Annual Report — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K Odwalla, Inc. Form 10-K 61 334K
2: EX-4.1 Warrant to Purchase Common Stock, Feb. 10, 1999 9 39K
3: EX-4.2 Warrant to Purchase Common Stock, May 22, 1997 6 25K
4: EX-10.1 Form of Indemnification Agreement 14 62K
6: EX-10.19 Important Notice and Agreement 4 15K
5: EX-10.5 Business Loan Agreement, July 12, 2001 35 121K
7: EX-21.1 Subsidiaries of the Registrant 1 4K
8: EX-23.1 Consent of Independent Accountants 1 5K
EX-10.5 — Business Loan Agreement, July 12, 2001
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Exhibit 10.5
BUSINESS LOAN AGREEMENT
This Agreement, dated as of July 12, 2001, is between Bank of America,
N.A. (the "Bank") and Odwalla, Inc., a California corporation ("Odwalla") and
Fresh Samantha, Inc., a Maine corporation ("Fresh Samantha") (Odwalla and Fresh
Samantha are sometimes referred to collectively as "Borrowers" and individually
as a "Borrower"), (the "Borrower").
1. DEFINITIONS
In addition to the terms which are defined elsewhere in this Agreement, the
following terms have the meanings indicated for the purposes of this Agreement:
1.1 "Borrowing Base" means 75% of the balance due on Acceptable
Receivables, minus the amount of the Reserves.
1.2 "Acceptable Receivable" means an account receivable which satisfies
the following requirements:
(a) The account has resulted from the sale of goods by any
Borrower in the ordinary course of such Borrower's business and without
any further obligation on the part of such Borrower to service, repair,
or maintain any such goods sold other than pursuant to any applicable
warranty.
(b) There are no conditions which must be satisfied before a
Borrower is entitled to receive payment of the account. Accounts arising
from COD sales, consignments or guaranteed sales are not acceptable.
(c) To the extent the debtor upon the account claims any defense
to payment of the account, whether well founded or otherwise, the
account balance does not include the amount of such claim.
(d) The account balance does not include the amount of any
counterclaims or offsets which have been or may be asserted against the
Borrowers by the account debtor (including offsets for any "contra
accounts" owed by the Borrowers to the account debtor for goods
purchased by the Borrowers or for services performed for the Borrowers).
To the extent any counterclaims, offsets, or contra accounts exist in
favor of the debtor, such amounts shall be deducted from the account
balance.
(e) The account represents a genuine obligation of the debtor
for goods sold to and accepted by the debtor. To the extent any credit
balances exist in favor of the debtor, such credit balances shall be
deducted from the account balance.
(f) A Borrower has invoiced the debtor in the amount of the
account.
(g) A Borrower is not prohibited by the laws of the state where
the account debtor is located from bringing an action in the courts of
that state to enforce the debtor's obligation to pay the account. Such
Borrower has taken all appropriate actions to ensure
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access to the courts of the state where the account debtor is located,
including, where necessary, the filing of a Notice of Business
Activities Report or other similar filing with the applicable state
agency or the qualification by such Borrower as a foreign corporation
authorized to transact business in such state.
(h) The account is owned by such Borrower free of any title
defects or any liens or interests of others except the security interest
in favor of the Bank.
(i) The debtor upon the account is not any of the following:
(i) an employee or Affiliate of any Borrower, to the
extent the amount owed by the account debtor exceeds $50,000.00.
(ii) the U.S. government or any agency or department of
the U.S. government unless the Bank accepts the obligation and
such Borrower complies with the procedures in the Federal
Assignment of Claims Act of 1940 (41 U.S.C. Section 15) with
respect to the obligation.
(iii) any person or entity located in a foreign country
unless (A) the account is supported by an irrevocable letter of
credit issued by a bank acceptable to the Bank, and, if
requested by the Bank, the original of such letter of credit
and/or any usance drafts drawn under such letter of credit and
accepted by the issuing or confirming bank have been delivered
to the Bank, or (B) the account is covered by foreign credit
insurance acceptable to the Bank and the account is otherwise an
Acceptable Receivable; provided that accounts from persons and
entities located in Canada may be included as Acceptable
Receivables to the extent the aggregate amount of such accounts
do not at any time exceed $150,000.00.
(j) The account is not in default. An account will be considered
in default if any of the following occur:
(i) The account is not paid within 45 days from its
invoice date;
(ii) The debtor obligated upon the account suspends
business, makes a general assignment for the benefit of
creditors, or fails to pay its debts generally as they come due;
or
(iii) Any petition is filed by or against the debtor
obligated upon the account under any bankruptcy law or any other
law or laws for the relief of debtors.
(k) The account is not the obligation of a debtor who is in
default (as defined above) on 25% or more of the accounts upon which
such debtor is obligated.
(l) The account does not arise from the sale of goods which
remain in any Borrower's possession or under any Borrower's control.
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(m) The account is not evidenced by a promissory note or chattel
paper, nor is the account debtor obligated to any Borrower under any
other obligation which is evidenced by a promissory note.
(n) The account is otherwise acceptable to the Bank, in its
exercise of reasonable business judgment.
In addition to the foregoing limitations, the dollar amount of accounts included
as Acceptable Receivables which are the obligations of a single debtor shall not
exceed the concentration limit established for that debtor. To the extent the
total of such accounts exceeds a debtor's concentration limit, the amount of any
such excess shall be excluded. The concentration limit for each debtor shall be
equal to 10% of the total amount of the Borrowers' Acceptable Receivables at
that time.
It is provided, however, that if the debtor obligated upon an account is one of
the debtors listed below, the concentration limit applicable to each such debtor
will be increased to the percentage set forth below:
[Download Table]
Debtor Concentration Limit
------ -------------------
Safeway 20%
Kroger 20%
1.3 "Affiliate" means, as to any person, any other person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such person or which owns, directly or indirectly, ten percent
(10%) or more of the outstanding voting interest of such person. A person shall
be deemed to control another person if the controlling person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of the other person, whether through the ownership of
voting securities, by contract, or otherwise.
1.4 "ACH Transactions" means any cash management or related services
including the automatic clearing house transfer of funds by the Bank for the
account of the Borrower pursuant to agreement or overdrafts.
1.5 "Bank Products" means any one or more of the following types of
services or facilities extended to the Borrowers by the Bank or any affiliate of
the Bank in reliance on Bank's agreement to indemnify such affiliate: (i) credit
cards; (ii) ACH Transactions; (iii) cash management, including controlled
disbursement services; and (iv) Hedge Agreements.
1.6 "Bank Product Reserves" means all reserves which the Bank from time
to time establishes in its reasonable discretion for the Bank Products then
provided or outstanding.
1.7 "Credit Limit" means the amount of Ten Million and no/100 Dollars
($10,000,000.00).
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1.8 "Dilution Reserve" means the reserve established by Bank in its
reasonable judgment to reflect the amount of receivables which are not
collected. On the date of this Agreement the Dilution Reserve shall be $350,000,
which shall be subject to adjustment from time to time by the Bank in its
reasonable judgment to reflect historical receivable dilution as determined by
the Bank in its reasonable judgment.
1.9 "Grower Payables" means, as of any date of determination, all
amounts then payable by any Borrower to growers of agricultural products which
such Borrower has purchased, whether for processing, for use in producing
inventory or otherwise.
1.10 "Hedge Agreement" means any and all transactions, agreements or
documents now existing or hereafter entered into, which provide for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination or option with respect to, these or similar transactions, for
the purpose of hedging the Borrowers' exposure to fluctuations in interest or
exchange rates, loan, credit exchange, security or currency valuations or
commodity prices.
1.11 "PACA" means the Perishable Agricultural Commodities Act, 7 U.S.C.
Section 499 et seq., as amended or replaced and as in effect from time to time.
1.12 "Plea Agreement" means the agreement set forth in that certain
Memorandum of Plea Agreement Pursuant to Rule 11(e) of the Federal Rules of
Criminal Procedure, dated July 23, 1998, United States of America v. Odwalla,
Inc., United States District Court for the Eastern District of California; CR.
F. No. 98 5261-SMS.
1.13 "Plea Agreement Reserve" means the amount of any payments due or to
become due from Odwalla to the United States of America (the "Government") or
any other entities in accordance with the Plea Agreement in the event the
Government takes any action which the Bank, in its reasonable discretion,
determines is likely to result in a lien in favor of the Government on any of
Borrower's assets which is prior to the Bank's lien.
1.14 "Reserves" means the amount established by the Bank from time to
time in the Bank's reasonable judgment as a reserve against the Borrowing Base.
Without limiting the generality of the foregoing and the right of the Bank to
establish additional reserves in its reasonable judgment, Reserves shall
include, without limitation, the sum of (a) Bank Product Reserves, (b) the
amount of Grower Payables (i) which is subject to the trust established in favor
of growers by PACA or otherwise or (ii) which has a lien priority on the
Collateral senior to the lien granted to the Bank, (c) the Dilution Reserve, and
(d) the Plea Agreement Reserve.
2. LINE OF CREDIT: AMOUNT AND TERMS
2.1 Line of Credit Amount.
(a) During the availability period described below, the Bank
will provide a line of credit to the Borrowers. The amount of the line
of credit (the "Commitment") is equal to the lesser of (i) the Credit
Limit or (ii) the Borrowing Base as determined by the Bank from time to
time in accordance with this Agreement.
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(b) This is a revolving line of credit providing for cash
advances and letters of credit. During the availability period, the
Borrowers may repay principal amounts and reborrow them.
(c) The Borrowers agree not to permit the outstanding principal
balance of advances under the line of credit plus the outstanding
amounts of any letters of credit, including amounts drawn on letters of
credit and not yet reimbursed, to exceed the Commitment. If the
Borrowers exceed this limit, the Borrowers will immediately pay the
excess to the Bank upon the Bank's demand. The Bank may apply payments
received from the Borrowers under this paragraph to the obligations of
the Borrowers to the Bank in the order and the manner as the Bank, in
its discretion, may determine.
