisable with respect to the total number of
shares of stock at the time subject to such option and may be exercised
for any or all of those shares as fully vested shares. Any options so
accelerated shall remain exercisable for the limited period set forth in
the stock option agreements evidencing the option, but no such option
shall be exercisable after the expiration of the option term.
Odwalla shall have the option, in its complete discretion, to terminate Levin at
any time prior to the end of the sixty (60) day notice period.
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<PAGE> 5
(d) By Employer For Cause. At any time, and without prior notice, Odwalla may
terminate Levin for Cause. Odwalla shall pay Levin all compensation then due and
owing; thereafter, all of Odwalla's obligations under this Agreement shall
cease. Termination shall be for "Cause" if Levin: (i) acts in bad faith and to
the detriment of Odwalla; (ii) refuses or fails to act in accordance with any
specific direction or order of Odwalla; (iii) exhibits in regard to his
employment unfitness or unavailability for service, unsatisfactory performance,
misconduct, dishonesty, habitual neglect, or incompetence; (iv) is convicted of
a crime involving dishonesty, breach of trust, or physical or emotional harm to
any person; (v) is selected for layoff pursuant to a bona fide
reduction-in-force; or (vi) breaches any material term of this Agreement. If
termination is due to Levin's disability, Section 4(b) above shall control, and
not this subsection on termination for Cause.
(e) By Employee Not for Good Reason. At any time, Levin may terminate his
employment without Good Reason (as defined below) by providing Odwalla thirty
(30) days' advance written notice. Odwalla shall have the option, in its
complete discretion, to make Levin's termination effective at any time prior to
the end of such notice period, provided Odwalla pays Levin all compensation due
and owing through the last day actually worked, plus an amount equal to the base
salary Levin would have earned through the balance of the above notice period,
not to exceed thirty (30) days; thereafter, all of Odwalla's obligations under
this Agreement shall cease.
(f) By Employee for Good Reason. Levin may terminate his employment for Good
Reason by giving Odwalla thirty (30) days' advance written notice. Termination
shall be for "Good Reason" if:
(i) the position, duties, or responsibilities assigned to Levin are
materially and adversely changed; or
(ii) Odwalla fails to comply in any material respect with any of its
material covenants and agreements hereunder.
Levin's written notice of termination of his employment for Good Reason shall
specify with reasonable detail the nature of the grounds for such termination
and provide Odwalla with a period of thirty (30) days during which Odwalla shall
be given the opportunity to cure the condition constituting Good Reason. Any
such notice shall be made not more than forty-five (45) days after the
occurrence of the event that is the basis for the Good Reason. If the condition
is remedied within the thirty (30) day notice period, Levin's notice of
termination shall be rescinded automatically; if not remedied, termination shall
become effective upon the expiration of the above notice period. In the event
Levin terminates his employment for Good Reason pursuant to this section, and
Odwalla fails to cure the condition constituting Good Reason, Levin shall be
entitled to receive severance pay in an amount equal to Levin's base salary then
in effect (as specified pursuant to Section 3(a)) for a period of twelve (12)
months and reimbursement for the cost of acquiring health benefits through COBRA
for a period of twelve (12) months. Such severance pay shall be in lieu of any
damages under this Agreement for any alleged breach. Thereafter, all of
Odwalla's obligations under this Agreement shall
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<PAGE> 6
cease. Odwalla shall also have the option, in its complete discretion, to make
Levin's termination effective at any time prior to the end of the notice period,
provided that Odwalla pays Levin all compensation due and owning through the
balance of the notice period (not to exceed thirty (30) days), in addition to
the payment of twelve (12) months base salary and health benefits reimbursement
described above. Such severance pay and health benefits reimbursement shall be
paid in accordance with Odwalla's normal payroll cycle.
(g) Involuntary Termination Following Change in Control/Corporate Transaction.
To the extent permitted by law, Odwalla, in its sole discretion, may terminate
the Period of Employment (in which case all of Odwalla's obligations under this
Agreement shall cease after payment of all compensation due and owing) upon any
formal action of Odwalla's management to effect a Change in Control or a
Corporate Transaction as those terms are defined in the 1997 Stock Option/Stock
Issuance Plan, as amended. In the event Levin is subjected to of an Involuntary
Termination, as the term is defined in the 1997 Stock Option/Stock Issuance
Plan, as amended, within twelve (12) months of a Change in Control or a
Corporate Transaction, Odwalla will:
(i) pay Levin all compensation due to Levin through December 21, 2002,
or the relevant anniversary thereof, if this Agreement has been
automatically renewed as provided by Section 1(b). The compensation due
to Levin during this period will be based on Levin's salary as of the
effective date of the Involuntary Termination and will be payable on a
bi-weekly basis;
(ii) reimburse Levin for the cost of acquiring health benefits, through
COBRA or, to the extent Levin's eligibility for COBRA ends prior to the
fulfillment of this obligation, through the independent purchase of
comparable health benefits, through December 21, 2002, or the relevant
anniversary thereof, if this Agreement has been automatically renewed as
provided by Section 1(b); and
(iii) automatically accelerate each outstanding stock option so that
each such option shall, immediately upon an Involuntary Termination of
Levin's Service, become fully exercisable with respect to the total
number of shares of stock at the time subject to such option and may be
exercised for any or all of those shares as fully vested shares. Any
options so accelerated shall remain exercisable for the limited period
set forth in the stock option agreements evidencing the option, but no
such option shall be exercisable after the expiration of the option
term.
In addition, notwithstanding any provision of this Agreement to the contrary,
the total payments or benefits to be made or provided to Levin by Odwalla
(whether pursuant to this Agreement or otherwise) due to a Change of Control or
Corporate Transaction shall not exceed three times Levin's annualized includible
compensation for the base period, as defined in subsection (d) of Section 280G
of the Internal Revenue Code of 1986 ("Code"), minus one dollar ($1.00). The
intent of this portion of this Section is to prevent any payment or benefit,
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<PAGE> 7
including the acceleration of vesting of any outstanding and unvested stock
options, to Levin from being subject to the excise tax imposed by Code Section
4999.
(h) Termination Obligations.
(i) Levin agrees that all property, including, without limitation, all
equipment, tangible Proprietary Information (as defined below), documents,
books, records, reports, notes, contracts, lists, computer disks (and other
computer-generated files and data), and copies thereof, created on any medium
and furnished to, obtained by, or prepared by Levin in the course of or incident
to his employment, belongs to Odwalla and shall be returned promptly to Odwalla
upon termination of the Period of Employment.
(ii) All benefits to which Levin is otherwise entitled shall cease upon
Levin's termination, unless explicitly continued either under this Agreement or
under any specific written policy or benefit plan of Odwalla.
(iii) Upon termination of the Period of Employment, Levin shall be deemed to
have resigned from all offices then held with Odwalla or any Affiliate.
(iv) The representations and warranties contained in this Agreement and
Levin's obligations under this Section 4(h) on Termination Obligations and
Section 5 on Proprietary Information shall survive the termination of the Period
of Employment and the expiration of this Agreement.
(v) Following any termination of the Period of Employment, Levin shall fully
cooperate with Odwalla in all matters relating to the winding up of pending work
on behalf of Odwalla and the orderly transfer of work to other employees of
Odwalla. Levin shall also cooperate in the defense of any action brought by any
third party against Odwalla that relates in any way to Levin's acts or omissions
while employed by Odwalla or in the defense of any action brought by any third
party relating to litigation pending against Odwalla at the time the Period of
Employment is terminated.
5. Proprietary Information.
(a) Defined. "Proprietary Information" is all information and any idea in
whatever form, tangible or intangible, pertaining in any manner to the business
of Odwalla, or any Affiliate, or its employees, clients, consultants, or
business associates, which was produced by any employee of Odwalla in the course
of his or her employment or otherwise produced or acquired by or on behalf of
Odwalla. All Proprietary Information not generally known outside of Odwalla's
organization, and all Proprietary Information so known only through improper
means, shall be deemed "Confidential Information." Levin should consult any
Odwalla procedures instituted to identify and protect certain types of
Confidential Information, which are considered by Odwalla to be safeguards in
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<PAGE> 8
addition to the protection provided by this Agreement. Nothing contained in
those procedures or in this Agreement is intended to limit the effect of the
other.
(b) General Restrictions on Use. During the Period of Employment, Levin shall
use Proprietary Information, and shall disclose Confidential Information, only
for the benefit of Odwalla and as is necessary to carry out his responsibilities
under this Agreement. Following termination, Levin shall neither, directly or
indirectly, use any Proprietary Information nor disclose any Confidential
Information, except as expressly and specifically authorized in writing by
Odwalla. The publication of any Proprietary Information through literature or
speeches must be approved in advance in writing by Odwalla.
(c) Location and Reproduction. Levin shall maintain at his work station and/or
any other place under his control only such Confidential Information as he has a
current "need to know." Levin shall return to the appropriate person or location
or otherwise properly dispose of Confidential Information once that need to know
no longer exists. Levin shall not make copies of or otherwise reproduce
Confidential Information unless there is a legitimate business need for
reproduction.
(d) Prior Actions and Knowledge. Levin represents and warrants that from the
time of his first contact with Odwalla, he has held in strict confidence all
Confidential Information and has not disclosed any Confidential Information,
directly or indirectly, to anyone outside of Odwalla, or used, copied,
published, or summarized any Confidential Information, except to the extent
otherwise permitted in this Agreement.
(e) Third-Party Information. Levin acknowledges that Odwalla has received and in
the future will receive from third parties their confidential information
subject to a duty on Odwalla's part to maintain the confidentiality of this
information and to use it only for certain limited purposes. Levin agrees that
he owes Odwalla and these third parties, during the Period of Employment and
thereafter, a duty to hold all such confidential information in the strictest
confidence and not to disclose or use it, except as necessary to perform his
obligations hereunder and as is consistent with Odwalla's agreement with third
parties.
(f) Competitive Activity. Levin acknowledges and agrees that the pursuit of the
activities forbidden by this subsection would necessarily involve the use or
disclosure of Confidential Information in breach of the preceding subsections,
but that proof of such a breach would be extremely difficult. To forestall this
disclosure, use, and breach, and in consideration of the employment under this
Agreement, Levin agrees that for a period of one (1) year following the
termination of his employment relationship with Odwalla or for any period in
which he is entitled to payments and health benefits pursuant to Sections 4(c)
and 4(f), whichever is greater, he shall not, directly or indirectly, (i) divert
or attempt to divert from Odwalla (or any Affiliate) any business of any kind in
which it is engaged; (ii) employ or recommend for employment any person employed
by Odwalla (or any Affiliate); or (iii) engage in any business activity that is
or may be competitive with Odwalla (or any Affiliate) in any state where Odwalla
conducts its business, unless
8
<PAGE> 9
Levin can prove that any action taken in contravention of this subsection was
done without the use in any way of Confidential Information. Additionally, in
consideration of the employment under this Agreement, Levin agrees that upon the
event that he, directly or indirectly, (i) diverts or attempts to divert from
Odwalla (or any Affiliate) any business of any kind in which it is engaged; (ii)
employs or recommends for employment any person employed by Odwalla (or any
Affiliate); or (iii) engages in any business activity that is or may be
competitive with Odwalla (or any Affiliate) in any state where Odwalla conducts
its business, during such time as that Levin is not employed by Odwalla but
receiving payments and health benefits pursuant to Sub-Sections 4(c) and 4(f),
all of Odwalla's obligations under this Agreement shall cease.
(g) Interference with Business. In order to avoid disruption of Odwalla's
business, Levin agrees that for a period of one (1) year after termination of
the Period of Employment, he shall not, directly or indirectly, (i) solicit any
customer of Odwalla (or any Affiliate) known to Levin during the Period of
Employment to have been a customer; or (ii) solicit for employment any person
employed by Odwalla (or any Affiliate). Additionally, Levin agrees that in the
event he, directly or indirectly, (i) solicits any customer of Odwalla (or any
Affiliate) known to Levin during the Period of Employment to have been a
customer; or (ii) solicits for employment any person employed by Odwalla (or any
Affiliate) during such time as that Levin is not employed by Odwalla but
receiving payments and health benefits pursuant to Sub-Sections 4(c) and 4(f),
all of Odwalla's obligations under this Agreement shall cease.
(h) Maintenance of Records. Levin agrees to keep and maintain adequate and
current written records of all sales and customer transactions, which records
shall be available to and remain the sole property of Odwalla at all times.
(i) The rights and obligations created in Section 5 of this Employment Agreement
are in addition to the rights and obligations contained the Employee Proprietary
Information Agreement executed by Levin on August 3, 1993.
6. Arbitration.
(a) Arbitrable Claims. To the fullest extent permitted by law, all contractual
disputes between Levin (and his attorneys, successors, and assigns) and Odwalla
(and its Affiliates, shareholders, directors, officers, employees, agents,
successors, attorneys, and assigns) arising under this Agreement ("Arbitrable
Claims") shall be resolved by arbitration. All persons and entities specified in
the preceding sentence (other than Odwalla and Levin) shall be considered
third-party beneficiaries of the rights and obligations created by this Section
on Arbitration.
(b) Procedure. Arbitration of Arbitrable Claims shall be in accordance with the
National Rules for the Resolution of Employment Disputes of the American
Arbitration Association, as amended ("AAA Employment Rules"), as augmented in
this Agreement. Arbitration shall be initiated as provided by the AAA Employment
Rules, although the
9
<PAGE> 10
written notice to the other party initiating arbitration shall also include a
statement of the claim(s) asserted and the facts upon which the claim(s) are
based. Arbitration shall be final and binding upon the parties and shall be the
exclusive remedy for all Arbitrable Claims. Either party may bring an action in
court to compel arbitration under this Agreement and to enforce an arbitration
award. Otherwise, neither party shall initiate or prosecute any lawsuit or
administrative action in any way related to any Arbitrable Claim.
Notwithstanding the foregoing, either party may, at its option, seek injunctive
relief pursuant to section 1281.8 of the California Code of Civil Procedure. All
arbitration hearings under this Agreement shall be conducted in San Francisco.
In any arbitration proceeding under this Agreement, the parties shall have the
rights to discovery provided for in the AAA Employment Rules. The interpretation
and enforcement of this agreement to arbitrate shall be governed by the
California Arbitration Act. THE PARTIES HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO
TRIAL BY JURY IN REGARD TO ARBITRABLE CLAIMS, INCLUDING WITHOUT LIMITATION ANY
RIGHT TO TRIAL BY JURY AS TO THE MAKING, EXISTENCE, VALIDITY, OR ENFORCEABILITY
OF THE AGREEMENT TO ARBITRATE.
(c) Arbitrator Selection and Authority. All disputes involving Arbitrable Claims
shall be decided by a single arbitrator. The arbitrator shall be selected by
mutual agreement of the parties within thirty (30) days of the effective date of
the notice initiating the arbitration. If the parties cannot agree on an
arbitrator, then the complaining party shall notify the AAA and request
selection of an arbitrator in accordance with the AAA Employment Rules. The
arbitrator shall have only such authority to award equitable relief, damages,
costs, and fees as a court would have for the particular claim(s) asserted. The
fees of the arbitrator shall be split between both parties equally. If the
allocation of responsibility for payment of the arbitrator's fees would render
the obligation to arbitrate unenforceable, the parties authorize the arbitrator
to modify the allocation as necessary to preserve enforceability. The arbitrator
shall have exclusive authority to resolve all Arbitrable Claims, including, but
not limited to, any claim that all or any part of this Agreement is void or
unenforceable.
(d) Confidentiality. All proceedings and all documents prepared in connection
with any Arbitrable Claim shall be confidential and, unless otherwise required
by law, the subject matter thereof shall not be disclosed to any person other
than the parties to the proceedings, their counsel, witnesses and experts, the
arbitrator, and, if involved, the court and court staff. All documents filed
with the arbitrator or with a court shall be filed under seal. The parties shall
stipulate to all arbitration and court orders necessary to effectuate fully the
provisions of this subsection concerning confidentiality.
(e) Continuing Obligations. The rights and obligations of Levin and Odwalla set
forth in this Section on Arbitration shall survive the termination of Levin's
employment and the expiration of this Agreement.
7. Notices. Any notice or other communication under this Agreement must be in
writing and shall be effective upon delivery by hand, upon facsimile
transmission to Odwalla (but only upon receipt by Levin of a written
confirmation of receipt), or three (3) business
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days after deposit in the United States mail, postage prepaid, certified or
registered, and addressed to Odwalla or to Levin at the corresponding address or
fax number (if any) below. Levin shall be obligated to notify Odwalla in writing
of any change in his address. Notice of change of address shall be effective
only when done in accordance with this Section.
Odwalla's Notice Address:
Odwalla, Inc.
120 Stone Pine Road
Half Moon Bay, CA 94019
Fax Number: 650-712-5959
Levin's Notice Address:
Douglas K. Levin
-------------------------
Cape Elizabeth, ME
8. Action by Odwalla. All actions required or permitted to be taken under this
Agreement by Odwalla, including, without limitation, exercise of discretion,
consents, waivers, and amendments to this Agreement, shall be made and
authorized only by the President or by his or her representative specifically
authorized in writing to fulfill these obligations under this Agreement.
9. Integration. This Agreement is intended to be the final, complete, and
exclusive statement of the terms of Levin's employment by Odwalla. This
Agreement supersedes all other prior and contemporaneous agreements and
statements, whether written or oral, express or implied, pertaining in any
manner to the employment of Levin, and it may not be contradicted by evidence of
any prior or contemporaneous statements or agreements. To the extent that the
practices, policies, or procedures of Odwalla, now or in the future, apply to
Levin and are inconsistent with the terms of this Agreement, the provisions of
this Agreement shall control.
10. Amendments; Waivers. This Agreement may not be amended except by an
instrument in writing, signed by each of the parties. No failure to exercise and
no delay in exercising any right, remedy, or power under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, or power under this Agreement preclude any other or further
exercise thereof, or the exercise of any other right, remedy, or power provided
herein or by law or in equity.
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11. Assignment; Successors and Assigns. Levin agrees that he will not assign,
sell, transfer, delegate, or otherwise dispose of, whether voluntarily or
involuntarily, or by operation of law, any rights or obligations under this
Agreement. Any such purported assignment, transfer, or delegation shall be null
and void. Nothing in this Agreement shall prevent the consolidation of Odwalla
with, or its merger into, any other entity, or the sale by Odwalla of all or
substantially all of its assets, or the otherwise lawful assignment by Odwalla
of any rights or obligations under this Agreement. Subject to the foregoing,
this Agreement shall be binding upon and shall inure to the benefit of the
parties and their respective heirs, legal representatives, successors, and
permitted assigns, and shall not benefit any person or entity other than those
specifically enumerated in this Agreement.
12. Severability. If any provision of this Agreement, or its application to any
person, place, or circumstance, is held by an arbitrator or a court of competent
jurisdiction to be invalid, unenforceable, or void, such provision shall be
enforced to the greatest extent permitted by law, and the remainder of this
Agreement and such provision as applied to other persons, places, and
circumstances shall remain in full force and effect.
13. Attorneys' Fees. In any legal action, arbitration, or other proceeding
brought to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to recover reasonable attorneys' fees and costs.
14. Injunctive Relief. If Levin breaches or threatens to breach any of the
covenants in Section 5 on Proprietary Information, the parties acknowledge and
agree that the damage or imminent damage to Odwalla's business or its goodwill
would be irreparable and extremely difficult to estimate, making any remedy at
law or in damages inadequate. Accordingly, Odwalla shall be entitled to
injunctive relief against Levin in the event of any breach or threatened breach
of the above provisions by Levin, in addition to any other relief (including
damages) available to Odwalla under this Agreement or under law.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of California.
16. Interpretation. This Agreement shall be construed as a whole, according to
its fair meaning, and not in favor of or against any party. By way of example
and not in limitation, this Agreement shall not be construed in favor of the
party receiving a benefit nor against the party responsible for any particular
language in this Agreement. Captions are used for reference purposes only and
should be ignored in the interpretation of the Agreement.
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17. Employee Acknowledgment. Levin acknowledges that he has had the opportunity
to consult legal counsel in regard to this Agreement, that he has read and
understands this Agreement, that he is fully aware of its legal effect, and that
he has entered into it freely and voluntarily and based on his own judgment and
not on any representations or promises other than those contained in this
Agreement.
The parties have duly executed this Agreement as of the date first written
above.
- --------------------------------
Douglas K. Levin
Odwalla, Inc.
- --------------------------------
By: D. Stephen C. Williamson
Its: Chief Executive Officer
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Exhibit A
[ODWALLA LOGO]
DATE: February 1, 2000
TO: Doug Levin
FROM: Stephen Williamson
RE: Temporary Housing
Odwalla has agreed to cover the following temporary housing and related costs:
- Reimbursement of monthly rental costs not to exceed twelve months
(on a tax adjusted basis);
- Temporary housing deposits and/or advances needed to secure a
temporary residence (deposits and/or advances will need to be
returned in full to Odwalla);
- Temporary house hunting trips for you and your family not to exceed
two trips; and
- Payment for moving your family (including airfare if requested by
you) and household belongings from Maine to California.
The above referenced temporary housing and related costs will be available to
you effective as of the date of your Employment Agreement.
14
<PAGE> 1
EXHIBIT 10.2
[EXECUTION COPY]
AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT is entered into as of April 28, 2000, by
and between ODWALLA, INC., a California corporation (hereinafter, together with
its successors in title and assigns, called the "BORROWER"), and IMPERIAL BANK,
a bank organized under the laws of the State of California (hereinafter,
together with its successors in title and assigns, called the "LENDER").
RECITALS
Reference is made to that certain Revolving Credit Agreement, dated
as of September 3, 1999 (as amended from time to time, the "CREDIT AGREEMENT"),
between the Borrower and the Lender.
The Borrower has requested the Lender to amend certain of the
provisions of the Credit Agreement and other Loan Documents in order (among
other things) to increase the Commitment Amount from $5,000,000 to $10,000,000.
The Borrower has also requested the Bank to grant to the Borrower and its
Subsidiaries all such consents and waivers as may be required under the Credit
Agreement and other Loan Documents to permit (a) the execution, delivery and
performance by the Borrower and its Subsidiaries of the Agreement and Plan of
Merger, dated as of February 2, 2000, by and among (1) the Borrower, (2) Orange
Acquisition Sub, Inc., a Maine corporation and a wholly-owned Subsidiary of the
Borrower ("MERGER SUB"), (3) Fresh Samantha, Inc., a Maine corporation
(hereinafter, together with its successors in title and assigns, called "FRESH
SAMANTHA"), and (4) certain other individuals and entities (such Agreement and
Plan of Merger, as amended from time to time, being herein called the "MERGER
AGREEMENT"), (b) the execution, delivery and performance by the Borrower and its
Subsidiaries of each of the other Transactional Agreements (as defined in the
Merger Agreement), and (c) the implementation of all of the transactions
contemplated by the Merger Agreement and the other Transactional Agreements.
The Lender has agreed to amend the Credit Agreement and other Loan
Documents and to grant the consents and waivers so requested by the Borrower,
all upon the terms and subject to the conditions contained in this Amendment
Agreement ("THIS AGREEMENT").
<PAGE> 2
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Accordingly, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS IN CREDIT AGREEMENT. Unless otherwise defined
herein, terms defined in the Credit Agreement (as amended hereby) are used
herein as therein defined.
ARTICLE II
AMENDMENTS AND CONSENTS
Effective on and as of April 28, 2000 ("EFFECTIVE DATE"), and subject
always in any event to the provisions contained in Article III hereof:
SECTION 2.1. AMENDMENT OF DEFINED TERMS. Section 1.1 of the Credit
Agreement is amended by amending and restating the following defined terms to
read in their entirety as follows:
"ANCILLARY DOCUMENTS" means, collectively, the Governing
Documents of each of the Borrower and its Subsidiaries, the
Preferred Stock Conversion Documents, the Subordinated Debt
Documents, the Merger Documents, the Equity Financing Documents,
the Shareholders' Agreements, the Management Agreements, the
Employment Agreements, the Tax Sharing Agreements, and all other
Instruments that shall from time to time be identified by the
Borrower and the Bank in writing as "ANCILLARY DOCUMENTS" for
purposes of this Agreement and the other Loan Documents.
"CHANGE OF CONTROL" means any event or series of related
events (including the Sale or issuance (or series of Sales or
issuances) of Equity Interests of the Borrower or of Fresh Samantha
by the Borrower or by any holder or holders thereof, or any merger,
consolidation, recapitalization, reorganization or other
transaction or arrangement) as a result of which: (a) any "person"
or "group" (as such terms are used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended), other than the
Institutional Investors, shall (whether directly or indirectly) own
and control, legally or beneficially, with full power to
<PAGE> 3
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vote, more than 20% of the Voting Interests of the Borrower
outstanding from time to time; (b) individuals who at the beginning
of any period of two consecutive years constituted the Borrower's
Board of Directors (together with any new directors whose election
by the Borrower's Board of Directors or whose nomination for
election by the Borrower's shareholders was approved by a vote of
not less than 66-2/3% of the directors then still in office who
were either directors at the beginning of such period or whose
election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the directors then
in office; or (c) the Borrower shall cease to own and control (both
legally and beneficially), with full power to vote, 100% of the
Voting Interests and 100% of all of the other Equity Interests of
Fresh Samantha.
"CONSOLIDATED ADJUSTED EBITDA" means, in relation to any
Person and its Subsidiaries for any period, the Consolidated EBITDA
of such Person and its Subsidiaries for such period, MINUS the SUM
of (a) the aggregate amount paid or required to be paid in cash in
respect of income taxes for such period by such Person and its
Subsidiaries, PLUS (b) the aggregate amount of all Capital
Expenditures by such Person and its Subsidiaries for such period
that were reasonably necessary or appropriate to permit such Person
and its Subsidiaries to continue to conduct business in the
ordinary course at then present volumes or levels, all as
determined on a consolidated basis in accordance with GAAP;
provided, however, that, for purposes of calculating the
Consolidated Adjusted EBITDA of the Borrower and its Subsidiaries
for any period, the aggregate amount of all Capital Expenditures by
the Borrower and its Subsidiaries for such period to be subtracted
from Consolidated EBITDA for such period shall be determined in
accordance with the provisions set forth in the letter of
agreement, dated on or about the Merger Closing Date (as amended
from time to time), between the Borrower and the Bank, relating to
the calculation of Consolidated Adjusted EBITDA.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached
hereto as the Second Schedule, as such Disclosure Schedule has been
amended, modified and supplemented by the Disclosure Schedule
attached to Amendment No. 1.
