EXHIBIT (A)(1)
Offer To Purchase For Cash
All Outstanding Shares Of Common Stock
of
Odwalla, Inc.
at
$15.25 Net Per Share
by
TCCC Acquisition Corp.
a wholly owned subsidiary of
The Coca-Cola Company
---------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
SAN FRANCISCO TIME, ON THURSDAY, DECEMBER 6, 2001,
UNLESS THE OFFER IS EXTENDED.
---------------------------
THE OFFER (THE "OFFER") IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND PLAN
OF MERGER (THE "MERGER AGREEMENT"), DATED AS OF OCTOBER 29, 2001, BY AND AMONG
THE COCA-COLA COMPANY ("TCCC"), TCCC ACQUISITION CORP. (FORMERLY KNOWN AS PERRY
PHILLIP CORP., THE "OFFEROR") AND ODWALLA, INC. ("ODWALLA"). THE OFFER IS
CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY TENDERED AND NOT
WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH NUMBER OF SHARES OF COMMON
STOCK OF ODWALLA (THE "SHARES") THAT WOULD CONSTITUTE AT LEAST NINETY AND
ONE-TENTH PERCENT (90.1%) OF THE SHARES THEN OUTSTANDING, INCLUDING FOR PURPOSES
OF SUCH CALCULATION SHARES THAT ARE ISSUABLE UPON EXERCISE OF VESTED OPTIONS AND
OUTSTANDING WARRANTS BUT EXCLUDING SHARES THAT ARE ISSUABLE UPON THE EXERCISE OF
OPTIONS AND WARRANTS THAT ARE CANCELLED PURSUANT TO THE MERGER AGREEMENT (THE
FOREGOING BEING REFERRED TO HEREIN AS "FULLY DILUTED BASIS"), (II) ANY WAITING
PERIOD UNDER THE HSR ACT (AS DEFINED HEREIN) APPLICABLE TO THE PURCHASE OF
SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR HAVING BEEN TERMINATED PRIOR TO
THE EXPIRATION OF THE OFFER, AND (III) THE SATISFACTION OR WAIVER OF CERTAIN
OTHER TERMS AND CONDITIONS. SEE SECTION 15.
IF MORE THAN 50% OF THE OUTSTANDING SHARES AND LESS THAN 90.1% OF THE SHARES
THEN OUTSTANDING ON A FULLY DILUTED BASIS ARE TENDERED PURSUANT TO THE OFFER AND
NOT WITHDRAWN, THE OFFEROR AND TCCC MAY, UNDER CERTAIN CIRCUMSTANCES DESCRIBED
BELOW, EITHER EXERCISE THE OPTION PURSUANT TO THE STOCK OPTION AGREEMENT
DESCRIBED HEREIN OR REDUCE THE NUMBER OF SHARES SUBJECT TO THE OFFER TO A NUMBER
EQUAL TO 49.9% OF THE SHARES THEN OUTSTANDING.
IN CONNECTION WITH THE MERGER AGREEMENT, THE OFFEROR AND TCCC ENTERED INTO
TENDER AGREEMENTS DATED AS OF OCTOBER 29, 2001 (THE "TENDER AGREEMENTS"), WITH
CERTAIN SHAREHOLDERS OF ODWALLA (THE "TENDERING SHAREHOLDERS") WHO OWN
APPROXIMATELY 57% OF THE SHARES THAT ARE OUTSTANDING. PURSUANT TO THE TENDER
AGREEMENTS, SUCH SHAREHOLDERS HAVE AGREED TO TENDER SUCH SHARES PURSUANT TO THE
OFFER.
---------------------------
THE BOARD OF DIRECTORS OF ODWALLA HAS UNANIMOUSLY APPROVED AND ADOPTED THE
MERGER AGREEMENT AND THE OPTION AGREEMENT REFERRED TO HEREIN AND THE
TRANSACTIONS CONTEMPLATED THEREBY, APPROVED THE OFFER AND THE MERGER (AS DEFINED
HEREIN) AND DETERMINED THAT THE TERMS OF THE OFFER, THE MERGER AND THE OPTION
AGREEMENT ARE FAIR TO AND IN THE BEST INTERESTS OF ODWALLA'S SHAREHOLDERS AND
RECOMMENDS THAT ALL SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES TO THE
OFFEROR.
---------------------------
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
Shares should either (1) complete and sign the accompanying Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in the
Letter of Transmittal and deliver the Letter of Transmittal with the Shares and
all other required documents to the Depositary (as hereinafter defined), (2)
follow the procedure for book-entry transfer set forth in Section 3 of this
Offer to Purchase or (3) request such shareholder's broker, dealer, commercial
bank, trust company or other nominee to effect the transaction for such
shareholder. Shareholders having Shares registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact such
broker, dealer, commercial bank, trust company or other nominee if they desire
to tender their Shares.
Any shareholder who desires to tender Shares and whose certificates representing
such Shares are not immediately available, or who cannot comply with the
procedure for book-entry transfer on a timely basis or who cannot deliver all
required documents to the Depositary, in each case prior to the expiration of
the Offer, must tender Shares pursuant to the guaranteed delivery procedure set
forth in Section 3 of this Offer to Purchase.
Questions and requests for assistance may be directed to the Dealer Manager or
to the Information Agent at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be obtained from the Information Agent or from
brokers, dealers, commercial banks, trust companies or other nominees.
---------------------------
The Dealer Manager for the Offer is:
MORGAN STANLEY
November 6, 2001
TABLE OF CONTENTS
PAGE
----
SUMMARY TERM SHEET.......................................... 1
INTRODUCTION................................................ 6
THE TENDER OFFER............................................ 10
1. Terms of the Offer; Expiration Date................... 10
2. Acceptance for Payment and Payment for Shares......... 11
3. Procedure for Accepting the Offer and Tendering
Shares................................................ 12
4. Withdrawal Rights..................................... 15
5. Certain United States Federal Income Tax
Consequences.......................................... 16
6. Price Range of Shares; Dividends...................... 17
7. Certain Information Concerning Odwalla................ 17
8. Certain Information Concerning the Offeror and TCCC... 23
9. Source and Amount of Funds............................ 24
10. Background of the Offer; Contacts with Odwalla........ 25
11. The Merger Agreement; the Option Agreement; the Tender
Agreements; and the Employment Agreement.............. 29
12. Purpose of the Offer; the Merger; Plans for Odwalla... 40
13. Dividends and Distributions........................... 42
14. Effect of the Offer on the Market for the Shares,
Stock Exchange Listing and Exchange Act
Registration........................................ 43
15. Certain Conditions of the Offer....................... 44
16. Certain Legal Matters and Regulatory Approvals........ 46
17. Fees and Expenses..................................... 48
18. Miscellaneous......................................... 49
ANNEX I--Certain Information Concerning the Directors and
Executive Officers of the Offeror and TCCC................ I-1
ANNEX II--Schedule B--Chapter 13 of the California General
Corporation Law--Dissenters' Rights....................... II-1
Appendix A--Agreement and Plan of Merger
Appendix B--Form of Tender Agreement with Voting Agreement
Appendix C--Form of Tender Agreement without Voting
Agreement
Appendix D--Stock Option Agreement
i
SUMMARY TERM SHEET
TCCC Acquisition Corp. (formerly known as Perry Phillip Corp., the
"Offeror") is offering to purchase all of the outstanding shares of common stock
of Odwalla, Inc. ("Odwalla") for $15.25 per share, net to the seller in cash,
less any required withholding taxes and without interest thereon (the "Offer").
Through a question and answer format, this Summary Term Sheet is designed to
explain to you, the shareholders of Odwalla, a number of important terms of the
proposed transaction. This Summary Term Sheet serves only as an introduction,
and we urge you to read carefully the remainder of the Offer to Purchase and the
accompanying Letter of Transmittal in order to fully educate yourself on the
details of the proposed transaction. Cross-referenced text refers to sections
within the Offer to Purchase, unless otherwise noted.
WHO IS OFFERING TO BUY THE COMMON STOCK OF ODWALLA?
Our name is TCCC Acquisition Corp. We are a California corporation formerly
known as Perry Phillip Corp. formed for the purpose of making a cash tender
offer for all of the outstanding shares of common stock of Odwalla. We are a
wholly owned subsidiary of The Coca-Cola Company, a Delaware corporation
("TCCC"). See "Introduction."
TCCC is the largest manufacturer, distributor and marketer of soft drink
concentrates and syrups in the world. Finished beverage products bearing TCCC's
trademarks, sold in the United States since 1886, are now sold in nearly 200
countries and include the leading soft drink products in most of these
countries.
TCCC's business is nonalcoholic beverages, principally soft drinks, but
also a variety of noncarbonated beverages, including juice and juice-drink
products. TCCC is one of numerous competitors in the commercial beverages
market. Of the approximately 48 billion beverage servings of all types consumed
worldwide every day, beverages bearing TCCC's trademarks account for more than
one billion.
TCCC was incorporated in September 1919 under the laws of the State of
Delaware and succeeded to the business of a Georgia corporation with the same
name that had been organized in 1892.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER? HOW MUCH ARE
YOU OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
We are offering to purchase all of the outstanding shares of common stock
of Odwalla for $15.25 per share, net to you, in cash less any required
withholding taxes and without interest. See "Introduction."
If you tender your shares in the Offer, you will not be obligated to pay
brokerage fees or commissions or, except as otherwise provided in Instruction 6
of the Letter of Transmittal, stock transfer taxes with respect to the sale of
your shares. See "Introduction."
WHAT IS THE PURPOSE OF THE OFFER?
The purpose of the tender offer is to enable TCCC to acquire control of,
and the entire equity interest in, Odwalla. Following the Offer, we intend to
acquire any remaining equity interest in Odwalla that was not acquired during
the tender offer. See "Introduction" and Section 12 ("Purpose of the Offer; the
Merger; Plans for Odwalla").
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
We are not obligated to purchase any shares that you validly tender unless
the number of shares validly tendered and not withdrawn before the expiration
date of the Offer represents, in the aggregate, at least ninety and one tenth
percent (90.1%) of the shares of Odwalla's common stock, including for purposes
of such calculation shares that are issuable upon exercise of vested options and
outstanding warrants but excluding shares that are issuable upon the exercise of
options and warrants that are cancelled pursuant to the Merger Agreement (the
foregoing being referred to herein as "Fully Diluted Basis"). For a complete
description of all of the conditions of the Offer, see Section 15 ("Certain
Conditions of the Offer"). If more than 50% of the outstanding shares and less
than 90.1% of the shares then outstanding on a Fully Diluted Basis are validly
tendered pursuant to the Offer and not withdrawn, the Offeror and TCCC may,
under certain circumstances described in this document, either exercise the
option agreement described in this document and purchase enough shares of
Odwalla common stock such that the Offeror would own at least 90.1% of all
Odwalla common stock on a Fully Diluted Basis or reduce the number of shares
subject to the Offer to a number equal to 49.9% of the shares then outstanding.
For a complete description of all of the conditions of the Offer, see Section 15
("Certain Conditions of the Offer"). If the number of shares subject to the
Offer is reduced, we will reduce the amount of shares we will purchase from you
by the same proportion we reduce the amount purchased from all other tendering
shareholders. If the subsequent merger between the Offeror and Odwalla occurs
(the "Merger"), you will receive the Offer Price as the merger consideration,
subject to your right, if any, under California law to dissent and demand the
fair market value of your shares, for your shares which were either not tendered
or tendered but not purchased in the Offer. See Section 12 ("Purpose of the
Offer; the Merger; Plans for Odwalla").
We are also not obligated to purchase any shares which you validly tender
if, among other things, the applicable waiting period under applicable antitrust
laws has not expired or been terminated. See Section 11 ("The Merger Agreement;
the Option Agreement; the Tender Agreements; and the Employment Agreement").
We are also not obligated to purchase any shares you validly tender if any
other conditions set forth in Section 15 ("Certain Conditions of the Offer") and
discussed in Section 1 ("Terms of the Offer; Expiration Date") is not satisfied
or waived.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
Our offer to purchase your shares expires at 12:00 midnight, San Francisco,
California time, on Thursday, December 6, 2001. This is called the initial
expiration date. See Section 1 ("Terms of the Offer; Expiration Date"). If you
cannot deliver everything that is required in order to make a valid tender by
that time, you may be able to use a guaranteed delivery procedure which is
described in Section 3 of this Offer to Purchase.
CAN WE EXTEND THE OFFER PAST THE INITIAL EXPIRATION DATE AND UNDER WHAT
CIRCUMSTANCES?
Yes. We can and may extend the Offer past the initial expiration date. If
we do so, you will be able to tender your shares until 12:00 midnight, New York
time, on the new expiration date.
Several terms define the circumstances in which we can extend the Offer,
including: (1) if any conditions to the Offer have not been satisfied or waived,
or (2) if any rule, requirement, interpretation or position of the Securities
and Exchange Commission requires us to extend the Offer. Furthermore, if certain
conditions in the Merger Agreement are not satisfied as of any scheduled
expiration date of the Offer, Odwalla may request that we extend the Offer,
subject to applicable termination rights. See Section 1 ("Terms of the Offer;
Expiration Date").
HOW DO I FIND OUT IF THE OFFEROR EXTENDS THE OFFER?
We will announce an extension no later than 9:00 a.m., New York time, on
the business day after a scheduled expiration date by issuing a press release to
the Dow Jones News Service. See Section 1 ("Terms of the Offer; Expiration
Date").
HOW DO I GET PAID FOR MY TENDERED SHARES?
We will pay for the shares accepted for payment by depositing the purchase
price with EquiServe Trust Company, N.A. (who is the depositary in the Offer
(the "Depositary")). The Depositary will transmit to you the payment for all
shares accepted for payment. See Section 2 ("Acceptance for Payment and Payment
for Shares").
2
HOW DO I TENDER MY SHARES?
To tender your shares in the Offer, you must:
-- complete and sign the accompanying Letter of Transmittal (or a
manually signed facsimile of the Letter of Transmittal) in accordance
with the instructions on the Letter of Transmittal and mail or
deliver it together with your share certificates, and any other
required documents to the Depositary;
-- tender your shares pursuant to the procedure for book-entry transfer
set forth in Section 3 ("Procedure for Accepting the Offer and
Tendering Shares"); or
-- if your share certificates are not immediately available or if you
cannot deliver your share certificates and any other required
documents to the Depositary prior to the expiration of the offer, or
you cannot complete the procedure for delivery by book-entry transfer
on a timely basis, you may still tender your shares if you comply
with the guaranteed delivery procedures described in Section 3
("Procedure for Accepting the Offer and Tendering Shares").
UNTIL WHAT TIME CAN I WITHDRAW MY PREVIOUSLY TENDERED SHARES?
You can withdraw your tendered shares at any time on or prior to a
scheduled expiration date. After the Offer expires, the tender is irrevocable
unless we have not accepted for payment your shares by January 5, 2002. At and
after this date, you can withdraw your tendered shares unless and until we
accept them for payment. See Section 4 ("Withdrawal Rights").
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw your shares, you must deliver to the Depositary written or
facsimile transmission notice of withdrawal that specifies your name, the number
of shares being withdrawn and the name of the registered holder of the shares,
if different from the person who tendered the shares. See Section 4 ("Withdrawal
Rights").
WHAT ARE THE TAX CONSEQUENCES OF THE SALE OF SHARES TO THE OFFEROR THROUGH THE
OFFER?
The sale of shares to us through the Offer is a taxable transaction for
United States federal income tax purposes, and may also be taxable under
applicable state, local, foreign and other tax laws. In general, if you are a
United States person, as defined under U.S. federal income tax law, you will
recognize gain or loss equal to the difference between the amount of cash that
you receive from us for the shares and the tax basis of your shares.
We encourage you to consult with your own tax advisor about the particular
effect the Offer will have on you. See Section 5 ("Certain United States Federal
Income Tax Consequences").
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On October 29, 2001, the last full trading day before we announced that we
entered into the Merger Agreement, the closing price per share of Odwalla's
common stock on the Nasdaq National Market System was $11.83 per share. On
November 5, 2001, the last full trading day before we commenced the Offer, the
closing price per share of Odwalla's common stock on Nasdaq was $15.15 per
share.
We encourage you to obtain a current market quotation for your shares
before deciding whether to tender your shares. See Section 6 ("Price Range of
Shares; Dividends") for recent high and low closing prices for the shares.
WHAT IS THE TOTAL AMOUNT OF FUNDS THAT WILL BE REQUIRED TO CONSUMMATE THE
PROPOSED TRANSACTION?
We estimate that the total amount of funds required to purchase all
outstanding shares (on a Fully Diluted Basis) pursuant to the Offer, to repay
outstanding indebtedness and to pay fees and expenses and other obligations
related to the Offer and the Merger will be approximately $192.5 million.
3
DOES THE OFFEROR HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
Yes. We will obtain all necessary funds through capital contributions or
advances by TCCC. TCCC will have sufficient funds from cash on hand to fully
fund the Offer and the Merger. See Section 9 ("Source and Amount of Funds").
IS THE OFFEROR'S FINANCIAL CONDITION RELEVANT TO MY DECISION ON WHETHER TO
TENDER SHARES IN THE OFFER?
We do not think our financial condition is relevant to your decision
whether to tender shares and accept the Offer because: (1) the Offer consists
solely of cash, (2) the Offer is not subject to any financing condition, (3)
TCCC will have adequate cash available, and (4) the Offer is for all outstanding
shares of Odwalla's common stock.
WHAT DOES ODWALLA'S BOARD OF DIRECTORS THINK OF THE OFFER AND MERGER?
On October 29, 2001, the board of directors of Odwalla unanimously
determined that the Offer, the Option (as defined herein) and the Merger were
fair to you and in your best interests.
Odwalla's board of directors recommends that you accept the Offer and
tender your shares and/or vote to approve the Merger. See "Introduction" and
Section 12 ("Purpose of the Offer; the Merger; Plans for Odwalla").
HAVE ANY SHAREHOLDERS ALREADY AGREED TO TENDER THEIR SHARES?
Yes. Shareholders holding 6,280,594 shares of common stock of Odwalla (the
"Committed Shares") have entered into tender agreements in which they have
agreed to tender their shares in the Offer. Certain of these shareholders owning
5,950,650 shares of common stock of Odwalla have agreed to vote in favor of the
Merger. See "Introduction" and Section 10 ("Background of the Offer; Contacts
with Odwalla").
IF THE OFFEROR CONSUMMATES THE OFFER, WHAT HAPPENS TO ODWALLA AFTER THE OFFER?
If the Offeror purchases at least 90.1% of the total shares outstanding on
a Fully Diluted Basis in the Offer, it intends to cause a merger to occur
between the Offeror and Odwalla in which shareholders who have not previously
tendered their shares will also receive $15.25 in cash, less any required
withholding taxes and without interest, subject to their right, if any, under
California law to dissent and demand the fair market value of their shares. If
less than 90.1% of the shares then outstanding on a Fully Diluted Basis but more
than 50% of the then outstanding shares are tendered in the Offer, the Offeror
may either (a) purchase from Odwalla pursuant to the option agreement entered
into on October 29, 2001 among TCCC, the Offeror and Odwalla enough shares so
that the Offeror would own after completion of the Offer at least 90.1% of the
total shares outstanding on a Fully Diluted Basis and immediately thereafter
cause the Merger to occur (the "Option") or (b) purchase 49.9% of the shares
then outstanding pursuant to the Offer and Odwalla will seek the approval of the
holders of a majority of the Odwalla shareholders to consummate the merger of
the Offeror with and into Odwalla. We and certain of the shareholders who have
signed tender agreements representing 5,950,650 of the Committed Shares have
agreed to vote in favor of the Merger.
Once the Merger takes place, Odwalla will no longer be publicly owned.
Odwalla will become a wholly owned subsidiary of TCCC. In such case, Odwalla's
common stock will no longer be traded through the Nasdaq or on any other
securities exchange. See Introduction and Section 14 ("Effect of the Offer on
the Market for the Shares, Stock Exchange Listing and Exchange Act
Registration").
This Offer to Purchase also constitutes notice to you pursuant to Section
1110 of the California General Corporation Law (the "CGCL") that if we acquire
at least 90.1% of the outstanding shares of Odwalla on a Fully Diluted Basis, we
will cause the Merger to become effective without any further notice to
Odwalla's shareholders. See Appendix A (Agreement and Plan of Merger).
4
IF I DECIDE NOT TO TENDER BUT THE OFFER IS SUCCESSFUL, OR IF NOT ALL OF THE
SHARES I TENDERED ARE PURCHASED WHAT WILL HAPPEN TO MY SHARES?
If the Offer is successful and the Merger occurs, shareholders either who
do not tender or who did not have all of the shares that they tendered purchased
in the Offer will receive the merger consideration per share of Odwalla common
stock described below, subject to their right, if any, under California law to
dissent and demand the fair market value of their shares. See Section 11 ("The
Merger Agreement; the Option Agreement; the Tender Agreements; and the
Employment Agreement"), Section 14 ("Effect of the Offer on the Market for the
Shares, Stock Exchange Listing and Exchange Act Registration") and Section 16
("Certain Legal Matters and Regulatory Approvals").
WHAT WILL BE PAID TO SHAREHOLDERS OF ODWALLA IN THE MERGER AND WHAT IS THE FORM
OF PAYMENT?
Shareholders of Odwalla who exchange their shares of common stock in the
Merger will receive the same amount they would have received had they tendered
their shares in the Offer -- $15.25 per share, net in cash less any required
withholding taxes and without interest.
WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE OFFER?
Shareholders can call Innisfree M&A Incorporated, the information agent for
the Offer, at 888-750-5834. In addition, shareholders can call Morgan Stanley &
Co. Incorporated, the dealer manager for the Offer, at 212-761-3539.
5
TO THE SHAREHOLDERS OF ODWALLA:
INTRODUCTION
TCCC Acquisition Corp., a California corporation (formerly known as Perry
Phillip Corp., the "Offeror") and a wholly owned subsidiary of The Coca-Cola
Company, a Delaware corporation ("TCCC"), hereby offers to purchase all of the
outstanding shares of common stock, no par value (the "Shares"), of Odwalla,
Inc., a California corporation ("Odwalla"), at a purchase price of $15.25 per
Share, net to the seller in cash, less any required withholding taxes and
without interest thereon (the "Offer Price"), upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer").
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in the Letter of Transmittal, stock transfer
taxes on the transfer and sale of Shares pursuant to the Offer. The Offeror will
pay all fees and expenses of EquiServe Trust Company, N.A., which is acting as
the depositary (in such capacity, the "Depositary"), Morgan Stanley & Co.
Incorporated, which is acting as the dealer manager (in such capacity, the
"Dealer Manager") and Innisfree M&A Incorporated, which is acting as the
information agent (in such capacity, the "Information Agent"), incurred in
connection with the Offer.
THE BOARD OF DIRECTORS OF ODWALLA (THE "BOARD OF DIRECTORS") HAS
UNANIMOUSLY APPROVED THE OFFER AND THE MERGER (AS DEFINED HEREIN) AND APPROVED
AND ADOPTED THE MERGER AGREEMENT AND THE OPTION AGREEMENT (EACH AS DEFINED
HEREIN) AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER, THE
OPTION (AS DEFINED HEREIN) AND THE MERGER, AND DETERMINED THAT THE TERMS OF THE
OFFER, THE OPTION AND THE MERGER, ARE FAIR TO AND IN THE BEST INTERESTS OF THE
SHAREHOLDERS OF ODWALLA, AND RECOMMENDS THAT ALL HOLDERS OF SHARES ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
The Board of Directors has received the written opinion dated October 29,
2001 of Dresdner Kleinwort Wasserstein, Inc. ("DrKW"), financial advisor to
Odwalla, to the effect that, as of such date and based upon and subject to
certain matters stated in such opinion, the Offer Price to be received in the
Offer and the Merger by the holders of Shares (other than TCCC and its
affiliates) is fair, from a financial point of view, to such holders. A copy of
such opinion is attached to Odwalla's Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") which is being distributed to the
shareholders of Odwalla concurrently herewith. Holders of Shares are urged to
read the opinion carefully in its entirety.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) AT
LEAST NINETY AND ONE-TENTH PERCENT (90.1%) OF THE SHARES THEN OUTSTANDING,
INCLUDING FOR PURPOSES OF SUCH CALCULATION SHARES THAT ARE ISSUABLE UPON
EXERCISE OF VESTED OPTIONS AND OUTSTANDING WARRANTS BUT EXCLUDING SHARES THAT
ARE ISSUABLE UPON THE EXERCISE OF OPTIONS AND WARRANTS OF ODWALLA THAT ARE
CANCELLED PURSUANT TO THE MERGER AGREEMENT (THE FOREGOING BEING REFERRED TO
HEREIN AS "FULLY DILUTED BASIS") (THE "MINIMUM CONDITION"). THE OFFER IS ALSO
SUBJECT TO THE EXPIRATION OR TERMINATION OF ALL APPLICABLE WAITING PERIODS UNDER
THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR
ACT") AND THE SATISFACTION OR WAIVER OF CERTAIN OTHER TERMS AND CONDITIONS. SEE
SECTIONS 1 AND 15.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
October 29, 2001 (the "Merger Agreement"), among TCCC, the Offeror and Odwalla.
The Merger Agreement provides, among other things, for the making of the Offer
by the Offeror, and further provides that, following the completion of the
Offer, upon the terms and subject to the conditions of the Merger Agreement and
in accordance with Section 1110 of the California General Corporation Law (the
"CGCL"), the Offeror will be merged with and into Odwalla (the "Merger") and
each Share then outstanding (other than Shares owned by TCCC, the Offeror, their
direct or indirect subsidiaries and dissenting shareholders, if any) will be
converted into the Offer Price less any required withholding taxes and without
interest thereon. Following the Merger, Odwalla will continue as the surviving
corporation (the "Surviving Corporation") and become a wholly owned subsidiary
of TCCC, and the separate corporate existence of the Offeror will cease.
6
The purpose of the Offer is for TCCC, indirectly through the Offeror, to
acquire a voting interest in Odwalla as the first step in a business
combination. In the event the Minimum Condition is not satisfied on any
scheduled expiration date of the Offer, at the request of Odwalla, the Offeror
shall, and TCCC shall cause the Offeror to take any of the actions set forth in
clauses (x), (y), or (z) (provided that the Offeror shall have complete
discretion concerning which action to take): (x) extend the Offer pursuant to
the provisions of the Merger Agreement, (y) amend the Offer in contemplation of
the exercise of the Option Agreement (to the extent the Option Agreement is
exercisable at such time) to reduce the Minimum Condition to that number of
Shares (the "Option Exercise Minimum Number") equal to the number of Shares
which, when combined with the number of shares issued upon exercise of the
Option Agreement, equals 90.1% of the Shares then outstanding on a Fully Diluted
Basis or (z) amend the Offer to provide that, if (i) the Minimum Condition is
not satisfied at the next scheduled expiration date of the Offer (after giving
effect to the issuance of any Shares theretofore acquired by TCCC or the
Offeror) and (ii) the number of Shares tendered pursuant to the Offer and not
withdrawn as of such next scheduled expiration date is more than 50% of the then
outstanding Shares, the Offeror shall waive the Minimum Condition and amend the
Offer to reduce the number of Shares subject to the Offer to 49.9% of the Shares
then outstanding (the "Revised Minimum Number") and, subject to the prior
satisfaction or waiver of the other conditions of the Offer, purchase, on a pro
rata basis, the Revised Minimum Number of Shares (it being understood that the
Offeror shall not in any event be required to accept for payment, or pay for,
any Shares less than the Revised Minimum Number of Shares that are tendered
pursuant to the Offer and not withdrawn at the expiration date).
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the approval and adoption of the Merger Agreement
by the requisite vote of the shareholders of Odwalla, if required by the CGCL.
Under the CGCL, if TCCC or the Offeror acquires, pursuant to the Offer, the
Option Agreement or otherwise, at least 90% of the Shares then outstanding, it
will be able to effect the Merger without a vote of the shareholders. In such
event, TCCC, the Offeror and Odwalla have agreed in the Merger Agreement to
take, subject to the satisfaction or waiver of the conditions set forth in the
Merger Agreement, all necessary and appropriate action to cause the Merger to be
effective as soon as practicable after the acceptance for payment and purchase
of Shares pursuant to the Offer, without a meeting of shareholders of Odwalla,
in accordance with Section 1110 of the CGCL (the "Short-Form Merger"). Under the
CGCL, the merger consideration paid to the shareholders of Odwalla may not be
cash if TCCC and the Offeror own, directly or indirectly, more than 50% but less
than 90% of the then outstanding Shares, unless either all the shareholders of
Odwalla consent to the Merger or the Commissioner of Corporations of the State
of California approves, after a hearing, the terms and conditions of the Merger
and the fairness thereof. If, pursuant to the Offer, the Option Agreement or
otherwise, the Offeror does not acquire Shares that, taken together with Shares
owned by TCCC, represent at least 90.1% of the Shares then outstanding on a
Fully Diluted Basis as of any scheduled expiration date of the Offer, and the
Offeror instead amends the Offer to reduce the number of Shares subject to the
Offer to the Revised Minimum Number, then the Offeror, together with TCCC, would
own 49.9% of the Shares then outstanding upon consummation of the Offer, and
would thereafter solicit the approval of the Merger and the Merger Agreement by
a majority vote of the shareholders of Odwalla. Under such circumstances, a
significantly longer period of time will be required to effect the Merger. For a
description of the conditions set forth in the Merger Agreement and the CGCL as
it relates to this transaction, see Section 11 ("The Merger Agreement; the
Option Agreement; the Tender Agreements; and the Employment Agreement"), Section
12 ("Purpose of the Offer; the Merger; Plans for Odwalla") and Section 15
("Certain Conditions of the Offer").
This Offer to Purchase also constitutes notice pursuant to Section 1110 of
the CGCL that if the Offeror, TCCC or any other subsidiary of TCCC acquires at
least 90.1% of the outstanding Shares on a Fully Diluted Basis, TCCC or the
Offeror will cause the Short-Form Merger to become effective without any further
notice to shareholders of Odwalla. See Appendix A (Agreement and Plan of
Merger).
Concurrently with the execution of the Merger Agreement, and as a condition
and inducement to TCCC's and the Offeror's entering into the Merger Agreement,
Odwalla entered into a Stock Option Agreement, dated as of October 29, 2001 (the
"Option Agreement"), with TCCC and the Offeror. Pursuant to the Option
Agreement, Odwalla granted to the Offeror an irrevocable option (the "Top-Up
Stock Option")
7
to purchase that number of Shares (the "Top-Up Option Shares") equal to the
number of Shares that, when added to the number of Shares owned by TCCC and the
Offeror immediately following consummation of the Offer, will constitute 90.1%
of the Shares then outstanding on a Fully Diluted Basis (assuming the issuance
of the Top-Up Option Shares) at a purchase price per Top-Up Option Share equal
to the Offer Price, subject to the terms and conditions set forth in the Option
Agreement, including, without limitation, that the Top-Up Stock Option shall not
be exercisable if the number of Shares that would otherwise be issued thereunder
would exceed the number of authorized Shares available for issuance. If the
Top-Up Stock Option is exercised by the Offeror (resulting in the Offeror and
TCCC owning 90.1% on a Fully Diluted Basis or more of the Shares then
outstanding), the Offeror will be able to effect a short-form merger under the
CGCL, subject to the terms and conditions of the Merger Agreement. For a
description of the Option Agreement, see Section 11 ("The Merger Agreement; the
Option Agreement; the Tender Agreements; and the Employment Agreement").
In connection with the Merger Agreement, the Offeror and TCCC entered into
Tender Agreements, dated October 29, 2001 (the "Tender Agreements"), with each
of the following shareholders: Bain Capital Fund VI, L.P.; BCIP Associates II;
BCIP Trust Associates II; BCIP Associates II-B; BCIP Trust Associates II-B; BCIP
Associates II-C; PEP Investments Pty. Limited; U.S. Equity Partners, L.P.; U.S.
Equity Partners (Offshore), L.P.; Catterton-Simon Partners III, L.P.; D. Stephen
C. Williamson; James R. Steichen; Theodore R. Leaman III; Douglas K. Levin;
Michael Carter; Julie Carter; and Robert Carter (collectively, the "Tendering
Shareholders"). Pursuant to the Tender Agreements, the Tendering Shareholders
have agreed to tender an aggregate of 6,280,594 Shares owned by the Tendering
Shareholders (the "Committed Shares") and certain of the Tendering Shareholders
have agreed to vote 5,950,650 of the Committed Shares in favor of the Merger and
otherwise in the manner directed by the Offeror. The Committed Shares represent
approximately 57% of the Shares that as of October 25, 2001 were issued and
outstanding.
Tender Agreements. Concurrently with the execution and delivery of the
Merger Agreement, TCCC, the Offeror and each of the Tendering Shareholders
entered into the Tender Agreements. Pursuant to the Tender Agreements, the
Tendering Shareholders agreed to tender into the Offer the Committed Shares. The
Tender Agreements also provide that U.S. Equity Partners, L.P.; U.S. Equity
Partners (Offshore), L.P.; Catterton-Simon Partners III, L.P.; Bain Capital Fund
VI, L.P.; BCIP Associates II; D. Stephen C. Williamson; Douglas Levin; Michael
Carter; Julie Carter; and Robert Carter (the "Voting Shareholders"),
representing in the aggregate 5,950,650 shares, irrevocably appoint the Offeror
as their proxy to vote their portion of such Committed Shares in connection with
the transaction in the following manner: (i) for the adoption and approval of
the Merger Agreement and the Merger and (ii) in any manner as TCCC, in its sole
discretion, may see fit with respect to any extraordinary corporate transaction
(other than the Merger), such as a merger, consolidation, business combination,
tender or exchange offer, reorganization, recapitalization, liquidation, sale or
transfer of a material amount of the assets or securities of Odwalla or any of
its subsidiaries (other than pursuant to the Merger) or any other change of
control involving Odwalla or any of its subsidiaries, including, but not limited
to, any Competing Acquisition Proposal, as defined herein. Notwithstanding the
foregoing grant to TCCC of the irrevocable proxy, if TCCC elects not to exercise
its rights to vote the securities pursuant to the irrevocable proxy, each Voting
Shareholder agreed to vote the securities during the term of the Tender
Agreement (i) in favor of or give its consent to, as applicable, a proposal to
adopt and approve the Merger Agreement and the Merger as described in the Tender
Agreements, or (ii) in the manner directed by TCCC if the issue on which the
Voting Shareholder is requested to vote is a matter described in clause (ii) of
the preceding sentence, in each case at any annual, special or other meeting or
action of the shareholders of Odwalla, in lieu of a meeting or otherwise. The
Merger Agreement and the Tender Agreements are more fully described in Section
11 ("The Merger Agreement; the Option Agreement; the Tender Agreements; and the
Employment Agreement"). The Committed Shares that are subject to voting
agreements represent approximately 54% of the Shares outstanding.
The Merger Agreement provides that, promptly after the Offeror acquires
Shares which represent at least the Minimum Condition, the Option Exercise
Minimum Number or the Revised Minimum Number, the Offeror will be entitled to
designate such number of directors, rounded up to the next whole number, on the
8
Board of Directors of Odwalla (the "Post-Acceptance Board"), subject to
compliance with Section 14(f) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as will make the number of Odwalla's directors designated
by the Offeror equal to the product of (1) the total number of available seats
on the Board of Directors and (2) the percentage that the number of Shares owned
by the Offeror and TCCC bears to the total number of Shares issued and
outstanding provided that, prior to or upon the purchase by the Offeror of any
Shares in the Offer, Odwalla shall increase the number of directors on the Board
of Directors from seven to eight and shall maintain the number of directors at
eight until the Effective Time (as defined herein). Prior to the Effective Time,
Odwalla shall use its reasonable best efforts to ensure that the Post-
Acceptance Board includes four directors in office as of October 29, 2001 (the
"Continuing Directors"). If the number of Continuing Directors is reduced below
four, then any remaining Continuing Directors will be entitled to designate such
persons to fill such vacancies, who will be considered Continuing Directors. If
no Continuing Directors remain, the other directors shall designate four persons
to fill the vacancies and such persons shall be considered Continuing Directors.
Odwalla shall, at such time, take all actions necessary to cause the Offeror's
designees to be so elected by its existing Board of Directors. In addition,
Odwalla shall use its commercially reasonable efforts to cause to be delivered
to TCCC resignations of all the directors of Odwalla's subsidiaries to be
effective upon the Merger. In addition, Odwalla will use its reasonable best
efforts to cause individuals designated by the Offeror to constitute the same
percentage as such individuals represented on the Post-Acceptance Board of each
committee of such Post-Acceptance Board (other than any committee of such
Post-Acceptance Board established to take action under the Merger Agreement).
Odwalla has represented to TCCC that as of October 25, 2001 there (i) were
11,103,321 Shares issued and outstanding, (ii) 1,737,699 Shares reserved for
issuance upon the exercise of outstanding options plus an additional 188,886
shares authorized and reserved for future issuance under the Odwalla stock
option plans, and (iii) warrants to purchase 31,806 Shares reserved for future
issuance pursuant to the exercise of the warrants. Based upon the foregoing, the
Offeror believes that approximately 10,004,093 Shares constitute 90.1% of the
outstanding Shares on a Fully Diluted Basis assuming all of the holders of
Company Options and the Company Warrants (each as hereinafter defined) agree to
exchange such Company Options and Company Warrants for the Option Consideration
and Warrant Consideration (each as hereinafter defined), as the case may be,
pursuant to the terms of the Merger Agreement (or approximately 11,139,730
Shares if none of the holders of Company Options and Company Warrants agree to
exchange such Company Options and Company Warrants for the Option Consideration
and Warrant Consideration, as the case may be, pursuant to the terms of the
Merger Agreement) and approximately 5,551,661 Shares constitute 50% of the
outstanding Shares.
If the Minimum Condition and the other conditions to the Offer are
satisfied and the Offer is consummated (or if the Offer is consummated using the
Option Exercise Minimum Number and the Top-Up Stock Option is exercised), the
Offeror will own a number of Shares to cause the Merger to occur without a vote
of the shareholders of Odwalla, pursuant to Section 1110 of the CGCL. As of the
effective time of the Merger (the "Effective Time"), each Share outstanding
immediately prior to the Effective Time (other than Shares owned by TCCC or any
other direct or indirect wholly owned subsidiary of TCCC, which shall be
canceled or Shares held by dissenting shareholders, if any) will be converted
into the right to receive from the Surviving Corporation the Offer Price. If,
however, after consummation of the Offer, the Offeror owns less than 90% of the
then outstanding Shares, a vote of Odwalla's shareholders will be required under
Section 1201 of the CGCL to approve the Merger, and a significantly longer
period of time will be required to effect the Merger.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
9
THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of such extension or amendment), the Offeror hereby offers
to purchase all of the Shares at a price of $15.25 per Share, net to the seller
in cash, less any required withholding taxes and without interest thereon, and
will accept for payment and pay for all Shares validly tendered on or prior to
the Expiration Date and not properly withdrawn as permitted by Section 4. The
term "Expiration Date" means 12:00 midnight, San Francisco, California time, on
December 6, 2001, unless the Offeror (subject to the terms and conditions of the
Merger Agreement) shall have extended the period during which the Offer is open,
in which event the term "Expiration Date" shall mean the latest time and date at
which the Offer, as so extended by the Offeror, shall expire.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SATISFACTION OF THE
MINIMUM CONDITION, THE EXPIRATION OR TERMINATION OF ALL WAITING PERIODS
APPLICABLE TO THE ACQUISITION OF THE SHARES IMPOSED BY THE HSR ACT AND CERTAIN
OTHER TERMS AND CONDITIONS. SEE SECTION 15 ("CERTAIN CONDITIONS OF THE OFFER").
The Merger Agreement and the Offer may be terminated by the Offeror and TCCC if
certain events occur. Subject to the provisions of the Merger Agreement and the
applicable rules and regulations of the Securities and Exchange Commission (the
"Commission"), the Offeror and TCCC expressly reserve the right to modify the
terms and conditions of the Offer. Subject to the provisions of the Merger
Agreement, including the provisions of the Merger Agreement described in the
next paragraph, and the applicable rules and regulations of the Commission, if
by the Expiration Date any or all of such conditions to the Offer have not been
satisfied, the Offeror reserves the right (but shall not be obligated) to (i)
terminate the Offer and return all tendered Shares to tendering shareholders,
(ii) waive such unsatisfied conditions and purchase all Shares validly tendered,
or (iii) extend the Offer and, subject to the terms of the Offer (including the
rights of shareholders to withdraw their Shares), retain the Shares which have
been tendered, until the termination of the Offer, as extended.
Under the terms of the Merger Agreement, the Offeror may not, without the
consent of Odwalla, (i) reduce the number of Shares subject to the Offer, (ii)
reduce the Offer Price, (iii) impose any other conditions to the Offer other
than the Offer Conditions or modify the Offer Conditions (other than to waive
any Offer Conditions to the extent permitted by the Merger Agreement) in a
manner adverse to the holders of the Shares, (iv) except as provided in the
Merger Agreement, extend the Offer, (v) change the form of consideration payable
in the Offer, or (vi) amend any other term of the Offer in a manner adverse to
the Odwalla shareholders. Notwithstanding the foregoing, the Offeror may,
without the consent of Odwalla, (i) extend the Offer, if at the scheduled or
extended expiration date of the Offer any of the Offer Conditions shall not be
satisfied or waived, until such time as such conditions are satisfied or waived,
subject in each case to any right of TCCC, the Offeror or Odwalla to terminate
the Merger Agreement pursuant to the terms thereof or (ii) extend the Offer for
any period required by any rule, regulation, interpretation or position of the
Commission or the staff thereof applicable to the Offer. Further, if the Minimum
Condition is not satisfied on any scheduled expiration date of the Offer, at the
request of Odwalla, subject to any right of the Offeror or TCCC to terminate the
Merger Agreement, the Offeror shall, and TCCC shall cause the Offeror to take
any of the actions set forth in clauses (x), (y), or (z) (provided that the
Offeror shall have complete discretion concerning which action to take): (x)
extend the Offer pursuant to the provisions of the Merger Agreement, (y) amend
the Offer in contemplation of the exercise of the Option Agreement (to the
extent the Option Agreement is exercisable at such time) to reduce the Minimum
Condition to the Option Exercise Minimum Number or (z) amend the Offer to
provide that, if (i) the Minimum Condition is not satisfied at the next
scheduled Expiration Date of the Offer (after giving effect to the issuance of
any Shares theretofore acquired by TCCC or the Offeror) and (ii) the number of
Shares tendered pursuant to the Offer and not withdrawn as of such next
scheduled Expiration Date is more than 50% of the then outstanding Shares, the
Offeror shall waive the Minimum Condition and amend the Offer to reduce the
number of Shares subject to the Offer to the Revised Minimum Number and, subject
to the prior satisfaction or waiver of the other conditions of the Offer,
purchase, on a pro rata basis, the Revised Minimum Number of Shares (it being
understood that the Offeror shall not in any event be required to accept for
payment, or pay for, any Shares less than the Revised Minimum Number of Shares
are tendered pursuant to the Offer and not withdrawn at the Expiration Date).
10
Any extension of the period during which the Offer is open, delay in
acceptance for payment or payment, termination or amendment of the Offer will be
followed, as promptly as practicable, by public announcement thereof, such
announcement in the case of an extension to be issued not later than 9:00 a.m.,
New York time, on the next business day after the previously scheduled
Expiration Date in accordance with the public announcement requirements of rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. Without limiting the
obligation of the Offeror under such rule or the manner in which the Offeror may
choose to make any public announcement, the Offeror currently intends to make
announcements by issuing a press release to the Dow Jones News Service and
making any appropriate filing with the Commission.
If, subject to the terms of the Merger Agreement, the Offeror makes a
material change in the terms of the Offer or the information concerning the
Offer, or if it waives a material condition of the Offer, the Offeror will
disseminate additional tender offer materials and extend the Offer if and to the
extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act or
otherwise. The minimum period during which a tender offer must remain open
following material changes in the terms of the Offer or the information
concerning the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
materiality of the changes. In the Commission's view, an offer should remain
open for a minimum of five business days from the date the material change is
first published, sent or given to shareholders, and, if material changes are
made with respect to information that is significant, such as the Offer Price
and the percentage of securities sought, a minimum ten business day period may
be required to allow for adequate dissemination to shareholders and investor
response. With respect to a change in price or a change in percentage of
securities sought, a minimum ten business day period is generally required to
allow for adequate dissemination to shareholders and investor response.
Odwalla has provided the Offeror with Odwalla's shareholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal and
other relevant materials will be mailed by the Offeror to record holders of
Shares whose names appear on Odwalla's shareholder list and will be furnished
for subsequent transmittal to beneficial owners of Shares to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the shareholder list or, if applicable, who are
listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment), the
Offeror will accept for payment and will pay for all Shares validly tendered and
not properly withdrawn in accordance with Section 4 prior to the Expiration Date
as soon as practicable (and in any event within five business days) after the
satisfaction or waiver of the conditions of the Offer set forth in Section 15,
including without limitation, the expiration or termination of the waiting
period applicable to the acquisition of Shares pursuant to the Offer under the
HSR Act. In addition, subject to applicable rules of the Commission, the Offeror
expressly reserves the right, in its sole discretion, to delay acceptance for
payment of or payment for Shares pending receipt of any other regulatory
approvals specified in Section 16 or to comply in whole or in part with
applicable law. Any such delays will be effected in compliance with Rule
14e-1(c) under the Exchange Act.
For information with respect to approvals required to be obtained prior to
the consummation of the Offer, including under the HSR Act, see Section 16.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
certificates evidencing such Shares ("Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in Section
3, (ii) the appropriate Letter of Transmittal, properly completed and duly
executed (or a facsimile thereof), with any required signature guarantees, or an
Agent's Message (as defined below) in connection with a book-entry transfer and
(iii) any other documents required by the Letter of Transmittal.
11
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Offeror may enforce such agreement against such participant.
Shareholders who cannot comply on a timely basis with the foregoing
procedures for acceptance of the Offer may deposit Share Certificates pursuant
to the procedures set forth below for guaranteed delivery.
For purposes of the Offer, the Offeror will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn if and when the Offeror gives oral notice followed by written notice
to the Depositary of the Offeror's acceptance for payment of such Shares
pursuant to the Offer. Upon the terms and subject to the conditions of the
Offer, payment for Shares accepted for payment pursuant to the Offer will be
made by deposit of the purchase price therefor with the Depositary, which will
act as agent for tendering shareholders for the purpose of receiving payments
from the Offeror and transmitting such payments to tendering shareholders whose
Shares have been accepted for payment. If for any reason whatsoever acceptance
for payment of or payment for any Shares tendered pursuant to the Offer is
delayed or the Offeror is unable to accept for payment or pay for Shares
tendered pursuant to the Offer, then without prejudice to the Offeror's rights
set forth herein, the Depositary may nevertheless, on behalf of the Offeror and
subject to Rule 14e-1(c) under the Exchange Act, retain tendered Shares and such
Shares may not be withdrawn except to the extent that the tendering shareholder
is entitled to and duly exercises withdrawal rights as described in Section 4
("Withdrawal Rights"). UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE
PRICE FOR SHARES BE PAID BY THE OFFEROR, REGARDLESS OF ANY EXTENSION OF THE
OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are submitted
for more Shares than are tendered, Share Certificates evidencing unpurchased or
untendered Shares will be returned without expense to the tendering shareholder
(or, in the case of Shares tendered by book-entry transfer into the Depositary's
account at the Book-Entry Transfer Facility pursuant to the procedures set forth
in Section 3, such Shares will be credited to an account maintained at the
Book-Entry Transfer Facility), as promptly as practicable following the
expiration, termination or withdrawal of the Offer.
If, prior to the Expiration Date, the Offeror increases the price being
paid for Shares accepted for payment pursuant to the Offer, such increased
consideration will be paid to all shareholders whose Shares are purchased
pursuant to the Offer, whether or not such Shares were tendered prior to such
increase in consideration.
The Offeror reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its affiliates the right to purchase all or
any portion of the Shares tendered pursuant to the Offer, but any such transfer
or assignment will not relieve the Offeror of its obligations under the Offer
and will in no way prejudice the rights of tendering shareholders to receive
payment for Shares validly tendered and accepted for payment pursuant to the
Offer.
3. PROCEDURE FOR ACCEPTING THE OFFER AND TENDERING SHARES.
Valid Tenders. Except as set forth below, for Shares to be validly
tendered pursuant to the Offer, the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, together with any required
signature guarantees, or an Agent's Message in connection with a book-entry
delivery of Shares, and any other documents required by the Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase on or prior to the Expiration
Date. In addition either (i) Share Certificates evidencing tendered Shares must
be received by the Depositary at such address or such Shares must be tendered
pursuant to the procedure for book-entry transfer described below and a Book-
Entry Confirmation must be received by the Depositary, in each case on or prior
to the Expiration Date or
12
(ii) the guaranteed delivery procedures described below must be complied with.
No alternative, conditional or contingent tenders will be accepted.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING SHAREHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
Book-Entry Transfer. The Depositary will make a request to establish an
account with respect to the Shares at the Book-Entry Transfer Facility for
purposes of the Offer. Any financial institution that is a participant in the
system of the Book-Entry Transfer Facility may make book-entry delivery of
Shares by causing the Book-Entry Transfer Facility to transfer such Shares into
the Depositary's account at the Book-Entry Transfer Facility in accordance with
the Book-Entry Transfer Facility's procedures for such transfer. However,
although delivery of Shares may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, together with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer, and any other documents required by the Letter of Transmittal, must in
any case be received by the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase on or prior to the Expiration Date, or the
tendering shareholder must comply with the guaranteed delivery procedures
described below.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE
WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO THE DEPOSITARY.
Signature Guarantees. Signatures on Letters of Transmittal must be
guaranteed by a firm which is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the Securities
Transfer Agents Medallion Program or by any other bank, broker, dealer, credit
union, savings organization or other entity which is an "eligible guarantor
institution" as such term defined in Rule 17Ad-15 under the Exchange Act (each
of the foregoing being referred to as an "Eligible Institution"), except in
cases where Shares are tendered (i) by a registered holder of Shares who has not
completed the box labeled "Special Payment Instructions" on the Letter of
Transmittal or (ii) for the account of an Eligible Institution.
If the Share Certificates are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, to a
person other than the registered holder, the tendered Share Certificate must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name of the registered holder appears on such certificates, with
the signatures on such certificates or stock powers guaranteed in the manner
described above. See Instructions 1 and 5 of the Letter of Transmittal.
If Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) must accompany each such delivery.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates evidencing such Shares are
not immediately available or such shareholder cannot deliver the Share
Certificates and all other required documents to the Depositary on or prior to
the Expiration Date, or such shareholder cannot complete the procedure for
delivery by book-entry transfer on a timely basis, such Shares may nevertheless
be tendered, provided that all of the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form made available by the Offeror is received
by the Depositary, as provided below, on or prior to the Expiration
Date; and
(iii) the Share Certificates (or a Book-Entry Confirmation), representing
all tendered Shares, in proper form for transfer, together with the
Letter of Transmittal (or a facsimile thereof) properly completed
and duly executed, with any required signature guarantees (or, in
the case of a book-
13
entry transfer, an Agent's Message) and any other documents required
by the Letter of Transmittal are received by the Depositary within
three trading days after the date of execution of such Notice of
Guaranteed Delivery. A "trading day," for purposes of the preceding
sentence, is any day on which the Nasdaq Stock Market's National
Market System (the "Nasdaq") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile transmission or mail to the Depositary and must include a guarantee
by an Eligible Institution and a representation that the shareholder owns the
Shares tendered within the meaning of, and that the tender of the Shares
effected thereby complies with, Rule 14e-4 under the Exchange Act, each in the
form set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) Share Certificates for, or of Book-Entry
Confirmation of the delivery of, such Shares, (ii) a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message), and (iii) any other documents required by the Letter of
Transmittal. Accordingly, payment might not be made to all tendering
shareholders at the same time and will depend upon when Share Certificates or
Book-Entry Confirmations of such Shares are received into the Depositary's
account at the Book-Entry Transfer Facility. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE OFFEROR,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING ANY PAYMENT.