2.2 Availability Period. The line of credit is available between the
date of this Agreement and July 1, 2003, or such earlier date as the
availability may terminate as provided in this Agreement (the "Expiration
Date").
2.3 Conditions to Availability of Credit. In addition to the items
required to be delivered to the Bank under the paragraph entitled "Financial
Information" in the "Covenants" section of this Agreement and subject to Section
9.2, the Borrowers will promptly deliver the following to the Bank at such times
as may be requested by the Bank:
(a) a Borrowing Base certificate, in form and detail
satisfactory to the Bank, summarizing the Borrowers' accounts receivable
on which the requested extension of credit is to be based, together with
all supporting documentation required by the Bank in order to calculate
the Borrowing Base.
(b) copies of the record of invoices from each Borrower's sales
journal for such accounts receivable.
(c) copies of the purchase orders, shipping instructions, bills
of lading and other documentation pertaining to such accounts
receivable.
(d) copies of the cash receipts journal pertaining to the
Borrowing Base certificate.
2.4 Calculation of Borrowing Base. The Borrowing Base will be calculated
by the Bank upon receipt of the Borrowing Base certificate and all supporting
documentation required under this Agreement. The Bank will provide a borrowing
base calculation to the Borrowers setting forth its determination of the
Borrowing Base, which calculation will be conclusive and binding in the absence
of manifest error. The Borrowing Base as determined by the Bank will become
effective upon calculation by the Bank and will remain in effect until a new
Borrowing Base is calculated by the Bank in accordance with this Agreement.
2.5 Interest Rate.
(a) Unless the Borrowers elect an optional interest rate as
described below, the interest rate is a rate per year equal to the
Bank's Prime Rate plus the Applicable Margin as defined below.
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(b) The Prime Rate is the rate of interest publicly announced
from time to time by the Bank as its Prime Rate. The Prime Rate is set
by the Bank based on various factors, including the Bank's costs and
desired return, general economic conditions and other factors, and is
used as a reference point for pricing some loans. The Bank may price
loans to its customers at, above, or below the Prime Rate. Any change in
the Prime Rate shall take effect at the opening of business on the day
specified in the public announcement of a change in the Bank's Prime
Rate.
2.6 Repayment Terms.
(a) The Borrowers will pay interest on August 1, 2001, and then
monthly thereafter on the first banking day of each month until payment
in full of any principal outstanding under this line of credit.
(b) The Borrowers will repay in full all principal and any
unpaid interest or other charges outstanding under this line of credit
no later than the Expiration Date. Any interest period for an optional
interest rate (as described below) shall expire no later than the
Expiration Date.
(c) The Borrowers may prepay the loan in full or in part at any
time.
2.7 Optional Interest Rates. Instead of the interest rate based on the
Bank's Prime Rate, the Borrowers may elect the optional interest rates listed
below during interest periods agreed to by the Bank and the Borrowers. The
optional interest rates shall be subject to the terms and conditions described
later in this Agreement. Any principal amount bearing interest at an optional
rate under this Agreement is referred to as a "Portion." The following optional
interest rates are available:
(a) the IBOR Rate plus the Applicable Margin as defined below.
(b) the LIBOR Rate plus the Applicable Margin as defined below.
2.8 Applicable Margin. The Applicable Margin shall be the following
amounts per annum, based upon the ratio of total liabilities to tangible net
worth (as defined in the "Covenants" section of this Agreement), as set forth in
the most recent compliance certificate received by the Bank as required in the
Covenants section; provided, however, that, until the Bank receives the first
compliance certificate, such amounts shall be those indicated for pricing level
2 set forth below:
[Enlarge/Download Table]
Applicable Margin
(in basis points per annum)
-----------------------------------------------------
Total Liabilities/
Pricing Level Tangible Net Worth Prime + IBOR or LIBOR +
------------------ ---------------------------------- ----------------------- -----------------------------
1 X < .90 00 275
2 .90 </= X < 1.25 25 300
3 1.25 </= X 50 350
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The Applicable Margin shall be in effect from the date the most recent
compliance certificate is received by the Bank until the date the next
compliance certificate is received; provided, however, that if the Borrowers
fail to timely deliver the next compliance certificate, the Applicable Margin
from the date such compliance certificate was due until the date such compliance
certificate is received by the Bank shall be the highest pricing level set forth
above.
2.9 Letters of Credit.
(a) This line of credit may be used for financing:
(i) commercial letters of credit with a maximum maturity
not to extend more than 90 days beyond the Expiration Date. Each
commercial letter of credit will require drafts payable at
sight.
(ii) standby letters of credit with a maximum maturity
not to extend more than 90 days beyond the Expiration Date. The
standby letters of credit may not include a provision providing
that the maturity date will be automatically extended each year.
(iii) The amount of the combined commercial and standby
letters of credit outstanding at any one time (including amounts
drawn on the letters of credit and not yet reimbursed) may not
exceed Five Million and no/100 Dollars ($5,000,000.00).
(b) Each Borrower agrees:
(i) any sum drawn under a letter of credit or
outstanding may, at the option of the Bank, be added to the
principal amount outstanding under this Agreement. The amount
will bear interest and be due as described elsewhere in this
Agreement.
(ii) if there is an event of default under this
Agreement and the Bank has accelerated Borrowers' obligations
hereunder, to immediately arrange for any letters of credit
outstanding to be cancelled and to deposit with the Bank cash
collateral equal to the face amount of such letters of credit,
to the extent not so cancelled.
(iii) the issuance of any letter of credit and any
amendment to a letter of credit is subject to the Bank's written
approval and must be in form and content satisfactory to the
Bank and in favor of a beneficiary acceptable to the Bank.
(iv) to sign the Bank's form Application and Agreement
for Commercial Letter of Credit or Application and Agreement for
Standby Letter of Credit, as applicable.
(v) to pay any issuance and/or other fees that the Bank
notifies the Borrowers will be charged for issuing and
processing letters of credit for the Borrowers.
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(vi) to allow the Bank to automatically charge the
Designated Account for applicable fees, discounts, and other
charges.
3. OPTIONAL INTEREST RATES
3.1 Optional Rates. Each optional interest rate is a rate per year.
Interest will be paid on the last day of each interest period, and on the first
day of each month during the interest period. At the end of any interest period,
the interest rate will revert to the rate based on the Prime Rate, unless the
Borrowers have designated another optional interest rate for the Portion. No
Portion will be converted to a different interest rate during the applicable
interest period. Upon the occurrence and during the continuation of an event of
default under this Agreement, the Bank may terminate the availability of
optional interest rates for interest periods commencing after such event of
default occurs.
3.2 IBOR Rate. The election of IBOR Rates shall be subject to the
following terms and requirements:
(a) The interest period during which the IBOR Rate will be in
effect will be no shorter than 30 days and no longer than one year. The
last day of the interest period will be determined by the Bank using the
practices of the offshore dollar inter-bank market.
(b) Each IBOR Rate Portion will be for an amount not less than
One Million and no/100 Dollars ($1,000,000.00).
(c) The "IBOR Rate" means the interest rate determined by the
following formula, rounded upward to the nearest 1/100 of one percent.
(All amounts in the calculation will be determined by the Bank as of the
first day of the interest period.)
IBOR Rate = IBOR Base Rate
--------------------
(1.00 - Reserve Percentage)
Where,
(i) "IBOR Base Rate" means the interest rate at which
the Bank's Grand Cayman Banking Center, Grand Cayman, British
West Indies, would offer U.S. dollar deposits for the applicable
interest period to other major banks in the offshore dollar
inter-bank market.
(ii) "Reserve Percentage" means the total of the maximum
reserve percentages for determining the reserves to be
maintained by member banks of the Federal Reserve System for
Eurocurrency Liabilities, as defined in Federal Reserve Board
Regulation D, rounded upward to the nearest 1/100 of one
percent. The percentage will be expressed as a decimal, and will
include, but not be limited to, marginal, emergency,
supplemental, special, and other reserve percentages.
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(d) Each prepayment of an IBOR Rate Portion, whether voluntary,
by reason of acceleration or otherwise, will be accompanied by the
amount of accrued interest on the amount prepaid, and a prepayment fee
as described below. A "prepayment" is a payment of an amount on a date
earlier than the scheduled payment date for such amount as required by
this Agreement.
(e) The prepayment fee shall be in an amount sufficient to
compensate the Bank for any loss, cost or expense incurred by it as a
result of the prepayment, including any loss of anticipated profits and
any loss or expense arising from the liquidation or reemployment of
funds obtained by it to maintain such Portion or from fees payable to
terminate the deposits from which such funds were obtained. The
Borrowers shall also pay any customary administrative fees charged by
the Bank in connection with the foregoing. For purposes of this
paragraph, the Bank shall be deemed to have funded each Portion by a
matching deposit or other borrowing in the applicable interbank market,
whether or not such Portion was in fact so funded.
(f) The Bank will have no obligation to accept an election for
an IBOR Rate Portion if any of the following described events has
occurred and is continuing:
(i) Dollar deposits in the principal amount, and for
periods equal to the interest period, of an IBOR Rate Portion
are not available in the offshore dollar inter-bank market; or
(ii) the IBOR Rate does not accurately reflect the cost
of an IBOR Rate Portion.
3.3 LIBOR Rate. The election of LIBOR Rates shall be subject to the
following terms and requirements:
(a) The interest period during which the LIBOR Rate will be in
effect will be one, two, three, four, five, six, seven, eight, nine,
ten, eleven or twelve months. The first day of the interest period must
be a day other than a Saturday or a Sunday on which the Bank is open for
business in New York and London and dealing in offshore dollars (a
"LIBOR Banking Day"). The last day of the interest period and the actual
number of days during the interest period will be determined by the Bank
using the practices of the London inter-bank market.
(b) Each LIBOR Rate Portion will be for an amount not less than
One Million and no/100 Dollars ($1,000,000.00).