<PAGE> 4
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"ELIGIBLE ACCOUNTS RECEIVABLE" means, with respect to any of
the Principal Companies, the aggregate amount of the unpaid
portions of Accounts Receivable of such Principal Company
(determined, without duplication, net of all (if any) credits,
rebates, offsets, holdbacks and other similar adjustments and also
net of all (if any) commissions payable to third parties that are
or may become adjustments to such Accounts Receivable):
(a) that each of the Principal Companies reasonably and in
good faith determines to be collectible;
(b) that are not outstanding for more than forty-five (45)
days past the invoice dates of the respective original invoices
therefor;
(c) that are with account debtors (i) that are not
Affiliates, Subsidiaries, directors, officers or employees of any
of the Principal Companies or of any of their Subsidiaries, and
(ii) that have purchased the goods or services giving rise to the
relevant Accounts Receivable in arm's length transactions;
(d) that are with account debtors that are not insolvent or
subject to Bankruptcy or Insolvency Proceedings and that have not
made assignments for the benefit of creditors;
(e) but only to the extent that, with respect to Accounts
Receivable from any particular account debtor, the aggregate amount
of all of the Accounts Receivable then owing to the Principal
Companies from such account debtor exceeds the aggregate amount
(determined without duplication) of all claims, defenses, offsets,
counterclaims, contras or other similar rights of such account
debtor to avoid or otherwise reduce the liabilities and obligations
represented by such Accounts Receivable;
(f) but only to the extent that, with respect to Accounts
Receivable from any particular account debtor, the aggregate amount
of all of the Accounts Receivable then owing to the Principal
Companies from such account debtor do not exceed twenty percent
(20%) of the aggregate amount of all of the Accounts Receivable
that are Eligible Accounts Receivable then owing to the Principal
Companies from all account debtors;
<PAGE> 5
-5-
(g) that are not due from any account debtor if more than
twenty-five percent (25%) in aggregate of all of the Accounts
Receivable then owing to the Principal Companies from such account
debtor does not satisfy the requirement for "ELIGIBLE ACCOUNTS
RECEIVABLE" set forth in clause (b) of this defined term;
(h) in which the Bank has a valid and perfected
first-priority security interest;
(i) that are not subject to any Liens other than Permitted
Liens and other Liens permitted by this Agreement or the other Loan
Documents;
(j) that are payable in Dollars or Canadian dollars;
provided, however, that Accounts Receivable in Canadian dollars may
be included in Eligible Accounts Receivable only to the extent that
the Dollar equivalent of the aggregate amount of all of such
Accounts Receivable in Canadian dollars shall not at any time
exceed $150,000;
(k) that do not arise from consignment or guaranteed sales,
that are not bill and hold accounts, collection accounts or c.o.d.
accounts, and that are not distributor sample accounts;
(l) that are not Accounts Receivable from Governmental
Authorities, unless valid and perfected first-priority security
interests in favor of the Bank have been created in such Accounts
Receivable in accordance with Applicable Law;
(m) that are not Accounts Receivable arising from
pre-billing arrangements;
(n) that, except as otherwise contemplated by clause (j) of
this defined term, are not payable from any office or by any Person
outside of the United States, unless such Accounts Receivable are
backed by letters of credit in amounts reasonably acceptable to the
Bank or by other insurance or credit support in form and substance
reasonably satisfactory to the Bank;
(o) that are not federal excise tax obligations on the Sale
of products that are the subject of such Accounts Receivable;
<PAGE> 6
-6-
(p) that are not Accounts Receivable requiring the
performance of services by any of the Principal Companies prior to
payment;
(q) that are not customer or account debtor deposits; and
(s) that have not otherwise been determined by the Bank, in
its reasonable business judgment, to be excluded from Eligible
Accounts Receivable.
"FINAL MATURITY DATE" means April 30, 2003.
"INSTITUTIONAL INVESTORS" means, collectively, (a) Bain
Capital Fund VI, L.P., (b) Catterton-Simon Partners III, L.P., and
(c) Affiliates of a Person identified in clause (a) or clause (b);
provided, however, that the term "INSTITUTIONAL INVESTORS" shall
not include any Person who is a successor in title or assignee of
any Person identified in clause (a) or clause (b) unless such first
Person is also an Affiliate of any Person so identified in clause
(a) or clause (b).
"LOAN DOCUMENTS" means, collectively, this Agreement, the
Amendment Agreement, the Note, the Subsidiary Guaranty, the
Collateral Documents, the Closing Date Certificate, the Merger Date
Certificate, and each other Instrument executed and delivered
pursuant to or in connection with any thereof.
"SECURITY AGREEMENTS" means, collectively, the Pledge
Agreement, the Security Agreement, the Subsidiary Security
Agreement, the Trademark Security Agreement, the Subsidiary
Trademark Security Agreement, and each of the Agency Account
Agreements entered into from time to time.
SECTION 2.2. NEW DEFINED TERMS. Section 1.1 of the Credit Agreement is
hereby further amended by adding thereto each of the following new defined
terms:
"AMENDMENT DOCUMENTS" means, collectively, the Amendment
Agreement, the Year 2000 Note, the Subsidiary Guaranty, the Pledge
Agreement, the Subsidiary Security Agreement, the Subsidiary
Trademark Security Agreement, and the Merger Date Certificate.
<PAGE> 7
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"AMENDMENT NO. 1" and "AMENDMENT AGREEMENT" mean the
Amendment Agreement, dated as of April 28, 2000, between the
Borrower and the Bank, upon the terms of which each of the parties
hereto has agreed to amend this Agreement.
"AMENDMENT NO. 1 EFFECTIVE DATE" means April 28, 2000, the
so-called "Effective Date" of Amendment No. 1.
"EQUITY FINANCING" means the equity financing, in the
aggregate amount of $6,000,000, obtained or to be obtained by the
Borrower through the issuance of its Equity Interests upon the
terms and subject to the conditions contained in the Equity
Financing Documents.
"EQUITY FINANCING DOCUMENTS" means, collectively, (a) the
Stock Purchase Agreement, dated as of February 11, 2000, among the
Borrower and the several investors identified on Schedule I
thereto, as amended, modified or supplemented from time to time,
and (b) all agreements, Instruments and other documents executed
and/or delivered in connection therewith or pursuant thereto,
including Amendment No. 1 thereto, dated as of April 25, 2000.
"EXISTING FRESHSAM CREDIT FACILITIES" means, collectively,
all of the credit facilities, extensions of credit and other
financial accommodation from time to time provided to Fresh
Samantha or to any of its Subsidiaries under or pursuant to (a) the
Second Amended and Restated Revolving Credit and Loan Agreement,
dated as of January 10, 2000, among the Fresh Samantha Subs and
Citizens Bank of Massachusetts, as amended from time to time, and
all of the agreements and Instruments from time to time executed
and/or delivered pursuant to or in connection with such Loan
Agreement, and (b) the Reimbursement Agreement, dated as of January
10, 2000, by and among Fresh Samantha and certain of its former
shareholders, relating to that certain irrevocable standby letter
of credit in the amount of $3,000,000 issued by Brown Brothers
Harriman & Co. in favor of Citizens Bank of Massachusetts.
"EXISTING INDEBTEDNESS" is defined in Section 3.7(c) of
Amendment No. 1.
"FRESH SAMANTHA" is defined in the Recitals to Amendment No.
1.
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"FRESH SAMANTHA ACQUISITION" means the acquisition by the
Borrower of the Fresh Samantha Subs on the terms and subject to the
conditions contained in the Merger Documents.
"FRESH SAMANTHA SUBS" means, collectively, Fresh Samantha
and FreshSam Juice.
"FRESHSAM JUICE" means Fresh Samantha Juice Bars, Inc., a
Maine corporation and a wholly-owned Subsidiary of the Borrower and
of Fresh Samantha.
"INDEBTEDNESS TO BE REFINANCED" is defined in Section 4.5(c)
of Amendment No. 1.
"MERGER AGREEMENT" is defined in the Recitals to Amendment
No. 1.
"MERGER CLOSING" and "MERGER CLOSING DATE" shall have the
respective meanings ascribed to the terms "Closing" and "Closing
Date" in the Merger Agreement.
"MERGER DATE CERTIFICATE" means a certificate, dated as of
the Merger Closing Date, in or substantially in the form of Exhibit
I to Amendment No. 1, duly executed and delivered to the Bank by
the Chief Financial Officer of the Borrower.
"MERGER DOCUMENTS" means, collectively, the Merger Agreement
and the other Transactional Agreements (as defined in the Merger
Agreement).
"PLEDGE AGREEMENT" means the Pledge Agreement, in or
substantially in the form of Exhibit D to Amendment No. 1, to be
executed and delivered by the Principal Companies on or promptly
after the Merger Closing Date.
"PLEDGED COLLATERAL" is defined in the Pledge Agreement.
"PREFERRED STOCK CONVERSION DOCUMENTS" means, collectively,
(a) the Preferred Stock Conversion Agreement, dated as of April 24,
2000, between the Borrower and Catterton-Simon Partners III, L.P.,
and (b) all Instruments executed and/or delivered in connection
therewith.
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"PRINCIPAL COMPANIES" means, collectively, the Borrower,
Fresh Samantha and FreshSam Juice.
"REFINANCING" means the repayment in full of the
Indebtedness to be Refinanced
"REFINANCING DOCUMENTS" means, collectively, all agreements
and other documents relating to the Refinancing.
"SHAREHOLDERS' AGREEMENTS", "MANAGEMENT AGREEMENTS",
"EMPLOYMENT AGREEMENTS" AND "TAX SHARING AGREEMENTS" are defined in
Section 3.5 of Amendment No. 1.
"SUBSIDIARY GUARANTORS" means, collectively, (a) each of the
Fresh Samantha Subs, and (b) each of the other Subsidiaries of the
Borrower that, at any time on or after the Merger Closing Date,
shall execute and deliver the Subsidiary Guaranty.
"SUBSIDIARY GUARANTY" means the Subsidiary Guaranty
Agreement, in or substantially in the form of Exhibit B to
Amendment No. 1, to be executed and delivered by the Fresh Samantha
Subs on or promptly after the Merger Closing Date.
"SUBSIDIARY SECURITY AGREEMENT" means the Subsidiary
Security Agreement, in or substantially in the form of Exhibit C to
Amendment No. 1, to be executed and delivered by the Fresh Samantha
Subs on or promptly after the Merger Closing Date.
"SUBSIDIARY TRADEMARK SECURITY AGREEMENT" means the
Trademark Security Agreement, in or substantially in the form of
Exhibit E to Amendment No. 1, to be executed and delivered by Fresh
Samantha on or promptly after the Merger Closing Date.
"TRANSACTION DOCUMENTS" means and includes, collectively,
(a) the Amendment Documents, (b) the Merger Documents, (c) the
Equity Financing Documents, and (d) the Refinancing Documents.
"TRANSACTIONS" means, collectively, (a) the execution and
delivery of the Amendment Documents by each of the respective
parties thereto, (b) the consummation of the Fresh
<PAGE> 10
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Samantha Acquisition, (c) the consummation of the Equity Financing,
and (d) the consummation of the Refinancing.
"WAREHOUSE" means, in relation to the Borrower or any of its
Subsidiaries at any particular time, any warehouse, depot or other
similar Person which is at such time a party to or bound by a
Warehouse Service Agreement with the Borrower or any of its
Subsidiaries.
"WAREHOUSE CONTROL AGREEMENT" means, in relation to any
Warehouse, a Warehouse Control Agreement, in or substantially in
the form of Exhibit G to Amendment No. 1, to be executed and
delivered by such Warehouse, the Borrower or (as the case may be)
its Subsidiary, and the Bank.
"WAREHOUSE SERVICE AGREEMENT" means any contract, agreement
or other Instrument pursuant to which any warehouse, depot or other
similar Person shall agree with the Borrower or any of its
Subsidiaries to receive, inspect, repair, clean, store or ship any
equipment or inventory or any other Property of the Borrower or any
of its Subsidiaries.
"YEAR 2000 NOTE" means the Promissory Note of the Borrower,
dated the Amendment No. 1 Effective Date, in the face amount of
$10,000,000, and in or substantially in the form of Exhibit A to
Amendment No. 1.
SECTION 2.3. AMENDMENT OF CERTAIN OTHER DEFINED TERMS.
(a) Clause (ii) of the last sentence of the defined term "AFFILIATE"
appearing in Section 1.1 of the Credit Agreement is hereby amended and restated
to read in its entirety as follows:
(ii) the Borrower shall not be or be deemed to be an
Affiliate of any of the Subsidiary Guarantors, and none of the
Subsidiary Guarantors shall be or be deemed to be an Affiliate of
the Borrower or of any of the other Subsidiary Guarantors,
(b) The defined term "PERMITTED DISPOSITION" appearing in Section 1.1 of
the Credit Agreement is amended by deleting the Dollar amount "$250,000"
appearing in each of clauses (d) and (g) of that defined term, and by
substituting in place thereof the dollar amount "$400,000".
<PAGE> 11
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(c) The defined term "PERMITTED INDEBTEDNESS" appearing in Section 1.1
of the Credit Agreement is amended as follows:
(i) by deleting the Dollar amount "$250,000" appearing in each of
clauses (c) and (f) of that defined term, and by substituting in place
thereof the Dollar amount "$400,000";
(ii) by deleting the Dollar amount "$250,000" appearing in clause
(h) of that defined term, and by substituting in place thereof the
Dollar amount "$400,000"; and
(iii) by amending and restating clause (g) of that defined term to
read in its entirety as follows:
(g) Indebtedness of the Borrower or of any of its
Subsidiaries that (i) is existing immediately after the Merger
Closing Date, and (ii) is specifically identified in Section 4.5(a)
of the Disclosure Schedule to Amendment No. 1.
(d) The defined term "PERMITTED INVESTMENTS" appearing in Section 1.1 of
the Credit Agreement is amended as follows:
(i) by amending and restating clause (a) of that defined term to
read in its entirety as follows:
(a) Investments that (i) are owned or held by the Borrower
or by any of its Subsidiaries or are outstanding or are in effect
immediately after the Merger Closing Date, and (ii) are identified,
unless immaterial and insubstantial, in Section 4.5(d) of the
Disclosure Schedule to Amendment No. 1.
(ii) by amending and restating clause (b) and clause (c) of that
defined term to read in their entirety as follows:
(b) Investments in cash or in Cash Equivalents, and
Investments in the form of Accounts Receivable;
(c) Investments by the Borrower in Subsidiary Guarantors,
and Investments by Subsidiary Guarantors in the Borrower or in any
of the other Subsidiary Guarantors;
(iii) by deleting the Dollar amount "$500,000" appearing in clause
(h) of that defined term, and by substituting in place thereof the
Dollar amount "$800,000".
<PAGE> 12
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(e) The defined term "PERMITTED LIENS" appearing in Section 1.1 of the
Credit Agreement is amended as follows:
(i) by amending and restating clause (f) of that defined term to
read in its entirety as follows:
(f) Liens (i) that are in existence immediately after the
Merger Closing Date, and (ii) that secure Indebtedness of the
Borrower or of any of its Subsidiaries that constitutes Permitted
Indebtedness hereunder or that are specifically identified in
Section 4.5(b) of the Disclosure Schedule to Amendment No. 1;
(ii) by deleting the Dollar amount "$250,000" appearing in clause
(g)(iii) of that defined term, and by substituting in place thereof the
Dollar amount "$400,000".
SECTION 2.4. AMENDMENT OF FINANCIAL COVENANT SCHEDULE. The Financial
Covenant Schedule attached as the First Schedule to the Credit Agreement is
hereby amended and restated in its entirety and replaced with a new First
Schedule to the Credit Agreement in the form of the Financial Covenant Schedule
annexed to this Agreement (i.e., Amendment No. 1) as the First Schedule.
SECTION 2.5. COMMITMENT AMOUNT; BORROWING BASE.
(a) Section 2.2 of the Credit Agreement is hereby amended by deleting
the first sentence of Section 2.2 in its entirety and by substituting in place
thereof the following new sentence:
The aggregate principal amount ("COMMITMENT AMOUNT") of the
Commitment of the Bank (i) shall be $5,000,000 on any date falling
prior to the Amendment No. 1 Effective Date, and (ii) shall be
$10,000,000 on any date falling on or after the Amendment No. 1
Effective Date and on or prior to the Commitment Termination Date.
(b) The Borrower understands that the Lender will be conducting a
commercial finance exam with respect to the Accounts Receivable created from
time to time by Fresh Samantha. Anything in the definitions of the defined terms
"BORROWING BASE" and "ELIGIBLE ACCOUNTS RECEIVABLE" to the contrary
notwithstanding, the Borrower understands and agrees with the Lender that, for
purposes of calculating the Borrowing Base from time to time pursuant to Section
2.3, Section 3.3.2, Section 5.2.4, Section 7.1.1(c) or any other provisions of
the Credit Agreement, the "ELIGIBLE ACCOUNTS RECEIVABLE" shall include ONLY the
<PAGE> 13
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Eligible Accounts Receivable of the Borrower and shall NOT include any of the
Eligible Accounts Receivable of Fresh Samantha or of any other Subsidiaries of
the Borrower until (i) the Lender shall have completed a commercial finance exam
satisfactory to the Lender with respect to the Accounts Receivable of Fresh
Samantha or (as the case may be) any such other Subsidiary, and (ii) the Lender
shall have approved in writing the terms and conditions which shall, under the
Credit Agreement, govern the definition of the defined term "ELIGIBLE ACCOUNTS
RECEIVABLE" to be applicable to the Accounts Receivable of Fresh Samantha or (as
the case may be) any such other Subsidiary.
SECTION 2.6. NOTE, ETC. Section 3.2 of the Credit Agreement is hereby
amended by deleting the first sentence of Section 3.2 in its entirety and by
substituting in place thereof the following new sentence:
From and after the Amendment No. 1 Effective Date, all Loans made
by the Bank from time to time, whether directly to the Borrower or,
as the case may be, indirectly for the account of the Borrower to
any of the Borrower's Subsidiaries, shall be evidenced by a
Promissory Note of the Borrower, dated as of the Amendment No. 1
Effective Date, and in or substantially in the form of Exhibit A to
Amendment No. 1 (such Promissory Note, as amended, endorsed,
replaced or otherwise modified from time to time, being herein
called the "Note"), payable to the order of the Bank in a face
amount equal to the Commitment Amount in effect on the Amendment
No. 1 Effective Date.
SECTION 2.7. EURODOLLAR LOANS. Paragraph (b) of Section 4.4.3 of the
Credit Agreement is hereby amended and restated in its entirety as follows:
(b) the total number of Eurodollar Loans in effect at any
time shall not exceed six (6).
SECTION 2.8. AGENCY ACCOUNTS. Section 7.1.12 of the Credit Agreement is
hereby amended and restated in its entirety as follows:
SECTION 7.1.12. Banking Arrangements. By June 16, 2000 and
at all times thereafter, the Borrower will, and the Borrower will
cause each of the other Principal Companies to, except (in each
case) as and to the extent otherwise expressly permitted by the
Bank from time to time, make subject to an agency account
agreement, in or substantially in the form of Exhibit H hereto or
in the form of
<PAGE> 14
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Exhibit F to Amendment No. 1, as applicable, or otherwise in form
and substance reasonably satisfactory to the Bank (each, an "AGENCY
ACCOUNT AGREEMENT"), each bank, securities or other investment
account held or maintained by any Principal Company or by any of
its Subsidiaries with any bank, investment bank or other financial
institution (other than the Bank) and in which any cash, Cash
Equivalents or any other Property owned by any Principal Company or
any of its Subsidiaries are at any time held or maintained;
provided, however, that none of the Principal Companies or their
Subsidiaries shall be required to make subject to an Agency Account
Agreement any account (a) the cash balances or the fair market
value of the Cash Equivalents or other Property of which at no time
exceed $5,000, and (b) the aggregate amount of all sums and the
fair market value all Cash Equivalents and other Property credited
to which in any calendar month do not exceed $10,000; and provided,
further, that none of the Borrower or any of the other Principal
Companies or their Subsidiaries shall at any time on or after June
16, 2000 cause or permit (i) the aggregate amount of all cash
balances and the fair market value of all Cash Equivalents and
other Property credited to all accounts held or maintained by the
Principal Companies or their Subsidiaries that are not Agency
Accounts (in this Section 7.1.12 called "EXCLUDED ACCOUNTS") to
exceed $75,000 in the aggregate, or (ii) the aggregate amount of
all sums and the fair market value of all Cash Equivalents and
other Property credited to Excluded Accounts in any calendar month
to exceed $125,000.
SECTION 2.9. REPRESENTATIONS AND WARRANTIES. Article VI of the Credit
Agreement is hereby amended as follows:
(a) Each of the representations and warranties of the
Borrower set forth in Article VI, in the Collateral Documents or in
any of the other Loan Documents shall, when made or repeated or
when deemed to be made or repeated, for all purposes (i) be treated
as amended and supplemented by, and to the limited extent of, the
information set forth in the Disclosure Schedule to Amendment No.
1, and (ii) be treated as subject to each of the specific
exceptions to such representations and warranties contained in the
Disclosure Schedule to Amendment No. 1.
<PAGE> 15
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(b) The last sentence of Section 6.7 of the Credit Agreement
is hereby amended by deleting the Dollar amount "$250,000" in each
of the three places it appears in such sentence, and by
substituting in place thereof the Dollar amount "$400,000"
SECTION 2.10. MINIMUM CONSOLIDATED TANGIBLE NET WORTH. Paragraph (c) of
Section 7.2.4 of the Credit Agreement is hereby amended to read in its entirety
as follows:
(c) MINIMUM CONSOLIDATED TANGIBLE NET WORTH. Permit the
Consolidated Tangible Net Worth as at any Test Date to be less than
the sum of:
(i) $28,000,000; PLUS
(ii) fifty percent (50%) of the Consolidated Net Income
(if and to the extent positive) of the Borrower and its
Subsidiaries for the Test Quarter ending on the most recent
Test Date for which the Bank shall have received financial
statements required by Section 7.1.1(a) or by Section
7.1.1(b); PLUS
(iii) fifty percent (50%) of the sum of the
Consolidated Net Income (if and to the extent positive) of
the Borrower and its Subsidiaries for each Test Quarter
ended prior to the Test Date referred to in clause (ii);
provided, however, that, in calculating such sum, only the
Consolidated Net Income for Test Quarters for which
Consolidated Net Income was positive shall be included; PLUS
(iv) the aggregate amount of all of the Net Proceeds
received by the Borrower or any of its Subsidiaries from
time to time after the Merger Closing Date from the issue
and sale by the Borrower or by any of its Subsidiaries to
any Person or Persons (other than the Borrower or any of its
Subsidiaries) of any Equity Interests of the Borrower or of
any of its Subsidiaries.
For purposes of this paragraph (c), (A) the term "TEST
QUARTER" means any fiscal quarter of the Borrower ending after
April 30, 2000, and (B) the term "TEST DATE" means the last day of
any Test Quarter.
<PAGE> 16
SECTION 2.11. COVENANTS AND EVENTS OF DEFAULT. Sections 7.2.5, 7.2.6,
7.2.13, 8.1.5 and 8.1.7 are hereby amended by:
(i) deleting the Dollar Amount "$250,000" whenever it appears in:
(A) clause (b) and clause (b)(i) of Section 7.2.5;
(B) clause (c) and clause (d) of Section 7.2.6;
(C) clause (b) and clause (c) of Section 7.2.13;
(D) clauses (a), (b) and (c) of Section 8.1.5; and
(E) Section 8.1.7; and
(ii) by substituting in place of the Dollar amount "$250,000",
wherever so deleted, the Dollar amount "$400,000".
SECTION 2.12. CONSENTS. In reliance on the agreements, representations,
warranties and covenants of the Borrower contained in this Agreement, and
subject always to the satisfaction of the conditions precedent contained in
Article III, the Lender hereby grants to the Borrower and its Subsidiaries all
such consents and waivers as are required under the Credit Agreement and other
Loan Documents for the execution, delivery and performance by the Borrower and
its Subsidiaries of the Merger Documents and for the implementation of all of
the transactions contemplated by the Merger Documents. Upon satisfaction of the
conditions precedent contained in Article III of this Agreement, all of such
consents and waivers of the Lender shall be deemed effective immediately prior
to consummation of the transactions contemplated by the Merger Documents.
ARTICLE III
CONDITIONS PRECEDENT
Each of the amendments to the Credit Agreement and other Loan Documents,
and each of the consents, set forth in Article II of this Agreement shall be
effective and in full force and effect on and as of and from and after the
Effective Date; provided, however, that each of the following conditions
precedent shall first be satisfied:
SECTION 3.1. EXECUTION AND DELIVERY OF THIS AGREEMENT AND YEAR 2000
NOTE. The Lender shall have received (a) counterparts of this Agreement, dated
as of the Effective Date, duly executed and delivered by
<PAGE> 17
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the Borrower (or, if executed counterparts shall not have been received from the
Borrower, the Lender shall have received, in form reasonably satisfactory to the
Lender, a facsimile or other written confirmation from the Borrower of the
execution and delivery of a counterpart hereof by the Borrower), and (b) the
Year 2000 Note, dated as of the Effective Date, duly executed and delivered by
the Borrower.
SECTION 3.2. PLEDGE AGREEMENT. The Lender shall have received
counterparts of the Pledge Agreement, duly executed and delivered by each of the
Principal Companies, together with:
(a) all stock certificates and other Instruments representing Pledged
Collateral then to be pledged thereunder;
(b) an undated stock power for each such stock certificate or other such
Instrument duly executed in blank by an authorized officer of the pledgor
thereof;
(c) with respect to Pledged Collateral, if any, consisting of book-entry
shares, evidence that all actions which are necessary to create and perfect the
security interests and Liens therein pursuant to the Pledge Agreement in
accordance with Article 8 of the Uniform Commercial Code have been taken;
(d) evidence that all such actions have been taken as may be necessary
or, in the reasonable opinion of the Lender, desirable to perfect the security
interests and Liens purported to be created by the Pledge Agreement in
partnerships or limited liability companies (including evidence that security
interests and Liens created by the Pledge Agreement in partnerships or limited
liability companies have been duly recorded in the books and records of such
Persons); and
(e) each of the promissory notes or other Instruments required to be
pledged thereunder, endorsed (without recourse) in blank (or accompanied by an
executed transfer form in blank reasonably satisfactory to the Lender) by the
pledgor thereof.
