<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
GARDENBURGER, INC.
(Name of Issuer)
Common Stock, no par value
(Title of Class of Securities)
365476100
(CUSIP Number)
Thomas F. Steyer
Farallon Capital Management, L.L.C.
One Maritime Plaza, Suite 1325
San Francisco, California 94111
(415) 421-2132
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 14, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [ ].
Note. Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits. See Rule
13d-7(b) for other parties to whom copies are to be sent.
(Continued on following pages)
Page 1 of 122 Pages
Exhibit Index Found on Page 53
<PAGE>
13D
===============================
CUSIP No. 365476100
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Farallon Capital Partners, L.P.
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
WC, OO
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
[ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 280,000 [See Preliminary Note]
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
280,000 [See Preliminary Note]
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
280,000 [See Preliminary Note]
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.1% [See Preliminary Note]
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
PN
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 2 of 122 Pages
<PAGE>
13D
===============================
CUSIP No. 365476100
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Farallon Capital Institutional Partners, L.P.
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
WC
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
[ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 302,800 [See Preliminary Note]
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
302,800 [See Preliminary Note]
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
302,800 [See Preliminary Note]
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.3 % [See Preliminary Note]
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
PN
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 3 of 122 Pages
<PAGE>
13D
===============================
CUSIP No. 365476100
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Farallon Capital Institutional Partners II, L.P.
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
WC
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
[ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 50,900 [See Preliminary Note]
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
50,900 [See Preliminary Note]
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
50,900 [See Preliminary Note]
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.6 % [See Preliminary Note]
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
PN
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 4 of 122 Pages
<PAGE>
13D
===============================
CUSIP No. 365476100
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Farallon Capital Institutional Partners III, L.P.
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
WC
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
[ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 60,000 [See Preliminary Note]
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
60,000 [See Preliminary Note]
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
60,000 [See Preliminary Note]
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.7 % [See Preliminary Note]
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
PN
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 5 of 122 Pages
<PAGE>
13D
===============================
CUSIP No. 365476100
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Tinicum Partners, L.P.
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
WC, OO
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
[ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 20,000 [See Preliminary Note]
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
20,000 [See Preliminary Note]
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
20,000 [See Preliminary Note]
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.2 % [See Preliminary Note]
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
PN
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 6 of 122 Pages
<PAGE>
13D
===============================
CUSIP No. 365476100
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Farallon Capital (CP) Investors, L.P.
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
WC, OO
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
[ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 30,000 [See Preliminary Note]
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
30,000 [See Preliminary Note]
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
30,000 [See Preliminary Note]
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.3 % [See Preliminary Note]
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
PN
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 7 of 122 Pages
<PAGE>
13D
===============================
CUSIP No. 365476100
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Farallon Capital Management, L.L.C.
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
OO
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
[ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 260,000 [See Preliminary Note]
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
260,000 [See Preliminary Note]
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
260,000 [See Preliminary Note]
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.9 % [See Preliminary Note]
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
IA, OO
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 8 of 122 Pages
<PAGE>
13D
===============================
CUSIP No. 365476100
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Farallon Partners, L.L.C.
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
AF
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
[ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 743,700 [See Preliminary Note]
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
743,700 [See Preliminary Note]
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
743,700 [See Preliminary Note]
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.8 % [See Preliminary Note]
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
OO
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 9 of 122 Pages
<PAGE>
13D
===============================
CUSIP No. 365476100
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Enrique H. Boilini
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
AF, OO
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
[ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Argentina
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,003,700 [See Preliminary Note]
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
1,003,700 [See Preliminary Note]
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,003,700 [See Preliminary Note]
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.2 % [See Preliminary Note]
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
IN
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 10 of 122 Pages
<PAGE>
13D
===============================
CUSIP No. 365476100
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
David I. Cohen
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
AF, OO
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
[ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
South Africa
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,003,700 [See Preliminary Note]
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
1,003,700 [See Preliminary Note]
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,003,700 [See Preliminary Note]
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.2 % [See Preliminary Note]
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
IN
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 11 of 122 Pages
<PAGE>
13D
===============================
CUSIP No. 365476100
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Joseph F. Downes
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
AF, OO
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
[ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,003,700 [See Preliminary Note]
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
1,003,700 [See Preliminary Note]
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,003,700 [See Preliminary Note]
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.2 % [See Preliminary Note]
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
IN
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 12 of 122 Pages
<PAGE>
13D
===============================
CUSIP No. 365476100
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
William F. Duhamel
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
AF, OO
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
[ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,003,700 [See Preliminary Note]
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
1,003,700 [See Preliminary Note]
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,003,700 [See Preliminary Note]
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.2 % [See Preliminary Note]
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
IN
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 13 of 122 Pages
<PAGE>
13D
===============================
CUSIP No. 365476100
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Fleur E. Fairman
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
AF
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
[ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 743,700 [See Preliminary Note]
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
743,700 [See Preliminary Note]
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
743,700 [See Preliminary Note]
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.8 % [See Preliminary Note]
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
IN
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 14 of 122 Pages
<PAGE>
13D
===============================
CUSIP No. 365476100
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Jason M. Fish
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
AF, OO
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
[ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,003,700 [See Preliminary Note]
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
1,003,700 [See Preliminary Note]
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,003,700 [See Preliminary Note]
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.2 % [See Preliminary Note]
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
IN
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 15 of 122 Pages
<PAGE>
13D
===============================
CUSIP No. 365476100
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Andrew B. Fremder
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
AF, OO
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
[ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,003,700 [See Preliminary Note]
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
1,003,700 [See Preliminary Note]
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,003,700 [See Preliminary Note]
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.2 % [See Preliminary Note]
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
IN
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 16 of 122 Pages
<PAGE>
13D
===============================
CUSIP No. 365476100
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Richard B. Fried
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
AF, OO
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
[ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,003,700 [See Preliminary Note]
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
1,003,700 [See Preliminary Note]
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,003,700 [See Preliminary Note]
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.2 % [See Preliminary Note]
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
IN
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 17 of 122 Pages
<PAGE>
13D
===============================
CUSIP No. 365476100
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
William F. Mellin
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
AF, OO
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
[ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,003,700 [See Preliminary Note]
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
1,003,700 [See Preliminary Note]
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,003,700 [See Preliminary Note]
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.2 % [See Preliminary Note]
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
IN
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 18 of 122 Pages
<PAGE>
13D
===============================
CUSIP No. 365476100
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Stephen L. Millham
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
AF, OO
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
[ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,003,700 [See Preliminary Note]
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
1,003,700 [See Preliminary Note]
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,003,700 [See Preliminary Note]
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.2 % [See Preliminary Note]
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
IN
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 19 of 122 Pages
<PAGE>
13D
===============================
CUSIP No. 365476100
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Meridee A. Moore
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
AF, OO
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
[ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,003,700 [See Preliminary Note]
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
1,003,700 [See Preliminary Note]
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,003,700 [See Preliminary Note]
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.2 % [See Preliminary Note]
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
IN
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 20 of 122 Pages
<PAGE>
13D
===============================
CUSIP No. 365476100
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Thomas F. Steyer
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
AF, OO
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
[ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,003,700 [See Preliminary Note]
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
1,003,700 [See Preliminary Note]
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,003,700 [See Preliminary Note]
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.2 % [See Preliminary Note]
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
IN
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 21 of 122 Pages
<PAGE>
Preliminary Note: The Reporting Persons (as defined below) are filing this
Schedule 13D with respect to the common stock, no par value (the "Shares"), of
Gardenburger, Inc. As of the date of this filing, the Reporting Persons are not
the record holder of any Shares, other than 3,700 Shares held in aggregate by
Farallon Capital Institutional Partners, L.P. and Farallon Capital Institutional
Partners II, L.P. (collectively, the "3,700 Shares"). On April 14, 1999, the
Reporting Persons purchased from Gardenburger, Inc. certain shares of Series A
Convertible Preferred Stock (the "Series A Preferred Shares") and Series B
Convertible Preferred Stock (the "Series B Preferred Shares") (collectively, the
"Preferred Shares"). Subject to the terms and conditions of the Determination of
Terms of Series A Convertible Preferred Stock and the Determination of Terms of
Series B Convertible Preferred Stock (collectively, the "Determinations"), the
Preferred Shares are immediately convertible into Shares. The Reporting Persons
are therefore filing this Schedule 13D with respect to both (i) Shares which
they are deemed to beneficially own through their ownership of the Preferred
Shares and (ii) the 3,700 Shares. In connection with this transaction, Jason M.
Fish, one of the Reporting Persons, was appointed to the Board of Directors of
Gardenburger, Inc.
Item 1. Security and Issuer.
This statement relates to shares of common stock, no par value (the
"Shares") of Gardenburger, Inc. (the "Company"). The Company's principal offices
are located at 1411 SW Morrison Street, Suite 400, Portland, Oregon 97205.
Item 2. Identity and Background.
(a) This statement is filed by: (i) Farallon Capital Partners, L.P., a
California limited partnership ("FCP"), with respect to the Shares of which FCP
is the deemed beneficial owner
Page 22 of 122 Pages
<PAGE>
(through direct ownership of Preferred Shares); (ii) Farallon Capital
Institutional Partners, L.P., a California limited partnership ("FCIP"), with
respect to the Shares of which FCIP is the deemed beneficial owner (through
direct ownership of Preferred Shares) and with respect to the 2,800 Shares which
FCIP owns directly; (iii) Farallon Capital Institutional Partners II, L.P., a
California limited partnership ("FCIP II"), with respect to the Shares of which
FCIP II is the deemed beneficial owner (through direct ownership of Preferred
Shares) and with respect to the 900 Shares which FCIP II owns directly; (iv)
Farallon Capital Institutional Partners III, L.P., a Delaware limited
partnership ("FCIP III"), with respect to the Shares of which FCIP III is the
deemed beneficial owner (through direct ownership of Preferred Shares); (v)
Tinicum Partners, L.P., a New York limited partnership ("Tinicum"), with respect
to the Shares of which Tinicum is the deemed beneficial owner (through direct
ownership of Preferred Shares); (vi) Farallon Capital (CP) Investors, L.P., a
Cayman Islands limited partnership ("FCCP") (collectively with FCP, FCIP, FCIP
II, FCIP III and Tinicum, the "Partnerships") with respect to the Shares of
which FCCP is the deemed beneficial owner (through direct ownership of Preferred
Shares); (vii) Farallon Capital Management, L.L.C., a Delaware limited liability
company ("FCMLLC"), with respect to the Shares of which Farallon Capital
Offshore Investors, Inc., a British Virgin Islands corporation ("Offshore"), and
a certain other account managed by FCMLLC (together with Offshore, the "Managed
Accounts"1) are the deemed beneficial owner (through the Managed Accounts'
direct ownership of Preferred Shares); (viii) Farallon Partners, L.L.C., a
Delaware limited liability company ("FPLLC"), with respect to the Shares of
which each of the Partnerships is the deemed beneficial owner (through direct
ownership of Preferred
- -------------------
1 Of the Shares reported by FCMLLC on behalf of the Managed Accounts, 10,000
Shares (equal to approximately 0.11% of the total Shares currently
outstanding) are attributable to The Absolute Return Fund of The Common
Fund, a non-profit corporation whose principal address is 450 Post Road
East, Westport, Connecticut 06881.