(c) The "LIBOR Rate" means the interest rate determined by the
following formula, rounded upward to the nearest 1/100 of one percent.
(All amounts in the calculation will be determined by the Bank as of the
first day of the interest period.)
LIBOR Rate = London Inter-Bank Offered Rate
------------------------------
(1.00 - Reserve Percentage)
Where,
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(i) "London Inter-Bank Offered Rate" means the average
per annum interest rate at which U.S. dollar deposits would be
offered for the applicable interest period by major banks in the
London inter-bank market, as shown on the Telerate Page 3750 (or
such other page as may replace it) at approximately 11:00 a.m.
London time two (2) London Banking Days before the commencement
of the interest period. If such rate does not appear on the
Telerate Page 3750 (or such other page that may replace it), the
rate for that interest period will be determined by such
alternate method as reasonably selected by Bank. A "London
Banking Day" is a day on which the Bank's London Banking Center
is open for business and dealing in offshore dollars.
(ii) "Reserve Percentage" means the total of the maximum
reserve percentages for determining the reserves to be
maintained by member banks of the Federal Reserve System for
Eurocurrency Liabilities, as defined in Federal Reserve Board
Regulation D, rounded upward to the nearest 1/100 of one
percent. The percentage will be expressed as a decimal, and will
include, but not be limited to, marginal, emergency,
supplemental, special, and other reserve percentages.
(d) The Borrowers shall irrevocably request a LIBOR Rate Portion
no later than 12:00 noon Pacific time on the LIBOR Banking Day preceding
the day on which the London Inter-Bank Offered Rate will be set, as
specified above. For example, if there are no intervening holidays or
weekend days in any of the relevant locations, the request must be made
at least three days before the LIBOR Rate takes effect.
(e) Each prepayment of a LIBOR Rate Portion, whether voluntary,
by reason of acceleration or otherwise, will be accompanied by the
amount of accrued interest on the amount prepaid and a prepayment fee as
described below. A "prepayment" is a payment of an amount on a date
earlier than the scheduled payment date for such amount as required by
this Agreement.
(f) The prepayment fee shall be in an amount sufficient to
compensate the Bank for any loss, cost or expense incurred by it as a
result of the prepayment, including any loss of anticipated profits and
any loss or expense arising from the liquidation or reemployment of
funds obtained by it to maintain such Portion or from fees payable to
terminate the deposits from which such funds were obtained. The
Borrowers shall also pay any customary administrative fees charged by
the Bank in connection with the foregoing. For purposes of this
paragraph, the Bank shall be deemed to have funded each Portion by a
matching deposit or other borrowing in the applicable interbank market,
whether or not such Portion was in fact so funded.
(g) The Bank will have no obligation to accept an election for a
LIBOR Rate Portion if any of the following described events has occurred
and is continuing:
(i) Dollar deposits in the principal amount, and for
periods equal to the interest period, of a LIBOR Rate Portion
are not available in the London inter-bank market; or
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(ii) the LIBOR Rate does not accurately reflect the cost
of a LIBOR Rate Portion.
4. FEES AND EXPENSES
4.1 Fees.
(a) Loan fee. The Borrowers agree to pay a loan fee in the
amount of Thirty-Five Thousand and no/100 Dollars ($35,000.00). This fee
is due on or before the date of this Agreement.
(b) Waiver Fee. If the Bank, at its discretion, agrees to waive
or amend any terms of this Agreement, the Borrowers will, at the Bank's
option, pay the Bank a fee for each waiver or amendment in an amount
advised by the Bank at the time the Borrowers request the waiver or
amendment. Nothing in this paragraph shall imply that the Bank is
obligated to agree to any waiver or amendment requested by the
Borrowers. The Bank may impose additional requirements as a condition to
any waiver or amendment.
4.2 Expenses. The Borrowers agree to repay the Bank within five business
days after demand for expenses that include, but are not limited to, filing,
recording and search fees, appraisal fees, title report fees, documentation
fees, and audit costs.
4.3 Reimbursement Costs.
(a) The Borrowers agree to reimburse the Bank within five
business days after demand for any reasonable expenses it incurs in the
preparation of this Agreement and any agreement or instrument required
by this Agreement. Expenses include, but are not limited to, reasonable
attorneys' fees, including any allocated costs of the Bank's in-house
counsel, and audit costs, including any allocated costs of the Bank's
in-house auditors.
(b) The Borrowers agree to reimburse the Bank within five
business days after demand for the cost of periodic audits of the
personal property collateral securing this Agreement, at such intervals
as the Bank may reasonably require, provided that so long as no event of
default exists, such audits, for which the Borrowers shall be charged,
shall be limited to two (2) in any one fiscal year of Borrowers. The
audits may be performed by employees of the Bank or by independent
auditors.
(c) The Borrowers agree to reimburse Bank within five business
days after demand for the cost of any appraisal of the personal property
collateral securing this Agreement which may be conducted by the Bank
after the occurrence of an event of default. The appraisals may be
performed by employees of the Bank or by independent appraisers.
5. COLLATERAL
5.1 Personal Property. The Borrowers' obligations to the Bank under this
Agreement will be secured by personal property the Borrowers now own or will own
in the future as listed below. The collateral is further defined in security
agreement(s) executed by the Borrowers. In
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addition, all personal property collateral securing this Agreement shall also
secure all other present and future obligations of the Borrowers or any one of
them to the Bank (including Bank Products but excluding any consumer credit
covered by the federal Truth in Lending law, unless the Borrowers has otherwise
agreed in writing). All personal property collateral securing any other present
or future obligations of the Borrowers or any one of them to the Bank shall also
secure this Agreement.
(a) Inventory.
(b) Receivables.
(c) Patents, trademarks and other general intangibles.
6. DISBURSEMENTS, PAYMENTS AND COSTS
6.1 Disbursements and Payments.
(a) Each payment by the Borrowers will be made at the Bank's
banking center (or other location) selected by the Bank from time to
time as designated in writing to any Borrower; and will be made in
immediately available funds, or such other type of funds selected by the
Bank.
(b) Each disbursement by the Bank and each payment by the
Borrowers will be evidenced by records kept by the Bank. In addition,
the Bank may, at its discretion, require the Borrowers to sign one or
more promissory notes.
6.2 Telephone and Telefax Authorization.
(a) The Bank may honor telephone or telefax instructions for
advances or repayments or for the designation of optional interest rates
and telefax requests for the issuance of letters of credit given, or
purported to be given, by any one of the individuals authorized to sign
agreements and instruments on behalf of each Borrower entered into in
connection with this Agreement, or any other individual designated by
any one of such authorized signers.
(b) Advances will be deposited in and repayments will be
withdrawn from Odwalla's account number 14759-00130, or such other
accounts with the Bank as designated in writing by the Borrowers.
(c) The Borrowers will indemnify and hold the Bank harmless from
all liability, loss, and costs in connection with any act resulting from
telephone or telefax instructions the Bank reasonably believes are made
by any individual authorized by the Borrowers to give such instructions.
This paragraph will survive this Agreement's termination, and will
benefit the Bank and its officers, employees, and agents.
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6.3 Direct Debit (Pre-Billing).
(a) The Borrowers agree that the Bank will debit Odwalla's
account number 14759-00130, or such other of the Borrowers' accounts
with the Bank as designated in writing by the Borrowers (the "Designated
Account") on the date each payment of interest and any fees from the
Borrowers becomes due (the "Due Date").
(b) Approximately 7 days prior to each Due Date, the Bank will
mail to the Borrowers a statement of the amounts that will be due on
that Due Date (the "Billed Amount"). The calculation will be made on the
assumption that no new extensions of credit or payments will be made
between the date of the billing statement and the Due Date, and that
there will be no changes in the applicable interest rate.
(c) The Bank will debit the Designated Account for the Billed
Amount, regardless of the actual amount due on that date (the "Accrued
Amount"). If the Billed Amount debited to the Designated Account differs
from the Accrued Amount, the discrepancy will be treated as follows:
(i) If the Billed Amount is less than the Accrued
Amount, the Billed Amount for the following Due Date will be
increased by the amount of the discrepancy. The Borrowers will
not be in default by reason of any such discrepancy.
(ii) If the Billed Amount is more than the Accrued
Amount, the Billed Amount for the following Due Date will be
decreased by the amount of the discrepancy.
Regardless of any such discrepancy, interest will continue to accrue
based on the actual amount of principal outstanding without compounding.
The Bank will not pay the Borrowers interest on any overpayment.
(d) The Borrowers will maintain sufficient funds in the
Designated Account to cover each debit. If there are insufficient funds
in the Designated Account on the date the Bank enters any debit
authorized by this Agreement, the Bank may reverse the debit.
6.4 Banking Days. Unless otherwise provided in this Agreement, a banking
day is a day other than a Saturday, Sunday or other day on which commercial
banks are authorized to close, or are in fact closed, in the state where the
Bank's lending office is located. All payments and disbursements which would be
due on a day which is not a banking day will be due on the next banking day. All
payments received on a day which is not a banking day will be applied to the
credit on the next banking day.
6.5 Taxes.
(a) If any payments to the Bank under this Agreement are made
from outside the United States, the Borrowers will not deduct any
foreign taxes from any payments they make to the Bank. If any such taxes
are imposed on any payments made by the Borrowers (including payments
under this paragraph), the Borrowers will pay the taxes
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and will also pay to the Bank, at the time interest is paid, any
additional amount which the Bank specifies as necessary to preserve the
after-tax yield the Bank would have received if such taxes had not been
imposed. The Borrowers will confirm that they have paid the taxes by
giving the Bank official tax receipts (or notarized copies) within 30
days after the due date.