SECTION 3.3. SUBSIDIARY SECURITY AGREEMENT; UCC FILINGS; ETC. The Lender
shall have received counterparts of the Subsidiary Security Agreement, duly
executed and delivered by each of the Fresh Samantha Subs and the Lender,
together with:
(a) executed copies of financing statements (Form UCC-1) in appropriate
form for filing under the Uniform Commercial Code of each jurisdiction as may be
reasonably necessary to perfect the security
<PAGE> 18
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interests and Liens purported to be created by the Subsidiary Security
Agreement; and
(b) copies of requests for information (Form UCC-11), or equivalent
reports, each of recent date, listing all effective financing statements that
name each Fresh Samantha Sub as debtor and that are filed in the jurisdictions
referred to in clause (a), together with copies of such financing statements
(none of which shall cover the Collateral, EXCEPT (i) those with respect to
which the secured party thereunder shall have executed appropriate termination
statements or a written commitment to execute and deliver the same, and (ii) to
the extent evidencing Liens permitted by the Credit Agreement and other Loan
Documents).
Any other action, including the taking of possession of specific Collateral by
the Lender, reasonably required by the Lender to create a perfected security
interest and Lien in the Collateral described in the Collateral Documents and
other Security Instruments referred to in Section 3.2 or in this Section 3.3
shall have been properly taken in order to create such a perfected security
interest and Lien.
SECTION 3.4. OTHER AMENDMENT DOCUMENTS. Each of the other Amendment
Documents shall have been duly and properly authorized, executed and delivered
by the respective party or parties thereto and shall be in full force and
effect. The Lender shall have received original counterparts of each of such
other Amendment Documents. Each such other Amendment Document shall, where
applicable, be substantially in the form of an Exhibit attached hereto, and all
of such other Amendment Documents shall be in form and substance reasonably
satisfactory to the Lender. All exhibits, schedules or other attachments to any
of the Collateral Documents or other Amendment Documents shall be in form and
substance reasonably satisfactory to the Lender.
SECTION 3.5. SHAREHOLDERS' AGREEMENT; ETC. On, prior to or promptly
after the Effective Date, there shall have been delivered to the Lender true,
correct and complete copies of: (a) all material agreements entered into by the
Borrower or any of its Subsidiaries governing the terms and relative rights of
its Equity Interests and, to the extent known to the Borrower or any of its
Subsidiaries, any agreements entered into by shareholders or other equity
holders relating to any such entity with respect to its Equity Interests
(collectively, the "SHAREHOLDERS' AGREEMENTS"); (b) all (if any) material
agreements with senior members of, or with respect to, the management of the
Borrower or any of its Subsidiaries (collectively, the "MANAGEMENT AGREEMENTS");
(c) any
<PAGE> 19
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material employment contracts entered into by the Borrower or any of its
Subsidiaries (collectively, the "EMPLOYMENT AGREEMENTS"); and (d) all (if any)
agreements relating to the sharing of tax liabilities and benefits among the
Borrower and/or its Subsidiaries (collectively, the "TAX SHARING AGREEMENTS");
all of which Shareholders' Agreements, Management Agreements, Employment
Agreements and Tax Sharing Agreements shall be in form and substance reasonably
satisfactory to the Lender and shall be in full force and effect on or as of the
Effective Date.
SECTION 3.6. CONSUMMATION OF CERTAIN TRANSACTIONS.
(a) On, prior to or promptly after the Effective Date (and, in any
event, by May 5, 2000), BOTH (i) the Equity Financing shall have been
consummated, AND (ii) the Fresh Samantha Acquisition shall have been
consummated.
(b) Each of the following conditions precedent shall have been satisfied
with respect to the Equity Financing:
(i) the Borrower shall have received, for its own account, an
aggregate gross amount of not less than $6,000,000 from the Equity
Financing; and
(ii) on, prior to or promptly after the Effective Date (and, in any
event, by May 5, 2000), there shall have been delivered to the Lender
true, correct and complete copies of the Equity Financing Documents, and
all of the material terms and conditions of the Equity Financing
Documents shall be reasonably satisfactory in form and substance to the
Lender; all material conditions precedent to the consummation of the
Equity Financing, as set forth in the Equity Financing Documents, shall
have been satisfied, and not waived in any material respect unless
consented to by the Lender (which consent shall not be unreasonably
withheld or delayed), to the reasonable satisfaction of the Lender; and
the Equity Financing shall have been consummated in all material
respects in accordance with the material terms and conditions of the
applicable Equity Financing Documents and all Applicable Law.
(c) on, prior to or promptly after the Effective Date (and, in any
event, by May 5, 2000), each of the following conditions precedent shall have
been satisfied with respect to the Fresh Samantha Acquisition:
(i) there shall have been delivered to the Lender true, correct and
complete copies of the Merger Documents, and all of the materials terms
and conditions of such Merger Documents
<PAGE> 20
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shall be reasonably satisfactory in form and substance to the Lender;
(ii) the Fresh Samantha Acquisition shall have been consummated in
all material respects in accordance with the Merger Documents and all
Applicable Law; and all material conditions precedent to the
consummation of the Fresh Samantha Acquisition, as set forth in the
Merger Documents, shall have been satisfied, and not waived in any
material respect, except with the prior consent of the Lender (which
consent shall not be unreasonably withheld or delayed), to the
reasonable satisfaction of the Lender, EXCEPT, in each case, as could
not reasonably be expected to have any Materially Adverse Effect; and
(iii) the material terms and conditions of each Merger Document
shall be in all material respects the same as and consistent with the
terms and conditions contained in the form of such Merger Document
previously delivered to the Lender and shall continue to be in full
force and effect on and as of the Merger Closing Date, and no material
provision of any such Merger Document shall have been modified or waived
in any respect reasonably determined by the Lender to be material, in
each case, without the prior written consent of the Lender (which
consent shall not be unreasonably withheld or delayed), EXCEPT, in each
case, as could not reasonably be expected to have any Materially Adverse
Effect.
SECTION 3.7. REFINANCINGS.
(a) On or prior to the Merger Closing Date, all of the commitments in
respect of the Indebtedness to be Refinanced shall have been terminated, and all
loans and notes with respect thereto shall have been repaid in full, together
with interest thereon, all letters of credit issued thereunder shall have been
terminated, and all other amounts (including premiums) owing pursuant to the
Indebtedness to be Refinanced shall have been repaid in full, and all
Instruments in respect of the Indebtedness to be Refinanced and all guarantees
with respect thereto shall have been terminated (except as to indemnification
provisions which may survive to the extent provided therein) and shall be of no
further force and effect.
(b) On or prior to the Merger Closing Date, the creditors in respect of
the Indebtedness to be Refinanced shall have terminated and released, or (as the
case may be) shall have made binding commitments in writing to terminate and
release, any and all security interests and
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Liens on the Property owned by the Fresh Samantha Subs. The Lender shall have
received all such releases of security interests in and Liens on the Property
owned by the Fresh Samantha Subs as may have been reasonably requested by the
Lender (or, as the case may be, binding commitments in writing with respect to
such releases), which releases (or, as the case may be, such commitments) shall
be in form and substance reasonably satisfactory to the Lender. Without limiting
the foregoing, there shall have been delivered (or, as the case may be, binding
commitments to deliver) (i) proper termination statements (Form UCC-3 or the
appropriate equivalent) for filing under the Uniform Commercial Code of each
jurisdiction where a financing statement (Form UCC-1 or the appropriate
equivalent) was filed with respect to the Indebtedness to be Refinanced and the
documentation related thereto, (ii) termination or reassignment of any security
interest in, or Lien on, any patents, trademarks, copyrights or similar
interests of any of the Fresh Samantha Subs on which filings have been made,
(iii) terminations of, or (as the case may be) binding commitments in writing to
terminate, all mortgages, leasehold mortgages, deeds of trust and leasehold
deeds of trust created with respect to Property of any of the Fresh Samantha
Subs, in each case, to secure the obligations in respect of the Indebtedness to
be Refinanced, all of which shall be in form and substance reasonably
satisfactory to the Lender, and (iv) all collateral owned by any of the Fresh
Samantha Subs in the possession of any of the creditors in respect of the
Indebtedness to be Refinanced or any collateral agent or trustee under any
related security document shall have been returned to the Fresh Samantha Subs.
(c) On the Merger Closing Date and after giving effect to the
Transactions completed on or prior to the Merger Closing Date, the Borrower and
its Subsidiaries shall have no Indebtedness outstanding other than (i) the
Loans, and (ii) the Indebtedness identified in Section 4.5(a) of the Disclosure
Schedule (with the Indebtedness described in this clause (ii) being herein
called the "EXISTING INDEBTEDNESS"). On and as of the Merger Closing Date, all
of the Existing Indebtedness shall remain outstanding after giving effect to the
Transactions and the other transactions contemplated hereby without any default
or event of default existing thereunder or arising as a result of the
Transactions and the other transactions contemplated hereby (except to the
extent amended or waived by the parties thereto on terms and conditions
reasonably satisfactory to the Lender).
SECTION 3.8. FINANCIAL STATEMENTS. The Borrower shall have furnished to
the Lender (a) the unaudited consolidated financial statements of the Borrower
and its Subsidiaries for the
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period ending February 26, 2000 together with internally generated estimates for
the third and fourth quarters of the 2000 fiscal year, which shall have been
prepared in accordance with GAAP (except for the absence of footnotes and
subject to normal year-end adjustments), and (b) the pro forma consolidated
balance sheet of the Borrower and its Subsidiaries as at the Merger Closing
Date, together with the related pro forma consolidated statements of operations
and of cash flows for the six (6) fiscal months ended February 26, 2000, all of
such financial statements to be prepared on a pro forma basis to reflect the
consummation of each of the Transactions completed or to be completed on or
prior to the Merger Closing Date, and to be in form and substance reasonably
satisfactory to the Lender.
SECTION 3.9. MERGER DATE CERTIFICATE. The Lender shall have received a
duly executed and completed Merger Date Certificate, dated as of the Merger
Closing Date, in or substantially in the form of Exhibit I, duly executed on
behalf of the Borrower by its Chief Financial Officer.
SECTION 3.10. CERTIFICATES OF INSURANCE. The Lender shall have received
certificates of insurance from the insurance brokers for the Principal
Companies, or other evidence reasonably satisfactory to the Lender, dated as of
a recent date, identifying insurers, types of insurance, insurance limits and
policy terms, and otherwise describing all of the insurance required to be
maintained by the Principal Companies and their Subsidiaries in accordance with
the terms the Loan Documents, and certifying that the Lender has been named as
additional insured or (as the case may be) loss payee under all of such
insurance.
SECTION 3.11. RESOLUTIONS, ETC. The Lender shall have received:
(a) from each of the Principal Companies, a certificate of its Secretary
or any Assistant Secretary as to:
(i) resolutions of its board of directors or (as the case may be)
managers or general partners then in full force and effect authorizing
the execution, delivery and performance of, in each case, to the extent
such Principal Company is a party thereto, this Agreement and each of
the other Amendment Documents;
(ii) the incumbency and signatures of the authorized officers of
each such Principal Company authorized to act with respect to (in each
case, to the extent such Principal Company is a party thereto) this
Agreement and each of the other Amendment Documents, (upon which
certificate the Lender may conclusively rely until the Lender shall have
received a further certificate of such Principal Company canceling or
amending such prior
<PAGE> 23
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certificate, which further certificate shall be reasonably satisfactory
to the Lender); and
(iii) each Governing Document of such Principal Company; and
(b) such other similar documents as the Lender may reasonably request
with respect to any matter relevant to this Agreement, the other Amendment
Documents, the Transaction Documents or the transactions contemplated hereby or
thereby.
Each of such documents shall be in form and substance reasonably satisfactory to
the Lenders.
SECTION 3.12. CERTIFICATES OF GOOD STANDING, ETC. The Lender shall have
received a good standing certificate as of a recent date for each Principal
Company from the Secretary of State of the jurisdiction of incorporation or
organization of such Principal Company and each State or other jurisdiction
where the failure of such Principal Company to be qualified to do business as a
foreign corporation or other entity could reasonably be expected to have a
Materially Adverse Effect.
SECTION 3.13. NO MATERIALLY ADVERSE EFFECT; ETC.
(a) No events or developments shall have occurred since August 30, 1999
which, individually or in the aggregate, have had or could reasonably be
expected to have a Materially Adverse Effect.
(b) On or prior to the Merger Closing Date, all necessary governmental
and third party approvals and/or consents in connection with the Transactions
completed or to be completed on or prior to the Merger Closing Date and the
other transactions contemplated by the Transaction Documents relating to such
Transactions and otherwise referred to therein shall have been obtained and
remain in effect, and all applicable waiting periods with respect thereto shall
have expired without any action being taken by any competent Governmental
Authority which restrains, prevents or imposes materially adverse conditions
upon the consummation of such Transactions or the other transactions
contemplated by such Transaction Documents or otherwise referred to therein.
Additionally, there shall not exist any judgment, order, injunction or other
restraint issued or filed or a hearing seeking injunction or other restraint
pending or notified prohibiting or imposing materially adverse conditions upon,
or materially delaying or making economically unfeasible the consummation of,
such Transactions or the other transactions contemplated by such Transaction
Documents or otherwise required to be consummated thereby.
<PAGE> 24
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SECTION 3.14. AFFILIATE TRANSACTIONS; OTHER CORPORATE TRANSACTIONS.
(a) AFFILIATE TRANSACTIONS. Since September 3, 1999, the Borrower shall
not have made any Restricted Payments or entered into, performed or completed
any Affiliate Transactions, EXCEPT the payments and transactions described in
Section 4.12 of the Disclosure Schedule.
(b) OTHER CORPORATE TRANSACTIONS. Since September 3, 1999, the Borrower
shall not have (i) merged or consolidated with any other Person, or (ii) sold,
transferred or otherwise disposed of all or any substantial part of its Property
otherwise than in the ordinary course of business, EXCEPT the mergers, Sales and
other dispositions described in and contemplated by the Transaction Documents.
(c) CHANGE OF CONTROL. No Change of Control shall have occurred since
September 3, 1999, EXCEPT in connection with an as a result of the consummation
of the Transactions.
SECTION 3.15. OPINIONS OF COUNSEL. The Lender shall have received a
written opinion, dated the Merger Closing Date addressed to the Lender, from
special counsel to the Principal Companies, in or substantially in the form of
Exhibit J, and otherwise in form and substance reasonably satisfactory to the
Lender.
SECTION 3.16. COMPLIANCE WITH WARRANTIES; NO DEFAULT; ETC. The
representations and warranties of the Borrower set forth in Article IV shall
have been true and correct in all material respects on and as of the date made;
and, immediately after giving effect to the consummation of the Transactions:
(a) such representations and warranties shall be true and correct in all
material respects with the same full force and effect as if then made (except
for any such representation or warranty that relates solely to a prior date);
and
(b) no Default shall then be continuing.
SECTION 3.17. FEES, COSTS AND EXPENSES. The Borrower shall have paid in
full (a) to the Lender, for the account of the Lender, an amendment fee in the
total amount of $75,000, and (b) to special counsel for the Lender, all of the
reasonable out-of-pocket costs and expenses of special counsel to the Lender
incurred from September 3, 1999 through the Merger Closing Date and that are
payable by the Borrower pursuant to Section 9.3 of the Credit Agreement and for
which an invoice shall
<PAGE> 25
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have been submitted to the Borrower on or prior to the Merger Closing Date.
ARTICLE IV
REPRESENTATIONS, AND WARRANTIES
The Borrower represents and warrants to the Lender that, on and as of
the Merger Closing Date, immediately after giving effect to the implementation
of the Fresh Samantha Acquisition:
SECTION 4.1. REPRESENTATIONS IN LOAN DOCUMENTS. Each of the
representations and warranties made by or on behalf of the Borrower to the
Lender in the Loan Documents prior to the Merger Closing Date was true and
correct in all material respects when made and is true and correct in all
material respects on and as of the Merger Closing Date; EXCEPT (a) as affected
by the consummation of the transactions contemplated by this Agreement and the
other Loan Documents; (b) to the extent that any such representation or warranty
relates by its express terms solely to a prior date; and (c) to the extent that
any such representation or warranty is affected or otherwise qualified by
information referred to in the Disclosure Schedule attached hereto.
SECTION 4.2. ORGANIZATION; ETC. Each Principal Company is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, is duly qualified to do business and is in
good standing as a foreign organization in each jurisdiction where the nature of
its business makes such qualification necessary or appropriate, and has full
power and authority and holds all requisite material governmental licenses,
permits and other Approvals to own or hold under lease its material Properties
and to conduct its business substantially as currently conducted by it, and to
execute, deliver and perform each of the Amendment Documents executed or to be
executed by it.
SECTION 4.3. POWER, AUTHORITY. Each Principal Company has taken all
necessary organizational action to authorize the execution, delivery and
performance by it of each of the Amendment Documents executed or to be executed
by it. The execution, delivery and performance by each Principal Company of each
of the Amendment Documents to which such Principal Company is or is to become a
party do not and will not (except for Approvals which have been already given or
obtained) require any Approvals, will not result in any violation of, or
constitute any default under, (a) any provisions of any Governing
<PAGE> 26
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Documents of any Principal Company or any other Ancillary Documents, (b) any
other material Contractual Obligations of any Principal Company, or (c) any
Applicable Laws, and do not and will not result in or require the creation or
imposition of any Liens on any of the Property of any Principal Company pursuant
to the provisions of any Instruments binding upon or applicable to any Principal
Company or to any of its Property.
SECTION 4.4. VALIDITY; ETC. Each of this Agreement and the Year 2000
Note has been duly executed and delivered by the Borrower and constitutes the
legal, valid, and binding Obligation of the Borrower, enforceable in accordance
with its terms. Each of the other Amendment Documents to which any Principal
Company is or is to become a party has been, or, upon execution and delivery
thereof will be, duly executed and delivered by such Principal Company, and does
or will constitute the legal, valid and binding Obligation of such Principal
Company, enforceable in accordance with its terms. The enforceability of this
Agreement and the other Amendment Documents against each Principal Company which
is or is to become a party thereto shall be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws at the time in effect affecting
the enforceability of the rights of creditors generally and to general equitable
principles.
SECTION 4.5. EXISTING INDEBTEDNESS; ABSENCE OF DEFAULTS; ETC.
(a) The Existing Indebtedness of each of the Borrower and its
Subsidiaries as of the Merger Closing Date is identified in Section 4.5(a) of
the Disclosure Schedule attached hereto. With respect to each item of Existing
Indebtedness identified in Section 4.5(a) of the Disclosure Schedule, the
outstanding principal amount of which is $3,000,000 or more on or as of the
Merger Closing Date, the Borrower has delivered or otherwise made available to
the Lender a true and complete copy of each Instrument evidencing such Existing
Indebtedness or pursuant to which such Existing Indebtedness was issued or
secured (including each amendment, consent, waiver or other Instrument executed
and/or delivered in respect thereof), as the same is in effect on or as of the
Merger Closing Date. Except as otherwise disclosed in Section 4.5(a) of the
Disclosure Schedule, neither the Borrower nor any of its Subsidiaries is in
default in the payment of any Existing Indebtedness, which payments, in the
aggregate, exceed $500,000, or in default or breach, in any material respect, in
the performance of any other material obligation under any Instrument evidencing
or governing any Existing Indebtedness (in an aggregate amount exceeding
$500,000) or pursuant to which any
<PAGE> 27
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such Existing Indebtedness (in an aggregate amount exceeding $500,000) was
issued or secured.
(b) Section 4.5(b) of the Disclosure Schedule identifies all of the
Liens upon Property of the Borrower or of any of its Subsidiaries that secure
Existing Indebtedness of the Borrower or of any of its Subsidiaries and that are
in existence on or as of the Merger Closing Date and either (i) are known to the
Borrower or to any of its Subsidiaries on or as of the Merger Closing Date, or
(ii) are of record on and as of the Merger Closing Date.
(c) Section 4.5(c) of the Disclosure Schedule sets forth a true and
complete list of all Indebtedness of the Borrower or of any of its Subsidiaries
which is to be repaid in full on or prior to the Merger Closing Date (including,
in any event, the Existing FreshSam Credit Facilities) (the "INDEBTEDNESS TO BE
REFINANCED"), in each case, showing the aggregate principal amount thereof, the
name of the respective borrower and any other Person which directly or
indirectly guaranteed such Indebtedness.
(d) Section 4.5(d) of the Disclosure Schedule identifies each Investment
of the Borrower or of any of its Subsidiaries that is owned or held or is
outstanding or in effect on or as of the Merger Closing Date, other than
insubstantial and immaterial Investments and other than Investments of the kind
described in any of clauses (b) through (e) or in clause (g) of the definition
of the term "PERMITTED INVESTMENTS".
SECTION 4.6. LITIGATION; ANCILLARY DOCUMENTS; ETC.
(a) Except as to matters identified in Section 4.6 of the Disclosure
Schedule, there is no pending or, to the best knowledge of the Borrower,
threatened litigation, arbitration or governmental investigation or proceeding
against the Borrower or any of its Subsidiaries or to which any of the
Properties of any thereof is subject which:
(i) has had and continues to have, or (as the case may be) could
reasonably be expected to have, any Materially Adverse Effect;
(ii) relates to this Agreement, any of the other Loan Documents or
any of the Ancillary Documents; or
(iii) seeks to enjoin or otherwise prevent the consummation of, or
to recover any damages or obtain relief as a result of, any of the
transactions contemplated by or in connection
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with this Agreement, any of the other Loan Documents or any of the
Ancillary Documents.
None of such pending or threatened proceedings has had and continues to have, or
could reasonably be expected to have, any Materially Adverse Effect.
(b) Each of the Ancillary Documents to which any Principal Company is a
party or by which any Principal Company is bound on or as of the Merger Closing
Date is identified in Section 4.6 of the Disclosure Schedule.
(c) Each of the Ancillary Documents is in full force and effect. No
material default on the part of any Person bound by any Ancillary Document, and
no material breach by any such Person in the payment, performance or observance
of any of its material obligations thereunder, is continuing. No Person bound by
any of the Ancillary Documents has exercised or attempted to exercise any right
of termination, cancellation or rescission thereunder; and no event or condition
is continuing which permits any Person bound by any of the Ancillary Documents
to exercise any right of termination, cancellation or rescission thereunder.
(d) No Change of Control has occurred, EXCEPT in connection with and as
a result of the consummation of the Transactions.
SECTION 4.7. CORPORATE STRUCTURE, ETC. Section 4.7 of the Disclosure
Schedule identifies, as of the Merger Closing Date, each Subsidiary of the
Borrower, each Subsidiary Guarantor and each Inactive Subsidiary. Section 4.7 of
the Disclosure Schedule identifies, with respect to each of the Principal
Companies and its Subsidiaries identified in Section 4.7 of the Disclosure
Schedule, as of the Merger Closing Date, (a) the State or other jurisdiction of
organization of each such Person, (b) the number of authorized and outstanding
shares of each class of Capital Stock and all other Equity Interests of each
such Person, and (c) with respect to each Subsidiary of the Borrower, (i) each
Person which owns or controls (whether legally or beneficially) any of the
Capital Stock or other Equity Interests of each such Subsidiary, and (ii) the
number of shares or units of each class or kind of Capital Stock or other Equity
Interests so owned or controlled by each such Person.
SECTION 4.8. TITLE TO PROPERTIES. All Real Estate owned or leased by the
Borrower or by any of its Subsidiaries as of the Merger Closing Date, and the
nature of the interest therein, is identified in Section 4.8 of the Disclosure
Schedule. Each of the Borrower and its Subsidiaries has good record and
marketable title in fee simple to, or valid leasehold interests in, all Real
Estate used in the ordinary conduct
<PAGE> 29
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of its businesses, including all Real Estate identified in Section 4.8 of the
Disclosure Schedule. None of such Real Estate is subject to any Liens, EXCEPT
for Permitted Liens, other Liens permitted by Section 7.2.3, and such defects in
title as, individually or in the aggregate, have not had and could not
reasonably be expected to have a Materially Adverse Effect.
SECTION 4.9. WAREHOUSES AND WAREHOUSE SERVICE AGREEMENTS.
Section 4.9 of the Disclosure Schedule identifies (a) each Warehouse
which, on a regular basis, warehouses equipment or inventory of the Borrower or
of any of its Subsidiaries with a fair market value in excess of $100,000 at any
time, (b) the location of each such Warehouse, and (c) the Warehouse Service
Agreement between the Borrower or any of its Subsidiaries, on the one hand, and
each such Warehouse, on the other hand, in each case, as of the Merger Closing
Date.
SECTION 4.10. AGENCY ACCOUNTS; ETC. Section 4.10 of the Disclosure
Schedule identifies, as of the Merger Closing Date, each bank, securities or
other investment account held or maintained by the Borrower or any of its
Subsidiaries on or as of the Merger Closing Date with any bank, investment bank
or other financial institution (other than the Lender) and in which any cash,
Cash Equivalents or other Property owned by the Borrower or any of its
Subsidiaries are at any time held or maintained.
SECTION 4.11. TRADEMARKS, ETC. All trademarks and patents owned by the
Borrower on the Merger Closing Date which have been registered with the U.S.
Patent and Trademark Office or for which applications for registration have been
made with the U.S. Patent and Trademark Office are identified in Section 4.11 of
the Disclosure Schedule. All trademarks owned by any Subsidiary of the Borrower
on the Merger Closing Date which have been registered with the U.S. Patent and
Trademark Office or for which applications for registration have been made with
the U.S. Patent and Trademark Office are identified in Attachment 1 of the
Subsidiary Trademark Security Agreement. Except as otherwise described in
Section 4.11 of the Disclosure Schedule, none of the Borrower or any of its
Subsidiaries owns, on or as of the Merger Closing Date, any patents or
copyrights which have been registered or otherwise recorded with the U.S. Patent
and Trademark Office or the U.S. Copyright Office or for any which any
applications for registration or recording have been made with the U.S. Patent
and Trademark Office or the U.S. Copyright Office.
SECTION 4.12. TRANSACTIONS WITH AFFILIATES. Section 4.12 of the
Disclosure Schedule identifies (a) all (if any) Indebtedness of the
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Borrower or of any of its Subsidiaries to any Affiliate of the Borrower on or as
of the Merger Closing Date, material Contractual Obligations of the Borrower or
of any of its Subsidiaries to any Affiliate of the Borrower on or as of the
Merger Closing Date, and Investments in the Borrower or in any of its
Subsidiaries owned, held or controlled by any Affiliate of the Borrower on or as
of the Merger Closing Date, and (b) all (if any) Indebtedness of any Affiliate
of the Borrower to the Borrower or to any of its Subsidiaries on or as of the
Merger Closing Date, material Contractual Obligations of any Affiliate of the
Borrower to the Borrower or to any of its Subsidiaries on or as of the Merger
Closing Date, and Investments in any Affiliate of the Borrower owned, held or
controlled by the Borrower or by any of its Subsidiaries on or as of the Merger
Closing Date.