Page 23 of 122 Pages
<PAGE>
Shares) and with respect to the 3,700 Shares owned directly by FCIP and FCIP II;
(ix) each of Enrique H. Boilini ("Boilini"), David I. Cohen ("Cohen"), Joseph F.
Downes ("Downes"), William F. Duhamel ("Duhamel"), Jason M. Fish ("Fish"),
Andrew B. Fremder ("Fremder"), Richard B. Fried ("Fried"), William F. Mellin
("Mellin"), Stephen L. Millham ("Millham"), Meridee A. Moore ("Moore") and
Thomas F. Steyer ("Steyer"), with respect to the Shares of which the
Partnerships and the Managed Accounts are the deemed beneficial owners (through
direct ownership of Preferred Shares) and with respect to the 3,700 Shares owned
directly by FCIP and FCIP II; and (x) Fleur E. Fairman ("Fairman") with respect
to the Shares of which each of the Partnerships is the deemed beneficial owner
(through direct ownership of Preferred Shares) and with respect to the 3,700
Shares owned directly by FCIP and FCIP II (FCP, FCIP, FCIP II, FCIP III,
Tinicum, FCCP, FCMLLC, FPLLC, Boilini, Cohen, Downes, Duhamel, Fairman, Fish,
Fremder, Fried, Mellin, Millham, Moore and Steyer shall collectively be referred
to hereafter as the "Reporting Persons").
The name, address, principal business, citizenship or state of
organization, executive officers, directors and controlling persons of FCMLLC
and FPLLC are set forth on Annex 1 hereto. The 3,700 Shares are held directly by
FCIP (2,800 Shares) and FCIP II (900 Shares). The Preferred Shares in respect of
which each Partnership is deemed to beneficially own Shares are owned directly
by each such Partnership. The Preferred Shares in respect of which FCMLLC is
deemed to beneficially own Shares are owned directly by the Managed Accounts.
FPLLC, as general partner to the Partnerships, may be deemed the beneficial
owner of the Shares beneficially owned by the Partnerships. FCMLLC, as
investment adviser to the Managed Accounts, may be deemed the beneficial owner
of the Shares beneficially owned by the Managed Accounts. Each of Boilini,
Cohen, Downes, Duhamel, Fish, Fremder, Fried, Mellin, Millham, Moore and Steyer,
as managing members of FPLLC and FCMLLC, may be
Page 24 of 122 Pages
<PAGE>
deemed the beneficial owner of the Shares beneficially owned by the Partnerships
and the Managed Accounts. Fairman, as a managing member of FPLLC, may be deemed
the beneficial owner of the Shares beneficially owned by the Partnerships. Each
of FCMLLC, FPLLC, Boilini, Cohen, Downes, Duhamel, Fairman, Fish, Fremder,
Fried, Mellin, Millham, Moore and Steyer hereby disclaims any beneficial
ownership of any such Shares.
(b) The address of the principal business and principal office of (i) the
Partnerships (other than FCCP), FCMLLC and FPLLC is One Maritime Plaza, Suite
1325, San Francisco, California 94111, (ii) Offshore is Craigmuir Chambers, P.O.
Box 71, Road Town, Tortola, British Virgin Islands and (iii) FCCP is c/o W.S.
Walker & Company, P.O. Box 265 GT, Walker House, Grand Cayman, Cayman Islands
and c/o FPLLC, One Maritime Plaza, Suite 1325, San Francisco, California 94111.
(c) The principal business of each of the Partnerships and Offshore is that
of a private investment fund engaging in the purchase and sale of investments
for its own account. The principal business of FPLLC is to act as the general
partner (the "General Partner") of the Partnerships. The principal business of
FCMLLC is that of a registered investment adviser.
(d) None of the Partnerships, FCMLLC, FPLLC, Offshore or any of the persons
listed on Annex 1 hereto has, during the last five years, been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) None of the Partnerships, FCMLLC, FPLLC, Offshore or any of the persons
listed on Annex 1 hereto has, during the last five years, been party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and,
as a result of such proceeding, was, or is subject to, a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
Item 3. Source and Amount of Funds and Other Consideration.
Page 25 of 122 Pages
<PAGE>
With respect to Shares held directly, the net investment cost (including
commissions) is approximately $34,493.75 for the 2,800 Shares held by FCIP and
approximately $11,143.75 for the 900 Shares held by FCIP II.
With respect to the Series A Preferred Shares and the Series B Preferred
Shares, the net investment cost (including commissions) is approximately
$2,800,000 for the 238,000 Series A Preferred Shares and the 42,000 Series B
Preferred Shares held by FCP, approximately $3,000,000 for the 255,000 Series A
Preferred Shares and the 45,000 Series B Preferred Shares held by FCIP,
approximately $500,000 for the 42,500 Series A Preferred Shares and the 7,500
Series B Preferred Shares held by FCIP II, approximately $600,000 for the 51,000
Series A Preferred Shares and the 9,000 Series B Preferred Shares held by FCIP
III, approximately $200,000 for the 17,000 Series A Preferred Shares and the
3,000 Series B Preferred Shares held by Tinicum, approximately $300,000 for the
25,500 Series A Preferred Shares and the 4,500 Series B Preferred Shares held by
FCCP and approximately $2,600,000 for the 221,000 Series A Preferred Shares and
the 39,000 Series B Preferred Shares held by the Managed Accounts. The Series A
Preferred Shares and Series B Preferred Shares are presently convertible into
Shares at a 1:1 conversion ratio, subject to the terms and conditions of the
Determinations.
The consideration for such acquisitions was obtained as follows: (i) with
respect to FCIP, FCIP II and FCIP III, from working capital; (ii) with respect
to the Managed Accounts, from the working capital of each Managed Account and/or
from borrowings pursuant to margin accounts maintained in the ordinary course of
business by one of the Managed Accounts at Goldman, Sachs & Co.; and (iii) with
respect to FCP, Tinicum and FCCP, from working capital, and/or from borrowings
pursuant to margin accounts maintained in the ordinary course of business by
FCP, Tinicum and FCCP at Goldman, Sachs & Co. FCP, Tinicum, FCCP and one of the
Managed
Page 26 of 122 Pages
<PAGE>
Accounts hold certain securities in their respective margin accounts at
Goldman, Sachs & Co., and the accounts may from time to time have debit
balances. It is not possible to determine the amount of borrowings, if any, used
to acquire the Preferred Shares and/or the Shares.
Item 4. Purpose of the Transaction.
The purpose of the acquisition of the Preferred Shares and the 3,700 Shares
is for investment. The acquisitions were made in the ordinary course of
business. On April 14, 1999, in connection with the acquisition of the Preferred
Shares, Jason M. Fish, a Reporting Person and a managing member of both FCMLLC
and FPLLC, was appointed by the then-current Board of Directors of the Company
to the Board of Directors of the Company.
On March 29, 1999, the Partnerships, the Managed Accounts, Rosewood Capital
III, L.P. ("Rosewood"), certain other investors (collectively, the "Purchasers")
and the Company entered into a Stock Purchase Agreement (the "Stock Purchase
Agreement") pursuant to which the Company agreed to sell to the Purchasers
certain Preferred Shares, subject to the terms and conditions contained in the
Stock Purchase Agreement. A summary of certain terms of the Stock Purchase
Agreement and certain related documents follows. Such summary is qualified in
its entirety by the text of such documents.
Under the Stock Purchase Agreement, subject to the terms and conditions
stated therein: (i) the Partnerships and the Managed Accounts (the "Purchasing
Farallon Entities") agreed to purchase in aggregate 1,000,000 Preferred Shares,
(ii) Rosewood agreed to purchase 1,000,000 Preferred Shares and (iii) the other
Purchasers agreed to purchase in aggregate 1,250,000 Preferred Shares. The
purchase of such Preferred Shares by the Purchasers from the Company was
consummated on April 14, 1999. For the text of the Stock Purchase Agreement, see
Exhibit 10.1 of the Form 8-K filed by the Company on April 1, 1999 and
incorporated herein by reference. The Stock Purchase
Page 27 of 122 Pages
<PAGE>
Agreement was amended by that certain Letter Agreement between the Company and
the Purchasers Amending and Waiving the Stock Purchase Agreement dated April 14,
1999 (the "Amendment"), a copy of which is filed as Exhibit 2 hereto.
Simultaneously with the purchase of the Preferred Shares by the Purchasers
and as a condition to closing under the Stock Purchase Agreement, the
then-existing Board of Directors of the Company increased the size of the Board
of Directors to 10 members and appointed to the Board of Directors Jason M.
Fish, one of the Reporting Persons reporting herein, and Kyle Anderson, managing
member of Rosewood Capital Associates, LLC, the general partner of Rosewood.
Pursuant to the Determinations, so long as at least 1,408,875 Series A
Preferred Shares remain outstanding, the Series A Preferred Shares are entitled
to elect two directors to serve on the Company's Board of Directors, and the
Series A Preferred Shares and the Series B Preferred Shares are entitled to vote
as a single voting group, together with the Shares, to elect all other members
of the Company's Board of Directors.2 The Preferred Shares, subject to certain
limitations, also have the right to approve certain significant corporate
transactions (including certain share issuances). The Preferred Shares are
convertible into Shares at any time by the holder at a 1:1 conversion ratio,
subject to certain adjustments set forth in the Determinations. The Preferred
Shares are also entitled to certain dividend rights, liquidation preferences,
and redemption rights as set forth in the Determinations.
For the full terms and conditions of the Series A Preferred Shares and the
Series B Preferred Shares, see the Determination of Terms of Series A
Convertible Preferred Stock and the
- -------------------
2 The Preferred Shares will not vote to elect members of the Board of
Directors at the upcoming May 12, 1999 Annual Meeting of Shareholders
because the Preferred Shares had not been issued as of the March 5, 1999
record date for such meeting.
Page 28 of 122 Pages
<PAGE>
Determination of Terms of Series B Convertible Preferred Stock both of which
were filed as Exhibit B to the Amendment (to the Stock Purchase Agreement) filed
as Exhibit 2 to this Schedule 13D.
Pursuant to the Stock Purchase Agreement, (i) the Company and the
Purchasers also entered into an Investors Rights Agreement (the "Investors
Rights Agreement") dated as of April 14, 1999 which provides the Purchasers
certain registration rights and (ii) the Company entered into Amendment No. 2 to
that certain Rights Agreement, dated as of April 25, 1996, as amended by that
certain Amendment No. 1 dated as of March 26, 1998 (the "First Amendment")
(collectively, the "Rights Agreement") regarding certain "poison pill"
provisions applicable to the Company. For further description of the Investors
Rights Agreement and Amendment No. 2 to the Rights Agreement, see Item 6 below.