(b) Payments made by the Borrowers to the Bank will be made
without deduction of United States withholding or similar taxes. If any
Borrower is required to pay U.S. withholding taxes, the Borrowers will
pay such taxes in addition to the amounts due to the Bank under this
Agreement. If the Borrowers fail to make such tax payments when due,
each Borrower indemnifies the Bank against any liability for such taxes,
as well as for any related interest, expenses, additions to tax, or
penalties asserted against or suffered by the Bank with respect to such
taxes.
6.6 Additional Costs. The Borrowers will pay the Bank, within five
business days after demand, for the Bank's costs or losses arising from any
statute or regulation, or any request or requirement of a regulatory agency
which is applicable to all national banks or a class of all national banks of
which the Bank is a party. The costs and losses will be allocated to the loan in
a manner determined by the Bank, using any reasonable method. The costs include
the following:
(a) any reserve or deposit requirements; and
(b) any capital requirements relating to the Bank's assets and
commitments for credit.
6.7 Interest Calculation. Except as otherwise stated in this Agreement,
all interest and fees, if any, will be computed on the basis of a 360-day year
and the actual number of days elapsed. This results in more interest or a higher
fee than if a 365-day year is used.
6.8 Default Rate. Upon the occurrence and during the continuance of any
event of default under this Agreement, principal amounts outstanding under this
Agreement will at the option of the Bank bear interest at a rate which is two
(2) percentage points higher than the rate of interest otherwise provided under
this Agreement. This will not constitute a waiver of any default.
6.9 Interest Compounding. At the Bank's sole option in each instance,
any interest, fees or costs which are not paid when due under this Agreement
shall bear interest from the due date at the rate of interest otherwise provided
under this Agreement. This may result in compounding of interest.
6.10 Overdrafts. At the Bank's sole option in each instance, the Bank
may do one of the following:
(a) The Bank may make advances under this Agreement to prevent
or cover an overdraft on any account of any Borrower with the Bank. Each
such advance will accrue interest from the date of the advance or the
date on which the account is overdrawn, whichever occurs first, at the
interest rate described in this Agreement.
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(b) The Bank may reduce the amount of credit otherwise available
under this Agreement by the amount of any overdraft on any account of
any Borrower with the Bank.
This paragraph shall not be deemed to authorize the Borrowers to create
overdrafts on any of the Borrowers' accounts with the Bank.
6.11 Payments in Kind. If the Bank requires delivery in kind of the
proceeds of collection of the Borrowers' accounts receivable as provided in any
security agreement required under this Agreement, such proceeds shall be
credited to interest, principal, and other sums owed to the Bank under this
Agreement in the order and proportion determined by the Bank in its sole
discretion. All such credits will be conditioned upon collection and any
returned items may, at the Bank's option, be charged to the Borrowers.
7. CONDITIONS
The Bank must receive the following items, in form and content
acceptable to the Bank, before it is required to extend any initial credit to
the Borrowers under this Agreement:
7.1 Authorizations. Evidence that the execution, delivery and
performance by each Borrower of this Agreement and any instrument or agreement
required under this Agreement have been duly authorized.
7.2 Governing Documents. A copy of each Borrower's articles of
incorporation.
7.3 Security Agreements. Signed original security agreements and
assignments which the Bank requires.
7.4 Perfection and Evidence of Priority. Except as provided in Section
9.26 hereof, financing statements and fixture filings (and any collateral in
which the Bank requires a possessory security interest), together with evidence
that the security interests and liens in favor of the Bank are valid and
enforceable.
7.5 Landlord's Waiver. Except as provided in Section 9.27 hereof, a
Consent to Removal from the owner of the real property located at 120 Stone Pine
Road, Half Moon Bay, California for the removal of any personal property
collateral located on the real property.
7.6 Insurance. Evidence of insurance coverage, as required in the
"Covenants" section of this Agreement.
7.7 Legal Opinion. A written opinion from the Borrowers' legal counsel,
covering such matters as the Bank may require. The legal counsel and the terms
of the opinion must be acceptable to the Bank.
7.8 Good Standing. Certificates of good standing for each Borrower from
its state of formation.
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7.9 Payment of Fees. Payment of all accrued and unpaid expenses then due
incurred by the Bank as required by the paragraph entitled "Reimbursement
Costs."
7.10 Other Items. Any other items that the Bank reasonably requires.
8. REPRESENTATIONS AND WARRANTIES
When the Borrowers sign this Agreement, and until the Bank is repaid in
full, each Borrower makes the following representations and warranties. Each
request for an extension of credit constitutes a renewal of these
representations and warranties as of the date of the request:
8.1 Organization of Borrower. Each Borrower is a corporation duly formed
and existing under the laws of the state where organized.
8.2 Authorization. This Agreement, and any instrument or agreement
required hereunder, are within each Borrower's powers, have been duly
authorized, and do not conflict with any of its organizational papers.
8.3 Enforceable Agreement. This Agreement is a legal, valid and binding
agreement of each Borrower, enforceable against each Borrower in accordance with
its terms, and any instrument or agreement required hereunder, when executed and
delivered, will be similarly legal, valid, binding and enforceable.
8.4 Good Standing. As of the date of this Agreement each Borrower is
qualified to do business in those states listed on Schedule 8.4, and after the
date of this Agreement each Borrower is qualified to do business and in good
standing in all states where the nature of its business makes such qualification
necessary except where the failure to be so qualified and in good standing would
not have any material adverse effect on the business, condition (financial or
otherwise), operations, properties or prospects of Borrowers, taken as a whole,
or on any Borrower's ability to repay the credit ("Material Adverse Effect").
8.5 No Conflicts. This Agreement does not conflict with any material
law, agreement, or obligation by which any Borrower is bound.
8.6 Financial Information. All financial and other information that has
been or will be supplied to the Bank presents fairly Odwalla's financial
condition on a consolidated basis, including all material contingent
liabilities. Since the date of the most recent financial statement provided to
the Bank, there has been no material adverse change in the business condition
(financial or otherwise), operations, properties or prospects of the Borrowers,
taken as a whole.
8.7 Lawsuits. Except as set forth in Schedule 8.7, there is no lawsuit,
tax claim or other dispute pending or to Borrower's knowledge threatened against
the Borrowers or any one of them which, if lost, would have a Material Adverse
Effect.
8.8 Collateral. All collateral required in this Agreement is owned by
the grantor of the security interest free of any title defects or any liens or
interests of others other than liens in favor of the Bank and the Growers' Liens
(as hereinafter defined).
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8.9 Permits, Franchises. Except where such failure would not have a
Material Adverse Effect, each Borrower possesses all permits, memberships,
franchises, contracts and licenses required and all trademark rights, trade name
rights, patent rights and fictitious name rights necessary to enable it to
conduct the business in which it is now engaged.
8.10 Other Obligations. No Borrower is in default on any obligation for
borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation.
8.11 Tax Matters. No Borrower is subject to limitations on its
entitlement to deduct interest for federal income tax purposes under Section
163(j) of the Internal Revenue Code of 1986 (known as the "earnings stripping"
provisions) and has no knowledge of any pending assessments or adjustments of
its income tax for any year and all taxes due in excess of $50,000.00 have been
paid except taxes which are being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with generally
accepted accounting principles, consistently applied, are being maintained.
8.12 No Tax Avoidance Plan. The Borrowers' obtaining of credit from the
Bank under this Agreement does not have as a principal purpose the avoidance of
U.S. withholding taxes.
8.13 No Event of Default. There is no event which is, or with notice or
lapse of time or both would be, an event of default under this Agreement.
8.14 Insurance. The Borrowers have obtained, and maintained in effect,
the insurance coverage required in the "Covenants" section of this Agreement.
8.15 ERISA Plans.
(a) Each Plan (other than a multiemployer plan) is in compliance
in all material respects with the applicable provisions of ERISA, the
Code and other federal or state law. Each Plan has received a favorable
determination letter from the IRS and to the best knowledge of the
Borrowers, nothing has occurred which would cause the loss of such
qualification. Each Borrower has fulfilled its obligations, if any,
under the minimum funding standards of ERISA and the Code with respect
to each Plan, and has not incurred any liability with respect to any
Plan under Title IV of ERISA.
(b) There are no claims, lawsuits or actions (including by any
governmental authority), and there has been no prohibited transaction or
violation of the fiduciary responsibility rules, with respect to any
Plan which has resulted or could reasonably be expected to result in a
material adverse effect.
(c) With respect to any Plan subject to Title IV of ERISA:
(i) No reportable event has occurred under Section
4043(c) of ERISA for which the PBGC requires 30-day notice.
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(ii) No action by any Borrower or any ERISA Affiliate to
terminate or withdraw from any Plan has been taken and no notice
of intent to terminate a Plan has been filed under Section 4041
of ERISA.
(iii) No termination proceeding has been commenced with
respect to a Plan under Section 4042 of ERISA, and no event has
occurred or condition exists which might constitute grounds for
the commencement of such a proceeding.
(d) The following terms have the meanings indicated for purposes
of this Agreement:
(i) "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(ii) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time.
(iii) "ERISA Affiliate" means any trade or business
(whether or not incorporated) under common control with any
Borrower within the meaning of Section 414(b) or (c) of the
Code.
(iv) "PBGC" means the Pension Benefit Guaranty
Corporation.
(v) "Plan" means a pension, profit-sharing, or stock
bonus plan intended to qualify under Section 401(a) of the Code,
maintained or contributed to by any Borrower or any ERISA
Affiliate, including any multiemployer plan within the meaning
of Section 4001(a)(3) of ERISA.
8.16 Location of Borrower. Odwalla's place of business (or, if Odwalla
has more than one place of business, its chief executive office) is located at
the address listed under the Odwalla's signature on this Agreement and Fresh
Samantha's place of business (or if Fresh Samantha has more than one place of
business, its chief executive office) is located at the address listed under
Fresh Samantha's signature on this Agreement.
