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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
GARDENBURGER, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Oregon 93-0886359
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
1411 S.W. Morrison Street, Suite 400
Portland, Oregon 97205
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
GARDENBURGER, INC.
401(k) PROFIT SHARING PLAN
(FULL TITLE OF THE PLAN)
RICHARD C. DIETZ
Executive Vice President, Chief Financial Officer, Secretary, and Treasurer
Gardenburger, Inc.
1411 S.W. Morrison Street, Suite 400
Portland, Oregon 97205
Telephone: (503) 205-1500
(NAME AND ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
TITLE OF MAXIMUM MAXIMUM
SECURITIES AMOUNT OFFERING AGGREGATE AMOUNT OF
TO BE TO BE PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER SHARE PRICE FEE
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Common Stock,
no par value
(1) 10,000 shares (2) $66,250 (2) $17.50
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(1) In addition, pursuant to Rule 416 under the Securities Act of 1933, this
registration statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the employee benefit plan referenced herein,
as well as such indefinite additional number of shares as may be issued as
a result of stock dividends and splits.
(2) Pursuant to Rule 457(h), the proposed maximum aggregate offering price and
the registration fee have been computed based on the average of the high
and low per share sales prices, $6.625, reported for the Common Stock on
the Nasdaq National Stock Market on December 8, 1999.
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<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by the registrant with the Securities
and Exchange Commission are incorporated by reference in this registration
statement:
(a) The registrant's annual report on Form 10-K for the year ended
December 31, 1998.
(b) The registrant's quarterly reports on Form 10-Q for the quarters
ended March 31, 1999, and June 30, 1999.
(c) The registrant's current reports on Form 8-K filed with the
Commission on January 28, 1999, April 1, 1999, and July 23, 1999.
(d) Registration Statement on Form 8-A dated June 23, 1992, as
supplemented by the description of the registrant's common stock included as
Exhibit 99 to the registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999.
All documents filed by the registrant subsequent to those listed above
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended, prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such
documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
INDEMNIFICATION
ORS 60.367, a section of the Oregon Business Corporation Act (the
"Act"), provides that any director held liable for an unlawful distribution in
violation of ORS 60.367 is entitled to contribution from (i) every other
director who voted for or assented to the distribution without complying with
the applicable statutory standards of conduct and (ii) each shareholder for the
amount the shareholder accepted knowing the distribution was made in violation
of the Act or the corporation's articles of incorporation.
Under Sections 60.387 to 60.414 of the Act, a person who is made a
party to a proceeding because such person is or was an officer or director of a
corporation (an "Indemnitee") shall be indemnified by the corporation (unless
the corporation's articles of incorporation provide otherwise) against
reasonable expenses incurred by the Indemnitee in connection with the proceeding
if the Indemnitee is wholly successful, on the merits or otherwise, or if
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ordered by a court of competent jurisdiction. In addition, under said sections a
corporation is permitted to indemnify an Indemnitee against liability incurred
in a proceeding if (i) the Indemnitee's conduct was in good faith and in a
manner he or she reasonably believed was in the corporation's best interests or
at least not opposed to its best interests, (ii) the Indemnitee had no
reasonable cause to believe his or her conduct was unlawful if the proceeding
was a criminal proceeding, (iii) the Indemnitee was not adjudged liable to the
corporation if the proceeding was by or in the right of the corporation, and
(iv) the Indemnitee was not adjudged liable on the basis that he or she
improperly received a personal benefit. Indemnification in connection with a
proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
The registrant's Restated Articles of Incorporation do not contain any
provisions regarding indemnification. Section 10.1 of the registrant's 1995
Restated Bylaws, as amended, provides that the registrant shall indemnify its
directors and officers to the fullest extent not prohibited by law, including,
but not limited to, the Act.
The registrant's Restated Articles of Incorporation provide for the
elimination of personal liability of directors to the registrant or its
shareholders for monetary damages for conduct as a director to the full extent
permitted by the Act. Under Section 60.047 of the Act, a corporation may not
eliminate or limit the liability of a director for: (i) any breach of the
director's duty of loyalty to the corporation or its shareholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) any unlawful distribution under Section 60.367 of the
Act, or (iv) any transaction from which the director derived an improper
personal benefit.
The registrant has entered into indemnity agreements with each of its
current directors. The agreements provide that the registrant will hold harmless
and indemnify the director against any liability (as defined) or expense (as
defined), including attorney fees, incurred in any threatened, pending or
completed actions, suits or proceedings, involving the director by reason of the
fact that he or she is or was a director of the registrant to the broadest and
maximum extent permitted by Oregon law (including the Act).
INSURANCE
The registrant maintains directors' and officers' liability insurance
under which the registrant's directors and officers are insured against loss (as
defined) as a result of claims brought against them for their wrongful acts in
such capacities.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The Index to Exhibits listing the exhibits required by Item 601 of
Regulation S-K is located on page II-7.
Pursuant to Item 8(b) of Form S-8, the registrant undertakes that it
will submit the plan, as amended, referenced herein to the Internal Revenue
Service (the "IRS") in a timely manner and will make all changes required by the
IRS in order to qualify such plan under Section 401 of the Internal Revenue
Code. The shares of the registrant's Common Stock available for investment under
the plan will be purchased in the open market.
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ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 ("Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or furnished to
the Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 ("Exchange Act") that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described in Item 6 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue. The
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undertaking of the registrant in the preceding sentence does not apply to
insurance against liability arising under the Securities Act.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the city of Portland, state of Oregon, as of the 13th day of
December, 1999.
GARDENBURGER, INC.
(Registrant)
By /s/Richard C. Dietz
----------------------------------------
Richard C. Dietz
Executive Vice President,
Chief Financial Officer,
Secretary and Treasurer
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following persons in the
capacities indicated as of the 13th day of December, 1999.
SIGNATURE TITLE
PRINCIPAL EXECUTIVE OFFICER:
LYLE G. HUBBARD* President and Chief Executive
Officer and Director
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:
/s/Richard C. Dietz
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Richard C. Dietz
Executive Vice President, Chief
Financial Officer, Secretary and
Treasurer
A MAJORITY OF THE BOARD OF DIRECTORS:
KYLE A. ANDERSON* Director
ALEXANDER P. COLEMAN*
Director
JASON M. FISH*
Director
RONALD C. KESSELMAN*
Director
RICHARD L. MAZER*
Director
MARY O. MCWILLIAMS*
Director
MICHAEL L. RAY*
Director
E. KAY STEPP*
Chairman of the Board
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PAUL F. WENNER* Founder, Chief Creative Officer,
and Director
*By /s/Richard C. Dietz
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Richard C. Dietz, Attorney-in-Fact
The Plan.
Pursuant to the requirements of the Securities Act of 1933, the
Gardenburger, Inc., 401(k) Profit Sharing Plan has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Portland, state of Oregon, on the 13th day of
December, 1999.
GARDENBURGER, INC., 401(k) PROFIT
SHARING PLAN
By /s/Peter Shipp
------------------------------------
Peter Shipp
Representative of Plan Administrator
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INDEX TO EXHIBITS
4.1 The registrant's Restated Articles of Incorporation, incorporated by
reference to Exhibit 3.1 to the registrant's Form 10-Q Quarterly Report for the
quarter ended March 31, 1999.
4.2 The registrant's 1995 Restated Bylaws as amended July 13, 1999.
4.3 Amended and Restated Rights Agreement dated as of July 15, 1999,
between the registrant and First Chicago Trust Company of New York.
23 Consent of Arthur Andersen LLP.
24 Power of attorney of officers and directors.
Other exhibits listed in Item 601 of Regulation S-K are not applicable.
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EXHIBIT 4.2
1995 RESTATED BYLAWS
OF
GARDENBURGER, INC.
(AS AMENDED JULY 13, 1999)
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CONTENTS
SECTION 1. OFFICES................................................... 1
SECTION 2. SHAREHOLDERS.............................................. 1
2.1 Annual Meeting...................................... 1
2.2 Special Meetings.................................... 1
2.3 Place of Meeting.................................... 1
2.4 Notice of Meeting................................... 1
2.5 Waiver of Notice ................................... 2
2.6 Fixing of Record Date for Determining Shareholders...2
2.7 Shareholders' List.................................. 3
2.8 Quorum.............................................. 3
2.9 Manner of Acting.................................... 3
2.10 Proxies............................................. 4
2.11 Voting of Shares.................................... 4
2.12 Voting for Directors................................ 4
2.13 Action by Shareholders Without a Meeting............ 4
2.14 Voting of Shares by Corporation..................... 4
2.14.1 Shares Held by Another Corporation......... 4
2.14.2 Shares Held by the Corporation............. 4
2.15 Acceptance or Rejection of Shareholder Votes,
Consents, Waivers and Proxy Appointments............ 5
2.15.1 Documents Bearing Name of Shareholders..... 5
2.15.2 Documents Bearing Name of Third Parties.... 5
2.15.3 Rejection of Documents..................... 5
2.16 Subject of Meetings................................. 5
SECTION 3. BOARD OF DIRECTORS........................................ 6
3.1 General Powers...................................... 6
3.2 Number, Tenure and Qualifications................... 6
3.3 Nominations of Directors............................ 7
3.4 Annual and Regular Meetings......................... 8
3.5 Special Meetings.................................... 8
3.6 Meetings by Telecommunications...................... 8
3.7 Notice of Special Meetings.......................... 8
3.7.1 Personal Delivery.......................... 8
3.7.2 Delivery by Mail........................... 8
3.7.3 Delivery by Telegraph...................... 8
3.7.4 Oral Notice................................ 9
3.7.5 Notice by Facsimile Transmission........... 9
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3.7.6 Notice by Private Courier.................. 9
3.8 Waiver of Notice.................................... 9
3.8.1 Written Waiver............................. 9
3.8.2 Waiver by Attendance....................... 9
3.9 Quorum.............................................. 9
3.10 Manner of Acting.................................... 9
3.11 Presumption of Assent............................... 9
3.12 Action by Board or Committees Without a Meeting.....10
3.13 Resignation.........................................10
3.14 Removal ............................................10
3.15 Vacancies...........................................10
3.16 Minutes.............................................11
3.17 Executive and Other Committees......................11
3.17.1 Creation of Committees.....................11
3.17.2 Authority of Committees....................11
3.17.3 Quorum and Manner of Acting................11
3.17.4 Minutes of Meetings........................11
3.17.5 Resignation................................11
3.17.6 Removal....................................11
3.18 Compensation........................................12
SECTION 4. OFFICERS...................................................12
4.1 Number..............................................12
4.2 Appointment and Term of Office......................12
4.3 Resignation.........................................12
4.4 Removal.............................................12
4.5 Vacancies...........................................12
4.6 Chair of the Board..................................13
4.7 President...........................................13
4.8 Vice President......................................13
4.9 Secretary...........................................13
4.10 Treasurer...........................................13
4.11 Salaries............................................14
SECTION 5. CONTRACTS, LOANS, CHECKS AND DEPOSITS......................14
5.1 Contracts...........................................14
5.2 Loans to the Corporation............................14
5.3 Loans to Directors..................................14
5.4 Checks, Drafts, Etc.................................14
5.5 Deposits............................................14
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SECTION 6. CERTIFICATES FOR SHARES AND THEIR TRANSFER.................14
6.1 Issuance of Shares..................................14
6.2 Escrow for Shares...................................15
6.3 Certificates for Shares.............................15
6.4 Stock Records.......................................15
6.5 Restriction on Transfer.............................15
6.5.1 Securities Laws............................15
6.5.2 Other Restrictions.........................15
6.6 Transfer of Shares..................................15
6.7 Lost or Destroyed Certificates......................16
6.8 Transfer Agent and Registrar........................16
6.9 Officer Ceasing to Act..............................16
6.10 Fractional Shares...................................16
SECTION 7. BOOKS AND RECORDS..................................16
SECTION 8. FISCAL YEAR........................................16
SECTION 9. SEAL...............................................16
SECTION 10. INDEMNIFICATION...........................................17
10.1 Directors and Officers.............................17
10.2 Employees and Other Agents.........................17
10.3 No Presumption of Bad Faith........................17
10.4 Advances of Expenses...............................17
10.5 Enforcement........................................17
10.6 Nonexclusivity of Rights...........................18
10.7 Survival of Rights.................................18
10.8 Insurance..........................................18
10.9 Amendments to Law..................................18
10.10 Savings Clause.....................................18
10.11 Certain Definitions................................18
SECTION 11. AMENDMENTS................................................19
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1995 RESTATED BYLAWS
OF
GARDENBURGER, INC.
<PAGE>
SECTION 1
OFFICES
The principal office of the Corporation shall be located at the
principal place of business or such other place as the Board of Directors (the
"Board") may designate. The Corporation may have such other offices, either
within or without the State of Oregon, as the Board may designate or as the
business of the Corporation may require from time to time.
SECTION 2
SHAREHOLDERS
2.1 ANNUAL MEETING. The annual meeting of the shareholders shall be
held in the month of May each year, or in such other month as fixed by the
Board, on such date and at such time as fixed by the Board, at the principal
office of the Corporation or at such other place as fixed by the Board, for the
purpose of electing Directors and transacting such other business as may
properly come before the meeting.
2.2 SPECIAL MEETINGS. The Board, the President or the Chair of the
Board may call special meetings of the shareholders for any purpose. The holders
of not less than one-tenth of all the outstanding shares of the Corporation
entitled to vote on any issue proposed to be considered at the proposed special
meeting, if they date, sign and deliver to the Corporation's Secretary a written
demand for a special meeting describing the purpose(s) for which it is to be
held, may call a special meeting of the shareholders for such stated purpose(s).
2.3 PLACE OF MEETING. All meetings shall be held at the principal
office of the Corporation or at such other place as designated by the Board, by
any persons entitled to call a meeting hereunder, or in a waiver of notice
signed by all of the shareholders entitled to vote at the meeting.
2.4 NOTICE OF MEETING.
2.4.1 The Corporation shall cause to be delivered to each
shareholder entitled to notice of or to vote at an annual or special meeting of
shareholders, either personally or by mail, not less than ten (10) nor more than
sixty (60) days before the meeting, written notice stating the date, time and
place of the meeting and, in the case of a special meeting, the purpose(s) for
which the meeting is called.
2.4.2 Notice to a shareholder of an annual or special shareholder
meeting shall be in writing. Such notice, if in comprehensible form, is
effective (a) when mailed, if it is mailed postpaid and is correctly addressed
to the shareholder's address shown in the Corporation's current record of
shareholders; or (b) when received by the shareholder, if it is delivered by
telegraph, facsimile transmission or private courier.
Page 1 - 1995 RESTATED BYLAWS
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2.4.3 If an annual or special shareholders' meeting is adjourned
to a different date, time, or place, notice need not be given of the new date,
time, or place if the new date, time, or place is announced at the meeting
before adjournment, unless a new record date for the adjourned meeting is or
must be fixed under Section 2.6.1 of these Bylaws or the Oregon Business
Corporation Act.
2.5 WAIVER OF NOTICE.
2.5.1 Whenever any notice is required to be given to any
shareholder under the provisions of these Bylaws, the Articles of Incorporation
or the Oregon Business Corporation Act, a waiver thereof in writing, signed by
the person or persons entitled to such notice, whether before or after the time
stated therein, and delivered to the Corporation for inclusion in the minutes
for filing with the corporate records, shall be deemed equivalent to the giving
of such notice.
2.5.2 The attendance of a shareholder at a meeting waives
objection to lack of, or defect in, notice of such meeting or of consideration
of a particular matter at the meeting, unless the shareholder, at the beginning
of the meeting or prior to consideration of such matter, objects to holding the
meeting, transacting business at the meeting, or considering the matter when
presented at the meeting.
2.6 FIXING OF RECORD DATE FOR DETERMINING SHAREHOLDERS.
2.6.1 For the purpose of determining shareholders entitled to
notice of, or to vote at, any meeting of shareholders or any adjournment
thereof, or shareholders entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other purpose, the Board
may fix in advance a date as the record date for any such determination. Such
record date shall be not more than seventy (70) days, and in case of a meeting
of shareholders, not less than ten (10) days, prior to the date on which the
particular action requiring such determination is to be taken. If no record date
is fixed for the determination of shareholders entitled to notice of or to vote
at a meeting, or to receive payment of a dividend, the date on which the notice
of meeting is mailed or on which the resolution of the Board declaring such
dividend is adopted, as the case may be, shall be the record date for such
determination. Such determination shall apply to any adjournment of the meeting,
provided such adjournment is not set for a date more than 120 days after the
date fixed for the original meeting.