Although no Reporting Person has any specific plan or proposal to acquire
or dispose of any Shares and/or Preferred Shares, consistent with its investment
purpose, each Reporting Person at any time and from time to time may acquire
additional Shares and/or Preferred Shares or dispose of any or all of its Shares
and/or Preferred Shares or convert any or all of its Preferred Shares into
Shares depending upon an ongoing evaluation of the investment in the Shares
and/or Preferred Shares, prevailing market conditions, other investment
opportunities, liquidity requirements of the Reporting Person and/or other
investment considerations. No Reporting Person has made a determination
regarding a maximum or minimum number of Shares and/or Preferred Shares which it
may hold at any point in time.
As stated above, Jason M. Fish, one of the Reporting Persons, is currently
a member of the Board of Directors. The Reporting Persons may engage in
communications with one or more shareholders of the Company, one or more
officers of the Company, and/or one or more members of the board of directors of
the Company regarding the Company, including but not limited to its
Page 29 of 122 Pages
<PAGE>
operations. Although the Reporting Persons may engage in communications with any
one or more of the Purchasers, the Reporting Persons have no agreement,
commitment or understanding that they will engage in communications with any or
all of such persons or will engage in any concerted activities with any or all
of such persons.
Except to the extent any of the foregoing may be deemed a plan or proposal,
none of the Reporting Persons has any plans or proposals which relate to, or
could result in, any of the matters referred to in paragraphs (a) through (j),
inclusive, of the instructions to Item 4 of Schedule 13D. The Reporting Persons
may, at any time and from time to time, review or reconsider their position
and/or change their purpose and/or formulate plans or proposals with respect
thereto.
Item 5. Interest in Securities of the Issuer.
A. Farallon Capital Partners, L.P.
(a), (b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for FCP is incorporated herein by
reference. The percentage amount set forth in Row 13 of such
cover page was based upon a Share outstanding figure
determined by increasing (i) the 8,839,251 Shares
outstanding as of April 14, 1999 by (ii) the 280,000 Shares
of which FCP is the deemed beneficial owner.
(c) There have been no purchases or sales of the Shares in the
past 60 days. The trade dates, number of Preferred Shares
purchased and the price per Preferred Share for all
purchases of the Preferred Shares in the past 60 days are
set forth on Schedule A hereto and are incorporated herein
by reference. All of such Preferred Shares were purchased
from the Company in a privately-negotiated transaction. See
Item 4 for a description of such transaction.
(d) FPLLC as General Partner has the power to direct the affairs
of FCP, including the disposition of the proceeds of the
sale of the Preferred Shares and/or the Shares. Steyer is
the senior managing member of FPLLC, and Boilini, Cohen,
Downes, Duhamel, Fairman, Fish, Fremder, Fried, Mellin,
Millham and Moore are managing members of FPLLC.
(e) Not applicable.
B. Farallon Capital Institutional Partners, L.P.
Page 30 of 122 Pages
<PAGE>
(a), (b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for FCIP is incorporated herein by
reference. The percentage amount set forth in Row 13 of such
cover page was based upon a Share outstanding figure
determined by increasing (i) the 8,839,251 Shares
outstanding as of April 14, 1999 by (ii) the 300,000 Shares
of which FCIP is the deemed beneficial owner.
(c) There have been no purchases or sales of the Shares in the
past 60 days. The trade dates, number of Preferred Shares
purchased and the price per Preferred Share for all
purchases of the Preferred Shares in the past 60 days are
set forth on Schedule B hereto and are incorporated herein
by reference. All of such Preferred Shares were purchased
from the Company in a privately-negotiated transaction. See
Item 4 for a description of such transaction.
(d) FPLLC as General Partner has the power to direct the affairs
of FCIP, including the disposition of the proceeds of the
sale of the Preferred Shares and/or the Shares. Steyer is
the senior managing member of FPLLC and Boilini, Cohen,
Downes, Duhamel, Fairman, Fish, Fremder, Fried, Mellin,
Millham and Moore are managing members of FPLLC.
(e) Not applicable.
C. Farallon Capital Institutional Partners II, L.P.
(a), (b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for FCIP II is incorporated herein by
reference. The percentage amount set forth in Row 13 of such
cover page was based upon a Share outstanding figure
determined by increasing (i) the 8,839,251 Shares
outstanding as of April 14, 1999 by (ii) the 50,000 Shares
of which FCIP II is the deemed beneficial owner.
(c) There have been no purchases or sales of the Shares in the
past 60 days. The trade dates, number of Preferred Shares
purchased and the price per Preferred Share for all
purchases of the Preferred Shares in the past 60 days are
set forth on Schedule C hereto and are incorporated herein
by reference. All of such Preferred Shares were purchased
from the Company in a privately-negotiated transaction. See
Item 4 for a description of such transaction.
(d) FPLLC as General Partner has the power to direct the affairs
of FCIP II, including the disposition of the proceeds of the
sale of the Preferred Shares and/or the Shares. Steyer is
the senior managing member of FPLLC and Boilini, Cohen,
Downes, Duhamel, Fairman, Fish, Fremder, Fried, Mellin,
Millham and Moore are managing members of FPLLC.
(e) Not applicable.
Page 31 of 122 Pages
<PAGE>
D. Farallon Capital Institutional Partners III, L.P.
(a), (b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for FCIP II is incorporated herein by
reference. The percentage amount set forth in Row 13 of such
cover page was based upon a Share outstanding figure
determined by increasing (i) the 8,839,251 Shares
outstanding as of April 14, 1999 by (ii) the 60,000 Shares
of which FCIP III is the deemed beneficial owner.
(c) There have been no purchases or sales of the Shares in the
past 60 days. The trade dates, number of Preferred Shares
purchased and the price per Preferred Share for all
purchases of the Preferred Shares in the past 60 days are
set forth on Schedule D hereto and are incorporated herein
by reference. All of such Preferred Shares were purchased
from the Company in a privately-negotiated transaction. See
Item 4 for a description of such transaction.
(d) FPLLC as General Partner has the power to direct the affairs
of FCIP III, including the disposition of the proceeds of
the sale of the Preferred Shares and/or the Shares. Steyer
is the senior managing member of FPLLC and Boilini, Cohen,
Downes, Duhamel, Fairman, Fish, Fremder, Fried, Mellin,
Millham and Moore are managing members of FPLLC.
(e) Not applicable.
E. Tinicum Partners, L.P.
(a), (b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for Tinicum is incorporated herein by
reference. The percentage amount set forth in Row 13 of such
cover page was based upon a Share outstanding figure
determined by increasing (i) the 8,839,251 Shares
outstanding as of April 14, 1999 by (ii) the 20,000 Shares
of which Tinicum is the deemed beneficial owner.
(c) There have been no purchases or sales of the Shares in the
past 60 days. The trade dates, number of Preferred Shares
purchased and the price per Preferred Share for all
purchases of the Preferred Shares in the past 60 days are
set forth on Schedule E hereto and are incorporated herein
by reference. All of such Preferred Shares were purchased
from the Company in a privately-negotiated transaction. See
Item 4 for a description of such transaction.
(d) FPLLC as General Partner has the power to direct the affairs
of Tinicum, including the disposition of the proceeds of the
sale of the Preferred Shares and/or the Shares. Steyer is
the senior managing member of FPLLC and Boilini, Cohen,
Downes, Duhamel, Fairman, Fish, Fremder, Fried, Mellin,
Millham and Moore are managing members of FPLLC.
Page 32 of 122 Pages
<PAGE>
(e) Not applicable.
F. Farallon Capital (CP) Investors, L.P.
(a), (b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for FCCP is incorporated herein by
reference. The percentage amount set forth in Row 13 of such
cover page was based upon a Share outstanding figure
determined by increasing (i) the 8,839,251 Shares
outstanding as of April 14, 1999 by (ii) the 30,000 Shares
of which FCCP is the deemed beneficial owner.
(c) There have been no purchases or sales of the Shares in the
past 60 days. The trade dates, number of Preferred Shares
purchased and the price per Preferred Share for all
purchases of the Preferred Shares in the past 60 days are
set forth on Schedule F hereto and are incorporated herein
by reference. All of such Preferred Shares were purchased
from the Company in a privately-negotiated transaction. See
Item 4 for a description of such transaction.
(d) FPLLC as General Partner has the power to direct the affairs
of FCCP, including the disposition of the proceeds of the
sale of the Preferred Shares and/or the Shares. Steyer is
the senior managing member of FPLLC and Boilini, Cohen,
Downes, Duhamel, Fairman, Fish, Fremder, Fried, Mellin,
Millham and Moore are managing members of FPLLC.
(e) Not applicable.
G. Farallon Capital Management, L.L.C.
(a), (b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for FCMLLC is incorporated herein by
reference. The percentage amount set forth in Row 13 of such
cover page was based upon a Share outstanding figure
determined by (i) the 8,839,251 Shares outstanding as of
April 14, 1999 by (ii) the 260,000 Shares of which FCMLLC is
the deemed beneficial owner.
(c) There have been no purchases or sales of the Shares in the
past 60 days. The trade dates, number of Preferred Shares
purchased and the price per Preferred Share for all
purchases of the Preferred Shares in the past 60 days are
set forth on Schedule G hereto and are incorporated herein
by reference. All of such Preferred Shares were purchased
from the Company in a privately-negotiated transaction. See
Item 4 for a description of such transaction.
(d) FCMLLC, as an investment adviser, has the power to direct
the disposition of the proceeds of the sale of the Preferred
Shares held by the Managed Account and/or the Shares into
which they are converted. Steyer is the senior managing
member of FCMLLC and Boilini, Cohen, Downes, Duhamel, Fish,
Page 33 of 122 Pages
<PAGE>
Fremder, Fried, Mellin, Millham and Moore are managing
members of FCMLLC.
(e) Not applicable.
H. Farallon Partners, L.L.C.
(a), (b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for FPLLC is incorporated herein by
reference. The percentage amount set forth in Row 13 of such
cover page was based upon a Share outstanding figure
determined by increasing (i) the 8,839,251 Shares
outstanding as of April 14, 1999 by (ii) the 740,000 Shares
of which FPLLC is the deemed beneficial owner.
(c) None.
(d) FPLLC as General Partner has the power to direct the affairs
of the Partnerships, including the disposition of the
proceeds of the sale of the Preferred Shares and/or the
Shares. Steyer is the senior managing member of FPLLC and
Boilini, Cohen, Downes, Duhamel, Fairman, Fish, Fremder,
Fried, Mellin, Millham and Moore are managing members of
FPLLC.
(e) Not applicable.
I. Enrique H. Boilini
(a), (b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for Boilini is incorporated herein by
reference. The percentage amount set forth in Row 13 of such
cover page was based upon a Share outstanding figure
determined by increasing (i) the 8,839,251 Shares
outstanding as of April 14, 1999 by (ii) the 1,000,000
Shares of which FPLLC and FCMLLC are the deemed beneficial
owner.
(c) None.