SECTION 4.13. FINANCIAL STATEMENTS, ETC.
(a) All balance sheets, statements of operations and other financial
statements which have been furnished by the Borrower or any of its Subsidiaries
to the Lender on or prior to the Merger Closing Date for the purposes of or in
connection with this Agreement or any of the transactions contemplated hereby do
present fairly, in all material respects, the financial condition of the Persons
involved as of the dates thereof and the results of their operations for the
periods covered thereby.
(b) The projected consolidated statements of operations and of cash
flows of the Borrower and its Subsidiaries for each of fiscal years 2000 through
2002, all of which have been delivered to the Lender prior to the date of this
Agreement, have been prepared on the basis of the reasonable assumptions
accompanying them and reflect, as of the date of preparation, the good faith
estimates made on a reasonable basis by the Borrower of the performance of the
Borrower and its Subsidiaries for the periods covered thereby based on such
assumptions. Nothing in this paragraph (b) shall be deemed a representation or
assurance that such projections will, in fact, be achieved.
SECTION 4.14. MATERIALLY ADVERSE EFFECT. No events or developments have
occurred since August 30, 1999 which, individually or in the aggregate, have had
or could reasonably be expected to have any Materially Adverse Effect.
SECTION 4.15. NO DEFAULTS. After giving effect to this Agreement, no
Defaults or Events of Default are continuing under the Credit Agreement or any
of the other Loan Documents.
<PAGE> 31
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ARTICLE V
COVENANTS
The Borrower agrees with the Lender and warrants that, from and after
the date of this Agreement and until the Commitment shall have terminated in
full and all of the Obligations shall have been paid in full, the Borrower will,
and will (as applicable) cause each of its Subsidiaries to:
SECTION 5.1. EXCESS CASH INVESTMENT ARRANGEMENTS. The Borrower agrees
with the Lender that the Borrower will, and will cause each of its Subsidiaries
to, comply at all times with the terms and conditions applicable to the Borrower
and its Subsidiaries contained in that certain letter of agreement, dated on or
about the Merger Closing Date, between the Borrower and the Lender, relating to
the investment by the Borrower and its Subsidiaries with the Lender from time to
time of the excess cash available to the Borrower and its Subsidiaries from time
to time.
SECTION 5.2. COLLATERAL AUDITS. The Borrower acknowledges and agrees
that the Lender shall have the right to perform a collateral audit at the
offices and at the business and Property locations of the Borrower and each of
its Subsidiaries twice during each fiscal year of the Borrower so long as no
Events of Default shall be continuing, and, if any Events of Default shall be
continuing, at such additional time or times during each fiscal year of the
Borrower as the Lender shall in its sole discretion determine to be necessary or
appropriate. All of the reasonable out-of-pocket costs and expenses incurred or
sustained by the Lender in connection with the conduct of each of such
collateral audits shall be for the account of the Borrower.
SECTION 5.3. WAREHOUSE CONTROL AGREEMENTS, ETC.
(a) The Borrower agrees to use, and to cause each of its Subsidiaries to
use, (i) all commercially reasonable efforts, including making written requests
and follow-up telephone calls, to cause a Warehouse Control Agreement in or
substantially in the form of Exhibit G hereto or otherwise reasonably
satisfactory to the Lender in form and substance to be executed and delivered to
the Lender by each Warehouse which (A) is not a party to or bound by a Warehouse
Control Agreement, and (B) on a regular basis, warehouses equipment or inventory
of the Borrower or any of its Subsidiaries having a fair market value in excess
of $100,000 at any time, and (ii) all commercially reasonable efforts, in
connection with the negotiation, completion, renewal or extension after the date
hereof of any Warehouse Service Agreement, to cause the
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Warehouse which is a party thereto (if such Warehouse, on a regular basis,
warehouses equipment or inventory of the Borrower or any of its Subsidiaries
having a fair market value in excess of $100,000 at any time) to execute and
deliver to the Lender a Warehouse Control Agreement reasonably satisfactory to
the Lender in form and substance.
(b) The Borrower also agrees to use, and to cause each of its
Subsidiaries to use, all commercially reasonable efforts, including making
written requests and follow-up telephone calls, to obtain a Landlord Lien Waiver
in or substantially in the form of Exhibit D to the Credit Agreement or in the
form of Exhibit H hereto, as the case may be, or otherwise reasonably
satisfactory to the Lender in form and substance with respect to each Real
Estate Lease (i) which is outstanding on the Merger Closing Date or which is
negotiated, completed, renewed or extended by the Borrower or by any of its
Subsidiaries at any time or from time to time after the Merger Closing Date, and
(ii) the aggregate amount of all of the rental payments required by the terms of
which shall exceed $200,000 during any fiscal year of the Borrower.
ARTICLE VI
PROVISIONS OF GENERAL APPLICATION
SECTION 6.1. NO OTHER CHANGES. Except as otherwise expressly provided by
this Agreement, all of the terms, conditions and provisions of the Credit
Agreement and each of the other Loan Documents, and all rights and remedies of
the Lender thereunder, shall remain unaltered.
SECTION 6.2. OTHER PROVISIONS. Each of this Agreement and the other
Amendment Documents is a Loan Document for all purposes of the Credit Agreement
and each of the other Loan Documents. This Agreement and the rights and
obligations hereunder of each of the parties hereto shall in all respects be
construed in accordance with and governed by the laws of the State of
California. This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, but all of such counterparts
shall together constitute but one and the same agreement. In making proof of
this Agreement, it shall not be necessary to produce or account for more than
one counterpart hereof signed by each of the parties hereto.
SECTION 6.3. TIMELY SATISFACTION OF CONDITIONS PRECEDENT. Except as and
to the extent that the Lender shall otherwise from time to time agree in writing
with the Borrower, this Agreement shall terminate, and shall have no force or
effect whatsoever, unless the
<PAGE> 33
-33-
conditions precedent set forth in Article III hereof shall have been (a)
satisfied in all material respects by the Borrower's close of business on May 5,
2000, or (b) otherwise waived by the Lender in writing. The Obligations of the
Borrower under Section 3.17 shall survive termination pursuant to the foregoing
sentence, and upon termination of this Agreement in accordance with the
foregoing sentence, the Borrower shall pay in full the unpaid balance of the
fees and other costs and expenses specified in clause (a) and clause (b) of
Section 3.17.
[REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
<PAGE> 34
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IN WITNESS WHEREOF, the parties hereto have caused this AMENDMENT
AGREEMENT to be executed and delivered by their respective authorized officers
as of the date first above written.
THE BORROWER:
ODWALLA, INC.
By:
------------------------------------
Name: James R. Steichen
Title: Chief Financial Officer
THE LENDER:
IMPERIAL BANK
By:
------------------------------------
Name: Paula J. Barysauskas
Title: First Vice President
<PAGE> 1
Exhibit 10.3
================================================================================
ODWALLA, INC.
STOCK PURCHASE AGREEMENT
Dated as of February 11, 2000
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Agreement To Sell And Purchase Stock.................................................1
1.1 Sale and Purchase of Stock....................................................1
1.2 Payment of Purchase Price and Delivery of Certificates........................1
2. Closing Conditions...................................................................2
2.1 Conditions Precedent to the Obligations of the Company........................2
2.2 Conditions Precedent to the Obligations of the Investors......................3
3. Representations and Warranties of the Company........................................4
3.1 Organization; Good Standing; Qualification....................................4
3.2 Capitalization................................................................4
3.3 Subsidiaries..................................................................5
3.4 Authorization.................................................................5
3.5 Valid Issuance of the Stock...................................................6
3.6 Governmental and Third-Party Consents.........................................6
3.7 SEC Filings; Financial Statements.............................................6
3.8 No Changes....................................................................7
3.9 Compliance with Laws..........................................................7
3.10 Compliance with Other Instruments; No Conflict................................7
3.11 Litigation....................................................................8
3.12 Tax Returns and Payments......................................................8
3.13 Finders and Brokers; Fees.....................................................9
3.14 Rights of Registration........................................................9
3.15 Voting Rights.................................................................9
3.16 Labor Relations and Employee Matters..........................................9
3.17 No Other Agreements to Sell the Assets or Capital Stock of the
Company......................................................................10
3.18 Private Placement............................................................10
4. Representations and Warranties of the Investors.....................................10
4.1 Authorization................................................................10
4.2 Disclosure of Information....................................................10
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
4.3 Status.......................................................................10
4.4 Investment Intent; Certain Restrictions......................................11
4.5 Restricted Securities........................................................11
5. Pre-Closing Covenants of the Company................................................11
5.1 Notification; Updates to Company Disclosure Schedule.........................11
5.2 Best Efforts.................................................................12
6. Pre-Closing Covenants of the Investors..............................................12
6.1 Best Efforts.................................................................12
7. Other Matters.......................................................................12
7.1 Restrictive Legend...........................................................12
7.2 California Securities Laws...................................................12
7.3 Public Disclosure............................................................13
8. Termination.........................................................................13
8.1 Termination Events...........................................................13
8.2 Termination Procedures.......................................................13
8.3 Effect of Termination........................................................14
8.4 Exclusivity of Termination Rights............................................14
9. Miscellaneous.......................................................................14
9.1 Further Assurances...........................................................14
9.2 Fees and Expenses............................................................14
9.3 Attorneys' Fees..............................................................14
9.4 Governing Law; Arbitration...................................................14
9.5 Successors and Assigns.......................................................15
9.6 Entire Agreement.............................................................15
9.7 Separability.................................................................15
9.8 Amendments...................................................................15
9.9 Notices......................................................................15
9.10 Publicity and Use of Confidential Information................................17
9.11 Counterparts.................................................................17
9.12 Delays or Omissions; Waivers.................................................17
9.13 Remedies Cumulative; Specific Performance....................................18
</TABLE>
ii
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<TABLE>
<S> <C>
9.14 Headings.....................................................................18
9.15 Construction.................................................................18
</TABLE>
iii
<PAGE> 5
ODWALLA, INC.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of
February 11, 2000, by and among ODWALLA, INC., a California corporation (the
"Company"), and the investors on Schedule I attached hereto (each, an
"Investor," and collectively, the "Investors").
RECITALS
A. The Company, Orange Acquisition Sub, a Maine corporation ("Merger Sub"),
Fresh Samantha, Inc., a Maine corporation ("Samantha"), and certain
other signatories thereto, have entered into that certain Agreement and
Plan of Merger, dated as of February 2, 2000 (the "Merger Agreement"),
to effectuate the merger (the "Merger") of Merger Sub with and into
Samantha with Samantha as the surviving corporation and wholly owned
subsidiary of the Company.
B. In connection with the Merger, pursuant to the terms and subject to the
conditions of this Agreement, the Investors wish to collectively
purchase Six Million Dollars ($6,000,000) of the Common Stock of the
Company (the "Common Stock," and such shares to be purchased pursuant to
this Agreement, the "Stock").
AGREEMENT
The Company and each of the Investors, intending to be legally bound,
agree as follows:
1. AGREEMENT TO SELL AND PURCHASE STOCK.
1.1 SALE AND PURCHASE OF STOCK.
Upon the terms and subject to the conditions set forth in this
Agreement, each Investor agrees, severally and not jointly, to purchase at the
Closing (as defined below), and the Company agrees to sell and issue to each
Investor at the Closing, the number of shares of Stock set forth next to such
Investor's name on Schedule I attached hereto for the purchase price (the
"Purchase Price") set forth next to such Investor's name on Schedule I attached
hereto.
1.2 PAYMENT OF PURCHASE PRICE AND DELIVERY OF CERTIFICATES.
(a) The closing (the "Closing") shall take place at the offices
of Morrison & Foerster LLP, 425 Market Street, San Francisco, California 94105,
at 10:00 a.m. (Pacific time) on the first business date after the Merger Closing
Date (as defined below) or on such other date or at such other place or time as
the Company and the Investors may mutually agree (such date is hereinafter
referred to as the "Closing Date").
(b) At the Closing:
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<PAGE> 6
(i) each Investor shall (i) pay the Purchase Price to the
Company by wire transfer of immediately available funds, and (ii) deliver the
documents and agreements required hereunder to be delivered by such Investor at
the Closing; and
(ii) the Company shall deliver (i) certificates
representing the Stock sold to the Investors pursuant to this Agreement, and
(ii) the other documents and agreements required hereunder to be delivered by
the Company at the Closing.
(c) The "Merger Closing Date" shall refer to that date upon which
all of the conditions set forth in Sections 4.1 and 4.2 of the Merger Agreement
are satisfied or waived.
2. CLOSING CONDITIONS.
2.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY.
The Company's obligation to sell and issue the Stock at the Closing is
subject to the satisfaction of the following conditions:
(a) the representations and warranties made by the Investors in
Section 4 hereof shall be true and accurate in all material respects as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date;
(b) all covenants and agreements contained in this Agreement to
be observed by the Investors on or prior to the Closing shall have been
performed or complied with in all material respects;
(c) each Investor shall have delivered the following documents to
the Company:
(i) the Shareholders' Rights Agreement, substantially in
the form attached hereto as Exhibit A (the "Rights Agreement"), duly executed by
each Investor;
(ii) a certificate (the "Investor Closing Certificate") of
each Investor, dated as of the Closing Date, and certifying to the satisfaction
of the conditions specified in Sections 2.1(a) and (b) with respect to such
Investor;
(d) each of the consents identified or required to be identified
in Part 3.6 of the Disclosure Schedule shall have been obtained and shall be in
full force and effect;
(e) the Merger shall have been consummated pursuant to all of the
material terms and conditions contained in the Merger Agreement as of the date
of this Agreement, including the conversion of the shares of Preferred Stock (as
defined below) held by Catterton (as defined below) into shares of Common Stock;
except to the extent (A) (i) any change in the material terms and conditions
contained in the Merger Agreement as of the date of this Agreement benefit the
Company, or (ii) the waiver or non-satisfaction of a condition contained in the
Merger Agreement is for the benefit of the Company, and (B) the Merger is
consummated, including the conversion of the shares of Preferred Stock held by
Catterton into shares of Common Stock; and
2
<PAGE> 7
(f) neither the consummation nor the performance of the
transactions contemplated by this Agreement (the "Transactions") will, directly
or indirectly (with or without notice or lapse of time), contravene or conflict
with or result in a violation of, or cause a material adverse effect on the
condition (financial or otherwise), assets, liabilities, obligations, business,
properties, prospects or results of operations (a "Material Adverse Effect") of
the Company as presently conducted or as proposed to be conducted, together with
its subsidiaries taken as a whole, as a result of, specifically, (i) a change in
any applicable legal requirement after the date of this Agreement or any federal
or state judgment, order, writ, decree, statute or regulation of any court,
regulatory body or administrative agency or other governmental body applicable
to the Company (an "Order") issued after the date of this Agreement, or (ii) any
legal requirement or Order that is proposed after the date of this Agreement by
or before any governmental body.
2.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE INVESTORS.
Each Investor's obligation to purchase the Stock at the Closing is
subject to the satisfaction of the following conditions:
(a) the representations and warranties made by the Company in
Section 3 hereof shall be true and accurate in all material respects as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date;
(b) all covenants and agreements contained in this Agreement to
be observed by the Company on or prior to the Closing shall have been performed
or complied with in all material respects;
(c) the Company shall have delivered the following documents to
the Investors:
(i) the Rights Agreement, duly executed by the Company;
(ii) the legal opinion of Morrison & Foerster, LLP,
counsel to the Company, dated the Closing Date, in substantially the form of
Exhibit B;
(iii) a certificate (the "Company Closing Certificate")
executed on behalf of the Company by a senior executive officer of the Company,
dated as of the Closing Date, certifying to the satisfaction of the conditions
specified in Sections 2.2(a) and (b) with respect to the Company;
(d)there shall not have occurred and be continuing any material
disruption of, or material adverse change in, the conditions of financial,
banking or capital markets;
(e)there shall have been no event or circumstance after the date
of this Agreement that is reasonably likely to have a Material Adverse Effect on
the Company;
(f) neither the consummation nor the performance of the
Transactions will, directly or indirectly (with or without notice or lapse of
time), contravene or conflict with or result in a violation of, or cause a
Material Adverse Effect on the Company as a result of, specifically, (i) a
change in any applicable legal requirement after the date of this Agreement or
3
<PAGE> 8
any Order issued after the date of this Agreement, or (ii) any legal requirement
or Order that is proposed after the date of this Agreement by or before any
governmental body; and
(g)all of the material terms and conditions contained in the
Merger Agreement as of the date of this Agreement shall have been complied with
or satisfied, as the case may be, by the applicable party thereto; except to the
extent (i) any change in the material terms and conditions contained in the
Merger Agreement as of the date of this Agreement benefit the Company, or (ii)
the waiver or non-satisfaction of a condition contained in the Merger Agreement
is for the benefit of the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as specifically set forth in the disclosure schedule provided by
the Company and attached hereto as Schedule II (the "Disclosure Schedule"), the
parts of which are numbered to correspond to the Section numbers of this
Agreement, the Company hereby represents and warrants to the Investors as
follows:
3.1 ORGANIZATION; GOOD STANDING; QUALIFICATION.
The Company is a corporation duly organized, validly existing, and in
good standing under the laws of the State of California, has all requisite
corporate power and authority to own and operate its properties and assets, to
lease the property or assets it operates as lessee and to carry on its business
as described in the Company SEC Reports (as defined in Section 3.7) filed on or
prior to the date of this Agreement (the "Existing Company SEC Reports"), to
execute and deliver this Agreement, to issue and sell the Stock and to carry out
the provisions of this Agreement. The Company is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which the character of the property owned or leased or the nature of the
business transacted by it makes qualification necessary, except where the
failure to be so qualified would not have or could not reasonably be expected to
have a Material Adverse Effect on the Company.
3.2 CAPITALIZATION.
As of January 27, 2000, the authorized capital stock of the Company
consisted of (i) 15,000,000 shares of Common Stock, of which: (A) 5,125,761
shares were issued and outstanding, (B) 1,351,865 shares were reserved for
issuance upon the exercise of outstanding options under the Company's stock
option plans, (C) 106,806 shares were reserved for issuance pursuant to the
exercise of the Warrants (as defined below), and (D) 1,265,319 shares were
reserved for issuance upon conversion of the Series A Preferred Stock; and (ii)
5,000,000 shares of preferred stock (the "Preferred Stock"), of which 1,265,319
shares had been designated Series A Preferred Stock, of which 1,074,666 shares
were issued and outstanding. The outstanding shares of Preferred Stock and
Common Stock have been duly authorized and validly issued in compliance with
applicable federal and state securities laws, are fully paid and nonassessable,
conform to the descriptions thereof in the Existing Company SEC Reports, and
were not issued in violation of or subject to (i) any preemptive rights or other
rights to subscribe for or to purchase securities or (ii) any liens,
preferential rights, priorities, claims, options, charges or other encumbrances
or restrictions, other than those created by (A) the Certificate of
4
<PAGE> 9
Determination filed in connection with the issuance of the Preferred Stock, (B)
the Investors' Rights Agreement (the "Original Rights Agreement"), dated as of
January 29, 1999, by and between the Company and Catterton-Simon Partners III,
L.P. ("Catterton"), (C) the Warrant dated January 29, 1999 issued to Catterton
to purchase 75,000 shares of Common Stock (the "Catterton Warrant"), (D) the
Warrant dated February 9, 1999 issued to Hambrecht & Quist LLC to purchase
24,806 shares of Common Stock (the "H&Q Warrant"), and (E) the Warrant dated May
21, 1997 issued to Sand Hill Capital LLC to purchase 7,000 shares of Common
Stock (the "Sand Hill Warrant" and collectively with the Catterton Warrant and
the H&Q Warrant, the "Warrants"). Except for (i) the rights and conversion of
the Preferred Stock, (ii) the options to purchase 1,351,865 shares of Common
Stock granted under the Company's stock option plans, (iii) the Warrants, and
(iv) the rights granted pursuant to the Original Rights Agreement, there are no
outstanding securities convertible into or exchangeable for capital stock of the
Company or any options, warrants, rights (including conversion or preemptive
rights, rights of first refusal, "tag along" rights, rights of co-sale or any
similar right), agreements or contracts for the purchase, subscription to or
acquisition of any shares of its capital stock from the Company, or contracts,
commitments, agreements, understandings or arrangements of any kind to which the
Company or any such holder of capital stock is a party relating to the issuance
of any capital stock of the Company, any such convertible or exchangeable
securities or any such options, warrants or rights. The issuance of Stock in the
Transactions will not result in any adjustment to the number of shares issuable
or the purchase price, conversion or exchange rate applicable to any option,
warrant, convertible or exchangeable security or similar right of the Company.
3.3 SUBSIDIARIES.
Except for the Merger Sub, the Company does not currently own or
control, directly or indirectly, any interest in any other corporation,
association or other business entity. The Company is not a participant in any
joint venture, partnership or similar arrangement.
3.4 AUTHORIZATION.
The Company has the requisite corporate power and authority to enter
into this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement and the consummation by the Company of the
Transactions have been duly authorized by all necessary corporate action on the
part of the Company (other than approval of the Merger by the shareholders of
the Company). All corporate action necessary for the authorization, execution
and delivery of this Agreement, the performance of all obligations of the
Company hereunder at the Closing and the authorization, and issuance of the
Stock being issued pursuant to this Agreement has been taken or will be taken
prior to the Closing Date. This Agreement constitutes or will constitute as of
the Closing Date the valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally, and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
5
<PAGE> 10
3.5 VALID ISSUANCE OF THE STOCK.
The Stock to be issued to the Investors pursuant to this Agreement, when
issued and delivered in accordance with the terms of this Agreement for the
consideration expressed herein, will be duly and validly issued, fully paid, and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and the Rights Agreement.
3.6 GOVERNMENTAL AND THIRD-PARTY CONSENTS.
No consent, approval, qualification, Order or authorization of, or
filing with, any local, state, or federal governmental authority or approval or
consent of any third party is required on the part of the Company in connection
with the Company's execution, delivery or performance of this Agreement, and the
offer, sale or issuance of the Stock, except for (i) the approval by the
shareholders of Company of the Merger and related matters, and (ii) the filings
and submissions that the Company shall make under the HSR Act in connection with
the Merger.
3.7 SEC FILINGS; FINANCIAL STATEMENTS.
The Company has timely filed with the Securities and Exchange Commission
(the "SEC") and made available to each Investor or its representatives all forms
(other than Forms 3, 4 or 5 filed on behalf of Affiliates (as defined below) of
the Company), reports and documents required to be filed by the Company with the
SEC since January 1, 1997 (collectively, the "Company SEC Reports"). The Company
SEC Reports (i) at the time filed, complied with the applicable requirements of
the Securities Act of 1933, as amended (the "Securities Act"), and the rules
thereunder, and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules thereunder, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. To the knowledge of
the Company, the SEC has not issued an Order preventing or suspending the use of
any Company SEC Report, nor instituted Proceedings for that purpose. The Company
meets the eligibility requirements set forth in Section I.A. of the General
Instructions for the Use of Form S-3 under the Securities Act. For purposes of
this Agreement, "Affiliate" shall mean a Person that directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with, the Person specified.
Each of the financial statements (including, in each case, any related
notes and schedules) contained in the Company SEC Reports, including any such
Company SEC Report filed from the date of the Merger Agreement until the earlier
of (i) the date on which the Merger Agreement is terminated pursuant to its
terms or (ii) the Merger Closing Date (such time period, the "Pre-Closing
Period"), complied with the applicable published rules and regulations of the
SEC with respect thereto, was prepared in accordance with generally accepted
accounting principals in the United States from ("GAAP") applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
to such financial statements or, in the case of unaudited statements, as
permitted by Form 10-Q under the Exchange Act) and fairly presented the
financial position of the Company at the respective dates and the results of
operations and cash
6
<PAGE> 11
flows of the Company for the periods indicated, and all adjustments necessary
for a fair presentation of results for such periods have been made, except that
the unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount.
3.8 NO CHANGES.
Since August 28, 1999:
(a)there has not been any change in the business, assets,
liabilities, financial condition, prospects or operating results of the Company,
from that reflected in the Company's financial statements contained in the
Company's Annual Report on Form 10-K for the fiscal year ended August 28, 1999,
except changes in the ordinary course of business that individually or
collectively have not had a Material Adverse Effect on the Company;
(b)there has not been any damage, destruction or loss, whether or
not covered by insurance having a Material Adverse Effect on the Company;
(c)other than the Merger, the Company has not entered into any
material transaction (other than the Transactions) not referred to in the
Existing Company SEC Reports; and
(d)the Company has no liabilities except for liabilities
reflected in the Existing Company SEC Reports or incurred in the ordinary course
of business consistent with past practices.
3.9 COMPLIANCE WITH LAWS.
The Company now holds all licenses, certificates, permits, franchises or
other governmental authorization, registration, acceptance or approval from
state, federal and other regulatory authorities that are necessary for the
conduct of its business ("Governmental authorizations"), other than where the
failure to hold such Governmental Authorization is not reasonably likely to have
a Material Adverse Effect on the Company. Other than as set forth in the
Existing Company SEC Reports, the Company has complied with, is not in violation
of and has not received any notices of violation or noncompliance and, to the
knowledge of the Company, has no reason to believe that any presently existing
circumstances would result in any violation with respect to, any federal, state
or local statute, law, ordinance, governmental rule or regulation or court
decree to which the Company may be subject, including any environmental laws,
nor has the Company failed to obtain any Governmental Authorization necessary to
the ownership, leasing or operation of its property or to the conduct of its
business as it is presently being carried on and as described in the Existing
Company SEC Reports, except for such noncompliance, violations or failures to
obtain such Governmental Authorization as would not have a Material Adverse
Effect on the Company.