Backup Federal Income Tax Withholding and Substitute Form W-9. Under the
"backup withholding" provisions of Federal income tax law, the Depositary may be
required to withhold 30.5% of the amount of any payments of cash pursuant to the
Offer or the Merger. In order to avoid backup withholding, each shareholder that
is a United States person as defined under U.S. federal income tax law
surrendering Shares in the Offer must, unless an exemption applies, provide the
payor of such cash with such shareholder's correct taxpayer identification
number ("TIN") on a substitute Form W-9 and certify, under penalties of perjury,
that such TIN is correct and that such shareholder is not subject to backup
withholding. If a shareholder does not provide its correct TIN or fails to
provide the certifications described above, the Internal Revenue Service ("IRS")
may impose a penalty on such shareholder and payment of cash to such shareholder
pursuant to the Offer may be subject to backup withholding of 30.5%.
All shareholders that are United States persons as defined under U.S.
federal income tax law surrendering Shares pursuant to the Offer should complete
and sign the substitute Form W-9 included in the Letter of Transmittal to
provide the information and certification necessary to avoid backup withholding
(unless an applicable exemption exists and is proved in a manner satisfactory to
the Depositary). Certain shareholders (including among others all corporations
and certain foreign individuals and entities) are not subject to backup
withholding. Foreign shareholders should complete and sign the enclosed Form
W-8BEN, Certificate of Foreign Status in order to avoid backup withholding. See
Instruction 9 of the Letter of Transmittal.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by the Offeror in its sole discretion, which
determination shall be final and binding on all parties. The Offeror reserves
the absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may in the opinion of the
Offeror be unlawful. The Offeror also reserves the absolute right to waive any
of the conditions of the Offer subject to applicable law and the limitations set
forth in the Merger Agreement, or any defect or irregularity in any tender of
Shares of any particular shareholder whether or not similar defects or
irregularities are waived in the case of other shareholders. The Offeror's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the Instructions to the Letter of Transmittal) will be final and
binding on all parties. No tender of Shares will be deemed to have been validly
made until all defects and irregularities have been cured or waived. None of the
Offeror, TCCC, any of their affiliates or
14
assigns, the Dealer Manager, the Depositary, the Information Agent or any other
person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification.
Other Requirements. By executing the Letter of Transmittal as set forth
above (including through delivery of an Agent's Message), a tendering
shareholder irrevocably appoints designees of the Offeror as such shareholder's
agent, attorneys-in-fact and proxies, each with full power of substitution, in
the manner set forth in the Letter of Transmittal, to exercise all voting and
other rights of the shareholder as each such attorney and proxy or his
substitute shall in his sole judgment deem proper, with respect to all of the
Shares tendered by such shareholder and accepted for payment by the Offeror (and
any and all other Shares or other securities issued or issuable in respect of
such Shares on or after the date of this Offer to Purchase). All such powers of
attorney and proxies will be considered irrevocable and coupled with an interest
in the tendered Shares. This appointment is effective when, and only to the
extent that, the Offeror accepts for payment the Shares in accordance with the
terms of the Offer. Upon acceptance for payment, all prior powers of attorney,
proxies and written consents granted by the shareholder at any time with respect
to such Shares or other securities or rights will, without further action, be
revoked and no subsequent powers of attorney or proxies may be given or written
consent executed by such shareholder (and, if given or executed, will not be
deemed effective). The designees of the Offeror will, with respect to the Shares
and other securities or rights, be empowered to exercise all voting and other
rights of such shareholder as they in their sole judgment deem proper in respect
of any annual or special meeting of Odwalla's shareholders, or any adjournment
or postponement thereof, any actions by written consent in lieu of any such
meeting or otherwise. In order for Shares to be deemed validly tendered,
immediately upon the Offeror's payment for such Shares, the Offeror must be able
to exercise full voting and other rights with respect to such Shares and the
other securities or rights issued or issuable in respect of such Shares,
including voting at any meeting of shareholders (whether annual or special or
whether or not adjourned) in respect of such Shares.
A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering shareholder's acceptance of the terms and
conditions of the Offer, as well as the tendering shareholder's representation
and warranty that (i) such shareholder has the full power and authority to
tender, sell, assign and transfer the tendered Shares (and any and all other
Shares or other securities issued or issuable in respect of such Shares), and
(ii) when the same are accepted for payment by the Offeror, the Offeror will
acquire good and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claims. A
tender of Shares pursuant to any of the procedures described above will
constitute the tendering shareholder's acceptance of the terms and conditions of
the Offer, as well as the tendering shareholder's representation and warranty to
the Offeror that (a) such shareholder has a net long position in such Shares
being tendered within the meaning of Rule 14e-4 under the Exchange Act and (b)
the tender of such Shares complies with Rule 14e-4 under the Exchange Act. It is
a violation of Rule 14e-4 under the Exchange Act for a person, directly or
indirectly, to tender Shares for such person's own account unless, at the time
of tender, the person so tendering (i) has a net long position equal to or
greater than the amount of (x) Shares tendered or (y) other securities
immediately convertible into or exchangeable or exercisable for the Shares
tendered and such person will acquire such Shares for tender by conversion,
exchange or exercise and (ii) will cause such Shares to be delivered in
accordance with the terms of the Offer. Rule 14e-4 provides a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person. The Offeror's acceptance for payment of Shares tendered pursuant
to the Offer will constitute a binding agreement between the tendering
shareholder and the Offeror upon the terms and subject to the conditions of the
Offer.
4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4,
tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered
pursuant to the Offer may be withdrawn at any time prior to the Expiration Date
and, unless theretofore accepted for payment pursuant to the Offer, may also be
withdrawn at any time after January 5, 2002. If acceptance of any Shares
tendered is delayed for any reason or if the Offeror is unable to accept for
payment or pay for Shares tendered pursuant to the Offer, then, without
prejudice to the Offeror's rights under the Offer, the Depositary may, on behalf
of the Offeror, retain tendered Shares, and such Shares may not be withdrawn
except to the extent that tendering shareholders are entitled to
15
and duly exercise withdrawal rights as set forth in this Section 4. Any such
delay in acceptance for payment will be accomplished by extension of the Offer
to the extent required by law.
For withdrawal of Shares tendered pursuant to the Offer to be effective, a
written or facsimile transmission notice of withdrawal must be timely received
by the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase. The facsimile number for the Depositary is 781-575-4826 or
781-575-4827. Any notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
(if certificates have been tendered) the name in which the certificates are
registered, if different from that of the person who tendered the Shares. If
certificates have been delivered or otherwise identified to the Depositary,
then, prior to the physical release of such certificates, the shareholder must
submit the serial numbers shown on the certificates evidencing the Shares to be
withdrawn to the Depositary and, unless such Shares have been tendered for the
account of an Eligible Institution, the signatures on the notice of withdrawal
must be Medallion guaranteed by an Eligible Institution. If Shares have been
tendered pursuant to the procedures for book-entry transfer set forth in Section
3, any notice of withdrawal must also specify the name and number of the account
at the Book-Entry Transfer Facility to be credited with the withdrawn Shares and
must otherwise comply with such Book-Entry Transfer Facility's procedures.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Offeror, in its sole discretion,
and its determination will be final and binding on all parties. None of the
Offeror, TCCC, the Dealer Manager, the Depositary, the Information Agent or any
other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be tendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3.
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. The following
is a summary of certain United States federal income tax consequences of the
Offer and the Merger to beneficial owners of Shares whose Shares are purchased
pursuant to the Offer or whose Shares are converted to cash in the Merger. The
discussion is for general information only and does not purport to consider all
aspects of United States federal income taxation that might be relevant to
beneficial owners of Shares. The discussion is based on current provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), proposed, temporary
and final regulations promulgated thereunder and administrative and judicial
interpretations thereof, all of which are subject to change possibly on a
retroactive basis. The discussion applies only to beneficial owners of Shares in
whose hands Shares are capital assets within the meaning of Section 1221 of the
Code, and may not apply to Shares received pursuant to the exercise of employee
stock options or otherwise as compensation, or to certain types of beneficial
owners of Shares (such as insurance companies, tax-exempt organizations, mutual
funds and broker-dealers) who might be subject to special rules. This discussion
does not discuss the United States federal income tax consequences to a
beneficial owner of Shares who, for United States federal income tax purposes,
is a non-resident alien individual, a foreign corporation, a foreign partnership
or a foreign estate or trust, nor does it consider the effect of any foreign,
state or local tax laws.
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH BENEFICIAL OWNER OF
SHARES SHOULD CONSULT SUCH BENEFICIAL OWNER'S OWN TAX ADVISOR TO DETERMINE THE
APPLICABILITY OF THE RULES DISCUSSED BELOW TO SUCH BENEFICIAL OWNER AND THE
PARTICULAR TAX EFFECTS TO SUCH BENEFICIAL OWNER OF THE OFFER AND THE MERGER,
INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER TAX LAWS.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for United States federal income tax purposes. In general,
for United States federal income tax purposes, a beneficial owner of Shares will
recognize gain or loss equal to the difference (if any) between the beneficial
owner's adjusted tax basis in the Shares sold pursuant to the Offer or converted
to cash in the Merger and the amount of cash received therefor. In general, such
gain or loss will be capital gain or loss and will be long-term capital
16
gain or loss if the beneficial owner held the Shares for more than one year as
of the date of sale (in the case of the Offer) or the Effective Time (in case of
the Merger). The excess of net long-term capital gains over net short-term
capital losses is currently taxed at a maximum rate of 20% for noncorporate
taxpayers.
Payments in connection with the Offer or the Merger might be subject to
"backup withholding" at a rate of 30.5%, unless a beneficial owner of Shares (a)
is a corporation or comes within certain exempt categories and, when required,
demonstrates this fact or (b) provides a correct TIN to the payor, certifies as
to no loss of exemption from backup withholding and otherwise complies with
applicable requirements of the backup withholding rules. A beneficial owner who
does not provide a correct TIN may be subject to penalties imposed by the
Internal Revenue Service. Any amount paid as backup withholding does not
constitute an additional tax and will be creditable against the beneficial
owner's United States federal income tax liability. Each beneficial owner of
Shares should consult with his or her own tax advisor as to his or her
qualification for exemption from backup withholding and the procedure for
obtaining such exemption. Those tendering their Shares in the Offer may prevent
backup withholding by completing the substitute Form W-9 included in the Letter
of Transmittal. Similarly, those who convert their Shares into cash in the
Merger may prevent backup withholding by completing a substitute Form W-9 and
submitting it to the paying agent for the Merger.
TCCC and the Offeror will be entitled to deduct and withhold from the
consideration otherwise payable pursuant to the Merger Agreement to any holder
of Shares such amounts as TCCC or the Offeror is required to deduct and withhold
with respect to the making of such payment. To the extent that amounts are so
withheld by TCCC or the Offeror, such withheld amounts shall be treated for all
purposes of the Merger Agreement as having been paid to the holder of the Shares
in respect of which such deduction and withholding was made by TCCC or the
Offeror.
6. PRICE RANGE OF SHARES; DIVIDENDS. According to Odwalla's Annual Report
on Form 10-K for the fiscal year ended September 2, 2000 (the "Form 10-K"), the
Shares have been traded on Nasdaq under the symbol "ODWA." The following table
sets forth, for the periods indicated, the high and low sales prices per Share
on Nasdaq as reported by the Dow Jones News Service. Odwalla did not pay any
cash dividends during such periods.
HIGH LOW
------- -------
FISCAL YEAR ENDED SEPTEMBER 2, 2000:
First Quarter............................................. $ 7.625 $ 4.313
Second Quarter............................................ $ 9.50 $ 4.625
Third Quarter............................................. $ 9.125 $ 5.25
Fourth Quarter............................................ $ 8.00 $ 5.875
FISCAL YEAR ENDED SEPTEMBER 1, 2001:
First Quarter............................................. $11.50 $ 6.25
Second Quarter............................................ $10.625 $ 8.563
Third Quarter............................................. $10.59 $ 8.75
Fourth Quarter............................................ $11.00 $ 7.30
FISCAL YEAR ENDING AUGUST 31, 2002:
First Quarter (through November 5, 2001).................. $15.21 $ 5.51
On October 29, 2001, the last full trading day prior to announcement of the
Merger Agreement, the last reported closing sales price of the Shares on Nasdaq
was $11.83 per Share. On November 5, 2001, the last full trading day before
commencement of the Offer, the last reported closing sales price of the Shares
on Nasdaq was $15.15 per Share. SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT
MARKET QUOTATION FOR THE SHARES.
Odwalla has not declared or paid any dividends on the Shares since its
initial public offering.
7. CERTAIN INFORMATION CONCERNING ODWALLA. Odwalla began operations in
September 1980 and was incorporated in California in September 1985.
17
Odwalla's business is to provide easy access to great tasting nourishment.
Odwalla is the nation's leading branded super-premium beverage company,
delivering nourishment coast to coast with the Odwalla and Samantha lines of
more than 45 all natural juices, smoothies, dairy-free shakes, spring water and
natural food bars. Odwalla's beverage product lines appeal to many consumers
because of the superior taste of minimally processed beverages and greater
nutritional value compared to juice from concentrate or with artificial flavors.
Odwalla products are currently sold in over 30 states. Odwalla's nourishing food
bars are available in additional states and can also be purchased online through
Odwalla's website.
Set forth below is certain selected financial information with respect to
Odwalla excerpted from the information contained in Odwalla's Annual Reports on
Form 10-K for the fiscal years ended September 2, 2000 and August 28, 1999 (the
"Odwalla 10-Ks") and Odwalla's Quarterly Reports on Form 10-Q for the periods
ended June 2, 2001 and May 27, 2000 (the "Odwalla 10-Qs"). More comprehensive
financial information is included in the Odwalla 10-Ks and Odwalla 10-Qs and
other documents filed by Odwalla with the Commission. The following summary is
qualified in its entirety by reference to the Odwalla 10-Ks, the Odwalla 10-Qs
and such other documents and all the financial information (including any
related notes) contained therein. The financial statements include the accounts
of Odwalla and Fresh Samantha, Inc., Fresh Samantha Juice Bars, Inc.
(collectively, "Fresh Samantha") and Odwalla Canada, Inc. The accounts of Fresh
Samantha are included since May 2, 2000, the date of acquisition. The Odwalla
10-Ks, the Odwalla 10-Qs and such other documents are available for inspection
and copies thereof are obtainable in the manner set forth below under "Available
Information."
ODWALLA, INC.
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS)
THIRTY-NINE
WEEKS ENDED,
FISCAL YEAR -----------------
--------------------------- JUNE 2, MAY 27,
2000 1999 1998 2001 2000
------- ------- ------- ------- -------
(UNAUDITED)
Statement of Operations Data:
Net Sales.................................. $93,450 $68,042 $59,088 $97,975 $60,541
Income (loss) from operations.............. 1,036 (2,361) (1,241) (161) 187
Net income (loss).......................... 3,655 (2,042) (1,379) (169) 3,121
Balance Sheet Data:
Current assets............................. $28,318 $20,337 $13,866 $28,340 $26,269
Total assets............................... 89,354 35,305 29,350 90,194 78,573
Total shareholders' equity................. 60,672 14,449 16,445 60,720 60,138
On November 6, 2001, Odwalla issued the following press release, according
to published sources:
(HALF MOON BAY, CALIF., NOVEMBER 6, 2001) -- Odwalla, Inc. (NASDAQ: ODWA)
today announced financial results for its thirteen-week fourth quarter ended
September 1, 2001. Fourth quarter net sales were $30.6 million, a 1% increase
over the same quarter in the prior year on a thirteen-week comparative basis.
Odwalla's fourth quarter of fiscal 2000 was a fourteen-week period and reported
net sales of $32.9 million.
"In the fourth quarter, we continued to maintain a strong balance sheet and
had substantial growth in EBITDA compared to the prior year," said Stephen
Williamson, Chairman and CEO. "However, our sales growth rates declined in some
parts of the country due to the slowing of the economy. Our business of
providing people with easy access to great tasting nourishment is as powerful as
ever. We look forward to the acquisition of Odwalla by The Coca-Cola Company
under the terms of the merger agreement we signed with The Coca-Cola Company
last week. The Coca-Cola Company believes in our vision, our products and our
people. We believe the acquisition will allow us to continue Odwalla's
entrepreneurial spirit and bringing our vision to more people with the support
and experience that Coca-Cola can provide."
18
Gross profit for the fourth quarter was 50.4% of net sales compared to
50.6% for the same period last year. The prior quarter had fourteen weeks
compared to the thirteen weeks of the current year, allowing fixed costs to be
spread over a larger sales base in the prior year. The fixed cost impact was
partially offset by improved variable costs resulting from investments made in
the Dinuba production facility.
Sales and distribution costs for the fourth quarter were 36.6% of net sales
compared to 33.4% for the same period last year. The increase reflects continued
investments in our overall sales and distribution organization, resulting
primarily from the merger with Fresh Samantha, Inc. in May 2000. The prior
quarter had fourteen weeks compared to the thirteen weeks of the current year,
allowing fixed costs to be spread over an additional week in the prior year. We
expect to continue to invest in our sales and distribution organization in
fiscal 2002.
Marketing and general and administrative expenses for the quarter were $3.5
million or 11.5% of net sales compared to $4.2 million or 12.9% of net sales for
the same period last year. The decrease results from transitional costs last
year associated with the acquisition of Fresh Samantha in May 2000, a reduction
in expenses this quarter in discretionary areas, and the impact in the prior
year of fourteen weeks of activity compared to thirteen weeks this year.
Amortization of intangible assets acquired with the Fresh Samantha merger
resulted in a $577,000 expense this quarter compared to $581,000 for the same
quarter last year.
Operating income for the quarter, excluding amortization of intangible
assets from the Fresh Samantha acquisition, was $713,000 compared to $1.4
million in the same period last year. Net income before taxes for the quarter
was $222,000 or $0.02 per basic and diluted share compared to a net income
before taxes of $843,000 or $0.08 per basic and diluted share for the same
period last year. The effective tax rate in the current year results from the
accounting for the Fresh Samantha acquisition, which was structured as a tax-
free reorganization for income tax purposes. As a result, there remains a
permanent difference between the financial accounting basis and the income tax
reporting basis of goodwill.
Net sales for fiscal 2001 were $128.3 million or 37.2% higher than the
$93.5 million of net sales last year, the increase due to the acquisition of
Fresh Samantha and the growth of Odwalla branded products. Gross profit was
51.9% compared to 49.2% last year. The increase was due primarily to the end of
the impact of the December 1998 California citrus freeze and the benefits from
the investments in the Dinuba production facility, both reflected over the past
two years.
Sales and distribution costs for fiscal 2001 were 35.5% of net sales
compared to 34.0% for last year, the increase primarily due to investment in our
organization and higher costs in our East Coast markets. Marketing and general
and administrative expenses were $15.2 million compared to $12.4 million last
year, the increase primarily due to systems infrastructure improvements and the
acquisition of Fresh Samantha. Amortization of intangible assets acquired with
the Fresh Samantha merger resulted in a $2.3 million expense for fiscal 2001
compared to $711,000 last year, reflecting the completion of the merger in May
2000. Net income, excluding the restructuring and other charges recorded in the
second quarter of this year, was $1.7 million or $0.15 per basic share and
diluted share for this year, compared to net income of $603,000 or $0.09 per
basic share and $0.08 per diluted share last year, excluding, net of tax, the
insurance settlement proceeds, the cost of converting the Series A preferred
stock and the preferred stock dividend. After considering the restructuring and
other charges and the unusual effective tax rate discussed above, the net loss
for fiscal 2001 was $434,000 or $.04 per share.
Odwalla, Inc. (NASDAQ: ODWA), the nation's leading branded super-premium
beverage company, delivers nourishment coast to coast with the Odwalla and
Samantha lines of all-natural juices, smoothies, dairy-free regular and
chocolate milk, dairy-free shakes, spring water and natural food bars. To learn
more about the Odwalla and Samantha brands, please visit us at www.odwalla.com
and at www.freshsamantha.com.
This press release contains forward-looking statements, including
statements regarding the investment in Odwalla's facilities and organization and
the completion of the transaction with The Coca-Cola Company that involve
certain risks and uncertainties. Our actual results could differ materially from
those anticipated in these forward-looking statements as a result of factors and
risks, including without limitation, those factors and risks regarding our
products, distribution and business expansion, described in documents filed
periodically with the Securities and Exchange Commission including our last
annual report on Form 10-K, filed in November 2000, and changes in economic and
political conditions. The annual report and other documents
19
contain and identify important factors that could cause the actual results to
differ materially from those contained in our projections or forward-looking
statements. The completion of the acquisition by The Coca-Cola Company is
subject to the satisfaction or waiver of the various conditions to the
acquisition set forth in the Agreement and Plan of Merger, dated as of October
29, 2001, among Odwalla, The Coca-Cola Company and TCCC Acquisition Corp. (the
"Merger Agreement").
This press release is neither an offer to purchase nor a solicitation of an
offer to sell shares of Odwalla in connection with the acquisition of Odwalla
common stock pursuant to the terms of the tender offer by The Coca-Cola Company
and TCCC Acquisition Corp. under the terms of the Merger Agreement, or
otherwise. At the time the tender offer is commenced, The Coca-Cola Company will
file a tender offer statement with the Securities and Exchange Commission (the
"SEC") and Odwalla will file a solicitation/recommendation statement with
respect to the tender offer. Odwalla shareholders are advised to read the tender
offer statement regarding the acquisition of Odwalla by The Coca-Cola Company
referenced in this press release, and the related solicitation/recommendation
statement. The tender offer statement (including an offer to purchase, letter of
transmittal and related tender documents) and the solicitation/recommendation
statement will contain important information which should be read carefully
before any decision is made with respect to the tender offer. These documents
will be made available to all shareholders of Odwalla at no expense to them.
These documents will also be available to all Odwalla shareholders at no charge
on the SEC's web site at www.sec.gov.
20
ODWALLA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
14 WEEKS 13 WEEKS 53 WEEKS 52 WEEKS
SEPT. 2, SEPT. 1, SEPT. 2, SEPT. 1,
2000 2001 2000 2001
-------- -------- -------- --------
Net sales......................................... $32,909 $30,585 $93,450 $128,260
Cost of sales..................................... 16,248 15,174 47,477 61,723
------- ------- ------- --------
Gross profit.................................... 16,661 15,411 45,973 66,537
------- ------- ------- --------
Operating expenses
Sales and distribution.......................... 10,989 11,186 31,815 45,574
Marketing....................................... 936 846 2,795 3,672
General and administrative...................... 3,306 2,666 9,616 11,518
Amortization of intangible assets from Fresh
Samantha acquisition......................... 581 577 711 2,308
------- ------- ------- --------
Total operating expenses before restructuring
and other charges............................ 15,812 15,275 44,937 63,072
------- ------- ------- --------
Income from operations before restructuring and
other charges................................... 849 136 1,036 3,465
Restructuring and other charges................. -- -- -- 3,490
------- ------- ------- --------
Income (loss) from operations..................... 849 136 1,036 (25)
Proceeds from insurance settlement, net of legal
fees............................................ -- -- 5,458 --
Series A preferred stock inducement expense to
convert to common stock......................... -- -- (1,587) --
Interest and other income (expense), net.......... (6) 86 (112) (211)
------- ------- ------- --------
Income (loss) before income taxes................. 843 222 4,795 (236)
Income tax expense................................ (309) (487) (1,140) (198)
------- ------- ------- --------
Net income (loss)................................. 534 (265) 3,655 (434)
Preferred stock dividend.......................... -- -- (568) --
------- ------- ------- --------
Net income (loss) applicable to common
shareholders.................................... $ 534 $ (265) $ 3,087 $ (434)
======= ======= ======= ========
Net income (loss) applicable to common
shareholders after stock dividend --
Basic........................................... $ 0.05 $ (0.02) $ 0.44 $ (0.04)
======= ======= ======= ========
Diluted......................................... $ 0.05 $ (0.02) $ 0.43 $ (0.04)
======= ======= ======= ========
Shares used in per share amounts
Basic........................................... 11,032 11,079 7,074 11,058
======= ======= ======= ========
Diluted......................................... 11,115 11,079 7,134 11,058
======= ======= ======= ========
21
ODWALLA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
SEPTEMBER 2, SEPTEMBER 1,
2000 2001
------------ ------------
Current assets
Cash, cash equivalents and short-term investments......... $ 5,392 $ 4,364
Trade accounts receivable................................. 11,599 12,605
Inventories............................................... 6,705 6,913
Prepaid expenses and other................................ 2,357 3,077
Deferred tax asset........................................ 2,265 2,725
------- -------
Total current assets.............................. 28,318 29,684
Plant, property and equipment, net.......................... 20,011 23,789
Total other assets.......................................... 41,025 37,612
------- -------
$89,354 $91,085
======= =======
Current liabilities
Accounts payable.......................................... $ 9,139 $ 9,322
Other accrued liabilities................................. 4,926 4,651
Line of credit............................................ 1,950 1,987
Current maturities of capital lease obligations and
long-term debt......................................... 591 1,632
------- -------
Total current liabilities......................... 16,606 17,592
Long-term liabilities
Capital lease obligations and long-term debt and other
liabilities, less current maturities................... 1,780 3,107
Deferred tax liability.................................... 10,296 9,906
------- -------
Total liabilities................................. 28,682 30,605
Shareholders' equity........................................ 60,672 60,480
------- -------
$89,354 $91,085
======= =======
Odwalla Projections. Prior to entering into the Merger Agreement, TCCC
conducted a due diligence review of Odwalla and in connection with such review
received certain non-public information provided by Odwalla, including certain
projected financial information (the "Projections") for the fiscal years 2002,
2003 and 2004. The Projections include expectations of (i) net sales of $153.2
million, $188.7 million and $233.9 million, (ii) gross profit of $83.1 million,
$104.1 million and $125.3 million, (iii) earnings before interest and taxes of
$8.4 million, $15.2 million and $23.3 million and (iv) earnings before interest,
taxes, depreciation and amortization of $16.9 million, $24.2 million and $32.9
million, each for the fiscal years 2002, 2003 and 2004, respectively. Odwalla
does not in the ordinary course publicly disclose projections, and the
Projections were not prepared with a view to public disclosure. In addition, the
Projections were prepared prior to the events in New York City and Washington,
D.C. on September 11, 2001 and the aftermath of such events. None of Odwalla,
TCCC or the Offeror intends to, and specifically declines any obligation to,
update or otherwise revise the Projections to reflect circumstances existing
since their preparation or to reflect the occurrence of unanticipated events,
even if any or all of the Projections are shown to be in error. Also, none of
Odwalla, TCCC or the Offeror intends to, and specifically declines any
obligation to, update or revise the Projections to reflect changes in general
economic or industry conditions. Odwalla has advised TCCC and the Offeror that
the Projections reflect significant assumptions and subjective judgments by
Odwalla's management regarding industry performance and general business and
economic conditions. The Projections do not give effect to the Offer or the
potential combined operations of TCCC and Odwalla. The Projections are included
for the limited purpose of giving the holders of the Shares access to the
material financial projections prepared by Odwalla's management that were made
available to TCCC and the Offeror in connection with the Merger Agreement and
the Offer. The inclusion of the Projections herein should not be regarded as an
indication that TCCC, the Offeror or Odwalla considered or consider the
Projections to be reliable predictions of future events and the Projections
should not be relied upon as such.
The Projections were prepared for the limited purpose of managing the
operating plan of Odwalla for the fiscal year 2001. While presented with
numerical specificity, the Projections are based upon a variety of
22
estimates and hypothetical assumptions which may not be accurate, may not be
realized, and are also inherently subject to significant business, economic and
competitive uncertainties and contingencies, all of which are difficult to
predict, and most of which are beyond the control of Odwalla, TCCC or the
Offeror. Furthermore, it is expected that there will be differences between
actual and projected results. Accordingly, there can be no assurance that any of
the Projections will be realized and the actual results may vary materially from
those shown above. In addition, the Projections were not prepared in accordance
with guidelines of the Commission, generally accepted accounting principles or
the guidelines established by the American Institute of Certified Public
Accountants regarding projections or forecasts, and neither Odwalla's nor TCCC's
independent accountants have examined or compiled any of the Projections or
expressed any conclusion or provided any other form of assurance with respect to
the Projections and accordingly assume no responsibility for, and disclaim any
association with, the Projections. The Projections should be read in conjunction
with the historical financial information of Odwalla included above and in the
reports and other documents of Odwalla that may be obtained from the offices of
the Commission in the manner set forth below under "Available Information." None
of TCCC, the Offeror or any other person assumes any responsibility for the
accuracy, completeness or validity of the foregoing Projections.
Certain matters discussed and statements made herein may constitute
forward-looking statements within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), and the Exchange Act, as amended by the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements are
not guarantees of future performance and involve risks and uncertainties and
actual results may differ materially from those contemplated by such
forward-looking statements. Forward-looking statements include the information
set forth in "Odwalla Projections." Forward-looking statements also include
those preceded by, followed by or that include the words "believes", "expects",
"anticipates" or similar expressions. Such statements should be viewed with
caution.
Available Information. Odwalla is subject to the informational filing
requirements of the Exchange Act and in accordance therewith is obligated to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information as of particular dates concerning Odwalla's directors and officers,
their remuneration, options granted to them, the principal holders of Odwalla's
securities and any material interest of such persons in transactions with
Odwalla is required to be disclosed in such proxy statements and distributed to
Odwalla's shareholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission located at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and may also be available for
inspection and copying at prescribed rates. Such reports, proxy statements and
other information may also be obtained at the Web site that the Commission
maintains at http://www.sec.gov. Copies of this material may also be obtained by
mail, upon payment of the Commission's customary fees, from the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. Except as
otherwise noted in this Offer to Purchase, all of the information with respect
to Odwalla set forth in this Offer to Purchase has been derived from publicly
available information.
8. CERTAIN INFORMATION CONCERNING THE OFFEROR AND TCCC. The Offeror, a
California corporation and a wholly owned subsidiary of TCCC, was newly
organized in connection with the Offer and has not carried on any activities to
date other than those incident to its formation and commencement of the Offer.
The Offeror and TCCC have their principal executive offices at One Coca-Cola
Plaza, Atlanta, Ga. 30313. The telephone number for the Offeror and TCCC at such
offices is (404) 676-2121. TCCC owns 100% of the outstanding capital stock of
the Offeror.
TCCC is the largest manufacturer, distributor and marketer of soft drink
concentrates and syrups in the world. Finished beverage products bearing TCCC's
trademarks, sold in the United States since 1886, are now sold in nearly 200
countries and include the leading soft drink products in most of these
countries.
TCCC's business is nonalcoholic beverages, principally soft drinks, but
also a variety of noncarbonated beverages, including juice and juice-drink
products. TCCC is one of numerous competitors in the commercial beverages
market. Of the approximately 48 billion beverage servings of all types consumed
worldwide every day, beverages bearing TCCC's trademarks account for more than
one billion.
23
TCCC was incorporated in September 1919 under the laws of the State of
Delaware and succeeded to the business of a Georgia corporation with the same
name that had been organized in 1892.
The name, citizenship, business address, principal occupation or
employment, and five-year employment history of each of the directors and
executive officers of the Offeror and TCCC and certain other information are set
forth in Annex I hereto. Except as described in this Offer to Purchase and in
Annex I hereto, none of TCCC, the Offeror or, to the best knowledge of such
corporations, any of the persons listed on Annex I to the Offer of Purchase has
during the last five years (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) been a party to
any judicial or administrative proceeding (except for matters that were
dismissed without sanction or settlement) that resulted in a judgment, decree or
final order enjoining the person from future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.
Except as provided in the Merger Agreement, the Option Agreement, the
Tender Agreements or as otherwise described in this Offer to Purchase, (i) none
of the Offeror, TCCC nor, to the best knowledge of the Offeror and TCCC, any of
the persons listed in Annex I to this Offer to Purchase or any associate or
majority owned subsidiary of the Offeror, TCCC or any of the persons so listed,
beneficially owns or has any right to acquire any Shares and (ii) none of the
Offeror, TCCC nor, to the best knowledge of the Offeror and TCCC, any of the
persons or entities referred to above nor any director, executive officer or
subsidiary of any of the foregoing has effected any transaction in the Shares
during the past 60 days.
Except as provided in the Merger Agreement, the Option Agreement or the
Tender Agreements and as otherwise described in this Offer to Purchase, none of
the Offeror, TCCC nor, to the best knowledge of the Offeror and TCCC, any of the
persons listed in Annex I to this Offer to Purchase, has any agreement,
arrangement, understanding, whether or not legally enforceable, with any other
person with respect to any securities of Odwalla, including, but not limited to,
the transfer or voting of such securities, joint venture, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss or the
giving or withholding of proxies, consents or authorizations. Except as set
forth in this Offer to Purchase, neither the Offeror nor TCCC nor, to the best
knowledge of the Offeror and TCCC, any of the persons listed on Annex I hereto,
has had any transaction with Odwalla or any of its executive officers, directors
or affiliates that is required to be reported under the rules and regulations of
the Commission applicable to the Offer. Except as set forth in this Offer to
Purchase, there have been no negotiations, transactions or material contacts
between any of Offeror, TCCC, or any of their respective subsidiaries or, to the
best knowledge of the Offeror and TCCC, any of the persons listed in Annex I to
this Offer to Purchase, on the one hand, and Odwalla or its affiliates, on the
other hand, concerning a merger, consolidation or acquisition, tender offer for
or other acquisition of any class of Odwalla's securities, an election of
Odwalla's directors or a sale or other transfer of a material amount of assets
of Odwalla.
Available Information. TCCC is subject to the informational filing
requirements of the Exchange Act and in accordance therewith is obligated to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information as of particular dates concerning TCCC's directors and officers,
their remuneration, options granted to them, the principal holders of TCCC's
securities and any material interest of such persons in transactions with TCCC
is required to be disclosed in such proxy statements and distributed to TCCC's
shareholders and filed with the Commission. Such reports, proxy statements and
other information should be available for inspection at the public reference
facilities of the Commission located in Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and may also be available for inspection and copying at
prescribed rates. Such reports, proxy statements and other information may also
be obtained at the Web site that the Commission maintains at http://www.sec.gov.
Copies of this material may also be obtained by mail, upon payment of the
Commission's customary fees, from the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549.
9. SOURCE AND AMOUNT OF FUNDS. The Offer is not conditioned upon any
financing arrangements. The Offeror estimates that the total amount of funds
required to purchase all outstanding Shares (on a Fully Diluted Basis) pursuant
to the Offer, to repay outstanding indebtedness and to pay fees and expenses and
other obligations related to the Offer and the Merger will be approximately
$192.5 million. The Offeror plans to obtain all funds needed for the Offer and
the Merger through capital contributions or advances made by
24
TCCC. TCCC plans to obtain the funds for such capital contributions or advances
from its available cash and from working capital.
While the foregoing represents the current intention of TCCC and the
Offeror with respect to such funds, such financial arrangements may change
depending on such factors as TCCC and the Offeror may deem appropriate.
10. BACKGROUND OF THE OFFER; CONTACTS WITH ODWALLA.
In November 2000, at TCCC's request, a representative of TCCC met with
Stephen Williamson, the Chairman of the Board and Chief Executive Officer of
Odwalla, and Jim Steichen, Chief Financial Officer of Odwalla, and held informal
discussions. During this brief meeting, TCCC and Odwalla discussed their future
business plans in a general manner. At the conclusion of the meeting, Mr.
Williamson indicated that TCCC could contact Odwalla at a future date if TCCC
believed it was in either party's best interest.
In January 2001 and in March 2001, representatives of TCCC made inquiries
of Mr. Williamson to learn more about Odwalla. Mr. Williamson met with and had
informal discussions with representatives of TCCC. During those discussions,
TCCC indicated that it was TCCC's belief that bringing Odwalla into the TCCC
family would greatly enhance the probability of achieving Odwalla's potential.
The TCCC representatives explored generally with Mr. Williamson whether Odwalla
would be interested in a possible strategic relationship with TCCC, although no
specific terms or conditions were discussed. Mr. Williamson stated that Odwalla
was not interested in pursuing a strategic transaction and preferred to pursue
independently its business objectives. Mr. Williamson indicated, though, that
the management and Board of Directors of Odwalla would give due consideration to
any proposal deemed to be in the best interest of the Odwalla shareholders.
Also, during this period, TCCC engaged Morgan Stanley & Co. Incorporated
("Morgan Stanley") to act as its financial advisor in connection with any
potential transaction with Odwalla.
In June 2001, several directors and officers of Odwalla met with
representatives of several investment banks to discuss strategic options
available to Odwalla and to consider whether Odwalla should retain an investment
bank.
In early August 2001, representatives of TCCC approached DrKW, which was
one of the investment banks with which Odwalla previously had discussions
regarding Odwalla's strategic options. TCCC's representatives expressed an
interest in discussing a possible cash acquisition of Odwalla for a price per
outstanding Share in the range of $12.00 to $13.00. Following discussions
between DrKW and Stephen Williamson, who had consulted with members of the Board
of Directors, DrKW indicated to representatives of TCCC that Odwalla was
unwilling to entertain discussions regarding a possible transaction between TCCC
and Odwalla at the range of values suggested by TCCC. DrKW, however, indicated
that Odwalla might be willing to entertain further discussions with TCCC if TCCC
were interested in a possible acquisition of Odwalla at a value range in excess
of $15 per Share.
In late August 2001, discussions renewed. After extensive discussions,
representatives of TCCC indicated to DrKW that TCCC would increase its
preliminary indication of interest to $15.50 for each outstanding Share, subject
to satisfactory completion by TCCC of due diligence, the negotiation of a
mutually satisfactory Merger Agreement and related documentation and
satisfaction of mutually acceptable closing conditions. TCCC stated that its
willingness to consider a possible transaction at this price was absolutely
conditioned upon Odwalla's willingness to negotiate exclusively with TCCC for a
period of time to complete a transaction and upon the willingness of the large
shareholders of Odwalla to provide their unconditional support of the
transaction. During these discussions, DrKW sought to encourage TCCC to increase
the price reflected in TCCC's preliminary indication of interest above $15.50
per Share, but TCCC was unwilling to do so.
In late August 2001, Odwalla received a draft indication of interest and a
draft confidentiality agreement from TCCC. From August 31 through September 4,
2001, legal counsel to Odwalla, Morrison & Foerster, LLP, reviewed the terms of
the draft indication of interest and the draft confidentiality agreement, and
negotiated the terms of the draft confidentiality agreement with legal counsel
to TCCC, King & Spalding.
On September 4, 2001, the Board of Directors met via teleconference to
discuss the TCCC indication of interest. Representatives of DrKW reviewed the
draft indication of interest from TCCC for the benefit of the
25
Board of Directors. The Board of Directors authorized its senior management to
enter into discussions with TCCC, negotiate a confidentiality agreement with
TCCC and proceed with appropriate due diligence efforts.
On September 5, 2001, the Board of Directors met via teleconference to
discuss the terms of the proposed confidentiality agreement with TCCC, the form
of which had been negotiated over the past week (the "Confidentiality
Agreement"), and the process, timing, structure and terms of a potential
transaction with TCCC. The Board of Directors considered and reviewed with
representatives from DrKW and Morrison & Foerster the various provisions of the
proposed Confidentiality Agreement and the draft indication of interest from
TCCC. The Board of Directors also discussed the provisions of the
Confidentiality Agreement including, among other provisions, a thirty day
exclusivity period during which Odwalla and principal shareholders of Odwalla
(the "Principal Shareholders") would agree, subject to the terms and conditions
of the Confidentiality Agreement, not to solicit, encourage or engage in any
discussion or negotiations with, or provide any information to, or otherwise
cooperate with, encourage or assist, any person or entity regarding any
acquisition transaction. After a lengthy discussion, the Board of Directors
authorized the senior management of Odwalla to enter into the Confidentiality
Agreement with TCCC in substantially the form presented to the Board of
Directors.
On September 7, 2001, TCCC submitted a written non-binding indication of
interest to the Board of Directors proposing a transaction in which Odwalla
shareholders would receive $15.50 in cash per Share, subject to satisfactory
completion by TCCC of due diligence, the negotiation of a mutually satisfactory
Merger Agreement and related documentation and satisfaction of mutually
acceptable closing conditions. Also on September 7, TCCC, Odwalla and the
Principal Shareholders entered into the Confidentiality Agreement with a thirty
day exclusivity period ending October 7, 2001.
Following September 7, 2001 and throughout the month of September 2001,
TCCC proceeded with its financial, legal and operational due diligence review of
Odwalla. Due to delays caused by the aftermath of terrorist attacks in New York
and Washington D.C. on September 11, 2001, TCCC requested, and Odwalla and the
Principal Shareholders granted, an extension of the exclusivity period,
ultimately through October 31, 2001 in order to continue negotiations and
complete due diligence. Between October 1 and 26, 2001, TCCC conducted
additional financial, legal and operational due diligence.
On September 13, 2001, King & Spalding delivered a proposed Merger
Agreement and, on September 14, 2001, delivered a proposed form of voting
agreement to Morrison & Foerster. Morrison & Foerster and legal counsel to the
Principal Shareholders began reviewing the Merger Agreement and form of voting
agreement. During the period from September 13, 2001 to September 25, 2001,
Morrison & Foerster discussed the proposed Merger Agreement and form of voting
agreement with counsel to the Principal Shareholders and senior management of
Odwalla.
On September 25, 2001, Morrison & Foerster delivered revised drafts of the
proposed Merger Agreement and form of voting agreement to King & Spalding which,
among other things, rejected the provisions that limited the Board of Directors'
ability to consider alternative offers. Odwalla objected to the limitations in
the TCCC draft, especially in combination with the proposed form of voting
agreement, which would require the Principal Shareholders and certain other
large shareholders to support the transaction with TCCC even if a more
attractive offer to purchase Odwalla were made. The revised draft delivered by
Morrison & Foerster on behalf of Odwalla provided that the Board of Directors
could consider alternative offers and provide information to third parties in
connection with alternative proposals received by Odwalla. If a more attractive
offer were made following the exercise of those rights, Odwalla could also elect
to terminate the Merger Agreement, which termination would, in turn, trigger the
termination of the proposed form of voting agreement. The draft provided by
Morrison & Foerster also limited the conditions to TCCC's obligations to close
and the ability of TCCC to terminate the Merger Agreement, in each case, in
order to provide Odwalla with more certainty that the proposed transaction, if
agreed to, would be consummated.
On September 27, 2001 Morrison & Foerster and King & Spalding commenced
negotiations of the proposed Merger Agreement and form of voting agreement.
On October 5, 2001, King & Spalding delivered a revised draft of the
proposed Merger Agreement to Morrison & Foerster. The revised draft again
limited the Board of Directors' ability to consider alternative
26
proposals or provide information in connection with an alternative proposal, and
provided that Odwalla could not terminate the Merger Agreement if a more
attractive offer was made. King & Spalding expressed TCCC's view that TCCC would
not agree to pursue the transaction unless the Principal Shareholders and
certain other large shareholders were committed to support the transaction with
TCCC even if a more attractive offer to purchase Odwalla were made. TCCC also
required more flexibility in its right to terminate the Merger Agreement,
especially in connection with events or developments at Odwalla prior to the
consummation of the Merger.
On October 12, 2001, Morrison & Foerster delivered revised drafts of the
proposed Merger Agreement and voting agreement to King & Spalding, which
revisions included structuring the acquisition of Odwalla as a tender offer
followed by a second-step merger. Under the tender offer structure proposed,
although Odwalla would retain certain rights with respect to considering
alternative proposals, the rights of termination of the parties were limited,
and TCCC could consummate the acquisition of Odwalla more quickly. The proposed
structure thus alleviated the concerns of both parties in connection with the
risks associated with not consummating the transaction once it was publicly
announced.
On October 17, 2001, King & Spalding delivered a revised draft of the
proposed Merger Agreement to Morrison & Foerster. The revised draft did not
reflect a tender offer structure and again included limitations on the Board of
Directors' ability to consider alternative offers and did not allow Odwalla to
terminate the Merger Agreement if the Board determined an alternative offer was
superior. The revised draft also continued to provide TCCC with broad
termination rights. King & Spalding emphasized to Morrison & Foerster that the
premium offered to Odwalla justified the terms dictated by TCCC and that TCCC
would not proceed without limitations on Odwalla's ability to consider other
offers and the unconditional support of the transaction by the Principal
Shareholders and certain other large shareholders.
On Friday, October 19, 2001, Beverage Digest published an article that
speculated that TCCC was in talks to acquire Odwalla. The Wall Street Journal
published a similar article on Monday, October 22, 2001. Neither Odwalla nor
TCCC commented on the rumors. On October 22, 2001, the price of the Shares rose
$3.25 from its closing price on October 19, 2001 to close at $10.05.
During the week of October 22, 2001, DrKW received communications from
representatives of two investment banks, each representing an interested
potential acquiror of Odwalla. DrKW indicated to the investment banks that DrKW
was not in a position at that time to discuss the matter with the investment
banks. Neither investment bank nor their principals made any further inquiries
or made any oral or written proposals to DrKW or to Odwalla.
On October 24, 2001, King & Spalding delivered a revised draft Merger
Agreement, stock option agreement and form of tender agreement to be entered
into by the Principal Shareholders and certain other large shareholders to
Morrison & Foerster reflecting a tender offer structure followed by a
second-step merger. The revised draft did not alter TCCC's position as to
Odwalla's ability to consider alternative actions or TCCC's ability to terminate
the Merger Agreement.
On October 25, 2001, the Board of Directors met via teleconference, with
representatives of DrKW and Morrison & Foerster in attendance. Representatives
of DrKW and Morrison & Foerster reviewed and discussed the principal issues in
the proposed Merger Agreement and related documentation and the respective
positions of Odwalla and TCCC as to each principal issue. Representatives of
DrKW discussed the two inquiries from potential acquirors and indicated that the
communications were only expressions of interest and that no terms were
discussed. The Board of Directors considered the potential value and risks
associated with exploring these inquiries after the expiration of the
exclusivity period. The Board of Directors considered the recent rise in the
price of the Shares to between $10 and $11 per Share which followed the Beverage
Digest and The Wall Street Journal articles referring to Odwalla's discussions
with TCCC. Morrison & Foerster discussed the fiduciary duties of the Board of
Directors in considering the proposed transaction with TCCC. After discussion,
the Board of Directors authorized senior management to continue negotiations
with TCCC.
Late on October 25, 2001, Morrison & Foerster delivered revised drafts of
the Merger Agreement, the tender agreement and the stock option agreement to
King & Spalding which again proposed, among other
27
changes, broader rights for the Board of Directors to consider alternative
offers and limited TCCC's ability to terminate the Merger Agreement prior to
consummation of the proposed tender offer or merger.
On the morning of October 26, 2001, representatives of Odwalla, Morrison &
Foerster and DrKW held a conference call with representatives of TCCC and King &
Spalding during which due diligence concerns and the principal unresolved terms
of the transaction were discussed.
Subsequently, on October 26, 2001, the Board of Directors met twice via
teleconference, with representatives of DrKW and Morrison & Foerster in
attendance at each telephonic meeting. During the first meeting the Board of
Directors discussed with representatives from DrKW and Morrison & Foerster the
results of the conference call that morning with representatives from TCCC and
its advisors and counsel. Representatives from DrKW reported that after the
morning call with representatives of TCCC, its counsel and financial advisor,
DrKW received a call from Morgan Stanley in which Morgan Stanley reported that,
based upon TCCC's due diligence and the effects on general economic conditions
resulting from the events in New York and Washington, D.C., on September 11,
2001, and the aftermath of such events, TCCC was only willing to pay $14.50 per
share. Morgan Stanley also reiterated that TCCC's willingness to consider a
possible transaction at this price was absolutely conditioned upon, among other
things, the willingness of the Principal Shareholders and certain other large
shareholders to provide their unconditional support of the transaction.
Representatives from Morrison & Foerster reported that in calls with King &
Spalding, it appeared that TCCC would be willing to compromise on several of the
provisions of the agreements under discussion if the price could be agreed upon
and if the Principal Shareholders and certain other large shareholders agreed to
provide their unconditional support of the transaction.
The Board of Directors had a lengthy discussion of the reduction in
purchase price and compromise terms proposed by King & Spalding on behalf of
TCCC. The Board of Directors determined that the largest concern was with
respect to the reduction in the purchase price. Strengthening its ability to
consider alternative proposals was another concern. A third concern was TCCC's
position that the Principal Shareholders and certain other large shareholders
should pay to TCCC any additional proceeds received by the Principal
Shareholders and certain other large shareholders from a sale of Odwalla to an
alternative acquiror to the extent that the price received by the Principal
Shareholders and certain other large shareholders was greater than the price
offered by TCCC. The Board of Directors authorized representatives of DrKW to
contact representatives of either TCCC or TCCC's financial advisor to address
the Board of Directors' concerns.
On the afternoon of October 27, 2001, the Board of Directors met via
teleconference, with representatives of DrKW and Morrison & Foerster in
attendance. DrKW and Morrison & Foerster provided the Board of Directors with a
report on the negotiations with TCCC. The Board of Directors directed DrKW and
Morrison & Foerster to negotiate a price of at least $15.25 per share, eliminate
provisions sought by TCCC, including expanded rights of termination, and expand
to the fullest extent possible the Board of Directors' ability to consider
competing proposals that might emerge after entering into the proposed
agreements with TCCC.
From October 27, 2001 through October 29, 2001, senior management of
Odwalla, together with representatives from DrKW and Morrison & Foerster, met
with representatives of TCCC, Morgan Stanley and King & Spalding in Atlanta,
Georgia to complete negotiations and drafting of the Merger Agreement and
related agreements. After extensive negotiations, TCCC agreed to a purchase
price of $15.25 per share in cash. In addition, TCCC agreed to allow Odwalla
broader rights to consider alternative transactions and to limit TCCC's ability
to terminate the Merger Agreement. Odwalla's ability to terminate the Merger
Agreement remained limited, and the Principal Shareholders and certain other
large shareholders agreed to provide TCCC their unconditional support of the
transaction.
On October 29, 2001, the Board of Directors met via teleconference, with
representatives of DrKW and Morrison & Foerster in attendance. Morrison &
Foerster provided the Board of Directors with a report on the revised terms and
conditions to the proposed Merger Agreement and related agreements. DrKW
presented its financial analyses and stated its oral opinion, later confirmed in
writing as of the same date, that, as of that date, the $15.25 per Share cash
consideration to be received by the Odwalla shareholders (other than TCCC, the
Offeror and their respective subsidiaries) pursuant to the Offer and the Merger
was fair to the Shareholders from a financial point of view. The Board of
Directors, after discussion, by the unanimous vote of the directors, determined
that the Merger Agreement, the Option Agreement, the Tender Agreements and the
28
transactions contemplated thereby, including the Offer and the Merger are
advisable and fair to, and in the best interest of, the shareholders, approved
the Offer and the Merger and the entry by Odwalla into the definitive
agreements, and recommended that the shareholders of Odwalla accept the Offer
and tender their Shares to the Offeror. Also on October 29, 2001, TCCC's board
of directors formally approved the proposed acquisition at a price of $15.25 per
share.