(d) FPLLC as General Partner has the power to direct the affairs
of the Partnerships, including the disposition of the
proceeds of the sale of the Preferred Shares and/or the
Shares. FCMLLC, as an investment adviser, has the power to
direct the disposition of the proceeds of the sale of the
Preferred Shares held by the Managed Accounts and/or any
Shares into which they are converted. Boilini is a managing
member of FCMLLC and FPLLC.
(e) Not applicable.
J. David I. Cohen
Page 34 of 122 Pages
<PAGE>
(a), (b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for Cohen is incorporated herein by
reference. The percentage amount set forth in Row 13 of such
cover page was based upon a Share outstanding figure
determined by increasing (i) the 8,839,251 Shares
outstanding as of April 14, 1999 by (ii) the 1,000,000
Shares of which FPLLC and FCMLLC are the deemed beneficial
owner.
(c) None.
(d) FPLLC as General Partner has the power to direct the affairs
of the Partnerships, including the disposition of the
proceeds of the sale of the Preferred Shares and/or the
Shares. FCMLLC, as an investment adviser, has the power to
direct the disposition of the proceeds of the sale of the
Preferred Shares held by the Managed Accounts and/or any
Shares into which they are converted. Cohen is a managing
member of FCMLLC and FPLLC.
(e) Not applicable.
K. Joseph F. Downes
(a), (b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for Downes is incorporated herein by
reference. The percentage amount set forth in Row 13 of such
cover page was based upon a Share outstanding figure
determined by increasing (i) the 8,839,251 Shares
outstanding as of April 14, 1999 by (ii) the 1,000,000
Shares of which FPLLC and FCMLLC are the deemed beneficial
owner.
(c) None.
(d) FPLLC as General Partner has the power to direct the affairs
of the Partnerships, including the disposition of the
proceeds of the sale of the Preferred Shares and/or the
Shares. FCMLLC, as an investment adviser, has the power to
direct the disposition of the proceeds of the sale of the
Preferred Shares held by the Managed Accounts and/or any
Shares into which they are converted. Downes is a managing
member of FCMLLC and FPLLC.
(e) Not applicable.
L. William F. Duhamel
(a), (b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for Duhamel is incorporated herein by
reference. The percentage amount set forth in Row 13 of such
cover page was based upon a Share outstanding figure
determined by increasing (i) the 8,839,251 Shares
outstanding as of April 14, 1999 by (ii) the 1,000,000
Shares which FPLLC and FCMLLC are the deemed beneficial
owner.
Page 35 of 122 Pages
<PAGE>
(c) None.
(d) FPLLC as General Partner has the power to direct the affairs
of the Partnerships, including the disposition of the
proceeds of the sale of the Preferred Shares and/or the
Shares. FCMLLC, as an investment adviser, has the power to
direct the disposition of the proceeds of the sale of the
Preferred Shares held by the Managed Accounts and/or any
Shares into which they are converted. Duhamel is a managing
member of FCMLLC and FPLLC.
(e) Not applicable.
M. Fleur E. Fairman
(a), (b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for Fairman is incorporated herein by
reference. The percentage amount set forth in Row 13 of such
cover page was based upon a Share outstanding figure
determined by increasing (i) the 8,839,251 Shares
outstanding as of April 14, 1999 by (ii) the 740,000 Shares
of which FPLLC is the deemed beneficial owner.
(c) None.
(d) FPLLC as General Partner has the power to direct the affairs
of the Partnerships, including the disposition of the
proceeds of the sale of the Preferred Shares and/or the
Shares. Fairman is a managing member of FPLLC.
(e) Not Applicable.
N. Jason M. Fish
(a), (b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for Fish is incorporated herein by
reference. The percentage amount set forth in Row 13 of such
cover page was based upon a Share outstanding figure
determined by increasing (i) the 8,839,251 Shares
outstanding as of April 14, 1999 by (ii) the 1,000,000
Shares of which FPLLC and FCMLLC are the deemed beneficial
owner.
(c) None.
(d) FPLLC as General Partner has the power to direct the affairs
of the Partnerships, including the disposition of the
proceeds of the sale of the Preferred Shares and/or the
Shares. FCMLLC, as an investment adviser, has the power to
direct the disposition of the proceeds of the sale of the
Preferred Shares held by the Managed Accounts and/or any
Shares into which they are converted. Fish is a managing
member of FCMLLC and FPLLC.
(e) Not applicable.
Page 36 of 122 Pages
<PAGE>
O. Andrew B. Fremder
(a), (b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for Fremder is incorporated herein by
reference. The percentage amount set forth in Row 13 of such
cover page was based upon a Share outstanding figure
determined by increasing (i) the 8,839,251 Shares
outstanding as of April 14, 1999 by (ii) the 1,000,000
Shares of which FPLLC and FCMLLC are the deemed beneficial
owner.
(c) None.
(d) FPLLC as General Partner has the power to direct the affairs
of the Partnerships, including the disposition of the
proceeds of the sale of the Preferred Shares and/or the
Shares. FCMLLC, as an investment adviser, has the power to
direct the disposition of the proceeds of the sale of the
Preferred Shares held by the Managed Accounts and/or any
Shares into which they are converted. Fremder is a managing
member of FCMLLC and FPLLC.
(e) Not applicable.
P. Richard B. Fried
(a), (b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for Fried is incorporated herein by
reference. The percentage amount set forth in Row 13 of such
cover page was based upon a Share outstanding figure
determined by increasing (i) the 8,839,251 Shares
outstanding as of April 14, 1999 by (ii) the 1,000,000
Shares of which FPLLC and FCMLLC are the deemed beneficial
owner.
(c) None.
(d) FPLLC as General Partner has the power to direct the affairs
of the Partnerships, including the disposition of the
proceeds of the sale of the Preferred Shares and/or the
Shares. FCMLLC, as an investment adviser, has the power to
direct the disposition of the proceeds of the sale of the
Preferred Shares held by the Managed Accounts and/or any
Shares into which they are converted. Fried is a managing
member of FCMLLC and FPLLC.
(e) Not applicable.
Q. William F. Mellin
(a), (b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for Mellin is incorporated herein by
reference. The percentage amount set forth in Row 13 of such
cover page was based upon a Share outstanding figure
determined by increasing (i) 8,839,251 Shares outstanding as
of April
Page 37 of 122 Pages
<PAGE>
14, 1999 by (ii) the 1,000,000 Shares of which FPLLC and
FCMLLC are the deemed beneficial owner.
(c) None.
(d) FPLLC as General Partner has the power to direct the affairs
of the Partnerships, including the disposition of the
proceeds of the sale of the Preferred Shares and/or the
Shares. FCMLLC, as an investment adviser, has the power to
direct the disposition of the proceeds of the sale of the
Preferred Shares held by the Managed Accounts and/or any
Shares into which they are converted. Mellin is a managing
member of FCMLLC and FPLLC.
(e) Not applicable.
R. Stephen L. Millham
(a), (b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for Millham is incorporated herein by
reference. The percentage amount set forth in Row 13 of such
cover page was based upon a Share outstanding figure
determined by increasing (i) the 8,839,251 Shares
outstanding as of April 14, 1999 by (ii) the 1,000,000
Shares of which FPLLC and FCMLLC are the deemed beneficial
owner.
(c) None.
(d) FPLLC as General Partner has the power to direct the affairs
of the Partnerships, including the disposition of the
proceeds of the sale of the Preferred Shares and/or the
Shares. FCMLLC, as an investment adviser, has the power to
direct the disposition of the proceeds of the sale of the
Preferred Shares held by the Managed Accounts and/or any
Shares into which they are converted. Millham is a managing
member of FCMLLC and FPLLC.
(e) Not applicable.
S. Meridee A. Moore
(a), (b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for Moore is incorporated herein by
reference. The percentage amount set forth in Row 13 of such
cover page was based upon a Share outstanding figure
determined by increasing (i) the 8,839,251 Shares
outstanding as of April 14, 1999 by (ii) the 1,000,000
Shares of which FPLLC and FCMLLC are the deemed beneficial
owner.
(c) None.
Page 38 of 122 Pages
<PAGE>
(d) FPLLC as General Partner has the power to direct the affairs
of the Partnerships, including the disposition of the
proceeds of the sale of the Preferred Shares and/or the
Shares. FCMLLC, as an investment adviser, has the power to
direct the disposition of the proceeds of the sale of the
Preferred Shares held by the Managed Accounts and/or any
Shares into which they are converted. Moore is a managing
member of FCMLLC and FPLLC.
(e) Not applicable.
T. Thomas F. Steyer
(a), (b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for Steyer is incorporated herein by
reference. The percentage amount set forth in Row 13 of such
cover page was based upon a Share outstanding figure
determined by increasing (i) the 8,839,251 Shares
outstanding as of April 14, 1999 by (ii) the 1,000,000
Shares of which FPLLC and FCMLLC are the deemed beneficial
owner.
(c) None.
(d) FPLLC as General Partner has the power to direct the affairs
of the Partnerships, including the disposition of the
proceeds of the sale of the Preferred Shares and/or the
Shares. FCMLLC, as an investment adviser, has the power to
direct the disposition of the proceeds of the sale of the
Preferred Shares held by the Managed Accounts and/or any
Shares into which they are converted. Steyer is the senior
managing member of FCMLLC and FPLLC.
(e) Not applicable.
The 3,700 Shares are held directly by FCIP (2,800 Shares) and FCIP II (900
Shares). The Preferred Shares in respect of which each Partnership is deemed to
beneficially own Shares are owned directly by each such Partnership. The
Preferred Shares in respect of which FCMLLC is deemed to beneficially own Shares
are owned directly by the Managed Accounts. FPLLC, as general partner to the
Partnerships, may be deemed the beneficial owner of the Shares beneficially
owned by the Partnerships. FCMLLC, as investment adviser to the Managed
Accounts, may be deemed the beneficial owner of the Shares beneficially owned by
the Managed Accounts. Each of Boilini, Cohen, Downes, Duhamel, Fish, Fremder,
Fried, Mellin, Millham, Moore and Steyer, as managing members of FPLLC and
FCMLLC, may be deemed the beneficial owner of the Shares beneficially owned by
the Partnerships and the Managed Accounts. Fairman, as a managing member of
FPLLC, may be deemed the beneficial owner of the Shares beneficially owned by
the Partnerships. Each of FCMLLC, FPLLC, Boilini, Cohen, Downes, Duhamel,
Fairman, Fish, Fremder, Fried, Mellin, Millham, Moore and Steyer hereby
disclaims any beneficial ownership of any such Shares.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
Page 39 of 122 Pages
<PAGE>
Pursuant to the Stock Purchase Agreement described in Item 4 above, the
Company and the Purchasers entered into the Investors Rights Agreement. Subject
to the terms and conditions of such agreement, the Company agreed to file with
the Securities and Exchange Commission, no later than May 31, 1999, a
registration statement registering a number of Shares sufficient to cover those
Shares issued or issuable upon conversion of the Preferred Shares (the
"Registrable Securities"). The holders of the Registrable Securities (the
"Holders") also have certain "piggyback" registration rights with respect to
registrations made by the Company, including registrations made on behalf of
other stockholders of the Company. The Company has agreed to pay most
registration expenses in connection with the registration of the Registrable
Securities. In addition, there are certain restrictions on the Company's ability
to grant comparable information and registration rights to other stockholders of
the Company.
