Tender-Offer Solicitation/Recommendation Statement — Schedule 14D-9
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 14D9 Tender-Offer Solicitation/Recommendation Statement 42 218K
2: EX-99.(A)(1)(J) Nov. 6, 2001 Press Release Issued by Odwalla, 3 22K
Inc.
3: EX-99.(A)(2) Letter to Shareholders 2± 8K
SC 14D9 — Tender-Offer Solicitation/Recommendation Statement
Document Table of Contents
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
(RULE 14D-101)
SOLICITATION/RECOMMENDATION STATEMENT
UNDER SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
ODWALLA, INC.
(NAME OF SUBJECT COMPANY)
ODWALLA, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, NO PAR VALUE PER SHARE
(TITLE OF CLASS OF SECURITIES)
676111107 (COMMON STOCK)
(CUSIP NUMBER OF CLASS OF SECURITIES)
D. STEPHEN C. WILLIAMSON
CHIEF EXECUTIVE OFFICER
ODWALLA, INC.
120 STONE PINE ROAD
HALF MOON BAY, CA 94019
(650) 726-1888
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
COPIES TO:
ROBERT S. TOWNSEND, ESQ.
P. RUPERT RUSSELL, ESQ.
MORRISON & FOERSTER LLP
425 MARKET STREET
SAN FRANCISCO, CALIFORNIA 94105
(415) 268-7000
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ITEM 1. SUBJECT COMPANY INFORMATION.
(a) Name and Address. The name of the subject company to which this
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
relates is Odwalla, Inc., a California corporation ("Odwalla" or the "Company").
The address of the principal executive offices of Odwalla is 120 Stone Pine
Road, Half Moon Bay, California 94019; telephone number: (650) 726-1888.
(b) Securities. The title of the class of equity securities to which this
Schedule 14D-9 relates is the common stock, no par value per share, of Odwalla
(the "Common Stock" or the "Shares"). As of October 25, 2001, there were
11,103,321 shares of Common Stock outstanding.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON.
(a) Name and Address. The name, address and telephone number of the
Company, which is the person filing this Schedule 14D-9, are set forth in Item
1(a) above.
(b) Tender Offer. This Schedule 14D-9 relates to a tender offer by TCCC
Acquisition Corp. (formerly known as Perry Phillip Corp.), a California
corporation (the "Offeror") and a wholly-owned subsidiary of The Coca-Cola
Company, a Delaware corporation ("TCCC"), disclosed in a Tender Offer Statement
on Schedule TO, dated November 6, 2001 (as amended or supplemented from time to
time, the "Schedule TO"), to purchase all of the issued and outstanding shares
of Common Stock at a purchase price of $15.25 per share, net to the seller in
cash, without interest thereon (the "Offer Price"), upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated November 6, 2001 (as
amended or supplemented from time to time, the "Offer to Purchase"), and in the
related Letter of Transmittal (which as amended or supplemented from time to
time, together with the Offer to Purchase constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of October 29, 2001 (the "Merger Agreement"), by and among the Offeror, TCCC
and Odwalla. The Merger Agreement provides, among other things, for the making
of the Offer by the Offeror, and further provides that, following the completion
of the Offer, upon the terms and subject to the conditions of the Merger
Agreement and in accordance with Section 1110 of the California General
Corporation Law ("CGCL"), as soon as practicable after the satisfaction or
waiver of the conditions set forth in the Merger Agreement, the Offeror will be
merged with and into Odwalla (the "Merger"), and each share of Common Stock then
outstanding will be converted into the right to receive the Offer Price, less
any required withholding taxes and without interest. Following the Merger,
Odwalla will continue as the surviving corporation (the "Surviving Corporation")
and will be a wholly-owned subsidiary of TCCC. The Merger Agreement, a copy of
which is filed as Exhibit (e)(1) to this Schedule 14D-9, is summarized in the
Section of Item 3 below, entitled "The Merger Agreement" and is incorporated
herein by reference.
As set forth in the Schedule TO, the principal executive offices of TCCC
are located at One Coca-Cola Plaza, Atlanta, Georgia 30313; telephone number:
(404) 676-2121. The principal executive offices of the Offeror are located at
the same address.
ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
Except as set forth in this Item 3, or as incorporated by reference herein,
to the knowledge of Odwalla, as of the date hereof, there are no material
agreements, arrangements or understandings or any actual or potential conflicts
of interest between Odwalla or its affiliates and: (1) its executive officers,
directors or affiliates; or (2) TCCC, the Offeror or their respective
subsidiaries, and any of their executive officers, directors or affiliates.
Current Employment Agreements with D. Stephen C. Williamson and James R.
Steichen
Under the terms of Odwalla's current employment agreements with D. Stephen
C. Williamson, the Chief Executive Officer and Chairman of the Board and James
R. Steichen, Chief Financial Officer of Odwalla, each dated December 21, 1999,
the consummation of the Offer will constitute a change of control as defined in
their respective agreements. If Mr. Williamson or Mr. Steichen is terminated
within 12 months of a change
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of control, such employee will be entitled to received the specified payments
and benefits as more fully discussed in the section entitled "Certain
Relationships and Related Transactions" in the Information Statement attached as
Schedule I to this Schedule 14D-9.
New Employment Agreement with D. Stephen C. Williamson
Concurrently with the execution of the Merger Agreement, Odwalla entered
into a new employment agreement with D. Stephen C. Williamson (the "New
Employment Agreement"). The New Employment Agreement will commence at the
Effective Time (as defined in the Merger Agreement) and will supersede Mr.
Williamson's current employment agreement with Odwalla, dated December 21, 1999,
which is more fully described in the section entitled "Certain Relationships and
Related Transactions" in the Information Statement attached as Schedule I to
this Schedule 14D-9.
The initial term of the New Employment Agreement extends through December
31, 2002, and thereafter is subject to automatic annual renewals through
December 31, 2005, unless either party provides 60 days written notice to the
other party in advance of a renewal period. Under the New Employment Agreement,
Mr. Williamson will receive an annual salary of $450,000, subject to annual
review by the Board of Directors of Odwalla (the "Board"), and will be eligible
for a special performance award of 20,000 TCCC stock options for achieving
certain revenue and operating income targets. Odwalla shall also provide Mr.
Williamson customary fringe benefits provided to similarly situated employees at
Odwalla.
Upon expiration of the New Employment Agreement, Odwalla shall pay Mr.
Williamson his base salary then in effect for a period of one year following the
date of the expiration, offset by any severance payment Mr. Williamson may
otherwise receive. Odwalla may terminate the New Employment Agreement with
written notice for cause without liability or further obligation. If Mr.
Williamson is not terminated for cause or Mr. Williamson terminates the New
Employment Agreement for good reason, Odwalla will (1) pay Mr. Williamson his
base salary then in effect for a period of one year following the date of the
expiration, offset by any severance payment Mr. Williamson may otherwise
receive, (2) reimburse Mr. Williamson for the cost of acquiring health benefits
for a period of one year, and (3) negotiate with Mr. Williamson the treatment of
any special performance award. In the event that Mr. Williamson's severance and
other benefits constitute a parachute payment under the Federal tax law and
would be subject to an excise tax, then Mr. Williamson's benefits will either be
delivered in full or delivered to such lesser extent as to avoid an excise tax,
whichever results in Mr. Williamson receiving the greatest amount on an
after-tax basis.
Under the terms of the New Employment Agreement, Mr. Williamson agreed that
he will not, while employed by Odwalla and for a period of two years following
the expiration or termination of his employment, solicit, interfere with or
endeavor to entice away from TCCC or any of its subsidiaries any other employee
of TCCC. Additionally, Mr. Williamson agreed that he will not at any time while
employed by Odwalla and for a period of one year following the expiration or
termination of his employment engage in the manufacture, sale, or distribution
of non-alcoholic beverages in the United States.
During the term of the New Employment Agreement and at all times
thereafter, Mr. Williamson has agreed to keep in confidence and not publish, use
or disclose to others, without Odwalla's prior written consent, any trade
secrets or other confidential information related to TCCC or TCCC's business.
Treatment of Options and Warrants
In connection and simultaneously with the Offer, Odwalla has agreed to use
its reasonable best efforts to ensure that each holder of outstanding options
(whether vested or unvested) to acquire any Shares (the "Company Options")
granted under Odwalla's Stock Option Plan adopted in 1993, Odwalla's 1994 Non-
Employee Directors' Stock Option Plan and Odwalla's Amended and Restated 1997
Stock Option/Stock Issuance Plan will execute an agreement to exchange
immediately prior to the consummation of the Offer such holder's Company Options
to Odwalla for an amount in cash determined by multiplying (A) the excess, if
any, of the Offer Price over the applicable exercise price per share of the
Company Option (regardless of the exercise price) by (B) the number of Shares
subject to the Company Options (whether vested or unvested) held by such holder
(such amount, the "Option Consideration") less any amounts withheld to satisfy
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applicable tax obligations. Upon the expiration date of the Offer, each holder
of Company Options immediately prior to the consummation of the Offer, who has
exchanged such Company Options shall become entitled to the Option
Consideration, and all rights of such holder associated with the Company Options
shall be terminated and canceled. As of the Effective Time, either (1) each
Company Option not so exchanged immediately prior to the consummation of the
Offer shall be canceled, and in consideration for such cancellation the holder
shall become entitled to receive an amount in cash equal to the Option
Consideration, subject to any amounts withheld to satisfy applicable tax
obligations, or (2) Odwalla shall use its reasonable best efforts to ensure that
each holder of a Company Option shall execute an agreement which provides that
such Company Option shall be canceled, and in consideration for such
cancellation the holder thereof shall become entitled to receive an amount in
cash equal to the product of (x) the number of Shares subject to the Company
Options, whether vested or unvested, held by such holder and (y) the excess of
the Merger Consideration (as defined in the Merger Agreement) per share over the
per share exercise price of each such Company Option, subject to any amounts
withheld to satisfy applicable tax obligations.
Under the terms of the Merger Agreement, Odwalla has agreed to use its
reasonable best efforts to provide that each of the issued and outstanding
warrants to purchase Shares (the "Company Warrants") will be exercised in full
immediately prior to the consummation of the Offer. In addition, Odwalla has
agreed to offer, by written notice to each holder of Company Warrants, to pay
such holder upon the consummation of the Offer, in exchange for the cancellation
of such holder's Company Warrants (regardless of exercise price) upon the
consummation of the Offer, an amount in cash determined by multiplying (A) the
excess, if any, of the Offer Price over the applicable exercise price per share
of the Company Warrant by (B) the number of Shares such holder could have
purchased had such holder exercised such Company Warrant in full immediately
prior to the consummation of the Offer, subject to any amounts withheld to
satisfy applicable tax obligations.
Director Indemnification
The Merger Agreement provides that, for six years from and after the
Effective Time, TCCC will cause the Surviving Corporation to indemnify and hold
harmless all past and present officers and directors of Odwalla and of its
subsidiaries for acts or omissions occurring at or prior to the Effective Time
to the same extent such persons are indemnified by Odwalla pursuant to its
Articles of Incorporation or Bylaws or agreements in effect on October 29, 2001.
TCCC has agreed to maintain (or to cause the Surviving Corporation to
maintain), for an aggregate period of at least six years from the Effective
Time, the current directors' and officers' insurance and indemnification
policies ("D&O Insurance") that provide coverage for events occurring prior to
the Effective Time or, coverage containing terms that are at least as favorable
as the current D&O Insurance; provided, however, that the Surviving Corporation
shall not be required to expend more than an amount per year equal to 200% of
current annual premiums paid by Odwalla for such insurance.
For additional discussion of the indemnification and insurance provisions
of the Merger Agreement, see Section 11 -- "The Merger Agreement; the Option
Agreement; the Tender Agreements; and the Employment Agreement" in the Offer to
Purchase, a copy of which is incorporated by reference herein.
Director and Officer Indemnification Agreements
On October 29, 2001, Odwalla entered into an indemnification agreement with
each of its executive officers and directors (each, an "Indemnitee"). The
indemnification agreement provides for Odwalla to hold harmless and indemnify
Indemnitee to the maximum extent not prohibited by the California Corporations
Code, the Articles of Incorporation and the Bylaws of Odwalla. The Indemnitee is
entitled to indemnification if by reason of the Indemnitee's status as a
director, officer, employee or other agent or fiduciary of Odwalla ("Corporate
Status") the Indemnitee is, or is threatened to be made, a party to or
participant in any proceeding. As long as the Indemnitee acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of Odwalla and its shareholders, Odwalla shall indemnify Indemnitee, at a
minimum, against all expenses actually and reasonably incurred by the Indemnitee
in connection with the
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defense or settlement of such proceeding or any claim, issue or matter therein.
In certain circumstances, Indemnitee shall have the right to obtain an advance
from Odwalla for all expenses incurred in connection with any proceeding by
reason of Indemnitee's Corporate Status. However, the Indemnitee shall not be
indemnified (1) if the Indemnitee shall have been adjudged by a court of
competent jurisdiction to be liable to Odwalla in the performance of the
Indemnitee's duty to Odwalla and its shareholders, (2) for amounts paid in
settling or otherwise disposing of a pending action without court approval, or
(3) for expenses incurred in defending a pending action which is settled or
otherwise disposed of without court approval.
The indemnification agreement shall continue during the period the
Indemnitee is an officer or director of Odwalla and shall continue thereafter
until the later of (1) the date the Indemnitee is no longer an officer or
director of Odwalla, (2) the date Indemnitee shall no longer be subject to any
proceeding by reason of the Indemnitee's Corporate Status, whether or not the
Indemnitee is acting or serving in any such capacity at the time any liability
or expense is incurred for which indemnification can be provided under the
indemnification agreement, or (3) October 29, 2004.
Certain agreements, arrangements or understandings between Odwalla or its
affiliates and certain of its directors, executive officers and affiliates are
described in the Information Statement of the Company attached to this Schedule
14D-9 as Schedule I (the "Information Statement"). The Information Statement is
being furnished to Odwalla's shareholders pursuant to Section 14(f) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
issued under the Exchange Act in connection with the Offeror's right (after
acquiring a majority of the Shares pursuant to the Offer) to designate persons
to the Board other than at a meeting of the shareholders of Odwalla. The
Information Statement is incorporated herein by reference.
THE MERGER AGREEMENT
The summary of the material terms of the Merger Agreement set forth in
Section 11 -- "The Merger Agreement; the Option Agreement; the Tender
Agreements; and the Employment Agreement" in the Offer to Purchase is
incorporated herein by reference. The summary of the Merger Agreement contained
in the Offer to Purchase is qualified in its entirety by reference to the Merger
Agreement, a copy of which is filed as Exhibit (e)(l) hereto and is incorporated
herein by reference.
TENDER AGREEMENTS
Concurrently with the execution of the Merger Agreement, the Offeror and
TCCC entered into Tender Agreements dated as of October 29, 2001 (the "Tender
Agreements"), with each of the following shareholders: Bain Capital Fund VI,
L.P.; BCIP Associates II; BCIP Trust Associates II; BCIP Associates II-B; BCIP
Trust Associates II-B; BCIP Associates II-C; PEP Investments Pty. Limited; U.S.
Equity Partners, L.P.; U.S. Equity Partners (Offshore), L.P.; Catterton-Simon
Partners III, L.P.; D. Stephen C. Williamson; James R. Steichen; Theodore R.
Leaman III; Douglas K. Levin; Michael Carter; Julie Carter; and Robert Carter
(the "Tendering Shareholders").