8.17 Plea Agreement. Except for payments of $124,998.00 due on each of
September 1, 2001, March 1, 2002, September 1, 2002 and March 1, 2003 and a
payment of $49,998.00 due on September 1, 2003, Odwalla has no current or future
financial obligations under the Plea Agreement. Odwalla is in compliance with
all provisions of the Plea Agreement, and the lien, if any, on Odwalla's assets
in favor of the Government has been subordinated to the lien on Borrowers'
assets in favor of the Bank.
9. COVENANTS
The Borrowers agree, so long as credit is available under this Agreement
and until the Bank is repaid in full:
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9.1 Use of Proceeds. To use the proceeds of the credit only for short
term working capital, repayment of existing indebtedness, general corporate
purposes and the issuance of letters of credit in the normal course of business.
9.2 Financial Information. To provide the following financial
information and statements in form and content acceptable to the Bank, and such
additional information as requested by the Bank from time to time:
(a) Within 95 days of the Borrowers' fiscal year end, the
Odwalla's annual financial statements. These financial statements must
be audited (with an unqualified opinion) by a Certified Public
Accountant acceptable to the Bank. The statements shall be prepared on a
consolidated basis.
(b) Within 45 days of the period's end (60 days in the case of
the last period in each fiscal year), the Odwalla's quarterly financial
statements, certified and dated by an authorized financial officer.
These financial statements may be Borrower prepared. The statements
shall be prepared on a consolidated basis.
(c) Promptly, upon sending or receipts, copies of any management
letters sent or received by any Borrower to or from such Borrower's
auditor.
(d) Copies of Odwalla's Form 10-K Annual Report, Form 10-Q
Quarterly Report and Form 8-K Current Report within 5 days after the
date of filing with the Securities and Exchange Commission.
(e) Within the period(s) provided in (a) and (b) above, a
compliance certificate signed by an authorized financial officer of
Odwalla setting forth (i) the information and computations (in
sufficient detail) to establish that Odwalla, on a consolidated basis,
is in compliance with all financial covenants at the end of the period
covered by the financial statements then being furnished and (ii) to the
knowledge of such person, whether there existed as of the date of such
financial statements and whether there exists as of the date of the
certificate, any default or event of default under this Agreement and,
if any such default exists, specifying the nature thereof and the action
the Borrowers are taking and proposes to take with respect thereto.
(f) A Borrowing Base certificate summarizing the Borrowers'
accounts receivable and Grower Payables as of the last day of each month
within 30 days after month end and, upon the Bank's request, copies of
the record of invoices from each Borrower's sales journal for such
accounts, copies of the purchase orders, shipping instructions, bills of
lading and other documentation pertaining to such accounts, and copies
of the cash receipts journal pertaining to the collateral certificate.
(g) A detailed aging by invoice and a summary aging by account
debtor of the combined receivables of Borrowers within thirty (30) days
after the end of each month.
(h) A summary aging by vendor of accounts payable, including
Grower Payables, within thirty (30) days after the end of each month.
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(i) If the Bank requires the Borrowers to deliver the proceeds
of accounts receivable to the Bank upon collection by the Borrowers, a
schedule of the amounts so collected and delivered to the Bank.
(j) A listing of the names and addresses of all debtors
obligated upon each Borrower's accounts receivable within thirty (30)
days after the end of each of Borrowers' fiscal years.
(k) Copies of all letters of credit issued in support of the
Borrowers' accounts receivable.
(l) Promptly upon the Bank's request, such other books, records,
statements, lists of property and accounts, budgets, forecasts or
reports as to the Borrowers and as to each guarantor of the Borrowers'
obligations to the Bank as the Bank may reasonably request.
Notwithstanding the foregoing, so long as the aggregate of outstanding advances
and letters of credit is at no time greater than $2,000,000.00, Borrowers shall
only be obligated to deliver the items described in clauses (f), (g) and (h)
above on or before the date forty-five (45) days after the end of each fiscal
quarter of the Borrowers, provided, however, that at such time Borrowers shall
deliver the items described in clauses (f), (g) and (h) for the current month
and each of the two (2) previous months.
9.3 Quick Ratio. Odwalla must maintain on a consolidated basis a ratio
of quick assets to current liabilities of at least .70:1.0 as of the last day of
each of Borrowers' fiscal quarters:
"Quick assets" means cash, short-term cash investments in non-affiliated
entities, net trade receivables and marketable securities not classified as
long-term investments. "Current liabilities" shall include all obligations
classified as current liabilities under generally accepted accounting
principles, plus all principal amounts outstanding under revolving lines of
credit, whether classified as current or long-term, which are not already
included above.
9.4 Total Liabilities to Tangible Net Worth. Odwalla must maintain on a
consolidated basis a ratio of total liabilities to tangible net worth not
exceeding 1.25:1.0 as of the last day of each of Borrowers' fiscal quarters:
"Total liabilities" means the sum of current liabilities plus long term
liabilities.
"Tangible net worth" means the gross book value of the Borrowers' assets
(excluding goodwill, patents, trademarks, trade names, organization expense,
unamortized debt discount and expense, capitalized or deferred research and
development costs, deferred marketing expenses, deferred receivables, and other
like intangibles, and monies due from Affiliates in excess of $50,000.00, and
monies due from officers or directors of the Borrowers less total liabilities,
including but not limited to accrued and deferred income taxes, and any reserves
against assets.
9.5 Fixed Charge Coverage Ratio. Odwalla must maintain on a consolidated
basis a Fixed Charge Coverage Ratio of at least 1.50:1.0.
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"Fixed Charge Coverage Ratio" means the ratio of (a) the sum of EBITDA, minus
capital expenditures incurred during such period which are not financed by third
party financiers, to (b) the sum of the current portion of long term debt
(including the current portion of capital leases) plus interest expense plus
cash taxes paid. "EBITDA" means the sum of net income (or net loss) before
taxes, plus interest expense (less interest income), plus depreciation plus
amortization (excluding restructuring charges in the fiscal quarter ended March
3, 2001 and charges related to the closing of the Borrowers' facility in Saco,
Maine, not to exceed $3,500,000.00). This ratio will be calculated at the end of
each fiscal quarter, using the results of that quarter and each of the 3
immediately preceding quarters.
9.6 Limitation on Losses. Not incur on a consolidated basis a net loss
before taxes and extraordinary items in any 2 consecutive quarterly accounting
periods after the quarterly accounting period ending December 2, 2000.
9.7 Other Debts. Not to have outstanding or incur any direct or
contingent indebtedness (other than those to the Bank), or become liable for the
indebtedness of others, without the Bank's written consent. This does not
prohibit:
(a) Acquiring goods, supplies, or merchandise on normal trade
credit and other trade payables incurred in the ordinary course of
business.
(b) Endorsing negotiable instruments received in the usual
course of business.
(c) Obtaining surety bonds in the usual course of business.
(d) Indebtedness existing on the date of this Agreement and
listed on Schedule 9.7 and any renewals, extensions or replacements
thereof.
(e) Purchase money indebtedness (including capital leases) in
equipment and other fixed assets acquired after the date of this
Agreement in an aggregate amount not greater than $ 2,000,000.00 and any
renewals, extensions or replacements thereof.
9.8 Other Liens. Not to create, assume, or allow any security interest
or lien (including judicial liens) on property any Borrower now or later owns,
except the following ("Permitted Liens"):
(a) Liens and security interests in favor of the Bank.
(b) Liens for taxes not yet due or which are being contested by
any Borrower in good faith by appropriate proceedings for which adequate
reserves in accordance with generally accepted accounting principles,
consistently applied, are being maintained provided no such lien shall
be prior to the Bank's lien provided by this Agreement.
(c) Purchase money security interests in equipment and other
fixed assets existing on the date of this Agreement and listed in
Schedule 9.8 and any renewals, extensions or replacements thereof.
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(d) Additional purchase money security interests in equipment or
other personal property fixed assets acquired after the date of this
Agreement to secure the indebtedness permitted by Section 9.7(e),
provided such liens may only secure the property being acquired and any
renewals, extensions or replacements thereof.
(e) Liens of carriers', warehousemen's, materialmen's and
mechanics' and other similar liens imposed by law arising in ordinary
course of business which are not delinquent or which are being contested
by any Borrower in good faith by appropriate proceedings for which
adequate reserves in accordance with generally accepted accounting
principles, consistently applied, are being maintained provided no such
lien shall be prior to the Bank's lien provided by this Agreement.
(f) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security legislation.
(g) Liens arising by operation of law and in the ordinary course
of the Borrowers' business securing amounts the Borrowers owe to growers
of agricultural products purchased by Borrowers for resale, processing
or use in producing Borrowers' inventory, provided such obligations are
not past due ("Growers' Liens").
9.9 Capital Expenditures. Not to spend in Capital Expenditures more than
$6,500,000.00 in Borrowers' fiscal year 2001 or more than $7,500,000.00 in
Borrowers' fiscal year 2002, excluding any capital amounts spent by Borrowers to
expand their facility in Loxahatchee, Florida. "Capital Expenditures" means
capital expenditures as reported in the Statement of Cash Flows in Odwalla's
annual financial statements audited (with an unqualified opinion) by a Certified
Public Accountant acceptable to Bank and prepared in accordance with generally
accepted accounting principles, consistently applied.
9.10 Dividends. Not to declare or pay any dividends on any of the
Borrowers' shares except dividends payable in capital stock of Odwalla, and
except as Borrowers may be obligated on the date of this Agreement, not to
purchase, redeem or otherwise acquire for value any of the Borrowers' shares, or
create any sinking fund in relation thereto except (a) in exchange for or upon
conversion of any warrants, options or other rights to purchase capital stock
and (b) any purchase of any shares from directors, officers or employees, the
total of (a) and (b) not to exceed $100,000.00 in any one fiscal year.
9.11 Loans and Investments. Not to have any existing, or make any new,
loans or other extensions of credit to, or investments in, any individual or
entity, or make any capital contributions or other transfers of assets to, any
individual or entity, except for:
(a) extensions of credit in the nature of accounts receivable or
notes receivable arising from the sale or lease of goods or services in
the ordinary course of business.