Pursuant to the Investor Rights Agreement, the Holders agreed not to sell,
to the extent requested by the Company and an underwriter, any Registrable
Securities, except the Shares included in such registration, during the ninety
(90) day period following the effective date of a registration statement of the
Company.
The Company also entered into Amendment No. 2 to that certain Rights
Agreement. Amendment No. 2, among other things, exempted the acquisition of the
Preferred Shares from triggering the "poison pill" provisions of the Rights
Agreement and extended to the Preferred Shares the same rights and benefits
(determined on an as-converted basis) provided under the Rights Agreement to
holders of the Shares. For the full text of the Rights Agreement (prior to the
First Amendment), see Exhibit 4 to the Form 8-K filed by the Company on May 8,
1996. For the full text of the First Amendment, see Exhibit 10.3 to the Form
10-Q filed by the Company for the quarterly period ended March 31, 1998. Both of
such documents are incorporated herein by reference.
Page 40 of 122 Pages
<PAGE>
For the full text of the Investors Rights Agreement and Amendment No.2 to
the Rights Agreement, see Exhibits 3 and 4, respectively, to this Schedule 13D.
The summary of such documents stated above is qualified in its entirety by the
text of such documents.
Except as described in Item 4 and the preceding paragraphs of Item 6, there
are no contracts, arrangements, understandings or relationships (legal or
otherwise) among the Reporting Persons or between such persons and any other
person with respect to any securities of the Company, including but not limited
to transfer or voting of any securities of the Company, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of profits,
divisions of profits or loss, or the giving or withholding of proxies. See Item
7 of the Schedule 13D for a list of written agreements filed as exhibits to the
Schedule 13D.
Item 7. Materials to be Filed as Exhibits.
There is filed herewith as Exhibit 1 a written agreement relating to the
filing of joint acquisition statements as required by Rule 13d-1(f)(1) under the
Securities Exchange Act of 1934, as amended There is filed herewith as Exhibit 2
the Letter Agreement Amending and Waiving the Stock Purchase Agreement. There is
filed herewith as Exhibit 3 the Investors Rights Agreement. There is filed
herewith as Exhibit 4 Amendment No. 2 to the Rights Agreement. For a description
of Exhibits 2-4, see Items 4 and 6 above.
Page 41 of 122 Pages
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
Dated: April 23, 1999
/s/ Thomas F. Steyer
FARALLON PARTNERS, L.L.C., on its own behalf and as
General Partner of FARALLON CAPITAL PARTNERS, L.P.,
FARALLON CAPITAL INSTITUTIONAL PARTNERS, L.P., FARALLON
CAPITAL INSTITUTIONAL PARTNERS II, L.P., FARALLON
CAPITAL INSTITUTIONAL PARTNERS III, L.P., TINICUM
PARTNERS, L.P., And FARALLON CAPITAL (CP) INVESTORS,
L.P.
By Thomas F. Steyer,
Senior Managing Member
/s/ Thomas F. Steyer
FARALLON CAPITAL MANAGEMENT, L.L.C.,
By Thomas F. Steyer,
Senior Managing Member
/s/ Thomas F. Steyer
Thomas F. Steyer, individually and as attorney-in-fact
for each of Enrique H. Boilini, David I. Cohen,
Joseph F. Downes, William F. Duhamel, Fleur E. Fairman,
Jason M. Fish, Andrew B. Fremder, Richard B. Fried,
William F. Mellin, Stephen L. Millham, and Meridee A.
Moore.
The Powers of Attorney executed by Boilini, Cohen, Downes, Fairman, Fish,
Fremder, Mellin, Millham and Moore authorizing Steyer to sign and file this
Schedule 13D on each person's behalf, which were filed with Amendment No. 1 to
the Schedule 13D filed with the Securities and Exchange Commission on September
26, 1997, by such Reporting Persons with respect to the Common Stock of Sphere
Drake Holdings Limited, are hereby incorporated by reference. The Powers of
Attorney executed by Duhamel and Fried authorizing Steyer to sign and file this
Schedule 13D on each person's behalf, which were filed with Amendment No. 1 to
the Schedule 13G filed with the Securities and Exchange Commission on January
13, 1999, by such Reporting Persons with respect to the Callable Class A Common
Shares of CliniChem Development Inc., are hereby incorporated by reference.
Page 42 of 122 Pages
<PAGE>
ANNEX 1
Set forth below with respect to FCMLLC and FPLLC is the following: (a)
name; (b) address; (c) principal business; (d) state of organization; and (e)
controlling persons. Set forth below with respect to each managing member of
FCMLLC and FPLLC is the following: (a) name; (b) business address; (c) principal
occupation; and (d) citizenship.
1. (a) Farallon Capital Management, L.L.C.
(b) One Maritime Plaza, Suite 1325
San Francisco, California 94111
(c) Serves as investment adviser to various managed accounts
(d) Delaware limited liability company
(e) Managing Members: Thomas F. Steyer, Senior Managing Member; Enrique H.
Boilini, David I. Cohen, Joseph F. Downes, William F. Duhamel, Jason
M. Fish, Andrew B. Fremder, Richard B. Fried, William F. Mellin,
Stephen L. Millham and Meridee A. Moore, Managing Members.
2. (a) Farallon Partners, L.L.C.
(b) c/o Farallon Capital Management, L.L.C.
One Maritime Plaza, Suite 1325
San Francisco, California 94111
(c) Serves as general partner to investment partnerships
(d) Delaware limited liability company
(e) Managing Members: Thomas F. Steyer, Senior Managing Member; Enrique H.
Boilini, David I. Cohen, Joseph F. Downes, William F. Duhamel, Fleur
E. Fairman, Jason M. Fish, Andrew B. Fremder, Richard B. Fried,
William F. Mellin, Stephen L. Millham and Meridee A. Moore, Managing
Members.
3. (a) Enrique H. Boilini
(b) c/o Farallon Capital Management, L.L.C.
75 Holly Hill Lane
Greenwich, Connecticut 06830
(c) Managing Member of Farallon Partners, L.L.C.; Managing Member of
Farallon Capital Management, L.L.C.
(d) Argentinean Citizen
4. (a) David I. Cohen
(b) c/o Farallon Capital Management, L.L.C.
One Maritime Plaza, Suite 1325
San Francisco, California 94111
(c) Managing Member of Farallon Partners, L.L.C.; Managing Member of
Farallon Capital Management, L.L.C.
(d) South African Citizen
Page 43 of 122 Pages
<PAGE>
5. (a) Joseph F. Downes
(b) c/o Farallon Capital Management, L.L.C.
One Maritime Plaza, Suite 1325
San Francisco, California 94111
(c) Managing Member of Farallon Partners, L.L.C.; Managing Member of
Farallon Capital Management, L.L.C.
(d) United States Citizen
6. (a) William F. Duhamel
(b) c/o Farallon Capital Management, L.L.C.
One Maritime Plaza, Suite 1325
San Francisco, California 94111
(c) Managing Member of Farallon Partners, L.L.C.; Managing Member of
Farallon Capital Management, L.L.C.
(d) United States Citizen
7. (a) Fleur E. Fairman
(b) c/o Farallon Capital Management, L.L.C.
One Maritime Plaza, Suite 1325
San Francisco, California 94111
(c) Managing Member of Farallon Partners, L.L.C.
(d) United States Citizen
8. (a) Jason M. Fish
(b) c/o Farallon Capital Management, L.L.C.
One Maritime Plaza, Suite 1325
San Francisco, California 94111
(c) Managing Member of Farallon Partners, L.L.C.; Managing Member of
Farallon Capital Management, L.L.C.
(d) United States Citizen
9. (a) Andrew B. Fremder
(b) c/o Farallon Capital Management, L.L.C.
One Maritime Plaza, Suite 1325
San Francisco, California 94111
(c) Managing Member of Farallon Partners, L.L.C.; Managing Member of
Farallon Capital Management, L.L.C.
(d) United States Citizen
10. (a) Richard B. Fried
(b) c/o Farallon Capital Management, L.L.C.
One Maritime Plaza, Suite 1325
San Francisco, California 94111
(c) Managing Member of Farallon Partners, L.L.C.; Managing Member of
Farallon Capital Management, L.L.C.
(d) United States Citizen
Page 44 of 122 Pages
<PAGE>
11. (a) William F. Mellin
(b) c/o Farallon Capital Management, L.L.C.
One Maritime Plaza, Suite 1325
San Francisco, California 94111
(c) Managing Member of Farallon Partners, L.L.C.; Managing Member of
Farallon Capital Management, L.L.C.
(d) United States Citizen
12. (a) Stephen L. Millham
(b) c/o Farallon Capital Management, L.L.C.
One Maritime Plaza, Suite 1325
San Francisco, California 94111
(c) Managing Member of Farallon Partners, L.L.C.; Managing Member of
Farallon Capital Management, L.L.C.
(d) United States Citizen
13. (a) Meridee A. Moore
(b) c/o Farallon Capital Management, L.L.C.
One Maritime Plaza, Suite 1325
San Francisco, California 94111
(c) Managing Member of Farallon Partners, L.L.C.; Managing Member of
Farallon Capital Management, L.L.C.
(d) United States Citizen
14. (a) Thomas F. Steyer
(b) c/o Farallon Capital Management, L.L.C.
One Maritime Plaza, Suite 1325
San Francisco, California 94111
(c) Senior Managing Member of Farallon Partners, L.L.C.; Senior Managing
Member of Farallon Capital Management, L.L.C.
(d) United States Citizen
Page 45 of 122 Pages
<PAGE>
SCHEDULE A
FARALLON CAPITAL PARTNERS, L.P.
NO. OF
PREFERRED SHARES PRICE
TRADE DATE PURCHASED PER SHARE
(including commission)
4/14/99 238,000 (Series A)* $10.00
4/14/99 42,000 (Series B)* $10.00
- -----------------------
*Presently convertible into Shares at a 1:1 conversion ratio, subject to
the terms and conditions of the Determinations.
Page 46 of 122 Pages
<PAGE>
SCHEDULE B
FARALLON CAPITAL INSTITUTIONAL PARTNERS, L.P.
NO. OF
PREFERRED SHARES PRICE
TRADE DATE PURCHASED PER SHARE
(Including commission)
4/14/99 255,000 (Series A)* $10.00
4/14/99 45,000 (Series B)* $10.00
- -----------------------
*Presently convertible into Shares at a 1:1 conversion ratio, subject to
the terms and conditions of the Determinations.
Page 47 of 122 Pages
<PAGE>
SCHEDULE C
FARALLON CAPITAL INSTITUTIONAL PARTNERS II, L.P.