Pursuant to the Tender Agreements, the Tendering Shareholders agreed to
tender into the Offer an aggregate of 6,280,594 Shares currently owned by the
Tendering Shareholders (the "Committed Shares"). The Committed Shares represent
approximately 57% of the total outstanding Common Stock. The Tender Agreements
also provide that Bain Capital Fund VI, L.P.; BCIP Associates II; U.S. Equity
Partners, L.P.; U.S. Equity Partners (Offshore), L.P.; Catterton-Simon Partners
III, L.P.; D. Stephen C. Williamson; Douglas K. Levin; Michael Carter; Julie
Carter; and Robert Carter (the "Voting Shareholders"), representing in the
aggregate 5,950,650 Shares, irrevocably appoint the Offeror as their proxy to
vote their portion of such Committed Shares in connection with the transaction
in the following manner: (1) for the adoption and approval of the Merger
Agreement and the Merger and (2) in any manner as TCCC, in its sole discretion,
may see fit with respect to any extraordinary corporate transaction (other than
the Merger), such as a merger, consolidation, business combination, tender or
exchange offer, reorganization, recapitalization, liquidation, sale or transfer
of a material amount of the assets or securities of Odwalla or any of its
subsidiaries (other than pursuant to the Merger) or any other change of control
involving Odwalla or any of its subsidiaries, including,
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but not limited to, any proposal from a third party with respect to a merger,
consolidation, share exchange, tender offer or similar transaction involving
Odwalla or any subsidiary of Odwalla, or any purchase or other acquisition of
20% or more of the assets of Odwalla or any subsidiary of Odwalla or any
purchase or other acquisition of any equity interest in Odwalla or any
subsidiary of Odwalla. Notwithstanding each of the grants to TCCC of irrevocable
proxies, if TCCC elects not to exercise its rights to vote the securities
pursuant to the irrevocable proxies, the Voting Shareholders that have granted
proxies to TCCC have agreed, (1) to vote their Common Stock in favor of or give
their consent to, as applicable, a proposal to adopt and approve the Merger
Agreement and the Merger as described in the Tender Agreements, or (2) to vote
in the manner directed by TCCC if the issue on which the Voting Shareholder is
requested to vote is a matter described in clause (2) of the preceding sentence,
in each case at any annual, special or other meeting or action of the
shareholders of Odwalla, in lieu of a meeting or otherwise.
The Tender Agreements provide that the Tendering Shareholders (i) except as
consented to in writing by TCCC in its sole discretion, will not, directly or
indirectly, sell, transfer, assign, pledge, hypothecate, tender, encumber or
otherwise dispose of or limit their right to vote in any manner any of the
Committed Shares, or agree to do any of the foregoing, and (ii) will not take
any action which would have the effect of preventing or disabling the Tendering
Shareholders from performing their obligations under the Tender Agreements.
Notwithstanding the foregoing, in connection with any transfer not involving or
relating to any Competing Acquisition Proposal (as defined in the Merger
Agreement), the Tendering Shareholders may transfer any or all of the Committed
Shares as follows: (i) in the case of a Tendering Shareholder that is an entity,
to any subsidiary, partner or member of the Tendering Shareholder and (ii) in
the case of an individual Tendering Shareholder, to such Tendering Shareholder's
descendants or any trust for any of their benefits or to a charitable trust;
provided, however, that in any such case, prior to and as a condition to the
effectiveness of such transfer, (x) each person or entity to which any of such
Committed Shares or any interest in any of such Committed Shares is or may be
transferred (a) shall have executed and delivered to TCCC and the Offeror a
counterpart to the applicable Tender Agreement pursuant to which such person or
entity shall be bound by all of the terms and provisions of the applicable
Tender Agreement, and (b) shall have agreed in writing with TCCC and the Offeror
to hold such Shares or interest in such Shares subject to all of the terms and
provisions of the applicable Tender Agreements, and (y) the applicable Tender
Agreement shall be the legal, valid and binding agreement of such person,
enforceable against such person in accordance with its terms, subject to the
qualification, however, that enforcement of the rights and remedies created by
the applicable Tender Agreement is subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general application
related to or affecting creditors' rights and to general equity principles.
In addition, during the term of the Tender Agreements, neither the
Tendering Shareholders nor any person acting as an agent of the Tendering
Shareholders or otherwise on the Tendering Shareholders' behalf shall, directly
or indirectly, (a) solicit, initiate or encourage the submission of any
Competing Acquisition Proposal or any other sale, transfer, pledge or other
disposition or conversion of any of the Committed Shares or (b) participate in
or encourage any discussion or negotiations regarding, or furnish to any person
any non-public information with respect to, enter into any agreement with
respect to, or take any other action to facilitate any inquiries or the making
of any proposal that constitutes, or may reasonably be expected to lead to, any
Competing Acquisition Proposal or any other sale, transfer, pledge or other
disposition or conversion of any of the Committed Shares, in any case, from, to
or with any person other than TCCC or the Offeror. The Tendering Shareholders
agreed to immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties with respect to any of the
foregoing. The Tendering Shareholders also agreed to notify the Offeror
immediately if any party contacts the Tendering Shareholders following the date
of the Tender Agreements (other than the Offeror or an affiliate or associate of
the Offeror) concerning any Competing Acquisition Proposal or any other sale,
transfer, pledge or other disposition or conversion of the Committed Shares.
The Tender Agreements terminate upon the earlier of (1) the termination of
the Merger Agreement pursuant to Sections 8.1(a), (b), (c), (d) or (e) of the
Merger Agreement or (2) six months after the termination of the Merger Agreement
pursuant to Sections 8.1 (f), (g) or (h) of the Merger Agreement.
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The summary set forth herein does not purport to be complete and is
qualified in its entirety by reference to the complete text of the forms of the
Tender Agreements, which are attached hereto as Exhibits (e)(2) and (e)(3) to
this Schedule 14D-9, and are incorporated by reference herein in their entirety.
LOANS TO ODWALLA EXECUTIVES FOR EXERCISE OF STOCK OPTIONS
Under the terms of the Tender Agreements with each of D. Stephen C.
Williamson, James R. Steichen and Theodore R. Leaman III (the "Executives"),
TCCC may cause immediately prior to the consummation of the Offer such Executive
to exercise any of the Executive's vested Company Options. Under the terms of
the Merger Agreement, if TCCC requires any of the Executives to exercise Company
Options to purchase Shares immediately prior to the consummation of the Offer
under the terms of such Executives' Tender Agreement, Odwalla will loan to the
Executives such funds as may be necessary to permit such Executives to exercise
such Company Options. If Odwalla becomes obligated to advance funds to
Executives for the exercise of the Executive's Company Options and Odwalla fails
to advance such funds to any Executive, TCCC has agreed to advance such funds to
any Executive on commercially reasonable terms.
STOCK OPTION AGREEMENT
Concurrently with the execution of the Merger Agreement, and as a condition
and inducement to TCCC's and the Offeror's entering into the Merger Agreement,
Odwalla entered into an Option Agreement dated as of October 29, 2001 (the
"Option Agreement") with TCCC and the Offeror. Under the Option Agreement,
Odwalla granted to the Offeror an irrevocable option (the "Top-Up Stock Option")
to purchase that number of Shares (the "Top-Up Option Shares") equal to the
number of Shares that, when added to the number of Shares owned by the Offeror
and TCCC immediately following consummation of the Offer, will constitute 90.1%
of the Shares then outstanding on a fully diluted basis (assuming the issuance
of the Shares in connection with the exercise of the Top-Up Stock Option),
calculated in accordance with the Option Agreement at a purchase price per
Top-Up Option Share equal to the Offer Price. However, the Top-Up Stock Option
will not be exercisable if the number of Shares subject thereto exceeds the
number of authorized Shares available for issuance.
Subject to the terms and conditions of the Option Agreement, the Top-Up
Stock Option may be exercised by the Offeror, at its election, in whole, but not
in part, at any one time after the occurrence of a Top-Up Exercise Event (as
defined below) and prior to the Top-Up Termination Date (as defined below). A
"Top-Up Exercise Event" will occur for purposes of the Option Agreement upon the
Offeror's acceptance for payment pursuant to the Offer of Shares constituting,
together with Shares owned directly or indirectly by TCCC, more than 50% but
less than 90% of the Shares then outstanding on a fully diluted basis. Except as
provided in the last sentence of this paragraph, the "Top-Up Termination Date"
will occur for purposes of the Option Agreement upon the earliest to occur of:
(1) the Effective Time; (2) the date which is 20 business days after the
occurrence of a Top-Up Exercise Event; (3) the termination of the Merger
Agreement; and (4) the date on which the Offeror reduces the Minimum Condition
(as defined in the Merger Agreement) to 49.9% of the Shares outstanding and
accepts for payment such Shares. Nevertheless, even if the Top-Up Termination
Date has occurred, the Offeror will be entitled to purchase the Top-Up Option
Shares if it has exercised the Top-Up Stock Option in accordance with the terms
of the Option Agreement prior to such occurrence.
The obligation of Odwalla to deliver Top-Up Option Shares upon the exercise
of the Top-Up Stock Option is subject to the following conditions: (a) any
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended ("HSR Act") and any applicable non-United States laws
regulating competition, antitrust, investment or exchange controls relating to
the issuance of the Top-Up Option Shares will have expired or been terminated;
(b) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the exercise of the Top-Up Stock
Option or the delivery of the Top-Up Option Shares in respect of any such
exercise; and (c) delivery of the Top-Up Option Shares would not require the
approval of Odwalla's shareholders pursuant to the rules of the National
Association of Securities Dealers.
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The summary set forth herein does not purport to be complete and is
qualified in its entirety by reference to the complete text of the form of Stock
Option Agreement, which is attached hereto as Exhibit (e)(4) to this Schedule
14D-9, and is incorporated by reference herein in their entirety.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation.
On October 29, 2001, at a meeting of the Board held via teleconference, the
Board by unanimous vote of the directors, determined that the Merger Agreement,
the Option Agreement, the Tender Agreements and the transactions contemplated
thereby, including the Offer and the Merger are advisable and fair to, and in
the best interest of, the Shareholders, approved the Offer and the Merger and
the entry by Odwalla into the definitive agreements, and recommended that the
shareholders of Odwalla accept the Offer and tender their Shares to the Offeror.
A press release announcing the commencement of the Offer and a letter to
the shareholders communicating the Board's recommendation are filed herewith as
Exhibits (a)(1)(I) and (a)(2), respectively, and are incorporated by reference
herein in their entirety.
(b) Background and Reasons for the Recommendation.
BACKGROUND OF THE OFFER
In November 2000, at TCCC's request, a representative of TCCC met with
Stephen Williamson, the Chairman of the Board and Chief Executive Officer of
Odwalla, and Jim Steichen, Chief Financial Officer of Odwalla, and held informal
discussions. During this brief meeting, TCCC and Odwalla discussed their future
business plans in a general manner. At the conclusion of the meeting, Mr.
Williamson indicated that TCCC could contact Odwalla at a future date if TCCC
believed it was in either party's best interest.
In January 2001 and in March 2001, representatives of TCCC made inquiries
of Mr. Williamson to learn more about Odwalla. Mr. Williamson met with and had
informal discussions with representatives of TCCC. During those discussions,
TCCC indicated that it was TCCC's belief that bringing Odwalla into the TCCC
family would greatly enhance the probability of achieving Odwalla's potential.
The TCCC representatives explored generally with Mr. Williamson whether Odwalla
would be interested in a possible strategic relationship with TCCC, although no
specific terms or conditions were discussed. Mr. Williamson stated that Odwalla
was not interested in pursuing a strategic transaction and preferred to pursue
independently its business objectives. Mr. Williamson indicated, though, that
the management and Board of Directors of Odwalla would give due consideration to
any proposal deemed to be in the best interest of the Odwalla shareholders.
Also, during this period, TCCC engaged Morgan Stanley & Co. Incorporated
("Morgan Stanley") to act as its financial advisor in connection with any
potential transaction with Odwalla.
In June 2001, directors and officers of Odwalla met with representatives of
several investment banks to discuss strategic options available to Odwalla and
to consider whether Odwalla should retain an investment bank.
In early August 2001, representatives of TCCC approached DrKW, which was
one of the investment banks with which Odwalla previously had discussions
regarding Odwalla's strategic options. TCCC's representatives expressed an
interest in discussing a possible cash acquisition of Odwalla for a price per
outstanding Share in the range of $12.00 to $13.00. Following discussions
between DrKW and Stephen Williamson, who had consulted with members of the
Board, DrKW indicated to representatives of TCCC that Odwalla was unwilling to
entertain discussions regarding a possible transaction between TCCC and Odwalla
at the range of values suggested by TCCC. DrKW, however, indicated that Odwalla
might be willing to entertain further discussions with TCCC if TCCC were
interested in a possible acquisition of Odwalla at a value range in excess of
$15 per Share.
In late August 2001, discussions renewed. After extensive discussions,
representatives of TCCC indicated to DrKW that TCCC would increase its
preliminary indication of interest to $15.50 for each outstanding Share, subject
to satisfactory completion by TCCC of due diligence, the negotiation of a
mutually satisfactory
7
Merger Agreement and related documentation and satisfaction of mutually
acceptable closing conditions. TCCC stated that its willingness to consider a
possible transaction at this price was absolutely conditioned upon Odwalla's
willingness to negotiate exclusively with TCCC for a period of time to complete
a transaction and upon the willingness of the large shareholders of Odwalla to
provide their unconditional support of the transaction. During these
discussions, DrKW sought to encourage TCCC to increase the price reflected in
TCCC's preliminary indication of interest above $15.50 per Share, but TCCC was
unwilling to do so.
In late August 2001, Odwalla received a draft indication of interest and a
draft confidentiality agreement from TCCC. From August 31 through September 4,
2001, legal counsel to Odwalla, Morrison & Foerster, LLP, reviewed the terms of
the draft indication of interest and the draft confidentiality agreement, and
negotiated the terms of the draft confidentiality agreement with legal counsel
to TCCC, King & Spalding.
On September 4, 2001, the Board met via teleconference to discuss the TCCC
indication of interest. Representatives of DrKW reviewed the draft indication of
interest from TCCC for the benefit of the Board. The Board authorized its senior
management to enter into discussions with TCCC, negotiate a confidentiality
agreement with TCCC and proceed with appropriate due diligence efforts.
On September 5, 2001, the Board met via teleconference to discuss the terms
of the proposed confidentiality agreement with TCCC, the form of which had been
negotiated over the past week (the "Confidentiality Agreement"), and the
process, timing, structure and terms of a potential transaction with TCCC. The
Board considered and reviewed with representatives from DrKW and Morrison &
Foerster the various provisions of the proposed Confidentiality Agreement and
the draft indication of interest from TCCC. The Board also discussed the
provisions of the Confidentiality Agreement including, among other provisions, a
thirty day exclusivity period during which Odwalla and principal shareholders of
Odwalla (the "Principal Shareholders") would agree, subject to the terms and
conditions of the Confidentiality Agreement, not to solicit, encourage or engage
in any discussion or negotiations with, or provide any information to, or
otherwise cooperate with, encourage or assist, any person or entity regarding
any acquisition transaction. After a lengthy discussion, the Board authorized
the senior management of Odwalla to enter into the Confidentiality Agreement
with TCCC in substantially the form presented to the Board.
On September 7, 2001, TCCC submitted a written non-binding indication of
interest to the Board proposing a transaction in which Odwalla shareholders
would receive $15.50 in cash per Share, subject to satisfactory completion by
TCCC of due diligence, the negotiation of a mutually satisfactory Merger
Agreement and related documentation and satisfaction of mutually acceptable
closing conditions. Also on September 7, TCCC, Odwalla and the Principal
Shareholders entered into the Confidentiality Agreement with a thirty day
exclusivity period ending October 7, 2001.
Following September 7, 2001 and throughout the month of September 2001,
TCCC proceeded with its financial, legal and operational due diligence review of
Odwalla. Due to delays caused by the aftermath of terrorist attacks in New York
and Washington D.C. on September 11, 2001, TCCC requested, and Odwalla and the
Principal Shareholders granted, an extension of the exclusivity period,
ultimately through October 31, 2001 in order to continue negotiations and
complete due diligence. Between October 1 and 26, 2001, TCCC conducted
additional financial, legal and operational due diligence.
On September 13, 2001, King & Spalding delivered a proposed Merger
Agreement and, on September 14, 2001, delivered a proposed form of voting
agreement to Morrison & Foerster. Morrison & Foerster and legal counsel to the
Principal Shareholders began reviewing the Merger Agreement and form of voting
agreement. During the period from September 13, 2001 to September 25, 2001,
Morrison & Foerster discussed the proposed Merger Agreement and form of voting
agreement with counsel to the Principal Shareholders and senior management of
Odwalla.
On September 25, 2001, Morrison & Foerster delivered revised drafts of the
proposed Merger Agreement and form of voting agreement to King & Spalding which,
among other things, rejected the provisions that limited the Board's ability to
consider alternative offers. Odwalla objected to the limitations in the TCCC
draft, especially in combination with the proposed form of voting agreement,
which would require the Principal Shareholders and certain other large
shareholders to support the transaction with TCCC even if a
8
more attractive offer to purchase Odwalla were made. The revised draft delivered
by Morrison & Foerster on behalf of Odwalla provided that the Board could
consider alternative offers and provide information to third parties in
connection with alternative proposals received by Odwalla. If a more attractive
offer were made following the exercise of those rights, Odwalla could also elect
to terminate the Merger Agreement, which termination would, in turn, trigger the
termination of the proposed form of voting agreement. The draft provided by
Morrison & Foerster also limited the conditions to TCCC's obligations to close
and the ability of TCCC to terminate the Merger Agreement, in each case in order
to provide Odwalla with more certainty that the proposed transaction, if agreed
to, would be consummated.