2.6.2 The record date for the determination of shareholders
entitled to demand a special shareholder meeting shall be the date the first
shareholder signs the demand.
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2.7 SHAREHOLDERS' LIST.
2.7.1 Beginning two (2) business days after notice of a meeting of
shareholders is given, a complete alphabetical list of the shareholders entitled
to notice of such meeting shall be made, arranged by voting group, and within
each voting group by class or series, with the address of and number of shares
held by each shareholder. This record shall be kept on file at the Corporation's
principal office or at a place identified in the meeting notice in the city
where the meeting will be held. On written demand, this record shall be subject
to inspection by any shareholder at any time during normal business hours. Such
record shall also be kept open at such meeting for inspection by any
shareholder.
2.7.2 A shareholder may, on written demand, copy the shareholders'
list at such shareholder's expense during regular business hours, provided that:
(a) Such shareholder's demand is made in good faith and for
a proper purpose;
(b) Such shareholder has described with reasonable
particularity such shareholder's purpose in the written demand; and
(c) The shareholders' list is directly connected with such
shareholder's purpose.
2.8 QUORUM. A majority of the votes entitled to be cast on a matter at
a meeting by a voting group, represented in person or by proxy, shall constitute
a quorum of that voting group for action on that matter at a meeting of the
shareholders. If a quorum is not present for a matter to be acted upon, a
majority of the shares represented at the meeting may adjourn the meeting from
time to time without further notice. If the necessary quorum is present or
represented at a reconvened meeting following such an adjournment, any business
may be transacted that might have been transacted at the meeting as originally
called. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
2.9 MANNER OF ACTING.
2.9.1 If a quorum exists, action on a matter (other than the
election of Directors) by a voting group is approved if the votes cast within
the voting group favoring the action exceed the votes cast opposing the action,
unless the affirmative vote of a greater number is required by these Bylaws, the
Articles of Incorporation or the Oregon Business Corporation Act.
2.9.2 If a matter is to be voted on by a single group, action on
that matter is taken when voted upon by that voting group. If a matter is to be
voted on by two or more voting groups, action on that matter is taken only when
voted upon by each of those voting groups counted separately. Action may be
taken by one voting group on a matter even though no action is taken by another
voting group entitled to vote on such matter.
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2.10 PROXIES. A shareholder may vote by proxy executed in writing by
the shareholder or by his or her attorney-in-fact. Such proxy shall be effective
when received by the Secretary or other officer or agent authorized to tabulate
votes at the meeting. A proxy shall become invalid eleven (11) months after the
date of its execution, unless otherwise expressly provided in the proxy. A proxy
for a specified meeting shall entitle the holder thereof to vote at any
adjournment of such meeting but shall not be valid after the final adjournment
thereof.
2.11 VOTING OF SHARES. Each outstanding share entitled to vote shall be
entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders.
2.12 VOTING FOR DIRECTORS. Each shareholder may vote, in person or by
proxy, the number of shares owned by such shareholder that are entitled to vote
at an election of Directors, for as many persons as there are Directors to be
elected and for whose election such shares have a right to vote. Unless
otherwise provided in the Articles of Incorporation, Directors are elected by a
plurality of the votes cast by shares entitled to vote in the election at a
meeting at which a quorum is present.
2.13 ACTION BY SHAREHOLDERS WITHOUT A MEETING. Any action which could
be taken at a meeting of the shareholders may be taken without a meeting if a
written consent setting forth the action so taken is signed by all shareholders
entitled to vote with respect to the subject matter thereof. The action shall be
effective on the date on which the last signature is placed on the consent, or
at such earlier or later time as is set forth therein. Such written consent,
which shall have the same force and effect as a unanimous vote of the
shareholders, shall be inserted in the minute book as if it were the minutes of
a meeting of the shareholders.
2.14 VOTING OF SHARES BY CORPORATION.
2.14.1 SHARES HELD BY ANOTHER CORPORATION. Shares standing in the
name of another corporation may be voted by such officer, agent or proxy as the
bylaws of such other corporation may prescribe, or, in the absence of such
provision, as the board of directors of such corporation may determine;
provided, however, such shares are not entitled to vote if the Corporation owns,
directly or indirectly, a majority of the shares entitled to vote for directors
of such other corporation.
2.14.2 SHARES HELD BY THE CORPORATION. Authorized but unissued
shares shall not be voted or counted for determining whether a quorum exists at
any meeting or counted in determining the total number of outstanding shares at
any given time. Notwithstanding the foregoing, shares of its own stock held by
the Corporation in a fiduciary capacity may be counted for purposes of
determining whether a quorum exists, and may be voted by the Corporation.
2.15 ACCEPTANCE OR REJECTION OF SHAREHOLDER VOTES, CONSENTS, WAIVERS AND
PROXY APPOINTMENTS.
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2.15.1 DOCUMENTS BEARING NAME OF SHAREHOLDERS. If the name signed
on a vote, consent, waiver or proxy appointment corresponds to the name of a
shareholder, the Secretary or other agent authorized to tabulate votes at the
meeting may, if acting in good faith, accept such vote, consent, waiver or proxy
appointment and give it effect as the act of the shareholder.
2.15.2 DOCUMENTS BEARING NAME OF THIRD PARTIES. If the name
signed on a vote, consent, waiver or proxy appointment does not correspond to
the name of its shareholder, the Secretary or other agent authorized to tabulate
votes at the meeting may nevertheless, if acting in good faith, accept such
vote, consent, waiver or proxy appointment and give it effect as the act of the
shareholder if:
(a) The shareholder is an entity and the name signed
purports to be that of an officer or an agent of the entity;
(b) The name signed purports to be that of an
administrator, executor, guardian or conservator representing the shareholder
and, if the Secretary or other agent requests, acceptable evidence of fiduciary
status has been presented;
(c) The name signed purports to be that of a receiver or
trustee in bankruptcy of the shareholder, and, if the Secretary or other agent
requests, acceptable evidence of this status has been presented;
(d) The name signed purports to be that of a pledgee,
beneficial owner or attorney-in-fact of the shareholder and, if the Secretary or
other agent requests, acceptable evidence of the signatory's authority to sign
has been presented; or
(e) Two or more persons are the shareholder as co-tenants
or fiduciaries and the name signed purports to be the name of at least one of
the co-owners and the person signing appears to be acting on behalf of all
co-owners.
2.15.3 REJECTION OF DOCUMENTS. The Secretary or other agent
authorized to tabulate votes at the meeting is entitled to reject a vote,
consent, waiver or proxy appointment if such agent, acting in good faith, has
reasonable basis for doubt about the validity of the signature on it or about
the signatory's authority to sign for the shareholder.
2.16 SUBJECT OF MEETINGS. To be properly brought before an annual
meeting of shareholders, business must be either (i) specified in the notice of
the meeting (or any supplement or amendment thereto) given by or at the
direction of the Board, (ii) otherwise brought before the meeting by or at the
direction of the Board, or (iii) otherwise brought before the meeting by a
shareholder who is a shareholder of record at the time of giving of the notice
provided for in this Section 2.16, who shall be entitled to vote at such meeting
and who complies fully with all of the notice procedures and other requirements
set forth in this Section 2.16. In addition to any other applicable
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requirements, for business to be properly brought before an annual meeting of
shareholders by a shareholder, the shareholder must have given timely notice
thereof in writing to the Secretary of the Corporation. To be timely, a
shareholder's notice shall be delivered to or mailed and received at the
principal executive offices of the Corporation not less than sixty (60) calendar
days nor more than ninety (90) calendar days prior to the first anniversary of
the preceding year's annual meeting; provided, however, that in the event that
the date of the annual meeting is changed by more than thirty (30) calendar days
from such anniversary date, notice by the shareholder to be timely must be so
received not later than the close of business on the tenth (10th) calendar day
following the earlier of the day on which notice of the date of the meeting was
mailed or public disclosure was made. A shareholder's notice to the
Corporation's Secretary of business proposed to be conducted at any annual or
special meeting of shareholders shall set forth as to each matter the
shareholder proposes to bring before such meeting (i) a brief description of the
business desired to be brought before the meeting and the reasons for conducting
such business at the meeting, (ii) the name and record address of the
shareholder proposing such business and the name and address of the beneficial
owner, if any, on whose behalf the proposal is made, (iii) the class, series and
number of shares of the capital stock of the Corporation which are owned
beneficially and of record by such shareholder and by the beneficial owner, if
any, on whose behalf the proposal is made, and (iv) any material interest of
such shareholder and the beneficial owner, if any, on whose behalf the proposal
is made in such business. Notwithstanding anything in these Bylaws to the
contrary, no business shall be conducted at a meeting of shareholders except in
accordance with the procedures set forth in this Section 2.16. The officer of
the Corporation presiding at a meeting of shareholders (the "Presiding Officer")
shall determine whether the proposed business is properly brought before the
meeting in accordance with the provisions of this Section 2.16. If the Presiding
Officer should determine that the proposed business is not properly brought
before the meeting, the Presiding Officer shall state such determination to the
meeting, whereupon any such business not properly brought before the meeting
shall not be transacted or otherwise brought before the meeting. Notwithstanding
the foregoing provisions of this Section 2.16, a shareholder shall also comply
with all applicable requirements of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder with respect to the matters
set forth herein.
SECTION 3
BOARD OF DIRECTORS
3.1 GENERAL POWERS. The business and affairs of the Corporation shall
be managed by the Board, except as may be otherwise provided in these Bylaws,
the Articles of Incorporation or the Oregon Business Corporation Act.
3.2 NUMBER, TENURE AND QUALIFICATIONS. The Board shall consist of no
less than three and no more than ten Directors, the specific number to be set by
resolution of the Board. The number of Directors may be changed from time to
time by amendment to these Bylaws, but no decrease in the number of Directors
shall shorten the term of any incumbent Director. The terms of the Directors
expire at the next annual shareholder's meeting following their election.
Despite the expiration of a Director's term, however, the Director continues to
serve until the Director's successor is elected and qualifies or until there is
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a decrease in the number of Directors. Directors need not be shareholders of the
Corporation or residents of the State of Oregon.
3.3 NOMINATIONS OF DIRECTORS. Only persons who are nominated in
accordance with the following procedures shall be eligible for election as
Directors. Nominations of persons for election to the Board of the Corporation
at any meeting of shareholders may be made by or at the direction of the Board,
by any committee of persons appointed by the Board or at the meeting by any
shareholder of the Corporation who is a shareholder of record at the time of
giving notice provided for in this Section 3.3, who shall be entitled to vote
for the election of directors at the meeting and who complies fully with all of
the notice procedures and other requirements set forth in this Section 3.3 and
the procedures and requirements set forth in the Oregon Business Corporation
Act. Nominations by any shareholder shall be made pursuant to timely notice in
writing to the Secretary of the Corporation. To be timely, a shareholder's
notice shall be delivered to or mailed and received at the principal executive
offices of the Corporation (a) in the case of an annual meeting, not less than
sixty (60) calendar days nor more than ninety (90) calendar days prior to the
first anniversary of the preceding year's annual meeting; provided, however,
that in the event that the date of the annual meeting is changed by more than
thirty (30) calendar days from such anniversary date, notice by the shareholder
to be timely must be so received not later than the close of business on the
tenth (10th) calendar day following the earlier of the day on which notice of
the date of the meeting was mailed or public disclosure was made, and (b) in the
case of a special meeting at which Directors are to be elected, not later than
the earlier of (i) the close of business on the tenth (10th) calendar day
following the earlier of the day on which notice of the date of the meeting was
mailed or public disclosure was made or (ii) the close of business on the fifth
(5th) calendar day before the date of the meeting. Such shareholder's notice to
the Secretary or a written demand from shareholders pursuant to Section 60.204
of the Oregon Revised Statutes shall set forth (i) as to each person whom such
shareholders propose to nominate for election or reelection as a Director, (a)
the name, age, business address and residence address of the person, (b) the
principal occupation or employment of the person, (c) the class and number of
shares of capital stock of the Corporation which are beneficially owned by the
person, and (d) all other information relating to the person that is or would be
required to be disclosed in a solicitation for proxies for election of Directors
pursuant to the Rules and Regulations of the Securities and Exchange Commission
under Section 14 of the Securities Exchange Act of 1934, as amended (including
such person's written consent to being named in the proxy statement as a nominee
and to serving as a Director if elected); (ii) as to the shareholders giving
such notice or demand (a) the name and record address of the shareholders, (b)
the class and number of shares of capital stock of the Corporation which are
beneficially owned by each such shareholder and also which are owned of record
by each such shareholder and (c) any material interest or relationship each such
shareholder has in or with the proposed nominee; and (iii) as to each beneficial
owner, if any, on whose behalf the nomination is made, (a) the name and address
of such person, (b) the class and number of shares of capital stock of the
Corporation which are beneficially owned by such person and (c) any material
interest or relationship such person has in or with the proposed nominee. The
Corporation may require any proposed nominee to furnish such other information
as may reasonably be required by the Corporation to determine the eligibility of
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such proposed nominee to serve as a Director of the Corporation. No person shall
be eligible for election as a Director of the Corporation unless nominated in
accordance with the procedures set forth herein. The Presiding Officer shall
determine whether the nomination is made in accordance with the foregoing
procedures. If the Presiding Officer should determine that the nomination was
not made in accordance with the foregoing procedures, the Presiding Officer
shall state such determination to the meeting, whereupon any such defective
nomination shall be disregarded and not otherwise brought before the meeting.
Notwithstanding the foregoing provisions of this Section 3.3, a shareholder
shall also comply with all applicable requirements of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder with respect
to the matters set forth herein.
3.4 ANNUAL AND REGULAR MEETINGS. An annual Board meeting shall be held
without further notice immediately after and at the same place as the annual
meeting of shareholders. By resolution, the Board, or any committee thereof, may
specify the time and place for holding regular meetings thereof without other
notice than such resolution.
3.5 SPECIAL MEETINGS. Special meetings of the Board or any committee
designated by the Board may be called by or at the request of the Chair of the
Board, or the President or any two Directors, and, in the case of any special
meeting of any committee designated by the Board, by the Chair thereof. The
person or persons authorized to call special meetings may fix any place either
within or without the State of Oregon as the place for holding any special Board
or committee meeting called by them.
3.6 MEETINGS BY TELECOMMUNICATIONS. Members of the Board or any
committee designated by the Board may participate in a meeting of such Board or
committee by use of any means of communication by which all persons
participating may simultaneously hear each other during the meeting.
Participation by such means shall be deemed presence in person at the meeting.
3.7 NOTICE OF SPECIAL MEETING. Notice of a special Board or committee
meeting stating the date, time and place of the meeting shall be given to a
Director in writing or orally by telephone or in person as set forth below.
Neither the business to be transacted at, nor the purpose of, any special
meeting need be specified in the notice of such meeting.
3.7.1 PERSONAL DELIVERY. If delivery is by personal service, the
notice shall be effective if delivered at such address at least one day before
the meeting.
3.7.2 DELIVERY BY MAIL. If notice is delivered by mail, the notice
shall be deemed effective if deposited in the official government mail at least
five days before the meeting properly addressed to a Director at his or her
address shown on the records of the Corporation with postage prepaid.
3.7.3 DELIVERY BY TELEGRAPH. If notice is delivered by
telegraph, the notice shall be deemed effective if the content thereof is
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delivered to the telegraph company by such time that telegraph company
guarantees delivery at least one day before the meeting.
3.7.4 ORAL NOTICE. If notice is delivered orally, by telephone
or in person, the notice shall be effective if personally given to a Director at
least one day before the meeting.
3.7.5 NOTICE BY FACSIMILE TRANSMISSION. If notice is delivered
by facsimile transmission, the notice shall be deemed effective if the content
thereof is transmitted to the office of a Director, at the facsimile number
shown on the records of the Corporation, at least one day before the meeting,
and receipt is either confirmed by confirming transmission equipment or
acknowledged by the receiving office.
3.7.6 NOTICE BY PRIVATE COURIER. If notice is delivered by
private courier, the notice shall be deemed effective if delivered to the
courier, properly addressed and prepaid, by such time that the courier
guarantees delivery at least one day before the meeting.