(b) investments in any of the following:
(i) certificates of deposit;
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(ii) U.S. treasury bills and other obligations of the
federal government.
(c) advances between Odwalla and Fresh Samantha.
(d) investments in the form of loans or advances to officers,
employees and agents in the ordinary course of business and consistent
with Borrower's usual and customary practice for travel expenses,
entertainment expenses, relocation expenses and other similar
business-related expenses, in no case to exceed $250,000.00 in the
aggregate.
(e) investments outstanding on the date of this Agreement
disclosed in writing to the Bank on Schedule 9.11.
(f) other investments not otherwise described above provided
that the aggregate amount of all such investments made from time to time
after the date of this Agreement shall not exceed $500,000.00.
9.12 Change of Ownership. Not to cause, permit, or suffer any person not
a shareholder on the date of this Agreement to own, directly or indirectly, in
excess of 15% of Odwalla's capital ownership and not to cause, permit or suffer
any shareholder on the date of this Agreement to acquire, directly or
indirectly, in excess of an additional 15% of Odwalla's capital ownership.
9.13 Notices to Bank. To promptly notify the Bank in writing of:
(a) any lawsuit over Five Hundred Thousand and no/100 Dollars
($500,000.00) against the Borrowers (or any guarantor) that could
reasonably be expected to have a Material Adverse Effect.
(b) any substantial dispute between any Borrower and any
government authority that could reasonably be expected to have a
Material Adverse Effect.
(c) any event of default under this Agreement, or any event
which, with notice or lapse of time or both, would constitute an event
of default.
(d) any material adverse change in the Borrowers', taken as a
whole, business condition (financial or otherwise), operations,
properties or prospects, or ability to repay the credit.
(e) any change in any Borrower's name, legal structure, place of
business, or chief executive office if such Borrower has more than one
place of business.
(f) any actual contingent liabilities of any Borrower, and any
such contingent liabilities which are reasonably foreseeable, where such
liabilities are in excess of Two Hundred Fifty Thousand and no/100
Dollars ($250,000.00) in the aggregate.
9.14 Books and Records. To maintain adequate books and records.
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9.15 Audits. To allow the Bank and its agents to inspect the Borrowers'
properties and examine, audit, and make copies of books and records at any
reasonable time. If any of the Borrowers' properties, books or records are in
the possession of a third party, the Borrowers authorize that third party to
permit the Bank or its agents to have access to perform inspections or audits
and to respond to the Bank's requests for information concerning such
properties, books and records.
9.16 Compliance with Laws. To comply with the laws (including any
fictitious name statute), regulations, and orders of any government body with
authority over each Borrower's business except to the extent such failure to
comply would have a Material Adverse Effect.
9.17 Preservation of Rights. To maintain and preserve all rights,
privileges, and franchises each Borrower now has unless any such Borrower
determines in its reasonable business judgment that any such rights, privileges
or franchises are no longer needed.
9.18 Maintenance of Properties. To make any repairs, renewals, or
replacements to keep each Borrower's properties in good working condition.
9.19 Perfection of Liens. To help the Bank perfect and protect its
security interests and liens, and reimburse it for related costs it incurs to
protect its security interests and liens.
9.20 Cooperation. To take any action reasonably requested by the Bank to
carry out the intent of this Agreement.
9.21 Insurance.
(a) Insurance Covering Collateral. To maintain all risk property
damage insurance policies covering the tangible property comprising the
collateral. Each insurance policy must be in an amount acceptable to the
Bank. The insurance must be issued by an insurance company with an A.M.
Best's rating of "A+" or better and must include a lender's loss payable
endorsement in favor of the Bank in a form acceptable to the Bank.
(b) General Business Insurance. To maintain insurance as is
usual for the business it is in with the Bank named as an additional
loss payee.
(c) Business Interruption Insurance. To maintain a business
interruption insurance policy for at least Fifty Million and no/100
Dollars ($50,000,000.00) with an insurer with an A.M. Best's rating of
"A+" or better, and with the Bank named as an additional loss payee.
(d) Evidence of Insurance. Upon the request of the Bank, to
deliver to the Bank a copy of each insurance policy, or, if permitted by
the Bank, a certificate of insurance listing all insurance in force.
9.22 Additional Negative Covenants. Not to, without the Bank's written
consent:
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(a) engage in any business activities substantially different
from the Borrowers' or any Borrower's present business or reasonably
related ancillary or complementary thereto.
(b) liquidate or dissolve the Borrowers' or any Borrower's
business.
(c) enter into any consolidation, merger, or other combination,
or become a partner in a partnership, a member of a joint venture, or a
member of a limited liability company.
(d) sell, assign, lease, transfer or otherwise dispose of any
accounts receivable or enter into any agreement to do so or sell,
assign, lease transfer or otherwise dispose of any inventory (except in
the ordinary course of business) or any part of the Borrowers' or any
Borrower's business or the Borrowers' or any Borrower's assets (except
in the ordinary course of business), or enter into any agreement to do
so, or sell, assign, lease, transfer or otherwise dispose of assets for
less than fair market value, or enter into any agreement to do so, other
than any disposition of (i) assets that are obsolete, worn-out or no
longer useful in such business and (ii) any disposition in connection
with the closing of the Borrowers' facility in Saco, Maine.
(e) enter into any sale and leaseback agreement covering any of
its fixed assets.
(f) acquire or purchase a business or its assets or acquire any
subsidiaries.
(g) voluntarily suspend its business for more than 7 days in any
365 day period.
(h) transfer any of the Borrowers' assets to a trust.
9.23 Bank as Principal Depository. On or before the date that is 30 days
after the date of this Agreement, to maintain the Bank as the Borrowers'
principal depository bank, including for the maintenance of business, cash
management, operating and administrative deposit accounts.
9.24 ERISA Plans. With respect to a Plan subject to Title IV of ERISA,
to give prompt written notice to the Bank of:
(a) The occurrence of any reportable event under Section 4043(c)
of ERISA for which the PBGC requires 30-day notice.
(b) Any action by any Borrower or any ERISA Affiliate to
terminate or withdraw from a Plan or the filing of any notice of intent
to terminate under Section 4041 of ERISA.
(c) The commencement of any proceeding with respect to a Plan
under Section 4042 of ERISA.
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9.25 Consignments. Prior to placement of any inventory on consignment
with any person ("Consignee"):
(a) To provide the Bank with all consignment agreements and
other documents to be used in connection with such consignment, all of
which must be acceptable to the Bank;
(b) To file appropriate financing statements with respect to the
consigned inventory showing the Consignee as debtor, the Borrower(s) as
secured party, and the Bank as assignee of secured party;
(c) To file appropriate financing statements with respect to the
consigned inventory showing the Borrower(s) as debtor and the Bank as
secured party;
(d) After all financing statements referred to above have been
filed, to conduct a search of all filings made against the Consignee in
all jurisdictions in which the consigned inventory is to be located, and
deliver to the Bank copies of the results of all such searches;
(e) To notify, in writing, all creditors of the Consignee which
are or may be holders of security interests in the inventory to be
consigned that the Borrower(s) expect(s) to deliver certain inventory to
the Consignee, all of which inventory shall be described in such notice
by item or type.
9.26 Patent and Trademark Filings. On or before the date which is 90
days after the date of this Agreement, Borrowers shall duly execute and deliver
to Bank all security agreements, in form and substance satisfactory to Bank,
granting Bank a security interest in all of Borrowers' patents and trademarks
and Borrowers shall cause to be filed, at Borrowers' expense, all patent and
trademark filings, in form and substance satisfactory to Bank, required to
perfect Bank's first priority lien in such patents and trademarks and shall
furnish Bank with evidence satisfactory to Bank thereof. Borrowers shall
promptly reimburse Bank within five business days after demand for all expenses
incurred by Bank in connection with such filings.
9.27 Landlord's Waiver. On or before the date which is 30 days after the
date of this Agreement, Borrowers shall cause to be executed and delivered to
Bank by the owner of the real property at 120 Stone Pine Road, Half Moon Bay,
California, a consent for the removal of any personal property collateral
located on such real property, in form and substance satisfactory to Bank.
10. HAZARDOUS SUBSTANCES
10.1 Site Visits, Observations and Testing. The Bank and its agents and
representatives will have the right at any reasonable time, after giving
reasonable notice to the Borrowers, to enter and visit any locations where the
collateral securing this Agreement (the "Collateral") is located for the
purposes of observing the Collateral, taking and removing environmental samples,
and conducting tests. The Bank will make reasonable efforts during any site
visit, observation or testing conducted pursuant this paragraph to avoid
interfering with the Borrowers' use of the Collateral. The Bank is under no duty
to observe the Collateral or to
-26-
conduct tests, and any such acts by the Bank will be solely for the purposes of
protecting the Bank's security and preserving the Bank's rights under this
Agreement. No site visit, observation or testing or any report or findings made
as a result thereof ("Environmental Report") (i) will result in a waiver of any
default of the Borrowers; (ii) impose any liability on the Bank; or (iii) be a
representation or warranty of any kind regarding the Collateral (including its
condition or value or compliance with any laws) or the Environmental Report
(including its accuracy or completeness). In the event the Bank has a duty or
obligation under applicable laws, regulations or other requirements to disclose
an Environmental Report to the Borrowers or any other party, the Borrowers
authorize the Bank to make such a disclosure. The Borrowers further understands
and agree that any Environmental Report or other information regarding a site
visit, observation or testing that is disclosed to the Borrowers by the Bank or
its agents and representatives is to be evaluated (including any reporting or
other disclosure obligations of the Borrowers) by the Borrowers without advice
or assistance from the Bank.
10.2 Definition of Hazardous Substances. "Hazardous substances" means
any substance, material or waste that is or becomes designated or regulated as
"toxic," "hazardous," "pollutant," or "contaminant" or a similar designation or
regulation under any federal, state or local law (whether under common law,
statute, regulation or otherwise) or judicial or administrative interpretation
of such, including without limitation petroleum or natural gas. This indemnity
will survive repayment of the Borrowers' obligations to the Bank.