On September 27, 2001 Morrison & Foerster and King & Spalding commenced
negotiations of the proposed Merger Agreement and form of voting agreement.
On October 5, 2001, King & Spalding delivered a revised draft of the
proposed Merger Agreement to Morrison & Foerster. The revised draft again
limited the Board's ability to consider alternative proposals or provide
information in connection with an alternative proposal, and provided that
Odwalla could not terminate the Merger Agreement if a more attractive offer was
made. King & Spalding expressed TCCC's view that TCCC would not agree to pursue
the transaction unless the Principal Shareholders and certain other large
shareholders were committed to support the transaction with TCCC even if a more
attractive offer to purchase Odwalla were made. TCCC also required more
flexibility in its right to terminate the Merger Agreement, especially in
connection with events or developments at Odwalla prior to the consummation of
the Merger.
On October 12, 2001, Morrison & Foerster delivered revised drafts of the
proposed Merger Agreement and voting agreement to King & Spalding, which
revisions included structuring the acquisition of Odwalla as a tender offer
followed by a second-step Merger. Under the tender offer structure proposed,
although Odwalla would retain certain rights with respect to considering
alternative proposals, the rights of termination of the parties were limited,
and TCCC could consummate the acquisition of Odwalla more quickly. The proposed
structure thus alleviated the concerns of both parties in connection with the
risks associated with not consummating the transaction once it was publicly
announced.
On October 17, 2001, King & Spalding delivered a revised draft of the
proposed Merger agreement to Morrison & Foerster. The revised draft did not
reflect a tender offer structure and again included limitations on the Board's
ability to consider alternative offers and did not allow Odwalla to terminate
the Merger Agreement if the Board determined an alternative offer was superior.
The revised draft also continued to provide TCCC with broad termination rights.
King & Spalding emphasized to Morrison & Foerster that the premium offered to
Odwalla justified the terms dictated by TCCC and that TCCC would not proceed
without limitations on Odwalla's ability to consider other offers and the
unconditional support of the transaction by the Principal Shareholders and
certain other large shareholders.
On Friday, October 19, 2001, Beverage Digest published an article that
speculated that TCCC was in talks to acquire Odwalla. The Wall Street Journal
published a similar article on Monday, October 22, 2001. Neither Odwalla nor
TCCC commented on the rumors. On October 22, 2001, the price of Odwalla Common
Stock rose $3.25 from its closing price on October 19, 2001 to close at $10.05.
During the week of October 22, 2001, DrKW received communications from
representatives of two investment banks, each representing an interested
potential acquiror of Odwalla. DrKW indicated to the investment banks that DrKW
was not in a position at that time to discuss the matter with the investment
banks. Neither investment bank nor their principals made any further inquiries
or made any oral or written proposals to DrKW or to Odwalla.
On October 24, 2001, King & Spalding delivered a revised draft Merger
Agreement, stock option agreement and form of tender agreement to be entered
into by the Principal Shareholders and certain other large shareholders to
Morrison & Foerster reflecting a tender offer structure followed by a
second-step merger. The revised draft did not alter TCCC's position as to
Odwalla's ability to consider alternative actions or TCCC's ability to terminate
the Merger Agreement.
On October 25, 2001, the Board met via teleconference, with representatives
of DrKW and Morrison & Foerster in attendance. Representatives of DrKW and
Morrison & Foerster reviewed and discussed the
9
principal issues in the proposed Merger Agreement and related documentation and
the respective positions of Odwalla and TCCC as to each principal issue.
Representatives of DrKW discussed the two inquiries from potential acquirors and
indicated that the communications were only expressions of interest and that no
terms were discussed. The Board considered the potential value and risks
associated with exploring these inquiries after the expiration of the
exclusivity period. The Board considered the recent rise in the price of Odwalla
Common Stock to between $10 and $11 per Share which followed the Beverage Digest
and The Wall Street Journal articles referring to Odwalla's discussions with
TCCC. Morrison & Foerster discussed the fiduciary duties of the Board in
considering the proposed transaction with TCCC. After discussion, the Board
authorized senior management to continue negotiations with TCCC.
Late on October 25, 2001, Morrison & Foerster delivered revised drafts of
the Merger Agreement, the tender agreement and the stock option agreement to
King & Spalding which again proposed, among other changes, broader rights for
the Board to consider alternative offers and limited TCCC's ability to terminate
the Merger Agreement prior to consummation of the proposed tender offer or
Merger.
On the morning of October 26, 2001, representatives of Odwalla, Morrison &
Foerster and DrKW held a conference call with representatives of TCCC and King &
Spalding during which due diligence concerns and the principal unresolved terms
of the transaction were discussed.
Subsequently, on October 26, 2001, the Board met twice via teleconference,
with representatives of DrKW and Morrison & Foerster in attendance at each
telephonic meeting. During the first meeting the Board discussed with
representatives from DrKW and Morrison & Foerster the results of the conference
call that morning with representatives from TCCC and its advisors and counsel.
Representatives from DrKW reported that after the morning call with
representatives of TCCC, its counsel and financial advisor, DrKW received a call
from Morgan Stanley in which Morgan Stanley reported that, based upon TCCC's due
diligence and the effects on general economic conditions resulting from the
events in New York and Washington, D.C., on September 11, 2001, and the
aftermath of such events, TCCC was only willing to pay $14.50 per share. Morgan
Stanley also reiterated that TCCC's willingness to consider a possible
transaction at this price was absolutely conditioned upon, among other things,
the willingness of the Principal Shareholders and certain other large
shareholders to provide their unconditional support of the transaction.
Representatives from Morrison & Foerster reported that in calls with King &
Spalding, it appeared that TCCC would be willing to compromise on several of the
provisions of the agreements under discussion if the price could be agreed upon
and if the Principal Shareholders and certain other large shareholders agreed to
provide their unconditional support of the transaction.
The Board had a lengthy discussion of the reduction in purchase price and
compromise terms proposed by King & Spalding on behalf of TCCC. The Board
determined that the largest concern was with respect to the reduction in the
purchase price. Strengthening its ability to consider alternative proposals was
another concern. A third concern was TCCC's position that the Principal
Shareholders and certain other large shareholders should pay to TCCC any
additional proceeds received by the Principal Shareholders and certain other
large shareholders from a sale of Odwalla to an alternative acquiror to the
extent that the price received by the Principal Shareholders and certain other
large shareholders was greater than the price offered by TCCC. The Board
authorized representatives of DrKW to contact representatives of either TCCC or
TCCC's financial advisor to address the Board's concerns.
On the afternoon of October 27, 2001, the Board met via teleconference,
with representatives of DrKW and Morrison & Foerster in attendance. DrKW and
Morrison & Foerster provided the Board with a report on the negotiations with
TCCC. The Board directed DrKW and Morrison & Foerster to negotiate a price of at
least $15.25 per share, eliminate provisions sought by TCCC, including expanded
rights of termination, and expand to the fullest extent possible the Board's
ability to consider competing proposals that might emerge after entering into
the proposed agreements with TCCC.
From October 27, 2001 through October 29, 2001, senior management of
Odwalla, together with representatives from DrKW and Morrison & Foerster, met
with representatives of TCCC, Morgan Stanley and King & Spalding in Atlanta,
Georgia to complete negotiations and drafting of the Merger Agreement and
related agreements. After extensive negotiations, TCCC agreed to a purchase
price of $15.25 per share in
10
cash. In addition, TCCC agreed to allow Odwalla broader rights to consider
alternative transactions and to limit TCCC's ability to terminate the Merger
Agreement. Odwalla's ability to terminate the Merger Agreement remained limited,
and the Principal Shareholders and certain other large shareholders agreed to
provide TCCC their unconditional support of the transaction.
On October 29, 2001, the Board met via teleconference, with representatives
of DrKW and Morrison & Foerster in attendance. Morrison & Foerster provided the
Board with a report on the revised terms and conditions to the proposed Merger
Agreement and related agreements. DrKW presented its financial analyses and
stated its oral opinion, later confirmed in writing as of the same date, that,
as of that date, the $15.25 per Share cash consideration to be received by the
Odwalla shareholders (other than TCCC, the Offeror and their respective
subsidiaries) pursuant to the Offer and the Merger was fair to such shareholders
from a financial point of view. The Board, after discussion, by the unanimous
vote of the directors, determined that the Merger Agreement, the Option
Agreement, the Tender Agreements and the transactions contemplated thereby,
including the Offer and the Merger are advisable and fair to, and in the best
interest of, the shareholders of Odwalla, approved the Offer and the Merger and
the entry by Odwalla into the definitive agreements, and recommended that the
shareholders of Odwalla accept the Offer and tender their Shares to the Offeror.
Also on October 29, 2001, TCCC's Board of Directors formally approved the
proposed acquisition at a price of $15.25 per share.
On the evening of October 29, 2001, Odwalla, the Offeror and TCCC entered
into the Merger Agreement and the Stock Option Agreement and TCCC entered into
the Tender Agreements with each of the Tendering Shareholders, which included
the Principal Shareholders and certain other large shareholders. On October 30,
2001, Odwalla and TCCC issued a press release announcing the transaction.
On November 6, 2001, TCCC and the Offeror commenced the Offer.
REASONS FOR THE RECOMMENDATION OF THE BOARD; FACTORS CONSIDERED
The Board consulted with Odwalla's senior management, as well as its legal
counsel, Morrison & Foerster, and financial advisor, DrKW, in reaching its
decision to approve the Merger Agreement. Among the factors considered by the
Board in its deliberations were the following:
(1) The historical and recent trading activity and market prices of the
Shares, and the fact that the Offer and the Merger will enable the holders of
Shares to realize (1) a premium of 124.3% over the last sale price of the Shares
reported on the Nasdaq National Market on October 19, 2001, the date immediately
prior to the publication of the transaction rumors reported in Beverage Digest
and The Wall Street Journal, (2) a premium of 36.2% over the last sale price of
the Shares reported on the Nasdaq National Market on October 26, 2001, the
trading day prior to the decision by the Board to approve the transaction, (3) a
premium of 135.7% over the sale price of the Shares reported on the Nasdaq
National Market on September 26, 2001, one month prior to the last trading day
prior to the decision by the Board to approve the transaction, (4) a premium of
99.3% over the average sale price of the Shares reported on the Nasdaq National
Market for the three month period ending on October 26, 2001, and (5) a premium
of 73.1% over the average sale price of the Shares reported on the Nasdaq
National Market for the six month period ending on October 26, 2001. The Board
considered these periods the most relevant to demonstrate the recent performance
of the Shares.
(2) The financial analysis and opinion of DrKW to the Board on October 29,
2001 to the effect that, as of that date, and based upon and subject to the
matters stated in its opinion, the $15.25 per Share cash consideration to be
received by the Odwalla shareholders (other than TCCC, the Offeror and their
respective subsidiaries) pursuant to the Offer and the Merger was fair to such
shareholders, from a financial point of view. The full text of DrKW's written
opinion, which sets forth the assumptions made, matters considered and
limitations on the review undertaken by DrKW is attached as Schedule II to this
Schedule 14D-9 and is incorporated herein by reference in its entirety. HOLDERS
OF SHARES ARE URGED TO READ SUCH OPINION CAREFULLY AND IN ITS ENTIRETY.
(3) The purchase price in the Offer and the Merger would be payable in
cash, thus eliminating any uncertainties in valuing the consideration to be
received by Odwalla's shareholders, which have been
11
particularly acute in light of the recent volatility in the price of the Shares,
as well as volatility in the market prices of shares traded on the Nasdaq Stock
Market and in stock markets generally.
(4) After several weeks of negotiations, TCCC made several provisions in
the Merger Agreement and Tender Agreements an absolute condition to the Offer
Price, including the provisions that (1) prevent the Board from terminating the
Merger Agreement in the event Odwalla receives a Superior Proposal (as defined
in the Merger Agreement), (2) provide that the Board may not withdraw its
approval of the Merger, (3) require the Board to submit the Merger Agreement to
Odwalla shareholders whether or not the Board makes a Subsequent Adverse
Determination (as defined in the Merger Agreement), (4) prevent the Board from
negotiating with any third party that makes an unsolicited offer unless (x) the
Board after taking into account advice from its legal counsel and financial
advisors determines that such action is required for the Board to comply with
its fiduciary obligations, (y) Odwalla receives from such third party a
confidentiality agreement, including standstill provisions, no less favorable to
Odwalla than the Confidentiality Agreement with TCCC and (z) the Board concludes
after taking into account the advice of its financial advisor that the
third-party offer is a Superior Proposal, (5) TCCC would not enter into the
Merger Agreement until shareholders holding at least 57% of the Shares entered
into Tender Agreements with TCCC and the Offeror requiring such shareholders to
tender their shares in the Offer, and, in the case of shareholders holding 54%
of the Shares, provide a proxy to TCCC and the Offeror to vote such Shares in
favor of the Merger at any meeting of shareholders called to consider the Merger
Agreement, the Stock Option Agreement and the Merger and in any manner as TCCC
may see fit with respect to any other extraordinary corporate transaction such
as a merger, business combination or recapitalization, and (6) require Odwalla
to pay a break-up fee of $8 million upon termination, in specified instances, of
the Merger Agreement. In exchange for such provisions, Odwalla was able to
obtain limited conditions to the consummation of the Offer which would increase
the likelihood of the consummation of the Offer and the Merger.
(5) The judgment of the Board, based on the extended arm's-length
negotiations with TCCC and the Offeror, that the Offer Price represented the
highest price that the Offeror would be willing to pay in acquiring the Shares.
(6) The price of the Common Stock rose to between $10 and $11 per share
following the Beverage Digest and The Wall Street Journal articles referring to
Odwalla's discussions with TCCC.
(7) Comments made by equity analysts following the Beverage Digest and The
Wall Street Journal articles estimating the "take-out value" of the Common Stock
in a sale transaction at approximately $11.00 to $14.00 per share.
(8) The absence of any other offers to purchase Odwalla from competing
bidders, including following the Beverage Digest and the Wall Street Journal
articles.
(9) The Offer provides shareholders who are considering selling their
Shares with the opportunity to sell their Shares at the Offer Price without
incurring the transaction costs typically associated with open market sales.
(10) The Offer and the Merger provide for a prompt cash tender offer for
all Shares to be followed by a merger for the same consideration, thereby
enabling Odwalla's shareholders to obtain cash in exchange for their Shares at
the earliest possible time.
(11) The Merger Agreement does not condition the Offeror's obligations to
consummate the Merger on the Offeror's or TCCC's ability to obtain financing for
the Merger.
(12) TCCC's representations in the Merger Agreement that it will have
available to it funds sufficient to satisfy its and the Offeror's obligation to
consummate the Offer and the Merger.
(13) Odwalla's financial performance and outlook, including the financial
projections provided to TCCC (and which are included in the Schedule TO), and
Odwalla's assets, business, financial condition, business strategy, results of
operations and Odwalla's prospects if it were to remain an independent, publicly
traded entity, including the risks of competing against companies that have far
greater resources, distribution capacity and product offerings than Odwalla. In
particular, the Board considered the competitive environment in its
12
business, and the Board's assessment of Odwalla's ability to effectively compete
in the industry as an independent entity.
(14) Odwalla's determination of the likelihood that a superior offer could
be found was insufficient to justify the risk of either delay in proceeding with
the favorable transaction with TCCC and the Offeror or breaking off negotiations
with TCCC and the Offeror.
(15) The Merger Agreement permits the Board to furnish information and
enter into discussions or negotiations, in connection with an unsolicited
acquisition proposal if (x) the Board after taking into consideration advice
from its legal counsel and financial advisors determines that such action is
required for the Board to comply with its fiduciary duty, (y) Odwalla receives
from such third party a confidentiality agreement, including standstill
provisions, no less favorable to Odwalla than the Confidentiality Agreement with
TCCC and (z) the Board concludes after taking into account the advice of its
financial advisor that the third-party offer is a Superior Proposal.
(16) The Board's determination that the termination fee was reasonable
taking into consideration the other terms of the transaction.
(17) The fact that the Merger Agreement provides for the exchange of
options to purchase the Shares held by employees and other persons into the
right to receive an amount in cash equal to the excess, if any, of the Offer
Price over the exercise price of each such stock option.
(18) The Principal Shareholders and other large shareholders are
sophisticated investors and were able to negotiate, with the assistance of
counsel, the Tender Agreements.