3.10 COMPLIANCE WITH OTHER INSTRUMENTS; NO CONFLICT.
The Company is not in violation of any provision of its Articles of
Incorporation or Bylaws or in default of the performance or observance of or
breach under or with respect to any
7
<PAGE> 12
provision of any obligation, agreement, covenant or condition contained in any
bond, debenture, note or other evidence of indebtedness or in any mortgage,
indenture, deed of trust, lease of real or personal property, undertaking,
agreement, instrument, contract, joint venture or other agreement or instrument
to which it is a party or by which it or any of its property is bound (a
"Company Contract") or, to its knowledge, of any federal or state Order, except
for such violations, defaults or breaches as would not have a Material Adverse
Effect on the Company. The Company has not received notice that any party to any
such Company Contract intends to cancel, amend or terminate any such agreement,
except where such cancellations, amendments or terminations would not have a
Material Adverse Effect on the Company. The execution, delivery and performance
by the Company of this Agreement, the consummation of the Transactions and the
fulfillment of the terms hereof does not and will not (i) violate, conflict with
or contravene the terms of the Articles of Incorporation or the Bylaws of the
Company, or any amendment thereof; (ii) violate, conflict with or result in any
material breach or contravention or constitute a default under (a) any Company
Contract or (b) any Order or (iii) constitute, with or without the passage of
time or giving of notice, an event that results in the creation of any lien,
charge or encumbrance upon any assets of the Company or the suspension,
revocation, impairment, forfeiture, or nonrenewal of any permit, license,
authorization, or approval applicable to the Company, its business or
operations, or any of its assets or properties, except for such violations,
conflicts, defaults, breaches or similar consequences as would not have a
Material Adverse Effect on the Company.
3.11 LITIGATION.
Other than as disclosed in the Existing Company SEC Reports, there is no
private or governmental action, suit, proceeding, claim, arbitration or
investigation (each, a "Proceeding") pending or, to the knowledge of the
Company, threatened against the Company or any of its properties before any
agency, court or tribunal, foreign or domestic (A) affecting the Transactions or
(B) which, if determined adversely to the Company, would have a Material Adverse
Effect on the Company. The Company is not a party, subject to the provisions of,
or in default with respect to, any Order, and there are no unsatisfied judgments
against the Company. The Company has made available to the Investors accurate
and complete copies of all pleadings, correspondence and other written materials
to which the Company has access that relate to Proceedings (i) to which the
Company is currently a party or (ii) which have been threatened in writing.
3.12 TAX RETURNS AND PAYMENTS.
The Company has timely filed all tax returns as required by law. These
tax returns are true, complete and correct in all material respects. The Company
has paid all taxes for all taxable periods ended on or prior to the Closing
Date, except where the failure to make such payment would not have a Material
Adverse Effect on the Company. The Company has not been advised (a) that any of
its returns, federal, state or other, have been or are being audited as of the
date hereof or (b) of any deficiency in assessment or proposed judgment to its
state or other taxes. The Company is not aware of any tax liability to be
imposed upon its properties or assets as of the date of this Agreement that
would have a Material Adverse Effect upon the Company. There are no matters
under discussion with any governmental authorities with respect
8
<PAGE> 13
to taxes that in the reasonable judgment of the Company are likely to result in
a material additional liability to the Company for taxes.
3.13 FINDERS AND BROKERS; FEES.
(a) Neither the Company nor any person acting on behalf of the
Company has engaged any finder, broker, intermediary or any similar person in
connection with the Transactions.
(b) The Company has not entered into a contract or other
agreement that provides that a fee shall be paid to any Person if the
Transactions are consummated.
Notwithstanding the foregoing, the Company has engaged W.R. Hambrecht & Co., LLC
("WRH") to act as its financial advisor in connection with the Merger pursuant
to that certain Engagement Letter between the Company and WRH dated December 17,
1999 and is obligated to pay WRH for certain fees and expenses as disclosed on
Part 3.13 of the Disclosure Schedule.
3.14 RIGHTS OF REGISTRATION.
Except as set forth in the Original Rights Agreement or as contemplated
in the Rights Agreement, the Company has not granted or agreed to grant any
registration rights, including piggyback rights, or other material rights to any
person or entity, (i) the provision or performance of which would render the
provision or performance (including the issuance of the Company Stock) of the
material rights to be granted to the Investors by the Company in this Agreement,
impracticable or (ii) for or relating to the registration of any shares of
capital stock of the Company that are currently outstanding.
3.15 VOTING RIGHTS.
Except as set forth in the Original Rights Agreement, as contemplated in
the Rights Agreement or as contemplated by the Voting Agreement to be entered
into by Catterton and the Chief Executive Officer of the Company, neither the
Company, nor to the Company's knowledge, the shareholders of the Company, has or
have, as the case may be, entered into any agreement with respect to the voting
of capital shares of the Company for the election of Directors of the Company or
otherwise.
3.16 LABOR RELATIONS AND EMPLOYEE MATTERS.
(a) The Company is not engaged in any unfair labor practice.
There is (i) no unfair labor practice complaint pending or, to the knowledge of
the Company, threatened against the Company before the National Labor Relations
Board, and no grievance or arbitration proceeding arising out of or under
collective bargaining agreements is so pending or, to the knowledge of the
Company, threatened against the Company, (ii) no strike, labor dispute, slowdown
or stoppage pending or, to the knowledge of the Company, threatened against the
Company, and (iii) no union representation question existing with respect to the
employees of the Company and, to the knowledge of the Company, no union
organizing activities are taking place.
9
<PAGE> 14
(b) Except as disclosed in the Existing Company SEC Reports, the
Company is not a party to any employment agreement (other than "at will"
employment relationships), collective bargaining agreement or covenant not to
compete, nor has the Company ever been party to any collective bargaining
agreement.
3.17 NO OTHER AGREEMENTS TO SELL THE ASSETS OR CAPITAL STOCK OF THE
COMPANY.
The Company does not have any legal obligation, absolute or contingent,
other than the obligations of the Company under this Agreement or the Merger
Agreement, to any person or firm to (i) sell assets other than in the ordinary
course of business consistent with past practices, (ii) sell any capital stock
of the Company or effect any merger, consolidation or other reorganization of
the Company or (iii) enter into any agreement with respect to any of the
foregoing.
3.18 PRIVATE PLACEMENT.
The offer, sale and issuance of the Stock as contemplated by this
Agreement is exempt from the registration requirements of the Securities Act and
state securities "blue sky" laws, and neither the Company nor any authorized
agent acting on its behalf will take any action hereafter that would cause the
loss of such exemptions.
4. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.
Each Investor, severally and not jointly, hereby represents and warrants
to the Company that:
4.1 AUTHORIZATION.
Each Investor has full power and authority to enter into this Agreement,
and each of the Agreement and the Rights Agreement constitutes, or will
constitute, the valid and legally binding obligation of each Investor,
enforceable against each Investor in accordance with its respective terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of
creditors' rights generally, and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies.
4.2 DISCLOSURE OF INFORMATION.
Each Investor further represents that it has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the offering of the Stock and the business, properties, prospects
and financial condition of the Company.
4.3 STATUS.
(a) Each Investor is an "accredited investor" as that term is
defined in Rule 501(a) of Regulation D of the Securities Act.
10
<PAGE> 15
(b) Each Investor, by reason of its business and financial
experience has such knowledge, sophistication and experience in financial and
business matters and in making investment decisions of this type that it is
capable of (i) evaluating the merits and risks of an investment in the Stock and
making an informed investment decision, (ii) protecting its own interest, and
(iii) bearing the economic risk of such investment for an indefinite period of
time.
4.4 INVESTMENT INTENT; CERTAIN RESTRICTIONS.
(a) Each Investor is acquiring the Stock for investment for its
own account, not as a nominee or agent and not with the view to, or any
intention of, a resale or distribution thereof, in whole or in part, or the
grant of any participation therein. Each Investor understands that the Stock has
not been, and will not be, registered under the Securities Act or state
securities laws by reason of specific exemptions from the registration
provisions of the Securities Act and applicable state securities laws that
depend upon, among other things, the bona fide nature of each Investor's
investment intent and the accuracy of each Investor's representations as set
forth in this Section 4. Each Investor has not been formed for the specific
purpose of acquiring the Stock. Each Investor further understands that, other
than pursuant to the Rights Agreement, the Company shall have no obligation to
register the Stock under the Securities Act or any state securities laws or to
take any action that would make available any exemption from the registration
requirements of such laws. Each Investor hereby acknowledges that because of the
restrictions on transfer and assignment of the Stock, each Investor may have to
bear the economic risk of the investment in the Stock for an indefinite period
of time.
(b) Each Investor will observe and comply with the Securities Act
and the rules and regulations promulgated thereunder, as now in effect and as
from time to time amended, in connection with any offer, sale, pledge, transfer
or other disposition of the Stock, including the conditions set forth in Section
5.28(m) of the Merger Agreement.
4.5 RESTRICTED SECURITIES.
Each Investor understands that the shares of Stock it is purchasing are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act only
in certain limited circumstances. In this connection, each Investor represents
that it is familiar with Rule 144, as presently in effect, and understands the
resale limitations imposed hereby and by the Securities Act.
5. PRE-CLOSING COVENANTS OF THE COMPANY.
5.1 NOTIFICATION; UPDATES TO COMPANY DISCLOSURE SCHEDULE.
During the Pre-Closing Period, the Company shall promptly notify the
Investors in writing of:
(a) the discovery by the Company of any event, condition, fact or
circumstance that constitutes a material breach of any representation or
warranty made by the Company in this Agreement; and
11
<PAGE> 16
(b) any event, condition, fact or circumstance that would make
the timely satisfaction of any of the conditions set forth in Section 2.2
impossible or unlikely.
5.2 BEST EFFORTS.
During the Pre-Closing Period, the Company shall use its commercial best
efforts to cause the conditions set forth in Section 2.2 to be satisfied on a
timely basis, and shall not take any action or omit to take any action, the
taking or omission of which would or could reasonably be expected to result in
any of the conditions to Closing set forth in Section 2.2 not being satisfied.
6. PRE-CLOSING COVENANTS OF THE INVESTORS.
6.1 BEST EFFORTS.
During the Pre-Closing Period, each Investor shall use its commercial
best efforts to cause the conditions set forth in Section 2.1 to be satisfied on
a timely basis, and shall not take any action or omit to take any action, the
taking or omission of which would or could reasonably be expected to result in
any of conditions to Closing set forth in Section 2.1 not being satisfied.
7. OTHER MATTERS.
7.1 RESTRICTIVE LEGEND.
All certificates representing the Stock deliverable to each
Investor pursuant to this Agreement, and any certificates subsequently issued
with respect thereto or in substitution therefor, shall bear the following
legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS PURSUANT TO THE TERMS
specified in thAT certain Stock Purchase Agreement, DATED AS OF February
11, 2000, and SHAREHOLDERS' rights agreement, dated as of MAy 2, 2000.
copIES of such Agreements may be obtained froM ODWALLA, INC. without
charge, by the holder of this certificate upon written request therefor.
The Company, in its sole discretion, may cause a stop transfer
order to be placed with its transfer agent(s) on any certificate representing
the Stock at any time and from time to time.
7.2 CALIFORNIA SECURITIES LAWS.
THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS AGREEMENT HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA AND THE ISSUANCE OF SUCH
12
<PAGE> 17
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH
SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF
SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS
SO EXEMPT.
7.3 PUBLIC DISCLOSURE.
Unless otherwise required by law (including securities laws) or, as to
the Company, by the rules and regulations of the National Association of
Securities Dealers ("NASD"), prior to the Merger Closing Date, no disclosure
(whether or not in response to an inquiry) of the subject matter of this
Agreement or the Merger shall be made by any party hereto unless approved in
writing by the Company prior to release (which approval shall not be
unreasonably withheld); provided, that the parties agree and understand that
certain disclosures regarding the Transactions may be made to (i) employees of
the Company, (ii) third parties whose consent or approval may be required in
connection with the Transactions, and (iii) the professional advisors of the
Company and/or the Investors, in each case without any prior written consent.
8. TERMINATION.
8.1 TERMINATION EVENTS.
This Agreement may be terminated prior to Closing:
(a) by the Investors if there is a material breach or inaccuracy
in any representation, warranty, covenant or obligation of the Company after the
date of this Agreement and prior to the Closing and such breach or inaccuracy
has not been cured within ten (10) business days after written notice of such
breach is given to the Company;
(b) by the Company if there is a material breach or inaccuracy in
any representation, warranty, covenant or obligation of the Investors after the
date of this Agreement and prior to the Closing and such breach or inaccuracy
has not been cured within ten (10) business days after written notice of such
breach is given to the Investors;
(c) by either the Company or the Investors if the Closing has not
taken place on or before September 30, 2000; or
(d) by the mutual consent of the Investors and the Company.
8.2 TERMINATION PROCEDURES.
If the Investors wish to terminate this Agreement pursuant to Section
8.1(a), the Investors shall deliver to the Company a written notice stating that
the Investors are terminating this Agreement and setting forth a brief
description of the basis on which the Investors are terminating this Agreement.
If the Company wishes to terminate this Agreement pursuant to Section 8.1(b),
the Company shall deliver to the Investors a written notice stating that the
13
<PAGE> 18
Company is terminating this Agreement and setting forth a brief description of
the basis on which the Company is terminating this Agreement.
8.3 EFFECT OF TERMINATION.
If this Agreement is terminated pursuant to Section 8.1, all further
obligations of the parties under this Agreement shall terminate; provided, that
each party shall remain liable for any breaches of this Agreement prior to its
termination and provided, further, that Sections 7.3, 9.2, 9.3 and 9.10 shall
survive the termination of this Agreement.
8.4 EXCLUSIVITY OF TERMINATION RIGHTS.
Except to the extent termination occurs due to the bad faith of the
other party, the termination rights and obligations provided in this Section 8
shall be deemed to be exclusive. Subject to the provisions of Section 8.3, the
parties shall not have any other or further Liabilities to or with respect to
one another by reason of this Agreement or its termination.
9. MISCELLANEOUS.
9.1 FURTHER ASSURANCES.
Each party hereto shall execute and/or cause to be delivered to each
other party hereto such instruments and other documents, and shall take such
other actions, as such other party may reasonably request (prior to, at or after
the Closing) for the purpose of carrying out or evidencing any of the
Transactions.
9.2 FEES AND EXPENSES.
Each party to this Agreement shall bear and pay its own costs and
expenses with respect to the negotiation, execution, delivery and performance of
this Agreement.
9.3 ATTORNEYS' FEES.
If any legal action or other legal Proceeding (including arbitration)
relating to the Transactions or the enforcement of any provision of any of the
Transactional Agreements is brought against any party hereto, the Person
presiding over such action or other Proceeding may award reasonable attorneys'
fees, costs and disbursements to the prevailing party (in addition to any other
relief to which the prevailing party may be entitled).
9.4 GOVERNING LAW; ARBITRATION.
(a) This Agreement is to be construed in accordance with and
governed by the laws of the State of California (as permitted by Section 1646.5
of the California Civil Code or any similar successor provision), without giving
effect to any choice of law rule that would cause the application of the laws of
any jurisdiction other than the State of California to the rights and duties of
the parties.
14
<PAGE> 19
(b) Any controversy or claim arising out of or relating to this
Agreement, or breach thereof, shall be settled by arbitration administered by
the American Arbitration Association in accordance with its then existing
Commercial Arbitration rules and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. The
arbitrator shall be appointed by mutual agreement of the Company and the
Investor(s) involved in such controversy or claim, but, if the Company and such
Investor(s) fail to agree, the arbitrator shall be appointed by the American
Arbitration Association in accordance with its then existing rules. The place of
the arbitration shall be San Francisco, California and the governing law shall
be the laws of the State of California in accordance with Section 9.4(a) of this
Agreement.
9.5 SUCCESSORS AND ASSIGNS.
Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns,
heirs, executors and administrators of the parties hereto and shall inure to the
benefit of and be enforceable by each person who shall be a holder of the Stock
from time to time. None of the parties hereto may assign any of its or their
rights or obligations hereunder to any other party (by contract, operation of
law or otherwise) without the prior written consent of the other, which consent
shall not be unreasonably withheld, and any attempted assignment in violation
thereof shall be void and of no effect.
9.6 ENTIRE AGREEMENT.
This Agreement, the Schedules and the Exhibits hereto, the Rights
Agreement and the other documents contemplated expressly hereby and thereby
constitute the full and entire understanding and agreement among the parties
thereto with regard to the subjects hereof and thereof and supersede all prior
agreements and understandings among or between any of the parties relating to
the subject matter hereof and thereof.
9.7 SEPARABILITY.
In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby, unless such
provision is material to the terms of this Agreement, in which case the Company
and the Investors shall in good faith agree upon such amendments as are
necessary to restore the original intent and arrangement between the parties.
9.8 AMENDMENTS.
This Agreement may be amended or modified only upon the written consent
of the Company and the Investors. Any amendment or modification effected
pursuant to this Section 9.8 shall be binding upon the Company and the
Investors.
9.9 NOTICES.
Any notice or other communication required or permitted to be delivered
to any party under this Agreement shall be in writing and shall be deemed
properly delivered and given (a) on the date delivered or given, when delivered
or given by hand or by telecopier during business
15
<PAGE> 20
hours, (b) one business day after being delivered or given by courier or
next-day express delivery service, or (c) two business days after being
delivered or give by registered mail to the address set forth beneath the name
of such party below (or to such other address or telecopier number as such party
shall have specified in a written notice given to the other parties hereto):
if to the Company:
Odwalla, Inc.
120 Stone Pine Road
Half Moon Bay, CA 94019
Attention: D. Stephen C. Williamson
Telecopier: (650) 712-5967
with a copy to:
Morrison & Foerster LLP
425 Market Street
San Francisco, California 94105
Attention: Robert Townsend, Esq.
Telecopier: (415) 268-7522
if to U.S. Equity Partners LP:
c/o Wasserstein Perella & Co., Inc.
1999 Avenue of the Stars, Suite 2950
Los Angeles, California 90067
Attention: Ellis B. Jones
Telecopier: (310) 286-7270
with copies to:
Skadden, Arps, et. al.
300 South Grand Avenue
Suite 3400
Los Angeles, California 90071
Attention: Brian J. McCarthy
Telecopier: (213) 687-5600
if to Catterton-Simon Partners:
Greenwich Office Park
Greenwich, Connecticut 06830
Attention: Craig Sakin
Telecopier: (203) 629-4903
16
<PAGE> 21
with copies to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178-0060
Attention: Philip H. Werner
Telecopier: (212) 309-6273
9.10 PUBLICITY AND USE OF CONFIDENTIAL INFORMATION.
(a) Notwithstanding anything to the contrary contained in any
agreement among the parties hereto, the Company shall have the right to disclose
the information provided to the Company by the Investors (including the terms of
this Agreement) through the use of printed offering materials or otherwise or as
otherwise required by applicable legal requirements, in connection with the
preparation of a proxy statement (the "Proxy Statement") in connection with the
solicitation by the Board of Directors of the Company of the affirmative vote of
a majority of the outstanding Common Stock and Preferred Stock to approve the
Merger and related matters.
(b) The Company, on the one hand, and the Investors, on the other
hand, shall keep strictly confidential, and shall not use, or disclose to any
other Person, any non-public document or other information in the Company's
possession, on the one hand, and in each Investor's possession, on the other
hand, that relates directly or indirectly to the business of the Company or any
Affiliate of the Company, on the one hand, or the Investor or any Affiliate of
the Purchaser, on the other hand; provided, however, that the Company and the
Investors may disclose such non-public information as required by any applicable
law or rule to which the Company or Investors are subject, including the
Exchange Act and the rules of the NASD.
(c) Except as set forth in Section 7.3, neither the Investors, on
the one hand, nor the Company, on the other hand, shall issue or disseminate any
press release or other publicity concerning any of the Transactions, or permit
any press release or other publicity concerning any of the Transactions to be
issued or otherwise disseminated on its behalf without the prior written consent
of the Investors, in the case of the Company, or the Company, in the case of the
Investors; provided, however, that the Company and Investors may disclose or
disseminate such information as required by any applicable law or rule to which
the Company or the Investors are subject, including the Exchange Act and the
rules of the NASD.
9.11 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
9.12 DELAYS OR OMISSIONS; WAIVERS.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise or waiver of any such power, right,
17
<PAGE> 22
privilege or remedy shall preclude any other or further exercise thereof or of
any other power, right, privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
9.13 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE.
(a) All remedies, either under this Agreement or by law or
otherwise afforded to the parties hereto, shall be cumulative and not
alternative.
(b) Each of the parties hereto agrees that if the conditions to
such party's obligation to consummate the Transactions have been satisfied as
set forth in Sections 2.1 or 2.2, as the case may be, and such party nonetheless
refuses to consummate the Transactions, then the other party shall be entitled
(in addition to any other remedy that may be available to it) to (i) a decree or
order of specific performance or mandamus to enforce the observance and
performance of such obligation to consummate the Transactions, and (ii) an
injunction restraining such non-performance.
9.14 HEADINGS.
The headings contained in this Agreement are for convenience of
reference only, shall not be deemed to be a part of this Agreement and shall not
be referred to in connection with the construction or interpretation of this
Agreement.
9.15 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise specified, all references in this
Agreement to "Sections," "Exhibits" and "Schedules" are intended to refer to
Sections of this Agreement and Exhibits and Schedules to this Agreement.
18
<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have executed this STOCK PURCHASE
AGREEMENT as of the date set forth in the first paragraph hereof.
COMPANY: ODWALLA, INC.,
a California corporation
By:________________________________________
Name: D. Stephen C. Williamson
Title: Chief Executive Officer
INVESTOR: U.S. EQUITY PARTNERS, L.P.,
a Delaware limited partnership
By:________________________________________
Name: Ellis B. Jones
Title: Managing Director
INVESTOR: CATTERTON-SIMON PARTNERS III, L.P.,
a Delaware limited partnership
By:________________________________________
Name: Craig Sakin
Title: Authorized Person
19
<PAGE> 24
INDEX OF SCHEDULES AND EXHIBITS
Schedule I Schedule of Investors
Schedule II Disclosure Schedule
Exhibit A Rights Agreement
Exhibit B Form of Opinion of Company Counsel
20
<PAGE> 25
STOCK PURCHASE AGREEMENT
SCHEDULE I
SCHEDULE OF INVESTORS
<TABLE>
<CAPTION>
INVESTOR NUMBER OF SHARES OF STOCK PURCHASE PRICE
<S> <C> <C>
U.S. Equity Partners, L.P. 800,641 $5,000,000
Catterton-Simon 160,128 $1,000,000
Partners III, L.P.
</TABLE>
21
<PAGE> 26
STOCK PURCHASE AGREEMENT
SCHEDULE II
DISCLOSURE SCHEDULE
22
<PAGE> 1
EXHIBIT 10.4
AMENDMENT NO. 1 TO
STOCK PURCHASE AGREEMENT
Reference is made to that certain Stock Purchase Agreement, dated as of
February 11, 2000 (the "Agreement"), by and among Odwalla, Inc., a California
corporation (the "Company"), and U.S. Equity Partners, L.P., a Delaware limited
partnership, and Catterton-Simon Partners, L.P., a Delaware limited partnership
(each, an "Investor" and collectively, the "Investors").
RECITAL
A. Pursuant to the terms and conditions of the Agreement, the
Company has agreed to issue to the Investors, and the Investors
have collectively agreed to purchase from the Company, nine
hundred sixty thousand seven hundred sixty nine (960,769) shares
of the Common Stock of the Company.
B. Pursuant to Section 9.8 of the Agreement, the Agreement may only
be amended with the consent of the Company and the Investors,
and it is the intent of the Company and the Investors to amend
the Agreement as set forth in this Amendment No. 1.
AGREEMENT
The Company and the Investors, intending to be legally bound, hereby
amend the Agreement as follows:
1. SECTION 2.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE INVESTORS.
Section 2.2(g) of the Agreement shall be amended and restated in
its entirety to read as follows:
all of the material terms and conditions contained in the Merger
Agreement as of the date of this Agreement shall have been
complied with or satisfied, as the case may be, by the applicable
party thereto; except, with the consent of each Investor, as the
case may be (such consent not to be unreasonably withheld), to
the extent (i) any change in the material terms and conditions
contained in the Merger Agreement as of the date of this
Agreement benefit the Company, or (ii) the waiver or
non-satisfaction of a condition contained in the Merger Agreement
is for the benefit of the Company.
1
<PAGE> 2
2. SECTION 9.2 FEES AND EXPENSES.
Section 9.2 of the Agreement shall be amended and restated in its
entirety to read as follows:
The Company shall bear and pay the reasonable costs and expenses
with respect to the negotiation, execution and delivery of this
Agreement and in connection with the Transactions.
3. SECTION 9.9 NOTICES.
Section 9.9 of the Agreement shall be amended to include the
following:
if to BancBoston Investments, Inc.:
BancBoston Investments Inc.
175 Federal Street, 10th Floor
Boston, Massachusetts 02110
Attention: Mark H. DeBlois
Telecopier: (617) 434-1153
with a copy to:
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Attention: Robert M. Wolf, Esq.
Telecopier: (617) 951-8736
[The remainder of this page intentionally left blank]
2
<PAGE> 3
4. SCHEDULE 1 SCHEDULE OF INVESTORS
Schedule 1 shall be amended and restated in its entirety to read as
follows:
<TABLE>
<CAPTION>
INVESTOR NUMBER OF SHARES OF STOCK PURCHASE PRICE
<S> <C> <C>
U.S. Equity Partners, L.P. 601,667 $3,757,410
U.S. Equity Partners 162,945 $1,017,590
(Offshore), L.P.
Catterton Simon Partners, 160,128 $1,000,000
L.P.
BancBoston Investments, Inc. 36,029 $225,000
TOTAL: 960,769 $6,000,000
</TABLE>
5. GENERAL.
By executing this Amendment No. 1, each of U.S. Equity Partners
(Offshore), L.P., a Cayman Islands limited partnership, and BancBoston
Investments, Inc., a Massachusetts corporation, agree to become a party to and
be bound by the terms of the Agreement, as amended by this Amendment No. 1.
The terms of this Amendment No. 1 shall prevail over any conflicting
provisions of the Agreement, but both instruments shall otherwise be constituted
and interpreted as a single integrated agreement. The Agreement remains in full
force and effect, in accordance with its terms as amended hereby.
This Amendment No. 1 may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one
instrument.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have executed this
AMENDMENT NO. 1 as of April 25, 2000.
COMPANY: ODWALLA, INC.,
a California corporation
By:___________________________________
Name: D. Stephen C. Williamson
Title: Chief Executive Officer
INVESTOR: U.S. EQUITY PARTNERS, L.P.,
a Delaware limited partnership
By:___________________________________
Name: Ellis B. Jones
Title: Managing Director
INVESTOR: U.S. EQUITY PARTNERS (OFFSHORE), L.P.,
a Cayman Islands limited partnership
By:___________________________________
Name:
Title:
4
<PAGE> 5
INVESTOR: CATTERTON-SIMON PARTNERS III, L.P.,
a Delaware limited partnership
By:___________________________________
Name: Craig Sakin
Title: Authorized Person
INVESTOR BANCBOSTON INVESTMENTS, INC.,
a Massachusetts corporation
By:___________________________________
Name:
Title:
5
<PAGE> 1
EXHIBIT 10.5
ODWALLA, INC.