On the evening of October 29, 2001, Odwalla, the Offeror and TCCC entered
into the Merger Agreement and the Stock Option Agreement and TCCC entered into
the Tender Agreements with each of the Tendering Shareholders, which included
the Principal Shareholders and certain other large shareholders. On October 30,
2001, Odwalla and TCCC issued a press release announcing the transaction.
On November 6, 2001, TCCC and the Offeror commenced the Offer.
11. THE MERGER AGREEMENT; THE OPTION AGREEMENT; THE TENDER AGREEMENTS; AND
THE EMPLOYMENT AGREEMENT. The following is a summary of the material terms of
the Merger Agreement, the Option Agreement, the Tender Agreements and the
employment agreement of D. Stephen C. Williamson, which summary is qualified in
its entirety by reference to the Merger Agreement, the two forms of Tender
Agreements, and the Stock Option Agreement which are attached hereto as Appendix
A, B, C and D, respectively.
The Offer. The Merger Agreement provides for the commencement of the Offer
no later than November 8, 2001. The obligation of the Offeror to accept for
payment the Shares tendered pursuant to the Offer is subject to (i) the Minimum
Condition, (ii) any waiting period under the HSR Act applicable to the purchase
of the Shares pursuant to the Offer having expired or having been terminated
prior to the expiration of the Offer and (iii) the satisfaction or waiver of
certain other terms and conditions of the Offer. See Section 15 ("Certain
Conditions to the Offer"). The Minimum Condition of the Offer is that at the
expiration of the Offer, a number at least equal to ninety and one-tenth percent
(90.1%) of the Shares then outstanding on a Fully Diluted Basis, together with
the Shares owned by TCCC, the Offeror and their direct and indirect
subsidiaries, shall have been validly tendered and not withdrawn.
The Offeror expressly reserves the right to modify the terms of the Offer,
except that, without the consent of Odwalla, the Offeror shall not, (i) reduce
the number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii)
impose any other conditions to the Offer other than the Offer Conditions or
modify the Offer Conditions (other than to waive any Offer Conditions to the
extent permitted by the Merger Agreement) in a manner adverse to the holders of
the Shares, (iv) except as provided in the Merger Agreement, extend the Offer,
(v) change the form of consideration payable in the Offer, or (vi) amend any
other term of the Offer in a manner adverse to the Odwalla shareholders. The
rights reserved by the Offeror in this paragraph are in addition to the
Offeror's rights to terminate the Offer as further described in this Section 11.
The Merger. The Merger Agreement provides that subject to the terms and
conditions thereof (and including those described in Section 15) and in
accordance with the CGCL, the Offeror shall be merged with and into Odwalla at
the Effective Time pursuant to the CGCL. Following the Merger, the separate
corporate existence of the Offeror shall cease and Odwalla shall continue as the
Surviving Corporation and shall succeed to and assume all the rights and
obligations of the Offeror in accordance with the CGCL.
Pursuant to the Merger Agreement, as of the Effective Time, each Share
issued and outstanding immediately prior to the Effective Time (other than
shares owned by TCCC, the Offeror, their direct or indirect subsidiaries and
dissenting shareholders, if any) shall be canceled, and converted automatically
into the right to receive an amount in cash equal to the Offer Price or any
higher price paid for each of the outstanding Shares payable, without interest,
less any required withholding taxes, upon surrender of the certificate formerly
representing such Share in the manner described in the Merger Agreement.
In connection and simultaneously with the Offer, Odwalla shall use its
reasonable best efforts to ensure that each holder of outstanding options
(whether vested or unvested) to acquire any Shares (the "Company Options")
granted under Odwalla's Stock Option Plan adopted in 1993, Odwalla's 1994
Non-Employee Directors' Stock Option Plan and Odwalla's Amended and Restated
1997 Stock Option/Stock Issuance Plan (collectively, the "Odwalla Stock Option
Plans") shall execute an agreement to exchange immediately prior to the
consummation of the Offer such holder's Company Options to Odwalla for an amount
in cash
29
determined by multiplying (A) the excess, if any, of the Offer Price over the
applicable exercise price per share of the Company Option (regardless of the
exercise price) by (B) the number of Shares subject to the Company Options
(whether vested or unvested) held by such holder (such amount, the "Option
Consideration") less any amounts withheld to satisfy applicable tax obligations.
Upon the expiration date of the Offer, each holder of Company Options
immediately prior to the consummation of the Offer, who has exchanged such
Company Options shall become entitled to the Option Consideration, and all
rights of such holder associated with the Company Options shall be terminated
and canceled. As of the Effective Time, either (i) each Company Option not so
exchanged immediately prior to the consummation of the Offer shall be canceled,
and in consideration for such cancellation the holder shall become entitled to
receive an amount in cash equal to the Option Consideration, subject to any
amounts withheld to satisfy applicable tax obligations, or (ii) Odwalla shall
use its reasonable best efforts to ensure that each holder of a Company Option
shall execute an agreement which provides that such Company Option shall be
canceled, and in consideration for such cancellation the holder thereof shall
become entitled to receive an amount in cash equal to the product of (x) the
number of Shares subject to the Company Options, whether vested or unvested,
held by such holder and (y) the excess of the Merger Consideration per Share
over the per Share exercise price of each such Company Option, subject to any
amounts withheld to satisfy applicable tax obligations.
Under the terms of the Tender Agreements with each of D. Stephen C.
Williamson, James R. Steichen and Theodore R. Leaman III (the "Executives"),
TCCC may cause immediately prior to the consummation of the Offer such Executive
to exercise any of the Executive's vested Company Options. Pursuant to the
Merger Agreement, if TCCC requires any of the Executives to exercise Company
Options to purchase Shares immediately prior to the consummation of the Offer
pursuant to such Executive's Tender Agreement, Odwalla will loan to the
Executive such funds as may be necessary to permit any of such Executives to
exercise such Company Options. If Odwalla becomes obligated to advance funds as
described in the immediately preceding sentence and Odwalla fails to advance
such funds to any Executive, TCCC shall advance such funds to any Executive on
commercially reasonable terms.
Pursuant to the Merger Agreement, Odwalla shall use its reasonable best
efforts to provide that each of the issued and outstanding warrants to purchase
Shares (the "Company Warrants") shall be exercised in full immediately prior to
the consummation of the Offer. In addition, Odwalla shall, by written notice to
each holder of Company Warrants, offer to pay such holder upon the consummation
of the Offer, in exchange for the cancellation of such holder's Company Warrants
(regardless of exercise price) upon the consummation of the Offer, an amount in
cash determined by multiplying (A) the excess, if any, of the Offer Price over
the applicable exercise price per Share of the Company Warrant by (B) the number
of Shares such holder could have purchased had such holder exercised such
Company Warrant in full immediately prior to the consummation of the Offer (such
amount, the "Warrant Consideration"), subject to any amounts withheld to satisfy
applicable tax obligations.
The Merger Agreement also provides that, at the Effective Time, the
Articles of Incorporation of Odwalla, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law or such Articles of Incorporation. At the Effective Time, the
Bylaws of Odwalla, as in effect immediately prior to the Effective Time, shall
be the Bylaws of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law, the Articles of Incorporation of the
Surviving Corporation or such Bylaws.
The Merger Agreement provides that (i) the directors of the Offeror at the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected or appointed and qualified, as the case may be, and (ii) the
officers of the Offeror at the Effective Time shall be the officers of the
Surviving Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.
Shareholder Meeting; Proxy Statement. The Merger Agreement provides, if
the approval and adoption of the Merger Agreement by Odwalla's shareholders are
required by law, Odwalla will, as soon as practicable following the consummation
of the Offer, duly call, give notice of, convene and hold a shareholders'
meeting for the purpose of considering the approval of the Merger Agreement and
the transactions contemplated
30
thereby. The Board of Directors of Odwalla will recommend to the shareholders
the adoption or approval of the Merger Agreement and the Merger, will solicit
proxies in favor of the Merger Agreement and the Merger and will take all other
actions necessary or, in the reasonable judgment of TCCC, helpful to secure the
vote or consent of such holders required by the CGCL or the Merger Agreement, to
effect the Merger and shall not withdraw such recommendation. In connection with
such meeting, Odwalla will promptly prepare and file with the Commission and
will thereafter mail to its shareholders as promptly as practicable a proxy
statement of Odwalla (the "Proxy Statement") and all other proxy materials for
such meeting. Notwithstanding the foregoing, if the Offeror acquires at least
90% of the outstanding Shares, the parties shall take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after the expiration of the Offer without a meeting of Odwalla's
shareholders in accordance with Section 1110 of the CGCL.
Board Recommendation; Competing Acquisition Proposals. Except as expressly
permitted by the Merger Agreement, neither the Board of Directors of Odwalla nor
any committee thereof may (i) withdraw, qualify or modify, or propose publicly
to withdraw, qualify or modify, in a manner adverse to TCCC, the approval or
recommendation by such Board of Directors or any such committee of the Offer,
the Merger, or the Merger Agreement, (ii) endorse, approve, recommend or submit
to the Odwalla shareholders, or propose publicly to endorse, approve, recommend
or submit to the Odwalla shareholders, any transaction involving a Competing
Acquisition Proposal (as hereinafter defined) or (iii) cause Odwalla to enter
into any letter of intent, agreement in principle or acquisition agreement or
other similar agreement (an "Acquisition Agreement") relating to any Competing
Acquisition Proposal. Notwithstanding the foregoing, if prior to the
consummation of the Offer, the Board of Directors of Odwalla determines in good
faith that it has received a Superior Proposal (as hereinafter defined) in
compliance with the solicitation provisions contained in the Merger Agreement
and after taking into account the opinion of outside counsel with respect to its
fiduciary duties to Odwalla's shareholders under applicable California law, the
Board of Directors of Odwalla may (except as described in this and the following
sentences) inform its shareholders that it no longer believes that the Merger is
advisable and no longer recommends approval (a "Subsequent Adverse
Determination") and enter into an Acquisition Agreement with respect to a
Superior Proposal, but only at a time that is more than three (3) business days
following TCCC's receipt of written notice advising TCCC that Odwalla's Board of
Directors intends to make a Subsequent Adverse Determination; provided that the
Board of Directors may not at any time withdraw its approval of the Offer, the
Merger or the Merger Agreement or seek to abandon the Offer, the Merger or the
Merger Agreement. Such notice shall specify the material terms and conditions of
such Superior Proposal (and include a copy of such proposal with all
accompanying documentation), identify the person making such Superior Proposal
and state that the Board of Directors intends to make a Subsequent Adverse
Determination. During this three business day period, Odwalla shall provide an
opportunity for TCCC to propose adjustments to the terms and conditions of the
Merger Agreement to enable Odwalla to proceed with its recommendation to its
shareholders without a Subsequent Adverse Determination. A "Competing
Acquisition Proposal" means any proposal from a third party with respect to a
merger, consolidation, share exchange, tender offer or similar transaction
involving Odwalla or any subsidiary of Odwalla, or any purchase or other
acquisition of 20% or more of the assets of Odwalla or any subsidiary of Odwalla
or any purchase or other acquisition of any equity interest in Odwalla or any
subsidiary of Odwalla. A "Superior Proposal" means any bona fide proposal with
respect to a merger, consolidation, share exchange, tender offer, business
combination or similar transaction involving Odwalla or any subsidiary of
Odwalla, or any purchase or other acquisition of 70% or more of the assets of
Odwalla or any subsidiary of Odwalla, taken as a whole, or any purchase or other
acquisition of more than 50% of the equity interests in the Odwalla in each
case, which (w) is fully financed without any financing condition, (x) does not
contain a "right of first refusal" or "right of first offer" with respect to any
proposal that TCCC may make, (y) does not contain any "due diligence" condition
and (z) the Board of Directors of Odwalla determines in good faith after taking
into advice from its independent financial advisor is more favorable to the
Odwalla shareholders than the transactions contemplated by the Merger Agreement
from a financial point of view taking into account any proposed changes to such
transactions that may be proposed by TCCC in response to such proposal.
Notwithstanding any other provision of the Merger Agreement, Odwalla shall
submit the Merger Agreement to the Odwalla shareholders whether or not the Board
of Directors of Odwalla makes a Subsequent Adverse Determination provided that
Odwalla, concurrently with the submission of the Merger Agreement and the
31
Merger, may submit to the Odwalla shareholders other Competing Acquisition
Proposals if it has complied with the provisions governing such matters in the
Merger Agreement.
Other Offers. The Merger Agreement provides that Odwalla will not, nor
shall Odwalla authorize or permit any of its subsidiaries, officers, directors
or employees or any financial advisors, auditors, attorneys, lenders or other
advisors or representatives to directly or indirectly, (a) solicit, initiate or
encourage the submission of any Competing Acquisition Proposal or (b)
participate in or encourage any discussion or negotiations regarding, or furnish
to any person any non-public information with respect to, enter into any
acquisition agreement with respect to, or take any other action to facilitate
any inquiries or the making of, any proposal that constitutes, or may reasonably
be expected to lead to, any Competing Acquisition Proposal; provided, however,
that the foregoing shall not prohibit the Board of Directors of Odwalla, prior
to the consummation of the Offer, from furnishing information to, or entering
into or participating in discussions or negotiations with, any person or entity
that makes an unsolicited Competing Acquisition Proposal only if, and only to
the extent that, (A) the Board of Directors of Odwalla, after taking into
account advice from independent outside legal counsel and financial advisors
determines in good faith that such action is required for the Board of Directors
of Odwalla to comply with its fiduciary obligations to the Odwalla shareholders
under applicable California law, (B) prior to taking such action, Odwalla
receives from such person or entity an executed agreement in reasonably
customary form relating to the confidentiality of information to be provided to
such person or entity and including standstill provisions no less favorable to
Odwalla than those contained in the Confidentiality Agreement and (C) the Board
of Directors of Odwalla concludes in good faith, after taking into account the
advice from its independent financial advisor, that the Competing Acquisition
Proposal is a Superior Proposal. Odwalla shall provide immediate oral and
written notice to TCCC of (a) the receipt of any such Competing Acquisition
Proposal or any inquiry which could reasonably be expected to lead to any
Competing Acquisition Proposal, (b) the material terms and conditions of such
Competing Acquisition Proposal or inquiry, (c) the identity of such person or
entity making any such Competing Acquisition Proposal or inquiry and (d)
Odwalla's intention to furnish information to, or enter into discussions or
negotiations with, such person or entity. Odwalla shall continue to keep TCCC
fully informed of the status and details of any such Competing Acquisition
Proposal or inquiry.
Nothing contained in the Merger Agreement shall prohibit Odwalla from
referring a third party to the provisions in the Merger Agreement governing
Competing Acquisition Proposals, complying with Rule 14e-2(a) promulgated under
the Exchange Act or making any disclosure to Odwalla's shareholders if, in the
good faith judgment of the Board of Directors of Odwalla, based on advice from
its outside counsel, failure so to disclose would violate applicable law;
provided, however, that, except as expressly provided in the Merger Agreement,
neither Odwalla nor its Board of Directors nor any committee thereof shall
withdraw, qualify or modify, or propose to withdraw, qualify or modify, its
position with respect to the Merger Agreement or in connection with the Offer or
the Merger, or approve or recommend, or propose to approve or recommend, a
Competing Acquisition Proposal.
Designation of Directors. The Merger Agreement provides that, promptly
after the Offeror acquires Shares which represent at least the Minimum
Condition, the Option Exercise Minimum Number or the Revised Minimum Number, the
Offeror will be entitled to designate, rounded up to the next whole number, such
number of directors on the Post-Acceptance Board, subject to compliance with
Section 14(f) of the Exchange Act, as will make the number of Odwalla's
directors designated by the Offeror equal to the product of (1) the total number
of available seats on the Board of Directors and (2) the percentage that the
number of Shares owned by the Offeror and TCCC bears to the total number of
Shares issued and outstanding provided that, prior to or upon the purchase by
the Offeror of any Shares in the Offer, Odwalla shall increase the number of
directors on the Board of Directors from seven to eight and shall maintain the
number of directors at eight until the Effective Time. Prior to the Effective
Time, Odwalla shall use its reasonable best efforts to ensure that the
Post-Acceptance Board includes four Continuing Directors. If the number of
Continuing Directors is reduced below four, then any remaining Continuing
Directors will be entitled to designate such persons to fill such vacancies, who
will be considered Continuing Directors. If no Continuing Directors remain, the
other directors shall designate four persons to fill the vacancies and such
persons will be considered Continuing Directors. Odwalla shall, at such time,
take all action necessary to cause the Offeror's designees to be so elected by
its existing Board of Directors. Odwalla has agreed to take all action necessary
to enable the
32
Offeror's designees to be elected or appointed to the Board of Directors
including, without limitation increasing the number of directors and seeking and
accepting the resignation of incumbent directors. In addition, Odwalla shall use
its commercially reasonable efforts to cause to be delivered to TCCC
resignations of all of the directors of Odwalla's subsidiaries to be effective
upon consummation of the Merger.
Odwalla shall use its reasonable best efforts to cause individuals
designated by Offeror to serve on the Board of Directors to constitute the same
percentage as such individuals represent on the Post-Acceptance Board of each
committee of the Board of Directors (other than any committee of the Board of
Directors established to take action under the Merger Agreement).
Following the election or appointment of Offeror's designees pursuant to
the Merger Agreement and prior to the Effective Time, TCCC and Offeror shall not
cause Odwalla to take any action with respect to any amendment, or waiver of any
term or condition, of the Merger Agreement, the Articles of Incorporation of
Odwalla or the Bylaws of Odwalla, any termination or rescission of the Merger
Agreement by Odwalla, any extension by Odwalla of the time for the performance
of any of the obligations or other acts of Offeror or TCCC or waiver or
assertion of any of Odwalla's rights under the Merger Agreement, or any other
consent or action by the Post-Acceptance Board with respect to the Merger
Agreement or the Offer (including any action which would cause Odwalla to breach
the Merger Agreement), without the concurrence of a majority of the Continuing
Directors and the concurrence of a majority of the directors who are not
Continuing Directors.
Access to Information; Confidentiality. Until the Effective Time, Odwalla
shall, and shall cause its officers, directors, employees, auditors, attorneys,
financial advisors, lenders and other agents (collectively, the
"Representatives") to afford the Representatives of TCCC and the Offeror
reasonable access at all reasonable times and upon reasonable notice to the
officers, employees, agents, properties, offices and other facilities, books and
records of Odwalla and its subsidiaries, and shall furnish TCCC and the Offeror
with all financial, operating and other data and information as TCCC or the
Offeror, through its Representatives, may reasonably request. Odwalla shall
furnish to TCCC and the Offeror monthly financial and operating data and
information for each four or five weeks fiscal period in the form currently
prepared by Odwalla within seventeen (17) days following the end of each such
period.
All information obtained by TCCC or the Offeror concerning Odwalla and its
subsidiaries in connection with the transactions contemplated by the Merger
Agreement shall be kept confidential in accordance with the Confidentiality
Agreement, dated as of September 7, 2001, as amended, between TCCC and Odwalla
(the "Confidentiality Agreement").
Directors' and Officers' Indemnification and Insurance. The Merger
Agreement provides that, for six (6) years from and after the Effective Time,
TCCC will cause the Surviving Corporation to indemnify and hold harmless all
past and present officers and directors of Odwalla and of its subsidiaries for
acts or omissions occurring at or prior to the Effective Time to the same extent
such persons are indemnified by Odwalla pursuant to its Articles of
Incorporation or Bylaws or agreements in effect on October 29, 2001.
TCCC has agreed to maintain (or to cause the Surviving Corporation to
maintain), for an aggregate period of at least six (6) years from the Effective
Time, the current directors' and officers' insurance and indemnification
policies ("D&O Insurance") that provide coverage for events occurring prior to
the Effective Time or, coverage containing terms that are at least as favorable
as the current D&O Insurance; provided, however, that the Surviving Corporation
shall not be required to expend more than an amount per year equal to two
hundred percent (200%) of current annual premiums paid by Odwalla for such
insurance.
Conduct of Business Pending the Merger. Pursuant to the Merger Agreement,
from and after the date thereof until the Effective Time or the termination of
the Merger Agreement unless TCCC shall otherwise expressly agree in writing
(which agreement shall not be unreasonably withheld or delayed):
-- (i) the business of Odwalla and its subsidiaries shall be conducted
only in, and Odwalla and its subsidiaries shall not take any action
except in, the ordinary course of business and in a manner consistent
with prior practice; (ii) Odwalla and its subsidiaries shall use
their reasonable best efforts to preserve intact their business
organizations, keep available the services of their current officers
and employees and preserve the current relationships of Odwalla and
its subsidiaries with customers,
33
suppliers, distributors and other persons with which Odwalla or its
subsidiaries has material business relations; and (iii) Odwalla and
its subsidiaries will comply in all material respects with all
applicable laws and regulations wherever their business is conducted,
including, without limitation, the timely filing of all reports,
forms or other documents with the Commission required pursuant to the
Securities Act or the Exchange Act.
-- Odwalla shall not, nor shall it permit any of its subsidiaries to,
(i) declare or pay any dividends on or make other distributions
(whether in cash, stock or property) in respect of any of its capital
stock, except for dividends payable to Odwalla by a wholly owned
subsidiary; (ii) split, combine or reclassify any of its capital
stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of
its capital stock; (iii) repurchase, redeem or otherwise acquire any
shares of its capital stock; (iv) issue, deliver or sell, or
authorize or propose the issuance, delivery or sale of, any shares of
its capital stock or any securities convertible into any such shares
of its capital stock, or any rights, warrants or options to acquire
any such shares or convertible securities or any stock appreciation
rights, phantom stock plans or stock equivalents, other than the
issuance of Shares upon (A) the exercise of Company Options
outstanding as of the date of the Merger Agreement or awarded in
conformity with the provisions described in clause (v) below, and (B)
the exercise of warrants outstanding as of the date of the Merger
Agreement; (v) award or grant, or authorize or propose the award or
grant of, any unvested Company Options, other than the award or grant
of Company Options to employees (other than executive officers of
Odwalla) in accordance with the terms of Odwalla Stock Option Plans
and in the ordinary course of business and consistent with past
practices for up to no more than 100,000 Shares in the aggregate for
all employees; (vi) modify or adjust any outstanding options to
acquire Shares; or (vii) take any action that would, or could
reasonably be expected to, result in any of the conditions set forth
in the Merger Agreement governing the conduct of business pending the
Merger not being satisfied.
-- Odwalla shall not, nor shall it permit any of its subsidiaries to,
(i) amend its articles of incorporation (including any certificate of
designations attached thereto) or bylaws or other equivalent
organizational documents; (ii) create, assume or incur any
indebtedness for borrowed money or guaranty any such indebtedness of
another person or mortgage or pledge any of its assets or properties,
other than in connection with (A) existing lines of credit, (B)
indebtedness owing to, or guaranties of indebtedness owing to,
Odwalla, (C) leasing contracts entered into in the ordinary course of
business with payments of less than $50,000 in the aggregate on a
monthly basis, (D) indebtedness incurred to make payments
specifically provided or contemplated by the Merger Agreement or (E)
accounts payable incurred in the ordinary course of business
consistent with past practice; (iii) make any loans or advances to
any other person other than loans or advances between any
subsidiaries of Odwalla or between Odwalla, and any of its
subsidiaries and other than advances of ordinary business expenses or
to employees in the ordinary course of business consistent with past
practice in principal amounts of not more than $10,000; (iv) merge or
consolidate with any other entity in any transaction, (v) sell any
business or assets, other than sales of assets and other than sales
of products and inventory in the ordinary course of business
consistent with past practices) having a value of less than $200,000
individually and $500,000 in the aggregate to the extent such sales
are in the ordinary course of business and consistent with past
practices; (vi) change its accounting policies except as required by
generally accepted accounting principles or applicable law; (vii)
make any change in employment terms for any of its directors or
officers, except as expressly contemplated by the Merger Agreement;
(viii) alter, amend or create any obligations with respect to
compensation, severance, benefits, change of control payments or any
other payments to employees, directors or affiliates of Odwalla or
its subsidiaries or enter into any new, or amend any existing,
employment agreements, except (A) as required by applicable law or
(B) severance agreements containing terms consistent with Odwalla's
policies and practices in amounts not to exceed $15,000 individually
or $150,000 in the aggregate other than severance agreements with
certain key employees; (ix) make any change to the Odwalla benefit
plans, except as required by applicable law; (x) amend or cancel or
agree to the amendment or cancellation of any material contract; (xi)
pay, loan or advance (other than the payment of compensation,
directors' fees or reimbursement of expenses in the ordinary course
of business) any
34
amount to, or sell, transfer or lease any properties or assets (real,
personal or mixed, tangible or intangible) to, or enter into any
agreement with, any of its officers or directors or any "affiliate"
or "associate" of any of its officers or directors; (xii) form or
commence the operations of any business or any corporation,
partnership, joint venture, business association or other business
organization or division thereof; (xiii) make any tax election or
settle or compromise any tax liability involving amounts in excess of
$25,000 individually or $200,000 in the aggregate; or (xiv) pay,
discharge, settle or satisfy any claims litigation, liabilities or
obligations (whether absolute, accrued, asserted or unasserted,
contingent or otherwise) involving amounts in excess of $75,000
individually or $200,000 in the aggregate. Odwalla also shall not
amend, modify, terminate or rescind, or waive any provision of, or
otherwise alter in any way the employment agreement (of even date of
the date of the Merger Agreement) between Odwalla and D. Stephen C.
Williamson prior to the Effective Time without the prior written
consent of TCCC.
In connection with the continued operation of Odwalla and its subsidiaries
between the date of the Merger Agreement and the Effective Time or the
termination of the Merger Agreement, Odwalla will confer in good faith on a
regular and frequent basis with one or more representatives of TCCC designated
to Odwalla regarding operational matters and the general status of ongoing
operations promptly and will notify TCCC of any event or occurrence that has had
or may reasonably be expected to have a Company Material Adverse Effect (as
defined below). Odwalla acknowledges that TCCC does not and will not waive any
rights it may have under the Merger Agreement as a result of such consultations.
Odwalla shall not take any action that would, or that could reasonably be
expected to, result in any of the representations and warranties of Odwalla set
forth in the Merger Agreement becoming untrue.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including, but
not limited to, representations and warranties by Odwalla concerning: Odwalla's
organization, standing and power; capitalization; the Board of Directors'
approval of the Merger Agreement and the Offer and the transactions contemplated
by the Merger Agreement; required filings and consents; Commission filings and
financial statements; absence of certain changes or events; compliance with law;
tax matters; absence of litigation; employee benefit plans; worker safety and
environmental matters; labor matters; required shareholder vote; financial
advisor opinion; and brokers. Some of the representations are qualified by a
material adverse effect clause. For purposes of the Merger Agreement, "Company
Material Adverse Effect" shall mean, with respect to Odwalla, any change, event
or effect that, when taken together with all other adverse changes, events or
effects that have occurred, (i) is materially adverse to the business,
operations, properties, condition (financial or otherwise), assets, liabilities
(including, without limitation, contingent liabilities) of Odwalla and its
subsidiaries taken as a whole or (ii) prevents or delays beyond May 31, 2002 the
consummation of the Offer or the Merger; provided, however, that a Company
Material Adverse Effect shall not include (x) in and of itself failure by
Odwalla to meet analysts' earnings forecasts or estimates or changes in the
market price of the Shares in and of itself or (y) any effect resulting from any
change in general economic conditions, including any change in general economic
conditions due to any act of war, terrorism or threat of war or terrorism, which
changes do not disproportionately affect Odwalla and its subsidiaries (provided
that it is understood and agreed that the foregoing exclusion shall not exclude
any change, event or effect that would otherwise be a Company Material Adverse
Effect caused by any act of war or terrorism or threat of war or terrorism
directed at the beverage industry which disproportionately affects Odwalla and
its subsidiaries as compared to the beverage industry as a whole) or (z) any
effect resulting solely in and of itself from the public announcement of the
Merger Agreement or the transactions contemplated by the Merger Agreement or the
consummation of such transactions (other than any litigation or claims the
substance of which is not related to the public announcement of the Merger
Agreement or the transactions contemplated by the Merger Agreement or the
consummation of such transactions).
Conditions of the Merger. Under the Merger Agreement, the respective
obligations of each party to effect the Merger shall be subject to the following
conditions:
(a) The Offeror shall have previously accepted for payment and paid for
Shares pursuant to the Offer, except that neither TCCC, the Offeror
nor Odwalla shall be entitled to invoke this condition if, in
35
breach of its obligations under the Merger Agreement, it shall have
been the cause of the failure of the Offeror to purchase pursuant to
the Offer Shares validly tendered and not withdrawn;
(b) The Merger Agreement and the Merger shall have been approved and
adopted by the requisite vote of the Odwalla shareholders, if any, as
required by the CGCL, the Odwalla Articles of Incorporation and the
Odwalla Bylaws;
(c) No temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other
legal prohibition preventing the consummation of the Merger shall be
in effect, provided that the party relying on this condition shall
have complied in all material respects with its obligations to perform
certain obligations under the Merger Agreement; and
(d) All actions by or in respect of or filings with any governmental
entity required to permit the consummation of the Offer and the Merger
shall have been obtained or made (including the expiration or
termination of any applicable waiting period under the HSR Act).
Termination Events. The Merger Agreement may be terminated at any time
prior to the Effective Time, whether before or after any approval of the matters
presented in connection with the Merger by the shareholders of Odwalla:
(a) By mutual written consent of TCCC and Odwalla;
(b) By any of TCCC, Offeror or Odwalla if any court of competent
jurisdiction or other governmental entity shall have issued an order,
decree, ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the Merger and such order, decree,
ruling or other action shall have become final and nonappealable,
except if the party relying on such order, decree or ruling or other
action has not complied in all material respects with its obligations
to perform certain obligations under the Merger Agreement;
(c) By any of TCCC, Offeror or Odwalla if (x) as a result of the failure
of any of the conditions of the Offer the Offer shall have terminated
or expired in accordance with its terms without Offeror, in accordance
with the Merger Agreement, having accepted for payment any Shares
pursuant to the Offer within the time period for acceptance specified
by the Agreement, or (y) Offeror, in accordance with the Agreement,
shall not have accepted for payment any Shares pursuant to the Offer
by May 31, 2002; provided, however, that the right to terminate the
Merger Agreement shall not be available to any party whose failure to
fulfill any obligation under the Merger Agreement has been the primary
cause of, or resulted in, the expiration or termination of the Offer
on or before such date;
(d) By TCCC or the Offeror if a Competing Acquisition Proposal shall have
been consummated or if the Board of Directors of Odwalla shall have
made a Subsequent Adverse Determination;
(e) By Odwalla, if TCCC or Offeror shall breach in any material respect
any of their respective representations, warranties or obligations
under the Merger Agreement and, within twenty (20) days after written
notice of such breach to TCCC from Odwalla, such breach shall not have
been cured in all material respects or waived by Odwalla;
(f) By any of Odwalla, TCCC or Offeror, if the Merger Agreement and the
Merger shall fail to be approved and adopted by the Odwalla
shareholders at a duly held Shareholders' Meeting or at any
adjournment or postponement thereof; provided, however, that neither
TCCC nor Offeror may terminate the Merger Agreement under this
provision if the Shares it is entitled to vote (whether by ownership,
proxy or otherwise) shall not have been voted in favor of the Merger
Agreement and the Merger;
(g) By TCCC or Offeror, if Odwalla shall breach any of its
representations, warranties, covenants or other obligations hereunder
which would give rise to the failure of any of the following
conditions: (A) the representations and warranties of Odwalla in the
Merger Agreement shall be true and correct in all respects as of the
date of the Merger Agreement and as of the expiration of the Offer
without giving effect to any exceptions for "material" or
"materiality" or "Company Material
36
Adverse Effect", except where the failure of such representations and
warranties to be true and correct, individually or in the aggregate,
does not have and is not reasonably likely to have a Company Material
Adverse Effect; (B) Odwalla shall have performed in all material
respects all covenants, agreements and obligations required to be
performed by it under the Merger Agreement; (C) the directors of
Odwalla shall have resigned as provided in the Merger Agreement; and
(D) an officer of Odwalla shall have delivered to TCCC and the Offeror
a certificate to the effect that each of the foregoing conditions are
satisfied in all respects, and, within twenty (20) days after written
notice of such breach to Odwalla from TCCC, such breach shall not have
been cured, or waived by TCCC or Offeror;
(h) By TCCC or Offeror, if, for any reason (i) the representations and
warranties regarding Odwalla's capitalization or (ii) the
representations and warranties of any Tendering Shareholder in such
Shareholder's Tender Agreement regarding ownership of Shares (clause
(i) and clause (ii) collectively being referred to as the "Capital
Stock Representations") shall not be true and correct in all respects;
provided, that neither TCCC nor Offeror may terminate the Merger
Agreement under this provision if, after giving effect to the failure
of any Capital Stock Representations to be true and correct, the
number of Shares owned by the Tendering Shareholders which is subject
to the Tender Agreements shall be equal to or greater than 54.0% of
the sum of (x) the issued and outstanding Shares and (y) the number of
Shares issuable upon the exercise of vested Company Options, and the
number of Shares owned by the Tendering Shareholders which is subject
to the voting provisions contained in the Tender Agreements shall be
equal to or greater than 50.1% of the sum of (x) the issued and
outstanding Shares and (y) the number of Shares issuable upon the
exercise of vested Company Options.
Odwalla shall pay TCCC a fee of $8.0 million (the "Termination Fee"),
payable in same-day funds, if TCCC or the Offeror terminates the Merger
Agreement in accordance with the provisions described paragraph (d) above. In
addition, within one year after termination of the Merger Agreement (other than
a termination pursuant to the provisions described paragraph (b) or paragraph
(c) above (but only if the termination pursuant to paragraph (c) results from a
failure to satisfy the following Offer Conditions: at or prior to the expiration
date of the Offer, (x) any applicable waiting period under the HSR Act shall
have been expired or terminated, and (y) all other actions by or in respect of
or other filings with any governmental entity required to permit the
consummation of the Offer and the Merger shall have been obtained or made other
than in the case of clause (y), such actions or filings the failure of which to
make or obtain would not reasonably be expected to have a Company Material
Adverse Effect) or the provisions described paragraph (e) above) Odwalla shall
enter into any agreement relating to a Competing Acquisition Proposal with a
person or entity other than TCCC or the Offeror or a Competing Acquisition
Proposal with a person or entity other than TCCC or the Offeror shall otherwise
be consummated, then immediately prior to, and as a condition of, the entering
into of such agreement or the consummation of such transaction, as the case may
be, Odwalla shall pay to TCCC upon demand the Termination Fee, payable in
same-day funds, to reimburse TCCC for its time, expense, lost opportunity costs
and other costs and damages associated with pursuing the Merger; provided that
no such amount shall be payable if the Termination Fee shall have been paid in
accordance with the first sentence of this paragraph.
Fees and Expenses. Except as specifically provided, all fees and expenses
incurred in connection with the transactions contemplated by the Merger
Agreement shall be paid by the party incurring such fees or expenses.
Option Agreement. Under the Option Agreement, Odwalla granted to the
Offeror an irrevocable Top-Up Stock Option to purchase that number of Top-Up
Option Shares equal to the number of Shares that, when added to the number of
Shares owned by Offeror and TCCC immediately following consummation of the
Offer, will constitute 90.1% of the Shares then outstanding on a Fully Diluted
Basis (assuming the issuance of the Top-Up Option Shares), calculated in
accordance with the Option Agreement at a purchase price per Top-Up Option Share
equal to the Offer Price. However, the Top-Up Stock Option will not be
exercisable if the number of Shares subject thereto exceeds the number of
authorized Shares available for issuance.
37
Subject to the terms and conditions of the Option Agreement, the Top-Up
Stock Option may be exercised by the Offeror, at its election, in whole, but not
in part, at any one time after the occurrence of a Top-Up Exercise Event (as
defined below) and prior to the Top-Up Termination Date (as defined below). A
"Top-Up Exercise Event" will occur for purposes of the Option Agreement upon the
Offeror's acceptance for payment pursuant to the Offer of Shares constituting,
together with Shares owned directly or indirectly by TCCC, more than 50% of the
outstanding Shares but less than 90% of the Shares then outstanding on a Fully
Diluted Basis. Except as provided in the last sentence of this paragraph, the
"Top-Up Termination Date" will occur for purposes of the Option Agreement upon
the earliest to occur of: (i) the Effective Time; (ii) the date which is 20
business days after the occurrence of a Top-Up Exercise Event; (iii) the
termination of the Merger Agreement; and (iv) and the date on which the Offeror
reduces the Minimum Condition to the Revised Minimum Number and accepts for
payment the Revised Minimum Number of Shares. Nevertheless, even if the Top-Up
Termination Date has occurred, the Offeror will be entitled to purchase the
Top-Up Option Shares if it has exercised the Top-Up Stock Option in accordance
with the terms of the Option Agreement prior to such occurrence.
The obligation of Odwalla to deliver Top-Up Option Shares upon the exercise
of the Top-Up Stock Option is subject to the following conditions: (a) any
applicable waiting period under the HSR Act and any applicable non-United States
laws regulating competition, antitrust, investment or exchange controls relating
to the issuance of the Top-Up Option Shares will have expired or been terminated
prior to the expiration of the Offer; (b) no provision of any applicable law or
regulation and no judgment, injunction, order or decree shall prohibit the
exercise of the Top-Up Stock Option or the delivery of the Top-Up Option Shares
in respect of any such exercise; and (c) delivery of the Top-Up Option Shares
would not require the approval of Odwalla's shareholders pursuant to the rules
of the National Association of Securities Dealers.
Tender Agreements. Concurrently with the execution and delivery of the
Merger Agreement, TCCC, the Offeror and each of the Tendering Shareholders
entered into the Tender Agreements. Pursuant to the Tender Agreements, the
Tendering Shareholders agreed to tender into the Offer the Committed Shares
currently owned by the Tendering Shareholders. The Tender Agreements also
provide that the Voting Shareholders representing in the aggregate 5,950,650
Shares, irrevocably appoint the Offeror as their proxy to vote their portion of
such Committed Shares in connection with the transaction in the following
manner: (i) for the adoption and approval of the Merger Agreement and the Merger
and (ii) in any manner as TCCC, in its sole discretion, may see fit with respect
to any extraordinary corporate transaction (other than the Merger), such as a
merger, consolidation, business combination, tender or exchange offer,
reorganization, recapitalization, liquidation, sale or transfer of a material
amount of the assets or securities of Odwalla or any of its subsidiaries (other
than pursuant to the Merger) or any other change of control involving Odwalla or
any of its subsidiaries, including, but not limited to, any Competing
Acquisition Proposal. Notwithstanding the foregoing grant to TCCC of the
irrevocable proxy, if TCCC elects not to exercise its rights to vote the
securities pursuant to the irrevocable proxy, the Voting Shareholders agreed to
vote the securities during the term of the Tender Agreement (i) in favor of or
give its consent to, as applicable, a proposal to adopt and approve the Merger
Agreement and the Merger as described in the Tender Agreements, or (ii) in the
manner directed by TCCC if the issue on which the Voting Shareholders are
requested to vote is a matter described in clause (ii) of the preceding
sentence, in each case at any annual, special or other meeting or action of the
shareholders of Odwalla, in lieu of a meeting or otherwise. Pursuant to the
Merger Agreement, if TCCC requires any of D. Stephen C. Williamson, James R.
Steichen and/or Theodore R. Leaman III (the "Executives", each an "Executive")
to exercise Company Options to purchase Shares immediately prior to the
consummation of the Offer pursuant to such Executive's Tender Agreement, Odwalla
will loan to the Executive such funds as may be necessary to permit any of such
Executives to exercise such Company Options. If Odwalla becomes obligated to
advance funds pursuant to the immediately preceding sentence and Odwalla fails
to advance such funds to any Executive, TCCC shall advance such funds to any
Executive on commercially reasonable terms.
The Tender Agreements provide that the Tendering Shareholders (i) except as
consented to in writing by TCCC in its sole discretion, will not, directly or
indirectly, sell, transfer, assign, pledge, hypothecate, tender, encumber or
otherwise dispose of or limit their right to vote in any manner any of the
Committed Shares, or agree to do any of the foregoing, and (ii) will not take
any action which would have the effect of preventing or
38
disabling the Tendering Shareholders from performing their obligations under the
Tender Agreements. Notwithstanding the foregoing, in connection with any
transfer not involving or relating to any Competing Acquisition Proposal, the
Tendering Shareholders may transfer any or all of the Committed Shares as
follows: (i) in the case of a Tendering Shareholder that is an entity, to any
subsidiary, partner or member of the Tendering Shareholder and (ii) in the case
of an individual Tendering Shareholder, to such Tendering Shareholder's
descendants or any trust for any of their benefits or to a charitable trust;
provided, however, that in any such case, prior to and as a condition to the
effectiveness of such transfer, (x) each person or entity to which any of such
Committed Shares or any interest in any of such Committed Shares is or may be
transferred (a) shall have executed and delivered to TCCC and the Offeror a
counterpart to the applicable Tender Agreement pursuant to which such person or
entity shall be bound by all of the terms and provisions of the applicable
Tender Agreement, and (b) shall have agreed in writing with TCCC and the Offeror
to hold such Shares or interest in such Shares subject to all of the terms and
provisions of the applicable Tender Agreements, and (y) the applicable Tender
Agreement shall be the legal, valid and binding agreement of such person,
enforceable against such person in accordance with its terms, subject to the
qualification, however, that enforcement of the rights and remedies created by
the applicable Tender Agreement is subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general application
related to or affecting creditors' rights and to general equity principles.
In addition, during the term of the Tender Agreements, neither the
Tendering Shareholders nor any person acting as an agent of the Tendering
Shareholders or otherwise on the Tendering Shareholders' behalf shall, directly
or indirectly, (a) solicit, initiate or encourage the submission of any
Competing Acquisition Proposal or any other sale, transfer, pledge or other
disposition or conversion of any of the Committed Shares or (b) participate in
or encourage any discussion or negotiations regarding, or furnish to any person
any non-public information with respect to, enter into any agreement with
respect to, or take any other action to facilitate any inquiries or the making
of any proposal that constitutes, or may reasonably be expected to lead to, any
Competing Acquisition Proposal or any other sale, transfer, pledge or other
disposition or conversion of any of the Committed Shares, in any case, from, to
or with any person other than TCCC or the Offeror. The Tendering Shareholders
agreed to immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties with respect to any of the
foregoing. The Tendering Shareholders also agreed to notify the Offeror
immediately if any party contacts the Tendering Shareholders following the date
of the Tender Agreements (other than the Offeror or an affiliate or associate of
the Offeror) concerning any Competing Acquisition Proposal or any other sale,
transfer, pledge or other disposition or conversion of the Committed Shares.
The Tender Agreements terminate upon the earlier of (1) the termination of
the Merger Agreement pursuant to Sections 8.1(a), (b), (c), (d) or (e) of the
Merger Agreement or (2) six months after the termination of the Merger Agreement
pursuant to Sections 8.1 (f), (g) or (h) of the Merger Agreement.
Employment Agreement. Concurrently with the execution of the Merger
Agreement, Odwalla entered into a new employment agreement with D. Stephen C.
Williamson, the Chief Executive Officer and Chairman of the Board of Odwalla
(the "New Employment Agreement"). The New Employment Agreement will commence at
the Effective Time (as defined in the Merger Agreement) and will supersede Mr.
Williamson's current employment agreement with Odwalla, dated December 21, 1999,
which is more fully described in the section entitled "Certain Relationships and
Related Transactions" in the Information Statement attached as Annex I to the
Schedule 14D-9.
The initial term of the New Employment Agreement extends through December
31, 2002, and thereafter is subject to annual automatic renewals through
December 31, 2005, unless either party provides 60 days written notice to the
other party in advance of a renewal period. Under the New Employment Agreement,
Mr. Williamson will receive an annual salary of $450,000, subject to annual
review by the Board of Directors, and will be eligible for a special performance
award of 20,000 TCCC stock options for achieving certain revenue and operating
income targets. Odwalla shall also provide Mr. Williamson customary fringe
benefits provided to similarly situated employees at Odwalla.
Upon the expiration of the New Employment Agreement, Odwalla shall pay Mr.
Williamson his base salary then in effect for a period of one year following the
date of the expiration, offset by any severance
39
payment Mr. Williamson may otherwise receive. Odwalla may terminate the New
Employment Agreement with written notice for cause without liability or further
obligation. If Mr. Williamson is not terminated for cause or Mr. Williamson
terminates the New Employment Agreement for good reason, Odwalla will (1) pay
Mr. Williamson his base salary then in effect for a period of one year following
the date of the expiration, offset by any severance payment Mr. Williamson may
otherwise receive, (2) reimburse Mr. Williamson for the cost of acquiring health
benefits for a period of one year, and (3) negotiate with Mr. Williamson the
treatment of any special performance award. In the event that Mr. Williamson's
severance and other benefits constitute a parachute payment under the Federal
tax law and would be subject to an excise tax, then Mr. Williamson's benefits
will either be delivered in full or delivered to such lesser extent as to avoid
an excise tax, whichever results in Mr. Williamson receiving the greatest amount
on an after-tax basis.
Under the terms of the New Employment Agreement, Mr. Williamson agreed that
he will not, while employed by Odwalla and for a period of two years following
the expiration or termination of his employment, solicit, interfere with or
endeavor to entice away from TCCC or any of its subsidiaries any other employee
of TCCC. Additionally, Mr. Williamson agreed that he will not at any time while
employed by Odwalla and for a period of one year following the expiration or
termination of his employment engage in the manufacture, sale, or distribution
of non-alcoholic beverages in the United States.
During the term of the New Employment Agreement and at all times
thereafter, Mr. Williamson has agreed to keep in confidence and not publish, use
or disclose to others, without Odwalla's prior written consent, any trade
secrets or other confidential information related to TCCC or TCCC's business.
12. PURPOSE OF THE OFFER; THE MERGER; PLANS FOR ODWALLA. The purpose of
the Offer is to acquire control of, and the entire equity interest in, Odwalla.
The Offer is being made pursuant to the Merger Agreement. As promptly as
practicable following the purchase of Shares pursuant to the Offer and after
satisfaction or waiver of all conditions to the Merger set forth in the Merger
Agreement, the Offeror intends to acquire the remaining equity interest in
Odwalla not acquired in the Offer by consummating the Merger.
Vote Required to Approve the Merger. The Board of Directors of Odwalla has
approved and adopted the Offer, the Merger and the Merger Agreement in
accordance with the CGCL. If the Minimum Condition or the Option Exercise
Minimum Number, as applicable, and the other conditions to the Offer are
satisfied and the Offer is consummated, Offeror will own a number of Shares to
cause the Merger to occur without a vote of the shareholders of Odwalla,
pursuant to Section 1110 of the CGCL. The Minimum Condition requires that there
shall have been validly tendered and not properly withdrawn, together with the
Shares owned by TCCC, the Offeror and their direct and indirect subsidiaries, at
least ninety and one-tenth percent (90.1%) of the Shares then outstanding on a
Fully Diluted Basis. If however, the Minimum Condition or the Option Exercise
Minimum Number, as applicable, is not satisfied but the Revised Minimum Number
and the other conditions are satisfied, the Board of Directors will be required
to submit the Merger Agreement to Odwalla's shareholders for approval at a
shareholders' meeting convened for that purpose in accordance with the CGCL.
Pursuant to the Merger Agreement, Odwalla has represented that the execution and
delivery of the Merger Agreement and the Option Agreement by Odwalla and the
consummation by Odwalla of the transactions contemplated thereby have been duly
authorized by all necessary corporate action on the part of Odwalla, subject to
the approval and adoption of the Merger by the shareholders of Odwalla in
accordance with the CGCL. In addition, Odwalla has represented that the
affirmative vote of the holders of a majority of the outstanding Shares is the
only vote of the holders of any of Odwalla's capital stock necessary in
connection with the consummation of the Merger. Therefore, unless the Merger is
consummated in accordance with the short-form merger provisions under the CGCL
described below (in which case no action by the shareholders of Odwalla will be
required to consummate the Merger), the only remaining corporate action of
Odwalla will be the approval and adoption of the Merger Agreement and the
transactions contemplated thereby by the affirmative vote of the holders of a
majority of the Shares. The Merger Agreement provides that TCCC will vote all
Shares beneficially owned by it in favor of the adoption of the Merger Agreement
at Odwalla shareholder's meeting. If the Offeror acquires the Revised Minimum
Number of Shares, it would have the ability to ensure approval of the Merger by
the shareholders of Odwalla with the approval of a de minimis number of
remaining outstanding Shares.
40
Under the CGCL, the merger consideration paid to Odwalla's shareholders may
not be cash if Offeror or TCCC owns, directly or indirectly, more than 50% but
less than 90% of the then outstanding Shares unless either all the shareholders
consent to the Merger or the Commissioner of Corporations of the State of
California approves, after a hearing, the terms and conditions of the Merger and
the fairness thereof. If such shareholder consent or Commissioner of
Corporations approval is not obtained, the CGCL requires that the consideration
received in the Merger consist only of non-redeemable common stock of TCCC. The
purpose of the Offer is to obtain 90.1% or more of the Shares then outstanding
on a Fully Diluted Basis and thus to enable TCCC and Offeror to acquire all the
equity of Odwalla for consideration consisting solely of cash.
THIS OFFER TO PURCHASE ALSO CONSTITUTES NOTICE UNDER SECTION 1110 OF THE
CGCL THAT IF THE OFFEROR, TCCC OR ANY OTHER SUBSIDIARY OF TCCC ACQUIRES AT LEAST
90.1% OF THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS, TCCC OR THE OFFEROR
SHALL CAUSE THE SHORT-FORM MERGER TO BECOME EFFECTIVE WITHOUT ANY FURTHER NOTICE
TO ODWALLA'S SHAREHOLDERS. SEE APPENDIX A (AGREEMENT AND PLAN OF MERGER).
THE OFFER IS CONDITIONED UPON THE MINIMUM CONDITION, THE OPTION EXERCISE
MINIMUM NUMBER OR THE REVISED MINIMUM NUMBER BEING SATISFIED.
THIS OFFER TO PURCHASE DOES NOT CONSTITUTE A SOLICITATION OF A PROXY,
CONSENT OR AUTHORIZATION FOR OR WITH RESPECT TO THE ANNUAL MEETING OR ANY
SPECIAL MEETING OF ODWALLA'S SHAREHOLDERS OR ANY ACTION IN LIEU THEREOF. ANY
SUCH SOLICITATION WHICH THE OFFEROR MAY MAKE WILL BE MADE ONLY PURSUANT TO
SEPARATE PROXY MATERIALS IN COMPLIANCE WITH THE REQUIREMENTS OF SECTION 14(A) OF
THE EXCHANGE ACT.
Dissenters' Rights. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, if the Merger is consummated, certain holders of
Shares who fully comply with and meet all the requirements of Chapter 13 of the
CGCL ("Qualifying Shareholders"), may have certain rights to dissent and to
require Odwalla to purchase their Shares for cash at "fair market value."