NO. OF
PREFERRED SHARES PRICE
TRADE DATE PURCHASED PER SHARE
(Including commission)
4/14/99 42,500 (Series A)* $10.00
4/14/99 7,500 (Series B)* $10.00
- -----------------------
*Presently convertible into Shares at a 1:1 conversion ratio, subject to
the terms and conditions of the Determinations.
Page 48 of 122 Pages
<PAGE>
SCHEDULE D
FARALLON CAPITAL INSTITUTIONAL PARTNERS III, L.P.
NO. OF
PREFERRED SHARES PRICE
TRADE DATE PURCHASED PER SHARE
(Including commission)
4/14/99 51,000 (Series A)* $10.00
4/14/99 9,000 (Series B)* $10.00
- -----------------------
*Presently convertible into Shares at a 1:1 conversion ratio, subject to
the terms and conditions of the Determinations.
Page 49 of 122 Pages
<PAGE>
SCHEDULE E
TINICUM PARTNERS, L.P.
NO. OF
PREFERRED SHARES PRICE
TRADE DATE PURCHASED PER SHARE
(Including commission)
4/14/99 17,000 (Series A)* $10.00
4/14/99 3,000 (Series B)* $10.00
- -----------------------
*Presently convertible into Shares at a 1:1 conversion ratio, subject to
the terms and conditions of the Determinations.
Page 50 of 122 Pages
<PAGE>
SCHEDULE F
FARALLON CAPITAL (CP) INVESTORS, L.P.
NO. OF
PREFERRED SHARES PRICE
TRADE DATE PURCHASED PER SHARE
(Including commission)
4/14/99 25,500 (Series A)* $10.00
4/14/99 4,500 (Series B)* $10.00
- -----------------------
*Presently convertible into Shares at a 1:1 conversion ratio, subject to
the terms and conditions of the Determinations.
Page 51 of 122 Pages
<PAGE>
SCHEDULE G
FARALLON CAPITAL MANAGEMENT, L.L.C.
NO. OF
PREFERRED SHARES PRICE
TRADE DATE PURCHASED PER SHARE
(Including commission)
4/14/99 212,500 (Series A)* $10.00
4/14/99 37,500 (Series B)* $10.00
4/14/99 8,500 (Series A)* $10.00
4/14/99 1,500 (Series B)* $10.00
- -----------------------
*Presently convertible into Shares at a 1:1 conversion ratio, subject to
the terms and conditions of the Determinations.
Page 52 of 122 Pages
<PAGE>
EXHIBIT INDEX3
EXHIBIT 1 Joint Acquisition Statement Pursuant to Rule 13D-(f)(1)
EXHIBIT 2 Letter Agreement Amending and Waiving the Stock Purchase
Agreement (including the Determination of Terms of Series A
Convertible Preferred Stock and the Determination of Terms
of Series B Convertible Preferred Stock)
EXHIBIT 3 Investor Rights Agreement
EXHIBIT 4 Amendment No. 2 to the Rights Agreement
- -------------------
3 The text of Exhibits 2-4 have been reformatted to meet the EDGAR filing
requirements.
Page 53 of 122 Pages
<PAGE>
EXHIBIT 1
to
SCHEDULE 13D
JOINT ACQUISITION STATEMENT
PURSUANT TO RULE 13D-(f)(1)
The undersigned acknowledge and agree that the foregoing statement on
Schedule 13D is filed on behalf of each of the undersigned and that all
subsequent amendments to this statement on Schedule 13D shall be filed on behalf
of each of the undersigned without the necessity of filing additional joint
acquisition statements. The undersigned acknowledge that each shall be
responsible for the timely filing of such amendments, and for the completeness
and accuracy of the information concerning him, her or it contained therein, but
shall not be responsible for the completeness and accuracy of the information
concerning the other entities or persons, except to the extent that he, she or
it knows or has reason to believe that such information is inaccurate.
Dated: April 23, 1999
/s/ Thomas F. Steyer
FARALLON PARTNERS, L.L.C., on its own behalf and as
General Partner of FARALLON CAPITAL PARTNERS, L.P.,
FARALLON CAPITAL INSTITUTIONAL PARTNERS, L.P., FARALLON
CAPITAL INSTITUTIONAL PARTNERS II, L.P., FARALLON
CAPITAL INSTITUTIONAL PARTNERS III, L.P., TINICUM
PARTNERS, L.P., And FARALLON CAPITAL (CP) INVESTORS,
L.P.
By Thomas F. Steyer,
Senior Managing Member
/s/ Thomas F. Steyer
FARALLON CAPITAL MANAGEMENT, L.L.C.,
By Thomas F. Steyer,
Senior Managing Member
/s/ Thomas F. Steyer
Thomas F. Steyer, individually and as attorney-in-fact
for each of Enrique H. Boilini, David I. Cohen,
Joseph F. Downes, William F. Duhamel, Fleur E. Fairman,
Jason M. Fish, Andrew B. Fremder, Richard B. Fried,
William F. Mellin, Stephen L. Millham, and Meridee A.
Moore.
Page 54 of 122 Pages
<PAGE>
EXHIBIT 2 to
SCHEDULE 13D
April 14, 1999
Richard C. Dietz
Executive Vice President and
Chief Financial Officer
Gardenburger, Inc.
1411 S.W. Morrison, Suite 400
Portland, OR 97205
Re: Amendment and Waiver of Stock Purchase Agreement
Dear Mr. Dietz:
Pursuant to Section 9.4 of the Stock Purchase Agreement by and among
Gardenburger, Inc. (the "Company") and the Purchasers (as defined therein) dated
as of March 29, 1999 (the "Agreement"), this amends and waives provisions of the
Agreement as specifically set forth herein. Capitalized terms not defined herein
have the meanings assigned to them in the Agreement.
Section 7.1(m). The Purchasers waive the Company's obligation under
Section 7.1(m) of the Agreement solely with respect to the requirement to obtain
"agreements to forebear from exercising any rights or remedies resulting from
future events of defaults until December 31, 1999 (other than those arising from
a failure to make an agreed payment)" from (a) Bank of America NT & SA with
respect to the Business Loan Agreement dated April 28, 1998, as amended, by and
between the Company and Bank of America NT & SA or any agreement between the
Company and Bank of America NT & SA intended to replace such agreement (the
"Business Loan Agreement"); (b) Dresdner Kleinwort Benson Private Equity
Partners LP with respect to the Note Purchase Agreement dated March 27, 1998,
and the related Notes (collectively, the "Dresdner Notes"); and (c) Lease
Agreements dated as of December 17, 1997 and May 28, 1998 by and between the
Company and BA Leasing & Capital Corporation (collectively, the "Lease
Agreements").
In lieu of the obligation specified above, Section 7.1(m) of the Agreement
is amended to provide that the Company shall deliver a certificate executed by
its Chief Financial Officer certifying that, based on the Company's 1999
operating plan and assuming the receipt of at least $32.0 million in gross
proceeds from the sale of the Shares, a default or event of default will not
occur during the period beginning on the Closing Date and ending on December 31,
1999 as a result of the failure of the Company to satisfy the financial
covenants specified in the Business Loan Agreement, the Dresdner Notes or the
Lease Agreements.
The Company's obligation under Section 7.1(m) to obtain waivers of all
events of default that exist as of the Closing Date under the Business Loan
Agreement, the Dresdner Notes and the Lease Agreements is not modified in any
way by this amendment and waiver.
Page 55 of 122 Pages
<PAGE>
Section 7.1(g). The Purchasers waive the condition under Section 7.1(g)
requiring the delivery of irrevocable proxies to Rosewood Capital III, L.P. from
holders of Series A Preferred and Section 7.1(g) of the Agreement is amended to
delete the second sentence only.
Exhibit A. Exhibit A (Schedule of Purchasers) of the Agreement is
superseded and replaced by the Exhibit A (Schedule of Purchasers) attached
hereto whereby Gruber & McBaine Capital Management, L.L.C. is no longer a
Purchaser and the persons listed on the Exhibit A attached hereto are deemed to
be Purchasers and are hereby made parties to the Agreement and to this amendment
and waiver.
Exhibit B. Exhibit B (Determination of Terms of Series A Stock and Series
B Stock) of the Agreement is superseded and replaced in its entirety by the
Exhibit B (Determination of Terms of Series A Stock and Series B Stock) attached
hereto.
This amendment and waiver agreement will only be effective upon its
execution and delivery by the Company and all of the Purchasers. Except as
provided herein, the Agreement shall remain in full force and effect. This
amendment and waiver may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
If you agree to the foregoing, please execute this amendment and waiver
where indicated below.
[Signatures follow]
Page 56 of 122 Pages
<PAGE>
FARALLON CAPITAL PARTNERS, L.P. FARALLON CAPITAL OFFSHORE INVESTORS,
FARALLON CAPITAL INSTITUTIONAL INC.
PARTNERS, L.P. THE COMMON FUND
FARALLON CAPITAL INSTITUTIONAL PARTNERS
II, L.P. By: Farallon Capital Management,
FARALLON CAPITAL INSTITUTIONAL PARTNERS L.L.C., its Agent and
III, L.P. Attorney-in-Fact
TINICUM PARTNERS, L.P.
FARALLON CAPITAL (CP) INVESTORS, L.P.
By: /s/ Andrew Fremder
By: Farallon Partners, L.L.C., Managing Member
its General Partner
BT Capital Investors, L.P.
By: /s/ Andrew Fremder
Managing Member
By:
------------------------------------
Michael J. Batal, III, Partner
BT Investment Partners, Inc.
By:
------------------------------------
Michael J. Batal, III, Partner
U.S. Development Capital Investment
Company
By:
-------------------------------- ------------------------------------
Ray Moss, Secretary Arvin H. Kash
GARDENBURGER, INC.
By:
-------------------------------- ------------------------------------
Richard C. Dietz, Executive Vice William D. Smithberg
President and Chief Financial Officer
Page 57 of 122 Pages
<PAGE>
FARALLON CAPITAL PARTNERS, L.P. FARALLON CAPITAL OFFSHORE INVESTORS,
FARALLON CAPITAL INSTITUTIONAL INC.
PARTNERS, L.P. THE COMMON FUND
FARALLON CAPITAL INSTITUTIONAL PARTNERS
II, L.P. By: Farallon Capital Management,
FARALLON CAPITAL INSTITUTIONAL PARTNERS L.L.C., its Agent and
III, L.P. Attorney-in-Fact
TINICUM PARTNERS, L.P.
FARALLON CAPITAL (CP) INVESTORS, L.P.
By:
------------------------------------
By: Farallon Partners, L.L.C., Managing Member
its General Partner
BT Capital Investors, L.P.
By:
---------------------------
Managing Member
By: /s/ Michael J. Batal, III
Michael J. Batal, III, Partner
Gruber & McBaine Capital Management, BT Investment Partners, Inc.
L.L.C.
By: /s/ Michael J. Batal, III
By: Michael J. Batal, III, Partner
--------------------------------
J. Patterson McBaine, Manager Member
U.S. Development Capital Investment
Company
By:
-------------------------------- ------------------------------------
Ray Moss, Secretary Arvin H. Kash
GARDENBURGER, INC.