The Board also considered a number of uncertainties and risks in their
deliberations concerning the Offer and the Merger, including the following:
(1) The restrictions on Odwalla's ability to enter into an alternative
transaction with a third party including the provisions that (1) prevent the
Board from terminating the Merger Agreement in the event Odwalla receives a
Superior Proposal (as defined in the Merger Agreement) and (2) TCCC would not
enter into the Merger Agreement until shareholders holding at least 57% of the
Shares entered into Tender Agreements with TCCC and the Offeror requiring such
shareholders to tender their shares in the Offer, and, in the case of
shareholders holding 54% of the Shares, provide a proxy to TCCC and the Offeror
to vote such Shares in favor of the Merger at any meeting of shareholders called
to consider the Merger Agreement, the Stock Option Agreement and the Merger and
in any manner as TCCC may see fit with respect to any other extraordinary
corporate transaction such as a merger, business combination or
recapitalization.
(2) TCCC required that Odwalla enter into the Confidentiality Agreement,
providing that Odwalla provide information and materials to TCCC and its
representatives and affiliates, and that Odwalla not provide information or
materials to, or hold discussions with, other potential acquirors regarding an
alternative transaction, with the exclusivity provisions regarding actions taken
with other potential acquirors ultimately being extended to October 31, 2001.
(3) The circumstances under the Merger Agreement in which the break-up fee
of $8 million becomes payable by Odwalla.
(4) Under the terms of the Merger Agreement, between the execution of the
Merger Agreement and Effective Time, Odwalla is required to obtain TCCC's
consent before it can take specified actions.
(5) The conditions to the Offeror's and TCCC's obligations to purchase
Shares in the Offer, and the possibility that such conditions might not be
satisfied.
(6) The possibility that, although the Offer gives Odwalla's shareholders
the opportunity to realize a premium over the price at which the Shares traded
prior to the public announcement of the Offer and the Merger, the price or value
of the Shares may increase in the future, and Odwalla's shareholders would not
benefit from those future increases.
13
In view of the variety of factors considered in connection with its evaluation
of the Merger Agreement, the Board found it impracticable to, and did not,
quantify, rank or otherwise assign relative weights to the factors considered or
determine that any factor was of particular importance in reaching its
determination that the Merger Agreement and the transactions contemplated
thereby are fair to, and in the best interests of, Odwalla's shareholders.
Rather, the decision of each Board member was based upon his own judgment, in
light of the totality of the information presented and considered, of the
overall effect of the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger, on Odwalla's shareholders compared
to any alternative transaction.
(c) Intent to Tender.
To Odwalla's knowledge after reasonable inquiry, except as set forth below,
all of Odwalla's executive officers, directors, affiliates and subsidiaries
currently intend to tender all Shares held of record or beneficially by them
(other than Shares held directly or indirectly by other public companies, as to
which Odwalla has no knowledge) pursuant to the Offer or to vote in favor of the
Merger. The foregoing does not include any Shares over which, or with respect to
which, any such executive officer, director, affiliate or subsidiary acts in a
fiduciary or representative capacity or is subject to the instructions of a
third party with respect to such tender.
ITEM 5. PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED.
The Board retained DrKW pursuant to an Engagement Letter, dated September
4, 2001. Under the terms of that Engagement Letter, DrKW will be entitled to a
transaction fee equal to $2,900,000 (the "Transaction Fee") upon consummation of
the Merger; provided that if the Offeror amends the Offer to purchase 49.9% of
the outstanding Shares, 50% of the Transaction Fee will be paid upon the
purchase of the 49.9% of the outstanding Shares and the remainder of the
Transaction Fee will be paid upon the closing of the Merger. Odwalla has also
agreed to reimburse DrKW for reasonable out-of-pocket expenses, including
reasonable fees and expenses of its legal counsel, and to indemnify DrKW and
related parties against certain liabilities arising out of the engagement of
DrKW. In the ordinary course of its business, DrKW and its affiliates may
actively trade or hold the securities of Odwalla and TCCC for their own account
or for the account of customers and, accordingly, may at any time hold a long or
short position in such securities.
The Executive Chairman and certain other senior executives of the
investment banking division of Dresdner Bank AG, of which DrKW is a part,
indirectly own interests in both U.S. Equity Partners, L.P. and U.S. Equity
Partners (Offshore), L.P., each of which is a shareholder of Odwalla and which
together own approximately 7% of Odwalla's outstanding Common Stock. In
addition, the Executive Chairman of the investment banking division of Dresdner
Bank AG is the Chairman of the entity that controls the management of U.S.
Equity Partners, L.P. and U.S. Equity Partners (Offshore), L.P. U.S. Equity
Partners, L.P. and U.S. Equity Partners (Offshore), L.P. have designated Ellis
Jones, Chief Executive Officer of Wasserstein & Co., to be a member of the
Board.
Neither Odwalla nor any person acting on its behalf currently intends to
employ, retain or compensate any person to make solicitations or recommendations
to shareholders on its behalf concerning the Offer.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
Other than the transactions listed below, no transactions in the Shares
have been effected during the past 60 days by Odwalla or, to the best of its
knowledge, by any executive officer, director, affiliate or subsidiary of
Odwalla:
(a) The Tender Agreements executed by the Tendering Shareholders. Under the
Tender Agreements, the Tendering Shareholders have agreed to tender the
Committed Shares in the Offer. The Committed Shares represent approximately 57%
of the Shares that as of October 25, 2001 were issued and outstanding. In
addition, Tendering Shareholders holding approximately 54% of the Shares
outstanding as of October 25, 2001 have agreed to vote their Shares in favor of
the Merger and otherwise in the manner directed by the Offeror.
14
(b) On September 25, 2001, Michael Cote, Senior Vice President of Sales and
Operations, was granted a stock option to purchase 50,000 Shares at an exercise
price of $6.90 in accordance with the terms of Odwalla's Amended and Restated
1997 Stock Option/Stock Issuance Plan.
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
The purpose of the Offer is for the Offeror to acquire control of, and the
entire equity interest in, Odwalla. The Offer is being made pursuant to the
Merger Agreement. As promptly as practicable following the purchase of Shares
pursuant to the Offer and after satisfaction or waiver of all conditions to the
Merger set forth in the Merger Agreement, the Offeror intends to acquire any
remaining equity interest in Odwalla not acquired in the Offer by consummating
the Merger.
(1) (a) Except as indicated in Items 3 and 4 above, no negotiations
are being undertaken or are underway by Odwalla in response to the Offer
which relate to a tender offer or other acquisition of Odwalla's securities
by Odwalla, any subsidiary of Odwalla or any other person.
(b) Except as indicated in Items 3 and 4 above, no negotiations are
being undertaken or are underway by Odwalla in response to the Offer which
relate to, or would result in, (1) any extraordinary transaction, such as a
merger, reorganization or liquidation, involving Odwalla or any subsidiary
of Odwalla, (2) any purchase, sale or transfer of a material amount of
assets of Odwalla or any subsidiary of Odwalla, or (3) any material change
in the present dividend rate or policy, or indebtedness or capitalization
of Odwalla.
(2) Except as indicated in Items 3 and 4 above, there are no
transactions, board resolutions, agreements in principle or signed
contracts in response to the Offer that relate to or would result in one or
more of the matters referred to in this Item 7.
ITEM 8. ADDITIONAL INFORMATION.
INFORMATION STATEMENT
The Information Statement attached as Schedule I to this Schedule 14D-9 is
being furnished in connection with the possible designation by the Offeror,
pursuant to the Merger Agreement, of certain persons to be appointed to the
Board other than at a meeting of Odwalla's shareholders as described in Item 3
above, and is incorporated herein by reference.
Vote Required to Approve the Merger. The Board has approved and adopted
the Offer, the Merger and the Merger Agreement in accordance with the CGCL. If
the Minimum Condition or the Option Exercise Minimum Number (as defined in the
Merger Agreement), as applicable, and the other conditions to the Offer are
satisfied and the Offer is consummated, the Offeror will own a number of Shares
necessary to cause the Merger to occur without a vote of the shareholders of
Odwalla, pursuant to Section 1110 of the CGCL. The Minimum Condition requires
that there shall have been validly tendered and not properly withdrawn, together
with the Shares owned, directly or indirectly, by TCCC, at least ninety and
one-tenth percent (90.1%) of the Shares (determined on a fully diluted basis as
calculated in Section 1.1(a) of the Merger Agreement ("Fully Diluted Basis")).
If however, the Minimum Condition or the Option Exercise Minimum Number, as
applicable, is not satisfied but the Revised Minimum Number and the other
conditions are satisfied, the Board will be required to submit the Merger
Agreement to Odwalla's shareholders for approval at a shareholders' meeting
convened for that purpose in accordance with the CGCL. The execution and
delivery of the Merger Agreement and the Option Agreement by Odwalla and the
consummation by Odwalla of the transactions contemplated thereby have been duly
authorized by all necessary corporate action on the part of Odwalla, subject to
the approval and adoption of the Merger by the shareholders of Odwalla in
accordance with the CGCL. In addition, the affirmative vote of the holders of a
majority of the outstanding Shares is the only vote of the holders of any of
Odwalla's capital stock necessary in connection with the consummation of the
Merger. Therefore, unless the Merger is consummated in accordance with the
provisions of Section 1110 of the CGCL described above (in which case no action
by the shareholders of Odwalla will be required to consummate the Merger), the
only remaining corporate action of Odwalla will be the approval and adoption of
the Merger
15
Agreement and the transactions contemplated thereby by the affirmative vote of
the holders of a majority of the Shares.
The Merger Agreement provides, if the approval and adoption of the Merger
Agreement by Odwalla's shareholders are required by law, Odwalla will, as soon
as practicable following the consummation of the Offer, duly call, give notice
of, convene and hold a shareholders' meeting for the purpose of considering the
approval of the Merger Agreement and the transactions contemplated thereby. The
Board of Directors of Odwalla will recommend to the shareholders the adoption or
approval of the Merger Agreement and the Merger, will solicit proxies in favor
of the Merger Agreement and the Merger and will take all other actions necessary
or, in the reasonable judgment of TCCC, helpful to secure the vote or consent of
such holders required by the CGCL or the Merger Agreement, to effect the Merger
and shall not withdraw such recommendation. In connection with such meeting,
Odwalla will promptly prepare and file with the Commission and will thereafter
mail to its shareholders as promptly as practicable a proxy statement of Odwalla
and all other proxy materials for such meeting. The Merger Agreement provides
that TCCC will vote all Shares beneficially owned by it in favor of the adoption
of the Merger Agreement at the Odwalla shareholder's meeting at which the Merger
Agreement and the Merger are considered by Odwalla's shareholders. If the
Offeror acquires the Revised Minimum Number of Shares, it would have the ability
to ensure approval of the Merger by the shareholders of Odwalla with the
approval of a de minimis number of remaining outstanding Shares.
Under the CGCL, the merger consideration paid to Odwalla's shareholders may
not be cash if the Offeror or TCCC owns, directly or indirectly, more than 50%
but less than 90% of the then outstanding Shares unless either all the
shareholders consent to the Merger or the Commissioner of Corporations of the
State of California approves, after a hearing, the terms and conditions of the
Merger and the fairness thereof. If such shareholder consent or Commissioner of
Corporations approval is not obtained, the CGCL requires that the consideration
received in the Merger consist only of non-redeemable common stock of TCCC. The
purpose of the Offer is to obtain 90.1% or more of the Shares then outstanding
on a Fully Diluted Basis and thus enable TCCC and the Offeror to acquire all the
equity of Odwalla for consideration consisting solely of cash.
Dissenters' Rights. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, if the Merger is consummated, certain holders of
Shares who fully comply with and meet all the requirements of the provisions of
Chapter 13 of the CGCL ("Qualifying Shareholders"), may have certain rights to
dissent and to require Odwalla to purchase their Shares for cash at "fair market
value." Additionally, Qualifying Shareholders will be entitled to exercise
dissenters' rights under the CGCL only if the holders of five percent or more of
the outstanding Shares properly file demands for payment or if the Shares held
by such holders are subject to any restriction on transfer imposed by Odwalla or
by any law or regulation ("Restricted Shares"). Accordingly, if any holder of
Restricted Shares or the holders of five percent or more of the Shares properly
file demands for payment in compliance with Chapter 13 of the CGCL, all other
Qualifying Shareholders will be entitled to require Odwalla to purchase their
Shares for cash at their fair market value if the Merger is consummated. If the
holders of fewer than five percent of the Shares properly file demands for
payment in compliance with Chapter 13 of the CGCL but any holder of Restricted
Shares properly files such a demand, only such holder or holders of Restricted
Shares shall be entitled to require Odwalla to purchase their Shares as
described in the preceding sentence. In addition, if immediately prior to the
Effective Time, the Shares are not listed on a national securities exchange
certified by the California Commission of Corporations or listed on the National
Market System of the Nasdaq Stock Market, holders of Shares may exercise
dissenters' rights as to any or all of their Shares entitled to such rights.
Under the CGCL, the "fair market value" of the Shares may be one agreed to
by Odwalla and the Qualifying Shareholder or judicially determined, depending on
the circumstances. The "fair market value" is determined as of the day before
the first announcement of the terms of the proposed Merger, excluding any
appreciation or depreciation as a result of the Merger and subject to
adjustments. The value so determined could be more or less than the Offer Price.
Moreover, a damages remedy or injunctive relief may be available if the Merger
is found to be the product of procedural unfairness, including fraud,
misrepresentation or other misconduct.
16
If the Merger is not completed, no Qualifying Shareholder will be entitled
to have Odwalla purchase such holder's Shares under Chapter 13 of the CGCL. If a
shareholder and Odwalla do not agree on whether that shareholder is a Qualifying
Shareholder, or if a Qualifying Shareholder and Odwalla fail to agree on the
fair market value of Shares and neither Odwalla nor the Qualifying Shareholder
files a complaint or intervenes in a pending action within six months after
Odwalla mails the required notice that shareholders have approved the Merger,
that shareholder does not have (or will cease to have) rights as a dissenting
shareholder. After a shareholder files a demand to exercise dissenters' rights,
that shareholder may not withdraw the demand without Odwalla's consent.
The foregoing discussion of the rights of Qualifying Shareholders does not
purport to be a complete statement of the procedures to be followed by
shareholders desiring to exercise any available dissenters' rights and is
qualified in its entirety by reference to Chapter 13 of the CGCL, which is set
forth in Annex II to the Offer to Purchase and incorporated herein by reference.
Rule 13e-3. The Securities and Exchange Commission (the "SEC" or the
"Commission") has adopted Rule 13e-3 under the Exchange Act which is applicable
to certain "going private" transactions and which may under certain
circumstances be applicable to the Merger following the purchase of Shares
pursuant to the Offer in which the Offeror seeks to acquire any remaining
Shares. Rule 13e-3 should not be applicable to the Merger if the Merger is
consummated within one year after the expiration or termination of the Offer and
the price paid in the Merger is not less than the per Share price paid pursuant
to the Offer. However, if the Offeror is deemed to have acquired control of
Odwalla pursuant to the Offer and if the Merger is consummated more than one
year after completion of the Offer or an alternative acquisition transaction is
effected whereby shareholders of Odwalla receive consideration less than that
paid pursuant to the Offer, in either case at a time when the Shares are still
registered under the Exchange Act, the Offeror may be required to comply with
Rule 13e-3 under the Exchange Act. If applicable, Rule 13e-3 would require,
among other things, that certain financial information concerning Odwalla and
certain information relating to the fairness of the Merger or such alternative
transaction and the consideration offered to minority shareholders in the Merger
or such alternative transaction, be filed with the SEC and disclosed to
shareholders prior to consummation of the Merger or such alternative
transaction. The purchase of a substantial number of Shares pursuant to the
Offer may result in Odwalla being able to terminate its Exchange Act
registration. See Section 14. If such registration were terminated, Rule 13e-3
would be inapplicable to any such future Merger or such alternative transaction.
Effect of the Offer on the Market for the Shares, Stock Exchange Listing
and Exchange Act Registration. The purchase of Shares pursuant to the Offer will
reduce the number of Shares that might otherwise trade publicly and will reduce
the number of holders of Shares, which could adversely affect the liquidity and
market value of the remaining Shares held by the public. Following the purchase
of Shares pursuant to the Offer, more than 90.1% of the outstanding Shares (on a
Fully Diluted Basis) will be owned by the Offeror or 49.9% of the outstanding
Shares will be owned by the Offeror.