Additionally, Qualifying Shareholders will be entitled to exercise dissenters'
rights under the CGCL only if the holders of five percent or more of the
outstanding Shares properly file demands for payment or if the Shares held by
such holders are subject to any restriction on transfer imposed by Odwalla or by
any law or regulation ("Restricted Shares"). Accordingly, if the holders of five
percent or more of the Shares properly file demands for payment in compliance
with Chapter 13 of the CGCL, all other Qualifying Shareholders will be entitled
to require Odwalla to purchase their Shares for cash at their fair market value
if the Merger is consummated. If the holders of fewer than five percent of the
Shares properly file demands for payment in compliance with Chapter 13 of the
CGCL but any holder of Restricted Shares properly files such a demand, only such
holder or holders of Restricted Shares shall be entitled to require Odwalla to
purchase their Shares as described in the preceding sentence. In addition, if
immediately prior to the Effective Time, the Shares are not listed on a national
securities exchange certified by the California Commission of Corporations or
listed on the National Market System of the Nasdaq Stock Market, holders of
Shares may exercise dissenters' rights as to any or all of their Shares entitled
to such rights.
Under the CGCL, the "fair market value" of the Shares may be one agreed to
by Odwalla and the Qualifying Shareholder or judicially determined, depending on
the circumstances. The "fair market value" is determined as of the day before
the first announcement of the terms of the proposed Merger, excluding any
appreciation or depreciation as a result of the Merger and subject to
adjustments. The value so determined could be more or less than the Offer Price.
If the Merger is not completed, no Qualifying Shareholder will be entitled
to have Odwalla purchase such holder's Shares under Chapter 13 of the CGCL. If a
shareholder and Odwalla do not agree on whether that shareholder is a Qualifying
Shareholder, or if a Qualifying Shareholder and Odwalla fail to agree on the
fair market value of Shares and neither Odwalla nor the Qualifying Shareholder
files a complaint or intervenes in a pending action within six months after
Odwalla mails the required notice that shareholders have approved the Merger,
that shareholder does not have (or will cease to have) rights as a dissenting
shareholder. After a shareholder files a demand to exercise dissenters' rights,
that shareholder may not withdraw the demand without Odwalla's consent.
41
The foregoing discussion of the rights of Qualifying Shareholders does not
purport to be a complete statement of the procedures to be followed by
shareholders desiring to exercise any available dissenters' rights and is
qualified in its entirety by reference to Chapter 13 of the CGCL, which is set
forth in Annex II to this Offer to Purchase and incorporated herein by
reference.
FAILING TO FOLLOW THE STEPS REQUIRED BY CHAPTER 13 OF THE CGCL FOR
PERFECTING DISSENTER'S RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may under
certain circumstances be applicable to the Merger following the purchase of
Shares pursuant to the Offer in which the Offeror seeks to acquire any remaining
Shares. Rule 13e-3 should not be applicable to the Merger if the Merger is
consummated within one year after the expiration or termination of the Offer and
the price paid in the Merger is not less than the per Share price paid pursuant
to the Offer. However, if the Offeror is deemed to have acquired control of
Odwalla pursuant to the Offer and if the Merger is consummated more than one
year after completion of the Offer or an alternative acquisition transaction is
effected whereby shareholders of Odwalla receive consideration less than that
paid pursuant to the Offer, in either case at a time when the Shares are still
registered under the Exchange Act, the Offeror may be required to comply with
Rule 13e-3 under the Exchange Act. If applicable, Rule 13e-3 would require,
among other things, that certain financial information concerning Odwalla and
certain information relating to the fairness of the Merger or such alternative
transaction and the consideration offered to minority shareholders in the Merger
or such alternative transaction, be filed with the Commission and disclosed to
shareholders prior to consummation of the Merger or such alternative
transaction. The purchase of a substantial number of Shares pursuant to the
Offer may result in Odwalla being able to terminate its Exchange Act
registration. See Section 14 ("Effect of the Offer on the Market for the Shares,
Stock Exchange Listing and Exchange Act Registration"). If such registration
were terminated, Rule 13e-3 would be inapplicable to any such future Merger or
such alternative transaction.
Plans for Odwalla. TCCC will continue to evaluate the business and
operations of Odwalla during the pendency of the Offer and after the
consummation of the Offer and the Merger. TCCC intends to seek additional
information about Odwalla during this period. Thereafter, TCCC intends to review
such information as part of a comprehensive review of Odwalla's business,
operations, capitalization and management with a view to optimizing Odwalla's
potential contribution to TCCC's business.
Except as indicated in this Offer to Purchase, TCCC does not have any
current plans or proposals which relate to or would result in any of the
following: an extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving Odwalla or any of its subsidiaries; a
sale or transfer of a material amount of assets of Odwalla or any of its
subsidiaries; any change in the present Board of Directors or management of
Odwalla; any material change in Odwalla's present capitalization or dividend
policy; or any other material change in Odwalla's corporate structure or
business. Notwithstanding the foregoing, promptly after the Offeror acquires a
majority of the Shares, the Offeror will be entitled to designate such number of
directors on the Board of Directors of Odwalla as will make the percentage of
Odwalla's directors designated by the Offeror equal to the percentage of
aggregate voting power of the Shares held by TCCC or any of its subsidiaries. In
addition, assuming the Offeror's nominees are appointed as directors of Odwalla
and so long as there are holders of Shares other than TCCC or any of its
subsidiaries, TCCC expects that the Board of Directors of Odwalla would not
declare dividends on the Shares.
13. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement provides that
between the date of the Merger Agreement and the earlier of the Effective Time
or the termination of the Merger Agreement in accordance with its terms, unless
TCCC otherwise expressly agrees in writing (which agreement shall not be
unreasonably withheld or delayed), Odwalla shall not, nor shall Odwalla permit
any of its subsidiaries to, (i) declare or pay any dividends on or make other
distributions (whether in cash, stock or property) in respect of any of its
capital stock, except for dividends payable to Odwalla by a wholly owned
subsidiary of Odwalla; (ii) split, combine or reclassify any of its capital
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock; (iii)
repurchase, redeem or otherwise acquire any shares of its capital stock; (iv)
issue, deliver or sell, or authorize or propose the issuance, delivery or sale
of, any shares of its capital stock or any securities convertible into any such
shares of
42
its capital stock, or any rights, warrants or options to acquire any such shares
or convertible securities or any stock appreciation rights, phantom stock plans
or stock equivalents, other than the issuance of Shares upon (A) the exercise of
Company Options outstanding as of the date of the Merger Agreement or awarded in
conformity with clause; (v) below, and (B) the exercise of warrants outstanding
as of the date of the Merger Agreement; (v) award or grant, or authorize or
propose the award or grant of, any unvested Company Options, other than the
award or grant of Company Options to employees (other than executive officers of
Odwalla) in accordance with the terms of the Company Stock Option Plans and in
the ordinary course of business and consistent with past practices for up to no
more than 100,000 Shares in the aggregate for all employees issued to employees
who have not prior to the date of the Merger Agreement received option grants in
calendar year 2001; (vi) modify or adjust any outstanding options to acquire
Shares; or (vii) take any action that would, or could reasonably be expected to,
result in any of the conditions to closing set forth in the Merger Agreement not
being satisfied.
14. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, STOCK EXCHANGE
LISTING AND EXCHANGE ACT REGISTRATION. The purchase of Shares pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
will reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the public. Following
the purchase of Shares pursuant to the Offer, at least ninety and one-tenth
percent (90.1%) of the Shares then outstanding on a Fully Diluted Basis or 49.9%
of the outstanding Shares will be owned by the Offeror.
Depending on the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the Nasdaq National Market for
continued listing. To maintain such designation, a security must substantially
meet one of two maintenance standards. The first maintenance standard requires
that (i) there be at least 750,000 publicly held shares; (ii) the publicly held
shares have a market value of at least $5 million; (iii) the issuer have net
tangible assets of at least $4 million or stockholder's equity of $10 million;
(iv) there be at least 400 shareholders of round lots; (v) the minimum bid price
per share must be at least $1.00; and (vi) there be at least two registered and
active market makers. The second maintenance standard requires that (i) the
issuer have either (A) a market capitalization of at least $50 million or (B)
total assets and total revenue of at least $50 million each for the most
recently completed fiscal year or two of the last three most recently completed
fiscal years; (ii) there be at least 1,100,000 shares publicly held; (iii) the
publicly held shares have a market value of at least $15 million; (iv) the
minimum bid price per share be at least $3.00; (v) there be at least 400
shareholders of round lots; and (vi) there be at least four registered and
active market makers.
If these standards for continued listing for Nasdaq National Market are not
met, the Shares might nevertheless continue to be included in the Nasdaq
SmallCap Market. Inclusion in the Nasdaq SmallCap Market, however, would require
that (i) there be at least 300 round lot holders, (ii) there be at least 500,000
publicly held shares, (iii) the publicly held shares have a market value of at
least $1 million, (iv) there be at least two registered and active market
makers, of which one may be entering stabilizing bids and (v) the issuer has
either (A) net tangible assets of at least $2 million or stockholder's equity of
$2.5 million, (B) market capitalization of at least $35 million or (C) net
income of at least $500,000 in the most recently completed fiscal year or in two
of the last three most recently completed fiscal years. Shares held directly or
indirectly by directors, officers or beneficial owners of more than 10% of the
Shares are not considered as being publicly held for the purpose of determining
whether either of the Nasdaq Stock Market listing criteria are met.
On September 27, 2001 the Nasdaq Stock Market implemented a moratorium on
the minimum bid and public float requirements for continued listing on the
Nasdaq National Market and the Nasdaq SmallCap Market. The temporary relief is
available until January 2, 2002. Until that date, companies will not be cited
for failing to meet the above described minimum bid and public float
requirements for continued listing.
If the purchase of Shares pursuant to the Offer causes the Shares to no
longer meet the requirements for continued inclusion in Nasdaq National Market
or the Nasdaq SmallCap Market as a result of a reduction in the number or market
value of publicly held Shares or the number of round lot holders or otherwise,
as the case may be, the market for Shares could be adversely affected. It is
possible that the Shares would continue to trade in the over-the-counter market
and that price quotations would be reported by other sources. The extent of the
public market therefor and the availability of such quotations would depend,
however, upon such
43
factors as the number of shareholders and/or the aggregate market value of such
securities remaining at such time, the interest in maintaining a market in the
Shares on the part of the securities firms, the possible termination of
registration under the Exchange Act as described below and other factors. The
Offeror cannot predict whether the reduction in the number of Shares that might
otherwise trade publicly would have an adverse or beneficial effect on the
market price for or marketability of the Shares or whether it would cause future
market prices to be greater or less than the Offer Price.
The Shares are currently registered under the Exchange Act. The purchase of
Shares pursuant to the Offer may result in the Shares becoming eligible for
deregistration under the Exchange Act. Registration of the Shares may be
terminated upon application of Odwalla to the Commission if the Shares are not
listed on a national securities exchange and there are fewer than 300 record
holders. The termination of the registration of the Shares under the Exchange
Act would substantially reduce the information required to be furnished by
Odwalla to holders of the Shares and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b), the requirement of furnishing a proxy statement in connection with
shareholders' meetings and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions, no longer applicable to the
Shares. Furthermore, "affiliates" of Odwalla and persons holding "restricted
securities" of Odwalla may be deprived of the ability to dispose of the
securities pursuant to Rule 144 under the Securities Act.
The Shares are currently "margin securities" under the rules of the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board"), which
has the effect, among other things, of allowing brokers to extend credit on the
collateral of such Shares for the purpose of buying, carrying, or trading in
securities. Depending upon factors similar to those described above with respect
to listing and market quotations, it is possible that, following the Offer, the
Shares might no longer constitute "margin securities" for the purposes of the
Federal Reserve Board's margin regulations and therefore could no longer be used
as collateral for purpose credits made by brokers. In any event, the Shares will
cease to be "margin securities" if registration of the Shares under the Exchange
Act is terminated.
TCCC currently intends to seek delisting of the Shares from Nasdaq and the
termination of the registration of the Shares under the Exchange Act as soon
after completion of the Offer as the requirements for such delisting and
termination are met. If Nasdaq listing and the Exchange Act registration of the
Shares are not terminated prior to the Merger, then the Shares will be delisted
from Nasdaq and the registration of the Shares under the Exchange Act will be
terminated following the consummation of the Merger.
15. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision
of the Offer, and in addition to (and not in limitation of) the Offeror's rights
to extend and/or amend the Offer at any time in its sole discretion (subject to
the provisions of the Merger Agreement), the Offeror's obligations under the
Merger Agreement pursuant to the Offer shall be subject to the following
conditions, and if such conditions are not satisfied, the Offeror may delay the
acceptance for payment of or, subject to any applicable rules and regulations of
the Commission, including Rule 14e-1(c) under the Exchange Act, the payment for,
any tendered Shares, and may terminate or amend the Offer as to any Shares not
then paid for:
-- at or prior to the expiration date of the Offer, the number of Shares
validly tendered and not withdrawn, together with any Shares then
owned by TCCC or the Offeror, shall satisfy the Minimum Condition or,
if applicable pursuant to the provisions of the Merger Agreement, the
Option Exercise Minimum Number or the Revised Minimum Number;
-- at or prior to the expiration date of the Offer, (a) any applicable
waiting period under the HSR Act shall have expired or been
terminated, and (b) all other actions by or in respect of or other
filings with any governmental entity required to permit the
consummation of the Offer and the Merger shall have been obtained or
made other than in the case of clause (b), such actions or filings
the failure of which to make or obtain would not reasonably be
expected to have a Company Material Adverse Effect;
-- the Shareholders' Rights Agreement dated as of May 2, 2000 among
Odwalla and certain shareholders shall have been terminated;
-- immediately prior to the consummation of the Offer all unpaid fines,
penalties and interest owed to the United States government under
Odwalla's settlement agreement with the United States
44
government dated July 23, 1998 (the "Settlement Fee") shall have been
paid, unless such failure to make payment of the Settlement Fee is
caused by the failure of TCCC to meet its obligation to loan Odwalla
the amount necessary to pay the Settlement Fee; and Odwalla shall
have provided to the Food and Drug Administration's San Francisco
District Office not less than 10 days prior notice of the
consummation of the Offer; and
-- at any time after the date of the Merger Agreement and prior to
acceptance for payment of Shares pursuant to the Offer, none of the
following events or conditions shall occur or exist:
-- there shall be instituted, pending or threatened any action or
proceeding by any governmental authority: (i) challenging or seeking
to permanently restrain, enjoin or otherwise prohibit the Offer or
the Merger; (ii) seeking to restrain or prohibit TCCC's or the
Offeror's full rights of ownership or operation of any portion of
the business or assets of Odwalla, or to compel TCCC or the Offeror
to dispose of or hold separate all or any portion of the business or
assets of Odwalla; (iii) seeking to impose limitations on the
ability of TCCC or the Offeror effectively to exercise full rights
of ownership of the Shares acquired pursuant to the Offer and the
Merger, including, without limitation, the right to vote any Shares
acquired or owned by TCCC or the Offeror on all matters properly
presented to Odwalla's shareholders; (iv) seeking to require
divestiture by TCCC or the Offeror of any Shares; or (v) that
otherwise would reasonably be expected to have a Company Material
Adverse Effect;
-- there shall be enacted, enforced, promulgated, in force, or deemed
applicable to the Offer or the Merger by any governmental authority
any statute, rule, regulation, judgment, order or injunction (other
than the application of the routine waiting period provisions of the
HSR Act) that has, directly or indirectly, resulted, or is
reasonably likely to, directly or indirectly, result in any of the
consequences referred to in the paragraph above;
-- an event shall have occurred that has resulted in, or would be
reasonably expected to result in, a Company Material Adverse Effect;
or
-- any court of competent jurisdiction or other governmental entity
shall have issued an order, decree, ruling or take any other action
restraining, enjoining or otherwise prohibiting the Offer or the
Merger provided, that with respect to shareholder litigation, unless
such order, decree, ruling or other action shall be final and
nonappealable, this condition in and of itself shall not be a ground
for termination and shall only have the effect of delaying the
consummation of the Offer during the effective period of such order,
decree, ruling or other action;
-- there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market, (ii) the declaration of
any banking moratorium or any suspension of payments in respect of
banks or any material limitation (whether or not mandatory) on the
extension of credit by lending institutions in the United States,
(iii) the commencement of a war, material armed hostilities or other
material international or national calamity directly or indirectly
involving the United States that has a significant adverse effect on
the functioning of the financial markets in the United States, or
(iv) in the case of any of the foregoing existing at the time of
execution of the Agreement, a material acceleration or worsening
thereof, provided that this condition in and of itself shall not be
a ground for termination and shall only have the effect of delaying
the consummation of the Offer during the effective period of such
declaration or suspension or other event;
-- (A) the representations and warranties of Odwalla in the Merger
Agreement shall not be true and correct in all respects as of the
date of the Merger Agreement and as of the expiration of the Offer
without giving effect to any exceptions for "material" or
"materiality" or "Company Material Adverse Effect", except where the
failure of such representations and warranties to be true and
correct, individually or in the aggregate, does not have and is not
reasonably likely to have a Company Material Adverse Effect; (B)
Odwalla shall not have performed in all material respects all
covenants, agreements and obligations required to be performed by it
under the Merger Agreement; (C) the directors of Odwalla shall have
not resigned as provided in the Merger
45
Agreement; or (D) an officer of Odwalla shall not have delivered to
TCCC and the Offeror a certificate to the effect that each of the
foregoing conditions are satisfied in all respects; or
-- the Merger Agreement shall have been terminated in accordance with
its terms or amended in accordance with its terms to provide for
such termination or amendment of the Offer.
The foregoing conditions are for the sole benefit of TCCC and the Offeror
and may be asserted or waived by TCCC or the Offeror, regardless of the
circumstances giving rise to any such condition (including any action or
omission by TCCC or the Offeror), in whole or in part at any time and from time
to time in their sole discretion. The failure by TCCC or the Offeror at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right; the waiver of any such right with respect to any particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances; and each such right shall be deemed an ongoing right and may be
asserted at any time and from time to time.
16. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
General. Except as set forth below, based upon its examination of publicly
available filings by Odwalla with the Commission and other publicly available
information concerning Odwalla, neither the Offeror nor TCCC is aware of any
licenses or other regulatory permits that appear to be material to the business
of Odwalla and its subsidiaries, taken as a whole, that might be adversely
affected by the Offeror's acquisition of Shares (and the indirect acquisition of
the stock of Odwalla's subsidiaries) as contemplated herein, or of any filings,
approvals or other actions by or with any domestic (Federal or state), foreign
or supranational governmental authority or administrative or regulatory agency
that would be required prior to the acquisition of Shares (or the indirect
acquisition of the stock of Odwalla's subsidiaries) by the Offeror pursuant to
the Offer as contemplated herein. Should any such approval or other action be
required, it is the Offeror's present intention to seek such approval or action.
However, the Offeror does not presently intend to delay the purchase of Shares
tendered pursuant to the Offer pending the receipt of any such approval or the
taking of any such action (subject to the Offeror's right to delay or decline to
purchase Shares if any of the conditions in Section 15 shall have occurred).
There can be no assurance that any such approval or other action, if needed,
would be obtained without substantial conditions or that adverse consequences
might not result to the business of Odwalla, TCCC or the Offeror or that certain
parts of the businesses of Odwalla, TCCC or the Offeror might not have to be
disposed of or held separate or other substantial conditions complied with in
order to obtain such approval or other action or in the event that such approval
was not obtained or such other action was not taken, any of which could cause
the Offeror to elect to terminate the Offer without purchasing the Shares
thereunder. The Offeror's obligation under the Offer to accept for payment and
pay for Shares is subject to certain conditions, including conditions relating
to the legal matters discussed in this Section 16.
Antitrust. Under the HSR Act and the rules promulgated thereunder by the
Federal Trade Commission (the "FTC"), the acquisition of Shares under the Offer
may not be consummated until notifications have been given and certain
information has been furnished to the FTC and the Antitrust Division of the
Department of Justice (the "Antitrust Division") and the specified waiting
period requirements have been satisfied. The FTC has deemed that TCCC filed
notification and report forms under the HSR Act with the FTC and the Antitrust
Division on November 2, 2001. Accordingly, the waiting period under the HSR Act
will expire at 11:59 p.m., Eastern time, on November 19, 2001 unless TCCC or
Odwalla receives a request for additional documentary material, or the Antitrust
Division and the FTC terminate the waiting period prior thereto. In practice,
complying with a request for additional information or material can take a
significant amount of time. In addition, if the Antitrust Division or the FTC
raises substantive issues in connection with a proposed transaction, the parties
may engage in negotiations with the relevant governmental agency concerning
possible means of addressing those issues and may agree to delay consummation of
the transaction while such negotiations continue.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Offeror's proposed acquisition of
Odwalla. At any time before or after the Offeror's acquisition of Shares
pursuant to the Offer, the Antitrust Division or the FTC could take such action
under the antitrust laws as either deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger, or seeking the divestiture of Shares
acquired by the Offeror or the divestiture of substantial assets of Odwalla or
its subsidiaries or TCCC
46
or its subsidiaries. Private parties may also bring legal action under the
antitrust laws under certain circumstances. Additionally, at any time before or
after the Offeror's acquisition of Shares pursuant to the Offer and
notwithstanding that the HSR Act waiting period may have expired, any state
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest. Such action could include seeking to enjoin
the purchase of Shares pursuant to the Offer or the consummation of the Merger,
or seeking the divestiture of Shares acquired by the Offeror or the divestiture
of substantial assets of Odwalla or its subsidiaries or TCCC or its
subsidiaries. There can be no assurance that a challenge to the Offer, the
consummation of the Merger or the tender of the Shares pursuant to the Tender
Agreements on antitrust grounds will not be made, or, if such a challenge is
made, of the result thereof.
If any waiting period under the HSR Act applicable to the Offer has not
expired or been terminated prior to the Expiration Date, the Offeror will not be
obligated to proceed with the Offer or the purchase of any Shares not
theretofore purchased pursuant to the Offer. See Section 15 ("Certain Conditions
of the Offer").
State Anti-Takeover Laws--California. Odwalla is incorporated under the
laws of the State of California. Section 1203 of the CGCL provides that if a
tender offer is made to some or all of a corporation's shareholders by an
"interested party," an affirmative opinion in writing as to the fairness of the
consideration to the shareholders of such corporation is required to be
delivered to the shareholders at the time that the tender offer is first made in
writing to the shareholders. However, if the tender offer is commenced by
publication and tender offer materials are subsequently mailed or otherwise
distributed to the shareholders, the opinion may be omitted in the publication
if the opinion is included in the materials distributed to the shareholders. For
purposes of Section 1203, the term "interested party" includes, among other
things, a person who is a party to the transaction and (A) directly or
indirectly controls the corporation that is the subject of the tender offer or
proposal, (B) is, or is directly or indirectly controlled by, an officer or
director of the subject corporation or (C) is an entity in which a material
financial interest is held by any director or executive officer of the subject
corporation. While none of Odwalla, TCCC or Offeror believes that the Offer
constitutes a transaction that falls within the provisions of Section 1203, an
independent financial advisor, DrKW, has been retained by Odwalla to provide a
fairness opinion with respect to the Offer and has provided such opinion to
Odwalla.
Under the CGCL, the Merger consideration paid to the shareholders of
Odwalla may not be cash if the Offeror or TCCC owns directly or indirectly more
than 50% but less than 90% of the then outstanding Shares, unless either all the
shareholders of Odwalla consent or the Commissioner of Corporations of the State
of California approves, after a hearing, the terms and conditions of the Merger
and the fairness thereof.
If the Minimum Condition is not satisfied on any scheduled Expiration Date
of the Offer, the Offeror may, in its sole discretion, either (x) extend the
Offer pursuant to the provisions of the Merger Agreement, (y) amend the Offer in
contemplation of the exercise of the Option Agreement (to the extent the Option
Agreement is exercisable at such time) to reduce the Minimum Condition to the
Option Exercise Minimum Number, or (z) amend the Offer to provide that, in the
event (i) the Minimum Condition is not satisfied at the next scheduled
expiration date of the Offer (after giving effect to the issuance of any Shares
theretofore acquired by TCCC or Offeror) and (ii) the number of Shares tendered
pursuant to the Offer and not withdrawn as of such next scheduled expiration
date is more than 50% of the then outstanding Shares, Offeror shall waive the
Minimum Condition and amend the Offer to reduce the number of Shares subject to
the Offer to the Revised Minimum Number and, subject to the prior satisfaction
or waiver of the other conditions of the Offer, purchase, on a pro rata basis,
the Revised Minimum Number of shares (it being understood that Offeror shall not
in any event be required to accept for payment, or pay for, any Shares less than
the Revised Minimum Number of Shares are tendered pursuant to the Offer and not
withdrawn at the expiration date).
State Takeover Laws--Other. A number of states have adopted takeover laws
and regulations which purport to varying degrees to be applicable to attempts to
acquire securities of corporations which are incorporated in such states or
which have or whose business operations have substantial economic effects in
such states, or which have substantial assets, security holders, principal
executive offices or principal places of business therein. In 1982, the Supreme
Court of the United States, in Edgar v. Mite Corp., invalidated on
constitutional grounds the Illinois Business Takeovers Act, which as a matter of
state securities law made takeovers of corporations meeting certain requirements
more difficult, and the reasoning in such decision is
47
likely to apply to certain other state takeover statutes. However, in 1987, in
CTS Corp. v. Dynamics Corp. of America, the Supreme Court of the United States
held that the State of Indiana could, as a matter of corporate law and in
particular those aspects of corporate law concerning corporate governance,
constitutionally disqualify a potential acquiror from voting on the affairs of a
target corporation without the prior approval of the remaining shareholders,
provided that such laws were applicable only under certain conditions.
Subsequently, in TLX Acquisition Corp. v. Telex Corp., a federal district court
in Oklahoma ruled that the Oklahoma statutes were unconstitutional insofar as
they applied to corporations incorporated outside Oklahoma in that they would
subject such corporations to inconsistent regulations. Similarly, in Tyson
Foods, Inc. v. McReynolds, a federal district court in Tennessee ruled that four
Tennessee takeover statutes were unconstitutional as applied to corporations
incorporated outside Tennessee. This decision was affirmed by the United States
Court of Appeals for the Sixth Circuit.
Except as described herein, the Offeror has not attempted to comply with
any state takeover statutes in connection with the Offer. The Offeror reserves
the right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer to Purchase nor any action
taken in connection herewith is intended as a waiver of that right. If any state
takeover statute is found applicable to the Offer, the Offeror might be unable
to accept for payment or purchase Shares tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer. In such case, the Offeror may
not be obligated to accept for purchase or pay for any Shares tendered. See
Section 15 ("Certain Conditions of the Offer").
Margin Regulations. The Shares are currently "margin securities," as such
term is defined under the rules of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), which has the effect, among other things,
of allowing brokers to extend credit on the collateral of such securities.
Depending upon factors similar to those described above regarding listing and
market quotations, following the Offer, it is possible that the Shares might no
longer constitute "margin securities" for purposes of the margin regulations of
the Federal Reserve Board, in which event such Shares could no longer be used as
collateral for loans made by brokers. In addition, if registration of the Shares
under the Exchange Act were terminated, the Shares would no longer constitute
"margin securities."
17. FEES AND EXPENSES. Except as set forth below, neither the Offeror nor
TCCC, nor any officer, director, shareholder, agent or other representative of
the Offeror or TCCC will pay any fees or commissions to any broker, dealer or
other person for soliciting tenders of Shares pursuant to the Offer. Brokers,
dealers, commercial banks and trust companies and other nominees will, upon
request, be reimbursed by the Offeror for customary mailing and handling
expenses incurred by them in forwarding materials to their customers.
Morgan Stanley is acting as Dealer Manager in connection with the Offer and
has provided certain financial advisory services to TCCC in connection with the
proposed acquisition of Odwalla. TCCC has agreed to pay Morgan Stanley customary
compensation for such services. TCCC has also agreed to reimburse Morgan Stanley
for reasonable expenses incurred, including fees and expenses of legal counsel
or advisors should they be engaged by Morgan Stanley, and to indemnify Morgan
Stanley and certain related persons against certain liabilities and expenses in
connection with the engagement of Morgan Stanley, including certain liabilities
under the federal securities laws. Morgan Stanley and its affiliates have from
time to time rendered, and continue to render, various investment banking
services to TCCC and have received, and may receive, fees for the rendering of
such services. In addition, at any time, Morgan Stanley and its affiliates may
actively trade Shares for its own account or for the account of customers and,
accordingly, may at any time hold a long or short position in Shares.
The Offeror has retained Innisfree M&A Incorporated as Information Agent
and EquiServe Trust Company, N.A. as Depositary in connection with the Offer.
The Information Agent and the Depositary will receive reasonable and customary
compensation for their services hereunder and reimbursement for their reasonable
out-of-pocket expenses. The Depositary will also be indemnified by the Offeror
against certain liabilities in connection with the Offer. The Information Agent
may contact holders of Shares by mail, facsimile or personal interviews and may
request brokers, dealers and other nominee shareholders to forward materials
relating to the Offer to beneficial owners of Shares.
The Offeror will not pay any fees or commissions to any broker or dealer or
any other person for soliciting tenders of Shares pursuant to the Offer (other
than to the Dealer Manager, the Information Agent and the
48
Depositary). Brokers, dealers, commercial banks and trust companies will, upon
request, be reimbursed by the Offeror for customary mailing and handling
expenses incurred by them in forwarding offering materials to their customers.
18. MISCELLANEOUS. The Offer is being made solely by this Offer to
Purchase and the related Letter of Transmittal and is being made to holders of
Shares. The Offeror is not aware of any jurisdiction where the making of the
Offer is prohibited by any administrative or judicial action pursuant to any
valid state statute. If the Offeror becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, the Offeror will make a good faith effort to comply with any such state
statute. If, after such good faith effort, the Offeror cannot comply with any
such state statute, the Offer will not be made to (nor will tenders be accepted
from or on behalf of) the holders of Shares in such state. In any jurisdiction
where the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of the
Offeror by the Dealer Manager or by one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, TCCC and Offeror have filed with the Commission the Schedule TO,
together with exhibits, furnishing certain additional information with respect
to the Offer. The Schedule TO and any amendments thereto, including exhibits,
may be inspected at, and copies may be obtained from, the same places and in the
same manner as set forth in Section 7 ("Certain Information Concerning Odwalla")
(except that they will not be available at the regional offices of the
Commission).
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE OFFEROR OR TCCC NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
November 6, 2001
49
ANNEX I
CERTAIN INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF THE OFFEROR AND TCCC
1. DIRECTORS AND EXECUTIVE OFFICERS OF THE OFFEROR. Set forth below are
the name, current business address, citizenship, present principal occupation or
employment history (covering a period of not less than five years) of each
executive officer and director of Offeror. The business address of each such
director and executive officer is: c/o The Coca-Cola Company, One Coca-Cola
Plaza, Atlanta, Georgia 30313. All directors and executive officers listed below
are citizens of the United States.
DIRECTORS OF OFFEROR
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME MATERIAL POSITIONS HELD DURING PAST FIVE YEARS
------------------------------------- ------------------------------------------------------------
Donald W. Short...................... Vice President of TCCC; President and Chief Executive
Officer of The Minute Maid Company ("TMMC"), a division of
TCCC; Chief Executive Officer of Global Health & Wellness
Business of TCCC from January 2001 until October 2001;
President of the Africa and Middle East Group from January
2000 until January 2001; President of the India Division of
TCCC from January 1997 until December 1999; Senior Vice
President, Retail Marketing for Coca-Cola (Japan) Co. Ltd.,
a subsidiary of TCCC, from 1993 until 1997.
Sole Director of the Board of Directors of the Offeror.
EXECUTIVE OFFICERS OF OFFEROR
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME MATERIAL POSITIONS HELD DURING PAST FIVE YEARS
------------------------------------- ------------------------------------------------------------
Paul Etchells........................ Assistant Vice President of TCCC and Director of Mergers and
Acquisitions; Group Mergers & Acquisitions Manager for Asia
for TCCC from 1998 to September 2001; Managing Director of
Swire Beverages, a key bottler with operations in China,
Hong Kong, Taiwan, and the United States, from 1996 until he
joined The Coca-Cola Company in 1998.
President of the Offeror.
Mr. Etchells is a citizen of the United Kingdom.
Shawn Sugarman....................... Vice President and General Manager, Bottler Juice Brands
Team and Business Development--TMMC from March 2001 to
present; Vice President, Business Strategy--TMMC from
January 2001 until February 2001; Vice President & Managing
Director, Single Serve Business Team--TMMC from August 2000
until December 2000; President and CEO--TMMC from July 1998
until July 2000; Vice President and Controller--TMMC from
May 1996 until June 1998.
Chief Financial Officer of the Offeror.
Steven Hauser........................ Vice President and General Counsel of TMMC.
Secretary of the Offeror.
I-1
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME MATERIAL POSITIONS HELD DURING PAST FIVE YEARS
------------------------------------- ------------------------------------------------------------
Steve Whaley......................... Vice President and General Tax Counsel of TCCC since October
1996.
Assistant Secretary of the Offeror.
David Taggart........................ Vice President and Treasurer of TCCC; Manager of Treasury
Operations from 1983 until 1985. Assistant Treasurer of TCCC
from 1985 until 1993.
Treasurer of the Offeror.
2. DIRECTORS AND EXECUTIVE OFFICERS OF TCCC. Set forth below are the
name, current business address, citizenship, present principal occupation or
employment history (covering a period of not less than five years) of each
executive officer and director of TCCC. Unless otherwise indicated, the business
address of each such director and executive officer is: c/o The Coca-Cola
Company, One Coca-Cola Plaza, Atlanta, Georgia 30313. Except as set forth below,
all directors and executive officers listed below are citizens of the United
States.
DIRECTORS OF TCCC
PRINCIPAL OCCUPATION
OR EMPLOYMENT AND MATERIAL
NAME POSITIONS HELD DURING PAST FIVE YEARS ADDRESS
---------------------- ---------------------------------------- ---------------------------
Douglas N. Daft....... Chairman of the Board of Directors and
Chief Executive Officer of TCCC;
President and Chief Operating Officer of
TCCC from December 5, 1999 until
February 17, 2000; Senior Vice President
of TCCC from 1991 until December 5,
1999.
Mr. Daft is a citizen of Australia.
Herbert A. Allen...... President and Chief Executive Officer of Allen & Company
Allen & Company Incorporated, a Incorporated
privately held investment banking firm, 711 Fifth Avenue
for more than the past five years; New York, NY 10022
Director of Convera Corporation.
Ronald W. Allen....... Consultant to and advisory director of Monarch Tower
Delta Air Lines, Inc., a major U.S. air Suite 1745
transportation company; Chairman of the 3424 Peachtree Road, N.E.
Board of Directors and Chief Executive Atlanta, GA 30326
Officer of Delta Air Lines, Inc. from
1987 to July 1997.
Cathleen P. Black..... President of Hearst Magazines, a unit of Hearst Magazines
The Hearst Corporation, a major media 959 8th Avenue
and communications company; Director of New York, NY 10019
International Business Machines
Corporation and Women.com Networks, Inc.
Warren E. Buffett..... Chairman of the Board of Directors and Berkshire Hathaway Inc.
Chief Executive Officer of Berkshire 1440 Kiewit Plaza
Hathaway Inc., a diversified holding Omaha, NE 68131
company; Director of The Gillette
Company and Director of The Washington
Post Company.
I-2
PRINCIPAL OCCUPATION
OR EMPLOYMENT AND MATERIAL
NAME POSITIONS HELD DURING PAST FIVE YEARS ADDRESS
---------------------- ---------------------------------------- ---------------------------
Susan B. King......... President of The Leadership Initiative, Duke University
a support corporation of Duke University The Leadership Initiative
charged with the establishment of Box 90545
undergraduate college leadership Durham, NC 27708-0545
programs, since September 1999; From
January 1995 to September 1999, served
as Leader in Residence, Hart Leadership
Program, Stanford Institute of Public
Policy, Duke University, a program for
the development and advancement of
leadership and management skills in the
public and private sectors; Director of
Guidant Corporation.
Donald F. McHenry..... Distinguished Professor in the Practice The IRC Group, LLC
of Diplomacy and International Affairs, 1320 19th Street, N.W.
Georgetown University; a principal owner Suite 410
and President of The IRC Group, LLC, a Washington, D.C. 20036
New York City and Washington, D.C.
consulting firm; Director of AT&T
Corporation, FleetBoston Financial
Corporation, International Paper Company
and GlaxoSmithKline plc.
Sam Nunn.............. Partner in the law firm of King & King & Spalding
Spalding since January 1997; A member of 191 Peachtree Street
the United States Senate from 1972 Atlanta, GA 30303-1763
through 1996; Director of Community
Health Systems, Inc., Dell Computer
Corporation, General Electric Company,
Internet Security Systems, Inc.,
National Service Industries, Inc.,
Scientific-Atlanta, Inc., Texaco, Inc.
and Total System Services, Inc.
Paul F. Oreffice...... Retired in 1992 as Chairman of the Board 11120 North 107th Way
of Directors and Chief Executive Officer Scottsdale, AZ 85259
of The Dow Chemical Company, a
diversified chemical, metals, plastics
and packaging company.
James D. Robinson Co-founder, Chairman and Chief Executive RRE Investors, LLC
III................. Officer of RRE Investors, LLC, a private 22nd Floor
information technology venture 126 East 56th Street
investment firm; General Partner of RRE New York, NY 10022
Ventures, L.P.; Chairman of Violy,
Byorum & Partners Holdings, LLC, a
private firm specializing in financial
advisory and investment banking
activities in Latin America; Director of
Bristol-Myers Squibb Company, Cambridge
Technology Partners (Massachusetts),
Inc., First Data Corporation,
ScreamingMedia, Inc. and Sunbeam
Corporation.
I-3
PRINCIPAL OCCUPATION
OR EMPLOYMENT AND MATERIAL
NAME POSITIONS HELD DURING PAST FIVE YEARS ADDRESS
---------------------- ---------------------------------------- ---------------------------
Peter V. Ueberroth.... Investor and Chairman of The Contrarian The Contrarian Group, Inc.
Group, Inc., a business management Suite 111
company; Chairman of Ambassadors 1071 Camelback Street
International, Inc.; Director of Hilton Newport Beach, CA 92660
Hotels Corporation and Co-Chairman of
Pebble Beach Company.
James B. Williams..... Director and Chairman of the Executive SunTrust Banks, Inc.
Committee of SunTrust Banks, Inc., a P.O. Box 4418
bank holding company; Retired in March Atlanta, GA 30302
1998 as Chairman of the Board of
Directors and Chief Executive Officer of
SunTrust Banks, Inc.; Director of
Genuine Parts Company, Georgia-Pacific
Corporation, Rollins, Inc. and RPC, Inc.
EXECUTIVE OFFICERS OF THE COCA-COLA COMPANY
PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME MATERIAL POSITIONS HELD DURING PAST FIVE YEARS
------------------------------------- ------------------------------------------------------------
Brian G. Dyson....................... Vice Chairman and Chief Operating Officer; Joined TCCC in
1959 and worked for many years in South America, the
Caribbean and Mexico; President of Coca-Cola USA from 1978
until 1983; President of Coca-Cola North America from 1983
until 1986; President and Chief Executive Officer of
Coca-Cola Enterprises, Inc. from 1988 until 1994
Mr. Dyson is a citizen of Argentina.
Steven J. Heyer...................... Executive Vice President and President and Chief Operating
Officer, Coca-Cola Ventures; In 1996, became President and
Chief Operating Officer of Turner Broadcasting System, Inc.;
In 1994, joined TBS, Inc. as President of Turner
Broadcasting Sales, Inc.
Mary Minnick......................... Executive Vice President and President and Chief Operating
Officer, Coca-Cola Asia Group; From 1996-1997, Vice
President and Director, Middle and Far East Marketing
President, South Pacific Division from 1997-2000; President,
Coca-Cola (Japan) Co., Ltd. 2000-2001; Ms. Minnick began her
career at TCCC in 1983, and spent ten years working in
Coca-Cola USA, both in Fountain Sales and in the Bottle/Can
Division.
Alexander R.C. Allan................. Executive Vice President and President and Chief Operating
Officer, Europe, Eurasia and Middle East Group; Mr. Allan, a
native of Johannesburg, joined the Coca-Cola system in 1968;
Formerly President of the Middle East Division (renamed
Middle East & North Africa Division in 1998); In October
1999, appointed President of the Middle & Far East Group.
I-4
PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME MATERIAL POSITIONS HELD DURING PAST FIVE YEARS
------------------------------------- ------------------------------------------------------------
James E. Chestnut.................... Executive Vice President, Operations Support; Joined TCCC in
1972 as financial analyst for The Coca-Cola Export
Corporation in London; In 1989, became Chief Financial
Officer of Coca-Cola (Japan) Company Limited; Vice President
and Controller of TCCC from 1993 until 1994; Elected Chief
Financial Officer of TCCC in 1994; Director of Coca-Cola
FEMSA and Coca-Cola Enterprises, Inc.
Mr. Chestnut is a citizen of the United Kingdom.
Carl Ware............................ Executive Vice President, Public Affairs; Appointed Vice
President, Special Markets, Coca-Cola USA in 1979; Appointed
Vice President, Urban Affairs of TCCC in 1982; Elected
Senior Vice President and Director, Corporate External
Affairs in 1986 and became Deputy Group President of
Northeast Europe/Africa Group of International Business
Sector in 1991; Appointed President of the Africa Group in
1993.
Deval L. Patrick..................... Executive Vice President and General Counsel; In 1999,
joined Texaco, Inc. as Vice President and General Counsel;
Partner with the law firm of Day Berry & Howard LLP since
1997; Assistant Attorney General of the United States and
Chief of the U.S. Justice Department's Civil Rights Division
from 1994 until 1997, where he was responsible for enforcing
federal laws prohibiting discrimination.
Gary P. Fayard....................... Senior Vice President and Chief Financial Officer; In July
1994, elected Vice President and Controller of TCCC; Partner
with Ernst & Young prior to April 1994.
Stephen C. Jones..................... Senior Vice President and Chief Marketing Officer; Joined
Coca-Cola Canada in 1986 as Brand Manager for Sprite; In
1998, joined Coca-Cola USA as Brand Manager for diet Coke
and Sprite; In 1994, appointed Senior Vice President,
Consumer Marketing for Coca-Cola (Japan) Co. Ltd. ("CCJC"),
and was named Deputy Division Manager and Executive Vice
President of CCJC in 1997; Appointed President and Chief
Executive Officer of The Minute Maid Company in October
1999.
I-5
ANNEX II
SCHEDULE B
CHAPTER 13 OF THE CALIFORNIA GENERAL CORPORATION LAW
DISSENTERS' RIGHTS
SEC.1300. REORGANIZATION OR SHORT-FORM MERGER; DISSENTING SHARES; CORPORATE
PURCHASE AT FAIR MARKET VALUE; DEFINITIONS
(a) If the approval of the outstanding shares (Section 152) of a
corporation is required for a reorganization under subdivisions (a) and (b) or
subdivision (e) or (f) of Section 1201, each shareholder of the corporation
entitled to vote on the transaction and each shareholder of a subsidiary
corporation in a short-form merger may, by complying with this chapter, require
the corporation in which the shareholder holds shares to purchase for cash at
their fair market value the shares owned by the shareholder which are dissenting
shares as defined in subdivision (b). The fair market value shall be determined
as of the day before the first announcement of the terms of the proposed
reorganization or short-form merger, excluding any appreciation or depreciation
in consequence of the proposed action, but adjusted for any stock split, reverse
stock split, or share dividend which becomes effective thereafter.
(b) As used in this chapter, "dissenting shares" means shares which come
within all of the following descriptions:
(1) Which were not immediately prior to the reorganization or short-form
merger either
(A) listed on any national securities exchange certified by the
Commissioner of Corporations under subdivision (o) of Section
25100 or
(B) listed on the National Market System of the Nasdaq Stock Market,
and the notice of meeting of shareholders to act upon the
reorganization summarizes this section and Sections 1301, 1302,
1303 and 1304; provided, however, that this provision does not
apply to any shares with respect to which there exists any
restriction on transfer imposed by the corporation or by any law
or regulation; and provided, further, that this provision does
not apply to any class of shares described in subparagraph (A)
or (B) if demands for payment are filed with respect to 5
percent or more of the outstanding shares of that class.
(2) Which were outstanding on the date for the determination of
shareholders entitled to vote on the reorganization and (A) were not
voted in favor of the reorganization or, (B) if described in
subparagraph (A) or (B) of paragraph (1) (without regard to the
provisos in that paragraph), were voted against the reorganization, or
which were held of record on the effective date of a short-form
merger; provided, however, that subparagraph (A) rather than
subparagraph (B) of this paragraph applies in any case where the
approval required by Section 1201 is sought by written consent rather
than at a meeting.
(3) Which the dissenting shareholder has demanded that the corporation
purchase at their fair market value, in accordance with Section 1301.
(4) Which the dissenting shareholder has submitted for endorsement, in
accordance with Section 1302.
(c) As used in this chapter, "dissenting shareholder" means the
recordholder of dissenting shares and includes a transferee of record.
SEC.1301. NOTICE TO HOLDERS OF DISSENTING SHARES IN REORGANIZATIONS; DEMAND FOR
PURCHASE; TIME; CONTENTS
(a) If, in the case of a reorganization, any shareholders of a corporation
have a right under Section 1300, subject to compliance with paragraphs (3) and
(4) of subdivision (b) thereof, to require the corporation to purchase their
shares for cash, such corporation shall mail to each such shareholder a notice
of
II-1
the approval of the reorganization by its outstanding shares (Section 152)
within 10 days after the date of such approval, accompanied by a copy of
Sections 1300, 1302, 1303, 1304 and this section, a statement of the price
determined by the corporation to represent the fair market value of the
dissenting shares, and a brief description of the procedure to be followed if
the shareholder desires to exercise the shareholder's right under such sections.
The statement of price constitutes an offer by the corporation to purchase at
the price stated any dissenting shares as defined in subdivision (b) of Section
1300, unless they lose their status as dissenting shares under Section 1309.
(b) Any shareholder who has a right to require the corporation to purchase
the shareholder's shares for cash under Section 1300, subject to compliance with
paragraphs (3) and (4) of subdivision (b) thereof, and who desires the
corporation to purchase such shares shall make written demand upon the
corporation for the purchase of such shares and payment to the shareholder in
cash of their fair market value. The demand is not effective for any purpose
unless it is received by the corporation or any transfer agent thereof (1) in
the case of shares described in clause (i) or (ii) of paragraph (1) of
subdivision (b) of Section 1300 (without regard to the provisos in that
paragraph), not later than the date of the shareholders' meeting to vote upon
the reorganization, or (2) in any other case within 30 days after the date on
which the notice of the approval by the outstanding shares pursuant to
subdivision (a) or the notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder.
(c) The demand shall state the number and class of the shares held of
record by the shareholder which the shareholder demands that the corporation
purchase and shall contain a statement of what such shareholder claims to be the
fair market value of those shares as of the day before the announcement of the
proposed reorganization or short-form merger. The statement of fair market value
constitutes an offer by the shareholder to sell the shares at such price.
SEC. 1302. SUBMISSION OF SHARE CERTIFICATES FOR ENDORSEMENT; UNCERTIFICATED
SECURITIES
Within 30 days after the date on which notice of the approval by the
outstanding shares or the notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder, the shareholder shall submit to the corporation at
its principal office or at the office of any transfer agent thereof, (a) if the
shares are certificated securities, the shareholder's certificates representing
any shares which the shareholder demands that the corporation purchase, to be
stamped or endorsed with a statement that the shares are dissenting shares or to
be exchanged for certificates of appropriate denomination so stamped or endorsed
or (b) if the shares are uncertificated securities, written notice of the number
of shares which the shareholder demands that the corporation purchase. Upon
subsequent transfers of the dissenting shares on the books of the corporation,
the new certificates, initial transaction statement, and other written
statements issued therefor shall bear a like statement, together with the name
of the original dissenting holder of the shares.
SEC. 1303. PAYMENT OF AGREED PRICE WITH INTEREST; AGREEMENT FIXING FAIR MARKET
VALUE; FILING; TIME OF PAYMENT
(a) If the corporation and the shareholder agree that the shares are
dissenting shares and agree upon the price of the shares, the dissenting
shareholder is entitled to the agreed price with interest thereon at the legal
rate on judgments from the date of the agreement. Any agreements fixing the fair
market value of any dissenting shares as between the corporation and the holders
thereof shall be filed with the secretary of the corporation.
(b) Subject to the provisions of Section 1306, payment of the fair market
value of dissenting shares shall be made within 30 days after the amount thereof
has been agreed or within 30 days after any statutory or contractual conditions
to the reorganization are satisfied, whichever is later, and in the case of
certificated securities, subject to surrender of the certificates therefor,
unless provided otherwise by agreement.
II-2
SEC. 1304. ACTION TO DETERMINE WHETHER SHARES ARE DISSENTING SHARES OR FAIR
MARKET VALUE; LIMITATION; JOINDER; CONSOLIDATION; DETERMINATION OF
ISSUES; APPOINTMENT OF APPRAISERS
(a) If the corporation denies that the shares are dissenting shares, or
the corporation and the shareholder fail to agree upon the fair market value of
the shares, then the shareholder demanding purchase of such shares as dissenting
shares or any interested corporation, within six months after the date on which
notice of the approval by the outstanding shares (Section 152) or notice
pursuant to subdivision (i) of Section 1110 was mailed to the shareholder, but
not thereafter, may file a complaint in the superior court of the proper county
praying the court to determine whether the shares are dissenting shares or the
fair market value of the dissenting shares or both or may intervene in any
action pending on such a complaint.
(b) Two or more dissenting shareholders may join as plaintiffs or be
joined as defendants in any such action and two or more such actions may be
consolidated.
(c) On the trial of the action, the court shall determine the issues. If
the status of the shares as dissenting shares is in issue, the court shall first
determine that issue. If the fair market value of the dissenting shares is in
issue, the court shall determine, or shall appoint one or more impartial
appraisers to determine, the fair market value of the shares.
SEC. 1305. REPORT OF APPRAISERS; CONFIRMATION; DETERMINATION BY COURT;
JUDGMENT; PAYMENT; APPEAL; COSTS
(a) If the court appoints an appraiser or appraisers, they shall proceed
forthwith to determine the fair market value per share. Within the time fixed by
the court, the appraisers, or a majority of them, shall make and file a report
in the office of the clerk of the court. Thereupon, on the motion of any party,
the report shall be submitted to the court and considered on such evidence as
the court considers relevant. If the court finds the report reasonable, the
court may confirm it.
(b) If a majority of the appraisers appointed fail to make and file a
report within 10 days from the date of their appointment or within such further
time as may be allowed by the court or the report is not confirmed by the court,
the court shall determine the fair market value of the dissenting shares.
(c) Subject to the provisions of Section 1306, judgment shall be rendered
against the corporation for payment of an amount equal to the fair market value
of each dissenting share multiplied by the number of dissenting shares which any
dissenting shareholder who is a party, or who has intervened, is entitled to
require the corporation to purchase, with interest thereon at the legal rate
from the date on which judgment was entered.