3.8 WAIVER OF NOTICE.
3.8.1 WRITTEN WAIVER. Whenever any notice is required to be
given to any Director under the provisions of these Bylaws, the Articles of
Incorporation or the Oregon Business Corporation Act, a waiver thereof in
writing, executed at any time, specifying the meeting for which notice is
waived, signed by the person or persons entitled to such notice, and filed with
the minutes or corporate records, shall be deemed equivalent to the giving of
such notice.
3.8.2 WAIVER BY ATTENDANCE. The attendance of a Director at a
Board or committee meeting shall constitute a waiver of notice of such meeting,
unless the Director, at the beginning of the meeting, or promptly upon such
Director's arrival, objects to holding the meeting or transacting any business
at the meeting and does not thereafter vote for or assent to action taken at the
meeting.
3.9 QUORUM. A majority of the number of Directors fixed by or in the
manner provided by these Bylaws shall constitute a quorum for the transaction of
business at any Board meeting.
3.10 MANNER OF ACTING. The act of the majority of the Directors present
at a Board or committee meeting at which there is a quorum shall be the act of
the Board or committee, unless the vote of a greater number is required by these
Bylaws, the Articles of Incorporation or the Oregon Business Corporation Act.
3.11 PRESUMPTION OF ASSENT. A Director of the Corporation present at a
Board or committee meeting at which action on any corporate matter is taken
shall be deemed to have assented to the action taken unless such Director
objects at the beginning of the meeting, or promptly upon such Director's
arrival, to holding the meeting or transacting business at the meeting; or such
Director's dissent is entered in the minutes of the meeting; or such Director
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delivers a written notice of dissent or abstention to such action with the
presiding officer of the meeting before the adjournment thereof; or such
Director forwards such notice by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. A Director who
voted in favor of such action may not thereafter dissent or abstain.
3.12 ACTION BY BOARD OR COMMITTEES WITHOUT A MEETING. Any action which
could be taken at a meeting of the Board or of any committee appointed by the
Board may be taken without a meeting if a written consent setting forth the
action so taken is signed by each Director or by each committee member. The
action shall be effective when the last signature is placed on the consent,
unless the consent specifies an earlier or later date. Such written consent,
which shall have the same effect as a unanimous vote of the Directors or such
committee, shall be inserted in the minute book as if it were the minutes of a
Board or committee meeting.
3.13 RESIGNATION. Any Director may resign at any time by delivering
written notice to the Chair of the Board, the Board, or to the registered office
of the Corporation. Such resignation shall take effect at the time specified in
the notice, or if no time is specified, upon delivery. Unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective. Once delivered, a notice of resignation is irrevocable unless
revocation is permitted by the Board.
3.14 REMOVAL. One or more members of the Board (including the entire
Board) may be removed at a meeting of shareholders called expressly for that
purpose, provided that the notice of such meeting states that the purpose, or
one of the purposes, of the meeting is such removal. A member of the Board may
be removed with or without cause, unless the Articles of Incorporation permit
removal for cause only, by a vote of the holders of a majority of the shares
then entitled to vote on the election of the Director(s). A Director may be
removed only if the number of votes cast to remove the Director exceeds the
number of votes cast to not remove the Director. If a Director is elected by a
voting group of shareholders, only the shareholders of that voting group may
participate in the vote to remove such Director.
3.15 VACANCIES. Any vacancy occurring on the Board, including a vacancy
resulting from an increase in the number of Directors, may be filled by the
shareholders, by the Board, by the affirmative vote of a majority of the
remaining Directors though less than a quorum of the Board, or by a sole
remaining Director. A Director elected to fill a vacancy shall be elected for
the unexpired term of his or her predecessor in office; except that the term of
a Director elected by the Board to fill a vacancy expires at the next
shareholders' meeting at which Directors are elected. Any Directorship to be
filled by reason of an increase in the number of Directors may be filled by the
affirmative vote of a majority of the number of Directors fixed by the Bylaws
prior to such increase for a term of office continuing only until the next
election of Directors by the shareholders. Any Directorship not so filled by the
Directors shall be filled by election at the next annual meeting of shareholders
or at a special meeting of shareholders called for that purpose. If the vacant
Directorship is filled by the shareholders and was held by a Director elected by
a voting group of shareholders, then only the holders of shares of that voting
group are entitled to vote to fill such vacancy. A vacancy that will occur at a
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specific later date by reason of a resignation effective at such later date or
otherwise may be filled before the vacancy occurs, but the new Director may not
take office until the vacancy occurs.
3.16 MINUTES. The Board shall keep minutes of its meetings and shall
cause them to be recorded in books kept for that purpose.
3.17 EXECUTIVE AND OTHER COMMITTEES.
3.17.1 CREATION OF COMMITTEES. The Board, by resolution adopted
by a majority of the number of Directors fixed in the manner provided by these
Bylaws, may appoint standing or temporary committees, including an Executive
Committee, from its own number and consisting of no less than two (2) Directors.
The Board may invest such committee(s) with such powers as it may see fit,
subject to such conditions as may be prescribed by the Board, these Bylaws, the
Articles of Incorporation and the Oregon Business Corporation Act.
3.17.2 AUTHORITY OF COMMITTEES. Each committee shall have and may
exercise all of the authority of the Board to the extent provided in the
resolution of the Board designating the committee and any subsequent resolutions
pertaining thereto and adopted in like manner, except that no such committee
shall have the authority to: (a) authorize distributions, except as may be
permitted by Section 3.17.2(g) of these Bylaws; (b) approve or propose to
shareholders actions required by the Oregon Business Corporation Act to be
approved by shareholders; (c) fill vacancies on the Board or any committee
thereof; (d) adopt, amend or repeal these Bylaws; (e) amend the Articles of
Incorporation; (f) approve a plan of merger not requiring shareholder approval;
or (g) authorize or approve reacquisition of shares, except within limits
prescribed by the Board.
3.17.3 QUORUM AND MANNER OF ACTING. A majority of the number of
Directors composing any committee of the Board, as established and fixed by
resolution of the Board, shall constitute a quorum for the transaction of
business at any meeting of such committee.
3.17.4 MINUTES OF MEETINGS. All committees so appointed shall
keep regular minutes of their meetings and shall cause them to be recorded in
books kept for that purpose.
3.17.5 RESIGNATION. Any member of any committee may resign at any
time by delivering written notice thereof to the Board, the Chair of the Board
or the Corporation. Any such resignation shall take effect at the time specified
in the notice, or if no time is specified, upon delivery. Unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective. Once delivered, a notice of resignation is irrevocable unless
revocation is permitted by the Board.
3.17.6 REMOVAL. The Board may remove from office any member of
any committee elected or appointed by it, but only by the affirmative vote of
not less than a majority of the number of Directors fixed by or in the manner
provided by these Bylaws.
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3.18 COMPENSATION. By Board resolution, Directors and committee members
may be paid their expenses, if any, of attendance at each Board or committee
meeting, or a fixed sum for attendance at each Board or committee meeting, or a
stated salary as Director or a committee member, or a combination of the
foregoing. No such payment shall preclude any Director or committee member from
serving the Corporation in any other capacity and receiving compensation
therefor.
SECTION 4
OFFICERS
4.1 NUMBER. The Officers of the Corporation shall be a President and a
Secretary, each of whom shall be appointed by the Board. One or more Vice
Presidents, a Treasurer and such other Officers and assistant Officers may be
appointed by the Board; such Officers and assistant Officers to hold office for
such period, have such authority and perform such duties as are provided in
these Bylaws or as may be provided by resolution of the Board. Any Officer may
be assigned by the Board any additional title that the Board deems appropriate.
The Board may delegate to any Officer or agent the power to appoint any such
subordinate Officers or agents and to prescribe their respective terms of
office, authority and duties. Any two or more offices may be held by the same
person.
4.2 APPOINTMENT AND TERM OF OFFICE. The Officers of the Corporation
shall be appointed annually by the Board at the Board meeting held after the
annual meeting of the shareholders. If the appointment of Officers is not made
at such meeting, such appointment shall be made as soon thereafter as a Board
meeting conveniently may be held. Unless an Officer dies, resigns, or is removed
from office, he or she shall hold office until the next annual meeting of the
Board or until his or her successor is appointed.
4.3 RESIGNATION. Any Officer may resign at any time by delivering
written notice to the Corporation. Any such resignation shall take effect at the
time specified in the notice, or if no time is specified, upon delivery. Unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective. Once delivered, a notice of resignation is
irrevocable unless revocation is permitted by the Board.
4.4 REMOVAL. Any Officer or agent appointed by the Board may be removed
by the Board, with or without cause, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed. Appointment of an
Officer or agent shall not of itself create contract rights.
4.5 VACANCIES. A vacancy in any office because of death, resignation,
removal, disqualification, creation of a new office or any other cause may be
filled by the Board for the unexpired portion of the term, or for a new term
established by the Board. If a resignation is made effective at a later date,
and the Corporation accepts such future effective date, the Board may fill the
pending vacancy before the effective date, if the Board provides that the
successor does not take office until the effective date.
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4.6 CHAIR OF THE BOARD. If appointed, the Chair of the Board shall
perform such duties as shall be assigned to him or her by the Board from time to
time and shall preside over meetings of the Board and shareholders unless
another Director or an Officer is appointed or designated by the Board as Chair
of such meeting. The Chair of the Board shall not, by virtue of that position
alone, be deemed to be an Officer of the Corporation.
4.7 PRESIDENT. The President shall be the chief executive Officer of
the Corporation unless some other Officer is so designated by the Board, shall
preside over meetings of the Board and shareholders in the absence of a Chair of
the Board and, subject to the Board's control, shall supervise and control all
of the assets, business and affairs of the Corporation. The President shall have
authority to sign deeds, mortgages, bonds, contracts, or other instruments,
except when the signing and execution thereof have been expressly delegated by
the Board or by these Bylaws to some other Officer or agent of the Corporation,
or are required by law to be otherwise signed or executed by some other Officer
or in some other manner. In general, the President shall perform all duties
incident to the office of President and such other duties as are prescribed by
the Board from time to time.
4.8 VICE PRESIDENT. In the event of the death of the President or his
or her inability to act, the Vice President (or if there is more than one Vice
President, the Vice President who was designated by the Board as the successor
to the President, or if no Vice President is so designated, the Vice President
first appointed to such office) shall perform the duties of the President,
except as may be limited by resolution of the Board, with all the powers of and
subject to all the restrictions upon the President. Vice Presidents shall have,
to the extent authorized by the President or the Board, the same powers as the
President to sign deeds, mortgages, bonds, contracts or other instruments. Vice
Presidents shall perform such other duties as from time to time may be assigned
to them by the President or by the Board.
4.9 SECRETARY. The Secretary shall: (a) prepare and keep the minutes of
meetings of the shareholders and the Board in one or more books provided for
that purpose; (b) see that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law; (c) be responsible for custody
of the corporate records and seal of the Corporation; (d) keep registers of the
post office address of each shareholder and Director; (e) have general charge of
the stock transfer books of the Corporation; and (f) in general perform all
duties incident to the office of Secretary and such other duties as from time to
time may be assigned to him or her by the President or by the Board. In the
absence of the Secretary, an Assistant Secretary may perform the duties of the
Secretary.
4.10 TREASURER. If required by the Board, the Treasurer shall give a
bond for the faithful discharge of his or her duties in such amount and with
such surety or sureties as the Board shall determine. The Treasurer shall have
charge and custody of and be responsible for all funds and securities of the
Corporation; receive and give receipts for moneys due and payable to the
Corporation from any source whatsoever, and deposit all such moneys in the name
of the Corporation in banks, trust companies or other depositories selected in
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accordance with the provisions of these Bylaws; and in general perform all of
the duties incident to the office of the Treasurer and such other duties as from
time to time may be assigned to him or her by the President or by the Board. In
the absence of the Treasurer, an Assistant Treasurer may perform the duties of
the Treasurer.
4.11 SALARIES. The salaries of the Officers shall be fixed from time to
time by the Board or by any person or persons to whom the Board has delegated
such authority. No Officer shall be prevented from receiving such salary by
reason of the fact that he or she is also a Director of the Corporation.
SECTION 5
CONTRACTS, LOANS, CHECKS AND DEPOSITS
5.1 CONTRACTS. The Board may authorize any Officer or Officers, or
agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation. Such authority may
be general or confined to specific instances.
5.2 LOANS TO THE CORPORATION. No loans shall be contracted on behalf of
the Corporation and no evidences of indebtedness shall be issued in its name
unless authorized by a resolution of the Board. Such authority may be general or
confined to specific instances.
5.3 LOANS TO DIRECTORS. The Corporation shall not lend money to or
guarantee the obligation of a Director unless: (a) the particular loan or
guarantee is approved by a majority of the votes represented by the outstanding
voting shares of all classes, voting as a single voting group, excluding the
votes of the shares owned by or voted under the control of the benefitted
Director; or (b) the Board determines that the loan or guarantee benefits the
Corporation and either approves the specific loan or guarantee or a general plan
authorizing the loans and guarantees. The fact that a loan or guarantee is made
in violation of this provision shall not affect the borrower's liability on the
loan.
5.4 CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation shall be signed by such Officer or Officers, or agent or agents,
of the Corporation and in such manner as is from time to time determined by
resolution of the Board.
5.5 DEPOSITS. All funds of the Corporation not otherwise employed shall
be deposited from time to time to the credit of the Corporation in such banks,
trust companies or other depositories as the Board may select.
SECTION 6
CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 ISSUANCE OF SHARES. No shares of the Corporation shall be issued
unless authorized by the Board, which authorization shall include the maximum
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number of shares to be issued and the consideration to be received for each
share. Before the Corporation issues shares, the Board shall determine that the
consideration received or to be received for such shares is adequate. Such
determination by the Board shall be conclusive insofar as the adequacy of
consideration for the issuance of shares relates to whether the shares are
validly issued, fully paid and nonassessable.
6.2 ESCROW FOR SHARES. The Board may authorize the placement in escrow
of shares issued for a contract for future services or benefits or a promissory
note, or may authorize other arrangements to restrict the transfer of shares,
and may authorize the crediting of distributions in respect of such shares
against their purchase price, until the services are performed, the note is paid
or the benefits received. If the services are not performed, the note is not
paid, or the benefits are not received, the Board may cancel, in whole or in
part, such shares placed in escrow or restricted and such distributions
credited.
6.3 CERTIFICATES FOR SHARES. Certificates representing shares of the
Corporation shall be in such form as shall be determined by the Board. Such
certificates shall be signed by any two of the following officers: the Chair of
the Board, the President, any Vice President, the Treasurer, the Secretary or
any Assistant Secretary. Any or all of the signatures on a certificate may be
facsimiles if the certificate is manually signed on behalf of a transfer agent
or a registrar other than the Corporation itself or an employee of the
Corporation. All certificates shall be consecutively numbered or otherwise
identified.
6.4 STOCK RECORDS. The stock transfer books shall be kept at the
registered office or principal place of business of the Corporation or at the
office of the Corporation's transfer agent or registrar. The name and address of
each person to whom certificates for shares are issued, together with the class
and number of shares represented by each such certificate and the date of issue
thereof, shall be entered on the stock transfer books of the Corporation. The
person in whose name shares stand on the books of the Corporation shall be
deemed by the Corporation to be the owner thereof for all purposes.
6.5 RESTRICTION ON TRANSFER.
6.5.1 SECURITIES LAWS. Except to the extent that the Corporation
has obtained an opinion of counsel acceptable to the Corporation that transfer
restrictions are not required under applicable securities laws, or has otherwise
satisfied itself that such transfer restrictions are not required, all
certificates representing shares of the Corporation shall bear conspicuously on
the front or back of the certificate a legend or legends describing the
restriction or restrictions.
6.5.2 OTHER RESTRICTIONS. In addition, the front or back of all
certificates shall include conspicuous written notice of any further
restrictions which may be imposed on the transferability of such shares.
6.6 TRANSFER OF SHARES. Transfer of shares of the Corporation shall be
made only on the stock transfer books of the Corporation pursuant to
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<PAGE>
authorization or document of transfer made by the holder of record thereof or by
his or her legal representative, who shall furnish proper evidence of authority
to transfer, or by his or her attorney-in-fact authorized by power of attorney
duly executed and filed with the Secretary of the Corporation. All certificates
surrendered to the Corporation for transfer shall be cancelled and no new
certificate shall be issued until the former certificates for a like number of
shares shall have been surrendered and cancelled.