By:
-------------------------------- ------------------------------------
Richard C. Dietz, Executive Vice William D. Smithberg
President and Chief Financial Officer
Page 58 of 122 Pages
<PAGE>
FARALLON CAPITAL PARTNERS, L.P. FARALLON CAPITAL OFFSHORE INVESTORS,
FARALLON CAPITAL INSTITUTIONAL INC.
PARTNERS, L.P. THE COMMON FUND
FARALLON CAPITAL INSTITUTIONAL PARTNERS
II, L.P. By: Farallon Capital Management,
FARALLON CAPITAL INSTITUTIONAL PARTNERS L.L.C., its Agent and
III, L.P. Attorney-in-Fact
TINICUM PARTNERS, L.P.
FARALLON CAPITAL (CP) INVESTORS, L.P.
By:
------------------------------------
By: Farallon Partners, L.L.C., Managing Member
its General Partner
BT Capital Investors, L.P.
By:
---------------------------
Managing Member
By:
------------------------------------
Michael J. Batal, III, Partner
Gruber & McBaine Capital Management, BT Investment Partners, Inc.
L.L.C.
By:
------------------------------------
By: Michael J. Batal, III, Partner
--------------------------------
J. Patterson McBaine, Manager Member
U.S. Development Capital Investment
Company
By: /s/ Ray Moss
Ray Moss, Secretary ------------------------------------
Arvin H. Kash
GARDENBURGER, INC.
By:
-------------------------------- ------------------------------------
Richard C. Dietz, Executive Vice William D. Smithberg
President and Chief Financial Officer
Page 59 of 122 Pages
<PAGE>
FARALLON CAPITAL PARTNERS, L.P. FARALLON CAPITAL OFFSHORE INVESTORS,
FARALLON CAPITAL INSTITUTIONAL INC.
PARTNERS, L.P. THE COMMON FUND
FARALLON CAPITAL INSTITUTIONAL PARTNERS
II, L.P. By: Farallon Capital Management,
FARALLON CAPITAL INSTITUTIONAL PARTNERS L.L.C., its Agent and
III, L.P. Attorney-in-Fact
TINICUM PARTNERS, L.P.
FARALLON CAPITAL (CP) INVESTORS, L.P.
By:
------------------------------------
By: Farallon Partners, L.L.C., Managing Member
its General Partner
BT Capital Investors, L.P.
By:
---------------------------
Managing Member
By:
------------------------------------
Michael J. Batal, III, Partner
Gruber & McBaine Capital Management, BT Investment Partners, Inc.
L.L.C.
By:
------------------------------------
By: Michael J. Batal, III, Partner
--------------------------------
J. Patterson McBaine, Manager Member
U.S. Development Capital Investment
Company
By:
--------------------------------
Ray Moss, Secretary /s/ Arvin H. Kash
Arvin H. Kash
GARDENBURGER, INC.
By:
-------------------------------- ------------------------------------
Richard C. Dietz, Executive Vice William D. Smithberg
President and Chief Financial Officer
Page 60 of 122 Pages
<PAGE>
FARALLON CAPITAL PARTNERS, L.P. FARALLON CAPITAL OFFSHORE INVESTORS,
FARALLON CAPITAL INSTITUTIONAL INC.
PARTNERS, L.P. THE COMMON FUND
FARALLON CAPITAL INSTITUTIONAL PARTNERS
II, L.P. By: Farallon Capital Management,
FARALLON CAPITAL INSTITUTIONAL PARTNERS L.L.C., its Agent and
III, L.P. Attorney-in-Fact
TINICUM PARTNERS, L.P.
FARALLON CAPITAL (CP) INVESTORS, L.P.
By:
------------------------------------
By: Farallon Partners, L.L.C., Managing Member
its General Partner
BT Capital Investors, L.P.
By:
---------------------------
Managing Member
By:
------------------------------------
Michael J. Batal, III, Partner
Gruber & McBaine Capital Management, BT Investment Partners, Inc.
L.L.C.
By:
------------------------------------
By: Michael J. Batal, III, Partner
--------------------------------
J. Patterson McBaine, Manager Member
U.S. Development Capital Investment
Company
By:
--------------------------------
Ray Moss, Secretary ------------------------------------
Arvin H. Kash
GARDENBURGER, INC.
By:
-------------------------------- /s/ William D. Smithberg
Richard C. Dietz, Executive Vice William D. Smithberg
President and Chief Financial Officer
Page 61 of 122 Pages
<PAGE>
FARALLON CAPITAL PARTNERS, L.P. FARALLON CAPITAL OFFSHORE INVESTORS,
FARALLON CAPITAL INSTITUTIONAL INC.
PARTNERS, L.P. THE COMMON FUND
FARALLON CAPITAL INSTITUTIONAL PARTNERS
II, L.P. By: Farallon Capital Management,
FARALLON CAPITAL INSTITUTIONAL PARTNERS L.L.C., its Agent and
III, L.P. Attorney-in-Fact
TINICUM PARTNERS, L.P.
FARALLON CAPITAL (CP) INVESTORS, L.P.
By:
------------------------------------
By: Farallon Partners, L.L.C., Managing Member
its General Partner
BT Capital Investors, L.P.
By:
---------------------------
Managing Member
By:
------------------------------------
Michael J. Batal, III, Partner
Gruber & McBaine Capital Management, BT Investment Partners, Inc.
L.L.C.
By:
------------------------------------
By: Michael J. Batal, III, Partner
--------------------------------
J. Patterson McBaine, Manager Member
U.S. Development Capital Investment
Company
By:
--------------------------------
Ray Moss, Secretary ------------------------------------
Arvin H. Kash
GARDENBURGER, INC.
By: /s/ Richard C. Dietz
Richard C. Dietz, Executive Vice ------------------------------------
President and Chief Financial Officer William D. Smithberg
Page 62 of 122 Pages
<PAGE>
FARALLON CAPITAL PARTNERS, L.P. FARALLON CAPITAL OFFSHORE INVESTORS,
FARALLON CAPITAL INSTITUTIONAL INC.
PARTNERS, L.P. THE COMMON FUND
FARALLON CAPITAL INSTITUTIONAL PARTNERS
II, L.P. By: Farallon Capital Management,
FARALLON CAPITAL INSTITUTIONAL PARTNERS L.L.C., its Agent and
III, L.P. Attorney-in-Fact
TINICUM PARTNERS, L.P.
FARALLON CAPITAL (CP) INVESTORS, L.P.
By:
------------------------------------
By: Farallon Partners, L.L.C., Managing Member
its General Partner
BT Capital Investors, L.P.
By:
---------------------------
Managing Member
By:
------------------------------------
Michael J. Batal, III, Partner
Gruber & McBaine Capital Management, BT Investment Partners, Inc.
L.L.C.
By:
------------------------------------
By: Michael J. Batal, III, Partner
--------------------------------
J. Patterson McBaine, Manager Member
U.S. Development Capital Investment
Company
By:
--------------------------------
Ray Moss, Secretary ------------------------------------
Arvin H. Kash
GARDENBURGER, INC.
By:
--------------------------------
Richard C. Dietz, Executive Vice ------------------------------------
President and Chief Financial Officer William D. Smithberg
Lagunitas Partners, L.P.
Gruber & McBaine International
Lockheed Martin
Hamilton College
By: /s/ J. Patterson McBaine
J. Patterson McBaine,
Gruber & McBaine Capital Management LLC, Member Manager
Lagunitas Partners, L.P. - General Partner
Gruber & McBaine International - Attorney in Fact
Lockheed Martin - Attorney in Fact
Hamilton College - Attorney in Fact
Page 63 of 122 Pages
<PAGE>
ROSEWOOD CAPITAL III, L.P.
By: Rosewood Capital Associates, LLC,
Its General Partner
By: /s/ Kyle A. Anderson
Kyle A. Anderson,
Managing Member
Page 64 of 122 Pages
<PAGE>
EXHIBIT A
SCHEDULE OF PURCHASERS
Total
Purchaser Name, No. of Shares No. of Shares Purchase
Address, Fax No. of Series A of Series B Amount
Stock Stock
Rosewood Capital III, L.P. 850,000 150,000 $10,000,000
One Maritime Plaza, Suite 1330
San Francisco, CA 94111
(415) 362-1192
Farallon Capital Partners, L.P* 238,000 42,000 $2,800,000
Farallon Capital Institutional 255,000 45,000 $3,000,000
Partners, L.P.*
Farallon Capital Institutional 42,500 7,500 $500,000
Partners II, L.P.*
Farallon Capital Offshore Investors, 212,500 37,500 $2,500,000
Inc.*
The Common Fund* 8,500 1,500 $100,000
Farallon Capital (CP) Investors, L.P.* 25,500 4,500 $300,000
Farallon Capital Institutional 51,000 9,000 $600,000
Partners III, L.P.*
Tinicum Partners, L.P.* 17,000 3,000 $200,000
BT Capital Investors, L.P. 425,000 75,000 $5,000,000
Attn: Michael J. Batal III
130 Liberty Street, Mailstop 2255
New York, NY 10006
Ph: 212-250-3402
Fax: 212-250-8375
BT Investment Partners, Inc. 127,500 22,500 $1,500,000
U.S. Development Capital Investment 127,500 22,500 $1,500,000
Company
Attn: Ray Moss, Secretary
400 Northpark Town Center, Suite 310
1000 Abernathy Road, N.E.
Atlanta, GA 30328
Ph: 770-481-7200
Fax: 770-481-7210
_____________________
*c/o Farallon Capital Management LLC, One Maritime Plaza, Suite 1325, San
Francisco, California 94111, Attn: Jason Fish and Susan Rubin, Facsimile:
(415) 421-2133.
A-1
Page 65 of 122 Pages
<PAGE>
Total
Purchaser Name, No. of Shares No. of Shares Purchase
Address, Fax No. of Series A of Series B Amount
Stock Stock
Lagunitas Partners, L.P. 191,250 33,750 $2,250,000
Attn: J. Patterson McBaine, Member
Manager
50 Osgood Place, Penthouse
San Francisco, CA 94133
Ph: 415-981-2101
Fax: 415-956-8769
Gruber & McBaine International 63,750 11,250 $750,000
Lockheed Martin 59,500 10,500 $700,000
Hamilton College 25,500 4,500 $300,000
Arvin H. Kash 21,250 3,750 $250,000
77 West Wacker Drive, 47th Floor
Chicago, IL 60601
Ph: 312- 425-3600
Fax: 312-425-3601
William D. Smithburg 21,250 3,750 $250,000
676 N. Michigan Avenue
Suite 3860
Chicago, IL 60611
Ph: 312- 867-5411
Fax: 312- 867-5415
Total 2,762,500 487,500 $32,500,000
A-2
Page 66 of 122 Pages
<PAGE>
EXHIBIT B
B-1
Page 67 of 122 Pages
<PAGE>
Gardenburger, Inc.