(d) Any such judgment shall be payable forthwith with respect to
uncertificated securities and, with respect to certificated securities, only
upon the endorsement and delivery to the corporation of the certificates for the
shares described in the judgment. Any party may appeal from the judgment.
(e) The costs of the action, including reasonable compensation to the
appraisers to be fixed by the court, shall be assessed or apportioned as the
court considers equitable, but, if the appraisal exceeds the price offered by
the corporation, the corporation shall pay the costs (including in the
discretion of the court attorneys' fees, fees of expert witnesses and interest
at the legal rate on judgments from the date of compliance with Sections 1300,
1301 and 1302 if the value awarded by the court for the shares is more than 125
percent of the price offered by the corporation under subdivision (a) of Section
1301).
SEC. 1306. PREVENTION OF IMMEDIATE PAYMENT; STATUS AS CREDITORS; INTEREST
To the extent that the provisions of Chapter 5 prevent the payment to any
holders of dissenting shares of their fair market value, they shall become
creditors of the corporation for the amount thereof together with interest at
the legal rate on judgments until the date of payment, but subordinate to all
other creditors in any liquidation proceeding, such debt to be payable when
permissible under the provisions of Chapter 5.
II-3
SEC. 1307. DIVIDENDS ON DISSENTING SHARES
Cash dividends declared and paid by the corporation upon the dissenting
shares after the date of approval of the reorganization by the outstanding
shares (Section 152) and prior to payment for the shares by the corporation
shall be credited against the total amount to be paid by the corporation
therefor.
SEC. 1308. RIGHTS OF DISSENTING SHAREHOLDERS PENDING VALUATION; WITHDRAWAL OF
DEMAND FOR PAYMENT
Except as expressly limited in this chapter, holders of dissenting shares
continue to have all the rights and privileges incident to their shares, until
the fair market value of their shares is agreed upon or determined. A dissenting
shareholder may not withdraw a demand for payment unless the corporation
consents thereto.
SEC. 1309. TERMINATION OF DISSENTING SHARE AND SHAREHOLDER STATUS
Dissenting shares lose their status as dissenting shares and the holders
thereof cease to be dissenting shareholders and cease to be entitled to require
the corporation to purchase their shares upon the happening of any of the
following:
(a) The corporation abandons the reorganization. Upon abandonment of the
reorganization, the corporation shall pay on demand to any dissenting
shareholder who has initiated proceedings in good faith under this chapter all
necessary expenses incurred in such proceedings and reasonable attorneys' fees.
(b) The shares are transferred prior to their submission for endorsement
in accordance with Section 1302 or are surrendered for conversion into shares of
another class in accordance with the articles.
(c) The dissenting shareholder and the corporation do not agree upon the
status of the shares as dissenting shares or upon the purchase price of the
shares, and neither files a complaint or intervenes in a pending action as
provided in Section 1304, within six months after the date on which notice of
the approval by the outstanding shares or notice pursuant to subdivision (i) of
Section 1110 was mailed to the shareholder.
(d) The dissenting shareholder, with the consent of the corporation,
withdraws the shareholder's demand for purchase of the dissenting shares.
SEC. 1310. SUSPENSION OF RIGHT TO COMPENSATION OR VALUATION PROCEEDINGS;
LITIGATION OF SHAREHOLDERS' APPROVAL
If litigation is instituted to test the sufficiency or regularity of the
votes of the shareholders in authorizing a reorganization, any proceedings under
Sections 1304 and 1305 shall be suspended until final determination of such
litigation.
SEC. 1311. EXEMPT SHARES
This chapter, except Section 1312, does not apply to classes of shares
whose terms and provisions specifically set forth the amount to be paid in
respect to such shares in the event of a reorganization or merger.
SEC. 1312. RIGHT OF DISSENTING SHAREHOLDER TO ATTACK, SET ASIDE OR RESCIND
MERGER OR REORGANIZATION; RESTRAINING ORDER OR INJUNCTION;
CONDITIONS
(a) No shareholder of a corporation who has a right under this chapter to
demand payment of cash for the shares held by the shareholder shall have any
right at law or in equity to attack the validity of the reorganization or
short-form merger, or to have the reorganization or short-form merger set aside
or rescinded, except in an action to test whether the number of shares required
to authorize or approve the reorganization have been legally voted in favor
thereof; but any holder of shares of a class whose terms and provisions
specifically set forth the amount to be paid in respect to them in the event of
a reorganization or short-form merger is entitled to payment in accordance with
those terms and provisions or, if the principal terms of the
II-4
reorganization are approved pursuant to subdivision (b) of Section 1202, is
entitled to payment in accordance with the terms and provisions of the approved
reorganization.
(b) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, subdivision (a) shall not
apply to any shareholder of such party who has not demanded payment of cash for
such shareholder's shares pursuant to this chapter; but if the shareholder
institutes any action to attack the validity of the reorganization or short-form
merger or to have the reorganization or short-form merger set aside or
rescinded, the shareholder shall not thereafter have any right to demand payment
of cash for the shareholder's shares pursuant to this chapter. The court in any
action attacking the validity of the reorganization or short-form merger or to
have the reorganization or short-form merger set aside or rescinded shall not
restrain or enjoin the consummation of the transaction except upon 10 days'
prior notice to the corporation and upon a determination by the court that
clearly no other remedy will adequately protect the complaining shareholder or
the class of shareholders of which such shareholder is a member.
(c) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, in any action to attack the
validity of the reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded, (1) a party to a
reorganization or short-form merger which controls another party to the
reorganization or short-form merger shall have the burden of proving that the
transaction is just and reasonable as to the shareholders of the controlled
party, and (2) a person who controls two or more parties to a reorganization
shall have the burden of proving that the transaction is just and reasonable as
to the shareholders of any party so controlled.
II-5
APPENDIX A
AGREEMENT AND PLAN OF MERGER
AMONG
THE COCA-COLA COMPANY,
PERRY PHILLIP CORP.
AND
ODWALLA, INC.
DATED OCTOBER 29, 2001
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
PAGE
----
ARTICLE I THE OFFER................................................... A-1
Section 1.1. The Offer................................................... A-1
Section 1.2. Company Action.............................................. A-3
Section 1.3. SEC Actions................................................. A-3
Section 1.4. Directors................................................... A-4
ARTICLE II THE MERGER.................................................. A-5
Section 2.1. The Merger.................................................. A-5
Section 2.2. Effective Time; Closing..................................... A-5
Section 2.3. Effect of the Merger........................................ A-6
Section 2.4. Conversion of Company Common Stock.......................... A-6
Section 2.5. Dissenting Shares........................................... A-6
Section 2.6. Stock Option Plans.......................................... A-7
Section 2.7. Company Warrants............................................ A-7
Section 2.8. Surrender of Shares of Company Common Stock; Stock Transfer
Books....................................................... A-8
Section 2.9. Shareholders Meeting........................................ A-10
Section 2.10. Subsequent Actions.......................................... A-11
ARTICLE III THE SURVIVING CORPORATION................................... A-11
Section 3.1. Articles of Incorporation................................... A-11
Section 3.2. Bylaws...................................................... A-11
Section 3.3. Directors and Officers...................................... A-11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY............... A-11
Section 4.1. Organization and Standing................................... A-11
Section 4.2. Capitalization.............................................. A-12
Section 4.3. Authority for Agreement..................................... A-12
Section 4.4. No Conflict................................................. A-13
Section 4.5. Required Filings and Consents............................... A-14
Section 4.6. Compliance.................................................. A-14
Section 4.7. SEC Filings, Financial Statements........................... A-14
Section 4.8. Absence of Certain Changes or Events........................ A-15
Section 4.9. Taxes....................................................... A-15
Section 4.10. Assets...................................................... A-16
Section 4.11. Change of Control Agreements................................ A-16
Section 4.12. Litigation.................................................. A-16
Section 4.13. Contracts and Commitments................................... A-17
Section 4.14. Employee Benefit Plans...................................... A-17
Section 4.15. Labor and Employment Matters................................ A-18
Section 4.16. Environmental Compliance and Disclosure..................... A-20
Section 4.17. Intellectual Property Rights................................ A-21
Section 4.18. Products.................................................... A-22
Section 4.19. Brokers..................................................... A-22
Section 4.20. Trade Secrets............................................... A-22
Section 4.21. Insurance Policies.......................................... A-22
Section 4.22. Notes and Accounts Receivable............................... A-23
i
PAGE
----
Section 4.23. Transactions with Affiliates................................ A-23
Section 4.24. No Existing Discussions..................................... A-23
Section 4.25. Shareholder Rights Agreement................................ A-23
Section 4.26. Major Suppliers, Customers and Distributors................. A-23
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB............ A-24
Section 5.1. Organization and Standing................................... A-24
Section 5.2. Sub......................................................... A-24
Section 5.3. Authority for Agreement..................................... A-24
Section 5.4. No Conflict................................................. A-24
Section 5.5. Required Filings and Consents............................... A-25
Section 5.6. Brokers..................................................... A-25
Section 5.7. Financing................................................... A-25
ARTICLE VI COVENANTS................................................... A-25
Section 6.1. Conduct of the Business Pending the Merger.................. A-25
Section 6.2. Access to Information; Confidentiality...................... A-27
Section 6.3. Notification of Certain Matters............................. A-27
Section 6.4. Reasonable Efforts; Further Assurances; Cooperation......... A-27
Section 6.5. Board Recommendations....................................... A-28
Section 6.6. Shareholder Litigation...................................... A-29
Section 6.7. Indemnification............................................. A-29
Section 6.8. Public Announcements........................................ A-30
Section 6.9. Competing Acquisition Proposals............................. A-30
Section 6.10. Undertakings of Parent...................................... A-31
Section 6.11. Director Resignations....................................... A-31
Section 6.12. Shareholders' Rights Agreement.............................. A-31
Section 6.13. Employee Benefits........................................... A-31
Section 6.14. Environmental Assessments................................... A-31
Section 6.15. Settlement Fee.............................................. A-32
Section 6.16. Conveyance Taxes............................................ A-32
Section 6.17. Shareholder Rights Plan..................................... A-32
Section 6.18. Actions by Company Board.................................... A-32
Section 6.19. Loans to Permit Exercise of Company Options................. A-32
ARTICLE VII CONDITIONS.................................................. A-33
Section 7.1. Conditions to the Obligation of Each Party.................. A-33
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER........................... A-33
Section 8.1. Termination................................................. A-33
Section 8.2. Effect of Termination....................................... A-34
Section 8.3. Amendments.................................................. A-35
Section 8.4. Waiver...................................................... A-35
ARTICLE IX GENERAL PROVISIONS.......................................... A-35
Section 9.1. No Third Party Beneficiaries................................ A-35
Section 9.2. Entire Agreement............................................ A-35
Section 9.3. Succession and Assignment................................... A-35
Section 9.4. Counterparts................................................ A-35
Section 9.5. Headings.................................................... A-35
ii
PAGE
----
Section 9.6. Governing Law............................................... A-35
Section 9.7. Severability................................................ A-35
Section 9.8. Specific Performance........................................ A-36
Section 9.9. Construction................................................ A-36
Section 9.10. Non-Survival of Representations and Warranties and
Agreements.................................................. A-36
Section 9.11. Certain Definitions......................................... A-36
Section 9.12. Fees and Expenses........................................... A-37
Section 9.13. Notices..................................................... A-37
Section 9.14. Waiver of Jury Trial........................................ A-38
ANNEX I CONDITIONS TO THE OFFER..................................... I-1
EXHIBIT A..................................................................... A-1
iii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated October 29, 2001
by and among The Coca-Cola Company, a Delaware corporation ("Parent"), Perry
Phillip Corp., a California corporation ("Sub") and wholly owned subsidiary of
Parent, and Odwalla, Inc., a California corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the parties to this Agreement desire to effect the acquisition of
the Company by Parent pursuant to a tender offer (the "Offer") by Sub for any
and all the issued and outstanding shares (the "Shares") of Common Stock, no par
value, of the Company ("Company Common Stock") followed by a merger (the
"Merger") of Sub with and into the Company with the Company as the surviving
corporation in accordance with the California General Corporation Law (the
"CGCL");
WHEREAS, as an inducement to Parent and Sub to enter into this Agreement,
Parent, Sub and the Company have entered into a Stock Option Agreement (the
"Option Agreement"), pursuant to which the Company has granted to Sub an option
to purchase newly issued shares of Company Common Stock under certain
circumstances;
WHEREAS, concurrently with the execution and delivery of this Agreement,
and as a condition and inducement to Parent entering into this Agreement, each
of the persons and entities set forth on Exhibit A hereto (collectively, the
"Principal Shareholders") has entered into a tender and/or voting agreement,
dated as of the date hereof (collectively, the "Tender Agreements"), pursuant to
which, among other things, each of the Principal Shareholders has agreed to
tender its shares of Company Common Stock to Sub in the Offer;
WHEREAS, the Board of Directors of Parent and Sub have each unanimously
approved this Agreement, the Option Agreement, the Offer, the Merger and the
transactions contemplated hereby upon the terms and subject to the conditions
set forth herein;
WHEREAS, the Board of Directors of the Company has unanimously determined
that this Agreement, the Option Agreement, the Offer, the Merger and the
transactions contemplated hereby, subject to the terms and conditions of this
Agreement, are fair to and in the best interests of the holders of the Company
Common Stock (the "Company Shareholders"); and
WHEREAS, the Board of Directors of the Company has unanimously resolved to
recommend that the Company Shareholders approve this Agreement, the Option
Agreement, the Offer, the Merger and the transactions contemplated hereby to
which the Company is a party.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained in this
Agreement and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
THE OFFER
Section 1.1. The Offer.
(a) Subject to the provisions of this Agreement, Parent shall cause Sub, no
later than November 8, 2001, to commence (within the meaning of Rule 14d-2 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) the Offer,
at a price of $15.25 per share, net to the seller in cash, without interest (or
at such higher price as Sub in its sole discretion elects to offer) (the "Offer
Price"), but subject to any withholding required by law. The obligation of
Parent and Sub to accept and pay for Shares tendered shall be subject only to
the condition that there shall be validly tendered prior to the expiration date
of the Offer and not withdrawn a number of Shares which, when added to the
shares of Company Common Stock owned by Parent, represent at least 90.1% of the
Shares issued and outstanding on a fully diluted basis (including for
A-1
purposes of such calculation all shares of Company Common Stock issuable upon
exercise of all Company Options (as defined in Section 2.6) that vest (or upon
consummation of the Offer will vest) (but excluding shares of Company Common
Stock that are issuable upon the exercise of Company Options that are cancelled
pursuant to Section 2.6(a) hereof or upon the exercise of Company Warrants that
are cancelled pursuant to Section 2.7 hereof) and the exercise of all
outstanding Company Warrants (as defined in Section 2.7)) (the "Minimum
Condition") and to the other conditions set forth in Annex I (collectively, the
"Offer Conditions"). Parent and Sub expressly reserve the right to waive any of
the Offer Conditions (except that Parent and Sub may not waive the Minimum
Condition except with the consent of the Company or as and to the extent
provided in this Agreement), to increase the price per share payable in the
Offer and to make any other change or changes in the terms or conditions of the
Offer, including without limitation extending the expiration date, except that,
without the consent of the Company, Parent and Sub shall not (i) reduce the
number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) impose
any other conditions to the Offer other than the Offer Conditions or modify the
Offer Conditions (other than to waive any Offer Conditions to the extent
permitted by this Agreement) in a manner adverse to the holders of the Company
Common Stock, (iv) except as provided in Section 1.1(b), extend the Offer, (v)
change the form of consideration payable in the Offer, or (vi) amend any other
term of the Offer in a manner adverse to the Company Shareholders.
(b) Subject to the terms and conditions hereof, the Offer shall expire at
midnight, San Francisco time, on the date twenty business days (as defined under
the Exchange Act) after the date the Offer is commenced, provided, that Sub may,
without the consent of the Company, (i) extend the Offer, if at the scheduled or
extended expiration date of the Offer any of the Offer Conditions shall not be
satisfied or waived, until such time as such conditions are satisfied or waived,
subject in each case to any right of Parent, Sub or the Company to terminate
this Agreement pursuant to the terms hereof or (ii) extend the Offer for any
period required by any rule, regulation, interpretation or position of the
Securities and Exchange Commission (the "SEC") or the staff thereof applicable
to the Offer. If, at any scheduled expiration date of the Offer, the conditions
set forth in paragraph 5(g) of Annex I are satisfied, but any of the conditions
set forth in paragraphs 2 or 5(a), (b), (c), (d), (e) or (f) of Annex I are not
satisfied, then at the request of the Company, Sub shall extend the Offer from
time to time, subject to any right of Parent, Sub or the Company to terminate
this Agreement pursuant to the terms hereof.
(c) Notwithstanding any other provision contained herein, in the event the
Minimum Condition is not satisfied on any scheduled expiration date of the
Offer, at the request of the Company, subject to any right of Parent or Sub to
terminate this Agreement pursuant to the terms hereof, Sub shall, and Parent
shall cause Sub to, take any of the actions set forth in the following clauses
(x), (y) or (z) (provided that Sub shall have complete discretion as to which
actions among the three clauses to take) as follows: (x) extend the Offer
pursuant to Section 1.1(b), (y) amend the Offer in contemplation of the exercise
of the Option Agreement (to the extent the Option Agreement is exercisable at
such time) to reduce the Minimum Condition to that number of shares (the "Option
Exercise Minimum Number") equal to the number of shares which, when combined
with the number of shares issued upon exercise of the Option Agreement, equals
90.1% of the shares of Company Common Stock on a fully diluted basis (but
excluding shares of Company Common Stock that are issuable upon the exercise of
Company Options that are cancelled pursuant to Section 2.6(a) hereof or upon the
exercise of Company Warrants that are cancelled pursuant to Section 2.7 hereof)
or (z) amend the Offer to provide that, in the event (i) the Minimum Condition
is not satisfied at the next scheduled expiration date of the Offer (after
giving effect to the issuance of any shares of Company Common Stock theretofore
acquired by Parent or Sub) and (ii) the number of shares of Company Common Stock
tendered pursuant to the Offer and not withdrawn as of such next scheduled
expiration date is more than 50% of the then outstanding shares of Company
Common Stock, Sub shall waive the Minimum Condition and amend the Offer to
reduce the number of shares of Company Common Stock subject to the Offer to
49.9% of the shares of Company Common Stock then outstanding (the "Revised
Minimum Number") and, subject to the prior satisfaction or waiver of the other
conditions of the Offer, purchase, on a pro rata basis, the Revised Minimum
Number of shares (it being understood that Sub shall not in any event be
required to accept for payment, or pay for, any shares of Company Common Stock
if less than the Revised Minimum Number of shares are tendered pursuant to the
Offer and not withdrawn at the expiration date).
A-2
(d) Sub shall, on the terms and subject to the prior satisfaction or
waiver of the conditions of the Offer, accept for payment shares of Company
Common Stock validly tendered as soon as practicable (and in any event
within five business days) after such satisfaction or waiver of all
conditions of the Offer, and pay for accepted shares of Company Common
Stock as promptly thereafter as reasonably practicable, and in any event in
compliance with Rule 14e-1(c) under the Exchange Act. Parent shall provide,
or cause to be provided to Sub on a timely basis the funds necessary to pay
for any shares of Company Common Stock Sub accepts or becomes obligated to
accept for payment.
Section 1.2. Company Action.
(a) The Company hereby approves and consents to the Offer and to the
inclusion in the Offer and the related documents thereto of the recommendation
of the Board of Directors of the Company described in Section 4.3(b) and the
opinion of the Independent Advisor described in Section 4.3(c).
(b) The Company will promptly, and in any event within three (3) business
days after the execution of this Agreement, instruct its transfer agent to
furnish Sub with a list of its shareholders, mailing labels and any available
listing or computer file containing the names and addresses of all record
holders of outstanding shares of Company Common Stock and lists of securities
positions of outstanding shares of Company Common Stock held in stock
depositories, and to provide to Sub such additional information (including,
without limitation, updated lists of shareholders, mailing labels and lists of
securities positions) and such other assistance as Parent or Sub or any of their
respective agents may reasonably request in connection with the Offer and
Merger. Subject to the requirements of applicable Law (as defined in Section
4.4), and except for such steps as are necessary to disseminate the Offer
Documents (as defined below) and any other documents necessary to consummate the
Merger, Parent and Sub shall, and shall cause their agents to, hold in
confidence and otherwise in conformity with the provisions of the
Confidentiality Agreement dated September 7, 2001, as amended (the
"Confidentiality Agreement"), the information contained in any such labels,
listings and files, use such information only in connection with the Offer and
the Merger and, if this Agreement shall be terminated, upon request, promptly
deliver to the Company all copies of such information then in their possession
or control.
Section 1.3. SEC Actions.
(a) On the date of commencement of the Offer, Parent and Sub shall file
with the SEC a Tender Offer Statement on Schedule TO with respect to the Offer
(including all supplements and amendments thereto, the "Schedule TO"), which
shall contain an offer to purchase, a related letter of transmittal and summary
advertisement (such Schedule TO and all other documents required to be filed by
Parent and Sub with the SEC in connection with the Offer and the Merger, are
collectively referred to as the "Offer Documents").
(b) On or as soon as practicable after the date the Offer Documents are
filed with the SEC, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (including all
supplements and amendments thereto, the "Schedule 14D-9"). The Schedule 14D-9
shall (except as specifically provided in Section 6.5 hereof) contain the
unanimous recommendation of the Board of Directors of the Company in favor of
the Offer and the Merger.
(c) (i) Parent and Sub will take all steps necessary to ensure that the
Offer Documents, and the Company will take all steps necessary to ensure that
the Schedule 14D-9 and all other documents required to be filed by the Company
with the SEC in connection with the Offer and the Merger (collectively, the
"Company Disclosure Documents"), comply or complies in all material respects
with the provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Company's
shareholders, do not contain any untrue statement of a material fact or omit to
state any 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, provided, that Parent and Sub make no representation with
respect to information furnished by the Company for inclusion in the Offer
Documents and provided further that the Company makes no representation with
respect to information furnished by Parent or Sub for inclusion in the Company
Disclosure Documents.
A-3
(ii) The Company will ensure that the information with respect to the
Company that the Company furnishes to Parent in writing specifically for
inclusion in the Offer Documents does not, at the time of the filing of the
Offer Documents, at the time of any distribution thereof and at the time of the
consummation of the Offer, contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Parent
and Sub will ensure that the information with respect to Parent and Sub that (x)
Parent or Sub furnishes to the Company in writing specifically for inclusion in
the Company Disclosure Documents, (y) is incorporated in the Company Disclosure
Documents by reference to any of the Offer Documents (other than any information
set forth in any of the Offer Documents that is furnished by the Company for
inclusion therein), or (z) is set forth in the Schedule TO (other than any
information set forth in the Schedule TO that is furnished by the Company for
inclusion therein), does not, at the time of the filing of the Offer Documents,
at the time of any distribution thereof and at the time of the consummation of
the Offer, contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of Parent and
Sub, on the one hand, and the Company, on the other hand, will promptly correct
any information provided by it for use in the Offer Documents and the Company
Disclosure Documents, as the case may be, if and to the extent that it shall
have become false and misleading in any material respect.
(iii) Each of Parent and Sub will take all steps necessary to cause the
Offer Documents, and the Company will take all steps necessary to cause the
Company Disclosure Documents, in each case including all amendments thereto, to
be filed with the SEC and to be disseminated to holders of the outstanding
shares of Company Common Stock as and to the extent required by applicable
federal securities laws.
(iv) Each of the Company, on the one hand, and Parent and Sub on the other
hand, will give the other, and their respective counsel, the opportunity to
review and provide comments with respect to the Company Disclosure Documents and
the Offer Documents, as the case may be, before they are filed with the SEC, in
each case including all amendments thereto. In addition, each such party will
provide the other such parties and their counsel with any comments, whether
written or oral, which it may receive from time to time from the SEC or its
staff with respect to the Company Disclosure Documents or the Offer Documents
promptly after the receipt of such comments.
Section 1.4. Directors.
(a) Effective upon the purchase by Sub of such number of shares of Company
Common Stock as shall constitute satisfaction of the Minimum Condition, the
Option Exercise Minimum Number or the Revised Minimum Number, as the case may
be, and subject to compliance with Section 14(f) of the Exchange Act, Sub shall
be entitled, at its option, to designate the number of directors, rounded up to
the next whole number, on the Company Board for the period following such
purchase (the "Post-Acceptance Board") that equals the product of (i) the total
number of available seats on the Post-Acceptance Board (giving effect to the
election of any additional directors, the resignation of any existing directors
and/or the increase in the number of members of the Company's Board of Directors
pursuant to this Section 1.4) and (ii) the percentage that the number of shares
of Company Common Stock owned by Sub (including shares of Company Common Stock
accepted for payment) and Parent bears to the total number of shares of Company
Common Stock issued and outstanding; provided that, prior to or upon the
purchase by Sub of Company Common Stock in the Offer, the Company shall increase
the number of directors on the Company's Board of Directors from seven to eight
and shall maintain the number of directors at eight until the Effective Time.
The Company shall take all action necessary to cause Sub's designees to be
elected or appointed to the Post-Acceptance Board, including, without
limitation, increasing the number of directors and seeking and accepting
resignations of incumbent directors. The Company will use its reasonable best
efforts to cause individuals designated by Sub to constitute the same percentage
as such individuals represent on the Post-Acceptance Board of each committee of
such Post-Acceptance Board (other than any committee of such Post-Acceptance
Board established to take action under this Agreement). Notwithstanding the
foregoing, the Company shall use its reasonable best efforts to ensure that
prior to the Effective Time, the Post-Acceptance Board shall include at least
four directors in office as of the date hereof (any such director remaining in
office being a "Continuing Director"). In the event that the number of
Continuing Directors shall be reduced below four for any reason whatsoever, any
remaining
A-4
Continuing Directors (or Continuing Director, if there shall only be one
remaining) shall be entitled to designate persons to fill such vacancies who
shall be deemed to be Continuing Directors for purposes of this Agreement. If no
Continuing Directors remain, the other directors shall designate four persons to
fill such vacancies and such persons shall be deemed to be Continuing Directors
for purposes of this Agreement. The provisions of this Section 1.4(a) are in
addition to and shall not limit any rights which Parent or Sub or any of their
Affiliates may have as a holder or beneficial owner of shares of Company Common
Stock as a matter of Law with respect to the election of directors or otherwise.
(b) To the fullest extent permitted by applicable Law, upon any request by
Sub following the purchase by Sub of such number of Shares as shall constitute
satisfaction of the Minimum Condition, the Option Exercise Minimum Number or the
Revised Minimum Number, as the case may be, the Company shall promptly take all
actions required in order to fulfill its obligations under this Section 1.4,
including without limitation, in the case of satisfaction of the Minimum
Condition, all actions required pursuant to Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder, which shall include without limitation
filing with the SEC and transmitting to the record shareholders of the Company
such information with respect to the Company and its officers and directors and
Sub's designees as is necessary to enable Sub's designees to be elected to the
Post-Acceptance Board. Parent or Sub will supply to the Company any information
with respect to itself and such nominees, officers, directors and Affiliates
required by such Section 14(f) and Rule 14f-1, and Parent and Sub jointly and
severally represent to the Company that such information will not, at the time
of the filing with the SEC of any document required to be filed pursuant to this
Section 1.4, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order that the
statements made therein, in light of the circumstances under which they were
made, are not misleading.
(c) Following the election or appointment of Sub's designees pursuant to
Section 1.4(a) and prior to the Effective Time, Parent and Sub shall not cause
the Company to take any action with respect to any amendment, or waiver of any
term or condition, of this Agreement, the Articles of Incorporation of the
Company or the Bylaws of the Company, any termination or rescission of this
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Sub or Parent or waiver
or assertion of any of the Company's rights hereunder, or any other consent or
action by the Board of Directors of the Company with respect to this Agreement
or the Offer (including any action which would cause the Company to breach this
Agreement), without the concurrence of a majority of the Continuing Directors
and the concurrence of a majority of the directors who are not Continuing
Directors.
ARTICLE II
THE MERGER
Section 2.1. The Merger. Upon the terms and subject to the conditions of
this Agreement, and in accordance with the CGCL, at the Effective Time (as
defined in Section 2.2), Sub shall be merged with and into the Company. As a
result of the Merger, the separate corporate existence of Sub shall cease and
the Company shall continue as the surviving corporation following the Merger
(the "Surviving Corporation"). The corporate existence of the Company, with all
its purposes, rights, privileges, franchises, powers and objects, shall continue
unaffected and unimpaired by the Merger and, as the Surviving Corporation, it
shall be governed by the Laws of the State of California.
Section 2.2. Effective Time; Closing. As promptly as practicable (and in
any event within three (3) business days) after the conditions set forth in
Article VII hereof are satisfied or waived (other than those conditions that by
their nature are to be satisfied at the Closing), the parties hereto shall cause
the Merger to be consummated by filing an agreement of merger pursuant to
Section 1103 of the CGCL (the "Agreement of Merger"), with the Secretary of
State of the State of California and by making all other filings or recordings
required under the CGCL in connection with the Merger, in such form as is
required by, and executed in accordance with the relevant provisions of, the
CGCL. The Merger shall become effective at such time as the Agreement of Merger
is duly filed with the Secretary of State of the State of California, or at such
other time as the parties hereto agree shall be specified in the Agreement of
Merger (the date and time the Merger
A-5
becomes effective, the "Effective Time"). On the date of such filing, a closing
(the "Closing") shall be held at 1:00 p.m., local time, at the offices of King &
Spalding, 191 Peachtree Street, Atlanta, Georgia 30303, or at such other time
and location as the parties hereto shall otherwise agree.
Section 2.3. Effect of the Merger. At the Effective Time, the effect of
the Merger, shall be as provided in the Agreement of Merger, the applicable
provisions of the CGCL and this Agreement. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of the Company and Sub shall vest in
the Surviving Corporation, and all debts, liabilities, obligations,
restrictions, disabilities and duties of the Company and Sub shall become the
debts, liabilities, obligations, restrictions, disabilities and duties of the
Surviving Corporation.
Section 2.4. Conversion of Company Common Stock.
(a) At the Effective Time, by virtue of the Merger and without any action
on the part of Sub, the Company or the holders of any of the following
securities:
(i) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares canceled
pursuant to Section 2.4(a)(ii) and Dissenting Shares (as defined in Section
2.5), if any) shall be canceled and, subject to Section 2.5, shall by
virtue of the Merger and without any action on the part of the holder
thereof be converted automatically into the right to receive an amount in
cash equal to the Offer Price or any higher price paid for each outstanding
share of Company Common Stock in the Offer payable, without interest, to
the holder of such share of Company Common Stock, upon surrender of the
certificate that formerly evidenced such share of Company Common Stock in
the manner provided in Section 2.8 (together with amounts payable under
Section 2.6(b), the "Merger Consideration"); and
(ii) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time that is owned by Parent or Sub or
any of their direct or indirect subsidiaries and each share of Company
Common Stock that is owned by the Company as treasury stock shall be
canceled and retired and cease to exist and no payment or distribution
shall be made with respect thereto.
(b) At the Effective Time, by virtue of the Merger and without any action
on the part of Sub, the Company or the holders of any of the following
securities, each share of common stock, no par value per share, of Sub issued
and outstanding immediately prior to the Effective Time shall be converted into
and become one validly issued, fully paid and nonassessable share of common
stock, no par value per share, of the Surviving Corporation and all such shares
together shall constitute the only outstanding shares of capital stock of the
Surviving Corporation.
(c) At the Effective Time, all shares of the Company Common Stock converted
pursuant to Section 2.4(a)(i) shall no longer be outstanding and shall
automatically be canceled and retired and cease to exist, and each holder of a
certificate ("Certificate") representing any such shares of Company Common Stock
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration in accordance with Section 2.4(a)(i).
Section 2.5. Dissenting Shares.
(a) If and only to the extent that any holders of shares of Company Common
Stock are entitled under Section 1300(b)(1) of the CGCL to be paid the "fair
market value" of such shares of Company Common Stock, then notwithstanding
anything in this Agreement to the contrary, shares of Company Common Stock that
are issued and outstanding immediately prior to the Effective Time and which are
held by Company Shareholders who have demanded and perfected their demands for
appraisal of such shares of Company Common Stock in the time and manner provided
in Section 1300 of the CGCL and, as of the Effective Time, have neither
effectively withdrawn nor lost their rights to such appraisal and payment under
the CGCL (the "Dissenting Shares") shall not be converted as described in
Section 2.4(a)(i), but shall, by virtue of the Merger, be entitled to only such
rights as are granted by Section 1300 of the CGCL; provided, however, that if
such holder shall have failed to perfect or shall have effectively withdrawn or
lost his, her or its right to appraisal and payment under the CGCL, such
holder's shares of Company Common Stock shall thereupon be
A-6
deemed to have been converted, at the Effective Time, as described in Section
2.4(a)(i), into the right to receive the Merger Consideration set forth in such
provisions, without any interest thereon.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal pursuant to Section 1300 of the CGCL received by the Company,
withdrawals of such demands, and any other instruments served pursuant to the
CGCL and received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
CGCL. The Company shall not, except with the prior written consent of Parent or
as otherwise required by applicable Law, make any payment with respect to any
such demands for appraisal or offer to settle or settle any such demands.
Section 2.6. Stock Option Plans.
(a) In connection and simultaneously with the Offer, the Company shall use
its reasonable best efforts to ensure that each holder of outstanding options
(whether vested or unvested) to acquire Company Common Stock (the "Company
Options") granted under the Company's Stock Option Plan adopted in 1993, the
Company's 1994 Non-Employee Directors' Stock Option Plan and the Company's
Amended and Restated 1997 Stock Option/Stock Issuance Plan (collectively, the
"Company Stock Option Plans") shall execute an agreement to exchange immediately
prior to the consummation of the Offer such holder's Company Options to the
Company for an amount in cash determined by multiplying (A) the excess, if any,
of the Offer Price over the applicable exercise price per share of the Company
Option (regardless of the exercise price) by (B) the number of shares of Company
Common Stock subject to the Company Options (whether vested or unvested) held by
such holder (such amount, the "Option Consideration"). Upon the expiration date
of the Offer, each holder of Company Options immediately prior to the
consummation of the Offer, who has exchanged such Company Options in accordance
with this Section 2.6 shall become entitled to the Option Consideration, and all
rights of such holder associated with the Company Options shall be terminated
and canceled. The obligation of the Company to accept and pay for the Company
Options so exchanged shall be subject to the satisfaction, or waiver by Sub, of
the conditions set forth in Annex I. On or prior to the expiration date of the
Offer, the Purchaser shall, or shall cause Sub to, lend to the Company on
commercially reasonable terms an amount equal to the aggregate amount of the
Option Consideration. The Company shall be entitled to deduct and withhold from
the Option Consideration otherwise payable to any holder of Company Options such
amount that the Company is required to deduct and withhold with respect to the
making of such payment under the Code, the rules and regulations promulgated
thereunder, or any provision of state, local or foreign tax Law. The Company
shall promptly pay or cause to be paid any amounts withheld pursuant to this
Section 2.6 for applicable foreign, federal, state and local taxes to the
appropriate Governmental Entity on behalf of such holders of Company Options.
(b) As of the Effective Time, either (i) each Company Option not so
exchanged immediately prior to the consummation of the Offer shall be canceled,
and in consideration for such cancellation the holder thereof shall become
entitled to receive an amount in cash (subject to Section 2.8(f)) equal to the
Option Consideration, or (ii) the Company shall use its reasonable best efforts
to ensure that each holder of a Company Option shall execute an agreement which
provides that such Company Option shall be canceled, and in consideration for
such cancellation the holder thereof shall become entitled to receive an amount
in cash (subject to Section 2.8(f)) equal to the product of (i) the number of
shares subject to the Company Options, whether vested or unvested, held by such
holder and (ii) the excess of the Merger Consideration per share over the per
share exercise price of each such Company Option.
Section 2.7. Company Warrants. The Company shall use its reasonable best
efforts to provide that each of the issued and outstanding warrants to purchase
shares of Company Common Stock (the "Company Warrants") shall be exercised in
full immediately prior to the consummation of the Offer. In addition, the
Company shall, by written notice to each holder of Company Warrants, offer to
pay such holder upon the consummation of the Offer, in exchange for the
cancellation of such holder's Company Warrants (regardless of exercise price)
upon the consummation of the Offer, an amount in cash determined by multiplying
(A) the excess, if any, of the Offer Price over the applicable exercise price
per share of the Company Warrant by (B) the number of shares of Company Common
Stock such holder could have purchased had such holder exercised such Company
Warrant in full immediately prior to the consummation of the Offer (the "Warrant
A-7
Consideration"). The Company shall be entitled to deduct and withhold from the
Warrant Consideration otherwise payable to any holder of Company Warrants such
amount that the Company is required to deduct and withhold with respect to the
making of such payment under the Code, the rules and regulations promulgated
thereunder, or any provision of state, local or foreign tax Law. The Company
shall promptly pay or cause to be paid any amounts withheld pursuant to this
Section 2.7 for applicable foreign, federal, state and local taxes to the
appropriate Governmental Entity on behalf of such holders of Company Warrants.
Section 2.8. Surrender of Shares of Company Common Stock; Stock Transfer
Books.
(a) Prior to the Effective Time, Parent shall designate a bank or trust
company reasonably acceptable to the Company to act as agent (the "Paying
Agent") for the holders of shares of Company Common Stock to receive the funds
necessary to make the payments to such holders provided for in Section 2.4 upon
surrender of their Certificates and for the holders of Company Options to
receive the payments provided for in Section 2.6(b) upon surrender and
cancellation of the Company Options. Parent will, on or prior to the Effective
Time, deposit with the Paying Agent the Merger Consideration to be paid in
respect of the shares of Company Common Stock and Company Options (the "Fund").
The Fund shall be invested by the Paying Agent as directed by Parent; provided
that such investments shall be in obligations of, or guaranteed by, the United
States of America or any agency thereof and backed by the full faith and credit
of the United States of America, in commercial paper obligations rated A-1 or
P-1 or better by Moody's Investor Services, Inc., or Standard and Poor's
Corporation, respectively, or in deposit accounts, certificates of deposit or
banker's acceptances of, or repurchase or reverse repurchase agreements with, or
Eurodollar time deposits purchased from, commercial banks with capital, surplus
and undivided profits aggregating in excess of US$100 million (based upon the
most recent financial statements of such bank which are then publicly
available). Any net profit resulting from, or interest or income produced by,
such investments, shall be placed in the Fund and be payable to the Surviving
Corporation upon demand of non-disbursed funds pursuant to Section 2.8(d)
hereof. Parent shall promptly replace any monies lost through any investment
made pursuant to this Section 2.8(a), and Parent shall in any event be liable
for the payment of the Merger Consideration, notwithstanding any losses in the
Fund. The Fund shall not be used for any purpose except as expressly provided in
this Agreement. The Paying Agent shall make the payments provided for in
Sections 2.4 and 2.6(b).
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each person who was, at the Effective Time, a holder of
record of shares of Company Common Stock entitled to receive the Merger
Consideration pursuant to Section 2.4 a form of letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Paying Agent) and instructions for use in effecting the surrender of the
Certificates pursuant to such letter of transmittal. Upon surrender to the
Paying Agent of a Certificate, together with such letter of transmittal, duly
completed and validly executed in accordance with the instructions thereto, and
such other documents as may be reasonably required pursuant to such
instructions, the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration for each share of Company Common
Stock formerly evidenced by such Certificate, and such Certificate shall then be
canceled. Until so surrendered, each such Certificate shall, at and after the
Effective Time, represent for all purposes, only the right to receive such
Merger Consideration. No interest shall accrue or be paid to any beneficial
owner of shares of Company Common Stock or any holder of any Certificate with
respect to the Merger Consideration payable upon the surrender of any
Certificate. If payment of the Merger Consideration is to be made to a person
other than the person in whose name the surrendered Certificate is registered on
the stock transfer books of the Company, it shall be a condition of payment that
the Certificate so surrendered shall be endorsed in blank or to the Paying Agent
or otherwise be in proper form for transfer and that the person requesting such
payment shall have paid all transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such taxes either have been paid or are not
applicable. If any Certificate shall have been lost, stolen or destroyed, upon
making of an affidavit of that fact by the person claiming such Certificate to
be lost, stolen or destroyed and, if required by the Surviving Corporation or
Parent, the posting by such person of a bond, in such reasonable amount as the
Surviving Corporation or Parent may direct, as indemnity against any claim that
may be made against it with respect to
A-8
such Certificate, the Paying Agent will issue in exchange for such lost, stolen
or destroyed Certificate the applicable Merger Consideration such holder is
entitled to receive pursuant to Section 2.4.
(c) The Parent and the Surviving Corporation shall cause the Paying Agent
to pay the amounts payable to each holder of a Company Option pursuant to
Section 2.6(b) as soon as reasonably practicable following the Effective Time.
(d) At any time following the sixth month after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any portion of the Fund which had been made available to the Paying Agent
and not disbursed to holders of shares of Company Common Stock (including,
without limitation, all interest and other income received by the Paying Agent
in respect of all amounts held in the Fund or other funds made available to it),
and thereafter each such holder shall be entitled to look only to Parent
(subject to abandoned property, escheat and other similar Laws), and only as
general creditors thereof, with respect to any Merger Consideration that may be
payable upon due surrender of the Certificates held by such holder. If any
Certificates representing shares of Company Common Stock shall not have been
surrendered immediately prior to such date on which the Merger Consideration in
respect of such Certificate would otherwise escheat to or become the property of
any Governmental Entity (as defined in Section 4.5), any such cash, shares,
dividends or distributions payable in respect of such Certificate shall, to the
extent permitted by applicable Law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto. Notwithstanding the foregoing, none of the Surviving
Corporation, Parent, or the Paying Agent shall be liable to any holder of a
share of Company Common Stock for any Merger Consideration delivered in respect
of such share of Company Common Stock to a public official pursuant to any
abandoned property, escheat or other similar Law.
(e) At the Effective Time, the stock transfer books of the Company shall be
closed and thereafter there shall be no further registration of transfers of
shares of Company Common Stock on the records of the Company. From and after the
Effective Time, except for Parent, the holders of shares of Company Common Stock
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such shares of Company Common Stock except as otherwise
provided herein or by applicable Law, and all cash paid pursuant to this Article
II upon the surrender or exchange of Certificates shall be deemed to have been
paid in full satisfaction of all rights pertaining to the shares of Company
Common Stock theretofore represented by such Certificate.
(f) Parent, Sub, the Surviving Corporation and the Paying Agent, as the
case may be, shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock or Company Options such amounts that Parent, Sub,
the Surviving Corporation or the Paying Agent is required to deduct and withhold
with respect to the making of such payment under the Internal Revenue Code of
1986, as amended (the "Code"), the rules and regulations promulgated thereunder
or any provision of state, local or foreign tax Law. To the extent that amounts
are so withheld by Parent, Sub, the Surviving Corporation or the Paying Agent,
such amounts shall be treated for all purposes of this Agreement as having been
paid to the holder of the shares of Company Common Stock or Company Options in
respect of which such deduction and withholding was made by Parent, Sub, the
Surviving Corporation or the Paying Agent. The Surviving Corporation or Parent
shall promptly pay or cause to be paid any amounts withheld pursuant to this
Section 2.8(f) for applicable foreign, federal, state and local taxes to the
appropriate Governmental Entity on behalf of such holders of Company Common
Stock or Company Options.
(g) Except as otherwise provided in this Agreement, the Surviving
Corporation shall pay all charges and expenses including those of the Paying
Agent, in connection with the exchange of cash for shares of Company Common
Stock.
A-9
Section 2.9. Shareholders Meeting.
(a) Subject to Section 2.9(d), if required by applicable Law in order to
consummate the Merger, the Company, acting through the Post-Acceptance Board,
shall, in accordance with applicable Law:
(i) duly call, give notice of, convene and hold a special meeting of
the Company Shareholders (the "Shareholders Meeting"), as promptly as
practicable following the acceptance for payment and purchase of shares of
Company Common Stock by Sub pursuant to the Offer, for the purpose of
obtaining the approval of the Merger and this Agreement;
(ii) prepare and file with the SEC a preliminary proxy statement or
information statement (the "Proxy Statement") relating to the Merger and
this Agreement, and use its reasonable best efforts (x) to obtain and
furnish the information required to be included by applicable Law in the
preliminary Proxy Statement and, after consultation with Parent, to respond
promptly to any comments made by the SEC with respect to the Proxy
Statement, and (y) to cause the Proxy Statement and any amendment or
supplement thereto, to be mailed to the Company Shareholders, provided,
that the Company (1) will promptly notify Parent of its receipt of any
comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements of the Proxy Statement or for
additional information; (2) will promptly provide Parent with copies of all
correspondence between the Company or any of its representatives, on the
one hand, and the SEC or its staff, on the other hand, with respect to the
Proxy Statement or the Merger and (3) will not amend or supplement the
Proxy Statement without first consulting with Parent and its counsel, and
(z) to obtain the necessary approvals of the Merger and this Agreement by
its shareholders to the extent required by the CGCL;
(iii) prepare and revise the Proxy Statement so that, at the date
mailed to Company shareholders and at the time of the Shareholders Meeting,
the Proxy Statement will (x) not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order that the statements made therein, in light of the
circumstances under which they are made, are not misleading (except that
the Company shall not be responsible under this clause (iii) with respect
to statements made therein based on information supplied by Parent or Sub
expressly for inclusion in the Proxy Statement), and (y) comply in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder;
(iv) include in the Proxy Statement the recommendation of the Board of
Directors of the Company that the Company Shareholders vote in favor of the
approval of the Merger and the adoption of this Agreement; and
(v) solicit proxies from the Company Shareholders in favor of the
approval of the Merger and the adoption of this Agreement and take all
other action necessary, or in the reasonable judgment of Parent, helpful to
secure the vote or consent of such holders required by the CGCL or this
Agreement to effect the Merger.
(b) Parent shall furnish to the Company such information concerning itself
and Sub, for inclusion in the Proxy Statement, as may be requested by the
Company and required to be included in the Proxy Statement. Such information
provided by Parent and Sub in writing expressly for inclusion in the Proxy
Statement will not, at the date the Proxy Statement is filed with the SEC, and
mailed to Company shareholders and (including any corrections or modifications
made by Parent or Sub to such information) at the time of the Shareholders
Meeting, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order that the
statements made therein, in light of the circumstances under which they were
made, are not misleading.
(c) Parent shall vote or cause to be voted all shares of the Company Common
Stock purchased pursuant to the Offer and all other shares beneficially owned by
Parent or Sub in favor of adoption of the Merger and the Merger Agreement.
(d) In the event that Parent or Sub, collectively, shall acquire at least
90% of the issued and outstanding shares of Company Common Stock, the Company,
Parent and Sub shall take all appropriate and necessary
A-10
action to cause the Merger to become effective as soon as practicable after the
expiration or termination of the Offer, without a meeting of shareholders of the
Company, in accordance with Section 1110 of the CGCL.
Section 2.10. Subsequent Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either Sub or the Company acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement and the Merger, the officers and
directors of the Surviving Corporation are hereby authorized to execute and
deliver, in the name and on behalf of each of Sub or the Company or otherwise,
all such deeds, bills of sale, assignments and assurances and to take and do, in
the name and on behalf of each of Sub or the Company or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement and the Merger.
ARTICLE III
THE SURVIVING CORPORATION
Section 3.1. Articles of Incorporation. The Articles of Incorporation of
the Company as in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation, until, subject to
Section 6.7(a), the same shall thereafter be altered, amended or repealed in
accordance with applicable Law or such Articles of Incorporation.
Section 3.2. Bylaws. The Bylaws of the Company as in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation,
until, subject to Section 6.7(a), the same shall thereafter be altered, amended
or repealed in accordance with applicable Law, the Articles of Incorporation of
the Surviving Corporation or such Bylaws.
Section 3.3. Directors and Officers. From and after the Effective Time,
until the earlier of their resignation or removal or until their respective
successors are duly elected or appointed and qualified in accordance with
applicable Law, (i) the directors of Sub at the Effective Time shall be the
directors of the Surviving Corporation, and (ii) the officers of Sub at the
Effective Time shall be the officers of the Surviving Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub (except as set forth
in the written disclosure letter (which letter shall in each case specifically
identify by reference to Sections of this Agreement any exceptions to each of
the representations and warranties contained in this Agreement) delivered by the
Company to Parent and Sub in connection with the execution and delivery of this
Agreement (the "Company Disclosure Letter")) as follows:
Section 4.1. Organization and Standing. Each of the Company and each
Subsidiary (as defined in Section 4.2(c)) (i) is a corporation duly organized,
validly existing and in good standing under the Laws of the jurisdiction of its
organization, (ii) has the necessary corporate power and authority to own, lease
and operate its properties and assets and to conduct its business as presently
conducted and (iii) is duly qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except, in the case of this
clause (iii), where the failure to be so qualified or licensed or be in such
good standing is not reasonably likely to have a Company Material Adverse Effect
(as defined in Section 9.11(a)). The Company has furnished or made available to
Parent true and complete copies of its articles of incorporation (including any
certificates of designations attached thereto, the "Company Articles of
Incorporation") and bylaws (the "Company Bylaws") and the articles of
incorporation and bylaws (or
A-11
equivalent organizational documents) of each Subsidiary, each as amended to
date. Such articles of incorporation, bylaws or equivalent organizational
documents are in full force and effect, and neither the Company nor any
Subsidiary is in violation of any provision of its articles of incorporation,
bylaws or equivalent organizational documents.
Section 4.2. Capitalization
(a) The authorized capital stock of the Company consists of 15,000,000
shares of Company Common Stock and 5,000,000 shares of preferred stock, no par
value per share (the "Preferred Stock"). As of October 25, 2001, (i) 11,103,321
shares of Company Common Stock are issued and outstanding, all of which are
validly issued, fully paid and nonassessable and free of preemptive rights, (ii)
no shares of Company Common Stock are held in the treasury of the Company, (iii)
Company Options (as defined in Section 1.6) to purchase 1,737,699 shares of
Company Common Stock are outstanding pursuant to the Company Stock Option Plans,
and an additional 188,886 shares of Company Common Stock are authorized and
reserved for future issuance pursuant to the Company Stock Option Plans that
have not yet been awarded, (iv) no shares of Preferred Stock are issued or
outstanding, and (v) Company Warrants to purchase 31,806 shares of Company
Common Stock are outstanding and 31,806 shares of Company Common Stock are
reserved for future issuance pursuant to the Company Warrants. Section 4.2 of
the Company Disclosure Letter sets forth a true and complete list of the
outstanding Company Options and Company Warrants together with the exercise
prices thereof. During the period from October 25, 2001 through the date of this
Agreement, the Company has not issued any shares of capital stock of the Company
or any other securities of the Company or any options or warrants to acquire any
such shares or other securities, other than issuances of shares of Company
Common Stock pursuant to the exercise of Company Options or Company Warrants
outstanding as of October 25, 2001.
(b) Except as set forth in Section 4.2(a) of this Agreement or in Section
4.2(b) of the Company Disclosure Letter, there are no options, warrants,
convertible securities, subscriptions, stock appreciation rights, phantom stock
plans or stock equivalents or other similar rights, agreements, arrangements or
commitments (contingent or otherwise) of any character issued or authorized by
the Company or any Subsidiary relating to the issued or unissued capital stock
of the Company or any Subsidiary or obligating the Company or any Subsidiary to
issue or sell any shares of capital stock of, or options, warrants, convertible
securities, subscriptions or other equity interests in, the Company or any
Subsidiary. All shares of Company Common Stock subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, will be duly authorized, validly issued, fully paid
and nonassessable. There are no outstanding contractual obligations of the
Company or any Subsidiary to repurchase, redeem or otherwise acquire any shares
of Company Common Stock or any capital stock of any Subsidiary or to pay any
dividend or make any other distribution in respect thereof or to provide funds
to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any person.