6.7 LOST OR DESTROYED CERTIFICATES. In the case of a lost, destroyed or
mutilated certificate, a new certificate may be issued therefor upon such terms
and indemnity to the Corporation as the Board may prescribe.
6.8 TRANSFER AGENT AND REGISTRAR. The Board may from time to time
appoint one or more Transfer Agents and one or more Registrars for the shares of
the Corporation, with such powers and duties as the Board shall determine by
resolution.
6.9 OFFICER CEASING TO ACT. In case any officer who has signed or whose
facsimile signature has been placed upon a stock certificate shall have ceased
to be such officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if the signer were such officer at the date
of its issuance.
6.10 FRACTIONAL SHARES. The Corporation shall not issue certificates
for fractional shares.
SECTION 7
BOOKS AND RECORDS
The Corporation shall keep correct and complete books and records of
account, stock transfer books, minutes of the proceedings of its shareholders
and Board and such other records as may be necessary or advisable.
SECTION 8
FISCAL YEAR
The fiscal year of the Corporation shall begin on October 1 in each
year.
SECTION 9
SEAL
The seal of the Corporation, if any, shall consist of the name of the
Corporation and the state of its incorporation.
Page 16 - 1995 RESTATED BYLAWS
<PAGE>
SECTION 10
INDEMNIFICATION
10.1 DIRECTORS AND OFFICERS. The Corporation shall indemnify its
directors and officers to the fullest extent not prohibited by law.
10.2 EMPLOYEES AND OTHER AGENTS. The Corporation shall have the power
to indemnify its employees and other agents to the fullest extent not prohibited
by law.
10.3 NO PRESUMPTION OF BAD FAITH. The termination of any proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which the person reasonably believed to be in
or not opposed to the best interests of this Corporation, or, with respect to
any criminal proceeding, that the person had reasonable cause to believe that
the conduct was unlawful.
10.4 ADVANCES OF EXPENSES. The expenses incurred by a director or
officer in any proceeding shall be paid by the Corporation in advance at the
written request of the director or officer, if the director or officer:
10.4.1 Furnishes the Corporation a written affirmation of such
person's good faith belief that such person is entitled to be indemnified by the
Corporation; and
10.4.2 Furnishes the Corporation a written undertaking to repay
such advance to the extent that it is ultimately determined by a court that such
person is not entitled to be indemnified by the Corporation. Such advances shall
be made without regard to the person's ability to repay such expenses and
without regard to the person's ultimate entitlement to indemnification under
this Bylaw or otherwise.
10.5 ENFORCEMENT. Without the necessity of entering into an express
contract, all rights to indemnification and advances under this Bylaw shall be
deemed to be contractual rights and be effective to the same extent and as if
provided for in a contract between the Corporation and the director or officer
who serves in such capacity at any time while this Bylaw and any other
applicable law, if any, are in effect. Any right to indemnification or advances
granted by this Bylaw to a director or officer shall be enforceable by or on
behalf of the person holding such right in any court of competent jurisdiction
if (a) the claim for indemnification or advances is denied, in whole or in part,
or (b) no disposition of such claim is made within ninety (90) days of request
thereof. The claimant in such enforcement action, if successful in whole or in
part, shall be entitled to be also paid the expense of prosecuting the claim. It
shall be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in connection with any proceeding in advance of its
final disposition when the required affirmation and undertaking have been
tendered to the Corporation) that the claimant has not met the standards of
conduct which makes it permissible under the law for the Corporation to
indemnify the claimant, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Page 17 - 1995 RESTATED BYLAWS
<PAGE>
Directors, independent legal counsel or its shareholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because the claimant has met the
applicable standard of conduct, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel or its
shareholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
10.6 NONEXCLUSIVITY OF RIGHTS. The rights conferred on any person by
this Bylaw shall not be exclusive of any other right which such person may have
or hereafter acquire under any statute, provision of articles of incorporation,
bylaws, agreement, vote of shareholders or disinterested directors or otherwise,
both as to action in the person's official capacity and as to action in another
capacity while holding office. The Corporation is specifically authorized to
enter into individual contracts with any or all of its directors, officers,
employees or agents respecting indemnification and advances to the fullest
extent not prohibited by law.
10.7 SURVIVAL OF RIGHTS. The rights conferred on any person by this
Bylaw shall continue as to a person who has ceased to be a director, officer,
employee or other agent and shall inure to the benefit of the heirs, executors
and administrators of such a person.
10.8 INSURANCE. To the fullest extent not prohibited by law, the
Corporation, upon approval by the Board of Directors, may purchase insurance on
behalf of any person required or permitted to be indemnified pursuant to this
Bylaw.
10.9 AMENDMENTS TO LAW. For purposes of this Bylaw, the meaning of
"law" within the phrase "to the fullest extent not prohibited by law" shall
include, but not be limited to, the Oregon Business Corporation Act, as the same
exists on the date hereof or as it may be amended; provided, however, that in
the case of any such amendment, such amendment shall apply only to the extent
that it permits the Corporation to provide broader indemnification rights than
the Act permitted the Corporation to provide prior to such amendment.
10.10 SAVINGS CLAUSE. If this Bylaw or any portion thereof shall be
invalidated on any ground by any court of competent jurisdiction, the
Corporation shall indemnify each director, officer or other agent to the fullest
extent permitted by any applicable portion of this Bylaw that shall not have
been invalidated, or by any other applicable law.
10.11 CERTAIN DEFINITIONS. For purposes of this Section, the following
definitions shall apply:
10.11.1 The term "proceeding" shall be broadly construed and shall
include, without limitation, the investigation, preparation, prosecution,
defense, settlement and appeal of any threatened, pending or completed action,
suit or proceeding, whether brought in the right of the Corporation or otherwise
and whether civil, criminal, administrative or investigative, in which the
director or officer may be or may have been involved as a party or otherwise by
Page 18 - 1995 RESTATED BYLAWS
<PAGE>
reason of the fact that the director or officer is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise.
10.11.2 The term "expenses" shall be broadly construed and shall
include, without limitation, all costs, charges and expenses (including fees and
disbursements of attorneys, accountants and other experts) actually and
reasonably incurred by a director or officer in connection with any proceeding,
all expenses of investigations, judicial or administrative proceedings or
appeals, and any expenses of establishing a right to indemnification under these
Bylaws, but shall not include amounts paid in settlement, judgments or fines.
10.11.3 "Corporation" shall mean Wholesome & Hearty Foods, Inc. and
any successor corporation thereof.
10.11.4 Reference to a "director," "officer," "employee" or "agent"
of the Corporation shall include, without limitation, situations where such
person is serving at the request of the Corporation as a director, officer,
employee, trustee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
10.11.5 References to "other enterprises" shall include employee
benefit plans. References to "fines" shall include any excise taxes assessed on
a person with respect to any employee benefit plan. References to "serving at
the request of the Corporation" shall include any service as a director,
officer, employee or agent of the Corporation which imposes duties on, or
involves services by, such director, officer, employee or agent with respect to
an employee benefit plan, its participants, or beneficiaries. A person who acted
in good faith and in a manner the person reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "not opposed to the best interests of the
Corporation" as referred to in this Bylaw.
SECTION 11
AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by the Board at any regular or special meeting of the Board; provided,
however, that the shareholders, in amending or repealing a particular Bylaw, may
provide expressly that the Board may not amend or repeal that Bylaw. The
shareholders may also make, alter, amend and repeal the Bylaws of the
Corporation at any annual meeting or at a special meeting called for that
purpose. All Bylaws made by the Board may be amended, repealed, altered or
modified by the shareholders at any regular or special meeting called for that
purpose.
The foregoing Bylaws were adopted by the Board of Directors of the
Corporation on November 21, 1995, and the Secretary of the Corporation was
empowered to authenticate such Bylaws by his signature below.
Page 19 - 1995 RESTATED BYLAWS
================================================================================
GARDENBURGER, INC.
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK
as Rights Agent
Amended and Restated Rights Agreement
Dated as of July 15, 1999
================================================================================
<PAGE>
AMENDED AND RESTATED RIGHTS AGREEMENT
-------------------------------------
This Amended and Restated Rights Agreement, dated as of July
15, 1999, is by and between Gardenburger, Inc., an Oregon corporation (the
"Company"), and First Chicago Trust Company of New York, a Delaware corporation,
as Rights Agent (the "Rights Agent").
RECITALS
--------
The Board of Directors of the Company has authorized and declared a
dividend of one right (a "Right") for each Common Share (as defined in Section
1.6) of the Company outstanding at the close of business on May 20, 1996 (the
"Record Date") and has authorized the issuance of one Right (subject to
adjustment as provided herein) with respect to each Common Share that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date and the Final Expiration Date (as such terms are
defined in Sections 3.1 and 7.1), each Right initially representing the right to
purchase one one-hundredth of a share of Series A Junior Participating Preferred
Stock (the "Preferred Shares") of the Company having the rights, powers and
preferences set forth in the form of Certificate of Designations attached hereto
as Exhibit A, upon the terms and subject to the conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1 CERTAIN DEFINITIONS. For purposes of this Rights Agreement,
the following terms have the meanings indicated:
1.1 "Acquiring Person" shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates and Associates (as such
terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 15% or more of the Common Shares of the
Company then outstanding, but shall not include: (i) the Company; (ii) any
Subsidiary of the Company; (iii) any employee benefit plan of the Company or of
any Subsidiary of the Company or any entity holding shares of capital stock of
the Company for or pursuant to the terms of any such plan, in its capacity as an
agent or trustee for any such plan; or (iv) any Exempt Person, unless such
Exempt Person becomes the Beneficial Owner of more than the Exempt Percentage of
the Common Shares of the Company then outstanding. "Exempt Person" shall mean
(x) Paul F. Wenner, together with all of his Affiliates and Associates,
including, without limitation, the Paul F. Wenner Charitable Foundation Trust
(collectively, "Wenner"); and (y) Dresdner Kleinwort Benson Private Equity
Partners LP, together with all of its Affiliates and Associates, or any one or
more of the Affiliates and Associates of Dresdner Kleinwort Benson Private
Equity Partners LP (collectively, "Dresdner"). "Exempt Percentage" shall mean,
with respect to Wenner, up to 25% of the Common Shares of the Company then
outstanding and, with respect to Dresdner, up to 22% of the Common Shares of the
Company then outstanding. Notwithstanding the foregoing, (a) no Person shall
become an "Acquiring Person" as the result of an acquisition of Common Shares by
the Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15% (25% as
to Wenner and 22% as to Dresdner) or more of the Common Shares of the Company
then outstanding, provided that if a Person shall become the Beneficial Owner of
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<PAGE>
15% (25% as to Wenner and 22% as to Dresdner) or more of the Common Shares of
the Company then outstanding solely by reason of share purchases by the Company
and shall, after such purchases by the Company, become the Beneficial Owner of
any additional Common Shares of the Company, then such Person shall be deemed to
be an "Acquiring Person;" (b) if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this Section 1.1,
has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that such Person would no
longer be an Acquiring Person, as defined pursuant to the foregoing provisions
of this Section 1.1, then such Person shall not be deemed to be an "Acquiring
Person" for any purposes of this Agreement (so long as such Person does not
become an Acquiring Person after such divestiture); and (c) none of the
Purchasers (as defined in that certain Stock Purchase Agreement dated as of
March 29, 1999, by and among the Company and the Purchasers, as amended by
letter agreement dated April 14, 1999), together with any one or more or all of
each Purchaser's Affiliates and Associates (collectively, the "Preferred
Investors"), shall become or be deemed to be an "Acquiring Person," either
singly or as a group, solely by reason of being or becoming the Beneficial Owner
of any number of the Company's shares of Series A Convertible Preferred Stock or
Series B Convertible Preferred Stock (together, the "Convertible Preferred
Shares"), or any of the Common Shares into which such Convertible Preferred
Shares are converted or may become convertible.
1.2 "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations, as in effect
on the date of this Rights Agreement, under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
1.3 A Person shall be deemed the "Beneficial Owner" of and shall be deemed
to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act as in
effect on the date of this Agreement);
(ii) which such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has (A) the right to acquire (whether such right is
exercisable immediately, or only after the passage of time, compliance with
regulatory requirements, fulfillment of a condition or otherwise) pursuant
to any agreement, arrangement or understanding, whether or not in writing
(other than customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of securities),
or upon the exercise of conversion rights, exchange rights, rights (other
than the Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, (1) securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange or (2) securities which such Person or any of such
2
<PAGE>
Person's Affiliates or Associates may acquire, does or do acquire or may be
deemed to have the right to acquire, pursuant to any merger or other
acquisition agreement between the Company and such Person (or one or more
of his Affiliates or Associates) if such agreement has been approved by the
Board of Directors of the Company prior to such Person's becoming an
Acquiring Person; or (B) the right to vote pursuant to any agreement,
arrangement or understanding (whether or not in writing); provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security under this clause (B) if the agreement,
arrangement or understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act and (2) is not also
then reportable on Schedule 13D under the Exchange Act (or any comparable
or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any other
Person (or any Affiliate or Associate thereof) with which such Person or
any of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a bona fide
public offering of securities), whether or not in writing, for the purpose
of acquiring, holding, voting (except pursuant to a revocable proxy as
described in the proviso to Section 1.3(ii)(B))or disposing of any
securities of the Company.
1.4 "Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of Oregon are authorized or
obligated by law or executive order to close.
1.5 "close of business" on any given date shall mean 5:00 p.m., Oregon
time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 p.m., Oregon time, on the next succeeding Business Day.
1.6 "Common Shares" when used with reference to the Company shall mean the
shares of common stock, no par value, of the Company. "Common Shares" when used
with reference to any Person other than the Company shall mean the capital stock
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such other Person
or, if such Person is a Subsidiary of another Person, the Person or Persons
which ultimately control such first-mentioned Person, and which has issued and
outstanding such capital stock, equity securities or equity interest.
1.7 INTENTIONALLY DELETED.
1.8 "Person" shall mean any individual, partnership, joint venture, limited
liability company, firm, corporation, unassociated association, trust or other
entity, and shall include any successor (by merger or otherwise) of such entity.
3
<PAGE>
1.9 "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, the filing of a report pursuant to Section 13(d) of the Exchange Act
or pursuant to a comparable successor statute) by the Company or an Acquiring
Person that an Acquiring Person has become such or that discloses information
which reveals the existence of an Acquiring Person.
1.10 "Subsidiary" of any Person shall mean any corporation or other entity
of which a majority of the voting power of the voting equity securities or
equity interests is owned, of record or beneficially, directly or indirectly, by
such Person.
1.11 A "Trigger Event" shall be deemed to have occurred upon any Person
becoming an Acquiring Person. Notwithstanding the foregoing, a Trigger Event
shall not be deemed to have occurred if the event causing the ownership
thresholds set forth in Section 1.1 to be crossed is (x) an acquisition of
Common Shares made pursuant to a cash tender offer made pursuant to the rules
and regulations under the Exchange Act and filed with the Securities and
Exchange Commission on Schedule 14D-1 (or any successor form) for all
outstanding Common Shares not beneficially owned by the Person making such offer
(or by its Affiliates or Associates) so long as the Board of Directors of the
Company determines, after receiving advice from one or more investment banking
firms, that such offer is (i) at a price and on terms which are fair to
stockholders (taking into account all factors which such members of the Board
deem relevant, including without limitation, prices which could reasonably be
achieved if the Company or its assets were sold on an orderly basis designed to
realize maximum value) and (ii) otherwise in the best interests of the Company
and its stockholders, or (y) an acquisition by a Person of Convertible Preferred
Shares and/or the Common Shares into which such Convertible Preferred Shares are
convertible from a Preferred Investor if the Board of Directors of the Company
determines in good faith that such acquisition by such Person is not contrary to
the best interests of the Company and its stockholders. Any Person acquiring
Convertible Preferred Shares and/or Common Shares in an acquisition approved by
the Board of Directors in accordance with the preceding sentence shall be deemed
to be, together with all of such Person's Affiliates and Associates, an Exempt
Person within the meaning of Section 1.1, and such Person's Exempt Percentage
shall be the percentage of Common Shares that such Person, together with all of
such Person's Affiliates and Associates, beneficially owns upon completion of
the approved acquisition.