Depending on the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of Nasdaq National Market for
continued listing. To maintain such designation, a security must substantially
meet one of two maintenance standards. The first maintenance standard requires
that (1) there be at least 750,000 publicly held shares, (2) the publicly held
shares have a market value of at least $5 million, (3) the issuer have net
tangible assets of at least $4 million on stockholder's equity of $10 million,
(4) there be at least 400 shareholders of round lots, (5) the minimum bid price
per share must be at least $1.00 and (6) there be at least two registered and
active market makers. The second maintenance standard requires that (1) the
issuer have either (A) a market capitalization of at least $50 million or (B)
total assets and total revenue of at least $50 million each for the most
recently completed fiscal year or two of the last three most recently completed
fiscal years, (2) there be at least 1,100,000 shares publicly held, (3) the
publicly held shares have a market value of at least $15 million, (4) the
minimum bid price per share be at least $3.00, (5) there be at least 400
shareholders of round lots and (6) there be at least four registered and active
market makers.
17
If these standards for continued listing for Nasdaq National Market are not
met, the Shares might nevertheless continue to be included in the Nasdaq
SmallCap Market. Inclusion in the Nasdaq SmallCap Market, however, would require
that (i) there be at least 300 round lot holders, (ii) there be at least 500,000
publicly held Shares, (iii) the publicly held Shares have a market value of at
least $1 million, (iv) there be at least two registered and active market
makers, of which one may be entering stabilizing bids and (v) the issuer have
either (A) net tangible assets of at least $2 million on stockholder's equity of
$2.5 million, (B) market capitalization of at least $35 million or (C) net
income of at least $500,000 in the most recently completed fiscal year or in two
of the last three most recently completed fiscal years. Shares held directly or
indirectly by directors, officers or beneficial owners of more than 10% of the
Shares are not considered as being publicly held for the purpose of determining
whether either of the Nasdaq Stock Market listing criteria are met.
On September 27, 2001 the Nasdaq Stock Market implemented a moratorium on
the minimum bid and public float requirements for continued listing on the
Nasdaq National Market and the Nasdaq SmallCap Market. The temporary relief is
available until January 2, 2002. Until that date, companies will not be cited
for failing to meet the above described minimum bid and public float
requirements for continued listing.
If the purchase of Shares pursuant to the Offer causes the Shares to no
longer meet the requirements for continued inclusion in Nasdaq or the Nasdaq
SmallCap Market as a result of a reduction in the number or market value of
publicly held Shares or the number of round lot holders or otherwise, as the
case may be, the market for Shares could be adversely affected. It is possible
that the Shares would continue to trade in the over-the-counter market and that
price quotations would be reported by other sources. The extent of the public
market therefor and the availability of such quotations would depend, however,
upon such factors as the number of shareholders and/or the aggregate market
value of such securities remaining at such time, the interest in maintaining a
market in the Shares on the part of the securities firms, the possible
termination of registration under the Exchange Act as described below and other
factors. The Offeror cannot predict whether the reduction in the number of
Shares that might otherwise trade publicly would have an adverse or beneficial
effect on the market price for or marketability of the Shares or whether it
would cause future market prices to be greater or less than the Offer price.
The Shares are currently registered under the Exchange Act. The purchase of
Shares pursuant to the Offer may result in the Shares becoming eligible for
deregistration under the Exchange Act. Registration of the Shares may be
terminated upon application of Odwalla to the Commission if the Shares are not
listed on a national securities exchange and there are fewer than 300 record
holders. The termination of the registration of the Shares under the Exchange
Act would substantially reduce the information required to be furnished by
Odwalla to holders of the Shares and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b), the requirement of furnishing a proxy statement in connection with
shareholders' meetings and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions, no longer applicable to the
Shares. Furthermore, "affiliates" of Odwalla and persons holding "restricted
securities" of Odwalla may be deprived of the ability to dispose of the
securities pursuant to Rule 144 under the Securities Act of 1933, as amended.
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board, which has the effect, among other things, of allowing brokers to
extend credit on the collateral of such Shares for the purpose of buying,
carrying, or trading in securities. Depending upon factors similar to those
described above with respect to listing and market quotations, it is possible
that, following the Offer, the Shares might no longer constitute "margin
securities" for the purposes of the Federal Reserve Board's margin regulations
and therefore could no longer be used as collateral for purpose credits made by
brokers. In any event, the Shares will cease to be "margin securities" if
registration of the Shares under the Exchange Act is terminated.
TCCC currently intends to seek delisting of the Shares from Nasdaq and the
termination of the registration of the Shares under the Exchange Act as soon
after completion of the Offer as the requirements for such delisting and
termination are met. If Nasdaq listing and the Exchange Act registration of the
Shares are not terminated prior to the Merger, then the Shares will be delisted
from Nasdaq and the registration of the Shares under the Exchange Act will be
terminated following the consummation of the Merger.
18
Antitrust. Under the HSR Act and the rules promulgated thereunder by the
Federal Trade Commission (the "FTC"), the acquisition of Shares under the Offer
may not be consummated until notifications have been given and certain
information has been furnished to the FTC and the Antitrust Division of the
Department of Justice (the "Antitrust Division") and the specified waiting
period requirements have been satisfied. The FTC has deemed that TCCC filed
notification and report forms under the HSR Act with the FTC and the Antitrust
Division on November 2, 2001. Accordingly, the waiting period under the HSR Act
will expire at 11:59 p.m., Eastern Time, on November 19, 2001 unless TCCC or
Odwalla receive a request for additional documentary material, or the Antitrust
Division and the FTC terminate the waiting period prior thereto. In practice,
complying with a request for additional information or material can take a
significant amount of time. In addition, if the Antitrust Division or the FTC
raises substantive issues in connection with a proposed transaction, the parties
may engage in negotiations with the relevant governmental agency concerning
possible means of addressing those issues and may agree to delay consummation of
the transaction while such negotiations continue.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Offeror's proposed acquisition of
Odwalla. At any time before or after the Offeror's acquisition of Shares
pursuant to the Offer, the Antitrust Division or the FTC could take such action
under the antitrust laws as either deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger, or seeking the divestiture of Shares
acquired by the Offeror or the divestiture of substantial assets of Odwalla or
its subsidiaries or TCCC or its subsidiaries. Private parties may also bring
legal action under the antitrust laws under certain circumstances. Additionally,
at any time before or after the Offeror's acquisition of Shares pursuant to the
Offer and notwithstanding that the HSR Act waiting period may have expired, any
state could take such action under the antitrust laws as it deems necessary or
desirable in the public interest. Such action could include seeking to enjoin
the purchase of Shares pursuant to the Offer or the consummation of the Merger,
or seeking the divestiture of Shares acquired by the Offeror or the divestiture
of substantial assets of Odwalla or its subsidiaries or TCCC or its
subsidiaries. There can be no assurance that a challenge to the Offer, the
consummation of the Merger or the tender of the Shares pursuant to the Tender
Agreements on antitrust grounds will not be made, or, if such a challenge is
made, of the result thereof.
If any waiting period under the HSR Act applicable to the Offer has not
expired or been terminated prior to the Expiration Date, the Offeror will not be
obligated to proceed with the Offer or the purchase of any Shares not
theretofore purchased pursuant to the Offer.
State Anti-Takeover Laws -- California. Odwalla is incorporated under the
laws of the State of California. Section 1203 of the CGCL provides that if a
tender offer is made to some or all of a corporation's shareholders by an
"interested party," an affirmative opinion in writing as to the fairness of the
consideration to the shareholders of such corporation is required to be
delivered to the shareholders at the time that the tender offer is first made in
writing to the shareholders. However, if the tender offer is commenced by
publication and tender offer materials are subsequently mailed or otherwise
distributed to the shareholders, the opinion may be omitted in the publication
if the opinion is included in the materials distributed to the shareholders. For
purposes of Section 1203, the term "interested party" includes, among other
things, a person who is a party to the transaction and (A) directly or
indirectly controls the corporation that is the subject of the tender offer or
proposal, (B) is, or is directly or indirectly controlled by, an officer or
director of the subject corporation or (C) is an entity in which a material
financial interest is held by any director or executive officer of the subject
corporation. While none of Odwalla, TCCC or Offeror believes that the Offer
constitutes a transaction that falls within the provisions of Section 1203, an
independent financial advisor, DrKW, has been retained by Odwalla to provide a
fairness opinion with respect to the Offer and has provided such opinion to
Odwalla.
State Takeover Laws -- Other. A number of states have adopted takeover
laws and regulations which purport to varying degrees to be applicable to
attempts to acquire securities of corporations which are incorporated in such
states or which have or whose business operations have substantial economic
effects in such states, or which have substantial assets, security holders,
principal executive offices or principal places of business therein. In 1982,
the Supreme Court of the United States, in Edgar v. Mite Corp., invalidated on
19
constitutional grounds the Illinois Business Takeovers Act, which as a matter of
state securities law made takeovers of corporations meeting certain requirements
more difficult, and the reasoning in such decision is likely to apply to certain
other state takeover statutes. However, in 1987, in CTS Corp. v. Dynamics Corp.
of America, the Supreme Court of the United States held that the State of
Indiana could, as a matter of corporate law and in particular those aspects of
corporate law concerning corporate governance, constitutionally disqualify a
potential acquiror from voting on the affairs of a target corporation without
the prior approval of the remaining shareholders, provided that such laws were
applicable only under certain conditions. Subsequently, in TLX Acquisition Corp.
v. Telex Corp., a federal district court in Oklahoma ruled that the Oklahoma
statutes were unconstitutional insofar as they applied to corporations
incorporated outside Oklahoma in that they would subject such corporations to
inconsistent regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a
federal district court in Tennessee ruled that four Tennessee takeover statutes
were unconstitutional as applied to corporations incorporated outside Tennessee.
This decision was affirmed by the United States Court of Appeals for the Sixth
Circuit.
ITEM 9. EXHIBITS.
[Download Table]
EXHIBIT NO. DESCRIPTION
----------- -----------
(a)(1)(A) Offer to Purchase dated November 6, 2001*+
(a)(1)(B) Form of Letter of Transmittal*+
(a)(1)(C) Form of Notice of Guaranteed Delivery*+
(a)(1)(D) Form of Letter from the Information Agent to Brokers,
Dealers, Commercial Banks, Trust Companies and Other
Nominees*+
(a)(1)(E) Form of Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees*+
(a)(1)(F) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9*+
(a)(1)(G) Instructions for Form W-8BEN*+
(a)(1)(H) Summary of Advertisement as published on November 6, 2001*
(a)(1)(I) Press Release jointly issued by Odwalla, Inc. and The
Coca-Cola Company on October 30, 2001**
(a)(1)(J) Press Release issued by Odwalla, Inc. on November 6, 2001
(a)(2) Letter to Shareholders from D. Stephen C. Williamson, Chief
Executive Officers of Odwalla, Inc. dated November 6, 2001+
(a)(5) Opinion of Dresdner Kleinwort Wasserstein, Inc. to the Board
of Directors of Odwalla, Inc. dated October 29, 2001
(incorporated by reference to Schedule II attached to the
Schedule 14D-9)+
(e)(1) Agreement and Plan of Merger, dated as of October 29, 2001,
by and among The Coca-Cola Company, Perry Phillip Corp. and
Odwalla, Inc.**+
(e)(2) Form of Tender Agreement with voting agreement, dated as of
October 29, 2001, by and among The Coca-Cola Company, Perry
Phillip Corp. and Odwalla, Inc.*+
(e)(3) Form of Tender Agreement without voting agreement, dated as
of October 29, 2001, by and among The Coca-Cola Company,
Perry Phillip Corp. and Odwalla, Inc.*+
(e)(4) Stock Option Agreement, dated as of October 29, 2001, by and
among Odwalla, Inc., The Coca-Cola Company and Perry Phillip
Corp.**+
(e)(5) Employment Agreement, dated as of October 29, 2001, by and
between Odwalla, Inc. and D. Stephen C. Williamson*
20
[Download Table]
EXHIBIT NO. DESCRIPTION
----------- -----------
(e)(6) Information Statement Pursuant to Section 14(f) of the
Securities Exchange Act of 1934, as amended, and Rule 14f-1
thereunder (incorporated by reference to Schedule I attached
to this Schedule 14D-9)+
(g) None
---------------
* Incorporated by reference to Schedule TO filed by TCCC and the Offeror on
November 6, 2001
** Incorporated by reference to Form 8-K filed by Odwalla on November 2, 2001
+ Included in copies mailed to Odwalla's shareholders
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
By: /s/ D. STEPHEN C. WILLIAMSON
------------------------------------
D. Stephen C. Williamson
Chief Executive Officer
Dated: November 6, 2001
21
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SCHEDULE I
ODWALLA, INC.
120 STONE PINE ROAD
HALF MOON BAY, CA 94019
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES EXCHANGE
ACT OF 1934 AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about November 6, 2001, as
a part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of Odwalla, Inc. ("Odwalla" or the "Company") with respect to
the tender offer by Offeror (the "Offeror"), a California corporation and a
wholly-owned subsidiary of TCCC, a Delaware corporation ("TCCC"), to the holders
of record of shares of common stock, no par value per share, of Odwalla (the
"Common Stock" or the "Shares"). Capitalized terms used and not otherwise
defined herein shall have the meaning set forth in this Schedule 14D-9. You are
receiving this Information Statement in connection with the possible election of
persons designated by the Offeror to a majority of the seats on the Board of
Directors of Odwalla.
The Merger Agreement provides that promptly upon the purchase of and
payment for any Shares by the Offeror, which, when added to the Shares owned by
TCCC, represent at least 90.1% (on a Fully Diluted Basis) or 49.9% (in the event
the Offeror revises the Offer under the terms of the Merger Agreement to require
only 49.9%) of the outstanding Shares, the Offeror will be entitled to elect or
designate such number of directors, rounded up to the next whole number, on the
Board for the period following such purchase as is equal to the product of the
total number of directors on the Board (giving effect to the directors elected
or designated by the Offeror pursuant to this sentence) multiplied by the
percentage that the aggregate number of Shares owned by the Offeror, TCCC and
any of their affiliates bears to the total number of Shares then outstanding.
Prior to the purchase of and payment for any Shares by the Offeror, Odwalla will
promptly increase the size of the Board from seven to eight and will maintain
the number of directors at eight until the Effective Time. In addition, Odwalla
will take all action necessary to cause the Offeror's designees to be so elected
or designated to the Board, including increasing the number of directors and
seeking and accepting resignations of incumbent directors. The Company will use
its reasonable best efforts to cause persons elected or designated by the
Offeror to constitute the same percentage (rounded up to the next whole number)
as is on the Board of each committee of the Board (other than any committee of
the Board established to take action under the Merger Agreement) only to the
extent permitted by applicable law or the rules of the Nasdaq National Market.
In the event that the Offeror's designees are elected or designated to the
Board, then, until the Effective Time, Odwalla will use its reasonable best
efforts to ensure that the Board includes at least four directors in office as
of the date of the Merger Agreement (any such director remaining in office being
a "Continuing Director"). If the number of Continuing Directors is reduced below
four, then any remaining Continuing Director will be entitled to designate
persons to fill such vacancies who will be considered Continuing Directors. If
no Continuing Directors remain, then the other directors will designate four
persons to fill such vacancies, and such persons will be considered Continuing
Directors. Following the election or appointment of the Offeror's designees to
the Board and prior to the Effective Time, TCCC and the Offeror will not cause
Odwalla to take any action with respect to any amendment or waiver of any term
of the Merger Agreement, Odwalla's Articles of Incorporation or Bylaws, or any
termination or rescission of the Merger Agreement by Odwalla or any other
consent or action by the Board with respect to the Merger Agreement or the
Offer, without the approval of a majority of the Continuing Directors and a
majority of the directors who are not Continuing Directors.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and Rule 14f-1 thereunder
in connection with the appointment or designation of the Offeror's designees to
the Board.
I-1
You are urged to read this Information Statement carefully. You are not,
however, required to take any action.
Pursuant to the Merger Agreement, Offeror commenced the Offer on November
6, 2001. The Offer is scheduled to expire at midnight, San Francisco, California
time, on Thursday, December 6, 2001, unless the Offer is extended, at which
time, if all conditions to the Offer have been satisfied or waived, the Offeror
will purchase all of the Shares validly tendered pursuant to the Offer and not
properly withdrawn.
The information contained in this Information Statement (including
information incorporated by reference) concerning Offeror, TCCC and the
Offeror's designees has been furnished to Odwalla by the Offeror, and Odwalla
assumes no responsibility for the accuracy or completeness of such information.
OFFEROR DESIGNEES
The Offeror has informed Odwalla that it will choose the designees from the
directors and executive officers of TCCC and/or the Offeror listed in Annex I of
the Offer to Purchase, a copy of which is being mailed to shareholders of
Odwalla. The information with respect to such individuals in Annex I is hereby
incorporated by reference. The Offeror has informed Odwalla that each of the
individuals listed in Annex I of the Offer to Purchase that may be chosen has
consented to act as a director of Odwalla, if so designated.