(c) Section 4.2(c) of the Company Disclosure Letter sets forth a correct
and complete list of each corporation, association, subsidiary, partnership,
limited liability company or other entity of which the Company owns of record or
beneficially, directly or indirectly, 30% or more of the outstanding equity
interests (each a "Subsidiary" and collectively, the "Subsidiaries"). The
Company owns beneficially and of record all of the issued and outstanding
capital stock of each Subsidiary and does not own an equity interest in any
other corporation, association, partnership, limited liability company or other
entity, other than in the Subsidiaries. Each outstanding share of capital stock
of each Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and each such share owned by the Company or another Subsidiary is
free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on the Company's or such other
Subsidiary's voting rights, charges and other encumbrances of any nature
whatsoever, except for liens for Taxes accrued but not yet payable.
Section 4.3. Authority for Agreement
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement and the Option Agreement, to perform its obligations
hereunder and thereunder and, subject to obtaining necessary shareholder
approval (if required by applicable Law), to consummate the Merger and the
A-12
other transactions to which the Company is a party contemplated by this
Agreement and the Option Agreement. The execution, delivery and performance by
the Company of this Agreement and the Option Agreement, and the consummation by
the Company of the Merger and the other transactions to which the Company is a
party contemplated by this Agreement and the Option Agreement, have been duly
authorized by all necessary corporate action (including, without limitation, the
unanimous approval of the Board of Directors of the Company) and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement and the Option Agreement or to consummate the Merger or the other
transactions to which the Company is a party contemplated by this Agreement and
the Option Agreement (other than, with respect to the Merger, the approval and
adoption of this Agreement and the Merger by the affirmative vote of a majority
of the then outstanding shares of Company Common Stock (if required by
applicable Law) and the filing and recordation of appropriate merger documents
as required by the CGCL). Each of this Agreement and the Option Agreement has
been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Sub, constitutes a legal,
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, subject to the qualification, however, that
enforcement of the rights and remedies created hereby is subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of
general application related to or affecting creditors' rights and to general
equity principles. The affirmative vote of a majority of the outstanding shares
of Company Common Stock entitled to vote at a duly called and held meeting of
shareholders is the only vote of the Company Shareholders necessary to approve
this Agreement, the Merger and the other transactions to which the Company is a
party contemplated by this Agreement.
(b) At a meeting duly called and held on October 29, 2001, the Board of
Directors of the Company unanimously (i) determined that, as of the date of this
Agreement, this Agreement, the Option Agreement and the transactions
contemplated hereby and thereby to which the Company is a party, including the
Offer and the Merger, are fair to and in the best interests of the Company and
the Company Shareholders, (ii) approved, authorized and adopted this Agreement,
the Option Agreement, the Offer and the Merger and the other transactions to
which the Company is a party contemplated hereby, and (iii) resolved, subject to
the provisions of this Agreement, to recommend approval, adoption and acceptance
of this Agreement, the Offer, and the Merger by the Company Shareholders. No
antitakeover or similar statute in California or New York, or to the knowledge
of the Company and its Subsidiaries in any other jurisdiction, is applicable to
Parent, Sub, the Company or the Surviving Corporation in connection with the
Merger, the Offer, this Agreement, the Option Agreement, the Tender Agreements
or any of the transactions to which the Company is a party contemplated hereby
or thereby.
(c) Dresdner Kleinwort Wasserstein, Inc. (the "Independent Advisor") has
delivered to the Board of Directors of the Company its opinion, as of the date
of this Agreement, that, as of such date and based on the assumptions,
qualifications and limitations contained therein, the consideration to be
received by the Company Shareholders in the Offer and the Merger is fair to the
Company Shareholders from a financial point of view. The Company will provide to
Parent and Sub a copy of the written opinion of the Independent Advisor promptly
after the date hereof.
Section 4.4. No Conflict. The execution and delivery of this Agreement
and the Option Agreement by the Company do not, and the performance of this
Agreement and the Option Agreement by the Company and the consummation of the
Merger, the Offer and the other transactions to which the Company is a party
contemplated by this Agreement and the Option Agreement will not, (i) conflict
with or violate the Company Articles of Incorporation or Company Bylaws or
equivalent organizational documents of any of its Subsidiaries, (ii) subject to
Section 4.5, conflict with or violate any United States federal, state or
material local or any material foreign statute, law, rule, regulation,
ordinance, code, order, judgment, decree or any other material requirement or
rule of law (a "Law") applicable to the Company or any of its Subsidiaries or by
which any material property or material group of properties or material asset or
material group of assets of the Company or any of its Subsidiaries is bound or
affected, or (iii) result in a material breach of or constitute a material
default (or an event which with notice or lapse of time or both would become a
material default) under, give to others any right of termination, amendment,
acceleration or cancellation of, result in triggering any payment or other
obligations, or result in the creation of a lien or other encumbrance on any
material property or
A-13
material group of properties or material asset or material group of assets of
the Company or any of its Subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation or Material Contract (as defined in Section 4.13) to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries or any property or asset of any of them is bound or
affected.
Section 4.5. Required Filings and Consents. The execution and delivery of
this Agreement and the Option Agreement by the Company do not, and the
performance of this Agreement and the Option Agreement by the Company will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any United States federal, state or local or any foreign
government or any court, administrative or regulatory agency or commission or
other governmental entity or agency, domestic or foreign (a "Governmental
Entity"), except (i) for applicable requirements, if any, of the Exchange Act
(including relating to the Offering Documents and, if necessary, the Proxy
Statement) and state securities or "blue sky" laws ("Blue Sky Laws"), (ii) for
those required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (iii) for filings contemplated by Article II hereof,
and (iv) for other immaterial approvals, authorizations, consents, orders,
filings, registrations or notifications.
Section 4.6. Compliance. Each of the Company and its Subsidiaries (i) has
been operated at all times in compliance in all material respects with all Laws
applicable to the Company or any of its Subsidiaries or by which any property,
business or asset of the Company or any of its Subsidiaries is bound or affected
and (ii) is not in material default or material violation of any notes, bonds,
mortgages, indentures, contracts, agreements, leases, licenses, permits,
franchises, or other instruments or obligations or Material Contract to which
the Company or any of its Subsidiaries is a party or by which the Company or any
of its Subsidiaries or any material property or material group of properties or
material asset or material group of assets of the Company or any of its
Subsidiaries is bound or affected.
Section 4.7. SEC Filings, Financial Statements.
(a) The Company and each Subsidiary, as necessary, has filed all forms,
reports, statements and documents required to be filed with the Securities and
Exchange Commission ("SEC") since August 28, 1999 (collectively, including all
exhibits thereto, the "SEC Reports"), each of which has complied in all material
respects with the applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations promulgated
thereunder, and the Exchange Act, and the rules and regulations promulgated
thereunder, each as in effect on the date so filed. None of the SEC Reports as
of their filing dates or, if amended, as of the date of the last such amendment,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated or incorporated by reference therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) All of the financial statements included in the SEC Reports, in each
case, including any related notes thereto, as filed with the SEC (collectively
referred to as the "Company Financial Statements") have been prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved (except as noted
therein, and, in the case of the unaudited statements, as may be permitted by
the applicable rules and regulations promulgated under the Exchange Act and the
Securities Act and subject, in the case of unaudited statements, to normal year
end adjustments permitted by GAAP and consistent with the Company's past
practices) and fairly present the consolidated financial position of the Company
and its Subsidiaries at the respective dates thereof and the consolidated
results of its operations and changes in cash flows for the periods indicated.
(c) There are no liabilities of the Company or any of its Subsidiaries of
any kind whatsoever, whether or not accrued and whether or not contingent or
absolute, that are material to the Company and its Subsidiaries, taken as a
whole, other than (i) liabilities disclosed or provided for in the consolidated
balance sheet of the Company and its Subsidiaries at September 2, 2000,
including the notes thereto, (ii) liabilities disclosed in the SEC Reports, and
(iii) liabilities incurred in the ordinary course of business consistent with
past practice since September 2, 2000, none of which is, individually or in the
aggregate, reasonably likely to be material to the Company.
A-14
(d) The Company has heretofore furnished or made available to Parent a
complete and correct copy of any amendments or modifications which have not yet
been filed with the SEC to agreements, documents or other instruments which
previously had been filed by the Company with the SEC as exhibits to the SEC
Reports pursuant to the Securities Act and the rules and regulations promulgated
thereunder or the Exchange Act and the rules and regulations promulgated
thereunder.
Section 4.8. Absence of Certain Changes or Events. Except as contemplated
by this Agreement or to the extent specifically disclosed in the SEC Reports
filed prior to the date hereof, since September 2, 2000, the Company and its
Subsidiaries have conducted their respective businesses only in the ordinary
course and consistent with prior practice and there has not been (i) any event
or occurrence of any condition that has had or would reasonably be expected to
have, individually or in the aggregate with other events, occurrences or
conditions, a Company Material Adverse Effect, (ii) any declaration, setting
aside or payment of any dividend or any other distribution with respect to any
of the capital stock of the Company or any Subsidiary, (iii) any change in
accounting methods, principles or practices employed by the Company, except as
may have been required by changes in GAAP or applicable Law that are not
material and except for any changes to comply with Statement of Financial
Accounting Standards No. 141 and No. 142, or (iv) any action of the type
described in Sections 6.1(b) (i) or (ii) or 6.1(c) (ii), (iii), (iv), (v), (vi),
(vii), (viii), (ix), (xi), (xii), (xiii) or (xiv) which had such action been
taken after the date of this Agreement would be in violation of any such
Section.
Section 4.9. Taxes. The Company and each of its Subsidiaries have timely
filed all Tax Returns (as defined below) required to be filed by any of them.
All such Tax Returns are true, correct and complete in all material respects.
All Taxes (as defined below) of the Company and its Subsidiaries which are (i)
shown as due on such Tax Returns, (ii) otherwise due and payable or (iii)
claimed or asserted by any taxing authority to be due, have been paid, except
for those Taxes being contested in good faith and for which adequate reserves
have been established in the financial statements included in the SEC Reports in
accordance with GAAP. There are no liens for any Taxes upon the assets of the
Company or any of its Subsidiaries, other than statutory liens for Taxes not yet
due and payable and liens for real estate Taxes contested in good faith. The
Company does not know of any proposed or threatened Tax claims or assessments
that, if upheld, individually or in the aggregate, are reasonably likely to have
a Company Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has made an election under Section 341(f) of the Code. Neither the
Company nor any of its Subsidiaries has waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency, which waiver or extension remains in effect. The
Company and each Subsidiary has withheld and paid over to the relevant taxing
authority all Taxes required to have been withheld and paid in connection with
payments to employees, independent contractors, creditors, shareholders or other
third parties. The unpaid Taxes of the Company and its Subsidiaries for the
current taxable period (A) did not, as of the most recent Company Financial
Statements, exceed the reserve for Tax liability set forth on the face of the
balance sheet in the most recent Company Financial Statements and (B) do not
exceed that reserve as adjusted for the passage of time through the Closing in
accordance with the past custom and practice of the Company and its Subsidiaries
in filing their Tax Returns. For purposes of this Agreement, (a) "Tax" (and,
with correlative meaning, "Taxes") means any federal, state, local or foreign
income, gross receipts, property, sales, use, license, excise, franchise,
employment, payroll, premium, withholding, alternative or added minimum, ad
valorem, transfer or excise tax, or any other tax, custom, duty, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest or penalty or addition thereto, whether disputed or not, imposed by any
Governmental Entity, and (b) "Tax Return" means any return, report or similar
statement required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
Section 4.9 of the Company Disclosure Letter sets forth with reasonable
specificity: (i) all jurisdictions in which the Company or any Subsidiary
currently has a presence requiring it to pay Taxes measured by income or gross
receipts (a "Taxable Presence") and all jurisdictions in which the Company or
any Subsidiary has had a Taxable Presence since January 1, 1998, (ii) all Tax
Returns for Taxes measured by income or gross receipts filed or due to be filed
applicable to the three year period ending on the date hereof and (iii) all
A-15
material correspondence with any Tax authorities (including, without limitation,
all audits, notices and requests for information from or to taxing authorities)
since January 1, 1998.
Section 4.10. Assets.
(a) Except as set forth in the Company's Annual Report on Form 10-K for
the fiscal year ended September 2, 2000 (the "10-K"), the Company and each of
its Subsidiaries have good and marketable title to, or a valid leasehold
interest in, all of their real and personal properties and assets reflected in
the 10-K or acquired after September 2, 2000 (other than assets disposed of
since September 2, 2000 in the ordinary course of business consistent with past
practice or which had an individual value of less than $200,000 or an aggregate
value of less than $1,000,000), in each case free and clear of all title
defects, liens, encumbrances and restrictions, except for (i) liens,
encumbrances or restrictions which secure indebtedness which are properly
reflected in the 10-K; (ii) liens for Taxes accrued but not yet payable; (iii)
liens arising as a matter of law in the ordinary course of business with respect
to obligations incurred after September 2, 2000, provided that the obligations
secured by such liens are not delinquent; and (iv) liens that do not
individually or in the aggregate, materially detract from the value of the
assets subject thereto or materially impact the operation of the Company or any
Subsidiary. Section 4.10 of the Company Disclosure Letter sets forth a true,
correct and complete list of all real property (i) owned or leased by the
Company or a Subsidiary, (ii) as to which the Company or a Subsidiary has a
written, or to the knowledge of the Company or any Subsidiary any other,
license, easement or right of way to use, (iii) as to which the Company or a
Subsidiary has the option to purchase, lease, license or acquire an easement or
right of way pursuant to any written, or to the knowledge of the Company or any
Subsidiary any other, agreement, arrangement or understanding or (iv) in which
the Company or a Subsidiary has any other material interest.
(b) Neither the Company nor any of its Subsidiaries has any legal
obligation, absolute or contingent, to any other person to sell or otherwise
dispose of any of its assets (other than sales of products and inventory in the
ordinary course of business consistent with past practices) with an individual
value in excess of $200,000 or an aggregate value in excess of $500,000.
(c) The buildings, fixtures and equipment of the Company and its
Subsidiaries are in good operating condition and repair (ordinary wear and tear
excepted) and are adequate for the uses to which they are being put and for the
conduct of the business of the Company and its Subsidiaries as conducted at and
prior to the Effective Time.
Section 4.11. Change of Control Agreements. Neither the execution and
delivery of this Agreement nor the consummation of the Merger or the other
transactions contemplated by this Agreement will (either alone or in conjunction
with any other event) result in, cause the accelerated vesting or delivery of,
or increase the amount or value of, any payment or benefit to any director,
officer or employee of the Company or any Subsidiary. Without limiting the
generality of the foregoing, no amount paid or payable by the Company or any
Subsidiary in connection with the Merger or the other transactions contemplated
by this Agreement, including accelerated vesting of options (either solely as a
result thereof or as a result of such transactions in conjunction with any other
event) will be an "excess parachute payment" within the meaning of Section 280G
of the Code.
Section 4.12. Litigation. Except to the extent specifically disclosed in
the SEC Reports filed prior to the date hereof, there are no claims, suits,
actions, investigations, indictments or information, or administrative,
arbitration or other proceedings ("Litigation") pending or, to the knowledge of
the Company and its Subsidiaries, threatened against the Company or any of its
Subsidiaries. Except to the extent specifically disclosed in the SEC Reports
filed prior to the date hereof, there are no judgments, orders, injunctions,
decrees, stipulations or awards (whether rendered by a court, administrative
agency, or by arbitration, pursuant to a grievance or other procedure) to which
the Company or any of its Subsidiaries is a party, or to the knowledge of the
Company or any Subsidiary, is otherwise subject. To the knowledge of the Company
and its Subsidiaries, the Company has complied with and is in compliance with
the Settlement Agreement with the United States government dated July 23, 1998,
and there have been no written, or to the knowledge of the Company or any of its
Subsidiaries any other, allegations by any person or entity, including any
Governmental Entity, that any of the Company or its Subsidiaries has failed to
so comply.
A-16
Section 4.13. Contracts and Commitments.
(a) Except for any contracts which have prior the date hereof been
terminated in accordance with their terms or been terminated by the parties
thereto, in each case with no continuing liabilities or obligations on the part
of the Company or any Subsidiary, Section 4.13 of the Company Disclosure Letter
sets forth a true, correct and complete list of the following contracts to which
the Company or a Subsidiary is a party (including every amendment, modification
or supplement to the foregoing): (i) any contracts of employment, (ii) any
contracts or agreements which limit or restrict the Company or any Subsidiary
(or, to the knowledge of the Company and its Subsidiaries, any employee) from
engaging in any business in any jurisdiction or limit the freedom of the Company
or any Subsidiary to compete in any line of business in any geographic area or
requiring the Company or any Subsidiary to share any profits, (iii) agreements
or arrangements for the purchase or sale of any assets (other than purchases or
sales of products and inventory in the ordinary course of business consistent
with past practices) involving payments of more than $200,000 individually or
$500,000 in the aggregate, (iv) all bonds, debentures, notes, loans, credit or
loan agreements or commitments, mortgages, indentures or guarantees or other
agreements or contracts relating to the borrowing of money, in each case
individually involving remaining principal amounts in excess of $200,000, (v)
agreements with unions, (vi) independent contractor agreements and leased or
temporary employee agreements involving in each case individually aggregate
annual payments of more than $75,000 or which are not terminable upon less than
30 days' notice, (vii) leases of any real property involving in each case
individually annual rent of $75,000 or more or leases of personal property
involving in each case individually annual rent of $50,000 or more, (viii)
agreements with copackers, manufacturers, suppliers and trade partners, in each
case involving individually aggregate annual payments made or received by the
Company and its Subsidiaries of more than $25,000, (ix) all agreements with
bottlers and distributors and all franchise and licensing agreements involving
in each case individually aggregate annual payments of more than $25,000, (x)
any contract or agreement for the granting or receiving of a license or
sublicense or arrangement (other than agreements or licenses for standard,
packaged software products and other than licenses to the Company or any
Subsidiary involving in each case individually annual payments of less than
$75,000) under which any person is obligated to pay or has the right to receive
a royalty, license fee or similar payment, and (xi) all other contracts,
agreements or commitments individually involving in each case individually
payments made by or to the Company or a Subsidiary of $250,000 or more
(individually, a "Material Contract" and collectively, "Material Contracts").
The Company has delivered or made available to Parent true, correct and complete
copies of all Material Contracts, including all amendments thereto.
(b) The Material Contracts are legal, valid, binding and enforceable in
accordance with their respective terms with respect to the Company and to the
knowledge of the Company and its Subsidiaries with respect to each other party
to any of such Material Contracts, except, in each case, to the extent that
enforcement of rights and remedies created by any Material Contracts are subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar Laws of general application related to or affecting creditors' rights
and to general equity principles. There are no existing material defaults or
breaches of the Company under any Material Contract (or events or conditions
which, with notice or lapse of time or both would constitute a material default
or breach) and, to the knowledge of the Company and its Subsidiaries, there are
no such material defaults (or events or conditions which, with notice or lapse
of time or both, would constitute a material default or breach) with respect to
any third party to any Material Contract. The Company and its Subsidiaries have
no knowledge of any pending or threatened bankruptcy, insolvency or similar
proceeding with respect to any party to any of such agreements. Section 4.13 of
the Company Disclosure Letter identifies each Material Contract set forth
therein that requires the consent of or notice to the other party thereto to
avoid any breach, default or violation of such contract, agreement or other
instrument in connection with the transactions contemplated hereby.
(c) The calculations of allowance for product returns for use in
connection with the preparation of the Company Financial Statements contained in
the SEC Reports conformed to GAAP. Set forth in Section 4.13 of the Company
Disclosure Letter is a description of the Company's policy regarding product
returns.
Section 4.14. Employee Benefit Plans. All employee benefit plans,
compensation arrangements and other benefit arrangements covering employees of
the Company or any of its Subsidiaries (the "Company
A-17
Benefit Plans") and all employee agreements providing for compensation,
severance or other benefits to any employee or former employee of the Company or
any of its Subsidiaries are listed in Section 4.14 of the Company Disclosure
Letter. True, correct and complete copies of the following documents with
respect to each of the Company Benefit Plans have been provided or made
available by the Company to Parent: (i) any plans and related trust documents
and amendments thereto, (ii) summary plan descriptions and material
modifications thereto, (iii) written communications made since January 1, 2000
to employees relating to the Company Benefit Plans and (iv) written descriptions
of all non-written agreements relating to the Company Benefit Plans. To the
extent applicable, the Company Benefit Plans comply in all material respects
with the requirements of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the Code, and any Company Benefit Plan intended to be
qualified under Section 401(a) of the Code has received a determination letter
or is a model prototype plan and continues to satisfy the requirements for such
qualification. Neither the Company nor any of its Subsidiaries nor any ERISA
Affiliate of the Company maintains, contributes to or has maintained or
contributed in the past six (6) years to any benefit plan which is covered by
Title IV of ERISA or Section 412 of the Code. Neither any Company Benefit Plan,
nor the Company nor any Subsidiary has incurred any liability or penalty under
Section 4975 of the Code or Section 502(i) of ERISA in excess of $10,000 in the
aggregate or engaged in any transactions that are reasonably likely to result in
any liabilities or penalties in excess of $10,000 in the aggregate. Each of the
Company and its Subsidiaries and any ERISA Affiliate which maintains a "group
health plan" within the meaning of Section 5000(b)(1) of the Code has complied
with the notice and continuation requirements of Section 4980B of the Code, Part
6 of Subtitle B of Title I of ERISA and the regulations thereunder (COBRA), and
the creditable coverage certification requirements and limitations on
pre-existing condition exclusion requirements of Section 9801 of the Code, Part
7 of Subtitle B of Title I of ERISA and the regulations thereunder (HIPAA). Each
Company Benefit Plan has been maintained and administered in compliance in all
material respects with its terms and with ERISA and the Code to the extent
applicable thereto. There is no pending or, to the knowledge of the Company and
its Subsidiaries, threatened or anticipated Litigation against or otherwise
involving any of the Company Benefit Plans and no Litigation (excluding claims
for benefits incurred in the ordinary course of Company Benefit Plan activities)
has been brought against or with respect to any such Company Benefit Plan. All
contributions required to be made to the Company Benefit Plans have been made or
provided for. Neither the Company nor any of its Subsidiaries maintains or
contributes to any plan or arrangement which provides or has any liability to
provide life insurance or medical or other employee welfare benefits to any
employee or former employee upon his retirement or termination of employment,
and neither the Company nor any of its Subsidiaries has ever represented,
promised or contracted (whether in oral or written form) to any employee or
former employee that such benefits would be provided.
Any individual who performs services for the Company or any of its
Subsidiaries (other than through a contract with an organization other than such
individual) and who is not treated as an employee for federal income tax
purposes by the Company or its Subsidiaries is not an employee for such
purposes. There are no agreements in effect between the Company or any
Subsidiary and any individual retained by the Company or any Subsidiary to
provide services as a consultant or independent contractor.
For purposes of this Agreement "ERISA Affiliate" means any business or
entity which is a member of the same "controlled group of corporations," an
"affiliated service group" or is under "common control" with an entity within
the meanings of Sections 414(b), (c) or (m) of the Code, is required to be
aggregated with the entity under Section 414(o) of the Code, or is under "common
control" with the entity, within the meaning of Section 4001(a)(14) of ERISA, or
any regulations promulgated or proposed under any of the foregoing Sections.
Section 4.15. Labor and Employment Matters.
(a) Neither the Company nor any of its Subsidiaries is a party to, or
bound by, any collective bargaining agreement or other contracts, arrangements,
agreements or understandings with a labor union or labor organization that was
certified by the National Labor Relations Board ("NLRB"). There is no existing,
pending or, to the knowledge of the Company and its Subsidiaries, threatened (i)
unfair labor practice charge or complaint, labor dispute, labor arbitration
proceeding or any other matter before the NLRB or any other
A-18
comparable state agency against or involving the Company or any of its
Subsidiaries, (ii) activity or proceeding by a labor union or representative
thereof to organize any employees of the Company or any of its Subsidiaries,
(iii) certification or decertification question relating to collective
bargaining units at the premises of the Company or any of its Subsidiaries or
(iv) lockout, strike, organized slowdown, work stoppage or work interruption
with respect to such employees.
(b) Neither the Company nor any of its Subsidiaries has taken any action
that would constitute a "Mass Layoff" or "Plant Closing" within the meaning of
the Worker Adjustment and Retraining Notification ("WARN") Act or would
otherwise trigger notice requirements or liability under any state or local
plant closing notice Law. No agreement, arbitration or court decision or
governmental order to which the Company or any of its Subsidiaries is a party,
or to the knowledge of the Company and its Subsidiaries is subject, in any way
limits or restricts any of the Company, any of its Subsidiaries or Parent from
relocating or closing any of the operations of the Company or any of its
Subsidiaries.
(c) Neither the Company nor any of its Subsidiaries has failed in any
material respect to pay when due any wages (including overtime wages), bonuses,
commissions, benefits, taxes, penalties or assessments or other monies, owed to,
or arising out of the employment of or any relationship or arrangement with, any
officer, director, employee, sales representative, contractor, consultant or
other agent. The Company and its Subsidiaries are in compliance in all material
respects with all applicable Laws relating to employment and the payment of
wages and benefits. There are no, and the Company has no reason to believe there
would be any, citations, investigations, administrative proceedings or formal
complaints of violations of any federal or state wage and hour Laws pending or,
to the knowledge of the Company and its Subsidiaries, threatened before the
Department of Labor or any federal, state or administrative agency or court
against or involving the Company or any of its Subsidiaries.
(d) The Company and each of its Subsidiaries are in compliance in all
material respects with all immigration Laws relating to employment and have
properly completed and maintained all applicable forms (including but not
limited to I-9 forms) and, to the knowledge of the Company and its Subsidiaries,
there are no citations, investigations, administrative proceedings or formal
complaints of violations of the immigration Laws pending or, to the knowledge of
the Company and its Subsidiaries, threatened before the Immigration and
Naturalization Service or any federal, state or administrative agency or court
against or involving the Company or any of its Subsidiaries.
(e) There are no investigations, administrative proceedings, charges or
formal complaints of discrimination (including discrimination based upon sex,
age, marital status, race, national origin, sexual preference, disability,
handicap or veteran status) pending or, to the knowledge of the Company and its
Subsidiaries, threatened before the Equal Employment Opportunity Commission or
any federal, state or local agency or court against or involving the Company or
any of its Subsidiaries. No discrimination, sexual harassment, retaliation
and/or wrongful or tortious conduct claim is pending or, to the knowledge of the
Company and its Subsidiaries, threatened against the Company or any of its
Subsidiaries under the 1866, 1877, 1964 or 1991 Civil Rights Acts, the Equal Pay
Act, the Age Discrimination in Employment Act, as amended, the Americans with
Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards
Act, ERISA, or any other federal Law relating to employment or any comparable
state or local fair employment practices act regulating discrimination in the
workplace, and no wrongful discharge, libel, slander, invasion of privacy or
other claim (including but not limited to violations of the Fair Credit
Reporting Act, as amended, and any applicable whistleblower statutes) under any
state or federal law is pending or, to the knowledge of the Company and its
Subsidiaries, threatened against the Company or any of its Subsidiaries.
(f) If the Company or any of its Subsidiaries is a Federal, State or local
contractor obligated to develop and maintain an affirmative action plan, no
discrimination claim, show-cause notice, conciliation proceeding, sanctions or
debarment proceedings is pending or, to the knowledge of the Company and its
Subsidiaries, has been threatened against the Company or any of its Subsidiaries
with the Office of Federal Contract Compliance Programs or any other Federal
agency or any comparable state or local agency or court and no desk audit or
on-site review is in progress.
A-19
(g) There are no citations, investigations, administrative proceedings or
formal complaints of violations of local, state or federal occupational safety
and health Laws pending or, to the knowledge of the Company and its
Subsidiaries, threatened before the Occupational Safety and Health Review
Commission or any federal, state or local agency or court against or involving
the Company or any of its Subsidiaries.
(h) No workers' compensation or retaliation claim is pending against the
Company or any of its Subsidiaries in excess of $50,000 in the aggregate and the
Company maintains insurance with respect to workers' compensation claims
pursuant to insurance policies that are currently in force as is customary for
businesses similar to the business of the Company, or has accrued an adequate
liability for such obligations, including, without limitation, adequate accruals
with respect to accrued but unreported claims and retroactive insurance
premiums.
Section 4.16. Environmental Compliance and Disclosure.
(a) As used in this Section 4.16, the following defined terms have the
meanings set forth below:
"Action" means any actual or threatened claim, demand, action,
lawsuit, hearing, or proceeding of any kind, whether judicial or
administrative in nature.
"Environment" means any surface water or groundwater, drinking supply
water, land or soil, surface or subsurface strata or medium, the ambient
air, or any other environmental medium.
"Environmental Condition" means any condition relating to the
Environment, whether on or off site, whether or not yet discovered, that
results or may result in any Action, removal or remedial action, liability,
damages, expenses, costs (including reasonable attorneys', consulting,
engineering, and accounting fees), or losses of any kind whatsoever,
including, without limitation, any Release of any Hazardous Materials.
"Environmental Laws" mean any international, regional, national,
federal, state, provincial, or local Laws, statutes, treaties, directives,
ordinances, rules, or regulations relating to the Environment, or human
health and safety, or the Release of any Hazardous Materials.
"Hazardous Materials" mean any waste, pollutant, hazardous substance,
toxic, flammable, explosive, reactive, corrosive, infectious, radioactive,
carcinogenic or mutagenic substance, hazardous waste, special waste,
industrial substance, by-product, process intermediate product or waste,
petroleum or petroleum-derived substance or waste, chemical liquids or
solids, liquid or gaseous products, or any constituent of any such
substance or waste, the generation, use, handling, storage, treatment,
transport, or disposal of which is in any way governed by or subject to any
Environmental Laws, or any substance that is or contains polychlorinated
biphenyls (PCB's), radon gas, urea formaldehyde, asbestos-containing
materials (ACM) or lead.
"Release" means any releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing,
or dumping into the Environment.
(b) All plants, facilities and real and personal property owned, leased,
licensed or otherwise used by the Company or any Subsidiary (collectively
referred to as the "Facilities"), and the Company's and any Subsidiary's
business operations and activities at, on, or under any of the Facilities or
otherwise (collectively referred to as the "Operations"), are and have been at
all times during the period of such ownership, lease, license, use, operation or
activity by the Company or any Subsidiary in compliance in all material respects
with all Environmental Laws and with all licenses, permits, consents or
authorizations required by Environmental Laws;
(c) There are not, and have not been at any time in the past, any Actions,
settlements, consent orders or decrees, judicial or administrative orders or
decrees, or judgments under any Environmental Laws against or relating to the
Company or any Subsidiary, any of the Operations or, during the period of
ownership, lease, license, use, operation or activity by the Company or any
Subsidiary, any of the Facilities;
(d) Neither the Company nor any Subsidiary has received notice or is aware
of any existing or potential liabilities, obligations, fines, costs, fees or
expenses relating to or arising out of any violation of any
A-20
Environmental Laws or the unauthorized Release of any Hazardous Materials by the
Company or any Subsidiary anywhere, including, without limitation, under the
Comprehensive Environmental Response, Compensation, and Liability Act, as
amended, 42 U.S.C. Section 9601 et seq., (collectively referred to as
"Environmental Liabilities"), and to the Company's or any Subsidiary's
knowledge, no facts, circumstances or conditions exist that are related to,
associated with or attributable to any of the Facilities or the Operations that
may result in any Environmental Liabilities;
(e) No remediation, removal or cleanup of any Hazardous Materials is being
conducted or, to the Company's or any Subsidiary's knowledge, has been conducted
at any time in the past at, on or under the Facilities, or caused by or
associated with any of the Operations;
(f) To the Company's or any Subsidiary's knowledge, no Environmental
Condition of any kind is or has been at any time in the past at, on or under the
Facilities, or caused by or associated with any of the Operations that has not
been corrected or remediated at least to the extent required under Environmental
Laws and that, individually or in the aggregate, is or could reasonably be
expected to be material;
(g) Hazardous Materials of any kind are not being and, to the Company's or
any Subsidiary's knowledge, have not been at any time in the past generated,
used, stored, treated, disposed of or Released at, on or under any of the
Facilities, or as a result of or in association with any of the Operations,
except in compliance in all material respects with applicable Environmental
Laws; and
(h) To the Company's or any Subsidiary's knowledge, no underground or
aboveground storage tanks, solid waste management units, landfills or other
waste disposal areas, dikes, or impoundments of any kind are located at, on, or
under any of the Facilities.
Section 4.17. Intellectual Property Rights. Section 4.17 of the Company
Disclosure Letter sets forth a complete and accurate list and description of all
United States and foreign patents, trademarks, trade names, service marks, trade
dress and domain names, whether the foregoing is in the form of registrations or
pending applications therefor, and all material common law rights, that are
owned by the Company or any Subsidiary (all such rights together with any
copyrights that are owned by the Company or any Subsidiary being hereinafter
referred to as the "Intellectual Property Rights"). The Company is the sole
legal owner of its material common law Intellectual Property Rights, free and
clear of any liabilities, liens, encumbrances, restrictions or claims (except
for liens for Taxes accrued, but not yet payable or liens arising as a matter of
Law in the ordinary course of business, provided that the obligations secured by
such liens are not delinquent ("Permitted Liens")); and is the sole legal owner
of, and has good, valid and enforceable title to, all of its other Intellectual
Property Rights, free and clear of any liabilities, liens, encumbrances,
restrictions, claims or imperfections of title of any kind (except for Permitted
Liens). The Intellectual Property Rights have not been adjudged invalid or
unenforceable in whole or in part, and any registrations thereof are in full
force and effect. To the knowledge of the Company and its Subsidiaries, no facts
or circumstances exist that might result in the invalidity or unenforceability
of the Intellectual Property Rights. To the knowledge of the Company and its
Subsidiaries, the Company's websites are operated in compliance with all
applicable privacy Laws, contest and sweepstakes Laws, rights of publicity Laws,
and trademark Laws. The Intellectual Property Rights are not subject to any
license (royalty bearing or royalty free) and are not subject to any other
arrangement requiring any payment to any person or the obligation to grant
rights to any person in exchange, and the Intellectual Property Rights are all
of the patent, copyright and trademark rights necessary to the conduct of the
business of the Company and the Subsidiaries as currently being conducted. The
validity of the Intellectual Property Rights and title thereto (i) have not been
questioned in any prior litigation; (ii) are not being questioned in any pending
litigation; and (iii) to the knowledge of the Company and its Subsidiaries, are
not the subject(s) of any threatened or proposed litigation. To the knowledge of
the Company and its Subsidiaries, the business of the Company and the
Subsidiaries, as now conducted, does not infringe or conflict with and has not
been alleged to infringe or conflict with any copyrights, patents, trade
secrets, trademarks, trade names, service marks, trade dress or domain names of
others, whether or not such rights result from the common law or registration
rights of others. The Company, to its knowledge and to the knowledge of its
Subsidiaries, has not received any written or oral inquiries, threats or demands
by the Lemelson Medical, Education and Research Foundation asserting violation
of one or more of its patents by the Company or any of the Subsidiaries. To the
A-21
knowledge of the Company and its Subsidiaries, the consummation of the
transactions contemplated hereby will not result in the loss or impairment of
any of the Intellectual Property Rights. To the knowledge of the Company and its
Subsidiaries, no person or entity currently engaging in any commercial activity
is infringing upon the Intellectual Property Rights.
Section 4.18. Products. Since August 28, 1999:
(a) No shipment or other delivery of products made by the Company or
any Subsidiary of the Company (the "Products"), as of the date of such
shipment or delivery, is or has been (i) to the extent such Product is
subject to the Federal Food, Drug and Cosmetic Act, as amended (the "FD&C
Act"), adulterated or misbranded within the meaning of Section 342 or
Section 343, respectively, of the FD&C Act or is otherwise in violation of
the FD&C Act; (ii) an article which may not be introduced into interstate
commerce under the provisions of Section 344 of the FD&C Act to the extent
such Product has been introduced by the Company or any Subsidiary into
interstate commerce; or (iii) "adulterated" or "misbranded" or is otherwise
in violation of any applicable food law of any jurisdiction.
(b) There have been no recalls or withdrawals related to the
Products.
(c) There have been no tampering incidents relating to the Products.
(d) No federal or state regulatory authority has issued any warning
letter or other formal notice of violation of any statute, ordinance or
regulation concerning the composition, production, storage, labeling or
advertising of the Products.
Section 4.19. Brokers. Except pursuant to the letter agreement dated
September 4, 2001 between the Company and the Independent Advisor (the
"Independent Advisor Engagement Letter"), no broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with this Agreement, the Merger or the other transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company. Section
4.19 of the Company Disclosure Letter includes a complete and correct copy of
the Independent Advisor Engagement Letter.
Section 4.20. Trade Secrets. Each of the Company and its Subsidiaries is,
or will be on the Closing Date, the sole legal owner of, and has, or will on the
Closing Date have, good, valid and enforceable title to, all trade secrets
(including, without limitation, any processes entitled to trade secret
protection; and formulae) and proprietary information used in connection with
the manufacture of the Products, and the conduct of the operations and
businesses of the Company and its Subsidiaries (collectively the "Trade
Secrets"), free and clear of any liabilities liens, encumbrances, restrictions,
claims or imperfections of title of any kind, other than Permitted Liens. To the
knowledge of the Company and its Subsidiaries, neither the Company or any
Subsidiary nor any predecessor in interest thereof has disclosed, apart from any
information that does not extend beyond what is required by applicable Law to be
disclosed, any Trade Secrets. The Company has used, and to the knowledge of the
Company and its Subsidiaries the Company's predecessors in interest used,
commercially reasonable efforts to protect the Company's rights in its Trade
Secrets.
Section 4.21. Insurance Policies. The Company has delivered to Parent
prior to the date hereof a complete and accurate list of all insurance policies
in force naming the Company, any of its Subsidiaries or employees thereof as an
insured or beneficiary or as a loss payable payee or for which the Company or
any Subsidiary has paid or is obligated to pay all or part of the premiums.
Neither the Company nor any Subsidiary has received notice of any pending or
threatened cancellation or premium increase (retroactive or otherwise) with
respect thereto, and each of the Company and the Subsidiaries is in compliance
in all material respects with all conditions contained therein. There are no
material pending claims against such insurance policies by the Company or any
Subsidiary as to which insurers are defending under reservation of rights or
have denied liability, and there exists no material claim under such insurance
policies that has not been properly filed by the Company or any Subsidiary. The
insurance policies of the Company and its Subsidiaries are comparable in the
aggregate to the insurance policies held by other entities of similar size and
engaged in comparable businesses.
A-22
Section 4.22. Notes and Accounts Receivable.
(a) There are no notes receivable of the Company or any Subsidiary owing
by any director, officer, shareholder or employee of the Company or any
Subsidiary ("Affiliate Debt").
(b) All accounts receivable of the Company and any Subsidiary are current
or covered by adequate reserves for uncollectability, and there are no material
disputes regarding the collectibility of any such accounts receivable.
Section 4.23. Transactions with Affiliates. Other than compensation and
benefits received in the ordinary course of business as an employee or director
of the Company or its Subsidiaries (collectively, the "Affiliate Transactions"),
no director, officer or other "affiliate" or "associate" (as hereinafter
defined) of the Company or any Subsidiary or any entity in which, to the
knowledge of the Company and its Subsidiaries, any such director, officer or
other affiliate or associate, owns any beneficial interest (other than a
publicly held corporation whose stock is traded on a national securities
exchange or in the over-the-counter market and less than 1% of the stock of
which is beneficially owned by any such persons) has any interest in: (i) any
contract, arrangement or understanding with, or relating to the business or
operations of Company or any Subsidiary; (ii) any loan, arrangement,
understanding, agreement or contract for or relating to indebtedness of the
Company or any Subsidiary; (iii) any property (real, personal or mixed),
tangible, or intangible, used or currently intended to be used in, the business
or operations of the Company or any Subsidiary; or (iv) any Major Supplier,
Major Customer or Major Distributor (each as defined in Section 4.26). Without
limiting the generality of the foregoing, there are no amounts due or payable by
the Company or any Subsidiary to any of the Principal Shareholders or any of
their affiliates or associates in connection with the transactions contemplated
by this Agreement or the Tender Agreements or otherwise.
Section 4.24. No Existing Discussions. As of the date hereof, the Company
is not engaged, directly or indirectly, in any negotiations or discussions with
any other party with respect to a Competing Acquisition Proposal (as defined in
Section 6.5).
Section 4.25. Shareholder Rights Agreement. Neither the Company nor any
Subsidiary has adopted a shareholder rights agreement or any similar plan or
agreement which limits or impairs the ability to purchase, or become the direct
or indirect beneficial owner of, shares of Company Common Stock or any other
equity or debt securities of the Company or any of its Subsidiaries, other than
any shareholder rights plan or shareholder rights agreement that (a) is adopted
after the date of this Agreement, (b) does not impair the ability of the parties
to consummate the Offer or the Merger in accordance with the terms of this
Agreement and (c) otherwise does not have an adverse effect on Parent or Sub or
on the rights of Parent or Sub under this Agreement or any of the Tender
Agreements.
Section 4.26. Major Suppliers, Customers and Distributors.
(a) Section 4.26(a) of the Company Disclosure Letter sets forth a list of
each supplier of goods or services to Company and the Subsidiaries (i) who is
involved in contract manufacturing, copacking arrangements or toll manufacturing
(i.e., taking possession but not title to inventory and finished goods for
purposes of production activities and receiving a fee in return for such
production activities) or a supplier of critical or key ingredients or (ii) to
whom the Company and the Subsidiaries paid in the aggregate more than $25,000
during the 12-month period ended September 1, 2001 (each a "Major Supplier" and,
collectively, "Major Suppliers"), together with in each case the amount paid
during such period. Neither the Company nor any Subsidiary is engaged in any
material dispute with any Major Supplier and, to the knowledge of the Company
and its Subsidiaries, no Major Supplier intends to terminate, or materially
limit or reduce, its business relations with the Company or any Subsidiary.
(b) Section 4.26(b) of the Company Disclosure Letter sets forth a list of
each customer which accounted for net sales to the Company and the Subsidiaries
in the aggregate of more than $500,000 during the 12-month period ended
September 1, 2001 (each a "Major Customer" and, collectively, "Major Customers")
together with the amount of net sales produced during such period. Neither the
Company nor any Subsidiary is engaged in any material dispute with any Major
Customer and, to the knowledge of the
A-23
Company and its Subsidiaries, no Major Customer intends to terminate, or
materially limit or reduce, its business relations with the Company or any
Subsidiary.
(c) Section 4.26(c) of the Company Disclosure Letter sets forth a list of
each distributor from whom the Company and its Subsidiaries received, or to whom
the Company and its Subsidiaries paid, in the aggregate more than $500,000
during the 12-month period ended September 1, 2001 (each a "Major Distributor"
and, collectively, "Major Distributors") together in each case with the amount
received or paid during such period. Neither the Company nor any Subsidiary is
engaged in any material dispute with any Major Distributor and, to the knowledge
of the Company and its Subsidiaries, no Major Distributor intends to terminate,
or materially limit or reduce, its business relations with the Company or any
Subsidiary.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUB
Each of Parent and Sub, jointly and severally, represents and warrants to
the Company as follows:
Section 5.1. Organization and Standing. Such person is a corporation duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of incorporation and has the corporate power and authority to own,
lease and operate its properties and assets and to conduct its business as
presently conducted.
Section 5.2. Sub.
(a) Since the date of its incorporation, Sub has not carried on any
business or conducted any operations other than the execution of this Agreement
and the performance of its obligations hereunder. Sub was incorporated solely
for the consummation of the transactions contemplated hereby.
(b) The authorized capital stock of Sub consists of 100 shares of common
stock, no par value per share, all of which have been validly issued, fully paid
and nonassessable and are owned by Parent free and clear of any Liens.
Section 5.3. Authority for Agreement. Such person has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the Merger and the other
transactions contemplated by this Agreement. The execution, delivery and
performance by such person of this Agreement, and the consummation by each such
person of the Merger and the other transactions contemplated by this Agreement,
have been duly authorized by all necessary corporate action and no other
corporate proceedings on the part of such person are necessary to authorize this
Agreement or to consummate the Merger or the other transactions contemplated by
this Agreement (other than, with respect to the Merger, the filing and
recordation of appropriate merger documents as required by the CGCL). This
Agreement has been duly executed and delivered by such person and, assuming due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of each of such person enforceable against such person in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar Laws of general application
related to or affecting creditors' rights and to general equity principles.
Section 5.4. No Conflict. The execution and delivery of this Agreement by
such person do not, and the performance of this Agreement by such person and the
consummation of the Merger and the other transactions contemplated by this
Agreement will not, (i) conflict with or violate the certificate of
incorporation or bylaws of such person, (ii) conflict with or violate any Law
applicable to such person or by which any property or asset of such person is
bound or affected, or (iii) result in any material breach of or constitute a
material default (or an event which with notice or lapse of time or both would
become a material default) under, give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any material property or material group of properties or
asset or material group of assets of such person pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which such person is a party or by which such
person or any property or asset of either of them is bound or affected, except
in the case of clauses
A-24
(ii) and (iii) for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate, prevent or
materially delay the performance by such person of its respective obligations
under this Agreement or the consummation of the Merger or the other transactions
contemplated by this Agreement.
Section 5.5. Required Filings and Consents. The execution and delivery of
this Agreement by such person do not, and the performance of this Agreement by
such person will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Entity, except (i) for
applicable requirements of the Exchange Act (including relating to the Offering
Documents and, if necessary, the Proxy Statement), Blue Sky Laws and filing and
recordation of appropriate merger documents as required by the CGCL, (ii) for
those required by the HSR Act, (iii) for filings and consents contemplated by
Article II and (iv) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not,
individually or in the aggregate, prevent or materially delay the performance by
such person of any of its respective obligations under this Agreement or the
consummation of the Merger or the other transactions contemplated by this
Agreement.
Section 5.6. Brokers. Except for Morgan, Stanley & Co., Incorporated, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission payable by such person in connection with this
Agreement, the Merger or the other transactions contemplated by this Agreement
based upon arrangements made by or on behalf of such person.
Section 5.7. Financing. Parent and Sub will have the funds available as
is necessary to consummate the transactions contemplated hereby in accordance
with the terms hereof.
ARTICLE VI
COVENANTS
Section 6.1. Conduct of the Business Pending the Merger.
(a) The Company covenants and agrees that between the date of this
Agreement and the earlier of the Effective Time or the termination of this
Agreement in accordance with Section 8.1, unless Parent shall otherwise
expressly agree in writing (which agreement shall not be unreasonably withheld
or delayed), (i) the business of the Company and its Subsidiaries shall be
conducted only in, and the Company and its Subsidiaries shall not take any
action except in, the ordinary course of business and in a manner consistent
with prior practice, (ii) the Company and its Subsidiaries shall use its
reasonable best efforts to preserve intact their business organizations, keep
available the services of their current officers and employees and preserve the
current relationships of the Company and its Subsidiaries with customers,
suppliers, distributors and other persons with which the Company or its
Subsidiaries has material business relations, and (iii) the Company and its
Subsidiaries will comply in all material respects with all applicable Laws and
regulations wherever its business is conducted, including, without limitation,
the timely filing of all reports, forms or other documents with the SEC required
pursuant to the Securities Act or the Exchange Act.
(b) The Company covenants and agrees that between the date of this
Agreement and the earlier of the Effective Time or the termination of this
Agreement in accordance with Section 8.1 hereof, unless Parent shall otherwise
expressly agree in writing (which agreement shall not be unreasonably withheld
or delayed), the Company shall not, nor shall the Company permit any of its
Subsidiaries to, (i) declare or pay any dividends on or make other distributions
(whether in cash, stock or property) in respect of any of its capital stock,
except for dividends payable to the Company by a wholly owned Subsidiary of the
Company, (ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock; (iii) repurchase, redeem
or otherwise acquire any shares of its capital stock; (iv) issue, deliver or
sell, or authorize or propose the issuance, delivery or sale of, any shares of
its capital stock or any securities convertible into any such shares of its
capital stock, or any rights, warrants or options to acquire any such shares or
convertible securities or any stock appreciation rights, phantom stock plans or
stock equivalents, other than the issuance of shares of Company Common Stock
upon (A) the exercise of Company Options outstanding as of the date of this
Agreement or awarded in conformity
A-25
with clause (v) below, and (B) the exercise of warrants outstanding as of the
date of this Agreement, (v) award or grant, or authorize or propose the award or
grant of, any unvested Company Options, other than the award or grant of Company
Options to employees (other than executive officers of the Company) in
accordance with the terms of the Company Stock Option Plans and in the ordinary
course of business and consistent with past practices for up to no more than
100,000 shares of Company Common Stock in the aggregate for all employees issued
to employees who have not prior to the date hereof received option grants in
calendar year 2001; (vi) modify or adjust any outstanding options to acquire
shares of Company Common Stock, or (vii) take any action that would, or could
reasonably be expected to, result in any of the conditions set forth in Article
VII not being satisfied.
(c) The Company covenants and agrees that between the date of this
Agreement and the earlier of the Effective Time or the termination of this
Agreement in accordance with Section 8.1 hereof, unless Parent shall otherwise
expressly agree in writing (which agreement shall not be unreasonably withheld
or delayed), the Company shall not, nor shall the Company permit any of its
Subsidiaries to, (i) amend its articles of incorporation (including any
certificate of designations attached thereto) or bylaws or other equivalent
organizational documents; (ii) create, assume or incur any indebtedness for
borrowed money or guaranty any such indebtedness of another person or mortgage
or pledge any of its assets or properties, other than in connection with (A)
existing lines of credit, (B) indebtedness owing to, or guaranties of
indebtedness owing to, the Company, (C) leasing contracts entered into in the
ordinary course of business with payments of less than $50,000 in the aggregate
on a monthly basis, (D) indebtedness incurred to make payments specifically
provided under or contemplated by Section 2.6(a), Section 4.19, Section 6.15 and
Section 6.19 of this Agreement or (E) accounts payable incurred in the ordinary
course of business consistent with past practice; (iii) make any loans or
advances to any other person other than loans or advances between any
Subsidiaries of the Company or between the Company and any of its Subsidiaries
and other than advances of ordinary business expenses or to employees in the
ordinary course of business consistent with past practice in principal amounts
of not more than $10,000; (iv) merge or consolidate with any other entity in any
transaction, (v) sell any business or assets, other than sales of assets (other
than sales of products and inventory in the ordinary course of business
consistent with past practices) having a value of less than $200,000
individually and $500,000 in the aggregate to the extent such sales are in the
ordinary course of business and consistent with past practices; (vi) change its
accounting policies except as required by GAAP or applicable Law; (vii) make any
change in employment terms for any of its directors or officers, except as
expressly contemplated by this Agreement; (viii) alter, amend or create any
obligations with respect to compensation, severance, benefits, change of control
payments or any other payments to employees, directors or affiliates of the
Company or its Subsidiaries or enter into any new, or amend any existing,
employment agreements, except (A) as required by applicable Law or (B) severance
agreements containing terms consistent with the Company's policies and practices
as of the date hereof in amounts not to exceed $15,000 individually or $150,000
in the aggregate other than severance agreements with key employees identified
in Section 6.1(c) of the Company Disclosure Letter, (ix) make any change to the
Company Benefit Plans, except as required by applicable Law, (x) amend or cancel
or agree to the amendment or cancellation of any Material Contract; (xi) pay,
loan or advance (other than the payment of compensation, directors' fees or
reimbursement of expenses in the ordinary course of business) any amount to, or
sell, transfer or lease any properties or assets (real, personal or mixed,
tangible or intangible) to, or enter into any agreement with, any of its
officers or directors or any "affiliate" or "associate" of any of its officers
or directors; (xii) form or commence the operations of any business or any
corporation, partnership, joint venture, business association or other business
organization or division thereof; (xiii) make any tax election or settle or
compromise any tax liability involving amounts in excess of $25,000 individually
or $200,000 in the aggregate; or (xiv) pay, discharge, settle or satisfy any
claims litigation, liabilities or obligations (whether absolute, accrued,
asserted or unasserted, contingent or otherwise) involving amounts in excess of
$75,000 individually or $200,000 in the aggregate. The Company shall not amend,
modify, terminate or rescind, or waive any provision of, or otherwise alter in
any way the Employment Agreement of even date herewith between the Company and
Stephen Williamson prior to the Effective Time without the prior written consent
of Parent.