SHAREHOLDERS' RIGHTS AGREEMENT
MAY 2, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGES
<S> <C>
1. GENERAL .............................................................................2
1.1 Definitions...................................................................2
2. REGISTRATION.........................................................................4
2.1 Demand Registrations..........................................................4
2.2 Company Registration..........................................................5
2.3 Additional Procedures in Connection with Underwritten
Offerings; Lockups; Cutbacks..................................................6
2.4 Expenses of Registration......................................................7
2.5 Obligations of the Company....................................................8
2.6 Termination of Registration Rights............................................9
2.7 Company Lockup...............................................................10
2.8 Indemnification..............................................................10
2.9 Assignment of Registration Rights............................................12
2.10 Participation by Shareholders................................................12
2.11 Reports Under Securities Exchange Act of 1934................................13
3. RIGHT OF FIRST OFFER; CO-SALE RIGHTS................................................13
3.1 Notice of Intended Disposition...............................................13
3.2 Exercise of Right by the Company.............................................14
3.3 Non-Exercise of Right of First Refusal.......................................14
3.4 Closing of Sale of Target Shares.............................................14
3.5 Assignment...................................................................15
3.6 Co-Sale Rights in Sales by a Transferring Shareholder........................15
3.7 Exempt Transfers.............................................................16
3.8 Termination..................................................................16
4. VOTING AGREEMENT....................................................................16
4.1 Election of Members of the Board of Directors................................16
4.2 Termination of Voting Agreement..............................................17
5. OTHER AGREEMENTS....................................................................17
5.1 Information Rights...........................................................17
5.2 Restrictive Legend...........................................................18
5.3 Shareholder Lockup...........................................................18
5.4 Standstill...................................................................18
6. MISCELLANEOUS.......................................................................20
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
6.1 LLC Shares...................................................................20
6.2 Amendment of LLC Agreement...................................................20
6.3 Governing Law................................................................20
6.4 Termination of Existing Rights Agreement.....................................20
6.5 Successors and Assigns.......................................................20
6.6 Severability.................................................................20
6.7 Amendment and Waiver.........................................................20
6.8 Delays or Omissions..........................................................21
6.9 Notices......................................................................21
6.10 Attorneys' Fees..............................................................21
6.11 Titles and Subtitles.........................................................21
6.12 Counterparts.................................................................22
6.13 Construction.................................................................22
6.14 Entire Agreement.............................................................22
</TABLE>
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ODWALLA, INC.
SHAREHOLDERS' RIGHTS AGREEMENT
This SHAREHOLDERS' Rights Agreement (this "Agreement") is entered into
as of May 2, 2000, by and among Odwalla, Inc., a California corporation (the
"Company"), Samantha Investors, LLC, a Massachusetts limited liability company,
and those shareholders of the Company and other Persons listed on Schedule 1
hereto (together with these permitted successors and assigns hereunder,
collectively the "Shareholders").
RECITALS
A. The Company previously entered into that certain Investors'
Rights Agreement, dated as of January 29, 1999, with
Catterton-Simon Partners III, L.P. ("Catterton") in connection
with the acquisition by Catterton of certain shares of Series A
Preferred Stock of the Company (the "Existing Rights
Agreement"). On or before the date hereof, Catterton has
converted such shares of Series A Preferred Stock together with
those additional shares of Series A Preferred Stock Catterton
received from the Company on June 30, 1999 and December 31, 1999
as a stock dividend into Common Stock of the Company. The
Company and Catterton wish to have this Agreement supersede and
terminate the Existing Rights Agreement.
B. The Company, Orange Acquisition Sub, a Maine corporation
("Merger Sub"), and Fresh Samantha, Inc., a Maine corporation
("Samantha"), have entered into that certain Agreement and Plan
of Merger, dated as of February 2, 2000 (the "Merger
Agreement"), to effectuate the merger (the "Merger") of Merger
Sub with and into Samantha with Samantha as the surviving
corporation and wholly-owned subsidiary of the Company.
C. Upon consummation of the Merger, the Shareholders identified as
"Samantha Shareholders" on Schedule 1 attached hereto will
exchange certificates formerly representing shares of the
capital stock of Samantha for shares of the Common Stock of the
Company.
D. Concurrent with the Closing of the Merger, the Company expects
to consummate a transaction pursuant to which it will issue and
sell up to Six Million Dollars ($6,000,000) of Common Stock to
WP and Catterton.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, the parties mutually agree as follows:
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1. GENERAL
1.1 DEFINITIONS.
In addition to those terms otherwise defined herein, as used in this
Agreement, the following terms shall have the following respective meanings:
"ACQUISITION PROPOSAL" shall mean (a) a bona fide, written proposal,
which proposal includes all material terms of a proposed transaction, received
by the Board of Directors of the Company from any person or Group (as such term
is defined in Section 13(d)(3) of the Exchange Act) proposing to enter into a
transaction with the Company or the Company's shareholders which, if effected,
result in such person or group acquiring more than 50% of the voting securities
of the Company, (b) a tender offer or exchange offer seeking to acquire 50% or
more of the outstanding shares of voting securities of the Company or (c) a
public announcement of the commencement of a bona fide proxy or consent
solicitation subject to Section 14 of the Exchange Act to remove a majority of
the Board of Directors.
"AFFILIATE" shall mean a person or entity that directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with, the person specified.
"BAIN SHAREHOLDERS" shall mean, collectively, Bain Capital Fund VI, L.P.
and its Affiliates.
"CLOSING" shall have the meaning given such term in the Merger
Agreement.
"COMMON STOCK" shall mean the common stock of the Company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended and
any successor rule or regulation thereto, and in the case of any referenced
section of such rule, any successor section thereto, collectively and as from
time to time amended and in effect.
"HOLDER" means any person owning or having the right to acquire
Registrable Securities or any assignee thereof.
"LLC" means Samantha Investors, LLC, a Massachusetts limited liability
company.
"MAJORITY PARTICIPATING HOLDERS" means, with respect to any registration
of Registrable Securities, the holder or holders at the relevant time of at
least a majority of the Registrable Securities to be included in the
registration statement in question.
"NASD" shall mean the National Association of Securities Dealers, Inc.
(or its successor).
"PERMITTED TRANSFEREE" shall mean, as to any Shareholder, (a) any
Affiliate, partner, retired partner, member, retired member, or other holder of
equity interests of such Shareholder and (b) any family member of such
Shareholder or any domestic partner of such Shareholder or
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<PAGE> 6
any trust, partnership, limited liability company, custodianship or fiduciary
account for the benefit of a Shareholder and/or members of his or her family or
his or her domestic partner.
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.
"REGISTRABLE SECURITIES" means (i) the Stock, (ii) any Common Stock
issued as (or issuable upon the conversion or exercise of any preferred stock
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, or
pursuant to a stock split, combination of shares, recapitalization, merger,
consolidation, reorganization or otherwise with respect to the Stock, and (iii)
any Common Stock issued upon exercise of the Warrant. Notwithstanding the
foregoing, Registrable Securities shall not include any securities either sold
by a person to the public pursuant to a registration statement or Rule 144 under
the Securities Act or sold in a private transaction in which the transferor's
rights under Section 2 of this Agreement are not assigned.
The number of shares of "REGISTRABLE SECURITIES THEN OUTSTANDING" shall
be determined by calculating the number of shares of Common Stock outstanding
which are, and the number of shares of Common Stock issuable pursuant to then
exercisable or convertible securities, including the Warrant, which are,
Registrable Securities.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the Company
in complying with Section 2.1 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, reasonable fees and disbursements of a single special
counsel for the Shareholders, blue sky fees and expenses and the expense of any
special audits incident to or required by any such registration.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and
any successor rule or regulation thereto, and in the case of any referenced
section of such rule, any successor section thereto, collectively and as from
time to time amended and in effect.
"STOCK" shall refer to the shares of Common Stock held by the
Shareholders.
"TAG ALONG SELLER" shall have the meaning given such term in Section 3.6
of this Agreement.
"WARRANT" shall refer to that warrant held by Catterton-Simon Partners
III, L.P. to purchase shares of Common Stock dated as of January 29, 1999.
"WP" shall mean U.S. Equity Partners, L.P., a Delaware limited
partnership, U.S. Equity Partners (Offshore), L.P., a Cayman Islands limited
partnership, and BancBoston Investments, Inc., a Massachusetts corporation.
Any capitalized terms not defined herein shall have the meanings given
them in the Merger Agreement.
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2. REGISTRATION
2.1 DEMAND REGISTRATIONS.
(a) REGISTRATION ON FORM S-3. From time to time after the first
anniversary of the date of this Agreement, a Holder or Holders may request in
writing that the Company effect the registration on Form S-3 of Registrable
Shares, provided that the gross proceeds of the offering to which such request
applies are expected to be at least $1,000,000. If the Holder or Holders
initiating such registration intend to distribute the Registrable Securities in
an underwritten offering, they shall so state in their request. Promptly after
receipt of such notice, the Company will give written notice of such requested
registration to all other Holders of Registrable Securities. The Company will
then use its commercially reasonable best efforts to expeditiously effect the
registration under the Securities Act of the Registrable Securities which the
Company has been requested to register by such Holders and all other Registrable
Securities which the Company has been requested to register by other Holders of
Registrable Securities by notice delivered to the Company within twenty (20)
days after the giving of such notice by the Company.
(b) REGISTRATION ON FORM S-1 OR S-2. From time to time after the
first anniversary of the date of this Agreement, when the Company is ineligible
to file a Registration Statement on Form S-3, one or more Holders of Registered
Securities may request in writing that the Company effect the registration under
the Securities Act of Registrable Securities; provided that the gross proceeds
of the offering to which such request applies are expected to be at least $5
million. If the Holder or Holders initiating such registration intend to
distribute the Registrable Securities in an underwritten offering, they shall so
state in their request. Promptly after receipt of such notice, the Company will
give written notice of such requested registration and related information to
all other Holders of Registrable Securities. The Company will then use its
commercially reasonable best efforts to expeditiously effect the registration
under the Securities Act of the Registrable Securities which the Company has
been requested to register by such Holders and all other Registrable Securities
which the Company has been requested to register by other Holders of Registrable
Securities by notice delivered to the Company within twenty (20) days after the
giving of such notice by the Company.
(c) FORM. Each registration requested pursuant to Section 2.1(b)
shall be effected by the filing of a registration statement on Form S-1 or S-2
(or the successor form of either, unless the use of a different form has been
agreed to in writing by the Company and the Majority Participating Holders). No
registration of Registrable Securities under this Section 2.1 which shall not
have become and remained effective for the period set forth in Section 2.5(a),
shall be deemed to be a registration for any purpose of this Section 2.1. In the
case of the filing of a registration statement on Form S-3 pursuant to this
Section 2.1, the Company shall include such additional disclosure in such
registration statement and the prospectus used in connection with such
registration statement as reasonably requested by the Majority Participating
Holders or, in the case of an underwritten offering, by the managing
underwriter(s), in order to successfully market the Common Stock offered in such
registration statement.
(d) LIMITATION OF REGISTRATION OBLIGATIONS. Notwithstanding the
foregoing provisions of this Section 2.1, the Company shall not be obligated to
effect any registration,
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<PAGE> 8
qualification or compliance (i) more than twice pursuant to Section 2.1(b), (ii)
if the Company shall furnish to the Shareholders a certificate signed by the
Chairman of the Board or the Chief Executive Officer of the Company stating that
in the good-faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for such registration
to be effected at such time, in which event the Company shall have the right to
defer the filing of the registration statement for a period of not more than
ninety (90) days after receipt of the request of the Holder or Holders under
this Section 2.1, provided that the Company may not delay the filing of a
registration statement pursuant to this clause (ii) more than once in any twelve
(12) month period; (iii) within one hundred eighty (180) days of the effective
date of a prior registration statement in respect of an underwritten offering to
which the provisions of Section 2.2(a) applied in connection with which all
Holders were able to sell 75% of the number of Registrable Securities they had
requested to be included in such prior registration statement; or (iv) more than
twice in a single year.
(e) FURNISHING INFORMATION. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Section 2.1
that the Shareholders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them and the intended method of
disposition of such securities as shall be reasonably requested by the Company
as required to effect the registration of their Registrable Securities.
2.2 COMPANY REGISTRATION.
(a) GENERAL. The Company shall notify the Shareholders in
writing at least thirty (30) days prior to the filing of any registration
statement under the Securities Act for purposes of offering securities of the
Company (excluding registration statements relating solely to employee benefit
plans or solely with respect to the issuance by the Company of securities
pursuant to corporate reorganizations or other transactions under Rule 145 under
the Securities Act), either for its own account or for the account of a security
holder or security holders, and the Company will afford each Shareholder an
opportunity to include in such registration statement all or part of such
Registrable Securities held by such Shareholder. Such notice by the Company
shall describe such securities and specify the form, manner and other relevant
aspects of such proposed registration. Each Shareholder desiring to include in
any such registration statement all or any part of the Registrable Securities
held by it shall, within twenty (20) days after the above-described notice from
the Company, so notify the Company in writing. Such notice shall state the
number of Registrable Securities such Shareholder desires to have included in
such registration statement and the intended method of disposition of the
Registrable Securities by such Shareholder. If a Shareholder decides not to
include all of its Registrable Securities in any registration statement
thereafter filed by the Company, such Shareholder shall nevertheless continue to
have the right to include any Registrable Securities in any subsequent
registration statement or registration statements as may be filed by the Company
with respect to offerings of its securities, all upon the terms and conditions
set forth herein. No registration of Registrable Securities effected under this
Section 2.2 shall relieve the Company of any of its obligations to effect
registrations of Registrable Securities pursuant to Section 2.1 hereof.
(b) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2.2 prior to the effectiveness of such registration whether or not any
Shareholder has elected to include securities
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in such registration. The Registration Expenses of such withdrawn registration
shall be borne by the Company in accordance with Section 2.4 hereof.
(c) NO OBLIGATION. Nothing in this Section 2.2 shall obligate
the Company to file a registration statement.
2.3 ADDITIONAL PROCEDURES IN CONNECTION WITH UNDERWRITTEN OFFERINGS;
LOCKUPS; CUTBACKS.
(a) REGISTRATIONS PURSUANT TO SECTION 2.1; CUTBACK. In the case
of a registration pursuant to Section 2.1 hereof, whenever the Majority
Participating Holders shall request that such registration shall be effected
pursuant to an underwritten offering, such registration shall be so effected,
and only securities which are to be distributed by the underwriters may be
included in such registration. Such underwriters shall be designated by the
following method: (i) the Company will provide a list to the Majority
Participating Holders of six (6) underwriters, each of which shall be on the
list of the top twenty (20) equity underwriters in the United States, (ii) the
Majority Participating Holders may then remove no more than three (3)
underwriters from such list, and (iii) the Company may then designate the
underwriters for the underwritten offering pursuant to Section 2.1 from those
remaining underwriters on such list. If requested by such underwriters, the
Company and each participating seller will enter into an underwriting agreement
with such underwriters for such offering containing such representations and
warranties by the Company and such other terms and provisions applicable to the
Company as are customarily contained in underwriting agreements with respect to
secondary distributions, including, without limitation, indemnity and
contribution. In each such registration pursuant to Section 2.1, each
Shareholder agrees that without the consent of the managing underwriter, for a
period from fifteen (15) days prior to the effective date of the registration
statement until ninety (90) days after such effective date, such Shareholder
will not directly or indirectly sell, offer to sell, grant any option for the
sale of, or otherwise dispose of any common equity or securities convertible
into common equity except (x) for Registered Securities sold in such registered
offering and (y) transfers to Permitted Transferees of such Shareholder, each of
whom shall have furnished to the Company and the managing underwriter their
written consent to be bound by this Agreement, including this Section 2.3.
If the managing underwriter shall advise the Shareholders initially
requesting registration that the total amount of securities to be included in a
registration pursuant to Section 2.1 should be limited due to market conditions
or otherwise, the securities so included shall be reduced as follows: (a) all
securities which shareholders other than the Shareholders seek to include in the
offering shall be excluded from the offering to the extent limitation on the
number of shares included in the underwriting is required, (b) if further
limitation on the number of shares to be included in the underwriting is
required, the number of Registrable Securities held by Shareholders that may be
included in the underwriting shall be reduced pro rata among the selling
Shareholders in accordance with the number of shares of Registrable Securities
held by each such Shareholder.
(b) REGISTRATIONS PURSUANT TO SECTION 2.2; CUTBACK. In
connection with the exercise of any registration rights granted to Shareholders
pursuant to Section 2.2 hereof, if the registration is to be effected by means
of an underwritten offering, the Company shall not be
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<PAGE> 10
required to include any of the Shareholders' securities in such underwriting
unless they agree to be bound by the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it (or by other persons
entitled to select the underwriters), and then only in such quantity as the
underwriters determine in their sole discretion will not jeopardize the success
of the offering by the Company.
If the managing underwriter for the offering shall advise the
Company that the total amount of securities, including Registrable Securities,
requested by shareholders to be included in such offering exceeds the amount of
securities to be sold other than by the Company that can be successfully
offered, then the Company shall be required to include in the offering only that
number of such securities, including Registrable Securities, which the managing
underwriter believes will not jeopardize the success of the offering. In such
case, the securities so included shall be reduced as follows: (a) all securities
which shareholders other than the Company and the Shareholders seek to include
in the offering shall be excluded from the offering to the extent limitation on
the number of shares included in the underwriting is required, (b) if further
limitation on the number of shares to be included in the underwriting is
required, the number of Registrable Securities held by Shareholders that may be
included in the underwriting shall be reduced pro rata among the selling
Shareholders in accordance with the total shares proposed to be included by each
Shareholder in the underwriting.
(c) SELLERS PARTY TO UNDERWRITING AGREEMENT. The Company shall
request and make commercially reasonable good-faith efforts to persuade the
underwriter(s) not to require any Shareholder to make any representations and
warranties to any underwriter in a registration effected pursuant to Sections
2.1 or 2.2 other than the customary representations, warranties and agreements
relating to such Shareholder's title to Registrable Securities and authority to
enter into the underwriting agreement.
2.4 EXPENSES OF REGISTRATION.
(a) All fees and expenses incident to the Company's performance
of or compliance with this Agreement shall be paid by the Company, including
without limitation: (i) all registration and filing fees (including, without
limitation, with respect to filings required to be made with the NASD); (ii)
fees and expenses of compliance with securities or blue sky laws (including,
without limitation, fees and disbursements of counsel for the underwriters or
selling holder in connection with blue sky qualifications of the Registrable
Securities and determination of their eligibility for investment under the laws
of such jurisdictions as the managing underwriters or holders of a majority of
the Registrable Securities being sold may designate); (iii) printing (including,
without limitation, expenses of printing or engraving certificates for the
Registrable Securities in a form eligible for deposit with Depository Trust
Company and of printing prospectuses), messenger, telephone and delivery
expenses; (iv) reasonable fees and disbursements of counsel for the Company,
underwriters and for the selling holders of the Registrable Securities; (v) fees
and disbursements of all independent certified public accountants of the Company
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance); (vi) fees and
disbursements of underwriters as reasonably approved by the Company (excluding
(x) discounts, commissions or fees of underwriters, selling brokers, dealer
managers or similar securities industry professionals relating to the
distribution of the Registrable Securities or (y) legal expenses of any Person
other
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than the Company, the underwriters and the selling holders); (vii) securities
acts liability insurance if the Company so desires, and in such event, coverage
for the underwriters or selling holders of the Registrable Securities should
they so request; (viii) fees and expenses associated with other Persons retained
by the Company, and (ix) fees and expenses associated with any NASD filing
required to be made in connection with the Registration Statement, including, if
applicable, the fees and expenses of any "qualified independent underwriter"
(and its counsel) that is required to be retained in accordance with the rules
and regulations of the NASD (all such expenses being herein called "Registration
Expenses").
The Company will, in any event, pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit, the
fees and expenses incurred in connection with the listing of the securities to
be registered on each securities exchange on which similar securities issued by
the Company are then listed, rating agency fees and the fees and expenses of any
person, including special experts, retained by the Company.
(b) In connection with each registration statement subject to
this Agreement, the Company will reimburse the holders of Registrable Securities
being registered pursuant to such registration statement for the reasonable fees
and disbursements of not more than one counsel (or more than one counsel if a
conflict exists among such selling holders in the exercise of the reasonable
judgment of counsel for the selling holders and counsel for the Company) chosen
by the Majority Participating Holders.
2.5 OBLIGATIONS OF THE COMPANY.
Whenever required to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as reasonably possible:
(a) Prepare and file promptly (and in any event within ninety
(90) days in the case of a Form S-1, and thirty (30) days in the case of a Form
S-3, from receipt by the Company of the written request of the requesting
Shareholders) with the SEC a registration statement with respect to such
Registrable Securities and use all commercially reasonable best efforts to cause
such registration statement to become effective as expeditiously as possible,
and, upon the request of the holders of a majority of the Registrable Securities
registered thereunder, keep such registration statement effective for up to one
hundred twenty (120) days or, if earlier, until the Shareholders have completed
the distribution related thereto.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Shareholders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by the Shareholders.
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(d) Use its commercially reasonable best efforts to register and
qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Shareholders, provided that the Company shall not be required
in connection therewith or as a condition thereto to qualify to do business or
to file a general consent to service of process in any such states or
jurisdictions.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each
Shareholder participating in such underwriting shall also enter into and perform
its obligations under such an agreement subject to Section 2.3(c) hereof.
(f) Use its commercially reasonable best efforts to cooperate,
and to cause its key executives to cooperate, with the Shareholder and, in the
case of an underwritten offering, the managing underwriter, in connection with
the disposition of the Registrable Securities owned by the Shareholders,
including without limitation causing key executives of the Company to
participate under the direction of the managing underwriter in a "road show"
scheduled by the managing underwriter.
(g) Without limiting the obligations of the Company under clause
(b) above, notify each holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(h) Furnish, at the request of any Shareholder participating in
the registration, on the date that such Registrable Securities are delivered to
the underwriters for sale, if such securities are being sold through
underwriters, or, if such securities are not being sold through underwriters, on
the date that the registration statement with respect to such securities becomes
effective, (i) an opinion, dated as of such date, of the counsel representing
the Company for the purposes of such registration, in such form and substance as
is customarily given to underwriters in an underwritten public offering and
reasonably satisfactory to the Shareholder requesting registration, addressed to
the underwriters, if any, and to the Shareholder requesting registration of
Registrable Securities, and (ii) a letter dated as of such date, from the
independent certified public accountants of the Company, in such form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering and reasonably satisfactory to
such Shareholder requesting registration, addressed to the underwriters, if any,
and if permitted by applicable accounting standards, to the Shareholders
requesting registration of Registrable Securities.
2.6 TERMINATION OF REGISTRATION RIGHTS.
All registration rights granted pursuant to Section 2.1 shall terminate
and be of no further force and effect with respect to a Shareholder as of the
date when all Registrable Securities held by and issuable to such Shareholder
may be sold under Rule 144 under the Securities Act during any ninety (90) day
period.
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2.7 COMPANY LOCKUP.
In the case of an underwritten offering under Section 2.1 hereof, the
Company shall refrain, without the consent of the managing underwriter, for a
period from fifteen (15) days before the effective date of the registration sale
until ninety (90) days after such effective date, from directly or indirectly
selling, offering to sell, granting any option for the sale of, or otherwise
disposing of any common equity or securities convertible into common equity
(excluding sales, offers and grants relating solely to employee benefit plans or
solely with respect to the issuance by the Company of securities pursuant to
corporate reorganizations or other transactions under Rule 145 under the
Securities Act).
2.8 INDEMNIFICATION.
In the event any Registrable Securities are included in a registration
statement under Section 2.1 or 2.2:
(a) To the extent permitted by law, the Company will, indemnify
and hold harmless each Shareholder, the partners, officers, directors and legal
counsel of each Shareholder, any underwriter (as defined in the Securities Act)
for such Shareholder and each person, if any, who controls such Shareholder or
underwriter within the meaning of the Securities Act or the Exchange Act (each a
"Covered Person"), against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Securities Act, the Exchange
Act or other federal or state law, common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements, omissions or violations
(collectively a "Violation") by the Company: (i) any untrue statement or alleged
untrue statement of a material fact contained in or incorporated by reference in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, or any
document incorporated by reference therein, or any other such disclosure
document (including without limitation reports and other documents filed under
the Exchange Act to the extent incorporated by reference therein), (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state or federal law, rule or regulation, including
without limitation, any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law in connection with the offering
covered by such registration statement; and the Company will reimburse each such
Covered Person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 2.8(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company, which consent shall not be unreasonably withheld,
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
a Violation which occurs in reliance upon and in conformity with written
information furnished by any Covered Person expressly for use in connection with
such registration by such Covered Person.
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(b) To the extent permitted by law, each Shareholder will
severally and not jointly, if Registrable Securities held by such Shareholder
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify and hold harmless the Company, each of
its directors, its officers, and legal counsel and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act, any underwriter and any other Shareholder selling securities under such
registration statement or any of such other Shareholder's partners, directors or
officers or any person who controls such Shareholder, against any losses,
claims, damages or liabilities (joint or several) to which the Company or any
such director, officer, legal counsel, controlling person, underwriter or other
such Shareholder, or partner, director, officer or controlling person of such
other Shareholder may become subject under the Securities Act, the Exchange Act
or other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Shareholder under an instrument duly executed by such
Shareholder and stated to be specifically for use in connection with such
registration; and each such Shareholder will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer, legal
counsel, controlling person, underwriter or other Shareholder, or partner,
officer, director or controlling person of such other Shareholder in connection
with investigating or defending any such loss, claim, damage, liability or
action if it is judicially determined that there was such a Violation; provided,
however, that the indemnity agreement contained in this Section 2.8(b) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Shareholder,
which consent shall not be unreasonably withheld; provided, further, that no
Shareholder shall provide an indemnity under this Section 2.8 for an amount in
excess of such Shareholder's net proceeds received in such offering.
(c) Promptly after receipt by an indemnified party under this
Section 2.8 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 2.8, deliver to
the indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate therein, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, to the extent materially prejudicial to its
ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 2.8, but the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 2.8.