Based solely on the information set forth in Annex I of the Offer to
Purchase filed by the Offeror, none of the executive officers and directors of
the Offeror or TCCC (1) is currently a director of, or holds any position with,
Odwalla, or (2) has a familial relationship with any directors or executive
officers of Odwalla. The Company has been advised that, to the best knowledge of
the Offeror and TCCC, none of the Offeror's or TCCC's directors or executive
officers beneficially owns any equity securities (or rights to acquire such
equity securities) of Odwalla and none have been involved in any transactions
with Odwalla or any of its directors, executive officers, affiliates or
associates which are required to be disclosed pursuant to the rules and
regulations of the SEC.
The Offeror has informed Odwalla that, to the best of its knowledge, none
of the executive officers and directors of the Offeror or TCCC has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or has been a party to any judicial or administrative proceeding
during the past five years (except for matters that were dismissed without
sanction or settlement) that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to, federal or state securities laws, or a finding of any violation of
federal or state securities laws.
It is expected that the Offeror's designees may assume office at any time
following the purchase by the Offeror of a specified minimum number of Shares
pursuant to the Offer, which purchase cannot be earlier than December 6, 2001,
and that, upon assuming office, the Offeror's designees will thereafter
constitute at least a majority of the Board. This step will be accomplished at a
meeting or by written consent of the Board providing that the size of the Board
be increased and/or sufficient numbers of current directors will resign such
that, immediately following such action, the number of vacancies to be filled by
the Offeror's designees will constitute at least a majority of the available
positions on the Board. It is currently not known which of the current directors
of Odwalla will resign.
CERTAIN INFORMATION CONCERNING THE COMPANY
The authorized capital stock of Odwalla consists of (a) 15,000,000 shares
of Common Stock and (b) 5,000,000 shares of preferred stock, no par value per
share (the "Preferred Stock"). As of the close of business on October 25, 2001,
there were 11,103,321 shares of Common Stock and no shares of Preferred Stock
outstanding. Each share of outstanding Common Stock entitles the record holder
to one vote.
Odwalla's Bylaws currently set the number of directors at seven. As
discussed further on the first page of this Information Statement, the number of
directors on Odwalla's Board will be increased from seven to eight under the
terms of the Merger Agreement. Each of Odwalla's current directors will hold
office until the next annual meeting in 2002 or until their successors have been
elected or until they resign. If any director resigns,
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dies or is otherwise unable to serve out his term, or the Board increases the
number of directors, the Board may fill the vacancy until the next annual
meeting of shareholders.
INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS
THE BOARD OF DIRECTORS
The Board oversees Odwalla's business and affairs and monitors the
performance of management. In accordance with corporate governance principles,
the Board does not involve itself in day-to-day operations. The directors keep
themselves informed through, among other things, discussions with the chief
executive officer, other key executives and Odwalla's principal external
advisers (legal counsel, outside auditors, investment bankers and other
consultants), reading reports and other materials that Odwalla sends them and by
participating in board and committee meetings.
The Board met seven times during fiscal 2001. Each incumbent director
attended at least 75% of the total number of Board and committee meetings, of
which the director was a member, held in fiscal 2001.
Set forth below are the name, age and position of each director and
executive officer of Odwalla.
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NAME AGE POSITION(S) WITH ODWALLA
---- --- ------------------------
D. Stephen C. Williamson..... 43 Chairman of the Board and Chief Executive Officer
Andrew B. Balson(1).......... 35 Director
Richard L. Grubman(1)(2)..... 39 Director
Ellis B. Jones(2)............ 47 Director
Mark E. Nunnelly............. 42 Director
Juan I. Prado................ 41 Director
Craig I. Sakin(1)(2)......... 41 Director
James R. Steichen............ 51 Senior Vice President, Finance and Chief Financial
Officer
Michael Cote................. 46 Senior Vice President -- Sales and Operations
Linda A. Frelka.............. 40 Vice President, Quality Assurance
Theodore R. Leaman III....... 45 Vice President, Manufacturing
Susan M. Kirmayer............ 43 Vice President, Human Resources
---------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
There are no family relationships among the directors or executive
officers. There are no material proceedings to which any director or executive
officer, or any associate of any such director or executive officer, is a party
adverse to Odwalla or any subsidiary of Odwalla or has a material interest
adverse to Odwalla or any subsidiary of Odwalla.
THE COMMITTEES OF THE BOARD
The Board has an audit committee and a compensation committee. The full
Board nominates the directors who are to serve on these committees.
THE AUDIT COMMITTEE The Audit Committee oversees Odwalla's independent
auditors and reviews Odwalla's internal financial
procedures and controls. Directors Jones, Grubman
and Sakin serve as members of the Audit Committee.
The Audit Committee met four times during fiscal
2001.
The Board adopted and approved a charter for the
Audit Committee in June 2000. The Board has
determined that all members of the Audit Committee
are "independent" as that term is defined in Rule
4200 of the listing standards of the National
Association of Securities Dealers.
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THE COMPENSATION COMMITTEE The Compensation Committee has overall
responsibility for Odwalla's compensation policies
and determines the compensation payable to
Odwalla's executive officers, including their
participation in Odwalla's employee benefit and
stock option plans. Directors Balson, Grubman and
Sakin currently serve as members of the
compensation committee. The Compensation Committee
met eleven times in fiscal 2001.
DIRECTORS AND EXECUTIVE OFFICERS
The following are brief biographies of each director and executive officer
of Odwalla (including present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years). Unless
otherwise indicated, to the knowledge of Odwalla, no director or executive
officer of Odwalla has been convicted in a criminal proceeding during the last
five years (excluding traffic violations or similar misdemeanors) and no
director or executive officer of Odwalla was a party to any judicial or
administrative proceeding during the last five years (except for any matters
that were dismissed without sanction or settlement) that resulted in a judgment,
decree or final order enjoining the person from future violations of, or
prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws. Each director and
officer of Odwalla is a citizen of the United States, except for Mr. Prado who
is a citizen of Brazil, and each individual's business address is c/o Odwalla,
Inc., 120 Stone Pine Road, Half Moon Bay, California 94019.
[Download Table]
NAME AND AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
------------ --------------------------------------------
D. Stephen C.
Williamson(43)............. D. Stephen C. Williamson currently serves as
Chairman of the Board and as Chief Executive
Officer, a position he has held since June 1996.
Prior to that time, Mr. Williamson served as
Co-Chairman of the Board and Co-Chief Executive
Officer from January 1995 to June 1996 and as Chief
Financial Officer of Odwalla from March 1991 to
August 1996. Mr. Williamson also served as
Odwalla's President from May 1992 until January
1995. Mr. Williamson holds a B.A. degree in history
from the University of California at Berkeley. He
is also Chairman of Avenal Land & Oil Company, a
private investment company.
Andrew B. Balson(35)....... Andrew B. Balson has served as a director of
Odwalla since May 2000. Mr. Balson has been a
Managing Director of Bain Capital since December
2000. Previously, Mr. Balson was a Principal of
Bain Capital since June 1998 and had been an
Associate at Bain Capital since November 1996.
Prior to this, Mr. Balson was a consultant with
Bain & Company since August 1994. Mr. Balson is
also a director of Domino's Pizza, Inc. and
Interpath, Inc.
Richard L. Grubman(39)..... Richard L. Grubman has served as a director of
Odwalla since August 1997. Mr. Grubman has been a
Managing Director of Highfields Capital Management,
LP since April 1998. Prior to this, Mr. Grubman was
a Managing Director of Development Capital, LLC
since January 1997 and a general partner of its
affiliate, Corporate Value Partners, LP, since
November 1996. Mr. Grubman was also previously
President of Sycamore Capital Management, Inc., a
position he held since January 1996. From December
1992 to November 1995, Mr. Grubman was a general
partner of Lakeview Partners, L.P. During 1992, he
was a vice president of Gollust, Tierney and
Oliver, Incorporated. Mr. Grubman holds an A.B.
degree in Art and Archaeology from Princeton
University.
Ellis B. Jones(47)......... Ellis B. Jones has served as a director of Odwalla
since May 2000. Mr. Jones is Chief Executive
Officer of Wasserstein & Co., which includes the
venture capital and the leveraged buyout funds, and
the
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other asset management businesses of Wasserstein &
Co. Formerly, Mr. Jones was a Managing Director of
Wasserstein Perella & Co., which he joined in
February of 1995. He was a Managing Director in
investment banking at Salomon Brothers during the
period of 1988 through 1994. Mr. Jones graduated
from the Yale School of Management and the
University of California at Berkeley. He also
serves on the Boards of Directors of Element K
Corporation, American Lawyer Media, IMAX
Corporation, Phoenix House (a non-profit
organization) and The Cate School in Carpinteria,
California.
Mark E. Nunnelly(42)....... Mark E. Nunnelly has served as a director of
Odwalla since May 2000. Mr. Nunnelly has been a
Managing Director of Bain Capital since 1990. Prior
to that time, Mr. Nunnelly was a partner at Bain &
Company and was employed by Procter & Gamble
Company Inc. in product management. Mr. Nunnelly
serves on the board of directors of several
companies, including Domino's Pizza, Modus Media,
Eschelon Telecommunications, CTC Communications,
Interpath and DoubleClick, Inc.
Juan I. Prado(41).......... Juan I. Prado has served as a director of Odwalla
since August 2000. Mr. Prado has served as Chairman
and CEO of Promisant Ltd., a provider of global
transaction processing services since March 1999.
Prior to this, Mr. Prado served as a senior officer
of the Coca-Cola Company's Latin American Group
since 1991. Mr. Prado received an MBA from The
Wharton School, an MA in languages and
international studies from The University of
Pennsylvania, and a B.S. in industrial engineering
from Tufts University.
Craig H. Sakin(41)......... Craig H. Sakin has served as a director of the
Company since February 1999. Mr. Sakin has served
as Managing Director and more recently a Managing
Partner of Catterton Partners, a group of
affiliated private equity funds, since August 1996.
From November 1991 to August 1996, Mr. Sakin was
Chairman and Chief Executive Officer of Gold Coast
Beverage Distributors, a beer distribution company.
Mr. Sakin holds a B.S. from St. Lawrence
University.
James R. Steichen(51)...... James R. Steichen has served as Senior Vice
President, Finance since August 1998 and as Chief
Financial Officer since September 1996. From May
1996 to August 1996, Mr. Steichen served as Vice
President, Finance and had served as a consultant
to Odwalla since August 1995. Prior to that, he had
been a partner with BDO Seidman, LLP, a public
accounting firm, since December 1990. Mr. Steichen
is a Certified Public Accountant and holds a B.S.
degree from the University of South Dakota.
Michael Cote(46)........... Michael Cote has served as Senior Vice
President -- Sales and Operations since June 2001.
Mr. Cote most recently served as Customer Vice
President, Growth Channels at Pepperidge Farm, Inc.
from May 1999 to May 2001. Prior to that, Mr. Cote
served as Customer Vice President, New England
Sales at Pepperidge Farm, Inc. from January 1998 to
May 1999 and as Director -- Northeast Sales from
August 1995 to January 1998. Mr. Cote attended
Nichols College and Franklin Pierce College,
majoring in Business Administration, and the
University of Maine, majoring in Criminal Justice.
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Linda A. Frelka(40)........ Linda A. Frelka has served as Vice President,
Quality Assurance since September 1997. From
October 1987 to August 1997, Ms. Frelka worked at
Redi-Cut Foods, Inc. in several quality assurance
roles, most recently as Vice President from 1995 to
1997. Ms. Frelka has a B.S. degree in Biological
Sciences, emphasis Microbiology, from Northern
Illinois University.
Theodore R. Leaman
III(45).................... Theodore R. Leaman III has served as Vice
President, Manufacturing since April 1999. From
January 1998 until April 1999, Mr. Leaman was Plant
Manager for Stouffer Foods, a subsidiary of Nestle
Corporation. From January 1993 until December 1998,
Mr. Leaman served as Plant Manger for Contadina,
another Nestle Corporation subsidiary. Mr. Leaman
received a B.S. in Industrial Management from
Carnegie-Mellon University.
Susan M. Kirmayer(43)...... Susan M. Kirmayer has served as Vice President,
Human Resources since August 1998. From October
1997 until August 1998, Ms. Kirmayer served as
Director, Human Resources. From February 1992 to
October 1997, Ms. Kirmayer served as Director of
Human Resources and Administrative Services for
Collagen Corporation. Ms. Kirmayer attended San
Jose State University and majored in Business
Administration.
COMPENSATION OF DIRECTORS
Members of the Board who are not employees currently receive $10,000 per
year, in addition to reimbursement for some expenses incurred in connection with
their attendance at meetings of the Board and committees.
Under the Automatic Option Grant Program of the Company's 1997 Stock
Option/Stock Issuance Plan, each individual who first becomes a non-employee
Board member, whether through election by the shareholders or appointment by the
Board, is automatically granted, at the time of the initial election or
appointment, a non-statutory option to purchase 5,000 shares of Common Stock,
provided the individual was not previously in Odwalla's employment. In addition,
on the date of each annual meeting, each individual who is to continue to serve
as a non-employee Board member, whether or not that individual is standing for
re-election to the Board at that particular annual meeting, will automatically
be granted at that meeting a non-statutory option to purchase 3,000 shares of
Common Stock, provided the individual has served as a non-employee Board member
for at least six months. There is no limit on the number of these 3,000-share
option grants any one non-employee Board member may receive over his or her
period of Board service, and non-employee Board members who have previously
served in Odwalla's employ will be fully eligible for one or more 3,000-share
option grants.
Each option granted under the Automatic Option Grant Program is subject to
the following terms and conditions:
1. The exercise price per share will be equal to 100% of the fair
market value per Share on the automatic grant date;
2. Each option will have a maximum term equal to the lesser of (a) 10
years measured from the grant date or (b) 12 months following termination
of Board service;
3. Each option will be immediately exercisable for all the Shares
subject to such option, but any purchased Shares will be subject to
repurchase by Odwalla, at the exercise price paid per Share, upon the
optionee's cessation of Board service prior to vesting in those Shares;
4. The Shares subject to each initial 5,000 share grant will vest in
four successive equal annual installments over the optionee's period of
Board service, with the first installment to vest upon the
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completion of one year of Board service, measured from the automatic grant
date. All of the Shares subject to each annual 3,000 share grant will vest
upon the optionee's completion of one year of Board service, measured from
the automatic grant date;
5. The Shares subject to each outstanding automatic option grant will
immediately vest should the optionee die or become permanently disabled
while a Board member or should any of the following events occur while the
optionee continues in Board service: (a) an acquisition of Odwalla by
merger or asset sale; (b) the successful completion of a hostile tender
offer for more than 50% of the total combined voting power of Odwalla's
outstanding securities; or (c) a change in the majority of the Board
occasioned by one or more contested elections for Board membership; and
6. Upon the successful completion of a hostile tender offer for
securities possessing more than fifty percent (50%) of the total combined
voting power of Odwalla's outstanding securities, each outstanding
automatic option grant may be surrendered to Odwalla for a cash
distribution per surrendered option share in an amount equal to the excess
of (a) the greater of (1) the fair market value per share of Common Stock
on the date the option is surrendered to Odwalla in connection with a
hostile tender offer or (2) the highest price per share of Common Stock
paid in the hostile tender offer over (b) the exercise price payable per
share.
Under the Automatic Option Grant Program described above, the following
options were granted to non-employee directors under the Company's 1997 Stock
Option/Stock Issuance Plan in fiscal 2001: Mr. Balson, Mr. Grubman, Mr. Jones,
Mr. Nunnelly and Mr. Sakin were each granted options to purchase 3,000 Shares at
an exercise price of $10.00 per share.
EXECUTIVE COMPENSATION
The following Summary Compensation Table contains information regarding the
compensation of Odwalla's Chief Executive Officer, President, and four most
highly compensated officers for the fiscal years ended September 1, 2001,
September 2, 2000 and August 28, 1999.