1.12 The following terms shall have the meanings defined for such terms in
the Sections set forth below:
Term Section
---- -------
Adjustment Shares 11.1.2
common stock equivalent 11.1.3
Company Recitals
current per share market price 11.4
Current Value 11.1.3
Distribution Date 3.1
equivalent preferred stock 11.2
Exchange Act 1.2
Exchange Consideration 27.1
4
<PAGE>
Exempt Percentage 1.1
Exempt Person 1.1
Final Expiration Date 7.1
Nasdaq 9
Preferred Shares Recitals
Purchase Price 4
Record Date Recitals
Redemption Date 7.1
Redemption Price 23.1
Right Recitals
Right Certificate 3.1
Rights Agent Recitals
Security 11.4
Spread 11.1.3
Substitution Period 11.1.3
Summary of Rights 3.2
Trading Day 11.4.1
SECTION 2 APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3, shall prior to the Distribution Date also be the
holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable. In the event the Company appoints one or more co-Rights Agents, the
respective duties of the Rights Agent and any co-Rights Agent shall be as the
Company shall determine. Contemporaneously with such appointment, if any, the
Company shall notify the Rights Agent thereof.
SECTION 3 ISSUANCE OF RIGHT CERTIFICATES.
3.1 Rights Evidenced by Share Certificates. Until the earlier of (i) the
10th day after the Shares Acquisition Date or (ii) the 10th day after the date
of the commencement of, or first public announcement of the intent of any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company or any entity holding
shares of capital stock of the Company for or pursuant to the terms of any such
plan, in its capacity as an agent or trustee for any such plan) to commence, a
tender or exchange offer the consummation of which would result in any Person
becoming the Beneficial Owner of Common Shares aggregating 15% or more of the
then outstanding Common Shares of the Company (the earlier of (i) and (ii) being
herein referred to as the "Distribution Date," whether or not either such date
occurs prior to the Record Date), (x) the Rights (unless earlier expired,
redeemed or terminated) will be evidenced (subject to the provisions of Section
3.2) by the certificates for Common Shares registered in the names of the
holders thereof (which certificates for Common Shares shall also be deemed to be
Right Certificates) and not by separate certificates, and (y) the Rights (and
the right to receive certificates therefor) will be transferable only in
connection with the transfer of the underlying Common Shares. Notwithstanding
the preceding sentence, before the occurrence of a Distribution Date resulting
from an event described in clause (ii) of the preceding sentence (or such later
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<PAGE>
Distribution Date as the Board of Directors may select pursuant to this
sentence), the Board of Directors may postpone, one or more times, such a
Distribution Date beyond the date set forth in such clause (ii). Nothing herein
shall permit such a postponement after a Person becomes an Acquiring Person,
except in the event the Board of Directors determines, in accordance with
Section 1.1, that the Person became an Acquiring Person inadvertently. As soon
as practicable after the Distribution Date, the Rights Agent will send, by
first-class, postage-prepaid mail, to each record holder of Common Shares as of
the close of business on the Distribution Date, at the address of such holder
shown on the records of the Company, one or more certificates for Rights, in
substantially the form of Exhibit B hereto (a "Right Certificate"), evidencing
one Right (subject to adjustment as provided herein) for each Common Share so
held. As of the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
3.2 Summary of Rights. On the Record Date or as soon as practicable
thereafter, the Company will send or cause to be sent a copy of a Summary of
Rights to Purchase Preferred Shares, in substantially the form attached hereto
as Exhibit C (the "Summary of Rights"), by first-class, postage-prepaid mail, to
each record holder of Common Shares as of the close of business on the Record
Date at the address of such holder shown on the records of the Company. With
respect to certificates for Common Shares outstanding as of the close of
business on the Record Date, until the Distribution Date (or the earlier
Redemption Date or Final Expiration Date), the Rights will be evidenced by such
certificates for Common Shares registered in the names of the holders thereof
together with a copy of the Summary of Rights and the registered holders of the
Common Shares shall also be registered holders of the associated Rights. Until
the Distribution Date (or the earlier Redemption Date or Final Expiration Date),
the surrender for transfer of any certificate for Common Shares outstanding at
the close of business on the Record Date, with or without a copy of the Summary
of Rights, shall also constitute the transfer of the Rights associated with the
Common Shares represented thereby.
3.3 New Certificates After Record Date. Certificates for Common Shares
which become outstanding (whether upon issuance out of authorized but unissued
Common Shares, issuance out of treasury or transfer or exchange of outstanding
Common Shares) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date, shall be
deemed also to be certificates for Rights, and shall have impressed, printed,
stamped, written or otherwise affixed onto them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between
Gardenburger, Inc. and First Chicago Trust Company of New York, dated
as of April 25, 1996, as the same may be amended from time to time
(the "Rights Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
executive offices of Gardenburger, Inc. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. Gardenburger, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. AS DESCRIBED IN THE RIGHTS
AGREEMENT, RIGHTS WHICH ARE HELD BY OR HAVE BEEN HELD BY ACQUIRING
PERSONS OR ASSOCIATES OR AFFILIATES THEREOF (AS DEFINED IN THE RIGHTS
AGREEMENT) SHALL BECOME NULL AND VOID.
6
<PAGE>
With respect to such certificates containing the foregoing legend, until the
Distribution Date (or the earlier Redemption Date or Final Expiration Date), the
Rights associated with the Common Shares represented by such certificates shall
be evidenced by such certificates, with or without a copy of the Summary of
Rights, and the surrender for transfer of any such certificates shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases or acquires any
Common Shares after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Shares shall be deemed cancelled and retired
so that the Company shall not be entitled to exercise any Rights associated with
the Common Shares which are no longer outstanding.
3.4 Convertible Preferred Shares. The Convertible Preferred Shares shall be
entitled to the same rights and benefits (determined on the basis of the number
of Common Shares into which Convertible Preferred Shares are convertible on the
relevant Distribution Date) provided under this Rights Agreement (as amended) or
under any replacement or alternative rights arrangements as are provided to the
Common Shares. Each obligation of the Company and the Rights Agent to the
holders of Common Shares under this Agreement shall apply equally (on such
as-converted basis set forth in the prior sentence) for the benefit of the
holders of the Convertible Preferred Shares. As soon as practicable after the
Distribution Date, the Rights Agent will send, by first-class, postage-prepaid
mail, to each record holder of Convertible Preferred Shares as of the close of
business on the Distribution Date, at the address of such holder shown on the
records of the Company, one or more Right Certificates, evidencing one Right
(subject to adjustment as provided herein) for each Common Share into which the
Convertible Preferred Shares held by such holder are then convertible. Any such
Rights so issued with respect to such Convertible Preferred Shares shall be
subject to rights, terms and conditions identical to those of the Rights
evidenced by Right Certificates issued pursuant to Section 3.1 hereof and such
holder of Convertible Preferred Shares shall be treated as a registered or
record holder of such Rights.
SECTION 4 FORM OF RIGHT CERTIFICATES. The Right Certificates (and the
forms of election to purchase Preferred Shares, certification and assignment to
be printed on the reverse thereof) shall be substantially the same as Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Rights
Agreement, or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or regulation of any
stock exchange or trading system on which the Rights may from time to time be
listed or quoted, or to conform to usage. Subject to the terms and conditions
hereof, the Right Certificates, whenever issued, shall be dated as of the Record
Date, and shall show the date of countersignature by the Rights Agent, and on
their face shall entitle the holders thereof to purchase such number of one
one-hundredths of a Preferred Share as shall be set forth therein at the price
per one one-hundredth of a Preferred Share set forth therein (the "Purchase
Price"), but the number of such one one-hundredths of a Preferred Share and the
Purchase Price shall be subject to adjustment as provided herein.
SECTION 5 COUNTERSIGNATURE AND REGISTRATION. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board of
Directors, Chief Executive Officer, President or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the Company's
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seal or a facsimile thereof which shall be attested by the Secretary or any
Assistant Secretary of the Company, either manually or by facsimile signature.
The Right Certificates shall be manually countersigned by an authorized
signatory of the Rights Agent, but it shall not be necessary for the same
signatory to countersign all of the Right Certificates hereunder. No Right
Certificate shall be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Right Certificates shall
cease to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent, and issued and delivered
by the Company with the same force and effect as though the person who signed
such Right Certificates had not ceased to be such officer of the Company; and
any Right Certificate may be signed on behalf of the Company by any person who,
at the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at its principal office in Jersey City, New Jersey books for registration
and transfer of the Right Certificates issued hereunder. Such books shall show
the names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates, the
certificate number of each of the Right Certificates and the date of each of the
Right Certificates.
SECTION 6 TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. Subject
to the provisions of Section 11.1.2 and Section 14, at any time after the close
of business on the Distribution Date, and at or prior to the close of business
on the earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11.1.2 or that have been
exchanged pursuant to Section 27) may be transferred, split up or combined or
exchanged for another Right Certificate or Right Certificates, entitling the
registered holder to purchase a like number of one one-hundredths of a Preferred
Share as the Right Certificate or Right Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer, split up or
combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender, together with any required
form of assignment and certificate duly completed, the Right Certificate or
Right Certificates to be transferred, split up or combined or exchanged at the
office of the Rights Agent designated for such purpose. Neither the Rights Agent
nor the Company shall be obligated to take any action whatsoever with respect to
the transfer of any such surrendered Right Certificate or Right Certificates
until the registered holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of such Right
Certificate or Right Certificates and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall countersign and deliver to the person entitled
thereto a Right Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment from the holders of Right
Certificates of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up or combination or
exchange of such Right Certificates.
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Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
SECTION 7 EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
7.1 Exercise of Rights. Subject to Section 11.1.3 and except as otherwise
provided herein, the registered holder of any Right Certificate may exercise the
Rights evidenced thereby in whole or in part at any time after the Distribution
Date upon surrender of the Right Certificate, with the form of election to
purchase and certification on the reverse side thereof duly executed, to the
Rights Agent at the office of the Rights Agent designated for such purpose,
together with payment of the Purchase Price for each one one-hundredth of a
Preferred Share as to which the Rights are exercised, at or prior to the
earliest of (i) the close of business on April 25, 2006 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided in Section 23
(the "Redemption Date"), (iii) the closing of any merger or other acquisition
transaction involving the Company pursuant to an agreement of the type described
in Section 1.3(ii)(A)(2), at which time the Rights are deemed terminated, or
(iv) the time at which the Rights are exchanged as provided in Section 27.
7.2 Purchase Price. The Purchase Price for each one one-hundredth of a
Preferred Share pursuant to the exercise of a Right shall initially be $47.00,
shall be subject to adjustment from time to time as provided in Sections 11, 13
and 26 and shall be payable in lawful money of the United States of America in
accordance with paragraph 7.3.
7.3 Payment Procedures. Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and certification duly
executed, accompanied by payment of the Purchase Price for the shares to be
purchased and an amount equal to any applicable transfer tax required to be paid
by the holder of such Right Certificate in accordance with Section 9, by
certified or cashier's check or money order payable to the order of the Company,
the Rights Agent shall thereupon promptly (i)(A) requisition from any transfer
agent of the Preferred Shares (or make available, if the Rights Agent is the
transfer agent) certificates for the number of Preferred Shares to be purchased
and the Company hereby irrevocably authorizes its transfer agent to comply with
all such requests, or (B) if the Company shall have elected to deposit the total
number of Preferred Shares issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a Preferred Share as are to be
purchased (in which case certificates for the Preferred Shares represented by
such receipts shall be deposited by the transfer agent with the depositary
agent) and the Company hereby directs the depositary agent to comply with all
such requests, (ii) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of the issuance of fractional shares in accordance with
Section 14, (iii) promptly after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
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holder of such Right Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after receipt, promptly
deliver such cash to or upon the order of the registered holder of such Right
Certificate. In the event that the Company is obligated to issue other
securities of the Company, pay cash and/or distribute other property pursuant to
Section 11.1.3, the Company will make all arrangements necessary so that such
other securities, cash and/or other property are available for distribution by
the Rights Agent, if and when appropriate.
7.4 Partial Exercise. In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to the registered
holder of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Section 14.
7.5 Full Information Concerning Ownership. Notwithstanding anything in this
Rights Agreement to the contrary, neither the Rights Agent nor the Company shall
be obligated to undertake any action with respect to a registered holder of
Rights upon the occurrence of any purported exercise as set forth in this
Section 7 unless the certificate contained in the form of election to purchase
set forth on the reverse side of the Right Certificate surrendered for such
exercise shall have been duly completed and signed by the registered holder
thereof and the Company shall have been provided with such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
SECTION 8 CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
SECTION 9 RESERVATION AND AVAILABILITY OF CAPITAL STOCK. The Company
covenants and agrees that from and after the Distribution Date it will cause to
be reserved and kept available out of its authorized and unissued Preferred
Shares (and, following the occurrence of a Trigger Event, out of its authorized
and unissued Common Shares or other securities or out of its shares held in its
treasury) the number of Preferred Shares (and, following the occurrence of a
Trigger Event, Common Shares and/or other securities) that will be sufficient to
permit the exercise in full of all outstanding Rights.
So long as the Preferred Shares (and, following the occurrence of a Trigger
Event, Common Shares and/or other securities) issuable upon the exercise of
Rights may be listed on any national securities exchange or traded in the
over-the-counter market and quoted on the National Association of Securities
Dealers, Inc. Automated Quotation System ("Nasdaq"), the Company shall use its
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best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such exchange
or so traded in such over-the-counter market, upon official notice of issuance
upon such exercise.
The Company covenants and agrees that it will take all such action as may
be necessary to ensure that all Preferred Shares (and, following the occurrence
of a Trigger Event, Common Shares and/or other securities) delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when due and
payable any and all Federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Preferred Shares (or Common Shares and/or other securities, as the case may
be) upon the exercise of Rights. The Company shall not, however, be required to
pay any transfer tax which may be payable in respect of any transfer or delivery
of Right Certificates to a person other than, or the issuance or delivery of
certificates for the Preferred Shares (or Common Shares and/or other securities,
as the case may be) in a name other than that of, the registered holder of the
Right Certificate evidencing Rights surrendered for exercise or to issue or
deliver any certificates for Preferred Shares (or Common Shares and/or other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until any such tax shall have been paid
(any such tax being payable by the holder of such Right Certificate at the time
of surrender) or until it has been established to the Company's satisfaction
that no such tax is due.
SECTION 10 PREFERRED SHARES RECORD DATE. Each person in whose name any
certificate for Preferred Shares (or Common Shares and/or other securities, as
the case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Shares (or Common
Shares and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Shares (or
Common Shares and/or other securities, as the case may be) transfer books of the
Company are closed, such person shall be deemed to have become the record holder
of such shares (fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Shares (or Common
Shares and/or other securities, as the case may be) transfer books of the
Company are open.
SECTION 11 ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF
RIGHTS. The Purchase Price, the number of shares covered by each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
11.1 Post Execution Events.
11.1.1 Corporate Dividends, Reclassifications, Etc. In the event the
Company shall at any time after the date of this Rights Agreement (A) declare a
dividend on the Preferred Shares payable in Preferred Shares, (B) subdivide the
outstanding Preferred Shares, (C) combine the outstanding Preferred Shares into
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a smaller number of shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), except as otherwise provided in this Section 11.1,
the Purchase Price in effect at the time of the record date for such dividend or
of the effective date of such subdivision, combination or reclassification, and
the number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books of the Company were
open, he would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification. If an
event occurs which would require an adjustment under both Section 11.1.1 and
Section 11.1.2, the adjustment provided for in this Section 11.1.1 shall be in
addition to, and shall be made prior to, the adjustment required pursuant to,
Section 11.1.2.