(d) If the indemnification provided for in this Section 2.8 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any losses,
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claims, damages or liabilities referred to herein, the indemnifying party, in
lieu of indemnifying such indemnified party thereunder, shall to the extent
permitted by applicable law contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the Violation(s) that resulted in such loss, claim, damage or liability, as
well as any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by a court
of law by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission; provided, that in no event
shall any contribution by a Shareholder hereunder exceed the net proceeds from
the offering received by such Shareholder.
(e) The obligations of the Company and Shareholders under this
Section 2.8 shall survive completion of any offering of Registrable Securities
in a registration statement. No indemnifying party, in the defense of any such
claim or litigation, shall, except with the consent of each indemnified party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of such
claim or litigation.
2.9 ASSIGNMENT OF REGISTRATION RIGHTS.
The rights to cause the Company to register Registrable Securities
pursuant to this Section 2 may be assigned by a Shareholder to a transferee or
assignee of Registrable Securities which (a) is a Permitted Transferee or (b)
acquires at least twenty-five percent (25%) of the Registrable Securities held
by such Shareholder as of the date of this Agreement (as adjusted for stock
splits and combinations etc.); provided, however, (i) the transferor shall,
within a reasonable time after such transfer, furnish to the Company written
notice of the name and address of such transferee or assignee and the securities
with respect to which such registration rights are being assigned and (ii) such
transferee shall agree to be subject to all rights and obligations of such
transferor Shareholder set forth in this Agreement. Notwithstanding the
foregoing, the right to cause the Company to register Registrable Securities
pursuant to this Section 2 shall be deemed to have been transferred by the LLC
to any of its Members in connection with the transfer by the LLC of Registrable
Securities to such Member(s); provided that, such Members are signatories to
this Agreement or are Permitted Transferees of such signatories.
2.10 PARTICIPATION BY SHAREHOLDERS.
In connection with the preparation and filing of each registration
statement registering Registrable Securities under the Securities Act, and
before filing any such registration statement or any other document in
connection therewith, the Company shall give the participating Holders and their
underwriters, if any, and their respective counsel and accountants, the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the SEC, each amendment thereof
or supplement thereto and any related underwriting agreement or other document
to be filed, and give each of the aforementioned Persons such
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access to its books and records and such opportunities to discuss the business
of the Company with its officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of such
Holders, underwriters, counsel or accountants, to conduct a reasonable
investigation within the meaning of the Securities Act.
2.11 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934.
With a view to making available to Holders the benefits of Rule 144
promulgated under the Securities Act and any other rule or regulation of the SEC
that may at any time permit a Holder to sell Securities of the Company to the
public without registration or pursuant to a registration on Form S-3, the
Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144 at all times for so long as the Company
remains subject to the periodic reporting requirements under Section 13 or 15(d)
of the Exchange Act;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any Registrable
Securities, promptly upon written request (i) a written statement by the Company
that it has complied with the reporting requirements of SEC Rule 144, the Act
and the 1934 Act, or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3, and (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed.
3. RIGHT OF FIRST OFFER; CO-SALE RIGHTS
Subject to Sections 3.7 and 3.8, the Company is hereby granted a right
of first offer with respect to any proposed disposition of shares of Stock owned
by Catterton, the Bain Shareholders, and WP, as of the date of this Agreement,
and to any shares of Stock transferred to their Permitted Transferees. Any
transfer or disposition of stock not in accordance with the provisions of this
Section 3 may at the option of the Company be treated as void and not reflected
on the stock transfer records of the Company.
3.1 NOTICE OF INTENDED DISPOSITION.
In the event that Catterton, the Bain Shareholders, WP or any of their
Permitted Transferees are contemplating the transfer of shares of Stock owned by
such Shareholder as of the date of this Agreement which transfer is not exempt
from the provisions of this Section 3 under the terms of Section 3.7 (the
"Transferring Shareholder," and the shares subject to such offer to be hereafter
called the "Target Shares"), the Transferring Shareholder shall promptly deliver
to the Secretary of the Company and to Catterton, the Bain Shareholders, WP and
any of their Permitted Transferees, as the case may be, written notice stating
that such Shareholder is contemplating such a transfer and setting forth the
number of Target Shares and the purchase price proposed by the Transferring
Shareholder (the "Disposition Notice").
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3.2 EXERCISE OF RIGHT BY THE COMPANY.
The Company shall, for a period of forty-five (45) business days from
receipt of the Disposition Notice (the "Company Exercise Period"), have the
right to make an offer to purchase all of the Target Shares at the purchase
price set forth in the Disposition Notice by giving the Transferring Shareholder
a written binding offer to purchase the Target Shares (the "Company Offer
Notice"), which offer, by its terms, shall remain open for thirty (30) days. At
the same time it gives such notice to the Transferring Shareholder, the Company
shall provide a copy of the Company Offer Notice to Catterton, the Bain
Shareholders, WP and any of their Permitted Transferees, as the case may be. If
the Company gives the Transferring Shareholder a Company Offer Notice before
expiration of the Company Exercise Period, then, for a period of thirty (30)
days following the date on which the Company Offer Notice is given, the
Transferring Shareholder may not transfer the Target Shares except to the
Company or to a Permitted Transferee pursuant to the terms of this Agreement.
If, at the end of the thirtieth (30th) day following the effective date of such
Company Offer Notice, the Transferring Shareholder shall not have transferred
the Target Shares pursuant to the prior sentence, the Company's first offer
rights shall continue to be applicable to any subsequent disposition of the
Target Shares by the Transferring Shareholder.
3.3 NON-EXERCISE OF RIGHT OF FIRST REFUSAL.
Subject to the co-sale rights described in Section 3.6 below of
Catterton, the Bain Shareholders, WP and any of their Permitted Transferees, in
the event the Company Offer Notice with respect to the Target Shares is not
given to the Transferring Shareholder before the expiration of the Company
Exercise Period, the Transferring Shareholder shall have a period of one hundred
twenty (120) days from the expiration of the Company Exercise Period in which to
sell the Target Shares to the third-party transferee at a purchase price not
less than that specified in the Disposition Notice without any further
obligation to the Company, with respect to the Target Shares. The third-party
transferee shall acquire the Target Shares free and clear of subsequent rights
of first offer under this Agreement. In the event the Transferring Shareholder
does not consummate the sale or disposition of the Target Shares within one
hundred twenty (120) days from the expiration of the Company Exercise Period,
the Company's first offer rights shall continue to be applicable to any
subsequent disposition of the Target Shares by the Transferring Shareholder
until such rights lapse in accordance with Section 3.8 below. Furthermore, the
exercise or non-exercise of the rights of the Company under this Agreement to
purchase Target Shares from a Transferring Shareholder shall not adversely
affect its rights to make subsequent purchases from a Transferring Shareholder
of Target Shares.
3.4 CLOSING OF SALE OF TARGET SHARES.
If the Transferring Shareholder shall accept the offer contained in the
Company Offer Notice, the closing of such purchase and sale of Target Shares by
the Company (and/or its assignees) shall take place as soon as reasonably
practicable, and in no event later than ten (10) business days, after the
Transferring Shareholder gives written notice to the Company that it accepts
such offer. At the closing of such purchase and sale of capital stock, and upon
delivery by the Company (and/or its assignees) of the purchase price of such
capital stock by wire transfer of immediately available funds to an account or
accounts designated by the Transferring
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Shareholder, the Shareholder shall deliver to the Company (and/or its assignee)
certificates representing the Target Shares to be purchased, each certificate to
be properly endorsed for transfer.
3.5 ASSIGNMENT.
The right of the Company to purchase any part of the Stock under this
Section 3 may be assigned in whole or in part to one or more employees, officers
or directors of the Company, or to the Shareholders, following acceptance of the
offer contained in the Company Offer Notice by the Transferring Shareholders;
provided that if assigned to the Shareholders, such right shall be assigned on a
pro rata basis in accordance with the number of Registrable Securities held by
each such Shareholder.
3.6 CO-SALE RIGHTS IN SALES BY A TRANSFERRING SHAREHOLDER.
(a) Grant of Co-Sale Rights. In the event that the Company does
not exercise its right of first offer pursuant to Section 3.2 with respect to
the Target Shares, then Catterton, the Bain Shareholders, WP and any of their
Permitted Transferees , as the case may be (each a "Tag Along Seller"), shall
have the right, exercisable upon written notice to the Transferring Shareholder
within twenty (20) days after receipt of the Disposition Notice, to sell a
number of shares of Stock owned by such Tag Along Seller to any third-party
transferee of the Target Shares upon the same terms and conditions as the
Transferring Shareholder and the Transferring Shareholder shall not consummate
such sale of Target Shares except in compliance with this Section 3.6. Such
written notice delivered to the Transferring Shareholder by such Tag Along
Seller shall set forth the number of shares of Stock which such Tag Along Seller
desires to sell to a third-party transferee, which number shall not exceed the
product obtained by multiplying (i) the aggregate number of Target Shares, by
(ii) a fraction, the numerator of which is the number of shares of Stock at the
time owned by such Tag Along Seller and the denominator of which is the number
of shares of Stock at the time owned by the Transferring Shareholder and such
Tag Along Seller, collectively.
(b) CUTBACK. If a third-party transferee does not agree to
purchase all of the shares of Stock which the Transferring Shareholder and any
Tag Along Seller wish to sell, the number of shares which each selling
Shareholder shall sell to such third-party transferee shall be reduced pro rata
among the selling Shareholders in accordance with the number of shares of Stock
which they proposed be sold in such transaction.
(c) CONTROL OF SALE PROCESS. The Transferring Shareholder shall,
in its sole discretion, decide whether or not to pursue, consummate, postpone or
abandon any proposed sale to a third-party transferee and the terms and
conditions thereof. The Transferring Shareholder and its Affiliates shall have
no liability to a Tag Along Seller or its Affiliates arising from, relating to
or in connection with the pursuit, consummation, postponement, abandonment or
terms and conditions of any proposed sale of Stock to a third-party transferee
except to the extent the Transferring Shareholder shall have failed to comply
with the provisions of this Section 3.6.
(d) NON-EXERCISE. The exercise or non-exercise of the rights of
such Shareholder hereunder to participate in one or more sales of capital stock
made by a Transferring Shareholder
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shall not adversely affect its rights to participate in subsequent sales by the
Transferring Shareholder.
3.7 EXEMPT TRANSFERS.
Notwithstanding the foregoing, the first offer right of the Company and
the co-sale rights of the Tag Along Seller set forth in this Section 3 shall not
apply to:
(a) any transfer of Stock by a Shareholder (i) to a Permitted
Transferee of such Shareholder; provided, that, the Permitted Transferee shall
furnish the Company with a written agreement to be bound by and comply with the
terms of this Agreement, and such transferred Stock shall remain subject to the
terms of this Agreement, and (ii) to the public pursuant to a registration
statement or pursuant to a "brokers' transaction," within the meaning of the
Securities Act, pursuant to Rule 144 under the Securities Act (each, an "Exempt
Transfer"); and
(b) the transfer of a number of shares of Stock by a Shareholder
which, in addition to all other shares of Stock transferred by such Shareholder
(except for (i) Shares transferred by such Shareholder in Exempt Transfers and
(ii) Target Shares transferred by such Shareholder), does not exceed five
percent (5%) of the fully diluted Common Stock of the Company at the time of
such transfer.
3.8 TERMINATION.
Notwithstanding anything to the contrary in this Agreement, the rights
and obligations of the parties pursuant to this Section 3 shall terminate upon
(a) a merger of the Company with another corporation or entity (without regard
to which entity survives), in which the Company's shareholders immediately prior
to the transaction own immediately after the transaction less than fifty percent
(50%) of the equity securities of the surviving corporation or its parent, as
applicable or (b) a sale of all or substantially all of the assets of the
Company.
4. VOTING AGREEMENT
4.1 ELECTION OF MEMBERS OF THE BOARD OF DIRECTORS.
(a) The Board of Directors of the Company (and, if applicable,
the Nominating Committee thereof) shall: (i) for so long as Catterton and its
Permitted Transferees hold at least five percent (5%) of the issued and
outstanding Common Stock of the Company, nominate one (1) member of the
Company's Board of Directors designated by Catterton, who initially shall be
Craig Sakin, (ii) for so long as the Bain Shareholders and their Permitted
Transferees hold at least twenty percent (20%) of the issued and outstanding
Common Stock of the Company, nominate two (2) members of the Company's Board of
Directors designated by the Bain Shareholders, (iii) for so long as the Bain
Shareholders and their Permitted Transferees hold at least five percent (5%) but
less than twenty percent (20%) of the issued and outstanding Common Stock of the
Company, nominate one (1) member of the Company's Board of Directors designated
by the Bain Shareholders, (iv) for so long as WP and its Permitted Transferees
hold at least five percent (5%) of the issued and outstanding Common Stock of
the Company, nominate one (1) member of the Company's Board of Directors
designated by WP, who initially shall be
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Ellis Jones, and (v) nominate one (1) member of the Company's Board of Directors
designated by the Chief Executive Officer of the Company, who initially shall be
D. Stephen C. Williamson.
(b) To the extent that additional "independent directors" in
addition to those Directors elected pursuant to Section 4.1(a) are required to
serve on the Board of Directors of the Company to fulfill the rules and
regulations promulgated by the NASD, the Board of Directors of the Company (and,
if applicable, the Nominating Committee thereof) shall, for so long as the Bain
Shareholders and their Permitted Transferees hold at least twenty percent (20%)
of the issued and outstanding Common Stock of the Company, nominate (i) one (1)
person designated by the Bain Shareholders to serve as a member of the Company's
Board of Directors, and (ii) one (1) person designated by, collectively, the
Company, Catterton and WP to serve as a member of the Company's Board of
Directors; provided, that, such individuals must meet the criteria established
by the NASD for "independent directors" to be so nominated.
(c) Each of the Company and the Shareholders shall, in the case
of the Shareholders, vote any shares of Common Stock he may own and, in the case
of the Company and the Shareholders, take such other action, whether by written
consent or otherwise, to (i) elect or cause the election of the foregoing
nominees, (ii) fix the number of members of the Company's Board of Directors at
five (5), or, in the event that additional "independent directors" are required
to serve on the Purchaser Board to fulfill the rules and regulations promulgated
by the NASD, then fix the number of members of the Company's Board of Directors
at seven (7), and (iii) remove from the Board of Directors such nominee at the
written request (and only at the written request) of the party entitled to
designate such director.
(d) In the event the Company's Board of Directors does not
nominate an individual pursuant to Section 4.1(b)(i) or (ii), the parties to
this Agreement shall not nominate or vote in favor of a candidate who was not
nominated pursuant to the applicable subsection, unless, based upon a written
opinion of counsel, which counsel is reasonably acceptable to the relevant
designating party pursuant to Section 4.1(b), that the failure to elect an
additional "independent director" would be reasonably likely to result in
Odwalla's common stock being delisted from the NASDAQ National Market within 30
calendar days.
4.2 TERMINATION OF VOTING AGREEMENT.
The rights and obligations of each Shareholder and the Company with
respect to Section 4.1 shall cease, (i) with respect to Catterton, the Bain
Shareholders and WP, at such time as such Shareholder ceases to hold at least
five percent (5%) of the issued and outstanding Common Stock of the Company, or
(ii) with respect to the other Shareholders, at such time as such Shareholder
ceases to hold at least fifty percent (50%) of the shares held as of the date
hereof as reflected in Schedule 1.
5. OTHER AGREEMENTS
5.1 INFORMATION RIGHTS.
For so long as each of the Bain Shareholders, Catterton and WP, and each
such party's Permitted Transferee, holds at least fifty percent (50%) of the
shares held by such party as of the date hereof as reflected in Schedule 1, the
Company shall deliver to such party, promptly
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following delivery to the Company's Board of Directors, a copy of each unaudited
balance sheet of the Company and its subsidiaries and each unaudited statement
of income of the Company and its subsidiaries, in each case prepared in
accordance with GAAP (subject to normal year-end adjustments and without
footnote disclosure).
5.2 RESTRICTIVE LEGEND.
All certificates representing the Stock and any certificates
subsequently issued with respect thereto or in substitution therefor shall bear
a legend substantially as follows, in addition to any legend the Company
determines is required pursuant to any applicable legal requirement:
"The shares represented by this certificate may not be offered, sold,
pledged, transferred or otherwise disposed of except in accordance with
the requirements of the Securities Act of 1933, as amended, and a
Shareholders' Rights Agreement, dated as of May 2, 2000, a copy of which
Shareholders' Rights Agreement Odwalla, Inc. will furnish, without
charge, to the holder of this certificate upon written request
therefor."
provided, however, that the holder of any such certificate shall be entitled to
receive from the Company, at no expense to such holder, a new certificate which
does not bear such legend if (a) the Stock represented by such certificate shall
have been sold, transferred or otherwise disposed of pursuant to one or more of
the alternative conditions set forth in Section 5.28(m) of the Merger Agreement
or (b) the conditions of paragraph (k) of Rule 144 promulgated under the
Securities Act shall have been satisfied.
The Company, at its discretion, may cause a stop transfer order to be
placed with its transfer agent(s) with respect to the certificates for the Stock
but not as to the certificates for any part of the Stock as to which said legend
is no longer appropriate.
5.3 SHAREHOLDER LOCKUP.
Except as provided in Section 5.4(b), notwithstanding anything in this
Agreement to the contrary: each of the Shareholders agrees not to sell or
otherwise transfer or dispose of any shares of Stock except to a Permitted
Transferee for a period of one (1) year commencing on the date of this
Agreement.
5.4 STANDSTILL.
(a) For the period beginning on the date of this Agreement and
ending upon a merger of the Company with another corporation or entity (without
regard to which entity survives), or a sale of all or substantially all of the
assets of the Company, in either case in which the Company's shareholders
immediately prior to the transaction own immediately after the transaction less
than fifty percent (50%) of the equity securities of the surviving corporation
or its parent, neither Catterton, WP nor any Bain Shareholder or any of their
respective Affiliates, shall, without the prior written consent of the Board of
Directors of the Company:
(i) acquire, offer to acquire, or agree to acquire,
directly or indirectly, including as part of a Group (as such term is defined in
Section 13(d)(3) of the Exchange Act), by purchase or otherwise, any additional
shares of Common Stock or other voting securities or
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direct or indirect rights to acquire any additional shares of Common Stock or
other voting securities of the Company or any subsidiary of the Company, or of
any successor to or person in control of the Company (except pursuant to a stock
split, stock dividend, recapitalization, reclassification or similar
transaction), or any assets of the Company or any subsidiary or division of the
Company or of any such successor or controlling person;
(ii) make, or in any way participate, directly or
indirectly, in any "solicitation" of "proxies" to vote (as such terms are
defined in Rule 14a-1 under the Exchange Act), with respect to the solicitation
or voting of any voting securities of the Company in opposition to any matter
that has been recommended by the Board of Directors of the Company or in favor
of any matter that has not been approved by the Board, or become a "participant"
in any "election contest" (as such terms are defined or used in Rule 14a-11
under the Exchange Act) with respect to the Company.
(iii) make any unsolicited offer or proposal to acquire
the Company or shares of Common Stock or other voting securities of the Company.
Notwithstanding the foregoing, nothing in this Agreement shall prohibit the Bain
Shareholders, Catterton or WP from purchasing in one or more transactions any
debt securities, or up to an aggregate of 5% of any class of publicly traded
equity securities (the "5% Limitation"), of any company referred to in this
Section 5.4. The 5% Limitation shall be computed on a cumulative basis and shall
be measured at the time of each purchase of such equity securities, such that at
the time of each such purchase the aggregate amount of such equity securities
purchased by the Bain Shareholders, Catterton or WP, as applicable, from the
date of this Agreement to the time of such purchase, shall not exceed 5% of the
outstanding shares of such class of publicly traded equity securities. The Bain
Shareholders, Catterton and WP acknowledge that they are aware, and that they
will advise their representatives who are informed of any of the confidential
information referred to in this Agreement and/or related to the Company, of the
restrictions imposed by applicable securities laws restricting trading in
securities while in possession of material non-public information received from
the issuer of such securities and on communication of such information when it
is reasonably foreseeable that the recipient is likely to trade such securities
in reliance on such information.
(b) The limitations provided in Section 5.3 and Section 5.4(a)
shall immediately be suspended as to each Shareholder upon the occurrence of any
of the following events: (i) the occurrence of an Acquisition Proposal which has
not been initiated by such Shareholder or its Affiliates, (ii) a public
announcement that the Company is "for sale" or (iii) the adoption by the Board
of Directors of a plan of liquidation or dissolution. The Company shall provide
the Shareholders with prompt written notice of the occurrence of any of the
events set forth in this clause (b), and in no event more than five (5) business
days after the occurrence of such event.
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6. MISCELLANEOUS
6.1 LLC SHARES.
For all purposes of this Agreement, all shares of Stock owned by the LLC
shall be deemed to be owned by the Bain Shareholders for so long as the Bain
Shareholders are Members of the LLC.
6.2 AMENDMENT OF LLC AGREEMENT.
Each of the LLC and each Shareholder party to the LLC Agreement dated as
of February 2, 2000 hereby agrees that it will not amend, supplement or
otherwise modify the provisions of Section 5.2 of such agreement without the
prior written consent of the Company.
6.3 GOVERNING LAW.
This Agreement is to be construed in accordance with and governed by the
laws of the State of California (as permitted by Section 1646.5 of the
California Civil Code or any similar successor provision), without giving effect
to any choice of law rule that would cause the application of the laws of any
jurisdiction other than the State of California to the rights and duties of the
parties.
6.4 TERMINATION OF EXISTING RIGHTS AGREEMENT.
Each of the Company and Catterton hereby agrees the Existing Rights
Agreement is hereby terminated and shall be of no further force and effect and
that no party thereto shall have any further rights or obligations thereunder.
6.5 SUCCESSORS AND ASSIGNS.
Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns,
heirs, executors, and administrators of the parties hereto and shall inure to
the benefit of and be enforceable by each person who shall be a transferee of a
Shareholder from time to time; provided, however, that prior to the receipt by
the Company of adequate written notice of the transfer of any Registrable
Securities specifying the full name and address of the transferee, the Company
may deem and treat the person listed as the holder of such Registrable
Securities in its records as the absolute owner and holder of such Registrable
Securities for all purposes, including the payment of dividends or any
redemption price.
6.6 SEVERABILITY.
In case any provision of this Agreement shall be invalid, illegal, or
unenforceable, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
6.7 AMENDMENT AND WAIVER.
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Except as otherwise expressly provided, the rights and obligations of
the Company and the Shareholders under this Agreement may be amended, modified
or waived only with the written consent of the Company and the holders of at
least a seventy-five percent (75%) of the Registrable Securities, provided,
however, that such consent is not required if the sole purpose of such amendment
or modification is to add additional shareholders of the Company to this
Agreement; and provided further that no amendment which would adversely affect
any Shareholder or group of Shareholders shall be effective without the written
consent of such Shareholder or such group.
6.8 DELAYS OR OMISSIONS.
It is agreed that no delay in exercising or omission to exercise any
right, power, or remedy accruing to any Shareholder, upon any breach, default or
noncompliance of the Company under this Agreement, shall impair any such right,
power, or remedy, nor shall it be construed to be a waiver of any such breach,
default or noncompliance, or any acquiescence therein, or of any similar breach,
default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent, or approval of any kind or character on any
Shareholder's part of any breach, default or noncompliance under the Agreement
or any waiver on such Shareholder's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to Shareholders, shall be cumulative
and not alternative.
6.9 NOTICES.
All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (i) upon personal delivery to the party to be
notified, (ii) when sent by confirmed telex or facsimile if sent during normal
business hours of the recipient; if not, then on the next business day, (iii)
three (3) days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (iv) one (1) day after deposit with a
nationally recognized overnight courier, specifying next-day delivery, with
written verification of receipt. All communications shall be sent to the
addresses set forth on Schedule 2 attached hereto or such other address as may
be specified by any Shareholder by giving notice to the Company as aforesaid.
6.10 ATTORNEYS' FEES.
In the event that any dispute among the parties to this Agreement should
result in litigation, arbitration or other method of dispute resolution, the
Person presiding over such action or other proceeding may award reasonable
attorneys' fees, costs and disbursements to the prevailing party (in addition to
any other relief to which the prevailing party may be entitled).
6.11 TITLES AND SUBTITLES.
The headings contained in this Agreement are for convenience of
reference only, shall not be deemed to be a part of this Agreement and shall not
be referred to in connection with the construction or interpretation of this
Agreement.
21
<PAGE> 25
6.12 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
but one and the same instrument.
6.13 CONSTRUCTION.
For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall include
the masculine and neuter genders; and the neuter gender shall include the
masculine and feminine genders.
6.14 ENTIRE AGREEMENT.
This Agreement, which includes the Exhibits and other agreements
expressly referenced herein (if any), constitutes the entire agreement between
the parties concerning the subject matter hereof and supersedes any prior
agreements (including, but not limited to, the Existing Rights Agreement),
representations, statements, negotiations, understandings, proposals or
undertakings, oral or written, with respect to the subject matter expressly set
forth herein.
22
<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have executed this SHAREHOLDERS'
RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.
THE COMPANY: ODWALLA, INC.,
a California corporation
By:
---------------------------------
Name: D. Stephen C. Williamson
Title: Chief Executive Officer
SHAREHOLDER: CATTERTON-SIMON PARTNERS III, L.P.,
a Delaware limited partnership
By:
---------------------------------
Name:
Title:
SHAREHOLDER: D. STEPHEN C. WILLIAMSON,
an individual
By:
---------------------------------
Name: D. Stephen C. Williamson
SHAREHOLDER: U.S. EQUITY PARTNERS, L.P.,
a Delaware limited partnership
By:
---------------------------------
Name:
Title:
23
<PAGE> 27
SHAREHOLDER: U.S. EQUITY PARTNERS (OFFSHORE),
L.P., a Cayman Islands limited
partnership
By:
---------------------------------
Name:
Title:
SHAREHOLDER: BANCBOSTON INVESTMENTS INC.
a Massachusetts corporation
By:
---------------------------------
Name:
Title:
SHAREHOLDER: BAIN CAPITAL FUND VI, L.P.,
By: Bain Capital Partners VI, L.P.,
its general partner
By: Bain Capital Investors VI,
Inc., its general partner
By:
---------------------------------
Name:
Title: Managing Director
SHAREHOLDER: BCIP ASSOCIATES II
BCIP TRUST ASSOCIATES II
BCIP ASSOCIATES II-B
BCIP TRUST ASSOCIATES II-B
BCIP ASSOCIATES II-C,
By: Bain Capital, Inc.,
their Managing Partner
By:
---------------------------------
Name:
Title: Managing Director
24
<PAGE> 28
SHAREHOLDER: PEP INVESTMENTS PTY LTD.,
By: Bain Capital, Inc.,
its Attorney-in-Fact
By:
---------------------------------
Name:
Title: Managing Director
SHAREHOLDER: RGIP, LLC,
a Delaware limited liability company
By:
---------------------------------
Name:
Title: Authorized Person
SHAREHOLDER: JIP ENTERPRISES, INC.,
a British Virgin Islands corporation
By:
---------------------------------
Name:
Title: Authorized Person
25
<PAGE> 29
SHAREHOLDER: MICHAEL CARTER,
an individual
By:
---------------------------------
Name:
Title:
SHAREHOLDER: DOUGLAS LEVIN,
an individual
By:
---------------------------------
Name:
Title:
SHAREHOLDER: SAMANTHA INVESTORS, LLC,
a Massachusetts limited liability
company
By:
---------------------------------
Name:
Title:
26
<PAGE> 1
EXHIBIT 10.6
================================================================================
ODWALLA, INC.