SUMMARY COMPENSATION TABLE
[Enlarge/Download Table]
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
NAME AND FISCAL --------------------- UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(1) ($)(2)
------------------ ------ --------- -------- ------------ ------------
D. Stephen C. Williamson............. 2001 394,712 -- 150,000 --
Chairman of the Board and 2000 242,308 30,000 110,000 --
Chief Executive Officer 1999 185,000 -- 160,000 --
James R. Steichen.................... 2001 266,827 -- 50,000 960
Senior Vice President, Finance and 2000 193,750 20,000 40,000 772
Chief Financial Officer 1999 169,577 -- 70,000 1,081
Theodore R. Leaman III............... 2001 175,685 -- 25,000 673
Vice President, Manufacturing 2000 163,077 15,000 -- 554
1999 64,615 -- 50,000 --
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[Enlarge/Download Table]
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
NAME AND FISCAL --------------------- UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(1) ($)(2)
------------------ ------ --------- -------- ------------ ------------
Karen Lucas.......................... 2001 165,000 -- 30,000 18,699
Vice President, East Coast Sales 2000 154,614 15,070 20,000 717
1999 3,217 -- -- --
Susan M. Kirmayer.................... 2001 159,519 -- 25,000 580
Vice President, Human Resources 2000 124,692 15,000 -- 681
1999 103,994 -- 20,000 868
---------------
(1) The options listed in the table were granted under the Company's 1997 Stock
Option/Stock Issuance Plan.
(2) Represents Odwalla's matching 401(k) plan contribution for all amounts shown
except the total shown for Ms. Lucas includes $17,694 for moving and housing
allowance.
INDIVIDUAL OPTION GRANTS TO EXECUTIVE OFFICERS DURING FISCAL YEAR 2001
The following table sets forth certain information regarding stock options
granted in 2001 to the individuals named in the Summary Compensation Table. No
stock appreciation rights were granted to those individuals during the fiscal
year 2001.
INDIVIDUAL GRANTS
[Enlarge/Download Table]
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENTAGE OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM (2)
OPTIONS EMPLOYEES IN EXERCISE PRICE -----------------------
NAME GRANTED FISCAL 2001 ($/SHARE)(1) EXPIRATION DATE 5% 10%
---- ---------- ------------- -------------- --------------- --------- -----------
D. Stephen C.
Williamson............. 150,000(3) 37.9% $9.938 2/8/11 $937,493 $2,375,792
James R. Steichen........ 50,000(3) 12.6% $9.938 2/8/11 $312,498 $ 791,931
Karen Lucas.............. 30,000(4) 7.6% $8.438 10/17/10 $159,198 $ 403,440
Theodore R. Leaman III... 25,000(4) 6.3% $8.438 10/17/10 $132,665 $ 336,200
Susan M. Kirmayer........ 25,000(4) 6.3% $8.438 10/17/10 $132,665 $ 336,200
---------------
(1) The exercise price may be paid in cash, in shares of Common Stock valued at
fair market value on the exercise date or through a cashless exercise
procedure involving a same-day sale of the purchased Shares. The Company may
also finance the option exercise by loaning the optionee sufficient funds to
pay the exercise price for the purchased Shares and the federal and state
income and employment tax liability incurred by the optionee in connection
with the exercise.
(2) There is no assurance provided to the option holder or any other holder of
Odwalla's securities that the actual stock price appreciation over the five-
or 10-year option term will be at the 5% and 10% assumed annual rates of
compounded stock price appreciation.
(3) The options were granted under Odwalla's 1997 Stock Option/Stock Issuance
Plan on February 8, 2001, with a vesting commencement date of the same date.
The options granted have a maximum term of 10 years, all measured from the
grant date, subject to earlier termination upon the optionee's cessation of
service with Odwalla. All options will vest as to 1/36 of the Shares each
month.
(4) The options were granted under the Company's 1997 Stock Option/Stock
Issuance Plan on October 17, 2000, with a vesting commencement date of the
same date. The options granted have a maximum term of
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10 years, all measured from the grant date, subject to earlier termination
upon the optionee's cessation of service with Odwalla. All options will vest
as to 1/36 of the Shares each month.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth for each of the individuals named in the
Summary Compensation Table, certain information concerning the number of Shares
subject to both exercisable and unexercisable stock options as of September 1,
2001. Also reported are values for "in-the-money" options that represent the
positive spread between the respective exercise prices of outstanding options
and the fair market value of the Company's Common Stock as of September 1, 2001.
No stock appreciation rights were exercised during fiscal year 2001 or were
outstanding at the end of fiscal year 2001.
[Enlarge/Download Table]
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT SEPTEMBER 1, 2001 AT FISCAL YEAR END(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
D. Stephen C.
Williamson............. -- $ -- 361,554 233,446 $190,577 $80,873
James R. Steichen........ -- $ -- 127,737 82,363 $ 79,505 $40,265
Theodore R. Leaman III... -- $ -- 44,721 30,279 $ 69,313 $21,047
Karen Lucas.............. -- $ -- 21,667 28,333 $ 9,934 $ 4,966
Susan M. Kirmayer........ -- $ -- 30,389 23,611 $ 12,567 $ 4,833
---------------
(1) Based on the fair market value of the Shares at the end of the 2001 fiscal
year ($7.87 per share) less the option exercise price payable for those
Shares.
EMPLOYMENT AGREEMENTS
On December 21, 1999, D. Stephen C. Williamson, Odwalla's Chief Executive
Officer, and James R. Steichen, Odwalla's Senior Vice President, Finance and
Chief Financial Officer, entered into employment agreements with Odwalla that
are effective until December 21, 2002. Thereafter, these agreements are subject
to three consecutive automatic one-year renewals. The agreements generally
provide for annual salaries to be paid at the most recently approved salary
approved by the Compensation Committee of the Board and the right to participate
in and to receive those employee benefits that are generally provided to
similarly situated employees at Odwalla. If Mr. Williamson's or Mr. Steichen's
employment is terminated due to death, a disability that prevents him from
performing his duties for six months, termination for cause, or resignation
without good reason, payment of his salary and benefits will cease.
If Mr. Williamson or Mr. Steichen is terminated other than for cause or is
terminated within 12 months of a change of control or corporate transaction (as
those terms are defined in Odwalla's 1997 Stock Option/ Issuance Plan), the
terminated employee will receive specified payments that are substantially
equivalent to the remaining payments he would have received had he remained
employed through the term of his agreement. The terminated employee will also
receive reimbursement for the cost of acquiring health benefits through the term
of his agreement. All stock options held by the terminated employee will
automatically become vested and fully exercisable at the time his termination
becomes effective. The total payments or benefits received by Mr. Williamson or
Mr. Steichen from Odwalla resulting from termination in connection with a change
of control or corporate transaction shall not exceed three times the terminated
employee's annualized compensation minus $1.00. If Mr. Williamson or Mr.
Steichen resigns for good reason, the resigning employee is entitled to received
severance pay equal to his base salary for a period of 12 months. The resigning
employee also would be entitled to reimbursement for the cost of acquiring
health benefits for a period of 12 months.
On October 29, 2001, concurrent with the execution of the Merger Agreement,
Mr. Williamson entered into a new employment agreement with Odwalla that will
become effective on the Effective Time, which is
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more fully discussed in Item 3 of the Company's Solicitation/Recommendation
Statement on Schedule 14D-9.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 21, 1999, D. Stephen C. Williamson and James R. Steichen
entered into employment agreements with Odwalla, the terms of which are
discussed more fully in the section entitled "Employment Agreements" above.
Mr. Williamson has also entered into a new employment agreement with the
Company on October 29, 2001, the terms of which are discussed more fully in Item
3 of the Company's Solicitation/Recommendation Statement on Schedule 14D-9.
Termination Agreement with Karen Lucas
By letter agreement, dated September 21, 2001, Karen Lucas, Odwalla's Vice
President, Marketing and East Coast Sales, agreed with Odwalla to terminate her
employment on October 8, 2001. From October 9, 2001 through April 9, 2002,
Odwalla agreed to provide Ms. Lucas (1) $82,500 in severance pay, less all
applicable withholdings, payable on Odwalla's bi-weekly payroll schedule, (2)
payment for continuation of COBRA benefits, (3) outplacement services with a
firm and in an amount determined by Odwalla and (4) relocation expenses should
Ms. Lucas move to Seattle, Washington.
The letter agreement also specified the number of vested stock options Ms.
Lucas had as of the termination date and that Ms. Lucas has until January 6,
2002 to exercise any of these vested shares.
In consideration for receiving the severance payments, COBRA reimbursement,
outplacement and relocation benefits described above, Ms. Lucas waived and
released and promised to never to assert any claims or causes of action against
Odwalla, its predecessors, successors, or past or present subsidiaries,
officers, directors, agents, employees and assigns with respect to any matter
arising out of or connected with Ms. Lucas' employment with Odwalla.
Under the terms of the letter agreement, for a period ending on April 8,
2003, Ms. Lucas has agreed not to (1) solicit employment of any employee of
Odwalla, (2) own, manage, operate, sell, control, participate in the ownership,
management, operation, sales or control of any business in the United States
that directly competes with Odwalla's business, or (3) solicit Odwalla's
customers or suppliers that Ms. Lucas contacted, solicited or became acquainted
with during her employment with Odwalla.
Douglas K. Levin Separation Agreement and Release
On December 14, 2000, Odwalla entered into a separation agreement and
release with Douglas K. Levin. As of the date of the agreement, Mr. Levin was
deemed to have resigned from all offices and directorships of Odwalla or any
affiliate. Odwalla agreed to pay Mr. Levin $654,000 in bi-weekly installment
payments, beginning December 29, 2000 through December 31, 2003, also known as
the "Severance Term." Under the terms of the agreement, Mr. Levin agreed that
all stock option agreements between him and Odwalla were cancelled and void, and
Mr. Levin further acknowledged that he had no rights and Odwalla had no
obligations under any of these stock option agreements.
For the 18 month period following the date of the separation agreement and
release, Odwalla agreed to provide Mr. Levin COBRA health benefits, and at the
end of this period, Odwalla agreed to reimburse Mr. Levin for the cost of
purchasing health care coverage for an additional 18 months. Odwalla also agreed
to pay, for the period beginning January 1, 2001 through June 30, 2001, Mr.
Levin's housing payments equal to $6,000 per month.
Upon receipt of his first severance payment, Mr. Levin agreed to dismiss
promptly and with prejudice any and all lawsuits and other actions against
Odwalla involving Mr. Levin. Mr. Levin has no obligation to seek alternative
employment during the Severance Term and will continue to receive severance
payments from Odwalla in the event that Mr. Levin does secure alternative
employment.
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Mr. Levin agreed not to disclose or use any information regarding Odwalla's
business, employees or customers, which was produced by any employee of Odwalla
in the course of his or her employment, and which is not properly in the public
domain. For a period of two-and-one-half years following the date of the
separation agreement and release, Mr. Levin agreed not to (1) divert or attempt
to divert from Odwalla or any affiliate any business in which it is engaged, (2)
employ or recommend for employment any person employed by Odwalla or any
affiliate, other than his wife Abby Carter, or (3) engage in any business
activity that is competitive with Odwalla or any affiliate in any state where
Odwalla conducts its business, unless Mr. Levin can prove that his actions were
done without the use of confidential information. In addition, for a period of
two-and-one-half years following the date of the separation agreement and
release, Mr. Levin agreed not to (1) solicit any customer of Odwalla or any
affiliate known to Mr. Levin to have been a customer for the provision of
substantially the same products or services as provided by Odwalla, or (2)
solicit for employment any person employed by Odwalla or any affiliate, other
than his wife Abby Carter.
Under the separation agreement and release, Mr. Levin completely released
and discharged Odwalla and any affiliate, and its and their present and former
shareholders, officers, directors, agents, employees, attorneys, successors and
assigns from all claims of every kind, known or unknown, mature or unmatured,
which Mr. Levin may now have or in the future arising from any act or omission
or condition occurring prior to the date of the agreement. Odwalla and Mr. Levin
agreed that the agreement reflects a compromise settlement of disputed claims
and that the furnishing of consideration for the agreement was not an admission
of liability by Odwalla.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No interlocking relationship exists between Odwalla's executive officers,
Board or compensation committee and any executive officer or member of the Board
or compensation committee of any other company, nor has such interlocking
relationship existed in the past.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Odwalla's directors and
executive officers, and persons who own more than 10% of a registered class of
Odwalla's equity securities, to file with the SEC initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of Odwalla. officers, directors and greater than 10% shareholders are required
by SEC regulations to furnish Odwalla with copies of all Section 16(a) forms
they file.
To Odwalla's knowledge, based solely on a review of the copies of the
reports furnished to Odwalla and written representations that no other reports
were required during the fiscal year ended September 1, 2001, all Section 16(a)
filing requirements applicable to its officers, directors and greater than 10%
beneficial owners for fiscal 2001 were complied with on a timely basis.
I-11
REPORT OF THE COMPENSATION COMMITTEE
The following Compensation Committee's Report on Executive Compensation
shall not be deemed to be "soliciting material" or to be "filed" with the SEC or
subject to Regulations 14A or 14C of or to the liabilities of Section 18 of the
Exchange Act, and shall not be deemed incorporated by reference into any filing
under the Securities Act of 1933, as amended (the "Securities Act"), or the
Exchange Act, notwithstanding any general incorporation by reference of this
Information Statement into any other document.
THE REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board, subject to review by the full
Board, is responsible for the establishment of remuneration arrangements for
senior management and the administration of compensation and employee benefit
plans. In addition, the Compensation Committee sets the base salary of Odwalla's
executive officers, approves individual bonus programs for executive officers,
and administers Odwalla's stock option plans under which grants may be made to
executive officers and other key employees. The following is a summary of
policies of the Compensation Committee that affect the compensation paid to
executive officers during the fiscal year 2001, as reflected in the tables and
text set forth elsewhere in this document.
General Compensation Policy
The objectives of Odwalla's executive compensation program are to motivate
and retain current executives and to attract future ones. Odwalla's executive
compensation program is designed to: (1) provide a direct and substantial link
between Odwalla's performance and executive pay, (2) consider individual
performance and accomplishments and compensate accordingly, and (3) determine
Odwalla's position in the specialty beverage and food labor markets and be
competitive in those labor markets. Odwalla's intent is to position its
executive pay levels at the median of U.S. specialty beverage and food
companies. The Committee also considers geographic location and companies that
may compete with Odwalla's in recruiting executive talent.
The principal factors which the Compensation Committee considered in
establishing the components of each executive officer's compensation package for
fiscal 2001 are summarized below. The Compensation Committee may, however, in
its discretion apply entirely different factors in setting executive
compensation for future years.
Base Salary
The base salary for each officer is set on the basis of personal
performance, the Compensation Committee's assessment of salary levels in effect
for comparable positions with the Company's principal competitors, and internal
comparability considerations. The weight given to each of these factors may vary
from individual to individual, and the Compensation Committee did not rely upon
any specific compensation surveys for comparative compensation purposes.
Instead, the Compensation Committee made its decisions as to the appropriate
market level of base salary for each executive officer on the basis of its
understanding of the salary levels in effect at companies with which Odwalla
competes for executive talent. Base salaries will be reviewed on an annual
basis, and adjustments will be made in accordance with the factors indicated
above.
Long-Term Incentive Compensation
Long-term incentives are provided through stock option grants. The grants
are designed to align the interests of the executive officers with those of the
shareholders, and to provide each officer with a significant incentive to manage
Odwalla from the perspective of an owner with an equity stake in the business.
The stock option plan encourages long term retention and provides rewards to
executives and other eligible employees commensurate with growth in shareholder
value. It is the Compensation Committee's practice to grant options to purchase
Shares at the market price on the date of grant with a term of up to 10 years.
The options granted to the Company's executive officers during fiscal 2001 will
vest from the date of grant in thirty-six or forty-eight equal monthly
installments. Accordingly, the options will provide a return to the executive
officer only if he or she remains in the Company's employ and the market price
of the underlying Shares appreciates.
I-12
The number of Shares subject to each option grant is set at a level
intended to create a meaningful opportunity for stock ownership based on the
officer's current position with the Company, the base salary associated with
that position, the size of comparable awards made to individuals in similar
positions within the industry, the individual's potential for increased
responsibility and promotion over the option term, and the individual's personal
performance in recent periods. The Compensation Committee also takes into
account the number of unvested options held by the executive offer in order to
maintain an appropriate level of equity incentive for that individual. However,
the Compensation Committee does not adhere to any specific guidelines as to the
relative option holdings of the Company's executive officers.
Compensation of Chief Executive Officer
The compensation payable to Mr. Williamson, Odwalla's Chief Executive
Officer, was determined by the Compensation Committee. Mr. Williamson's base
salary was set at a level which the Board believed would be competitive with the
base salary levels in effect for chief executive officers at similarly-sized
companies within the industry. For fiscal year 2001, Mr. Williamson's
compensation package was set by the Compensation Committee on the basis of the
compensation policy summarized in this report.