11.1.2 Triggering Events. Subject to Sections 23.1 and 27 of this
Agreement, in the event that a Trigger Event occurs, then, from and after the
first occurrence of such event, each holder of a Right, except as provided
below, shall thereafter have a right to receive, upon exercise thereof at a
price per Right equal to the then current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for which a Right is then
exercisable (without giving effect to this Section 11.1.2), in accordance with
the terms of this Rights Agreement, such number of Common Shares as shall equal
the result obtained by (x) multiplying the then current Purchase Price by the
then number of one one-hundredths of a Preferred Share for which a Right is then
exercisable (without giving effect to this Section 11.1.2) and (y) dividing that
product by 50% of the current per share market price of the Common Shares
(determined pursuant to Section 11.4) on the first of the date of the occurrence
of, or the date of the first public announcement of, a Trigger Event (the
"Adjustment Shares"); provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject to the
provisions of Section 13, then only the provisions of Section 13 shall apply and
no adjustment shall be made pursuant to this Section 11.1.2; provided, further,
that the Purchase Price and the number of Adjustment Shares shall thereafter be
subject to further adjustment pursuant to Section 11.1.1 hereof. Notwithstanding
the foregoing, upon the occurrence of a Trigger Event, any Rights that are or
were acquired or beneficially owned by (1) an Acquiring Person or any Associate
or Affiliate thereof, (2) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (3) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
the Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect avoidance of this Section 11.1.2, shall
become void, and any holder (whether or not such holder is an Acquiring Person
or an Associate or Affiliate of an Acquiring Person) of such Rights shall
thereafter have no right to exercise such Rights under any provision of this
Rights Agreement or otherwise. Any Right Certificate issued pursuant to Section
3 or Section 22 that represents Rights beneficially owned by: (1) an Acquiring
Person or any Associate or Affiliate thereof, (2) a transferee of an Acquiring
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Person (or of any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (3) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect avoidance
of this Section 11.1.2, and any Right Certificate issued pursuant to Section 6,
7.4 or 22 or this Section 11 upon transfer, exchange, replacement or adjustment
of any other Right Certificate referred to in this sentence, shall contain the
following legend (provided, however, that the Rights Agent shall not be
responsible for affixing such legend unless it has actual knowledge as to the
foregoing circumstances or the Company has notified the Rights Agent in writing
thereof):
THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE ARE HELD OR HAVE BEEN
HELD BY A PERSON WHO IS OR WAS AN ACQUIRING PERSON OR AN AFFILIATE OR
AN ASSOCIATE OF AN ACQUIRING PERSON OR A NOMINEE THEREOF. THIS RIGHT
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY HAVE BECOME NULL AND
VOID AS SPECIFIED IN SECTION 11.1.2 OF THE RIGHTS AGREEMENT.
The Company shall use all reasonable efforts to insure that the provisions
of this Section 11.1.2 are complied with, but shall have no liability to any
holder of Right Certificates or other Person as a result of its failure to make
any determinations with respect to any Acquiring Person or its Affiliates,
Associates or transferees hereunder.
11.1.3 Insufficient Shares. In the event that upon the occurrence of the
event listed in Section 11.1.2 above there shall not be sufficient Common Shares
authorized but unissued, or held by the Company as treasury shares, to permit
the exercise in full of the Rights in accordance with the foregoing Section
11.1.2, the Company shall take all such action as may be necessary to authorize
additional Common Shares for issuance upon exercise of the Rights, provided,
however, that if the Company determines that it is unable to cause the
authorization of a sufficient number of additional Common Shares, then, in the
event the Rights become exercisable, the Company, with respect to each Right and
to the extent necessary and permitted by applicable law and any agreements or
instruments in effect on the date hereof to which it is a party, shall: (A)
determine the excess of (1) the value of the Adjustment Shares issuable upon the
exercise of a Right (the "Current Value"), over (2) the Purchase Price (such
excess, the "Spread") and (B) with respect to each Right, make adequate
provision to substitute for the Adjustment Shares, upon payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
Common Shares or other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock which the Board of
Directors of the Company has deemed to have the same value as Common Shares)
(each such share of preferred stock constituting a "common stock equivalent")),
(4) debt securities of the Company, (5) other assets or (6) any combination of
the foregoing having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors of the Company
based upon the advice of a nationally recognized investment banking firm
selected by the Board of Directors of the Company; provided, however, that if
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the Company shall not have made adequate provision to deliver value pursuant to
clause (B) above within thirty (30) days following the occurrence of the event
listed in Section 11.1.2 above, then the Company shall be obligated to deliver,
upon the surrender for exercise of a Right and without requiring payment of the
Purchase Price, Common Shares (to the extent available) and then, if necessary,
cash, which in the aggregate are equal to the Spread. If the Board of Directors
of the Company shall determine in good faith that it is unlikely that sufficient
additional Common Shares could be authorized for issuance upon exercise in full
of the Rights, the thirty (30) day period set forth above may be extended and
re-extended to the extent necessary, but not more than ninety (90) days
following the occurrence of the event listed in Section 11.1.2 above, in order
that the Company may seek stockholder approval for the authorization of such
additional shares (such period as may be extended, the "Substitution Period").
To the extent that the Company determines that some action need be taken
pursuant to the first and/or second sentences of this Section 11.1.3, the
Company (x) shall provide that such action shall apply uniformly to all
outstanding Rights, and (y) may suspend the exercisability of the Rights until
the expiration of the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended as
well as a public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11.1.3, the value of a Common Share shall
be the current per share market price (as determined pursuant to Section 11.4)
on the date of the occurrence of the event listed in Section 11.1.2 above and
the value of any "common stock equivalent" shall be deemed to have the same
value as the Common Shares on such date.
11.2 Dilutive Rights Offering. In case the Company shall fix a record date
for the issuance of rights, options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within forty-five (45) calendar
days after such record date) to subscribe for or purchase Preferred Shares (or
securities having the same rights, privileges and preferences as the Preferred
Shares ("equivalent preferred stock")) or securities convertible into Preferred
Shares or equivalent preferred stock at a price per share of Preferred Shares or
per share of equivalent preferred stock (or having a conversion or exercise
price per share, if a security convertible into or exercisable for Preferred
Shares or equivalent preferred stock) less than the current per share market
price of the Preferred Shares (as defined in Section 11.4) on such record date,
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred Shares which the
aggregate offering price of the total number of Preferred Shares and/or
equivalent preferred stock to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current per share market price and the denominator of which shall be the
number of Preferred Shares outstanding on such record date plus the number of
additional Preferred Shares and/or equivalent preferred stock to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be paid
in a consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. Preferred Shares owned by or held for the account of the
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Company or any Subsidiary of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such rights or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
11.3 Distributions. In case the Company shall fix a record date for the
making of a distribution to all holders of the Preferred Shares (including any
such distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash, securities or assets (other than a regular periodic cash
dividend at a rate not in excess of 125% of the rate of the last regular
periodic cash dividend theretofore paid or, in case regular periodic cash
dividends have not theretofore been paid, at a rate not in excess of 50% of the
average net income per share of the Company for the four quarters ended
immediately prior to the payment of such dividend, or a dividend payable in
Preferred Shares (which dividend, for purposes of this Agreement, shall be
subject to the provisions of Section 11.1.1(A) hereof)) or convertible
securities, or subscription rights or warrants (excluding those referred to in
Section 11.2), the Purchase Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the current per
share market price of the Preferred Shares (as defined in Section 11.4) on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the cash, assets,
securities or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Preferred Share and the
denominator of which shall be such current per share market price of the
Preferred Shares. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not so made,
the Purchase Price shall again be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.
11.4 Current Per Share Market Value.
11.4.1 General. For the purpose of any computation hereunder, the "current
per share market price" of any security (a "Security" for the purpose of this
Section 11.4.1) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date; provided, however, that in the event that the current per share market
price of the Security is determined during any period following the announcement
by the issuer of such Security of (i) a dividend or distribution on such
Security payable in shares of such Security or securities convertible into such
shares or (ii) any subdivision, combination or reclassification of such
Security, and prior to the expiration of thirty (30) Trading Days after the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
"current per share market price" shall be appropriately adjusted to reflect the
current market price per share equivalent of such Security. The closing price
for each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Security is not listed or
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admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by Nasdaq or such other system then in use, or, if on any such date
the Security is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Security selected by the Board of Directors of the Company. If on any
such date no such market maker is making a market in the Security, the fair
value of the Security on such date as determined in good faith by the Board of
Directors of the Company shall be used. The term "Trading Day" shall mean a day
on which the principal national securities exchange on which the Security is
listed or admitted to trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national securities
exchange, a Business Day. If the Security is not publicly held or not so listed
or traded, "current per share market price" shall mean the fair value per share
as determined in good faith by the Board of Directors of the Company or, if at
the time of such determination there is an Acquiring Person, by a nationally
recognized investment banking firm selected by the Board of Directors, which
shall have the duty to make such determination in a reasonable and objective
manner, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
11.4.2 Preferred Shares. Notwithstanding Section 11.4.1, for the purpose of
any computation hereunder, the "current per share market price" of the Preferred
Shares shall be determined in the same manner as set forth above in Section
11.4.1 (other than the last sentence thereof). If the current per share market
price of the Preferred Shares cannot be determined in the manner described in
Section 11.4.1, the "current per share market price" of the Preferred Shares
shall be conclusively deemed to be an amount equal to 100 (as such number may be
appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Shares occurring after the date of
this Agreement) multiplied by the current per share market price of the Common
Shares. If neither the Common Shares nor the Preferred Shares is publicly held
or so listed or traded, "current per share market price" of the Preferred Shares
shall mean the fair value per share as determined in good faith by the Board of
Directors of the Company, or, if at the time of such determination there is an
Acquiring Person, by a nationally recognized investment banking firm selected by
the Board of Directors of the Company, which shall have the duty to make such
determination in a reasonable and objective manner, which determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for
all purposes. For purposes of this Agreement, the "current per share market
price" of one one-hundredth of a Preferred Share shall be equal to the "current
per share market price" of one Preferred Share divided by 100.
11.5 Insignificant Changes. No adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or decrease of at
least 1% in such price. Any adjustments which by reason of this Section 11.5 are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest one-millionth of a Preferred Share or the
nearest ten-thousandth of a Common Share, as the case may be.
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11.6 Shares Other Than Preferred Shares. If as a result of an adjustment
made pursuant to Section 11.1, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than Preferred Shares, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Shares contained in Sections 11.1
through 11.3, inclusive, and the provisions of Sections 7, 9, 10 and 13 with
respect to the Preferred Shares shall apply on like terms to any such other
shares.
11.7 Rights Issued Subsequent to Adjustment. All Rights originally issued
by the Company subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase Price, the number
of one one-hundredths of a Preferred Share purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
11.8 Effect of Adjustments. Unless the Company shall have exercised its
election as provided in Section 11.9, upon each adjustment of the Purchase Price
as a result of the calculations made in Sections 11.2 and 11.3, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a Preferred Share (calculated to the nearest one-millionth
of a Preferred Share) obtained by (i) multiplying (x) the number of one
one-hundredths of a Preferred Share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
11.9 Adjustment in Number of Rights. The Company may elect on or after the
date of any adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of one one-hundredths of a
Preferred Share issuable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be exercisable
for the number of one one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Right Certificates have been issued, shall be at least ten (10) days
later than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11.9, the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in substitution
and replacement for the Right Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders shall be
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entitled after such adjustment. Right Certificates so to be distributed shall be
issued, executed and countersigned in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Right Certificates on the
record date specified in the public announcement.
11.10 Right Certificates Unchanged. Irrespective of any adjustment or
change in the Purchase Price or the number of one one-hundredths of a Preferred
Share issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the Purchase Price per
share and the number of one one-hundredths of a Preferred Share which were
expressed in the initial Right Certificates issued hereunder.
11.11 Par Value Limitations. Before taking any action that would cause an
adjustment reducing the Purchase Price below one one-hundredth of the then par
value, if any, of the Preferred Shares issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable Preferred Shares at such adjusted Purchase Price.
11.12 Deferred Issuance. In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the occurrence of
such event the issuing to the holder of any Right exercised after such record
date of the Preferred Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the Preferred Shares
and other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
11.13 Reduction in Purchase Price. Anything in this Section 11 to the
contrary notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly required by
this Section 11, as and to the extent that it in its sole discretion shall
determine to be advisable in order that any consolidation or subdivision of the
Preferred Shares, issuance wholly for cash of any of the Preferred Shares at
less than the current market price, issuance wholly for cash of Preferred Shares
or securities which by their terms are convertible into or exchangeable for
Preferred Shares, dividends on Preferred Shares payable in Preferred Shares or
issuance of rights, options or warrants referred to hereinabove in this Section
11, hereafter made by the Company to holders of its Preferred Shares shall not
be taxable to such stockholders.
11.14 Company not to Diminish Benefits of Rights. The Company covenants and
agrees that after the Distribution Date it will not, except as permitted by
Section 26, take (or permit any Subsidiary to take) any action if at the time
such action is taken it is reasonably foreseeable that such action will
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
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11.15 Adjustment of Rights Associated with Common Shares. Notwithstanding
anything contained in this Agreement to the contrary, in the event that the
Company shall at any time after the date hereof and prior to the Distribution
Date (i) declare or pay any dividend on the outstanding Common Shares payable in
Common Shares, (ii) effect a subdivision or consolidation of the outstanding
Common Shares (by reclassification or otherwise than by the payment of dividends
payable in Common Shares), or (iii) combine the outstanding Common Shares into a
greater or lesser number of Common Shares, then in any such case, the number of
Rights associated with each Common Share then outstanding, or issued or
delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each Common Share following any such event shall equal the result obtained by
multiplying the number of Rights associated with each Common Share immediately
prior to such event by a fraction, the numerator of which shall be the total
number of Common Shares outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total number of Common Shares
outstanding immediately following the occurrence of such event. The adjustments
provided for in this Section 11.15 shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.
SECTION 12 CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Sections 11 and 13, the Company
shall (a) promptly prepare a certificate setting forth such adjustment, and a
brief statement of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent and with each transfer agent for the Common Shares or the
Preferred Shares a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 25. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of any
such adjustment unless and until it shall have received such certificate.
SECTION 13 CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
13.1 General. In the event that, from and after the first occurrence of a
Trigger Event, directly or indirectly, (A) the Company shall consolidate with,
or merge with and into, any other Person and the Company shall not be the
continuing or surviving corporation, (B) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed into or exchanged for
stock or other securities of the Company or any other Person or cash or any
other property, or (C) the Company shall sell, exchange, mortgage or otherwise
transfer (or one or more of its Subsidiaries shall sell, exchange, mortgage or
otherwise transfer), in one or more transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons, then, and in
each such case, proper provision shall be made so that (i) each holder of a
Right (except as provided in Section 11.1.2 and as otherwise provided herein)
shall thereafter have the right to receive, upon the exercise thereof at a price
per Right equal to the then current Purchase Price multiplied by the number of
one one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Trigger Event (as subsequently
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adjusted pursuant to Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12), in
accordance with the terms of this Rights Agreement and in lieu of Preferred
Shares, such number of Common Shares of such other Person (including the Company
as successor thereto or as the surviving corporation) as shall be equal to the
result obtained by (x) multiplying the then current Purchase Price by the number
of one one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Trigger Event (as subsequently
adjusted pursuant to Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12) and (y)
dividing that product by 50% of the then current per share market price of the
Common Shares of such other Person (determined pursuant to Section 11.4) on the
date of consummation of such consolidation, merger, sale or transfer; provided,
that the price per Right so payable and the number of Common Shares of such
Person so purchasable shall thereafter be adjusted in accordance with Sections
11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12 by reason of such subsequent events
covered thereby occurring in respect of such Person; (ii) the issuer of such
Common Shares shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of
the Company pursuant to this Rights Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such issuer; and (iv) such issuer shall take
such steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares in accordance with Section 9) in connection with
such consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
Common Shares thereafter deliverable upon the exercise of the Rights. The
Company shall not enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements which,
as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights. The
Company shall not consummate any such consolidation, merger, sale or transfer
unless prior thereto the Company and such issuer shall have executed and
delivered to the Rights Agent a supplemental agreement so providing. The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
13.2 Approved Acquisitions. Notwithstanding anything contained herein to
the contrary, in the event of any merger or other acquisition transaction
involving the Company pursuant to a merger or other acquisition agreement
between the Company and any Person (or one or more of such Person's Affiliates
or Associates) which agreement has been approved by the Board of Directors of
the Company prior to any Person becoming an Acquiring Person, this Rights
Agreement and the rights of holders of Rights hereunder shall be terminated in
accordance with Section 7.1.
SECTION 14 FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
14.1 Cash in Lieu of Fractional Rights. The Company shall not be required
to issue fractions of Rights or to distribute Right Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable an amount in cash equal to the
same fraction of the current market value of a whole Right. For the purposes of
this Section 14.1, the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable. The closing
price for any day shall be the last sale price, regular way, or, in case no such
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sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by Nasdaq or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used.