PREFERRED STOCK CONVERSION AGREEMENT
Dated as of April 24, 2000
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Conversion of Preferred Stock and Cancellation of Warrant........................... 1
2. Tax Treatment....................................................................... 2
3. Closing............................................................................. 2
4. Closing Conditions.................................................................. 2
5. Representations and Warranties of Catterton......................................... 3
5.1 Authorization................................................................ 3
5.2 Disclosure of Information.................................................... 3
5.3 Status....................................................................... 3
5.4 Investment Intent; Certain Restrictions...................................... 4
5.5 Restricted Securities........................................................ 4
6. Representations and Warranties of the Company....................................... 4
6.1 Authorization................................................................ 4
6.2 Private Placement............................................................ 5
7. Other Matters....................................................................... 5
7.1 Limitation on Conversion of Preferred Stock.................................. 5
7.2 Restrictive Legend........................................................... 5
7.3 California Securities Laws................................................... 5
8. Termination......................................................................... 6
8.1 General...................................................................... 6
8.2 Effect of Termination........................................................ 6
8.3 Exclusivity of Termination Rights............................................ 6
9. Miscellaneous....................................................................... 6
9.1 Further Assurances........................................................... 6
9.2 Fees and Expenses............................................................ 6
9.3 Attorneys' Fees.............................................................. 6
9.4 Governing Law; Arbitration................................................... 6
9.5 Successors and Assigns....................................................... 7
9.6 Entire Agreement............................................................. 7
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
9.7 Separability................................................................. 7
9.8 Amendments................................................................... 7
9.9 Notices...................................................................... 8
9.10 Publicity and Use of Confidential Information................................ 8
9.11 Counterparts................................................................. 9
9.12 Delays or Omissions; Waivers................................................. 9
9.13 Remedies Cumulative; Specific Performance.................................... 9
9.14 Headings..................................................................... 10
9.15 Construction................................................................. 10
</TABLE>
ii
<PAGE> 4
ODWALLA, INC.
PREFERRED STOCK CONVERSION AGREEMENT
THIS PREFERRED STOCK CONVERSION AGREEMENT (the "Agreement") is entered
into as of April 24, 2000, by and between ODWALLA, INC., a California
corporation (the "Company"), and CATTERTON-SIMON PARTNERS III, L.P., a Delaware
Limited Partnership ("Catterton").
RECITALS
A. The Company, Orange Acquisition Sub, a Maine corporation and
wholly owned subsidiary of the Company ("Merger Sub"), Fresh
Samantha, Inc., a Maine corporation ("Samantha"), and the other
signatories thereto, have entered into that certain Agreement
and Plan of Merger, dated as of February 2, 2000 (the "Merger
Agreement"), to effectuate the merger (the "Merger") of Merger
Sub with and into Samantha, with Samantha as the surviving
corporation and wholly owned subsidiary of the Company.
B. Pursuant to that certain Stock and Warrant Purchase Agreement,
dated as of January 29, 1999 (the "Purchase Agreement"), by and
between the Company and Catterton, Catterton purchased (i)
1,000,000 shares of the Company's Series A Preferred Stock (the
"Preferred Stock") convertible into the Common Stock of the
Company (the "Common Stock") on a 1:1 basis, and (ii) a Warrant,
dated as of February 10, 1999, to purchase 75,000 shares of the
Company's Common Stock at $10.00 per share (the "Warrant").
C. Pursuant to the dividend preference of the Preferred Stock,
Catterton has received stock dividends in the amount of 74,666
shares of Preferred Stock.
D. In connection with the Merger, Catterton and U.S. Equity
Partners, L.P. (and its affiliates) have entered into that
certain Stock Purchase Agreement, dated as of February 12, 2000,
pursuant to which Catterton shall purchase an additional 160,128
shares of Common Stock.
E. Pursuant to the terms of the Merger, the obligation of the
parties to consummate the Merger is subject to, among other
things, both the conversion of the Preferred Stock into Common
Stock and the cancellation of the Warrant.
AGREEMENT
The Company and Catterton, intending to be legally bound, agree as
follows:
1. CONVERSION OF PREFERRED STOCK AND CANCELLATION OF WARRANT.
In consideration of both the conversion of the Preferred Stock into
Common Stock and the cancellation of the Warrant pursuant this Section 1, and
subject to the terms and conditions hereof, the approval of the shareholders of
the Company and the amendment of the Certificate of Determination, filed January
26, 1999, setting forth the preference and rights of the Preferred Stock (the
"Certificate"), at the Closing (a) the 1,074,666 shares of Preferred Stock
presently
1
<PAGE> 5
held by Catterton shall be converted into 1,333,333 shares of Common Stock
pursuant to a conversion ratio of 1:1.2407, and (b) the Warrant shall be
cancelled and be of no further force and effect.
2. TAX TREATMENT.
For tax purposes, the parties hereto acknowledge and agree that the
transactions contemplated by this Agreement (the "Transactions") shall be
treated as a recapitalization in accordance with Section 368(a)(1)(E) of the
Internal Revenue Code of 1986, as amended.
3. CLOSING
(a) The closing (the "Closing") shall take place at the offices
of Morrison & Foerster LLP, 425 Market Street, San Francisco, California 94105,
at 10:00 a.m. (Pacific time) contemporaneous with the Merger Closing Date (as
defined below) or on such other date or at such other place or time as the
Company and Catterton may mutually agree (such date is hereinafter referred to
as the "Closing Date").
(b) At the Closing:
(i) Catterton will deliver: (i) the stock certificate(s)
representing the Preferred Stock; (ii) the Warrant, marked "CANCELLED;" and
(iii) any other documents and agreements reasonably requested by the Company to
be delivered at the Closing; and
(ii) the Company shall deliver: (i) certificates
representing the Common Stock to be issued to Catterton pursuant to this
Agreement in proper form for transfer; and (ii) the other documents and
agreements required hereunder to be delivered by the Company at the Closing.
(c) The "Merger Closing Date" shall refer to that date upon which
all of the conditions set forth in Sections 4.1 and 4.2 of the Merger Agreement,
other than the condition requiring the conversion of the Preferred Stock held by
Catterton into Common Stock, are satisfied or waived.
4. CLOSING CONDITIONS.
Each of the Company's obligation to issue the Common Stock at the
Closing, and Catterton's obligations to convert the Preferred Stock into Common
Stock and cancel the Warrant at the Closing, are subject to the satisfaction of
the following conditions:
(a) the amendment to the Certificate, substantially in the form
attached hereto as Exhibit A, shall have been accepted for filing by the
Secretary of State of the State of California;
(b) the Merger shall have been consummated pursuant to all of the
material terms and conditions contained in the Merger Agreement, except (i) for
the condition requiring the conversion of the Preferred Stock held by Catterton
into Common Stock, and (ii) with the consent of Catterton (which consent shall
not be unreasonably withheld), to the extent (A) any
2
<PAGE> 6
change in the terms and conditions of the Merger Agreement benefit the Company,
or (B) the waiver or non-satisfaction of a condition contained in the Merger
Agreement is for the benefit of the Company; and
(c) neither the consummation nor the performance of the
Transactions will, directly or indirectly (with or without notice or lapse of
time), contravene or conflict with or result in a violation of, or cause a
material adverse effect on the condition (financial or otherwise), assets,
liabilities, obligations, business, properties, prospects or results of
operations of the Company as presently conducted or as proposed to be conducted,
together with its subsidiaries taken as a whole, as a result of, specifically,
(i) a change in any applicable legal requirement after the date of this
Agreement or any federal or state judgment, order, writ, decree, statute or
regulation of any court, regulatory body or administrative agency or other
governmental body applicable to the Company (an "Order") issued after the date
of this Agreement, or (ii) any legal requirement or Order that is proposed after
the date of this Agreement by or before any governmental body.
5. REPRESENTATIONS AND WARRANTIES OF CATTERTON.
Catterton hereby represents and warrants to the Company that:
5.1 AUTHORIZATION.
Catterton has full power and authority to enter into this Agreement, and
this Agreement constitutes the valid and legally binding obligation of
Catterton, enforceable against Catterton in accordance with its terms, except
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of creditors' rights
generally, and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
5.2 DISCLOSURE OF INFORMATION.
Catterton further represents that it has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the conversion of the Preferred Stock and the business,
properties, prospects and financial condition of the Company.
5.3 STATUS.
(a) Catterton is an "accredited investor" as that term is defined
in Rule 501(a) of Regulation D of the Securities Act.
(b) Catterton, by reason of its business and financial experience
has such knowledge, sophistication and experience in financial and business
matters and in making investment decisions of this type that it is capable of
(i) evaluating the merits and risks of an investment in the Common Stock of the
Company and making an informed investment decision, (ii) protecting its own
interest, and (iii) bearing the economic risk of such investment for an
indefinite period of time.
3
<PAGE> 7
5.4 INVESTMENT INTENT; CERTAIN RESTRICTIONS.
(a) Catterton is acquiring the Common Stock for investment for
its own account, not as a nominee or agent and not with the view to, or any
intention of, a resale or distribution thereof, in whole or in part, or the
grant of any participation therein. Catterton understands that the Common Stock
has not been, and will not be, registered under the Securities Act or state
securities laws by reason of specific exemptions from the registration
provisions of the Securities Act and applicable state securities laws that
depend upon, among other things, the bona fide nature of Catterton's investment
intent and the accuracy of Catterton's representations as set forth in this
Section 5. Catterton has not been formed for the specific purpose of acquiring
the Common Stock. Catterton further understands that, other than pursuant to
that certain Shareholders' Rights Agreement, to be entered into on the Merger
Closing Date by and among the Company, Catterton and the other signatories
thereto, the Company shall have no obligation to register the Common Stock under
the Securities Act or any state securities laws or to take any action that would
make available any exemption from the registration requirements of such laws.
Catterton hereby acknowledges that because of the restrictions on transfer and
assignment of the Common Stock, Catterton may have to bear the economic risk of
the investment in the Common Stock for an indefinite period of time.
(b) Catterton will observe and comply with the Securities Act and
the rules and regulations promulgated thereunder, as now in effect and as from
time to time amended, in connection with any offer, sale, pledge, transfer or
other disposition of the Common Stock.
5.5 RESTRICTED SECURITIES.
Catterton understands that the shares of Common Stock issuable by the
Company upon conversion of the Preferred Stock are characterized as "restricted
securities" under the federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may be resold
without registration under the Securities Act only in certain limited
circumstances. In this connection, Catterton represents that it is familiar with
Rule 144, as presently in effect, and understands the resale limitations imposed
hereby and by the Securities Act.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to Catterton that:
6.1 AUTHORIZATION.
The Company has full power and authority to enter into this Agreement,
and this Agreement constitutes the valid and legally binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of creditors' rights
generally, and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
4
<PAGE> 8
6.2 PRIVATE PLACEMENT.
The offer, sale and issuance of the Common Stock upon conversion of the
Preferred Stock as contemplated by this Agreement is exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act") and state securities "blue sky" laws, and neither the Company
nor any authorized agent acting on its behalf will take any action hereafter
that would cause the loss of such exemptions.
7. OTHER MATTERS.
7.1 LIMITATION ON CONVERSION OF PREFERRED STOCK.
The parties hereto agree and understand that they are entering
into this Agreement in connection with the Merger, and therefore Catterton
covenants and agrees that, notwithstanding the acceptance by the Secretary of
State of the State of California of the aforementioned amendment to the
Certificate, Catterton shall only convert the Preferred Stock at the higher
conversion ratio contained in such amendment pursuant to the terms of this
Agreement in connection with the consummation of the Merger.
7.2 RESTRICTIVE LEGEND.
All certificates representing the Common Stock deliverable to
Catterton pursuant to this Agreement, and any certificates subsequently issued
with respect thereto or in substitution therefor, shall bear the following
legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS PURSUANT TO THE TERMS
specified in thAT certain SHAREHOLDERS' rights agreement, dated as of
APRIL __, 2000. copIES of such Agreements may be obtained froM ODWALLA,
INC. without charge, by the holder of this certificate upon written
request therefor.
7.3 CALIFORNIA SECURITIES LAWS.
THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS AGREEMENT HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY
PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS
UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION
25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL
PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION
BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
5
<PAGE> 9
8. TERMINATION.
8.1 GENERAL.
This Agreement may be terminated prior to Closing by the mutual consent
of the Company and Catterton.
8.2 EFFECT OF TERMINATION.
If this Agreement is terminated pursuant to Section 8.1, all further
obligations of the parties under this Agreement shall terminate provided,
further, that Sections 9.2, 9.3, 9.4, 9.9 and 9.10 shall survive the termination
of this Agreement.
8.3 EXCLUSIVITY OF TERMINATION RIGHTS.
Except to the extent termination occurs due to the bad faith of the
other party, the termination rights and obligations provided in this Section 8
shall be deemed to be exclusive. The parties shall not have any other or further
liabilities to or with respect to one another by reason of this Agreement or its
termination.
9. MISCELLANEOUS.
9.1 FURTHER ASSURANCES.
Each party hereto shall execute and/or cause to be delivered to each
other party hereto such instruments and other documents, and shall take such
other actions, as such other party may reasonably request (prior to, at or after
the Closing) for the purpose of carrying out or evidencing any of the
Transactions.
9.2 FEES AND EXPENSES.
The Company shall bear the reasonable costs and expenses with respect to
the negotiation, execution and delivery of this Agreement and in connection with
the Transactions, including any transfer, recording or similar taxes levied as a
result of the consummation of the Transactions.
9.3 ATTORNEYS' FEES.
If any legal action or other legal proceeding (including arbitration)
relating to the Transactions or the enforcement of any provision of any of this
Agreement is brought against any party hereto, the person presiding over such
action or other proceeding may award reasonable attorneys' fees, costs and
disbursements to the prevailing party (in addition to any other relief to which
the prevailing party may be entitled).
9.4 GOVERNING LAW; ARBITRATION.
(a) This Agreement is to be construed in accordance with and
governed by the laws of the State of California (as permitted by Section 1646.5
of the California Civil Code or
6
<PAGE> 10
any similar successor provision), without giving effect to any choice of law
rule that would cause the application of the laws of any jurisdiction other than
the State of California to the rights and duties of the parties.
(b) Any controversy or claim arising out of or relating to this
Agreement, or breach thereof, shall be settled by arbitration administered by
the American Arbitration Association in accordance with its then existing
Commercial Arbitration rules and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. The
arbitrator shall be appointed by mutual agreement of the Company and Catterton
involved in such controversy or claim, but, if the Company and Catterton fail to
agree, the arbitrator shall be appointed by the American Arbitration Association
in accordance with its then existing rules. The place of the arbitration shall
be San Francisco, California and the governing law shall be the laws of the
State of California in accordance with Section 9.4(a) of this Agreement.
9.5 SUCCESSORS AND ASSIGNS.
Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns,
heirs, executors and administrators of the parties hereto and shall inure to the
benefit of and be enforceable by each person who shall be a holder from time to
time of the Common Stock to be issued pursuant to this Agreement. None of the
parties hereto may assign any of its or their rights or obligations hereunder to
any other party (by contract, operation of law or otherwise) without the prior
written consent of the other, which consent shall not be unreasonably withheld,
and any attempted assignment in violation thereof shall be void and of no
effect.
9.6 ENTIRE AGREEMENT.
This Agreement constitutes the full and entire understanding and
agreement among the parties thereto with regard to the subjects hereof and
supersede all prior agreements and understandings among or between any of the
parties relating to the subject matter hereof and thereof.
9.7 SEPARABILITY.
In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby, unless such
provision is material to the terms of this Agreement, in which case the Company
and Catterton shall in good faith agree upon such amendments as are necessary to
restore the original intent and arrangement between the parties.
9.8 AMENDMENTS.
This Agreement may be amended or modified only upon the written consent
of the Company and Catterton. Any amendment or modification effected pursuant to
this Section 9.8 shall be binding upon the Company and Catterton.
7
<PAGE> 11
9.9 NOTICES.
Any notice or other communication required or permitted to be delivered
to any party under this Agreement shall be in writing and shall be deemed
properly delivered and given (a) on the date delivered or given, when delivered
or given by hand or by telecopier during business hours, (b) one business day
after being delivered or given by courier or next-day express delivery service,
or (c) two business days after being delivered or give by registered mail to the
address set forth beneath the name of such party below (or to such other address
or telecopier number as such party shall have specified in a written notice
given to the other parties hereto):
if to the Company:
Odwalla, Inc.
120 Stone Pine Road
Half Moon Bay, CA 94019
Attention: D. Stephen C. Williamson
Telecopier: (650) 712-5967
with a copy to:
Morrison & Foerster LLP
425 Market Street
San Francisco, California 94105
Attention: Robert Townsend, Esq.
Telecopier: (415) 268-7522
if to Catterton-Simon Partners:
Greenwich Office Park
Greenwich, Connecticut 06830
Attention: Craig Sakin
Telecopier: (203) 629-4903
with copies to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178-0060
Attention: Philip H. Werner
Telecopier: (212) 309-6273
9.10 PUBLICITY AND USE OF CONFIDENTIAL INFORMATION.
(a) Notwithstanding anything to the contrary contained in any
agreement among the parties hereto, the Company shall have the right to disclose
the terms of this Agreement through the use of printed offering materials or
otherwise or as otherwise required by applicable legal requirements, in
connection with the preparation of a proxy statement (the "Proxy
8
<PAGE> 12
Statement") in connection with the solicitation by the Board of Directors of the
Company of the affirmative vote of a majority of the outstanding Common Stock
and Preferred Stock to approve the Merger and related matters.
(b) Neither Catterton, on the one hand, nor the Company, on the
other hand, shall issue or disseminate any press release or other publicity
concerning any of the Transactions, or permit any press release or other
publicity concerning any of the Transactions to be issued or otherwise
disseminated on its behalf without the prior written consent of Catterton, in
the case of the Company, or the Company, in the case of Catterton; provided,
however, that the Company and Catterton may disclose or disseminate such
information as required by any applicable law or rule to which the Company or
the Catterton are subject, including the Securities Exchange Act of 1934, as
amended, and the rules of the National Association of Securities Dealers.
9.11 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
9.12 DELAYS OR OMISSIONS; WAIVERS.
(a) No failure on the part of any person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise or waiver of any such power, right, privilege or
remedy shall preclude any other or further exercise thereof or of any other
power, right, privilege or remedy.
(b) No person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
9.13 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE.
(a) All remedies, either under this Agreement or by law or
otherwise afforded to the parties hereto, shall be cumulative and not
alternative.
(b) Each of the parties hereto agrees that if the conditions to
such party's obligation to consummate the Transactions have been satisfied as
set forth in Section 4, as the case may be, and such party nonetheless refuses
to consummate the Transactions, then the other party shall be entitled (in
addition to any other remedy that may be available to it) to (i) a decree or
order of specific performance or mandamus to enforce the observance and
performance of such obligation to consummate the Transactions, and (ii) an
injunction restraining such non-performance.
9
<PAGE> 13
9.14 HEADINGS.
The headings contained in this Agreement are for convenience of
reference only, shall not be deemed to be a part of this Agreement and shall not
be referred to in connection with the construction or interpretation of this
Agreement.
9.15 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise specified, all references in this
Agreement to "Sections" are intended to refer to Sections of this Agreement.
10
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have executed this PREFERRED
STOCK CONVERSION AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: ODWALLA, INC.,
a California corporation
By:
-------------------------------------
Name: D. Stephen C. Williamson
Title: Chief Executive Officer
CATTERTON-SIMON PARTNERS III, L.P.,
a Delaware limited partnership
By:
-------------------------------------
Name: Craig Sakin
Title: Authorized Person
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EXHIBIT A
AMENDMENT TO CERTIFICATE OF DETERMINATION
OF SERIES A PREFERRED STOCK
12
<PAGE> 1
EXHIBIT 10.7
BAIN CAPITAL FUND VI, L.P.
Two Copley Place
Boston, MA 02116
May 1, 2000
Mr. Stephen Williamson, CEO
Odwalla, Inc.
120 Stone Pine Road
Half Moon Bay, CA 94019
Mr. Craig Sakin
Catterton-Simon Partners III, L.P.
9 Greenwich Office Park
Greenwich, CT 06830
Re: Working Capital Adjustment Agreement dated as of May 1, 2000
Dear Gentlemen:
I refer to the: (i) Working Capital Adjustment agreement (the
"Working Capital Agreement"), entered into as of May 1, 2000, by and among,
Odwalla, Inc. ("Odwalla"), Fresh Samantha, Inc. ("Fresh Samantha") and certain
individuals and entities set forth therein; and (ii) the Shareholders Rights
Agreement (the "Rights Agreement") to be entered into on May 2, 2000, by and
among Odwalla, Samantha Investors, LLC and certain other individuals and
entities set forth on Schedule 1 attached thereto. Capitalized words used herein
without definition are as defined in the Rights Agreement.
Pursuant to Section 4.1(b)(i) of the Rights Agreement, to the
extent additional "independent directors" are required to serve on Odwalla's
Board of Directors to fulfill the rules and regulations promulgated by the NASD
and for so long as the Bain Shareholders and their Permitted Transferees hold at
least twenty percent (20%) of the issued and outstanding Common Stock of
Odwalla, the Odwalla Board of Directors shall nominate one independent member of
Odwalla's Board of Directors as designated by the Bain Shareholders.
Notwithstanding the foregoing, in consideration of the settlement of the working
capital dispute as reflected in the Working Capital Agreement, as long as
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Catterton-Simon Partners III, L.P. ("Catterton") holds at least five percent
(5%) of the issued and outstanding Common Stock of Odwalla, the Bain
Shareholders hereby agree that commencing as of the effective time of the Merger
and for so long as the Bain Shareholders have the right to designate an
independent director for nomination to Odwalla's Board of Directors pursuant to
Section 4.1(b)(i) of the Rights Agreement, the Bain Shareholders will, prior to
nominating such director, provide written notice of the proposed nominee to
Catterton, and shall only designate such person for nomination with Catterton's
approval in the manner set forth below, which approval shall not be unreasonably
withheld. The Company, Catterton and the Bain Shareholders agree and understand
the aforementioned right of Catterton to approve such proposed designee(s) shall
not apply to an individual already serving on Odwalla's Board.
After the date hereof, if Catterton's approval shall be required
prior to designating a person to serve on Odwalla's Board of Directors pursuant
to Section 4.1(b)(i) of the Rights Agreement, Catterton shall be deemed to have
approved such person unless, within six (6) business days of the giving of
written notice to Catterton as provided in the previous paragraph, it shall have
given the Bain Shareholders written notice that it does not approve of such
person, which notice shall include the reasons for such disapproval . The giving
of all notices hereunder shall be governed by the provisions set forth in
Section 6.9 of the Rights Agreement.
If Catterton shall have given the Bain Shareholders notice that
it does not approve a designee for nomination to the Odwalla Board of Directors
as provided in the previous paragraph, (i) the Bain Shareholders shall have the
right to propose additional designee(s) and (ii) Odwalla shall not take any
action, or suffer any action to be taken, to elect as an additional director any
person not designated by the Bain Shareholders, unless, based upon a written
opinion of counsel, which counsel is reasonably acceptable to the Bain
Shareholders, Odwalla determines that the failure to elect an additional
"independent director" would be reasonably likely to result in Odwalla's common
stock being delisted from the NASDAQ National Market within 30 calendar days.
The Company hereby agrees that it shall take all actions (including, without
limitation, actions to satisfy the rules and regulations promulgated by the
NASD) to prevent such delisting without electing an additional "independent
director" not designated by the Bain Shareholders.
[The remainder of this page intentionally left blank]
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If the foregoing correctly sets forth our understanding and
agreement, please so indicate by signing a copy of this Letter Agreement in the
space provided below.
Very truly yours,
BAIN CAPITAL FUND IV, L.P.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
ACKNOWLEDGED AND AGREED:
ODWALLA, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
CATTERTON-SIMON PARTNERS III, L.P.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
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EXHIBIT 99
MEDIA CONTACT: Karen Lucas FOR IMMEDIATE RELEASE
Odwalla, Inc.
650) 712-5578
INVESTOR CONTACT: Jim Steichen
Odwalla, Inc.
(650) 712-5517
ODWALLA COMPLETES MERGER WITH FRESH SAMANTHA
(Half Moon Bay, Calif., May 3, 2000) - Odwalla, Inc. (NASDAQ: ODWA) announced
today the completion of its merger with Saco, Maine based Fresh Samantha, Inc.
Odwalla is the national leader in the super premium juice category and has
strengthened its position with the merger with Fresh Samantha. Simultaneous with
the merger, Odwalla also strengthened its financial position through the sale of
common stock to Catterton-Simon Partners and Wasserstein Perella's U.S. Equity
Partners Fund. Odwalla now has the support of three major equity sponsors in
Bain Capital, Catterton-Simon Partners and Wasserstein Perella.
"The West Coast leader Odwalla and East Coast leader Fresh Samantha are joining
forces. Both Odwalla and Fresh Samantha are innovative companies that share
similar roots, values and energy. This combination will create a true national
leader and will deliver nourishment coast to coast" said Stephen Williamson,
chairman and chief executive officer.
Odwalla, Inc. is the nation's leading brand of all-natural, super-premium juices
and smoothies, dairy-free shakes, natural spring water and food bars serving
thousands of accounts coast to coast from its production facility in Dinuba,
California. As a brand of Odwalla, Fresh Samantha will continue to be the
leading supplier of all natural, super premium fruit and vegetable juices, soy
shakes, water, and frozen fruit bars from the facility in Saco, Maine. To learn
more about the Odwalla and Fresh Samantha brands, please visit us at
www.odwalla.com and at www.freshsamantha.com.
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