Deductibility of Executive Compensation
The Compensation Committee has considered the impact of Section 162(m) of
the Internal Revenue Code adopted under the Omnibus Budget Reconciliation Act of
1993, which section disallows a deduction for any publicly held corporation for
individual compensation exceeding $1 million in any taxable year for the chief
executive officer and the four other most highly compensated executive officers,
respectively, unless such compensation meets the requirements for the
"performance-based" exception to Section 162(m). The compensation paid to
Odwalla's executive officers for fiscal 2001 did not exceed the $1 million limit
per officer, and it is not expected that the compensation to Odwalla's executive
officers for fiscal year 2002 will exceed that limit. In addition, Odwalla's
1997 Stock Option/Stock Issuance Plan is structured so that any compensation
deemed paid to an executive officer in connection with the exercise of his or
her outstanding options under the 1997 Stock Option/Stock Issuance Plan will
qualify as performance-based compensation which will not be subject to the $1
million limitation. It is the Compensation Committee's policy to qualify, to the
extent reasonable, its executive officers' compensation for deductibility under
the applicable tax law. However, we may from time to time pay compensation to
our executive officers that may not be deductible.
SUBMITTED BY THE COMPENSATION COMMITTEE:
RICHARD L. GRUBMAN,
BOARD MEMBER AND COMPENSATION COMMITTEE CHAIRMAN
ANDREW B. BALSON,
BOARD MEMBER AND COMPENSATION COMMITTEE MEMBER
CRAIG H. SAKIN,
BOARD MEMBER AND COMPENSATION COMMITTEE MEMBER
I-13
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
Company's Common Stock with that of the Nasdaq Stock Market (U.S.) Index and the
Russell 2000 Index. The comparison for each of the periods assumes that $100 was
invested on August 31, 1996 in the Company's Common Stock including reinvestment
of dividends. These indices, which reflect formulas for dividend reinvestment
and weighing of individual stocks, do not necessarily reflect returns that could
be achieved by individual investors.
COMPARISON OF FIVE (5) YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE RUSSELL 2000 INDEX
[PERFORMANCE GRAPH]
[Download Table]
NASDAQ
--------------------------------------------------------------------------------
THE MARKET RUSSELL
COMPANY (U.S.) 2000
--------------------------------------------------------------------------------
August 1996 100.00 100.00 100.00
August 1997 68.70 139.49 128.95
August 1998 54.96 131.81 103.94
August 1999.................................... 43.89 244.89 133.42
August 2000.................................... 41.22 374.16 169.65
August 2001.................................... 48.24 160.03 149.92
Notwithstanding anything to the contrary set forth in any of Odwalla's
previous filings under the Securities Act or the Exchange Act that might
incorporate future filings, including this Information Statement, in whole or in
part, the preceding Compensation Committee Report on Executive Compensation and
the preceding Performance Graph shall not be incorporated by reference into any
of these filings; nor shall the Report or graph be incorporated by reference
into any future filings.
I-14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the ownership of
Odwalla's Common Stock as of November 1, 2001, by (1) each director, (2) the
Chief Executive Officer and each of the four other most highly compensated
executive officers of the Company, determined for the Company's fiscal year
ended September 1, 2001, (3) all those known by the Company to be beneficial
owners of more than five percent of its Common Stock, and (4) all directors and
executive officers as a group. Except as otherwise indicated, the address of
each of the people in this table is as follows: c/o Odwalla, Inc., 120 Stone
Pine Road, Half Moon Bay, California 94019.
[Enlarge/Download Table]
COMMON STOCK
BENEFICIALLY OWNED(1)(2)
---------------------------
NUMBER OF
SHARES
BENEFICIALLY PERCENT
NAME OF BENEFICIAL OWNER OWNED OF CLASS(1)
------------------------ ------------ -----------
Bain Capital Funds(3)....................................... 2,769,275 24.79%
c/o Bain Capital Partners, LLC
111 Huntington Avenue
Boston, MA 02199
Catterton-Simon Partners III, L.P........................... 1,493,461 13.37%
7 Greenwich Office Park
Greenwich, CT 06830
D. Stephen C. Williamson(4)................................. 1,031,107 8.90%
U.S. Equity Partners, LP and U.S. Equity Partners
(Offshore), LP(5)......................................... 764,612 6.84%
1999 Avenue of the Stars, Suite 2950
Los Angeles, CA 90067
Richard Grubman(6).......................................... 60,848 *
Craig H. Sakin(7)........................................... 5,500 *
Andrew B. Balson(8)......................................... 1,250 *
Ellis B. Jones(9)........................................... 1,250 *
Mark E. Nunnelly(10)........................................ 1,250 *
Juan I. Prado(11)........................................... 58,742 *
James R. Steichen(12)....................................... 147,183 1.30%
Theodore R. Leaman III(13).................................. 53,055 *
Susan M. Kirmayer(14)....................................... 35,689 *
Karen Lucas(15)............................................. 23,055 *
All directors and executive officers as a group (13
persons)(16).............................................. 1,447,492 12.96%
---------------
* Less than one percent (1%).
(1) This table is based upon information supplied by officers, directors and
principal shareholders and Schedules 13D and 13G filed with the SEC. Unless
otherwise indicated in the footnotes to this table and subject to community
property laws applicable, the Company believes that each of the
shareholders named in this table has sole voting and investment power with
respect to the Shares indicated as beneficially owned.
(2) Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to
securities. Shares of Common Stock, subject to options currently
exercisable or exercisable within 60 days of November 1, 2001, are deemed
outstanding for computing the percentage of the person holding the options,
but are not deemed outstanding for computing the percentage of any other
person. Percentage of ownership is based on 11,171,579 shares of Common
Stock outstanding on November 1, 2001.
I-15
(3) Includes (i) 1,971,664 shares of Common Stock held by Bain Capital Fund VI,
L.P. whose sole general partner is Bain Capital Partners VI, L.P., whose
sole general partner is Bain Capital Investors, LLC ("BCI"); (ii) 472,960
shares of Common Stock held by BCIP Associates II, whose managing general
partner is BCI; (iii) 92,331 shares of Common Stock held by BCIP Associates
II-B, whose managing general partner is BCI; (iv) 88,166 shares of Common
Stock held by BCIP Associates II-C, whose managing general partner is BCI;
(v) 91,430 shares of Common Stock held by BCIP Trust Associates II, whose
managing general partner is BCI; (vi) 51,474 shares of Common Stock held by
BCIP Trust Associates II-B, whose managing general partner is BCI; and
(vii) 6,543 shares of Common Stock held by PEP Investments Pty. Ltd., as to
which BCI holds a power of attorney. Mr. Balson and Mr. Nunnelly are
managing directors of Bain Capital, LLC and partners of certain of BCI,
BCIP Associates II, BCIP Associates II-B, BCIP Associates II-C; BCIP Trust
Associates II, and BCIP Trust Associates II-B and accordingly may be deemed
to beneficially own Shares owned by such funds of which they are partners.
Mr. Balson and Mr. Nunnelly disclaim beneficial ownership of any of such
Shares in which they do not have a pecuniary interest. The address of Mr.
Balson and Mr. Nunnelly is c/o Bain Capital, LLC, 111 Huntington Avenue,
Boston, Massachusetts 02199.
(4) Includes 41,250 shares of Common Stock held by Alexandra Bowes, Mr.
Williamson's wife, and 194,851 Shares held by Willy Juice Partners, a
limited partnership of which Mr. Williamson is the general partner. Mr.
Williamson disclaims beneficial ownership of Shares held by Willy Juice
Partners, except to the extent of his pecuniary interest therein. Also
includes 412,890 shares of Common Stock subject to options exercisable
within 60 days of November 1, 2001.
(5) Includes 601,667 shares of Common Stock held by U.S. Equity Partners, L.P.
and 162,945 shares of Common Stock held by U.S. Equity Partners (Offshore),
L.P. managed by Wasserstein & Co., of which Mr. Jones disclaims beneficial
ownership. Mr. Jones is the Chief Executive Officer of Wasserstein & Co.
(6) Includes 1,100 shares of Common Stock held by Caroline Mortimer, Mr.
Grubman's wife, and 46,000 shares of Common Stock subject to options
exercisable within 60 days of November 1, 2001, plus Mr. Grubman's interest
in 1,548 shares of Common Stock held by Willy Juice Partners.
(7) Excludes 1,493,461 shares of Common Stock held by Catterton-Simon Partners
III, L.P., a Delaware limited partnership. Mr. Sakin disclaims beneficial
ownership of the Shares held by Catterton-Simon Partners III, L.P. Mr.
Sakin is a manager of Catterton-Simon Managing Partners III, L.L.C., the
general partner of Catterton-Simon Partners III, L.P. Includes 5,500 shares
of Common Stock subject to options exercisable within 60 days of November
1, 2001.
(8) Includes 1,250 shares of Common Stock subject to options exercisable within
60 days of November 1, 2001 and excludes shares of Common Stock held by
BCI, BCIP Associates II, BCIP Associates II-B, BCIP Associates II-C; BCIP
Trust Associates II, and BCIP Trust Associates II-B, as discussed in Note
3.
(9) Includes 1,250 shares of Common Stock subject to options exercisable within
60 days of November 1, 2001.
(10) Includes 1,250 shares of Common Stock subject to options exercisable within
60 days of November 1, 2001 and excludes shares of Common Stock held by
BCI, BCIP Associates II, BCIP Associates II-B, BCIP Associates II-C; BCIP
Trust Associates II, and BCIP Trust Associates II-B, as discussed in Note
3.
(11) Includes 57,492 shares of Common Stock held by JIP Enterprises, Inc., of
which Mr. Prado is the sole stockholder, and 1,250 shares of Common Stock
subject to options exercisable within 60 days of November 1, 2001.
(12) Includes 147,183 shares of Common Stock subject to options exercisable
within 60 days of November 1, 2001.
(13) Includes 53,055 shares of Common Stock subject to options exercisable
within 60 days of November 1, 2001.
I-16
(14) Includes 35,689 shares of Common Stock subject to options exercisable
within 60 days of November 1, 2001.
(15) Includes 23,055 shares of Common Stock subject to options exercisable
within 60 days of November 1, 2001.
(16) Includes 758,183 shares of Common Stock subject to options exercisable
within 60 days of November 1, 2001, and excludes common stock held by
entities of which Bain Capital Investors, LLC is the sole general partner,
Catterton-Simon Partners III, L.P., U.S. Equity Partners, LP and U.S.
Equity Partners (Offshore), LP of which Mr. Balson, Mr. Nunnelly, Mr. Jones
and Mr. Sakin disclaims beneficial ownership as discussed in Notes 3, 5,
and 7.
I-17
SCHEDULE II
[DRESDNER KLEINWORT WASSERSTEIN LOGO]
[DRESDNER KLEINWORT WASSERSTEIN LETTERHEAD]
October 29, 2001
Board of Directors
Odwalla, Inc.
120 Stone Pine Road
Half Moon Bay, CA 94019
Members of the Board:
You have asked us to advise you with respect to the fairness, from a
financial point of view, to the holders (other than Parent, Sub and their
respective subsidiaries) of the common stock, no par value per share (the
"Shares"), of Odwalla, Inc., a California corporation (the "Company"), of the
consideration to be received by such holders pursuant to the terms of the
Agreement and Plan of Merger, dated as of October 29, 2001 (the "Merger
Agreement"), among the Company, The Coca-Cola Company, a Delaware corporation
("Parent"), and Perry Phillip Corp., a California corporation and a wholly owned
subsidiary of Parent ("Sub"). The Merger Agreement provides for a cash tender
offer by Sub for all Shares of the Company at a price of $15.25 per share (the
"Tender Offer"), and for a subsequent merger of Sub with and into the Company
pursuant to which each outstanding Share (other than Shares owned by Parent, Sub
or any other subsidiary of Parent and other than Shares which are held by
shareholders exercising dissenters' rights) will be converted into the right to
receive $15.25 in cash (the "Merger"). The Tender Offer and the Merger are
referred herein collectively as the "Proposed Transaction." The terms and
conditions of the Tender Offer and the Merger are set forth in more detail in
the Merger Agreement.
In connection with rendering our opinion, we have reviewed the Merger
Agreement and reviewed and analyzed certain publicly available business and
financial information relating to the Company for recent years and interim
periods to date, as well as certain internal financial and operating information
prepared by or on behalf of the Company and provided to us for purposes of our
analysis, and we have met with management of the Company to review and discuss
such information and, among other matters, the Company's business, operations,
assets, financial condition and future prospects.
We have reviewed and considered certain financial and stock market data
relating to the Company, and we have compared that data with similar data for
certain other companies, the securities of which are publicly traded, that we
believe may be relevant or comparable in certain respects to the Company or one
or more of its businesses or assets, and we have reviewed and considered the
financial terms of certain recent acquisitions and business combination
transactions in the beverage and health and natural food products industries
specifically, and in the food industry generally, that we believe to be
reasonably comparable to the Proposed Transaction or otherwise relevant to our
inquiry. We have also performed such other financial studies, analyses, and
investigations and reviewed such other information as we considered appropriate
for purposes of this opinion.
In our review and analysis and in formulating our opinion, we have assumed
and relied upon the accuracy and completeness of all of the historical financial
and other information provided to or discussed with us or publicly available,
and we have not assumed any responsibility for independent verification of any
of such information. We have also assumed and relied upon the reasonableness and
accuracy of the financial projections, forecasts and analyses provided to us,
and we have assumed that such projections, forecasts and analyses were
reasonably prepared in good faith and on bases reflecting the best currently
available judgments
II-1
Board of Directors
October 29, 2001
Page 2
and estimates of the Company's management. We express no opinion with respect to
such projections, forecasts and analyses or the assumptions upon which they are
based. In addition, we have not reviewed any of the books and records of the
Company, or assumed any responsibility for conducting a physical inspection of
the properties or facilities of the Company, or for making or obtaining an
independent valuation or appraisal of the assets or liabilities of the Company,
and no such independent valuation or appraisal was provided to us. We also have
assumed that the transactions described in the Merger Agreement will be
consummated without waiver or modification in any material respect of any of the
terms or conditions contained therein by any party thereto. Our opinion is
necessarily based on economic and market conditions and other circumstances as
they exist and can be evaluated by us as of the date hereof.
It should be noted that in the context of our engagement by the Company, we
were not authorized to and did not solicit third party indications of interest
in acquiring all or any part of the Company, or investigate any alternative
transactions that may be available to the Company.
We are acting as a financial advisor to the Company in connection with the
Proposed Transaction and will receive a fee for our services, including
rendering this opinion, a portion of which is contingent upon the consummation
of the Tender Offer, with the remainder payable upon consummation of the Merger.
In the ordinary course of our business, we may actively trade the debt and
equity securities of the Company and the Parent for our own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
The Executive Chairman and certain other senior executives of the
investment banking division of Dresdner Bank AG, of which the undersigned is a
part, indirectly own interests in both U.S. Equity Partners, L.P. and U.S.
Equity Partners (Offshore), L.P., each of which is a stockholder of the Company.
In addition, the Executive Chairman of the investment banking division of
Dresdner Bank AG is the Chairman of the entity that controls the management of
U.S. Equity Partners, L.P. and U.S. Equity Partners (Offshore), L.P.
Our opinion addresses only the fairness from a financial point of view to
the shareholders of the Company of the consideration to be received by such
shareholders pursuant to the Proposed Transaction, and we do not express any
views on any other terms of the Proposed Transaction. Specifically, our opinion
does not address the Company's underlying business decision to effect the
transactions contemplated by the Merger Agreement.
It is understood that this letter is for the benefit and use of the Board
of Directors of the Company in its consideration of the Merger Agreement and
except for inclusion in its entirety in any solicitation/recommendation
statement on Schedule 14D-9 or any proxy statement required to be circulated to
shareholders of the Company relating to the Proposed Transaction may not be
quoted, referred to or reproduced at any time or in any manner without our prior
written consent. This opinion does not constitute a recommendation to any
shareholder with respect to whether to tender Shares pursuant to the Tender
Offer or how such holder should vote with respect to the Merger, and should not
be relied upon by any shareholder as such.
Based upon and subject to the foregoing, including the various assumptions
and limitations set forth herein, it is our opinion that as of the date hereof,
the $15.25 per share cash consideration to be received by the shareholders of
the Company (other than Parent, Sub and their respective subsidiaries) pursuant
to the Tender Offer and the Merger is fair to such shareholders from a financial
point of view.
Very truly yours,
[DRESDNER KLEINWORT WASSERSTEIN, INC.
LOGO]
DRESDNER KLEINWORT WASSERSTEIN, INC.
II-2
Dates Referenced Herein and Documents Incorporated by Reference
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