In connection with the continued operation of the Company and its
Subsidiaries between the date hereof and the Closing Date, the Company will
confer in good faith on a regular and frequent basis with one or more
A-26
representatives of Parent designated to the Company regarding operational
matters and the general status of ongoing operations promptly and will notify
Parent of any event or occurrence that has had or may reasonably be expected to
have a Company Material Adverse Effect. The Company acknowledges that Parent
does not and will not waive any rights it may have under this Agreement as a
result of such consultations. The Company shall not take any action that would,
or that could reasonably be expected to, result in any of the representations
and warranties of the Company sets forth in this Agreement becoming untrue.
Section 6.2. Access to Information; Confidentiality.
(a) From the date hereof to the Effective Time, the Company shall, and
shall cause the officers, directors, employees, auditors, attorneys, financial
advisors, lenders and other agents (collectively, the "Representatives") of the
Company to, afford the Representatives of Parent and Sub reasonable access at
all reasonable times and upon reasonable notice to the officers, employees,
agents, properties, offices and other facilities, books and records of the
Company and its Subsidiaries, and shall furnish Parent and Sub with all
financial, operating and other data and information as Parent or Sub, through
its Representatives, may reasonably request. Nothing in this Section 6.2 shall
require the Company to provide access to or disclose information where such
access or disclosure would result in the loss of any attorney-client privilege.
The parties hereto shall make appropriate substitute disclosure arrangements
under circumstances in which the restrictions of the preceding sentence apply.
The Company shall furnish to Parent and Sub financial and operating data and
information for each four or five week fiscal period in the form currently
prepared by the Company within seventeen (17) days following the end of each
such period. Parent and Sub will remain subject to the terms of the
Confidentiality Agreement.
(b) No investigation pursuant to this Section 6.2 shall limit or modify in
any way or affect any representation or warranty in this Agreement of any party
hereto or any condition to the obligations of the parties hereto.
Section 6.3. Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be reasonably likely to cause any representation
or warranty made by it contained in this Agreement to be materially untrue or
inaccurate so as to cause the condition set forth in paragraph 5(f)(A) of Annex
I to fail to be satisfied, and (ii) any failure of the Company, Parent or Sub,
as the case may be, in any material respect to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it so as to
cause the condition set forth in paragraph 5(f)(B) of Annex I to fail to be
satisfied. If any event or matter arises after the date of this Agreement which,
if existing or occurring at the date of this Agreement, would have been required
to be set forth or described in the Company Disclosure Letter or which is
necessary to make any representation and warranty true and correct on the
Closing Date, then the Company shall, for informational purposes only, promptly
supplement, or amend, and deliver to Parent the Company Disclosure Letter which
it has delivered pursuant to this Agreement. The disclosure of any matter in
accordance with the provisions of this Section 6.3 shall not in any way limit or
otherwise affect the remedies available hereunder to the party receiving such
disclosure (including for purposes of determining whether the conditions set
forth in paragraph 5(f) of Annex I have been satisfied).
Section 6.4. Reasonable Efforts; Further Assurances; Cooperation.
(a) Subject to the other provisions of this Agreement, each of the parties
hereto will each use its commercially reasonable, good faith efforts to perform
its obligations set forth in this Agreement and to take, or cause to be taken,
and do, or cause to be done, all things necessary, proper or advisable under
applicable Law to obtain all consents required as described in Section 4.4 of
the Company Disclosure Letter and all regulatory approvals (including, but not
limited to those identified in Sections 4.5 and 5.4) and to satisfy all
conditions to their respective obligations under this Agreement and to cause the
transactions contemplated in this Agreement to be effected as soon as
practicable after the date hereof, in accordance with the terms of this
Agreement and will cooperate fully with each other and their respective
officers, directors, employees, agents, counsel, accountants and other designees
in connection with any steps required to be taken as a part of their respective
obligations under this Agreement.
A-27
(b) Each of the parties hereto promptly will make their respective filings
and submissions and will use its commercially reasonable, good faith efforts to
take all actions necessary, proper or advisable under applicable Laws and
regulations to obtain any required approval of any Governmental Entity with
jurisdiction over the transactions contemplated by this Agreement. Each of the
parties hereto will furnish all information required for any application or
other filing to be made pursuant to the rules and regulations of any applicable
Law in connection with the transactions contemplated by this Agreement.
Notwithstanding the foregoing, in connection with any filing or submission
required or action to be taken by Parent to consummate the Merger, (i) neither
Parent nor any of its affiliates is required to become subject to any
requirement or condition that it divest or "hold separate" any assets or
businesses or any similar transaction or restriction, (ii) neither Parent nor
any of its affiliates is required to divest or hold separate or otherwise take
(or refrain from taking) or commit to take (or refrain from taking) any action
that limits its freedom of action with respect to, or its ability to retain, any
of the businesses, product lines or assets of Parent or any of its affiliates,
and (iii) neither Parent nor any of its affiliates shall be required to litigate
or otherwise contest in any judicial proceeding any adverse determination by any
Governmental Entity with respect to the Merger or the other transactions
contemplated by this Agreement.
(c) The Company will use its commercially reasonable, good faith efforts
to give any notices to third parties and use its commercially reasonable, good
faith efforts (in consultation with Parent) to obtain any third party consents
(i) necessary, proper or advisable to consummate the transactions contemplated
by this Agreement, (ii) disclosed or required to be disclosed in the Company
Disclosure Letter, including, without limitation, the consents described in
Section 4.4 of the Company Disclosure Letter, (iii) required to avoid a breach
of or default under any Material Contracts in connection with the consummation
of the transactions contemplated by this Agreement or (iv) required to prevent a
Company Material Adverse Effect whether prior to or after the Closing Date.
(d) The Company and its Board of Directors shall, if any state takeover
statute or similar statute is or becomes applicable to this Agreement, the
Offer, the Merger, the Tender Agreements or any other transactions contemplated
hereby or thereby, take all action reasonably necessary to ensure that the
Offer, the Merger and the other transactions contemplated by this Agreement and
the Tender Agreements may be consummated as promptly as practicable on the terms
contemplated hereby and thereby and otherwise to minimize the effect of such
statute or regulation on this Agreement, the Offer, the Merger, the Tender
Agreements and the other transactions contemplated hereby and thereby.
Section 6.5. Board Recommendations.
(a) In connection with the Merger and the meeting of the Company
Shareholders to consider the approval and adoption of this Agreement and the
Merger (the "Shareholders Meeting"), the Board of Directors of the Company shall
(i) subject to Section 6.5(b), recommend to the Company Shareholders to vote in
favor of this Agreement and the Merger and use its reasonable best efforts to
obtain the necessary approvals by the Company Shareholders of this Agreement and
the Merger and (ii) otherwise comply with all legal requirements applicable to
such meeting.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall, except as expressly permitted by this Section 6.5(b), (i)
withdraw, qualify or modify, or propose publicly to withdraw, qualify or modify,
in any manner adverse to Parent or Sub, the approval or recommendation of such
Board of Directors or such committee of the Offer, the Merger or this Agreement
or otherwise seek in any manner to abandon the Merger or this Agreement, (ii)
endorse, approve, recommend or submit to the Company Shareholders, or propose
publicly to endorse, approve, recommend or submit to the Company Shareholders,
any transaction involving a Competing Acquisition Proposal (as defined below),
or (iii) cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement, memorandum of understanding or other similar
agreement or understanding (each, an "Acquisition Agreement") related to or with
respect to any Competing Acquisition Proposal. Notwithstanding the foregoing, if
the Company has complied fully with this Section 6.5 and Section 6.9 and the
Board of Directors of the Company determines in good faith, after it has
received a Superior Proposal (as hereinafter defined) in compliance with Section
6.9 and after taking into account advice from independent outside legal counsel
with respect to its fiduciary duties to Company
A-28
Shareholders under applicable California Law, that such action is required for
the Board of Directors of the Company to comply with its fiduciary obligations
to the Company Shareholders under applicable California Law, the Board of
Directors of the Company may (subject to this and the following sentences), but
only prior to the consummation of the Offer, take any of the actions described
in clauses (i) through (iii) of this Section 6.5(b) (a "Subsequent Adverse
Determination"), but only at a time that is after the third business day
following Parent's receipt of written notice advising Parent that the Board of
Directors of the Company intends to make a Subsequent Adverse Determination;
provided that the Board of Directors of the Company may not at any time withdraw
its approval of the Offer, the Merger or this Agreement or seek to abandon the
Offer, the Merger or this Agreement. Such written notice shall specify the
material terms and conditions of such Superior Proposal (and include a copy
thereof with all accompanying documentation), identify the person making such
Superior Proposal and state that the Board of Directors of the Company intends
to make a Subsequent Adverse Determination. During such three business day
period, the Company shall provide a full opportunity for Parent to propose such
adjustments to the terms and conditions of this Agreement as would enable the
Company to proceed with its recommendation to its shareholders without a
Subsequent Adverse Determination. For purposes of this Agreement, "Competing
Acquisition Proposal" means any proposal from a third party with respect to a
merger, consolidation, share exchange, tender offer or similar transaction
involving the Company or any Subsidiary, or any purchase or other acquisition of
20% or more of the assets of the Company or any Subsidiary or any purchase or
other acquisition of any equity interest in the Company or any Subsidiary. For
purposes of this Agreement, a "Superior Proposal" means any bona fide proposal
with respect to a merger, consolidation, share exchange, tender offer, business
combination or similar transaction involving the Company or any Subsidiary, or
any purchase or other acquisition of 70% or more of the assets of the Company
and its Subsidiaries, taken as a whole, or any purchase or other acquisition of
more than 50% of the equity interests in the Company, in each case, which (w) is
fully financed without any financing condition, (x) does not contain a "right of
first refusal" or "right of first offer" with respect to any proposal that
Parent may make, (y) does not contain any "due diligence" condition and (z) the
Board of Directors determines in good faith after taking into account advice
from the independent financial advisor of the Company is more favorable to the
Company Shareholders than the transactions contemplated by this Agreement from a
financial point of view taking into account any proposed changes to such
transactions that may be proposed by Parent in response to such proposal.
Notwithstanding any other provision of this Agreement, the Company shall submit
this Agreement to the Company Shareholders whether or not the Board of Directors
of the Company makes a Subsequent Adverse Determination; provided that the
Company, concurrently with the submission of this Agreement and the Merger may
submit to the Company Shareholders other Competing Acquisition Proposals, if the
Company has complied with Section 6.5 and Section 6.9 with respect to such other
Competing Acquisition Proposals.
Section 6.6. Shareholder Litigation. After consummation of the Offer, the
Company shall give Parent the opportunity to participate in the defense or
settlement of any shareholder Litigation against the Company and its directors
relating to the transactions contemplated by this Agreement or the Merger
("Shareholder Litigation"); provided, however, that no such settlement (whether
made before or after the consummation of the Offer) shall be agreed to without
Parent's consent which consent will not be unreasonably withheld; provided,
further, that no such settlement without Parent's consent shall be deemed to
constitute a breach of this Agreement unless such settlement is material or has
a material impact on Parent or Sub in relation to the transactions contemplated
by this Agreement.
Section 6.7. Indemnification.
(a) It is understood and agreed that all rights to indemnification by the
Company now existing in favor of each present and former director and officer of
the Company or its Subsidiaries (the "Indemnified Parties") as provided in the
Company Articles of Incorporation or the Company Bylaws, in each case as in
effect on the date of this Agreement, or pursuant to any other agreements in
effect on the date hereof, copies of which have been provided to Parent, shall
survive the Merger. Except as required by applicable Law, Parent shall ensure
that the Surviving Corporation does not prior to the sixth anniversary of the
Effective Time rescind or otherwise amend the provisions of Article IV of the
Articles of Incorporation of the Surviving Corporation in effect as of the
Effective Time with respect to the period prior to the Effective Time or Article
X of the Bylaws
A-29
of the Surviving Corporation in effect as of the Effective Time with respect to
the period prior to the Effective Time. Parent shall (i) cause the Surviving
Corporation to continue in full force and effect for a period of at least six
years from the Effective Time and (ii) perform, or cause the Surviving
Corporation to perform, in a timely manner, the Surviving Corporation's
obligations with respect thereto. Parent and Sub agree that any claims for
indemnification hereunder as to which they have received written notice prior to
the sixth anniversary of the Effective Time shall survive, whether or not such
claims shall have been finally adjudicated or settled.
(b) Parent shall cause the Surviving Corporation to, and the Surviving
Corporation shall, maintain in effect for six years from the Effective Time, the
current directors' and officers' liability insurance policies ("D&O Insurance")
covered by such policies (provided that the Surviving Corporation may substitute
therefor policies of at least the same coverage containing terms and conditions
which are not less favorable in any material respect) with respect to matters
occurring prior to the Effective Time; provided, however, that in no event shall
the Surviving Corporation be required to expend pursuant to this Section 6.7(b)
more than an amount per year equal to two hundred percent (200%) of current
annual premiums paid by the Company for such insurance. In the event that, but
for the proviso to the immediately preceding sentence, the Surviving Corporation
would be required to expend more than two hundred percent (200%) of current
annual premiums, the Surviving Corporation shall obtain the maximum amount of
such insurance obtainable by payment of annual premiums equal to two hundred
percent (200%) of current annual premiums.
(c) If the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then, and in each such case, proper provision shall be made so that the
successors and assigns of the Surviving Corporation shall assume the obligations
set forth in this Section 6.7. (d) The provisions of this Section 6.7 are
intended for the benefit of, and may be enforced by, each person entitled to
indemnification under this Section 6.7.
Section 6.8. Public Announcements. Parent, Sub and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or the Merger and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by Law or the requirements of any
securities exchange or trading system. Promptly following the execution of this
Agreement, the Company may issue a press release in the form agreed to by the
parties.
Section 6.9. Competing Acquisition Proposals. The Company shall not, nor
shall it authorize or permit any of its Subsidiaries or Representatives to,
directly or indirectly, (a) solicit, initiate or encourage the submission of any
Competing Acquisition Proposal or (b) participate in or encourage any discussion
or negotiations regarding, or furnish to any person any non-public information
with respect to, enter into any Acquisition Agreement with respect to, or take
any other action to facilitate any inquiries or the making of, any proposal that
constitutes, or may reasonably be expected to lead to, any Competing Acquisition
Proposal; provided, however, that the foregoing shall not prohibit the Board of
Directors of the Company, prior to the consummation of the Offer, from
furnishing information to, or entering into or participating in discussions or
negotiations with, any person or entity that makes an unsolicited Competing
Acquisition Proposal which did not result from a breach of Section 6.5 or this
Section 6.9 only if, and only to the extent that, (A) the Board of Directors of
the Company, after taking into account advice from independent outside legal
counsel and financial advisors, determines in good faith that such action is
required for the Board of Directors of the Company to comply with its fiduciary
obligations to the Company Shareholders under applicable California law, (B)
prior to taking such action, the Company receives from such person or entity an
executed agreement in reasonably customary form relating to the confidentiality
of information to be provided to such person or entity and including standstill
provisions no less favorable to the Company than those contained in the
Confidentiality Agreement and (C) the Board of Directors of the Company
concludes in good faith, after taking into account the advice of its independent
financial advisor, that the Competing Acquisition Proposal is a Superior
Proposal. The Company shall provide immediate oral and written notice to Parent
of (a) the receipt of any such Competing Acquisition Proposal or any inquiry
which could reasonably be expected to lead
A-30
to any Competing Acquisition Proposal, (b) the material terms and conditions of
such Competing Acquisition Proposal or inquiry, (c) the identity of such person
or entity making any such Competing Acquisition Proposal or inquiry and (d) the
Company's intention to furnish information to, or enter into discussions or
negotiations with, such person or entity. The Company shall continue to keep
Parent fully informed of the status and details of any such Competing
Acquisition Proposal or inquiry.
Nothing contained in this Agreement shall prohibit the Company or any of
the officers, directors or employees of the Company from (i) referring a third
party to this Section 6.9 or (ii) complying with Rule 14(e)-2 promulgated under
the Exchange Act or from making any disclosure to the Company Shareholders if,
in the good faith judgment of the Board of Directors of the Company, based on
advice from its outside counsel, failure to so disclose would violate applicable
Law; provided, however, that neither the Company nor its Board of Directors nor
any committee thereof shall, except as specifically permitted by Section 6.5(b),
withdraw, qualify, or modify, or propose to withdraw, qualify or modify, its
position with respect to the Offer, the Merger or this Agreement or approve or
recommend, or propose to approve or recommend a Competing Acquisition Proposal.
Section 6.10. Undertakings of Parent. Parent shall perform, or cause to
be performed, when due all obligations of Sub and the Surviving Corporation
under this Agreement.
Section 6.11. Director Resignations. The Company shall use its
commercially reasonable efforts to cause to be delivered to Parent resignations
of all the directors of the Company's Subsidiaries to be effective upon the
consummation of the Merger.
Section 6.12. Shareholders' Rights Agreement. The Company shall use its
commercially reasonable efforts to terminate, as of immediately prior to the
consummation of the Offer, the Shareholders' Rights Agreement dated as of May
22, 2000 between the Company, the Principal Shareholders and the other parties
named on the signature pages thereof (the "Shareholders' Rights Agreement"), and
the Company shall execute and deliver such agreements or certificates as Parent
may reasonably request to further evidence the termination of the Shareholders'
Rights Agreement. The Company hereby waives any rights that it may have under
the Shareholders' Rights Agreement relating to the execution and delivery of the
Merger Agreement and the Tender Agreements.
Section 6.13. Employee Benefits. As of the Effective Time and for a
period of at least one year after the Closing Date, Parent shall, or shall cause
the Surviving Corporation to, maintain compensation and benefit plans and
arrangements for employees of the Company who continue employment with the
Surviving Corporation or any subsidiary thereof after the Effective Time
("Continuing Employees") that, in the aggregate, are at least, in the case of
compensation plans and arrangements substantially comparable in value, and in
the case of benefit plans and arrangements otherwise substantially comparable,
to those currently provided by the Company to the Continuing Employees as of the
Effective Time (excluding any stock options or other stock-based compensation),
except as required by applicable Law (including as required to preserve any
favorable tax treatment afforded such benefits as of the Effective Time). Parent
shall give each Continuing Employee credit for past service for any benefit plan
or scheme (with the exception of any defined benefit pension plan) that may be
in place for Continuing Employees within a period of one year after the Closing
Date as if such service had been with Parent; provided that nothing in this
sentence shall obligate Parent, the Surviving Corporation or any subsidiary
thereof to establish or maintain any particular benefit plan or scheme for
Continuing Employees. Parent agrees that the Surviving Corporation shall be
responsible for providing all legally-mandated continuation coverage for
Continuing Employees and their covered dependents who experience a loss of
coverage due to a "qualifying event" (within the meaning of Section 603 of
ERISA) which occurs at any time on or after the Effective Time. Nothing in this
Section 6.13 is intended to create any employment obligation other than as
employees at will who may be terminated with or without cause.
Section 6.14. Environmental Assessments. On and after the date of this
Agreement and through the Closing Date, Parent and its agents and
representatives shall have the right to conduct, at Parent's sole cost,
environmental assessments (including reasonable on-site access during normal
business hours and at least meeting Phase I environmental assessment
requirements) ("Environmental Assessments") of the Facilities located in Dinuba,
California and Saco, Maine. The Company and the Subsidiaries shall cooperate in
good
A-31
faith with Parent regarding such Environmental Assessments and use their
reasonable best efforts to facilitate such Environmental Assessments. Parent
shall give forty-eight (48) business hours (two business days) advance notice to
the Company of Parent's intention to access the Facilities so that the Company
may have the opportunity to have a representative(s) present. Parent shall use
its commercially reasonable efforts to minimize interference with the operations
or activities of the Facilities. Upon request, Parent shall give the Company a
true and accurate copy of any documentation or results of any such Environmental
Assessments of the Facilities. Any such documentation or results of the
Environmental Assessments of the Facilities shall be subject to and governed by
the Confidentiality Agreement. Parent acknowledges that prior to the signing of
this Agreement, Environmental Assessments were conducted by Parent's agents
regarding the Facilities located in Dinuba, California and Saco, Maine. Parent
agrees that additional Environmental Assessments will be conducted only if
Parent has an objective, reasonable basis for requesting the same based on
information of which Parent becomes aware after the date hereof and that was not
reasonably apparent from the reports prepared in connection with the
Environmental Assessments conducted prior to the date hereof.
Section 6.15. Settlement Fee. Prior to the consummation of the Offer, the
Company shall cause to be paid in full all unpaid fines, penalties and interest
owed to the United States government under the settlement agreement with the
United States government dated July 23, 1998 (the "Settlement Fee") and the
Company shall provide to the Food and Drug Administration's San Francisco
District Office not less than 10 days prior notice of the consummation of the
Offer. On or prior to the expiration date of the Offer, the Purchaser shall, or
shall cause Sub to, lend to the Company on commercially reasonable terms an
amount equal to the amount necessary to pay the Settlement Fee.
Section 6.16. Conveyance Taxes. Parent and the Company shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar Taxes which become
payable in connection with the transactions contemplated hereby that are
required or permitted to be filed on or before the Effective Time.
Section 6.17. Shareholder Rights Plan. Neither the Company nor any
Subsidiary shall adopt any shareholder rights agreement or any similar plan or
agreement which limits or impairs the ability to purchase, or become the direct
or indirect beneficial owner of, shares of Company Common Stock or any other
equity or debt securities of the Company or any of its Subsidiaries, other than
any shareholder rights plan or shareholder rights agreement that (a) does not
impair the ability of the parties to consummate the Offer or the Merger in
accordance with the terms of this Agreement and (b) otherwise does not have an
adverse effect on Parent or Sub or on the rights of Parent or Sub under this
Agreement or any of the Tender Agreements.
Section 6.18. Actions by Company Board. Prior to the consummation of the
Offer, the Board of Directors of the Company shall comply as applicable with the
provisions of the SEC's no-action letter dated January 12, 1999 addressed to
Skadden, Arps, Slate, Meagher and Flom LLP relating to Section 16(b) of the
Exchange Act.
Section 6.19. Loans to Permit Exercise of Company Options. If and only to
the extent that Parent requires any of D. Stephen C. Williamson, James R.
Steichen and/or Theodore R. Leaman (the "Executives") to exercise Company
Options immediately prior to the consummation of the Offer pursuant to Section
1.4 of the Executive's Tender Agreements, the Company will loan to D. Stephen C.
Williamson, James R. Steichen and/or Theodore R. Leaman such funds as may be
necessary to permit any of such Executives to exercise such Company Options. In
the event that the Company becomes obligated to advance funds pursuant to the
immediately preceding sentence and the Company fails to advance such funds to
any Executive, Parent shall advance such funds to any Executive on commercially
reasonable terms.
A-32
ARTICLE VII
CONDITIONS
Section 7.1. Conditions to the Obligation of Each Party. The respective
obligations of Parent, Sub and the Company to effect the Merger are subject to
the satisfaction of the following conditions, unless waived in writing by all
parties:
(a) Sub shall have previously accepted for payment and paid for Shares
pursuant to the Offer, except that neither Parent, Sub nor the Company
shall be entitled to invoke this condition if, in breach of its obligations
under this Agreement, it shall have been the cause of the failure of Sub to
purchase pursuant to the Offer Shares validly tendered and not withdrawn;
(b) This Agreement and the Merger shall have been approved and adopted
by the requisite vote of the Company Shareholders, if any, as required by
the CGCL, the Company Articles of Incorporation and the Company Bylaws;
(c) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other legal prohibition preventing the consummation of the Merger shall be
in effect, provided that the party relying on this condition shall have
complied in all material respects with its obligations under Section 6.4;
and
(d) All actions by or in respect of or filings with any Governmental
Entity required to permit the consummation of the Offer and the Merger
shall have been obtained or made (including the expiration or termination
of any applicable waiting period under the HSR Act).
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, whether before or
after approval of matters presented in connection with the Merger by the Company
Shareholders, only:
(a) By mutual written consent of duly authorized representatives of
Parent and the Company;
(b) By any of Parent, Sub or the Company if any court of competent
jurisdiction or other Governmental Entity shall have issued an order,
decree, ruling or taken any other action permanently restraining, enjoining
or otherwise prohibiting the Merger and such order, decree, ruling or other
action shall have become final and nonappealable, except if the party
relying on such order, decree or ruling or other action has not complied in
all material respects with its obligations under Section 6.4;
(c) By any of Parent, Sub or the Company if (x) as a result of the
failure of any of the Offer Conditions the Offer shall have terminated or
expired in accordance with its terms without Sub, in accordance with this
Agreement, having accepted for payment any Shares pursuant to the Offer
within the time period for acceptance specified by this Agreement, or (y)
Sub, in accordance with this Agreement, shall not have accepted for payment
any Shares pursuant to the Offer by May 31, 2002; provided, however, that
the right to terminate this Agreement under this Section 8.1(c) shall not
be available to any party whose failure to fulfill any obligation under
this Agreement has been the primary cause of, or resulted in, the
expiration or termination of the Offer on or before such date;
(d) By Parent or Sub if a Competing Acquisition Proposal shall have
been consummated or if the Board of Directors of the Company shall have
made a Subsequent Adverse Determination;
(e) By the Company, if Parent or Sub shall breach in any material
respect any of their respective representations, warranties or obligations
hereunder and, within twenty (20) days after written notice of such breach
to Parent from the Company, such breach shall not have been cured in all
material respects or waived by the Company;
A-33
(f) By any of the Company, Parent or Sub, if this Agreement and the
Merger shall fail to be approved and adopted by the Company Shareholders at
a duly held Shareholders' Meeting or at any adjournment or postponement
thereof; provided, that neither Parent nor Sub may terminate this Agreement
under this Section 8.1(f) if the Company Common Stock it is entitled to
vote (whether by ownership, proxy or otherwise) shall not have been voted
in favor of this Agreement and the Merger;
(g) By Parent or Sub, if the Company shall breach any of its
representations, warranties, covenants or other obligations hereunder which
would give rise to the failure of a condition set forth in paragraph 5(f)
of Annex I and, within twenty (20) days after written notice of such breach
to the Company from Parent, such breach shall not have been cured, or
waived by Parent or Sub; or
(h) By Parent or Sub, if, for any reason (i) the representations and
warranties of the Company in Section 4.2(a) of this Agreement or (ii) the
representations and warranties of any Principal Shareholder in Section 2.1
of any Tender Agreement (clause (i) and clause (ii) collectively being
referred to as the "Capital Stock Representations") shall not be true and
correct in all respects; provided, that neither Parent nor Sub may
terminate this Agreement under this Section 8.1(h) if, after giving effect
to the failure of any Capital Stock Representations to be true and correct,
the number of shares of Company Common Stock owned by the Principal
Shareholders which is subject to the Tender Agreements shall be equal to or
greater than 54.0% of the sum of (x) the issued and outstanding shares of
Company Common Stock and (y) the number of shares of Company Common Stock
issuable upon the exercise of vested Company Options, and the number of
shares of Company Common Stock owned by the Principal Shareholders which is
subject to the voting provisions contained in the Tender Agreements shall
be equal to or greater than 50.1% of the sum of (x) the issued and
outstanding shares of Company Common Stock and (y) the number of shares of
Company Common Stock issuable upon the exercise of vested Company Options.
Section 8.2. Effect of Termination.
(a) In the event of the termination of this Agreement pursuant to Section
8.1 hereof, this Agreement shall forthwith be terminated and have no further
effect except as specifically provided herein and, except as provided in this
Section 8.2 and in Section 9.10 and Section 9.12, there shall be no liability on
the part of any party hereto, provided that nothing herein shall relieve any
party from liability for any willful breach hereof.
(b) If Parent or Sub exercises its right to terminate this Agreement under
Section 8.1(d), the Company shall pay to Parent upon demand $8,000,000 (the
"Termination Fee"), payable in same-day funds, to reimburse Parent for its time,
expense, lost opportunity costs and other costs and damages associated with
pursuing the Merger.
(c) If within one year after termination of this Agreement (other than a
termination pursuant to Section 8.1(b), Section 8.1(c) (but only if the
termination pursuant to Section 8.1(c) results from a failure to satisfy the
Offer Conditions set forth in paragraph 2 of Annex I) or Section 8.1(e)) the
Company shall enter into any agreement relating to a Competing Acquisition
Proposal with a person or entity other than Parent or Sub or a Competing
Acquisition Proposal with a person or entity other than Parent or Sub shall
otherwise be consummated, then immediately prior to, and as a condition of, the
entering into of such agreement or the consummation of such transaction, as the
case may be, the Company shall pay to Parent upon demand the Termination Fee,
payable in same-day funds, to reimburse Parent for its time, expense, lost
opportunity costs and other costs and damages associated with pursuing the
Merger; provided that no such amount shall be payable if the Termination Fee
shall have been paid in accordance with Section 8.2(b) of this Agreement.
(d) Notwithstanding anything to the contrary set forth in this Agreement,
if the Company fails promptly to pay to Parent any amounts due under this
Section 8.2, the Company shall pay the costs and expenses (including reasonable
legal fees and expenses) in connection with any action, including the filing of
any lawsuit or other legal action, taken to collect payment, together with
interest on the amount of any unpaid fee or obligation at the publicly announced
prime rate of Citibank, N.A. in effect from time to time from the date such fee
or obligation was required to be paid.
A-34
Section 8.3. Amendments. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto; provided,
however, that after approval of the Merger by the Company Shareholders, no
amendment may be made without the further approval of the Company Shareholders
if the effect of such amendment would be to reduce the Merger Consideration or
change the form thereof, and no amendment may be made to Section 6.7 without the
consent of the third party beneficiaries of such Section.
Section 8.4. Waiver. At any time prior to the Effective Time, whether
before or after the Shareholders Meeting, any party hereto, by action taken or
authorized by its board of directors, may (i) extend the time for the
performance of any of the covenants, obligations or other acts of any other
party hereto or (ii) waive any inaccuracy of any representations or warranties
or compliance with any of the agreements, covenants or conditions of any other
party or with any conditions to its own obligations. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party by its duly
authorized officer. The failure of any party to this Agreement to assert any of
its rights under this Agreement or otherwise shall not constitute a waiver of
such rights. The waiver of any such right with respect to particular facts and
other circumstances shall not be deemed a waiver with respect to any other facts
and circumstances and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1. No Third Party Beneficiaries. Other than the provisions of
Section 6.7 hereof, nothing in this Agreement shall confer any rights or
remedies upon any person other than the parties hereto.
Section 9.2. Entire Agreement. This Agreement, together with the
Confidentiality Agreement, constitutes the entire agreement among the parties
with respect to the subject matter hereof and supersedes any prior
understandings, agreements, or representations by or among the parties, written
or oral, with respect to the subject matter hereof. No amendment, modification
or alteration of the terms or provisions of this Agreement or the Company
Disclosure Letter shall be binding unless the same shall be in writing and duly
executed by the parties hereto.
Section 9.3. Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and their respective
successors and permitted assigns. No party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other parties; provided, however, that each of Parent and Sub
may freely assign its rights to another direct or indirect wholly owned
subsidiary of Parent or Sub without such prior written approval but no such
assignment shall relieve Parent or Sub of any of its obligations hereunder. Any
purported assignment without such consent shall be void.
Section 9.4. 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 one and the same instrument.
Section 9.5. Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of New York, without regard
to principles of conflicts of Law thereof.
Section 9.7. Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is
invalid or unenforceable, the parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with
A-35
a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
Section 9.8. Specific Performance. Each of the parties acknowledges and
agrees that the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the parties agrees that
the other party shall be entitled to seek an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any action instituted in
any court of the United States or any state thereof having jurisdiction over the
parties and the matter, in addition to any other remedy to which it may be
entitled, at law or in equity.
Section 9.9. Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
Section 9.10. Non-Survival of Representations and Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.1, as the case may be, except that (i) the agreements set
forth in Articles II and IX and Sections 6.6 and 6.7 shall survive the Effective
Time indefinitely and (ii) the agreements set forth in Sections 6.2 (with
respect to confidentiality), 6.6, 6.8 and 8.2 and in Article IX shall survive
the termination of this Agreement indefinitely.
Section 9.11. Certain Definitions.
(a) For purposes of this Agreement, the terms "associate" and "affiliate"
shall have the same meaning as set forth in Rule l2b-2 promulgated under the
Exchange Act, and the term "person" shall mean any individual, corporation,
partnership (general or limited), limited liability company, limited liability
partnership, trust, joint venture, joint-stock company, syndicate, association,
entity, unincorporated organization or government or any political subdivision,
agency or instrumentality thereof or any other entity. For purposes of this
Agreement, the phrase "Company Material Adverse Effect" shall mean, with respect
to the Company, any change, event or effect that, when taken together with all
other adverse changes, events or effects that have occurred, (i) is materially
adverse to the business, operations, properties, condition (financial or
otherwise), assets, liabilities (including, without limitation, contingent
liabilities) of the Company and its Subsidiaries taken as a whole or (ii)
prevents or delays beyond May 31, 2002 the consummation of the Offer or the
Merger; provided, however, that a Company Material Adverse Effect shall not
include (x) in and of itself failure by the Company to meet analysts' earnings
forecasts or estimates or changes in the market price of the Company Common
Stock in and of itself or (y) any effect resulting from any change in general
economic conditions, including any change in general economic conditions due to
any act of war, terrorism or threat of war or terrorism, which changes do not
disproportionately affect the Company and its Subsidiaries (provided that it is
understood and agreed that the foregoing exclusion shall not exclude any change,
event or effect that would otherwise be a Company Material Adverse Effect caused
by any act of war or terrorism or threat of war or terrorism directed at the
beverage industry which disproportionately affects the Company and its
Subsidiaries as compared to the beverage industry as a whole) or (z) any effect
resulting solely in and of itself from the public announcement of this Agreement
or the transactions contemplated by this Agreement or the consummation of such
transactions (other than any Litigation or claims the substance of which is not
related to the public announcement of this Agreement or the transactions
contemplated by this Agreement or the consummation of such transactions).
Subject to the provisions set forth below, for purposes of determining
whether any Litigation arising from a claim that is made after the execution of
this Agreement and prior to the date that is the earlier of (i) the consummation
of the Offer or (ii) the termination of this Agreement is, or is reasonably
likely to constitute or contribute to a "Company Material Adverse Effect," the
alleged claim amount by the plaintiffs in such Litigation shall not be taken
into account in making such determination, but instead the relevant factors in
determining the materiality of such Litigation shall be (w) the relative merits
of such litigation, (x) the
A-36
objective probability of success of such Litigation, (y) the reasonably expected
magnitude of any judgment, settlement and/or defense costs associated with such
Litigation, and (z) the benefit of any insurance proceeds available to the
Company to cover losses relating to such Litigation. In the event of a dispute
between the Parent and Sub, on the one hand, and the Company, on the other hand,
regarding whether such Litigation constitutes or contributes to or is reasonably
likely to constitute or contribute to a Company Material Adverse Effect, upon
the request of Parent, Sub or the Company, the parties hereto shall submit such
dispute to a mutually agreed upon nationally recognized United States law firm,
and the determination of such law firm regarding whether and to what extent such
Litigation constitutes or contributes to or is reasonably likely to constitute
or contribute to a Company Material Adverse Effect (the "Dispute Decision")
shall be final and binding on the parties hereto. The expenses of such
determination shall be borne equally by the Parent and the Company. The closing
of the Offer shall not take place until the second business day following the
rendering of the Dispute Decision, assuming the satisfaction, or waiver by
Parent and Sub, of the Offer Conditions. For the avoidance of doubt, any
Litigation arising in connection with those claims described in Section 4.12 of
the Company Disclosure Letter shall not constitute or contribute to a Company
Material Adverse Effect. Notwithstanding anything else contained herein, any
Shareholder Litigation shall be excluded from Litigation subject to
determination pursuant to this paragraph and shall not in and of itself be taken
into account in determining whether a Company Material Adverse Effect has
occurred or would be reasonably expected to occur.
(b) For purposes of this Agreement, the phrases "to the knowledge of the
Company," "known to the Company," and similar formulations shall mean the actual
knowledge of the Company's executive officers and other officers having primary
responsibility for such matter.
Section 9.12. Fees and Expenses. Except as provided in Section 8.2, all
costs and expenses incurred by the parties hereto in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses.
Section 9.13. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by telecopy
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties at the following addresses, or at such other address
for a party as shall be specified in a notice given in accordance with this
Section 9.13:
If to Parent or Sub:
The Coca-Cola Company
One Coca-Cola Plaza
Atlanta, Georgia 30313
Telecopier: (404) 676-8621
Attention: Chief Financial Officer
with a copy (which does not constitute notice) to:
The Coca-Cola Company
One Coca-Cola Plaza
Atlanta, Georgia 30313
Telecopier: (404) 676-6209
Attention: General Counsel
and with a copy to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303
Telecopier: (404) 572-5100
Attention: C. William Baxley
A-37
If to the Company:
Odwalla, Inc.
120 Stone Pine Road
Half Moon Bay, California 94019
Telecopier: (650) 712-5967
Attention: Chief Financial Officer
with a copy to:
Morrison & Foerster LLP
425 Market Street
San Francisco, California 94965
Telecopier: (415) 268-7522
Attention: Robert S. Townsend
Section 9.14. Waiver of Jury Trial. EACH OF PARENT, SUB AND THE COMPANY
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
THE COCA-COLA COMPANY
By: /s/ DAVID M. TAGGART
--------------------------------------
Name: David M. Taggart
Title: Vice President
PERRY PHILLIP CORP.
By: /s/ PAUL ETCHELLS
--------------------------------------
Name: Paul Etchells
Title: President
ODWALLA, INC.
By: /s/ D. STEPHEN C. WILLIAMSON
--------------------------------------
Name: D. Stephen C. Williamson
Title: Chairman of the Board and
Chief Executive Officer
A-38
ANNEX I
CONDITIONS TO THE OFFER
Capitalized terms used in this Annex I shall have the meanings assigned to
them in this Agreement.
Notwithstanding any other provision of the Offer, and in addition to (and
not in limitation of) Sub's rights to extend and/or amend the Offer at any time
in its sole discretion (subject to the provisions of this Agreement), Sub's
obligations under this Agreement pursuant to the Offer shall be subject to the
following conditions, and if such conditions are not satisfied, Sub may delay
the acceptance for payment of or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act, the
payment for, any tendered Shares, and may terminate or amend the Offer as to any
Shares not then paid for:
(1) at or prior to the expiration date of the Offer, the number of
Shares validly tendered and not withdrawn, together with any Shares then
owned by Parent or Sub, shall satisfy the Minimum Condition or, if
applicable pursuant to the provisions of this Agreement, the Option
Exercise Minimum Number or the Revised Minimum Number;
(2) at or prior to the expiration date of the Offer, (a) any
applicable waiting period under the HSR Act shall have expired or been
terminated, and (b) all other actions by or in respect of or other filings
with any Governmental Entity required to permit the consummation of the
Offer and the Merger shall have been obtained or made, other than, in the
case of clause (b), such actions or filings the failure of which to make or
obtain would not reasonably be expected to have a Company Material Adverse
Effect;
(3) the Shareholders' Rights Agreement shall have been terminated;
(4) the Settlement Fee shall have been paid in full immediately prior
to the consummation of the Offer, unless such failure to make payment of
the Settlement Fee is caused by the failure of Parent to meet its
obligation under Section 6.15 of this Agreement; and the Company shall have
provided to the Food and Drug Administration's San Francisco District
Office not less than 10 days prior notice of the consummation of the Offer;
or
(5) at any time after the date of this Agreement and prior to
acceptance for payment of Shares pursuant to the Offer, none of the
following events or conditions shall occur or exist:
(a) there shall be instituted, pending or threatened any action or
proceeding by any Governmental Authority: (i) challenging or seeking to
permanently restrain, enjoin or otherwise prohibit the Offer or the
Merger; (ii) seeking to restrain or prohibit Parent's or Sub's full
rights of ownership or operation of any portion of the business or
assets of the Company, or to compel Parent or Sub to dispose of or hold
separate all or any portion of the business or assets of the Company;
(iii) seeking to impose limitations on the ability of Parent or Sub
effectively to exercise full rights of ownership of the Shares acquired
pursuant to the Offer and the Merger, including, without limitation, the
right to vote any Shares acquired or owned by Parent or Sub on all
matters properly presented to the Company's shareholders; (iv) seeking
to require divestiture by Parent or Sub of any Shares; or (v) that
otherwise would reasonably be expected to have a Company Material
Adverse Effect;
(b) there shall be enacted, enforced, promulgated, in force or
deemed applicable to the Offer or the Merger by any Governmental
Authority any statute, rule, regulation, judgment, order or injunction
(other than the application of the routine waiting period provisions of
the HSR Act) that has, directly or indirectly, resulted, or is
reasonably likely to, directly or indirectly, result in any of the
consequences referred to in paragraph (a) above;
(c) an event shall have occurred that has resulted in, or would be
reasonably expected to result in, a Company Material Adverse Effect;
(d) any court of competent jurisdiction or other Governmental
Entity shall have issued an order, decree, ruling or taken any other
action restraining, enjoining or otherwise prohibiting the Offer or the
Merger; provided, that with respect to Shareholder Litigation, unless
such order, decree,
I-1
ruling or other action shall be final and nonappealable, this condition
in and of itself shall not be a ground for termination and shall only
have the effect of delaying the consummation of the Offer during the
effective period of such order, decree, ruling or other action;
(e) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market, (ii) the declaration of any
banking moratorium or any suspension of payments in respect of banks or
any material limitation (whether or not mandatory) on the extension of
credit by lending institutions in the United States, (iii) the
commencement of a war, material armed hostilities or other material
international or national calamity directly or indirectly involving the
United States that has a significant adverse effect on the functioning
of the financial markets in the United States, or (iv) in the case of
any of the foregoing existing at the time of execution of the Agreement,
a material acceleration or worsening thereof; provided that this
condition in and of itself shall not be a ground for termination and
shall only have the effect of delaying the consummation of the Offer
during the effective period of such declaration or suspension or other
event;
(f) (A) the representations and warranties of the Company in this
Agreement shall not be true and correct in all respects as of the date
of this Agreement or as of the expiration of the Offer without giving
effect to any exceptions for "material" or "materiality" or "Company
Material Adverse Effect", except where the failure of such
representations and warranties to be true and correct, individually or
in the aggregate, does not have and is not reasonably likely to have a
Company Material Adverse Effect; (B) the Company shall not have
performed in all material respects all covenants, agreements and
obligations required to be performed by it under this Agreement; (C) the
directors of the Company shall not have resigned as provided in Article
I; or (D) an officer of the Company shall not have delivered to Parent
and Buyer a certificate to the effect that each of the foregoing
conditions is satisfied in all respects; or
(g) this Agreement shall have been terminated in accordance with
its terms or amended in accordance with its terms to provide for such
termination or amendment of the Offer.
The foregoing conditions are for the sole benefit of Parent and Sub and may
be asserted or waived by Parent or Sub, regardless of the circumstances giving
rise to any such condition (including any action or omission by Parent or Sub),
in whole or in part at any time and from time to time in their sole discretion.
The failure by Parent or Sub at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right; the waiver of any such right
with respect to any particular facts and circumstances shall not be deemed a
waiver with respect to any other facts and circumstances; and each such right
shall be deemed an ongoing right and may be asserted at any time and from time
to time.
I-2
EXHIBIT A
Bain Capital Fund VI, L.P.
BCIP Associates II
BCIP Trust Associates II
BCIP Associates II-B
BCIP Trust Associates II-B
BCIP Trust Associates II-C
PEP Investments Pty. Limited
U.S. Equity Partners, L.P.
U.S. Equity Partners (Offshore), L.P.
Catterton-Simon Partners III, L.P.
Stephen C. Williamson
James Steichen
Theodore Leaman
Douglas Levin
Michael Carter
Julie Carter
Robert Carter
A-1
APPENDIX B
FORM TENDER AGREEMENT WITH VOTING AGREEMENT
TENDER AGREEMENT
THIS TENDER AGREEMENT (this "Agreement") dated October 29, 2001, is entered
into between THE COCA-COLA COMPANY, a Delaware corporation ("Parent"), PERRY
PHILLIP CORP., a California corporation and wholly owned subsidiary of Parent
("Sub"), and ("Shareholder"), with respect to the shares of common
stock, no par value (the "Company Common Stock"), of Odwalla, Inc., a California
corporation (the "Company"), owned by Shareholder.
WITNESSETH:
WHEREAS, Parent, Sub and the Company have entered into an Agreement and
Plan of Merger dated as of the date hereof (the "Merger Agreement") pursuant to
which Sub has agreed to make a cash tender offer described therein and
thereafter merge with and into the Company (the "Merger") with the result that
the Company becomes a wholly owned subsidiary of Parent;
WHEREAS, as of the date hereof, Shareholder beneficially owns and has the
power to vote and dispose of shares of Company Common Stock as
identified on Schedule I hereto (such shares of Company Common Stock, together
with any securities issued or exchanged with respect to such shares of Company
Common Stock, and upon any recapitalization, reclassification, merger,
consolidation, spin-off, partial or complete liquidation, stock dividend,
split-up or combination of the securities of the Company or any other change in
the Company's capital structure, are collectively referred to herein as the
"Securities");
WHEREAS, Parent and Sub desire to enter into this Agreement in connection
with their efforts to consummate the acquisition of the Company, and in
consideration of Parent's and Sub's agreements herein and in the Merger
Agreement, Shareholder has agreed to cooperate with Parent and Sub with respect
to the acquisition of the Company by Parent and Sub upon the terms and subject
to the conditions in the Merger Agreement; and
WHEREAS, capitalized terms used in this Agreement and not defined have the
meaning given to such terms in the Merger Agreement.
NOW, THEREFORE, in contemplation of the foregoing and in consideration of
the mutual agreements, covenants, representations and warranties contained
herein and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Certain Covenants.
1.1 Lock-Up. Subject to Section 1.4, Shareholder hereby covenants and
agrees that during the term of this Agreement, Shareholder will not (a) directly
or indirectly, sell, transfer, assign, pledge, hypothecate, tender, encumber or
otherwise dispose of or limit its right to vote in any manner any of the
Securities, or agree to do any of the foregoing, or (b) take any action which
would have the effect of preventing or disabling Shareholder from performing its
obligations under this Agreement. Notwithstanding the foregoing, in connection
with any transfer not involving or relating to any Competing Acquisition
Proposal, Shareholder may transfer any or all of the Securities as follows: (i)
in the case of a Shareholder that is an entity, to any subsidiary, partner or
member of Shareholder, and (ii) in the case of an individual Shareholder, to
Shareholder's spouse, ancestors, descendants or any trust for any of their
benefits or to a charitable trust; provided, however, that in any such case,
prior to and as a condition to the effectiveness of such transfer, (x) each
person or entity to which any of such Securities or any interest in any of such
Securities is or may be transferred (a) shall have executed and delivered to
Parent and Sub a counterpart to this Agreement pursuant to which such person or
entity shall be bound by all of the terms and provisions of this Agreement, and
(b) shall have agreed in writing with Parent and Sub to hold such Securities or
interest in such Securities subject to all of the terms and provisions of this
Agreement, and (y) this Agreement shall be the legal, valid
B-1
and binding agreement of such person, enforceable against such person in
accordance with its terms, subject to the qualification, however, that
enforcement of the rights and remedies created by this Agreement is subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general application related to or affecting creditors' rights
and to general equity principles.
1.2 No Solicitation. During the term of this Agreement, neither the
Shareholder nor any director, officer, agent, representative, employee,
affiliate or associate (collectively, "Representatives") of Shareholder shall,
directly or indirectly, (a) solicit, initiate or encourage the submission of any
Competing Acquisition Proposal (as defined in the Merger Agreement) or any other
sale, transfer, pledge or other disposition or conversion of any of the
Securities or (b) participate in or encourage any discussion or negotiations
regarding, or furnish to any person any non-public information with respect to,
enter into any agreement with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Competing Acquisition Proposal or any other sale,
transfer, pledge or other disposition or conversion of any of the Securities, in
any case, from, to or with any person other than Parent or Sub. Shareholder will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any such other parties conducted heretofore
with respect to any of the foregoing. Shareholder will notify Parent immediately
if any party contacts the Shareholder following the date hereof (other than
Parent and Sub) concerning any Competing Acquisition Proposal or any other sale,
transfer, pledge or other disposition or conversion of any of the Securities.
1.3 Grant of Proxy; Voting Agreement.
(a) The Shareholder has revoked or terminated any proxies, voting
agreements or similar arrangements previously given or entered into with
respect to the Securities and hereby irrevocably appoints Parent as proxy
for Shareholder to vote the Securities for Shareholder and in Shareholder's
name, place and stead, at any annual, special or other meeting or action of
the shareholders of the Company, as applicable, or at any adjournment
thereof or pursuant to any consent of the shareholders of the Company, in
lieu of a meeting or otherwise, whether before or after the closing of the
Offer (as defined in the Merger Agreement), in the following manner: (i)
for the adoption and approval of the Merger Agreement and the Merger and
(ii) in any manner as Parent, in its sole discretion, may see fit with
respect to any extraordinary corporate transaction (other than the Merger),
such as a merger, consolidation, business combination, tender or exchange
offer, reorganization, recapitalization, liquidation, sale or transfer of a
material amount of the assets or securities of the Company or any of its
subsidiaries (other than pursuant to the Merger) or any other change of
control involving the Company or any of its subsidiaries, including, but
not limited to, any Competing Acquisition Proposal. THE AUTHORITY GRANTED
UNDER THE IRREVOCABLE PROXY SHALL NOT EXPIRE ELEVEN (11) MONTHS AFTER ITS
DATE BUT SHALL BE IRREVOCABLE UNTIL THE TERMINATION DATE (AS HEREINAFTER
DEFINED) AND DEEMED TO BE COUPLED WITH AN INTEREST SUFFICIENT IN LAW AS
REQUIRED BY SECTION 705 OF THE CALIFORNIA GENERAL CORPORATION LAW. The
parties acknowledge and agree that neither Parent, nor Parent's successors,
assigns, subsidiaries, divisions, employees, officers, directors,
shareholders, agents and affiliates shall owe any duty to, whether in law
or otherwise, or incur any liability of any kind whatsoever, including
without limitation, with respect to any and all claims, losses, demands,
causes of action, costs, expenses (including reasonable attorney's fees)
and compensation of any kind or nature whatsoever to the Shareholder in
connection with or as a result of any voting (or refrain from voting) by
Parent of the Securities subject to the irrevocable proxy hereby granted to
Parent at any annual, special or other meeting or action or the execution
of any consent of the shareholders of the Company. The parties acknowledge
that, pursuant to the authority hereby granted under the irrevocable proxy,
Parent may vote the Securities in furtherance of its own interests, and
Parent is not acting as a fiduciary for the Shareholder.