11. DEFAULT
If any of the following events (each an "event of default") occurs, the
Bank may do one or more of the following: declare the Borrowers in default, stop
making any additional credit available to the Borrowers, and require the
Borrowers to repay their entire debt immediately and without prior notice. If an
event of default occurs under the paragraph entitled "Bankruptcy," below, with
respect to any Borrower, then the entire debt outstanding under this Agreement
will automatically be due immediately.
11.1 Failure to Pay. Any Borrower fails to make a payment under this
Agreement when due.
11.2 Lien Priority. The Bank fails to have an enforceable first lien
(except for any Growers' Liens) on or security interest in any property given as
security for this Agreement (or any guaranty).
11.3 False Information. Any Borrower has given the Bank materially false
or misleading information or representations.
11.4 Bankruptcy. Any Borrower or any general partner of any Borrower
files a bankruptcy petition, a bankruptcy petition is filed against any Borrower
or any general partner of any Borrower which is not discharged within 60 days of
filing, or any Borrower or any general partner of any Borrower makes a general
assignment for the benefit of creditors.
11.5 Receivers. A receiver or similar official is appointed for a
substantial portion of any Borrower's business, or the business is terminated.
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11.6 Lawsuits. Any lawsuit or lawsuits are filed against any one or more
of the Borrowers which in the reasonable judgment of the Borrowers would result
in a judgment in excess of Two Hundred Fifty Thousand and no/100 Dollars
($250,000.00) or more in excess of any insurance coverage.
11.7 Judgments. Any final judgments or arbitration awards are entered
against any one or more of the Borrowers, or any one or more of the Borrowers
enters into any settlement agreements with respect to any litigation or
arbitration, in an aggregate amount of Two Hundred Fifty Thousand and no/100
Dollars ($250,000.00) or more in excess of any insurance coverage, which is not
dismissed, discharged, satisfied, stayed or bonded pending appeal within 30 days
thereof, provided, however, that any judgment, arbitration award, or settlement
with respect thereto which creates a lien on the collateral granted to the Bank
under this Agreement shall be an event of default.
11.8 Government Action. Any government authority takes action that the
Bank believes materially adversely affects Borrowers' financial condition, taken
as a whole, or ability to repay.
11.9 Material Adverse Change. A material adverse change occurs in
Borrowers' business condition (financial or otherwise), operations, properties
or prospects, taken as a whole, or ability to repay the credit.
11.10 Cross-default. Any default occurs by any Borrower under any
agreement in connection with any credit any Borrower has obtained from anyone
else, or which any Borrower has guaranteed which would permit the creditor
thereunder to accelerate any obligation or obligations in an aggregate amount
exceeding $250,000.00, or any default occurs by Odwalla under the Plea
Agreement.
11.11 Other Bank Agreements. Any Borrower fails to meet the conditions
of, or fails to perform any obligation under any other agreement any Borrower
has with the Bank or any affiliate of the Bank. If, in the Bank's opinion, the
breach is capable of being remedied, the breach, unless such breach is a failure
to make any payment when due, will not be considered an event of default under
this Agreement for a period of ten (10) days after the date on which the Bank
gives written notice of the breach to the Borrowers; provided, however, that the
Bank will not be obligated to extend any additional credit to the Borrowers
during that period.
11.12 ERISA Plans. Any one or more of the following events occurs with
respect to a Plan of any Borrower subject to Title IV of ERISA, provided such
event or events could reasonably be expected, in the reasonable judgment of the
Bank, to subject such Borrower to any tax, penalty or liability (or any
combination of the foregoing) which, in the aggregate, could have a material
adverse effect on the financial condition of such Borrower:
(a) A reportable event shall occur under Section 4043(c) of
ERISA with respect to a Plan.
(b) Any Plan termination (or commencement of proceedings to
terminate a Plan) or the full or partial withdrawal from a Plan by such
Borrower or any ERISA Affiliate.
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11.13 Other Breach Under Agreement. Any Borrower fails to meet the
conditions of, or fails to perform any obligation under, any term of this
Agreement not specifically referred to in this Article or any default occurs
under any guaranty, subordination agreement, security agreement, deed of trust,
mortgage, or other document required by or delivered in connection with this
Agreement or any such document is no longer in effect, or any guarantor purports
to revoke or disavow the guaranty. This includes any failure by any Borrower to
comply with any financial covenants set forth in this Agreement, whether such
failure is evidenced by financial statements delivered to the Bank or is
otherwise known to any Borrower or the Bank. If the breach is capable of being
remedied, the breach will not be considered an event of default under this
Agreement for a period of ten (10) days after the date on which the Bank gives
written notice of the breach to such Borrower; provided, however, that the Bank
will not be obligated to extend any additional credit to the Borrowers during
that period.
12. ENFORCING THIS AGREEMENT; MISCELLANEOUS
12.1 GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made under
generally accepted accounting principles, consistently applied.
12.2 California Law. This Agreement is governed by California law.
12.3 Successors and Assigns. This Agreement is binding on the Borrower's
and the Bank's successors and assignees. The Borrower agrees that it may not
assign this Agreement without the Bank's prior consent.
12.4 Arbitration and Waiver of Jury Trial.
(a) This paragraph concerns the resolution of any controversies
or claims between one or more of the Borrowers and the Bank, whether
arising in contract, tort or by statute, including but not limited to
controversies or claims that arise out of or relate to: (i) this
Agreement (including any renewals, extensions or modifications); or (ii)
any document related to this Agreement (collectively a "Claim").
(b) At the request of any Borrower or the Bank, any Claim shall
be resolved by binding arbitration in accordance with the Federal
Arbitration Act (Title 9, U. S. Code) (the "Act"). The Act will apply
even though this Agreement provides that it is governed by the law of a
specified state.
(c) Arbitration proceedings will be determined in accordance
with the Act, the applicable rules and procedures for the arbitration of
disputes of JAMS or any successor thereof ("JAMS"), and the terms of
this paragraph. In the event of any inconsistency, the terms of this
paragraph shall control.
(d) The arbitration shall be administered by JAMS and conducted
in any U. S. state where real or tangible personal property collateral
for this credit is located or if there is no such collateral, in
California. All Claims shall be determined by one arbitrator; however,
if Claims exceed Five Million Dollars ($5,000,000), upon the request of
any party, the Claims shall be decided by three arbitrators. All
arbitration hearings shall
-29-
commence within ninety (90) days of the demand for arbitration and close
within ninety (90) days of commencement and the award of the
arbitrator(s) shall be issued within thirty (30) days of the close of
the hearing. However, the arbitrator(s), upon a showing of good cause,
may extend the commencement of the hearing for up to an additional sixty
(60) days. The arbitrator(s) shall provide a concise written statement
of reasons for the award. The arbitration award may be submitted to any
court having jurisdiction to be confirmed and enforced.
(e) The arbitrator(s) will have the authority to decide whether
any Claim is barred by the statute of limitations and, if so, to dismiss
the arbitration on that basis. For purposes of the application of the
statute of limitations, the service on JAMS under applicable JAMS rules
of a notice of Claim is the equivalent of the filing of a lawsuit. Any
dispute concerning this arbitration provision or whether a Claim is
arbitrable shall be determined by the arbitrator(s). The arbitrator(s)
shall have the power to award legal fees pursuant to the terms of this
Agreement.
(f) This paragraph does not limit the right of the Borrowers or
the Bank to: (i) exercise self-help remedies, such as but not limited
to, setoff; (ii) initiate judicial or nonjudicial foreclosure against
any real or personal property collateral; (iii) exercise any judicial or
power of sale rights, or (iv) act in a court of law to obtain an interim
remedy, such as but not limited to, injunctive relief, writ of
possession or appointment of a receiver, or additional or supplementary
remedies.
(g) The procedure described above will not apply if the Claim,
at the time of the proposed submission to arbitration, arises from or
relates to an obligation to the Bank secured by real property. In this
case, both the Borrowers and the Bank must consent to submission of the
Claim to arbitration. If both parties do not consent to arbitration, the
Claim will be resolved as follows: The Borrowers and the Bank will
designate a referee (or a panel of referees) selected under the auspices
of JAMS in the same manner as arbitrators are selected in JAMS
administered proceedings. The designated referee(s) will be appointed by
a court as provided in California Code of Civil Procedure Section 638
and the following related sections. The referee (or the presiding
referee of the panel) will be an active attorney or a retired judge. The
award that results from the decision of the referee(s) will be entered
as a judgment in the court that appointed the referee, in accordance
with the provisions of California Code of Civil Procedure Sections 644
and 645.
(h) The filing of a court action is not intended to constitute a
waiver of the right of the Borrowers or the Bank, including the suing
party, thereafter to require submittal of the Claim to arbitration.
(i) By agreeing to binding arbitration, the parties irrevocably
and voluntarily waive any right they may have to a trial by jury in
respect of any Claim. Furthermore, without intending in any way to limit
this agreement to arbitrate, to the extent any Claim is not arbitrated,
the parties irrevocably and voluntarily waive any right they may have to
a trial by jury in respect of such Claim. This provision is a material
inducement for the parties entering into this Agreement.
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12.5 Severability; Waivers. If any part of this Agreement is not
enforceable, the rest of the Agreement may be enforced. The Bank retains all
rights, even if it makes a loan after default. If the Bank waives a default, it
may enforce a later default. Any consent or waiver under this Agreement must be
in writing.
12.6 Administration Costs. The Borrowers shall pay the Bank for all
reasonable costs incurred by the Bank in connection with administering this
Agreement.