14.2 Cash in Lieu of Fractional Shares. The Company shall not be required
to issue fractions of Preferred Shares (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share) upon exercise of the Rights
or to distribute certificates which evidence fractional Preferred Shares (other
than fractions which are integral multiples of one one-hundredth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one one-hundredth
of a Preferred Share may, at the election of the Company, be evidenced by
depositary receipts, pursuant to an appropriate agreement between the Company
and a depositary selected by it; provided, that such agreement shall provide
that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not integral multiples of one one-hundredth
of a Preferred Share, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current per share market price of one
Preferred Share. For purposes of this Section 14.2, the current per share market
price of a Preferred Share shall be the closing price of a Preferred Share (as
determined pursuant to the second sentence of Section 11.4.2) for the Trading
Day immediately prior to the date of such exercise.
14.3 Waiver of Right to Receive Fractional Rights or Shares. The holder of
a Right by the acceptance of the Rights expressly waives his right to receive
any fractional Rights or any fractional shares upon exercise of a Right, except
as permitted by this Section 14.
SECTION 15 RIGHTS OF ACTION. All rights of action in respect of this
Rights Agreement, except the rights of action given to the Rights Agent under
Section 18, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce this Rights Agreement, and may institute and maintain any suit,
action or proceeding against the Company to enforce this Rights Agreement, or
otherwise enforce or act in respect of his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
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Certificate and in this Rights Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Rights Agreement and shall be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person (including, without limitation, the
Company) subject to this Rights Agreement.
SECTION 16 AGREEMENT OF RIGHT HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) as of and after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer with all required certifications
completed; and
(c) the Company and the Rights Agent may deem and treat the Person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
SECTION 17 RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 24), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.
SECTION 18 CONCERNING THE RIGHTS AGENT. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder in accordance with a fee schedule to be mutually agreed upon and, from
time to time, on demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration and execution of
this Rights Agreement and the exercise and performance of its duties hereunder.
The Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without negligence,
bad faith or willful misconduct on the part of the Rights Agent, for anything
done or omitted by the Rights Agent in connection with the acceptance and
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administration of this Rights Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
The Rights Agent shall be protected and shall incur no liability for or in
respect of any action taken, suffered or omitted by it in connection with its
administration of this Rights Agreement in reliance upon any Right Certificate
or certificate for the Preferred Shares or the Common Shares or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, instruction, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons.
SECTION 19 MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust or
stock transfer business of the Rights Agent or any successor Rights Agent, shall
be the successor to the Rights Agent under this Rights Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Rights Agreement, any of the Right Certificates shall have been countersigned
but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Rights Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.
SECTION 20 DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Rights Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
20.1 Legal Counsel. The Rights Agent may consult with legal counsel
selected by it (who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and protection to the
Rights Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
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20.2 Certificates as to Facts or Matters. Whenever in the performance of
its duties under this Rights Agreement the Rights Agent shall deem it necessary
or desirable that any fact or matter be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by any
one of the Chairman of the Board of Directors, the Chief Executive Officer, the
President, the Chief Financial Officer, any Vice President, the Treasurer, the
Secretary or any Assistant Treasurer or Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Rights Agreement in reliance upon such certificate.
20.3 Standard of Care. The Rights Agent shall be liable hereunder only for
its own negligence, bad faith or willful misconduct.
20.4 Reliance on Rights Agreement and Right Certificates. The Rights Agent
shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Rights Agreement or in the Right Certificates (except
as to its countersignature thereof) or be required to verify the same, but all
such statements and recitals are and shall be deemed to have been made by the
Company only.
20.5 No Responsibility as to Certain Matters. The Rights Agent shall not be
under any responsibility in respect of the validity of this Rights Agreement or
the execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Right Certificate
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Rights
Agreement or in any Right Certificate; nor shall it be responsible for any
change in the exercisability of the Rights (including the Rights becoming void
pursuant to Section 11.1.2) or any adjustment required under the provisions of
Sections 3, 11, 13, 23 or 27 or responsible for the manner, method or amount of
any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any Preferred Shares to be issued
pursuant to this Rights Agreement or any Right Certificate or as to whether any
Preferred Shares will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
20.6 Further Assurance by Company. The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for the carrying
out or performing by the Rights Agent of the provisions of this Rights
Agreement.
20.7 Authorized Company Officers. The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board of Directors, the Chief
Executive Officer, the President, the Chief Financial Officer, any Vice
President, the Treasurer, the Secretary or any Assistant Treasurer or Assistant
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Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties under this Rights Agreement, and it
shall not be liable for any action taken or suffered to be taken by it in good
faith in accordance with instructions of any such officer or for any delay in
acting while waiting for these instructions. Any application by the Rights Agent
for written instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken or omitted by the
Rights Agent with respect to its duties or obligations under this Rights
Agreement and the date on and/or after which such action shall be taken or
omitted. The Rights Agent shall not be liable to the Company for any action
taken or omitted in accordance with a proposal included in any such application
on or after the date specified therein (which date shall not be less than three
business days after the date any such officer actually receives such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking of any such action (or the effective date
in the case of omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken
or omitted.
20.8 Freedom to Trade in Company Securities. The Rights Agent and any
shareholder, director, officer or employee of the Rights Agent may buy, sell or
deal in any of the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Rights Agent under this Rights Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other capacity
for the Company or for any other legal entity.
20.9 Reliance on Attorneys and Agents. The Rights Agent may execute and
exercise any of the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, omission, default,
neglect or misconduct of any such attorneys or agents or for any loss to the
Company resulting from any such act, omission, default, neglect or misconduct,
provided that reasonable care was exercised in the selection and continued
employment thereof.
20.10 Rights Holders List. At any time and from time to time after the
Distribution Date, upon the request of the Company, the Rights Agent shall
promptly deliver to the Company a list, as of the most recent practicable date
(or as of such earlier date as may be specified by the Company), of the holders
of record of Rights.
SECTION 21 CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon thirty (30) days' notice in writing mailed to the Company and to
each transfer agent of the Common Shares and/or Preferred Shares, as applicable,
by registered or certified mail. The Company shall promptly notify the holders
of the Right Certificates by first-class mail of any such resignation. The
Company may remove the Rights Agent or any successor Rights Agent upon thirty
(30) days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Shares
and/or Preferred Shares, as applicable, by registered or certified mail, and to
the holders of the Right Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
resigning, removed, or incapacitated Rights Agent shall remit to the Company, or
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<PAGE>
to any successor Rights Agent designated by the Company, all books, records,
funds, certificates or other documents or instruments of any kind then in its
possession which were acquired by such resigning, removed or incapacitated
Rights Agent in connection with its services as Rights Agent hereunder, and
shall thereafter be discharged from all duties and obligations hereunder.
Following notice of such removal, resignation or incapacity, the Company shall
appoint a successor to such Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be (A) a corporation organized and doing business under the
laws of the United States or of the State of New York (or any other state of the
United States so long as such corporation is authorized to do business as a
banking institution in the State of New York in good standing, having a
principal office in the State of New York, which is authorized under such laws
to exercise stock transfer or corporate trust powers and is subject to
supervision or examination by Federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million or (B) an affiliate of a corporation described in clause (A)
of this sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares and/or Preferred Shares, as applicable, and mail a notice
thereof in writing to the registered holders of the Right Certificates. Failure
to give any notice provided for in this Section 21, however, or any defect
therein, shall not affect the legality or validity of the resignation or removal
of the Rights Agent or the appointment of the successor Rights Agent, as the
case may be.
SECTION 22 ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
the provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Rights Agreement. In addition, in
connection with the issuance or sale of Common Shares following the Distribution
Date and prior to the exchange, termination or expiration of the Rights, the
Company (a) shall, with respect to Common Shares so issued or sold pursuant to
the exercise of stock options or under any employee plan or arrangement, granted
or awarded as of the Distribution Date, or upon exercise, conversion or exchange
of securities hereinafter issued by the Company, and (b) may, in any other case,
if deemed necessary or appropriate by the Board of Directors of the Company,
issue Right Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that (i) no such Right
Certificate shall be issued if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
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Right Certificate would be issued, and (ii) no such Right Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
SECTION 23 REDEMPTION.
23.1 Right to Redeem. The Board of Directors of the Company may, at its
option, at any time prior to the close of business on the ninth day following a
Trigger Event, redeem all but not less than all of the then outstanding Rights
at a redemption price of $.01 per Right, appropriately adjusted to reflect any
stock split, stock dividend, recapitalization or similar transaction occurring
after the date hereof (such redemption price being hereinafter referred to as
the "Redemption Price"). The redemption of the Rights by the Board of Directors
may be made effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish. The Company may, at
its option, pay the Redemption Price in cash, Common Shares (based on the
current per share market price at the time of the redemption) or any other form
of consideration deemed appropriate by the Board of Directors. Anything
contained in this Rights Agreement to the contrary notwithstanding, the Rights
shall not be exercisable following an event described in Section 11.1.2 prior to
the expiration of the Company's right of redemption hereunder. In the event
that, pursuant to the last sentence of Section 1.1, the Board of Directors
determines that a person has become an Acquiring Person inadvertently, and such
person divests Common Shares in accordance with such sentence, then the
Company's right of redemption hereunder shall be deemed to have not expired as a
result of such inadvertent acquisition.
23.2 Redemption Procedures. Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights, and without any
further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right so held. Within ten (10) days after
the action of the Board of Directors ordering the redemption of the Rights, the
Company shall give, or cause the Rights Agent to give, notice of such redemption
to the holders of the then outstanding Rights by mailing such notice to all such
holders at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Shares. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. Neither the Company nor any of its
Affiliates or Associates may redeem, acquire or purchase for value any Rights at
any time in any manner other than that specifically set forth in this Section 23
or in Section 27, and other than in connection with the purchase, acquisition or
redemption of Common Shares prior to the Distribution Date.
SECTION 24 NOTICE OF CERTAIN EVENTS. In case the Company shall propose at
any time after the Distribution Date (a) to pay any dividend payable in stock of
any class to the holders of Preferred Shares or to make any other distribution
to the holders of Preferred Shares (other than a regular periodic cash dividend
at a rate not in excess of 125% of the rate of the last regular periodic cash
dividend theretofore paid or, in case regular periodic cash dividends have not
theretofore been paid, at a rate not in excess of 50% of the average net income
27
<PAGE>
per share of the Company for the four quarters ended immediately prior to the
payment of such dividends, or a stock dividend on, or a subdivision, combination
or reclassification of the Common Shares), or (b) to offer to the holders of
Preferred Shares rights or warrants to subscribe for or to purchase any
additional Preferred Shares or shares of stock of any class or any other
securities, rights or options, or (c) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares), or (d) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to permit one or more
of its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person (other than pursuant to
a merger or other acquisition agreement of the type described in Section
1.3(ii)(A)(2)), or (e) to effect the liquidation, dissolution or winding up of
the Company, or (f) to declare or pay any dividend on the Common Shares payable
in Common Shares or to effect a subdivision, combination or consolidation of the
Common Shares (by reclassification or otherwise than by payment of dividends in
Common Shares), then, in each such case, the Company shall give to the Rights
Agent and to each holder of a Right Certificate, in accordance with Section 25,
a notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the date
on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Preferred Shares and/or Common
Shares, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (a) or (b) above at least ten (10) days
prior to the record date for determining holders of the Preferred Shares for
purposes of such action, and in the case of any such other action, at least ten
(10) days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Shares and/or Common
Shares, whichever shall be the earlier.
In case an event set forth in Section 11.1.2 of this Rights Agreement shall
occur, then, in any such case, (i) the Company shall as soon as practicable
thereafter give to the Rights Agent and to each holder of a Right Certificate,
in accordance with Section 25, a notice of the occurrence of such event, which
notice shall describe the event and the consequences of the event to holders of
Rights under Section 11.1.2, and (ii) all references in this Section 24 to
Preferred Shares shall be deemed thereafter to refer to Common Shares and/or, if
appropriate, other securities.
Notwithstanding anything in this Rights Agreement to the contrary, prior to
the Distribution Date a filing by the Company with the Securities and Exchange
Commission shall constitute sufficient notice to the holders of securities of
the Company, including the Rights, for purposes of this Rights Agreement and no
other notice need be given.
SECTION 25 NOTICES. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
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Gardenburger, Inc.
1411 S.W. Morrison, Suite 400
Portland, Oregon 97205
Attention: President
Subject to the provisions of Section 21, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
First Chicago Trust Company of New York
P.O. Box 2507, Suite 4660
Jersey City, New Jersey 07303-2507
Attention: Tenders & Exchanges Administration
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate (or,
prior to the Distribution Date, to the holder of any certificate representing
Common Shares) shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.
SECTION 26 SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date
and subject to the last sentence of this Section 26, the Company and the Rights
Agent may, if the Company so directs, supplement or amend any provision of this
Rights Agreement without the approval of any holders of certificates
representing Common Shares. From and after the Distribution Date and subject to
the last sentence of this Section 26, the Company and the Rights Agent may from
time to time supplement or amend this Rights Agreement without the approval of
any holders of Right Certificates (i) to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, or (ii) so long as the interests of the
holders of the Right Certificates (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person) are not adversely affected
thereby, to make any other changes or provisions in regard to matters or
questions arising hereunder which the Company and the Rights Agent may deem
necessary or desirable, including but not limited to extending the Final
Expiration Date. Upon the delivery of a certificate from an appropriate officer
of the Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 26, the Rights Agent shall execute
such supplement or amendment. Without limiting the foregoing, at any time prior
to such time as any Person becomes an Acquiring Person, the Company and the
Rights Agent may amend this Agreement to lower the thresholds set forth in
Sections 1.1 and 3.1 to not less than the greater of (i) any percentage greater
than the largest percentage of the outstanding Common Shares then known by the
Company to be beneficially owned by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any
Subsidiary of the Company, or any entity holding Common Shares for or pursuant
to the terms of any such plan) and (ii) 10%.
29
<PAGE>
SECTION 27 EXCHANGE.
27.1 Exchange of Common Shares for Rights. The Board of Directors of the
Company may, at its option, at any time after the occurrence of a Trigger Event,
exchange Common Shares for all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to the
provisions of Section 11.1.2) by exchanging that number of Common Shares having
an aggregate value equal to the Spread (with such value being based on the
current per share market price (as determined pursuant to Section 11.4) on the
date of the occurrence of a Trigger Event) per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (such amount per Right being hereinafter referred to as the
"Exchange Consideration"). Notwithstanding the foregoing, (i) the Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Common
Shares for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding and (ii) the Board shall not be
empowered to effect an exchange for more than that number of Rights for which
there are sufficient Common Shares authorized but unissued, or held by the
Company as treasury shares, to permit the exchange for Rights.
27.2 Exchange Procedures. Immediately upon the action of the Board of
Directors of the Company ordering the exchange for any Rights pursuant to
Section 27.1 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange
Consideration. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the Common Shares for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than the Rights which have become void pursuant to the
provisions of Section 11.1.2) held by each holder of Rights.
27.3 No Fractional Shares Upon Exchange. The Company shall not be required
to issue fractions of Common Shares or to distribute certificates which evidence
fractional Common Shares. In lieu of such fractional Common Shares, the Company
shall pay to the registered holders of the Right Certificates, with regard to
which such fractional Common Shares would otherwise be issuable, in an amount in
cash equal to the same fraction of the current market value of a whole Common
Share. For the purposes of this Section 27.3, the current market value of a
whole Common Share shall be the current per share market price (as determined
pursuant to Section 11.4) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 27.
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SECTION 28 SUCCESSORS. All the covenants and provisions of this Rights
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 29 BENEFITS OF THIS RIGHTS AGREEMENT. Nothing in this Rights
Agreement shall be construed to give to any Person or corporation other than the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Rights Agreement; but this Rights Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares).
SECTION 30 SEVERABILITY. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
SECTION 31 GOVERNING LAW. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Oregon and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
SECTION 32 COUNTERPARTS. This Rights Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
SECTION 33 DESCRIPTIVE HEADING. Descriptive headings of the several
Sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Rights Agreement to be duly executed and their respective corporate
seals to be hereunto affixed, all as of the day and year first above written.
GARDENBURGER, INC.