(b) Notwithstanding the foregoing grant to Parent of the irrevocable
proxy, if Parent elects not to exercise its rights to vote the Securities
pursuant to the irrevocable proxy, Shareholder agrees to vote the
Securities during the term of this Agreement (i) in favor of or give its
consent to, as applicable, a proposal to adopt and approve the Merger
Agreement and the Merger as described in clause (i) of
B-2
Section 1.3(a), or (ii) in the manner directed by Parent if the issue on
which Shareholder is requested to vote is a matter described in clause (ii)
of Section 1.3(a), in each case at any annual, special or other meeting or
action of the shareholders of the Company, in lieu of a meeting or
otherwise.
(c) This irrevocable proxy shall not be terminated by any act of the
Shareholder or by operation of law, whether by the death or incapacity of
the Shareholder or by the occurrence of any other event or events
(including, without limiting the foregoing, the termination of any trust or
estate for which Shareholder is acting as a fiduciary or fiduciaries or the
dissolution or liquidation of any corporation or partnership). If between
the execution hereof and the Termination Date, Shareholder should die or
become incapacitated, or if any trust or estate holding the Securities
should be terminated, or if any corporation or partnership holding the
Securities should be dissolved or liquidated, or if any other such similar
event or events shall occur before the Termination Date, certificates
representing the Securities shall be delivered by or on behalf of
Shareholder in accordance with the terms and conditions of the Merger
Agreement and this Agreement, and actions taken by the Parent hereunder
shall be as valid as if such death, incapacity, termination, dissolution,
liquidation or other similar event or events had not occurred, regardless
of whether or not the Parent has received notice of such death, incapacity,
termination, dissolution, liquidation or other event.
(d) Nothing in this Agreement shall give Parent or Sub the power to
vote for the election of directors.
1.4 Tender of Securities. Shareholder agrees to tender the Securities to
Sub in the Offer as soon as practicable following the commencement of the Offer,
and in any event not later ten (10) business days following the commencement of
the Offer and Shareholder shall not withdraw any Securities so tendered unless
the Offer is terminated or has expired. Subject to the terms and conditions of
the Offer and the Merger Agreement, Sub hereby agrees to purchase the shares of
Company Common Stock so tendered at a price per share equal to $15.25 or any
higher price that may be paid in the Offer; provided, however, that Sub's
obligations to accept for payment and pay for the Securities in the Offer is
subject to all the terms and conditions of the Offer set forth in the Merger
Agreement and Annex I thereto.
1.5 Public Announcement. Shareholder shall consult with Parent before
issuing any press releases or otherwise making any public statements with
respect to the transactions contemplated herein and shall not issue any such
press release or make any such public statement without the approval of Parent,
except as may be required by law.
1.6 Disclosure. Shareholder hereby authorizes Parent and Sub to publish
and disclose in any announcement or disclosure required by the Securities and
Exchange Commission (the "SEC") or the New York Stock Exchange (the "NYSE") or
any other national securities exchange and in the Offer Documents and, if
necessary, the Proxy Statement (each as defined in the Merger Agreement),
(including all documents and schedules filed with the SEC in connection with
either of the foregoing), its identity and ownership of the Securities and the
nature of its commitments, arrangements and understandings under this Agreement.
Parent and Sub hereby authorize Shareholder to make such disclosure or filings
as may be required by the SEC or the NYSE or any other national securities
exchange.
1.7 Stop Transfer Instruction; Legend.
(a) Promptly following the date hereof, Shareholder and Sub shall
deliver joint written instructions to the Company and to the Company's
transfer agent stating that the Securities may not be sold, transferred,
pledged, assigned, hypothecated, tendered or otherwise disposed of in any
manner without the prior written consent of Sub or except in accordance
with the terms and conditions of this Agreement.
(b) Promptly following the date hereof, Shareholder shall cause a
legend to be placed on the certificates (to the extent the Securities are
certificated) representing the Securities as set forth below:
"The Securities represented by this certificate are subject to
restrictions on transfer and may not be sold, transferred, pledged,
assigned, hypothecated, tendered or otherwise disposed of except in
B-3
accordance with and subject to the terms and conditions of a Tender
Agreement dated October 29, 2001, between the registered holder hereof
and The Coca-Cola Company."
The parties hereto agree that the legend set forth above shall be removed
only upon delivery to the Company's transfer agent of written notice signed
by Sub (which notice shall not be unreasonably withheld or delayed) that
this Agreement has terminated and the restrictions set forth in the legend
above are of no further force and effect.
2. Representations and Warranties of Shareholder. Shareholder hereby
represents and warrants to Parent and Sub, as of the date hereof and as of the
date Sub purchases shares of Company Common Stock pursuant to the Offer, that:
2.1 Ownership. Shareholder has good and marketable title to, and is the
sole legal and beneficial owner of the Securities, in each case free and clear
of all liabilities, claims, liens, options, proxies, charges, participations and
encumbrances of any kind or character whatsoever (collectively, "Liens"). At the
time Sub purchases shares of Company Common Stock pursuant to the Offer,
Shareholder will transfer and convey to Parent or its designee good and
marketable title to the shares of Company Common Stock included in the
Securities, free and clear of all Liens created by or arising through
Shareholder.
2.2 Authorization. Shareholder has all requisite power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby and has sole voting power and sole power of disposition,
with respect to the Securities with no restrictions on its voting rights or
rights of disposition pertaining thereto. Shareholder has duly executed and
delivered this Agreement and this Agreement is a legal, valid and binding
agreement of Shareholder, enforceable against Shareholder in accordance with its
terms, subject to the qualification, however, that enforcement of the rights and
remedies created hereby is subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general application
related to or affecting creditors' rights and to general equity principles. No
state anti-takeover or similar statute is applicable to Parent, Sub, the Company
or the Surviving Corporation in connection with the Merger, the Merger Agreement
or this Agreement or any of the transactions contemplated hereby or thereby.
2.3 No Violation. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (a) require
the Shareholder to file or register with, or obtain any material permit,
authorization, consent or approval of, any governmental agency, authority,
administrative or regulatory body, court or other tribunal, foreign or domestic,
or any other entity, or (b) violate, or cause a breach of or default under, any
contract, agreement or understanding, any statute or law, or any judgment,
decree, order, regulation or rule of any governmental agency, authority,
administrative or regulatory body, court or other tribunal, foreign or domestic,
or any other entity or any arbitration award binding upon the Shareholder,
except for such violations, breaches or defaults which are not reasonably likely
to have a material adverse effect on the Shareholder's ability to satisfy its
obligations under this Agreement. No proceedings are pending which, if adversely
determined, will have a material adverse effect on any ability to vote or
dispose of any of the Securities. The Shareholder has not previously assigned or
sold any of the Securities to any third party.
2.4 Shareholder Has Adequate Information. Shareholder is a sophisticated
seller with respect to the Securities and has adequate information concerning
the business and financial condition of the Company to make an informed decision
regarding the sale of the Securities and has independently and without reliance
upon either Sub or Parent and based on such information as Shareholder has
deemed appropriate, made its own analysis and decision to enter into this
Agreement. Shareholder acknowledges that neither Sub nor Parent has made and
neither makes any representation or warranty, whether express or implied, of any
kind or character except as expressly set forth in this Agreement. Shareholder
acknowledges that the agreements contained herein with respect to the Securities
by Shareholder is irrevocable, and that Shareholder shall have no recourse to
the Securities or Parent, except with respect to breaches of representations,
warranties, covenants and agreements expressly set forth in this Agreement.
B-4
2.5 Parent's Excluded Information. Shareholder acknowledges and confirms
that (a) Sub or Parent may possess or hereafter come into possession of certain
non-public information concerning the Securities and the Company which is not
known to Shareholder and which may be material to Shareholder's decision to sell
the Securities ("Parent's Excluded Information"), (b) Shareholder has requested
not to receive Parent's Excluded Information and has determined to sell the
Securities notwithstanding its lack of knowledge of Parent's Excluded
Information, and (c) Parent shall have no liability or obligation to Shareholder
in connection with, and Shareholder hereby waives and releases Parent from, any
claims which Shareholder or its successors and assigns may have against Parent
(whether pursuant to applicable securities, laws or otherwise) with respect to
the non-disclosure of Parent's Excluded Information; provided, however, nothing
contained in this Section 2.5 shall limit Shareholder's right to rely upon the
express representations and warranties made by Parent in this Agreement, or
Shareholder's remedies in respect of breaches of any such representations and
warranties.
2.6 No Setoff. The Shareholder has no liability or obligation related to
or in connection with the Securities other than the obligations to Parent and
Sub as set forth in this Agreement. There are no legal or equitable defenses or
counterclaims that have been or may be asserted by or on behalf of the Company,
as applicable, to reduce the amount of the Securities or affect the validity or
enforceability of the Securities.
2.7 No Amounts Payable to Shareholder. Other than with respect to (a)
amounts payable to the director(s) of the Company appointed by Shareholder in
such person's capacity as a director, including all director fees and reasonable
travel expenses to attend Board meetings that have not been reimbursed, and (b)
reasonable fees and expenses of legal counsel in connection with the negotiation
and execution of this Agreement, the Merger Agreement and the other Tender
Agreements which shall be reimbursed by the Company to Shareholder up to an
amount in the aggregate for all Principal Shareholders not to exceed $100,000,
there are no amounts due or payable by the Company or any Subsidiary to the
Shareholder or any of its affiliates or associates in connection with the
transactions contemplated by the Merger Agreement or this Agreement or
otherwise.
3. Representations and Warranties of Parent and Sub. Parent and Sub
hereby represent and warrant to Shareholder, as of the date hereof that:
3.1 Authorization. Parent and Sub have all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. Parent and Sub have duly executed and
delivered this Agreement and this Agreement is a legal, valid and binding
agreement of each of Parent and Sub, enforceable against each of Parent and Sub
in accordance with its terms, subject to the qualification however, that
enforcement of the rights and remedies created hereby is subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general application related to or affecting creditors' rights and to general
equity principles.
3.2 No Violation. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (a) require
Parent to file or register with, or obtain any material permit, authorization,
consent or approval of, any governmental agency, authority, administrative or
regulatory body, court or other tribunal, foreign or domestic, or any other
entity, or (b) violate, or cause a breach of or default under, any contract,
agreement or understanding, any statute or law, or any judgment, decree, order,
regulation or rule of any governmental agency, authority, administrative or
regulatory body, court or other tribunal, foreign or domestic, or any other
entity or any arbitration award binding upon Parent or Sub, except for such
violations, breaches or defaults which are not reasonably likely to have a
material adverse effect on each of Parent or Sub's ability to satisfy its
obligations under this Agreement.
4. Survival of Representations and Warranties. The respective
representations and warranties of Shareholder and Parent contained herein shall
not be deemed waived or otherwise affected by any investigation made by the
other party hereto, and each representation and warranty contained herein shall
survive the closing of the transactions contemplated hereby until the expiration
of the applicable statute of limitations, including extensions thereof.
B-5
5. No Control. Nothing contained in this Agreement shall give Parent or
Sub the right to control or direct the Company or the Company's operations.
6. Specific Performance. Shareholder acknowledges that Sub and Parent
will be irreparably harmed and that there will be no adequate remedy at law for
a violation of any of the covenants or agreements of Shareholder which are
contained in this Agreement. It is accordingly agreed that, in addition to any
other remedies which may be available to Sub and Parent upon the breach by
Shareholder of such covenants and agreements, Sub and Parent shall have the
right to obtain injunctive relief to restrain any breach or threatened breach of
such covenants or agreements or otherwise to obtain specific performance of any
of such covenants or agreements.
7. Termination of Shareholders' Rights Agreement. Shareholder, the
Company and the other persons named on the signature pages thereto are parties
to that certain Shareholders' Rights Agreement dated as of May 2, 2000 (the
"Shareholders' Rights Agreement"). Shareholder acknowledges and agrees that,
effective as of the date Sub purchases shares of Company Common Stock pursuant
to the Offer, the Shareholders' Rights Agreement shall be terminated in
accordance with the terms thereof and shall have no further force or effect, and
Shareholder agrees to execute and deliver such agreements or certificates as
Parent may reasonably request to further evidence the termination of the
Shareholders' Rights Agreement. Shareholder hereby waives any rights that it may
have under the Shareholders' Rights Agreement relating to the execution and
delivery of this Agreement, the Merger Agreement and the other Tender Agreements
and the transactions contemplated hereby and thereby.
8. Miscellaneous.
8.1 Term. This Agreement shall terminate upon the earlier of (i) the
consummation of the Merger or the termination of the Merger Agreement pursuant
to Section 8.1(a), (b), (c), (d) or (e) thereof, or (ii) six (6) months after
the termination of the Merger Agreement pursuant to Section 8.1(f), (g) or (h)
(the "Termination Date"). At the Termination Date, this Agreement shall
thereupon become void and be of no further force and effect, provided that
nothing herein shall relieve any party from liability hereof for breaches of
this Agreement prior to the Termination Date.
8.2 Fiduciary Duties. Notwithstanding anything in this Agreement to the
contrary: (a) Shareholder makes no agreement or understanding herein in any
capacity other than in Shareholder's capacity as a record holder and beneficial
owner of Securities, (b) nothing herein shall be construed to limit or affect
any action or inaction by any officer, partner, member or employee, as
applicable, of Shareholder serving on the Company's Board of Directors acting in
such person's capacity as a director or fiduciary of the Company, and (c)
Shareholder shall have no liability to Parent or any of its affiliates under
this Agreement or otherwise as a result of any action or inaction by any
officer, partner, member or employee, as applicable, of Shareholder serving on
the Company's Board of Directors acting in such person's capacity as a director
or fiduciary of the Company.
8.3 Expenses. Subject to Section 2.7, each of the parties hereto shall
pay its own expenses incurred in connection with this Agreement. Each of the
parties hereto warrants and covenants to the others that it will bear all claims
for brokerage fees attributable to action taken by it.
8.4 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
representatives and permitted successors and assigns.
8.5 Entire Agreement. This Agreement contains the entire understanding of
the parties and supersedes all prior agreements and understandings between the
parties with respect to its subject matter. This Agreement may be amended only
by a written instrument duly executed by the parties hereto.
8.6 Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Time is of the essence with respect to all provisions of this
Agreement.
8.7 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties named herein and their respective successors and
permitted assigns. No party may assign either this Agreement or
B-6
any of its rights, interests, or obligations hereunder without the prior written
approval of the other parties; provided, however, that each of Parent and Sub
may freely assign its rights to another direct or indirect wholly owned
subsidiary of Parent or Sub without such prior written approval but no such
assignment shall relieve Parent or Sub of any of its obligations hereunder. Any
purported assignment without such consent shall be void.
8.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, but each of which together
shall constitute one and the same Agreement.
8.9 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given if so given) by delivery, telegram or telecopy,
or by mail (registered or certified mail, postage prepaid, return receipt
requested) or by any national courier service, provided that any notice
delivered as herein provided shall also be delivered by telecopy at the time of
such delivery. All communications hereunder shall be delivered to the respective
parties at the following addresses (or at such other address for a party as
shall be specified by like notice, provided that notices of a change of address
shall be effective only upon receipt thereof):
(a) If to Parent or Sub: The Coca-Cola Company
One Coca-Cola Plaza
Atlanta, Georgia 30313
Attention: Chief Financial Officer
Telecopy: (404) 676-6209
with a copy to: The Coca-Cola Company
One Coca-Cola Plaza
Atlanta, Georgia 30313
Attention: General Counsel
Telecopy: (404) 676-6209
and
with a copy to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: C. William Baxley
Telecopy: (404) 572-5100
(b) If to Shareholder: ----------------------------------------
----------------------------------------
----------------------------------------
Attention:
-------------------------------------
Telecopy:
--------------------------------------
8.10 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York, without regard to
its principles of conflicts of laws.
8.11 Enforceability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
8.12 Further Assurances. From time to time at or after the date Sub
purchases shares of Company Common Stock pursuant to the Offer, at Parent's
request and without further consideration, Shareholder shall execute and deliver
to Parent such documents and take such action as Parent may reasonably request
in order to consummate more effectively the transactions contemplated hereby and
to vest in Parent good, valid and marketable title to the Securities, including,
but not limited to, using its best efforts to cause the appropriate transfer
agent or registrar to transfer of record the Securities.
8.13 Remedies Not Exclusive. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity will be cumulative and not alternative, and the exercise
B-7
of any thereof by either party will not preclude the simultaneous or later
exercise of any other such right, power or remedy by such party.
8.14 Waiver of Jury Trial. EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
B-8
IN WITNESS WHEREOF, Parent, Sub and Shareholder have caused this Agreement
to be duly executed as of the day and year first above written.
THE COCA-COLA COMPANY
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
PERRY PHILLIP CORP.
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
SHAREHOLDER:
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
B-9
APPENDIX C
FORM TENDER AGREEMENT WITHOUT VOTING AGREEMENT
TENDER AGREEMENT
THIS TENDER AGREEMENT (this "Agreement") dated October 29, 2001, is entered
into between THE COCA-COLA COMPANY, a Delaware corporation ("Parent"), PERRY
PHILLIP CORP., a California corporation and wholly owned subsidiary of Parent
("Sub"), and ("Shareholder"), with respect to the shares of common
stock, no par value (the "Company Common Stock"), of Odwalla, Inc., a California
corporation (the "Company"), owned by Shareholder.
WITNESSETH:
WHEREAS, Parent, Sub and the Company have entered into an Agreement and
Plan of Merger dated as of the date hereof (the "Merger Agreement") pursuant to
which Sub has agreed to make a cash tender offer described therein and
thereafter merge with and into the Company (the "Merger") with the result that
the Company becomes a wholly owned subsidiary of Parent;
WHEREAS, as of the date hereof, Shareholder beneficially owns and has the
power to vote and dispose of shares of Company Common Stock as
identified on Schedule I hereto (such shares of Company Common Stock, together
with any securities issued or exchanged with respect to such shares of Company
Common Stock, and upon any recapitalization, reclassification, merger,
consolidation, spin-off, partial or complete liquidation, stock dividend,
split-up or combination of the securities of the Company or any other change in
the Company's capital structure, are collectively referred to herein as the
"Securities");
WHEREAS, Parent and Sub desire to enter into this Agreement in connection
with their efforts to consummate the acquisition of the Company, and in
consideration of Parent's and Sub's agreements herein and in the Merger
Agreement, Shareholder has agreed to cooperate with Parent and Sub with respect
to the acquisition of the Company by Parent and Sub upon the terms and subject
to the conditions in the Merger Agreement; and
WHEREAS, capitalized terms used in this Agreement and not defined have the
meaning given to such terms in the Merger Agreement.
NOW, THEREFORE, in contemplation of the foregoing and in consideration of
the mutual agreements, covenants, representations and warranties contained
herein and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Certain Covenants.
1.1 Lock-Up. Subject to Section 1.4, Shareholder hereby covenants and
agrees that during the term of this Agreement, Shareholder will not (a) directly
or indirectly, sell, transfer, assign, pledge, hypothecate, tender, encumber or
otherwise dispose of or limit its right to vote in any manner any of the
Securities, or agree to do any of the foregoing, or (b) take any action which
would have the effect of preventing or disabling Shareholder from performing its
obligations under this Agreement. Notwithstanding the foregoing, in connection
with any transfer not involving or relating to any Competing Acquisition
Proposal, Shareholder may transfer any or all of the Securities as follows: (i)
in the case of a Shareholder that is an entity, to any subsidiary, partner or
member of Shareholder, and (ii) in the case of an individual Shareholder, to
Shareholder's spouse, ancestors, descendants or any trust for any of their
benefits or to a charitable trust; provided, however, that in any such case,
prior to and as a condition to the effectiveness of such transfer, (x) each
person or entity to which any of such Securities or any interest in any of such
Securities is or may be transferred (a) shall have executed and delivered to
Parent and Sub a counterpart to this Agreement pursuant to which such person or
entity shall be bound by all of the terms and provisions of this Agreement, and
(b) shall have agreed in writing with Parent and Sub to hold such Securities or
interest in such Securities subject to all of the terms and provisions of this
Agreement, and (y) this Agreement shall be the legal, valid
C-1
and binding agreement of such person, enforceable against such person in
accordance with its terms, subject to the qualification, however, that
enforcement of the rights and remedies created by this Agreement is subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general application related to or affecting creditors' rights
and to general equity principles.
1.2 No Solicitation. During the term of this Agreement, neither the
Shareholder nor any director, officer, agent, representative, employee,
affiliate or associate (collectively, "Representatives") of Shareholder shall,
directly or indirectly, (a) solicit, initiate or encourage the submission of any
Competing Acquisition Proposal (as defined in the Merger Agreement) or any other
sale, transfer, pledge or other disposition or conversion of any of the
Securities or (b) participate in or encourage any discussion or negotiations
regarding, or furnish to any person any non-public information with respect to,
enter into any agreement with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Competing Acquisition Proposal or any other sale,
transfer, pledge or other disposition or conversion of any of the Securities, in
any case, from, to or with any person other than Parent or Sub. Shareholder will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any such other parties conducted heretofore
with respect to any of the foregoing. Shareholder will notify Parent immediately
if any party contacts the Shareholder following the date hereof (other than
Parent and Sub) concerning any Competing Acquisition Proposal or any other sale,
transfer, pledge or other disposition or conversion of any of the Securities.
1.3 [Intentionally Omitted]
1.4 Tender of Securities. Shareholder agrees to tender the Securities to
Sub in the Offer as soon as practicable following the commencement of the Offer,
and in any event not later ten (10) business days following the commencement of
the Offer and Shareholder shall not withdraw any Securities so tendered unless
the Offer is terminated or has expired. Subject to the terms and conditions of
the Offer and the Merger Agreement, Sub hereby agrees to purchase the shares of
Company Common Stock so tendered at a price per share equal to $15.25 or any
higher price that may be paid in the Offer; provided, however, that Sub's
obligations to accept for payment and pay for the Securities in the Offer is
subject to all the terms and conditions of the Offer set forth in the Merger
Agreement and Annex I thereto.
1.5 Public Announcement. Shareholder shall consult with Parent before
issuing any press releases or otherwise making any public statements with
respect to the transactions contemplated herein and shall not issue any such
press release or make any such public statement without the approval of Parent,
except as may be required by law.
1.6 Disclosure. Shareholder hereby authorizes Parent and Sub to publish
and disclose in any announcement or disclosure required by the Securities and
Exchange Commission (the "SEC") or the New York Stock Exchange (the "NYSE") or
any other national securities exchange and in the Offer Documents and, if
necessary, the Proxy Statement (each as defined in the Merger Agreement),
(including all documents and schedules filed with the SEC in connection with
either of the foregoing), its identity and ownership of the Securities and the
nature of its commitments, arrangements and understandings under this Agreement.
Parent and Sub hereby authorize Shareholder to make such disclosure or filings
as may be required by the SEC or the NYSE or any other national securities
exchange.
1.7 Stop Transfer Instruction; Legend.
(a) Promptly following the date hereof, Shareholder and Sub shall
deliver joint written instructions to the Company and to the Company's
transfer agent stating that the Securities may not be sold, transferred,
pledged, assigned, hypothecated, tendered or otherwise disposed of in any
manner without the prior written consent of Sub or except in accordance
with the terms and conditions of this Agreement.
(b) Promptly following the date hereof, Shareholder shall cause a
legend to be placed on the certificates (to the extent the Securities are
certificated) representing the Securities as set forth below:
"The Securities represented by this certificate are subject to
restrictions on transfer and may not be sold, transferred, pledged,
assigned, hypothecated, tendered or otherwise disposed of except in
C-2
accordance with and subject to the terms and conditions of a Tender
Agreement dated October 29, 2001, between the registered holder hereof
and The Coca-Cola Company."
The parties hereto agree that the legend set forth above shall be removed
only upon delivery to the Company's transfer agent of written notice signed
by Sub (which notice shall not be unreasonably withheld or delayed) that
this Agreement has terminated and the restrictions set forth in the legend
above are of no further force and effect.
2. Representations and Warranties of Shareholder. Shareholder hereby
represents and warrants to Parent and Sub, as of the date hereof and as of the
date Sub purchases shares of Company Common Stock pursuant to the Offer, that:
2.1 Ownership. Shareholder has good and marketable title to, and is the
sole legal and beneficial owner of the Securities, in each case free and clear
of all liabilities, claims, liens, options, proxies, charges, participations and
encumbrances of any kind or character whatsoever (collectively, "Liens"). At the
time Sub purchases shares of Company Common Stock pursuant to the Offer,
Shareholder will transfer and convey to Parent or its designee good and
marketable title to the shares of Company Common Stock included in the
Securities, free and clear of all Liens created by or arising through
Shareholder.
2.2 Authorization. Shareholder has all requisite power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby and has sole voting power and sole power of disposition,
with respect to the Securities with no restrictions on its voting rights or
rights of disposition pertaining thereto. Shareholder has duly executed and
delivered this Agreement and this Agreement is a legal, valid and binding
agreement of Shareholder, enforceable against Shareholder in accordance with its
terms, subject to the qualification, however, that enforcement of the rights and
remedies created hereby is subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general application
related to or affecting creditors' rights and to general equity principles. No
state anti-takeover or similar statute is applicable to Parent, Sub, the Company
or the Surviving Corporation in connection with the Merger, the Merger Agreement
or this Agreement or any of the transactions contemplated hereby or thereby.
2.3 No Violation. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (a) require
the Shareholder to file or register with, or obtain any material permit,
authorization, consent or approval of, any governmental agency, authority,
administrative or regulatory body, court or other tribunal, foreign or domestic,
or any other entity, or (b) violate, or cause a breach of or default under, any
contract, agreement or understanding, any statute or law, or any judgment,
decree, order, regulation or rule of any governmental agency, authority,
administrative or regulatory body, court or other tribunal, foreign or domestic,
or any other entity or any arbitration award binding upon the Shareholder,
except for such violations, breaches or defaults which are not reasonably likely
to have a material adverse effect on the Shareholder's ability to satisfy its
obligations under this Agreement. No proceedings are pending which, if adversely
determined, will have a material adverse effect on any ability to vote or
dispose of any of the Securities. The Shareholder has not previously assigned or
sold any of the Securities to any third party.
2.4 Shareholder Has Adequate Information. Shareholder is a sophisticated
seller with respect to the Securities and has adequate information concerning
the business and financial condition of the Company to make an informed decision
regarding the sale of the Securities and has independently and without reliance
upon either Sub or Parent and based on such information as Shareholder has
deemed appropriate, made its own analysis and decision to enter into this
Agreement. Shareholder acknowledges that neither Sub nor Parent has made and
neither makes any representation or warranty, whether express or implied, of any
kind or character except as expressly set forth in this Agreement. Shareholder
acknowledges that the agreements contained herein with respect to the Securities
by Shareholder is irrevocable, and that Shareholder shall have no recourse to
the Securities or Parent, except with respect to breaches of representations,
warranties, covenants and agreements expressly set forth in this Agreement.
C-3
2.5 Parent's Excluded Information. Shareholder acknowledges and confirms
that (a) Sub or Parent may possess or hereafter come into possession of certain
non-public information concerning the Securities and the Company which is not
known to Shareholder and which may be material to Shareholder's decision to sell
the Securities ("Parent's Excluded Information"), (b) Shareholder has requested
not to receive Parent's Excluded Information and has determined to sell the
Securities notwithstanding its lack of knowledge of Parent's Excluded
Information, and (c) Parent shall have no liability or obligation to Shareholder
in connection with, and Shareholder hereby waives and releases Parent from, any
claims which Shareholder or its successors and assigns may have against Parent
(whether pursuant to applicable securities, laws or otherwise) with respect to
the non-disclosure of Parent's Excluded Information; provided, however, nothing
contained in this Section 2.5 shall limit Shareholder's right to rely upon the
express representations and warranties made by Parent in this Agreement, or
Shareholder's remedies in respect of breaches of any such representations and
warranties.
2.6 No Setoff. The Shareholder has no liability or obligation related to
or in connection with the Securities other than the obligations to Parent and
Sub as set forth in this Agreement. There are no legal or equitable defenses or
counterclaims that have been or may be asserted by or on behalf of the Company,
as applicable, to reduce the amount of the Securities or affect the validity or
enforceability of the Securities.
2.7 No Amounts Payable to Shareholder. Other than with respect to (a)
amounts payable to the director(s) of the Company appointed by Shareholder in
such person's capacity as a director, including all director fees and reasonable
travel expenses to attend Board meetings that have not been reimbursed, and (b)
reasonable fees and expenses of legal counsel in connection with the negotiation
and execution of this Agreement, the Merger Agreement and the other Tender
Agreements which shall be reimbursed by the Company to Shareholder up to an
amount in the aggregate for all Principal Shareholders not to exceed $100,000,
there are no amounts due or payable by the Company or any Subsidiary to the
Shareholder or any of its affiliates or associates in connection with the
transactions contemplated by the Merger Agreement or this Agreement or
otherwise.
3. Representations and Warranties of Parent and Sub. Parent and Sub
hereby represent and warrant to Shareholder, as of the date hereof that:
3.1 Authorization. Parent and Sub have all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. Parent and Sub have duly executed and
delivered this Agreement and this Agreement is a legal, valid and binding
agreement of each of Parent and Sub, enforceable against each of Parent and Sub
in accordance with its terms, subject to the qualification however, that
enforcement of the rights and remedies created hereby is subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general application related to or affecting creditors' rights and to general
equity principles.
3.2 No Violation. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (a) require
Parent to file or register with, or obtain any material permit, authorization,
consent or approval of, any governmental agency, authority, administrative or
regulatory body, court or other tribunal, foreign or domestic, or any other
entity, or (b) violate, or cause a breach of or default under, any contract,
agreement or understanding, any statute or law, or any judgment, decree, order,
regulation or rule of any governmental agency, authority, administrative or
regulatory body, court or other tribunal, foreign or domestic, or any other
entity or any arbitration award binding upon Parent or Sub, except for such
violations, breaches or defaults which are not reasonably likely to have a
material adverse effect on each of Parent or Sub's ability to satisfy its
obligations under this Agreement.
4. Survival of Representations and Warranties. The respective
representations and warranties of Shareholder and Parent contained herein shall
not be deemed waived or otherwise affected by any investigation made by the
other party hereto, and each representation and warranty contained herein shall
survive the closing of the transactions contemplated hereby until the expiration
of the applicable statute of limitations, including extensions thereof.
C-4
5. No Control. Nothing contained in this Agreement shall give Parent or
Sub the right to control or direct the Company or the Company's operations.
6. Specific Performance. Shareholder acknowledges that Sub and Parent
will be irreparably harmed and that there will be no adequate remedy at law for
a violation of any of the covenants or agreements of Shareholder which are
contained in this Agreement. It is accordingly agreed that, in addition to any
other remedies which may be available to Sub and Parent upon the breach by
Shareholder of such covenants and agreements, Sub and Parent shall have the
right to obtain injunctive relief to restrain any breach or threatened breach of
such covenants or agreements or otherwise to obtain specific performance of any
of such covenants or agreements.
7. Termination of Shareholders' Rights Agreement. Shareholder, the
Company and the other persons named on the signature pages thereto are parties
to that certain Shareholders' Rights Agreement dated as of May 2, 2000 (the
"Shareholders' Rights Agreement"). Shareholder acknowledges and agrees that,
effective as of the date Sub purchases shares of Company Common Stock pursuant
to the Offer, the Shareholders' Rights Agreement shall be terminated in
accordance with the terms thereof and shall have no further force or effect, and
Shareholder agrees to execute and deliver such agreements or certificates as
Parent may reasonably request to further evidence the termination of the
Shareholders' Rights Agreement. Shareholder hereby waives any rights that it may
have under the Shareholders' Rights Agreement relating to the execution and
delivery of this Agreement, the Merger Agreement and the other Tender Agreements
and the transactions contemplated hereby and thereby.
8. Miscellaneous.
8.1 Term. This Agreement shall terminate upon the earlier of (i) the
consummation of the Merger or the termination of the Merger Agreement pursuant
to Section 8.1(a), (b), (c), (d) or (e) thereof, or (ii) six (6) months after
the termination of the Merger Agreement pursuant to Section 8.1(f), (g) or (h)
(the "Termination Date"). At the Termination Date, this Agreement shall
thereupon become void and be of no further force and effect, provided that
nothing herein shall relieve any party from liability hereof for breaches of
this Agreement prior to the Termination Date.
8.2 Fiduciary Duties. Notwithstanding anything in this Agreement to the
contrary: (a) Shareholder makes no agreement or understanding herein in any
capacity other than in Shareholder's capacity as a record holder and beneficial
owner of Securities, (b) nothing herein shall be construed to limit or affect
any action or inaction by any officer, partner, member or employee, as
applicable, of Shareholder serving on the Company's Board of Directors acting in
such person's capacity as a director or fiduciary of the Company, and (c)
Shareholder shall have no liability to Parent or any of its affiliates under
this Agreement or otherwise as a result of any action or inaction by any
officer, partner, member or employee, as applicable, of Shareholder serving on
the Company's Board of Directors acting in such person's capacity as a director
or fiduciary of the Company.
8.3 Expenses. Subject to Section 2.7, each of the parties hereto shall
pay its own expenses incurred in connection with this Agreement. Each of the
parties hereto warrants and covenants to the others that it will bear all claims
for brokerage fees attributable to action taken by it.
8.4 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
representatives and permitted successors and assigns.
8.5 Entire Agreement. This Agreement contains the entire understanding of
the parties and supersedes all prior agreements and understandings between the
parties with respect to its subject matter. This Agreement may be amended only
by a written instrument duly executed by the parties hereto.
8.6 Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Time is of the essence with respect to all provisions of this
Agreement.
8.7 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties named herein and their respective successors and
permitted assigns. No party may assign either this Agreement or
C-5
any of its rights, interests, or obligations hereunder without the prior written
approval of the other parties; provided, however, that each of Parent and Sub
may freely assign its rights to another direct or indirect wholly owned
subsidiary of Parent or Sub without such prior written approval but no such
assignment shall relieve Parent or Sub of any of its obligations hereunder. Any
purported assignment without such consent shall be void.
8.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, but each of which together
shall constitute one and the same Agreement.
8.9 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given if so given) by delivery, telegram or telecopy,
or by mail (registered or certified mail, postage prepaid, return receipt
requested) or by any national courier service, provided that any notice
delivered as herein provided shall also be delivered by telecopy at the time of
such delivery. All communications hereunder shall be delivered to the respective
parties at the following addresses (or at such other address for a party as
shall be specified by like notice, provided that notices of a change of address
shall be effective only upon receipt thereof):
(a) If to Parent or Sub: The Coca-Cola Company
One-Coca Cola Plaza
Atlanta, Georgia 30313
Attention: Chief Financial Officer
Telecopy: (404) 676-6209
with a copy to: The Coca-Cola Company
One-Coca Cola Plaza
Atlanta, Georgia 30313
Attention: General Counsel
Telecopy: (404) 676-6209
and
with a copy to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: C. William Baxley
Telecopy: (404) 572-5100
(b) If to Shareholder: -----------------------------------------
-----------------------------------------
-----------------------------------------
Attention:
-----------------------------------------
Telecopy:
-----------------------------------------
8.10 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York, without regard to
its principles of conflicts of laws.
8.11 Enforceability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
8.12 Further Assurances. From time to time at or after the date Sub
purchases shares of Company Common Stock pursuant to the Offer, at Parent's
request and without further consideration, Shareholder shall execute and deliver
to Parent such documents and take such action as Parent may reasonably request
in order to consummate more effectively the transactions contemplated hereby and
to vest in Parent good, valid and marketable title to the Securities, including,
but not limited to, using its best efforts to cause the appropriate transfer
agent or registrar to transfer of record the Securities.
8.13 Remedies Not Exclusive. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity will be cumulative and not alternative, and the exercise of any thereof
by either party will not preclude the simultaneous or later exercise of any
other such right, power or remedy by such party.
C-6
8.14 Waiver of Jury Trial. EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
C-7
IN WITNESS WHEREOF, Parent, Sub and Shareholder have caused this Agreement
to be duly executed as of the day and year first above written.
THE COCA-COLA COMPANY
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
PERRY PHILLIP CORP.
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
SHAREHOLDER:
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
C-8
APPENDIX D
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of October 29, 2001 (this "Agreement"), is
entered into among Odwalla, Inc., a California corporation (the "Company"), The
Coca-Cola Company, a Delaware corporation ("Parent"), and Perry Phillip Corp., a
California corporation and wholly owned subsidiary of Parent ("Sub").
WITNESSETH:
WHEREAS, concurrently with the execution and delivery of this Agreement,
the parties hereto are entering into an Agreement and Plan of Merger (the
"Merger Agreement") which provides, upon the terms and subject to the conditions
set forth therein, for (i) the commencement by Sub of a tender offer (the
"Offer") to purchase any and all of the outstanding shares of the common stock,
no par value (the "Shares"), of the Company at a price of $15.25 per Share in
cash, net to the seller (such price, or such greater amount which may be paid
pursuant to the Offer, the "Offer Price") and (ii) the subsequent merger of Sub
with and into the Company (the "Merger"), whereby each Share issued and
outstanding (other than Shares owned by Parent, Sub or any other subsidiary of
Parent and other than Shares which are held by shareholders exercising
dissenters' rights pursuant to Chapter 13 of the California General Corporation
Law (the "CGCL")) shall be converted into the right to receive the Offer Price;
WHEREAS, as a condition to the willingness of Parent and Sub to enter into
the Merger Agreement, Parent and Sub have required that the Company agree, and
in order to induce Parent and Sub to enter into the Merger Agreement, the
Company has agreed, to grant to Sub an option to purchase Shares upon the terms
and subject to the conditions of this Agreement; and
WHEREAS, capitalized terms used but not defined in this Agreement shall
have the meanings ascribed to them in the Merger Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
THE TOP-UP OPTION
Section 1.1. Grant of Top-Up Stock Option. Subject to the terms and
conditions set forth herein, the Company hereby grants to Sub an irrevocable
option (the "Top-Up Stock Option") to purchase that number of Shares (the
"Top-Up Option Shares") equal to the number of Shares that, when added to the
number of Shares owned by Sub, Parent and any other subsidiary of Parent
immediately following consummation of the Offer, shall constitute 90.1% of the
Shares outstanding on a fully diluted basis (assuming the issuance of the Top-Up
Option Shares) and shall permit Sub to effect the Merger pursuant to Section
1110 of the CGCL (assuming the issuance of the Top-Up Option Shares) at a
purchase price per Top-Up Option Share equal to the Offer Price; provided,
however, that the Top-Up Stock Option shall not be exercisable if the number of
Shares subject thereto exceeds the number of authorized shares of common stock
of the Company available for issuance. The Company agrees to provide Parent and
Sub with information regarding the number of Shares available for issuance on an
ongoing basis.
Section 1.2. Exercise of Top-Up Stock Option.
(a) Subject to the conditions set forth in Section 2.1, Sub may, at its
election, exercise the Top-Up Stock Option in whole, but not in part, at any one
time after the occurrence of a Top-Up Exercise Event (as defined below) and
prior to the Top-Up Termination Date (as defined below).
(b) A "Top-Up Exercise Event" shall occur for purposes of this Agreement
upon Sub's acceptance for payment pursuant to the Offer of Shares constituting,
together with Shares owned directly or indirectly by
D-1
Sub, Parent and any other subsidiary of Parent, more than 50% of the Shares then
outstanding but less than 90% of the Shares then outstanding on a fully diluted
basis.
(c) Except as provided in the last sentence of this Section 1.2(c), the
"Top-Up Termination Date" shall occur for purposes of this Agreement upon the
earliest to occur of: (i) the Effective Time; (ii) the date which is 20 business
days after the occurrence of a Top-Up Exercise Event; (iii) the termination of
the Merger Agreement; and (iv) the date on which Sub reduces the Minimum
Condition to the Revised Minimum Number and accepts for payment a number of
Shares equal to the Revised Minimum Number.
(d) Notwithstanding the occurrence of the Top-Up Termination Date, Sub
shall be entitled to purchase the Top-Up Option Shares if it has exercised the
Top-Up Stock Option in accordance with the terms hereof prior to such
occurrence, and the occurrence of the Top-Up Termination Date shall not affect
any rights hereunder which by their terms do not terminate or expire prior to or
as of such date.
(e) In the event Sub wishes to exercise the Top-Up Stock Option, Sub shall
send to the Company a written notice (a "Top-Up Exercise Notice," the date of
which notice is referred to herein as the "Top-Up Notice Date") specifying the
denominations of the certificate or certificates evidencing the Top-Up Option
Shares which Sub wishes to receive, the place for the closing of the purchase
and sale pursuant to the Top-Up Stock Option (the "Top-Up Closing") and a date
not earlier than one day nor later than ten business days after the Top-Up
Notice Date for the Top-Up Closing; provided, however, that (i) if the Top-Up
Closing cannot be consummated by reason of any applicable Laws or orders, the
period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which such restriction on consummation has expired or
been terminated and (ii) without limiting the foregoing, if prior notification
to or approval of any Governmental Entity is required in connection with such
purchase, Sub and the Company shall promptly file the required notice or
application for approval and shall cooperate in the expeditious filing of such
notice or application, and the period of time that otherwise would run pursuant
to this sentence shall run instead from the date on which, as the case may be,
(A) any required notification period has expired or been terminated or (B) any
required approval has been obtained, and in either event, any requisite waiting
period has expired or been terminated. The Company shall, promptly after receipt
of the Top-Up Exercise Notice, deliver a written notice to Sub confirming the
number of Top-Up Option Shares and the aggregate purchase price therefor.
ARTICLE II
CLOSING
Section 2.1. Conditions to Closing. The obligation of the Company to
deliver Top-Up Option Shares upon the exercise of the Top-Up Stock Option is
subject to the following conditions:
(a) any applicable waiting period under the HSR Act and any
applicable non-United States Laws regulating competition, antitrust,
investment or exchange controls relating to the issuance of the Top-Up
Option Shares hereunder shall have expired or been terminated;
(b) no provision of any applicable Law or regulation and no judgment,
injunction, order or decree shall prohibit the exercise of the Top-Up Stock
Option or the delivery of the Top-Up Option Shares in respect of any such
exercise; and
(c) delivery of the Top-Up Option Shares would not violate, or
otherwise cause a violation of the rule of the Nasdaq Stock Market set
forth in Section 4350(i)1(D) of the NASD Manual.
Section 2.2. Closing.
(a) At the Top-Up Closing (i) the Company shall deliver to Sub a
certificate or certificates evidencing the applicable number of Top-Up Option
Shares (in the denominations designated by Sub in the Top-Up Exercise Notice)
and (ii) Sub shall purchase each Top-Up Option Share from the Company at the
Offer Price. Payment by Sub of the purchase price for the Top-Up Option Shares
shall be made by delivery of immediately available funds by wire transfer to an
account designated by the Company.
D-2
(b) The Company shall pay all expenses, and any and all federal, state and
local taxes and other charges, that may be payable in connection with the
preparation, issuance and delivery of stock certificates under this Section 2.2.
Section 2.3. Securities Law Compliance. Sub understands that the Shares
which Sub may acquire hereunder will not be registered under the Securities Act
of 1933, as amended (the "Securities Act") in reliance upon an exemption
thereunder for transactions not involving a public transaction. Sub is, or will
be upon the purchase of the Top-Up Option Shares, an accredited investor for
purposes of the federal securities laws. The Top-Up Stock Option and the Top-Up
Option Shares to be acquired upon exercise of the Top-Up Stock Option are being
and will be acquired by Sub without a view to public distribution thereof
otherwise than in compliance with the Securities Act and applicable state
securities laws and will not be transferred or otherwise disposed of except in a
transaction registered or exempt from registration under the Securities Act and
in compliance with applicable state securities laws. Sub will not effect any
offer or sale of Top-Up Option Shares which would cause the Company to violate
the registration requirements of the Securities Act or the registration or
qualification requirements of the securities laws of any jurisdiction. Sub will
comply with all obligations under applicable securities law in connection with
the receipt of the Top-Up Stock Option or the purchase of the Top-Up Option
Shares or otherwise with respect to the consummation of the transactions
contemplated by this Agreement.
ARTICLE III
ADDITIONAL AGREEMENTS
Section 3.1. Restrictive Legends. Certificates evidencing the Shares to
be delivered hereunder may include legends legally required including the legend
in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES OR BLUE SKY LAWS, AND MAY BE REOFFERED OR SOLD ONLY IF SO
REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. SUCH
SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET
FORTH IN THE STOCK OPTION AGREEMENT, DATED AS OF OCTOBER 29, 2001, A COPY
OF WHICH MAY BE OBTAINED FROM THE ISSUER UPON REQUEST.
It is understood and agreed that (i) the reference to the resale restrictions of
the Securities Act and state securities or blue sky laws in the foregoing legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Company or Sub, as the case may be, shall have delivered to the other
party a copy of a letter from the staff of the Securities and Exchange
Commission, or an opinion of counsel, in form and substance reasonably
satisfactory to the other party, to the effect that such legend is not required
for purposes of the Securities Act or such laws; (ii) the reference to the
provisions of this Agreement in the foregoing legend shall be removed by
delivery of substitute Certificate(s) without such reference if the Shares have
been sold or transferred in compliance with the provisions of this Agreement and
under circumstances that do not require the retention of such reference; and
(iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
Section 3.2. Reasonable Best Efforts. Subject to the terms and conditions
of this Agreement, Parent, Sub and the Company will use their reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement.
Section 3.3. Further Assurances. Each party shall perform such further
acts and execute such further documents and instruments as may reasonably be
required to vest in Sub and Parent the power to consummate the transactions
contemplated by this Agreement. If Sub shall exercise the Top-Up Stock Option
granted hereunder in accordance with the terms of this Agreement, each party
shall, without additional consideration, execute and deliver all such further
documents and instruments and take all such further
D-3
actions as any other party may reasonably request to consummate the transactions
contemplated by this Agreement.
ARTICLE IV
MISCELLANEOUS
Section 4.1. Waiver of Conditions. The conditions to each of the parties'
obligations to consummate this Agreement are for the sole benefit of such party
and may be waived by such party in whole or in part to the extent permitted by
applicable law.
Section 4.2. Expenses. Each of the parties hereto shall pay its own
expenses incurred in connection with this Agreement. Each of the parties hereto
warrants and covenants to the others that it will bear all claims for brokerage
fees attributable to action taken by it.
Section 4.3. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective representatives and permitted successors and assigns.
Section 4.4. Entire Agreement. This Agreement contains the entire
understanding of the parties and supersedes all prior agreements and
understandings between the parties with respect to its subject matter. This
Agreement may be amended only by a written instrument duly executed by the
parties hereto.
Section 4.5. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Time is of the essence with respect to all
provisions of this Agreement.
Section 4.6. Assignment. This Agreement shall be binding upon and inure
to the benefit of the parties named herein and their respective successors and
permitted assigns. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties; provided, however, that each of Parent and Sub may freely
assign its rights to another direct or indirect wholly owned subsidiary of
Parent or Sub without such prior written approval but no such assignment shall
relieve Parent or Sub of any of its obligations hereunder. Any purported
assignment without such consent shall be void.
Section 4.7. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, but each of which together
shall constitute one and the same Agreement.
Section 4.8. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given if so given) by delivery, telegram or telecopy,
or by mail (registered or certified mail, postage prepaid, return receipt
requested) or by any national courier service, provided that any notice
delivered as herein provided shall also be delivered by telecopy at the time of
such delivery. All communications hereunder shall be delivered to the respective
D-4
parties at the following addresses (or at such other address for a party as
shall be specified by like notice, provided that notices of a change of address
shall be effective only upon receipt thereof):
(a) If to Parent or The Coca-Cola Company
Sub: One Coca-Cola Plaza
Atlanta, Georgia 30313
Attention: Chief Financial Officer
Telecopy: (404) 676-8621
With a copy The Coca-Cola Company
(which does One Coca-Cola Plaza
not constitute Atlanta, Georgia 30313
notice) to: Attention: General Counsel
Telecopy: (404) 676-6209
and with a copy to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: C. William Baxley
Telecopy: (404) 572-5100
(b) If to Odwalla, Inc.
the Company: 120 Stone Pine Road
Half Moon Bay, California 94019
Attention: Chief Financial Officer
Telecopy: (650) 712-5967
with a copy to: Morrison & Foerster LLP
425 Market Street
San Francisco, California 94965
Attention: Robert S. Townsend
Telecopy: (415) 268-7522
Section 4.9. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York,
without regard to its principles of conflicts of laws.
Section 4.10. Enforceability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
Section 4.11. Remedies Not Exclusive. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity will be cumulative and not alternative, and the exercise of any
thereof by either party will not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
Section 4.12. Waiver of Jury Trial. EACH PARTY HERETO IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 4.13. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof,
in addition to any other remedy to which they are entitled at law or in equity.
D-5
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto on the date first hereinabove
written.
ODWALLA, INC.
By: /s/ D. STEPHEN C. WILLIAMSON
------------------------------------
Name: D. Stephen C. Williamson
Title: Chairman of the Board and
Chief Executive Officer
THE COCA-COLA COMPANY
By: /s/ DAVID M. TAGGART
------------------------------------
Name: David M. Taggart
Title: Vice President
PERRY PHILLIP CORP.
By: /s/ PAUL ETCHELLS
------------------------------------
Name: Paul Etchells
Title: President
D-6
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal and certificates for
Shares and any other required documents should be sent or delivered by each
shareholder of Odwalla or such shareholder's broker, dealer, commercial bank,
trust company or other nominee to the Depositary at one of the addresses set
forth below:
THE DEPOSITARY FOR THE OFFER IS:
EQUISERVE TRUST COMPANY, N.A.
BY MAIL: BY HAND: BY OVERNIGHT COURIER:
P.O. Box 43034 c/o Securities Transfer and 40 Campanelli Drive
Providence, RI 02940-3034 Reporting Services, Inc. Braintree, MA 02184
100 William Street -- Galleria
New York, NY 10038
CONFIRM BY TELEPHONE: BY EMAIL: INTERNET:
Toll Free (781) 575-4816 fctc_cocacola@equiserve.com www.equiserve.com
Any questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective telephone numbers and addresses
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may also be obtained from the
Information Agent. You may also contact your broker, dealer, commercial bank or
trust company for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
(Innisfree M&A Incorporated LOGO)
501 Madison Avenue, 20th Floor
New York, New York 10022
Banks and Brokers Call Collect: 212-750-5833
All Others Call Toll-Free: 1-888-750-5834
THE DEALER MANAGER FOR THE OFFER IS:
MORGAN STANLEY
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
212-761-3539