12.7 Attorneys' Fees. The Borrowers shall reimburse the Bank for any
reasonable costs and attorneys' fees incurred by the Bank in connection with the
enforcement or preservation of any rights or remedies under this Agreement and
any other documents executed in connection with this Agreement, and in
connection with any amendment, waiver, "workout" or restructuring under this
Agreement. In the event of a lawsuit or arbitration proceeding, the prevailing
party is entitled to recover costs and reasonable attorneys' fees incurred in
connection with the lawsuit or arbitration proceeding, as determined by the
court or arbitrator. In the event that any case is commenced by or against any
of the Borrowers under the Bankruptcy Code (Title 11, United States Code) or any
similar or successor statute, the Bank is entitled to recover costs and
reasonable attorneys' fees incurred by the Bank related to the preservation,
protection, or enforcement of any rights of the Bank in such a case. As used in
this paragraph, "attorneys' fees" includes the allocated costs of the Bank's
in-house counsel.
12.8 Joint and Several Liability.
(a) Each Borrower agrees that it is jointly and severally liable
to the Bank for the payment of all obligations arising under this
Agreement, and that such liability is independent of the obligations of
the other Borrower(s). The Bank may bring an action against any
Borrower, whether an action is brought against the other Borrower(s).
(b) Each Borrower agrees that any release which may be given by
the Bank to the other Borrower(s) or any guarantor will not release such
Borrower from its obligations under this Agreement.
(c) Each Borrower waives any right to assert against the Bank
any defense, setoff, counterclaim, or claims which such Borrower may
have against the other Borrower(s) or any other party liable to the Bank
for the obligations of the Borrowers under this Agreement.
(d) Each Borrower waives any defense by reason of any other
Borrower's or any other person's defense, disability, or release from
liability. The Bank can exercise its rights against each Borrower even
if any other Borrower or any other person no longer is liable because of
a statute of limitations or for other reasons.
(e) Each Borrower agrees that it is solely responsible for
keeping itself informed as to the financial condition of the other
Borrower(s) and of all circumstances which bear upon the risk of
nonpayment. Each Borrower waives any right it may have to require the
Bank to disclose to such Borrower any information which the Bank may now
or hereafter acquire concerning the financial condition of the other
Borrower(s).
-31-
(f) Each Borrower waives all rights to notices of default or
nonperformance by any other Borrower under this Agreement. Each Borrower
further waives all rights to notices of the existence or the creation of
new indebtedness by any other Borrower and all rights to any other
notices to any party liable on any of the credit extended under this
Agreement.
(g) The Borrowers represent and warrant to the Bank that each
will derive benefit, directly and indirectly, from the collective
administration and availability of credit under this Agreement. The
Borrowers agree that the Bank will not be required to inquire as to the
disposition by any Borrower of funds disbursed in accordance with the
terms of this Agreement.
(h) Until all obligations of the Borrowers to the Bank under
this Agreement have been paid in full and any commitments of the Bank or
facilities provided by the Bank under this Agreement have been
terminated, each Borrower (a) waives any right of subrogation,
reimbursement, indemnification and contribution (contractual, statutory
or otherwise), including without limitation, any claim or right of
subrogation under the Bankruptcy Code (Title 11, United States Code) or
any successor statute, which such Borrower may now or hereafter have
against any other Borrower with respect to the indebtedness incurred
under this Agreement; (b) waives any right to enforce any remedy which
the Bank now has or may hereafter have against any other Borrower, and
waives any benefit of, and any right to participate in, any security now
or hereafter held by the Bank.
(i) Each Borrower waives any right to require the Bank to
proceed against any other Borrower or any other person; proceed against
or exhaust any security; or pursue any other remedy. Further, each
Borrower consents to the taking of, or failure to take, any action with
respect to any other Borrower which might in any manner or to any extent
vary the risks of the Borrower under this Agreement or which, but for
this provision, might operate as a discharge of the Borrower.
12.9 One Agreement. This Agreement and any related security or other
agreements required by this Agreement, collectively:
(a) represent the sum of the understandings and agreements
between the Bank and the Borrowers concerning this credit;
(b) replace any prior oral or written agreements between the
Bank and the Borrowers concerning this credit; and
(c) are intended by the Bank and the Borrowers as the final,
complete and exclusive statement of the terms agreed to by them.
In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail.
12.10 Disposition of Schedules, Reports, Etc. Delivered by Borrowers.
The Bank will not be obligated to return any schedules, invoices, statements,
budgets, forecasts, reports or other
-32-
papers delivered by the Borrowers. The Bank will destroy or otherwise dispose of
such materials at such time as the Bank, in its discretion, deems appropriate.
12.11 Returned Merchandise. Until the Bank exercises its rights to
collect the accounts receivable as provided under any security agreement
required under this Agreement, the Borrowers may continue their present policies
for returned merchandise and adjustments. Credit adjustments with respect to
returned merchandise shall be made immediately upon receipt of the merchandise
by the Borrowers or upon such other disposition of the merchandise by the debtor
in accordance with the Borrowers' instructions. If a credit adjustment is made
with respect to any Acceptable Receivable, the amount of such adjustment shall
no longer be included in the amount of such Acceptable Receivable in computing
the Borrowing Base.
12.12 Verification of Receivables. The Bank may at any time, either
orally or in writing, request confirmation from any debtor of the current amount
and status of the accounts receivable upon which such debtor is obligated.
12.13 Waiver of Confidentiality. The Borrowers authorize the Bank to
discuss the Borrowers' financial affairs and business operations with any
accountants, auditors, business consultants, or other professional advisors
employed by the Borrowers, and authorizes such parties to disclose to the Bank
such financial and business information or reports (including management
letters) concerning the Borrowers as the Bank may request.
12.14 Indemnification. Each Borrower will indemnify and hold the Bank
harmless from any loss, liability, damages, judgments, and costs of any kind
relating to or arising directly or indirectly out of (a) this Agreement or any
document required hereunder, (b) any credit extended or committed by the Bank to
the Borrowers hereunder, (c) any claim, whether well-founded or otherwise, that
there has been a failure to comply with any law regulating the Borrowers' sales
or leases to or performance of services for debtors obligated upon the
Borrowers' accounts receivable and disclosures in connection therewith, and (d)
any litigation or proceeding related to or arising out of this Agreement, any
such document, any such credit, or any such claim; provided that the Borrowers
shall have no obligation to any indemnified person for any loss, liability,
damages, judgments or costs resulting from such person's fraud, gross negligence
or willful misconduct or breach of their obligations under this Agreement or any
other agreement or instrument entered into in connection with this Agreement.
This indemnity includes but is not limited to attorneys' fees (including the
allocated cost of in-house counsel). This indemnity extends to the Bank, its
parent, subsidiaries and all of their directors, officers, employees, agents,
successors, attorneys, and assigns. This indemnity will survive repayment of the
Borrowers' obligations to the Bank. All sums due to the Bank hereunder shall be
obligations of the Borrowers, due and payable immediately without demand.
12.15 Notices. Unless otherwise provided in this Agreement or in another
agreement between the Bank and the Borrowers, all notices required under this
Agreement shall be personally delivered or sent by first class mail, postage
prepaid, or by overnight courier, to the addresses on the signature page of this
Agreement, or sent by facsimile to the fax numbers listed on the signature page,
or to such other addresses as the Bank and the Borrowers may specify from time
to time in writing. Notices and other communications sent by (a) first class
mail shall be deemed delivered on the earlier of actual receipt or on the fourth
business day after deposit in
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the U.S. mail, postage prepaid, (b) overnight courier shall be deemed delivered
on the next business day, and (c) telecopy shall be deemed delivered when
transmitted. The parties acknowledge and agree that all notices (including
requests for advances), certificates, consents, elections, requests and other
communications from Borrowers to Bank under this Agreement or any agreements
entered into in connection with this Agreement, may be made solely by Odwalla,
acting on behalf of itself and Fresh Samantha.
12.16 Bank Products. The Borrowers may request and the Bank may, in its
sole and absolute discretion, arrange for the Borrowers to obtain from the Bank
or the Bank's affiliates Bank Products although the Borrowers are not required
to do so. If Bank Products are provided by an affiliate of the Bank, each
Borrower agrees to indemnify and hold the Bank harmless from any and all costs
and obligations now or hereafter incurred by the Bank which arise from any
indemnity given by the Bank to its affiliates related to such Bank Products;
provided, however, nothing contained herein is intended to limit any Borrower's
rights, with respect to the Bank or its affiliates, if any, which arise as a
result of the execution of documents by and between any Borrower and the Bank or
any of its affiliates which relate to Bank Products. The agreement contained in
this Section shall survive termination of this Agreement. Each Borrower
acknowledges and agrees that the obtaining of Bank Products from the Bank or the
Bank's affiliates (a) is in the sole and absolute discretion of the Bank or the
Bank's affiliates, and (b) is subject to all rules and regulations of the Bank
or the Bank's affiliates.
12.17 Headings. Article and paragraph headings are for reference only
and shall not affect the interpretation or meaning of any provisions of this
Agreement.
12.18 Counterparts. This Agreement may be executed in as many
counterparts as necessary or convenient, and by the different parties on
separate counterparts each of which, when so executed, shall be deemed an
original but all such counterparts shall constitute but one and the same
agreement.
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This Agreement is executed as of the date stated at the top of the first page.
Bank of America, N.A. Odwalla, Inc.,
a California corporation
By By
--------------------------------- ---------------------------------
Typed Name: John C. Plecque Typed Name: James R. Steichen
Title: Senior Vice President Title: Chief Financial Officer
By Fresh Samantha, Inc.,
--------------------------------- a Maine corporation
Typed Name: Chris P. Giannotti
Title: Senior Vice President
By
----------------------------------
Typed Name:
-------------------------
Title:
------------------------------
Address where notices to Address where notices to
the Bank are to be sent: the Borrowers are to be sent:
125 South Market Street 120 Stone Pine Road
San Jose, California 95113-2250 Half Moon Bay, California 94019-1791
Facsimile: (408) 277-7087 Facsimile: (650) 712-5967
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Dates Referenced Herein and Documents Incorporated by Reference
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