By /s/Richard C. Dietz
-------------------------------------
Name: Richard C. Dietz
Title: Executive Vice President, CFO
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By /s/Thomas McDonough
-------------------------------------
Name: Thomas McDonough
Title: Senior Account Manager
S-1
<PAGE>
Exhibit A
---------
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
GARDENBURGER, INC.
(Pursuant to Section 60.134 of the
Oregon Revised Statutes)
----------------------------------
Gardenburger, Inc., a corporation organized and existing under the Revised
Statutes of the State of Oregon (hereinafter called the "Corporation"), hereby
certifies that the following resolution was adopted by the Board of Directors of
the Corporation as required by Section 60.134 of the Oregon Business Corporation
Act at a meeting duly called and held on April 25, 1996.
RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors of this Corporation (hereinafter called the "Board of Directors" or
the "Board") in accordance with the provisions of the Articles of Incorporation,
the Board of Directors hereby creates a series of Preferred Stock, no par value
(the "Preferred Stock") of the Corporation, and hereby states the designation
and number of shares, and fixes the relative rights, preferences, and
limitations thereof as follows:
Series A Junior Participating Preferred Stock:
SECTION 1 DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 250,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
SECTION 2 DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any similar stock) ranking prior and superior to the
Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of Common Stock, no par
value (the "Common Stock") of the Corporation, and of any other junior stock,
A-1
<PAGE>
shall be entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends payable in
cash on the first day of April, July, October, and January in each year (each
such date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b)
subject to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock,, or
effect a subdivision, combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section 2
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the
Series A Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than (60) days prior to the date fixed for the payment thereof.
A-2
<PAGE>
SECTION 3 VOTING RIGHTS. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the shareholders of the Corporation.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Series A Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the Corporation having general
Voting rights shall vote together as one class on all matters submitted to a
vote of shareholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.
SECTION 4 CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock,
A-3
<PAGE>
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock ranking on a
parity with the Series A Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any Subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
SECTION 5 REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Articles of Incorporation, or in any other Certificate of Designations creating
a series of Preferred Stock or any similar stock or as otherwise required by
law.
SECTION 6 LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision, combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the aggregate amount to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such event
under the proviso in clause (1) of the preceding sentence shall be adjusted by
A-4
<PAGE>
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that are
outstanding immediately prior to such event.
SECTION 7 CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
SECTION 8 NO REDEMPTION. The shares of Series A Preferred Stock shall
not be redeemable.
SECTION 9 RANK. The Series A Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets, junior to all series
of any other class of the Corporation's Preferred Stock, except to the extent
that any such other series specifically provides that it shall rank on a parity
with or junior to the Series A Preferred Stock.
SECTION 10 AMENDMENT. The Articles of Incorporation of the Corporation
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
A-5
<PAGE>
IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf
of the Corporation by its ______________________ this _______ day of
_______________, 1996.
_________________________________________
Name:
Title:
A-6
<PAGE>
EXHIBIT B
---------
[Form of Right Certificate]
Certificate No. R- ______________ Rights
NOT EXERCISABLE AFTER APRIL 25, 2006 OR EARLIER IF NOTICE OF
REDEMPTION OR EXCHANGE IS GIVEN OR IF THE COMPANY IS MERGED OR
ACQUIRED PURSUANT TO AN AGREEMENT OF THE TYPE DESCRIBED IN SECTION
1.3(ii)(A)(2) OF THE RIGHTS AGREEMENT. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER RIGHT ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
(SPECIFIED IN SECTION 11.1.2 OF THE RIGHTS AGREEMENT), RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON, OR ITS AFFILIATES OR
ASSOCIATES, OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL
AND VOID. [THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE HELD OR HAVE
BEEN HELD BY A PERSON WHO IS OR WAS AN ACQUIRING PERSON OR AN
ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON OR A NOMINEE THEREOF.
THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY HAVE BECOME
NULL AND VOID AS SPECIFIED IN SECTION 11.1.2 OF THE RIGHTS AGREEMENT.]
Right Certificate
GARDENBURGER, INC.
This certifies that [_________________], or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the
Amended and Restated Rights Agreement, dated as of July 15, 1999, as the same
may be amended from time to time (the "Rights Agreement"), between Gardenburger,
Inc., an Oregon corporation (the "Company"), and First Chicago Trust Company of
New York, a Delaware corporation, as Rights Agent (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date and prior to
5:00 P.M. (Oregon time) on April 25, 2006, at the offices of the Rights Agent,
or its successors as Rights Agent, designated for such purpose, one
one-hundredth of a fully paid, nonassessable share of Series A Junior
Participating Preferred Stock, no par value (the "Preferred Shares") of the
Company, at a purchase price of $47.00 per one one-hundredth of a share, subject
to adjustment (the "Purchase Price"), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase and certification duly
executed. The number of Rights evidenced by this Right Certificate (and the
number of one one-hundredths of a Preferred Share which may be purchased upon
exercise thereof) set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of May 20, 1996 based on the Preferred Shares
as constituted at such date. Capitalized terms used in this Right Certificate
without definition shall have the meanings ascribed to them in the Rights
B-1
<PAGE>
Agreement. As provided in the Rights Agreement, the Purchase Price and the
number of Preferred Shares which may be purchased upon the exercise of the
Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal offices of the Company and the
Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the offices of the Rights Agent designated for such purpose, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like aggregate number
of one one-hundredths of a Preferred Share as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Board of Directors
may, at its option, (i) redeem the Rights evidenced by this Right Certificate at
a redemption price of $.01 per Right at any time prior to the occurrence of a
Trigger Event or (ii) exchange Common Shares for the Rights evidenced by this
Certificate, in whole or in part, after the occurrence of a Trigger Event.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby, but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
If any term, provision, covenant or restriction of the Rights Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of the Rights Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.
B-2
<PAGE>
This Right Certificate shall not be valid or binding for any purpose until
it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of ___________________.
GARDENBURGER, INC.
By_________________________________ By______________________________________
Name: Name:
Title: Title:
Countersigned:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By_____________________________________
Name:
Title:
B-3
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ________________________ hereby sells, assigns and transfers
unto __________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print name and address
of transferee)
this Right Certificate and the Rights evidenced thereby, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint _________________________ Attorney, to transfer the within Right
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: __________________________
_______________________________________
Signature
Signature Guaranteed:
_________________________________
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
B-4
<PAGE>
_______________________________________________________________________________
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof; and
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
Dated: _________________________
_______________________________________
Signature
B-5
<PAGE>
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate.)
To: GARDENBURGER, INC.
The undersigned hereby irrevocably elects to exercise ______________
Rights represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights (or such other securities of the
Company or of any other Person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of:
Please insert social security
or other identifying number
______________________________________
(Please print name and address)
______________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
______________________________________
(Please print name and address)
______________________________________
Dated: ___________________
_______________________________________
Signature
Signature Guaranteed:
__________________________
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
B-6
<PAGE>
_______________________________________________________________________________
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof; and
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
Dated: _____________________
_______________________________________
Signature
_______________________________________________________________________________
NOTICE
------
The signature in the foregoing Form of Assignment and Form of Election
to Purchase must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of
Assignment or Form of Election to Purchase is not completed, the Company will
deem the beneficial owner of the Rights evidenced by this Right Certificate to
be an Acquiring Person or an Affiliate or Associate hereof and, in the case of
an Assignment, will affix a legend to that effect on any Right Certificates
issued in exchange for this Right Certificate.
B-7
<PAGE>
EXHIBIT C
---------
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On April 25, 1996 the Board of Directors of Gardenburger, Inc., then
known as Wholesome & Hearty Foods, Inc. (the "Company"), declared a dividend of
one Right for each share of common stock, no par value (the "Common Shares"), of
the Company outstanding at the close of business on May 20, 1996 (the "Record
Date"). As long as the Rights are attached to the Common Shares, the Company
will issue one Right (subject to adjustment) with each new Common Share so that
all such shares will have attached Rights. When exercisable, each Right will
entitle the registered holder to purchase from the Company one one-hundredth of
a share of Series A Junior Participating Preferred Stock (the "Preferred
Shares") at a price of $47.00 per one one-hundredth of a Preferred Share,
subject to adjustment (the "Purchase Price"). The description and terms of the
Rights are set forth in a Rights Agreement, dated as of April 25, 1996, as the
same may be amended from time to time (the "Rights Agreement"), between the
Company and First Chicago Trust Company of New York as Rights Agent (the "Rights
Agent").
Until the earlier to occur of (i) the 10th day after a public
announcement that any person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the Common Shares or (ii) the 10th day after the
commencement or announcement of an intention to make a tender offer or exchange
offer the consummation of which would result in the beneficial ownership by a
person or group of 15% or more of the Common Shares (the earlier of (i) and (ii)
being called the "Distribution Date," whether or not either such date occurs
prior to the Record Date), the Rights will be evidenced, with respect to any of
the Common Share certificates outstanding as of the Record Date, by such Common
Share certificate. The Rights Agreement excludes certain shareholders from the
definition of Acquiring Person, so long as they do not acquire specified
additional percentages of the outstanding Common Shares. The Rights Agreement
also provides that persons acquiring shares pursuant to a cash tender offer
approved by the Board of Directors for all outstanding Common Shares not owned
by the person making the offer, will not be deemed Acquiring Persons.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the close of business on the Record Date
upon transfer or new issuance of the Common Shares will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date (or
earlier redemption, exchange, termination or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares, with or without a
copy of this Summary of Rights, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution Date and such
separate Right Certificates alone will evidence the Rights.
C-1
<PAGE>
The Rights are not exercisable before the Distribution Date and do not
become exercisable until the Company's right to redeem them has expired. The
Rights will expire on April 25, 2006, subject to the Company's right to extend
such date (the "Final Expiration Date"), unless earlier redeemed or exchanged by
the Company or terminated.
Each Preferred Share purchasable upon exercise of the Rights will be
entitled to a minimum preferential quarterly dividend payment of $1.00 per share
but will be entitled to an aggregate dividend of 100 times the dividend, if any,
declared per Common Share. In the event of liquidation, the holders of the
Preferred Shares will be entitled to a minimum preferential liquidation payment
of $100.00 per share but will be entitled to an aggregate payment of 100 times
the payment made per Common Share. Each Preferred Share will have 100 votes and
will vote together with the Common Shares. Finally, in the event of any merger,
consolidation or other transaction in which Common Shares are exchanged, each
Preferred Share will be entitled to receive 100 times the amount received per
Common Share. These rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Share's dividend, liquidation and voting
rights, the value of one one-hundredth of a Preferred Share purchasable upon
exercise of each Right should approximate the value of one Common Share.
The Purchase Price payable, and the number of Preferred Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares or convertible
securities at less than the current market price of the Preferred Shares or
(iii) upon the distribution to holders of the Preferred Shares of evidences of
indebtedness, cash, securities or assets (excluding regular periodic cash
dividends at a rate not in excess of 125% of the rate of the last regular
periodic cash dividend theretofore paid or, in case regular periodic cash
dividends have not theretofore been paid, at a rate not in excess of 50% of the
average net income per share of the Company for the four quarters ended
immediately prior to the payment of such dividend, or dividends payable in
Preferred Shares (which dividends will be subject to the adjustment described in
clause (i) above)) or of subscription rights or warrants (other than those
referred to above).
In the event that a Person becomes an Acquiring Person, each holder of
a Right, other than Rights that are or were acquired or beneficially owned by
the 15% stockholder (which Rights will thereafter be void), will thereafter have
the right to receive upon exercise that number of Common Shares having a market
value of two times the then current Purchase Price of the Right. With certain
exceptions, in the event that the Company were acquired in a merger or other
business combination transaction or more than 50% of its assets or earning power
were sold, proper provision shall be made so that each holder of a Right shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction would have a market
value of two times the then current Purchase Price of the Right.
At any time after a Person becomes an Acquiring Person and prior to
the acquisition by such Acquiring Person of 50% or more of the outstanding
Common Shares, the Board of Directors may cause the Company to acquire the
C-2
<PAGE>
Rights (other than Rights owned by an Acquiring Person which have become void),
in whole or in part, in exchange for that number of Common Shares having an
aggregate value equal to the Spread (the excess of the value of the Common
Shares issuable upon exercise of a Right after a Person becomes an Acquiring
Person over the Purchase Price) per Right (subject to adjustment).
The Rights may be redeemed in whole, but not in part, at a price of
$.01 per Right (the "Redemption Price") by the Board of Directors at any time
prior to the close of business on the ninth day after a Person has become an
Acquiring Person. The redemption of the Rights by the Board of Directors may be
made effective at such time, on such basis and with such conditions as the Board
of Directors in its sole discretion may establish. The Company may, at its
option, pay the Redemption Price in cash, Common Shares (based on the current
per share market price at the time of the redemption) or any other form of
consideration deemed appropriate by the Board of Directors. Immediately upon the
action of the Board of Directors of the Company electing to redeem the Rights,
the Company shall make an announcement thereof, and upon such election, the
right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company beyond those as an existing shareholder,
including, without limitation, the right to vote or to receive dividends.
Any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the Company and the Rights Agent may amend or supplement the
Rights Agreement without the approval of any holders of Right Certificates to
cure any ambiguity, to correct or supplement any provision contained therein
which may be defective or inconsistent with any other provisions therein, or so
long as the interests of the holders of Right Certificates (other than an
Acquiring Person or an affiliate or associate of an Acquiring Person) are not
adversely affected thereby, to make any other provisions in regard to matters or
questions arising thereunder which the Company and the Rights Agent may deem
necessary or desirable, including but not limited to extending the Final
Expiration Date. The Company may at any time prior to such time as any Person
becomes an Acquiring Person amend the Rights Agreement to lower the thresholds
described above to not less than the greater of (i) any percentage greater than
the largest percentage of the outstanding Common Shares then known by the
Company to be beneficially owned by any person or group of affiliated or
associated persons and (ii) 10%.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is incorporated herein
by reference.
C-3
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated January 26, 1999
(except as to the matters discussed in Note 13, as to which the date is March
30, 1999), included in the Annual Report on Form 10-K for the year ended
December 31, 1998 of Gardenburger, Inc., and to all references to our Firm
included in this Registration Statement.
/s/ ARTHUR ANDERSEN LLP
Portland, Oregon,
December 13, 1999
EXHIBIT 24
POWER OF ATTORNEY
Each person whose signature appears below designates and appoints LYLE
G. HUBBARD and RICHARD C. DIETZ, and each of them, the person's true and lawful
attorneys-in-fact and agents to sign a registration statement on Form S-8 to be
filed by Gardenburger, Inc., an Oregon corporation, with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, for the
purpose of registering 10,000 shares of common stock of Gardenburger, Inc. (the
"Company"), to be purchased by participants in the Company's 401(k) Profit
Sharing Plan, together with an indeterminate amount of interests in such plan,
and any and all amendments (including post-effective amendments) to the
registration statement. Each person whose signature appears below also grants
full power and authority to these attorneys-in-fact and agents to take any
action and execute any instruments that they deem necessary or desirable in
connection with the preparation and filing of the registration statement, as
fully as the person could do in person, hereby ratifying and confirming all that
the attorneys-in-fact and agents may lawfully do or cause to be done.
IN WITNESS WHEREOF, this power of attorney has been executed by each
of the undersigned as of the 8th day of December, 1999.
Signature Title
- --------- -----
/s/Lyle G. Hubbard
- ---------------------------------- Director, President and Chief
Lyle G. Hubbard Executive Officer
(Principal Executive Officer)
/s/Richard C. Dietz
- ---------------------------------- Executive Vice President, Chief Financial
Richard C. Dietz Officer, Secretary and Treasurer
(Principal Financial and
Accounting Officer)
- ---------------------------------- Director
Kyle A. Anderson
/s/Alexander P. Coleman
- ---------------------------------- Director
Alexander P. Coleman
/s/Jason M. Fish
- ---------------------------------- Director
Jason M. Fish
/s/Ronald C. Kesselman
- ---------------------------------- Director
Ronald C. Kesselman
- ---------------------------------- Director
Richard L. Mazer
- ---------------------------------- Director
Mary O. McWilliams
/s/Michael L. Ray
- ---------------------------------- Director
Michael L. Ray
/s/E. Kay Stepp
- ---------------------------------- Chairman of the Board
E. Kay Stepp
/s/Paul F. Wenner
- ---------------------------------- Founder, Chief Creative
Paul F. Wenner Officer and Director