------------------
Determination of Terms of Series A Convertible Preferred Stock
Series A Convertible Preferred Stock. The board of directors
(the "Board") of Gardenburger, Inc. (the "Corporation") hereby establishes out
of the authorized and unissued shares of Preferred Stock, no par value, of the
Corporation (the "Preferred Stock") a series of Preferred Stock designated as
"Series A Convertible Preferred Stock." The authorized number of shares of
Series A Convertible Preferred Stock and the preferences, limitations, and
relative rights and other matters pertaining to Series A Convertible Preferred
Stock are as follows:
1. Number of Shares. The Series A Convertible Preferred Stock ("Series A
Preferred") shall consist of 2,762,500 shares. All shares of Series A Preferred
shall be identical with each other in all respects.
2. Dividends. Except as otherwise provided in this Section 2, the holders
of shares of Series A Preferred shall be entitled to receive out of any legally
available funds of the Corporation cumulative dividends at the rate of twelve
percent (12%) per annum ("12% Cumulative Dividends") commencing with the date of
original issuance of the shares of Series A Preferred (the "Original Issuance
Date") and payable only in the event of a liquidation or deemed liquidation of
the Corporation or the redemption of shares of Series A Preferred by the
Corporation in accordance with Section 4 below or as otherwise provided herein.
The 12% Cumulative Dividend per share shall be computed based upon a rate of
twelve percent (12%) on a base amount of $10.00 per share of Series A Preferred.
Any dividends declared upon shares of Series A Preferred shall be declared pro
rata per share among the series and pari passu among the shares of Series A
Preferred and all outstanding shares of Series B Convertible Preferred Stock
("Series B Preferred"), which is entitled to an identical dividend amount. No
dividend may be paid on shares of the Corporation's common stock ("Common
Shares") or shares of any other class or series of the Corporation's capital
stock (other than the Series B Preferred) (collectively, "Junior Shares") unless
dividends have been or contemporaneously are declared and paid on all
outstanding shares of Series A Preferred and on all outstanding shares of Series
B Preferred in an amount equal to the greater of (i) the 12% Cumulative
Dividends accrued on such shares through the record date for such dividend on
the Junior Shares and (ii) the amount per share of Series A Preferred equal, on
an as-converted basis, to the amount of the dividend then proposed to be
declared and paid on the Junior Shares (the "Junior Dividends"), in each case
less the amount of any 12% Cumulative Dividends previously paid with respect to
such shares of the Series A Preferred and Series B Preferred. No Junior Shares
shall be redeemed, purchased or otherwise acquired by the Corporation so long as
any shares of Series A Preferred or Series B Preferred remain outstanding
without the unanimous written consent of all holders of shares of Series A
Preferred and Series B Preferred then outstanding. Holders of Series A Preferred
and of Series B Preferred shall not be entitled to any dividend, whether payable
in cash, property or stock, in excess of the greater of the Junior Dividends and
the 12% Cumulative Dividends accumulated with respect to such shares. Upon
conversion of any shares of Series A Preferred or of Series B Preferred, any
dividends accrued and payable with respect to such shares shall be forfeited and
the Corporation shall have no further obligation to the holder of such shares
for such accumulated dividends; provided that such forfeiture shall not apply to
any dividends as to which
-1-
Page 68 of 122 Pages
<PAGE>
the Corporation has breached its payment obligation. No interest shall accrue on
accumulated dividends prior to payment or forfeiture.
3. Liquidation Preference. In the event of any liquidation, dissolution, or
winding up of the Corporation, or any distribution of assets to its
shareholders, whether voluntary or involuntary, the holders of outstanding
shares of Series A Preferred shall be entitled to receive for each share
thereof, out of any legally available assets of the Corporation, in preference
to the holders of Junior Shares but on a pari passu basis with the holders of
outstanding shares of Series B Preferred, an amount equal to $10.00 (the
"Original Issue Price") per share of Series A Preferred, plus any accumulated
and unpaid dividends (including any amounts payable in connection with the
payment of Junior Dividends) as of the date of liquidation, dissolution, or
winding up of the Corporation (the "Series A Liquidation Preference Amount"),
before any distribution shall be made to the holders of Junior Shares and
contemporaneously with the payment of the liquidation preference of the Series B
Preferred. After payment of the full amount to which such holders of shares of
Series A Preferred are entitled, the holders of such shares shall have no right
to any remaining assets of the Corporation. In the event that assets so
distributable to holders of Series A Preferred and Series B Preferred are
insufficient to permit payment of the full preferential amount to which holders
of such shares are entitled, the entire assets legally available for
distribution to shareholders shall be distributed ratably among the holders of
Series A Preferred and Series B Preferred in proportion to the aggregate
preferential amount to which each such holder is entitled. In case the
Corporation shall desire to liquidate, dissolve, or wind up the Corporation, it
shall give notice of such liquidation, dissolution, or winding up to holders of
the shares of Series A Preferred by first class mail to the last address as may
appear in the Corporation's records not less than 30 calendar days prior to the
date fixed for liquidation, dissolution, or winding up. Each holder of Series A
Preferred shall have the option to deem a merger or other business combination
in which the Corporation is not the surviving entity, a sale of all or
substantially all of the Corporation's assets, a capital reorganization of the
Corporation, or a reclassification of the Common Shares to be a liquidation for
purposes of this Section 3.
4. Redemption. The shares of Series A Preferred may not be redeemed before
December 31, 2004. Thereafter, the holders of a majority of the Series A
Preferred outstanding may request that their shares of Series A Preferred be
redeemed at a price equal to the Series A Liquidation Preference Amount;
provided, however, that if at least $5,000,000 in principal amount of the 7%
Convertible Senior Subordinated Notes ("Dresdner Notes") issued to Dresdner
Kleinwort Benson Private Equity Partners, L.P.("Dresdner") remain outstanding,
and Dresdner and its affiliates continue to own at least a majority of the
outstanding principal amount of Dresdner Notes, then the Corporation may not
redeem shares of Series A Preferred without the consent of the holders of a
majority of the then outstanding principal amount of Dresdner Notes, and the
right of redemption provided herein is subject to the receipt of such consent.
Also after December 31, 2004, shares of Series A Preferred shall be redeemable
at the option of the Corporation, in whole but not in part, at a redemption
price equal to 105% of the Original Issue Price, plus all accumulated and unpaid
dividends (including any amounts payable in connection with the payment of
Junior Dividends); provided that (i) a registration statement covering the
resale of the Common Shares issuable upon conversion of the Series A Preferred
and the Series B Preferred is effective as of the date of the redemption, or is
no longer required to be effective, and (ii) the closing price of the Common
Shares as quoted on a national securities
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exchange or market is greater than or equal to 200% of the Conversion Price (as
defined in Section 7) for 60 consecutive trading days prior to notice of
redemption. In case the Corporation shall desire to exercise its right to redeem
all of the outstanding shares of Series A Preferred, it shall give notice of
such redemption to holders of such shares by first class mail to the last
address as may appear in the Corporation's records not less than 30 calendar
days prior to the date fixed for redemption. Each notice shall specify the
redemption date and the redemption price at which shares are to be redeemed. The
holders of Series A Preferred shall continue to have the conversion rights
specified in Section 7 until their shares of Series A Preferred are in fact
redeemed. Any shares of Series A Preferred redeemed pursuant to this Section 4
shall be redeemed subject to the right of shares of Series B Preferred to
participate pari passu in such redemption, the right of redemption of such
shares being equal. Any partial redemption of shares of Series A Preferred shall
be conducted pro rata among the series. Any shares that are redeemed or
otherwise acquired by the Corporation shall be retired and canceled and shall be
restored to the status of authorized but unissued shares of Preferred Stock
without designation as to series, and may thereafter be issued, but not as
shares of the Series A Preferred.
5. Voting Rights. Except as otherwise required by law and herein, each
holder of Series A Preferred shall be entitled to a number of votes equal to the
number of full Common Shares into which that holder's shares of Series A
Preferred may be converted (eliminating any fractional shares that may result)
and the Series A Preferred shall vote together with the Common Shares and the
Series B Preferred as a single voting group. Notwithstanding the foregoing, so
long as more than 1,408,875 shares of Series A Preferred remain outstanding,
holders of Series A Preferred, voting as a separate voting group, shall by a
majority of the outstanding shares be entitled to elect two directors to the
Board. Holders of the Series A Preferred shall also be entitled to vote together
with holders of the Common Shares and the Series B Preferred as a single voting
group in the election of all other directors. Any director elected by the
holders of Series A Preferred may be removed during his or her term of office,
with or without cause, by, and only by, the affirmative vote of the holders of a
majority of the outstanding shares of Series A Preferred, either at a special
meeting of such shareholders duly called for that purpose or pursuant to a
unanimous written consent of such shareholders, and any vacancy thereby created
may be filled only by the holders of Series A Preferred at such special meeting
or pursuant to a unanimous written consent. If any of the directors elected by
the holders of Series A Preferred should cease to be a director for any reason,
the vacancy shall only be filled by the vote of holders of a majority of the
outstanding shares of Series A Preferred or pursuant to a unanimous written
consent of such shareholders.
6. Additional Class Votes by Series A Preferred and Series B Preferred.
Except to the extent otherwise required by law, so long as at least 552,500
shares of Series A Preferred remain outstanding, the Corporation may not,
without the consent of holders (voting together as a single voting group with
the Series B Preferred so long as such series has comparable rights or acting by
unanimous written consent) of at least a majority of the shares of Series A
Preferred then outstanding, do any of the following:
(a) authorize or issue any additional shares of Series A Preferred or
Series B Preferred or any class of Preferred Stock on a parity with or
having priority over the Series A Preferred or Series B Preferred as to the
payment of dividends or the distribution of assets upon the liquidation or
dissolution of the Corporation;
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<PAGE>
(b) amend the Corporation's Articles of Incorporation or bylaws so as
to alter any existing provision relating to the Series A Preferred or
Series B Preferred or the holders thereof or adversely alter any of the
rights granted to holders of Series A Preferred or Series B Preferred
(other than to effect a reverse split of the Common Shares or to increase
the number of authorized Common Shares);
(c) effect a change of control, merger, liquidation or
recapitalization of the capital stock of the Corporation;
(d) sell or lease 25 percent or more of its assets, except in the
ordinary course of business;
(e) enter into any agreement, including any loan or credit agreement,
capital lease or joint venture which would obligate the Corporation to
incur capital lease obligations plus bank and other outstanding
indebtedness (including any renewals, extensions or amendments to any
obligations which exist on the Original Issuance Date) aggregating in
excess of $35,000,000;
(f) declare or pay any dividends or make any distributions with
respect to its capital stock other than dividends payable on the Series A
Preferred or the Series B Preferred;
(g) purchase, redeem or otherwise acquire any of its equity securities
other than the Dresdner Notes (in accordance with their terms), the Series
A Preferred or the Series B Preferred;
(h) issue additional securities to the Corporation's employees or
directors, except for 3,370,123 Common Shares issuable upon the exercise of
options granted pursuant to plans existing on the Original Issuance Date;
(i) adopt, amend, or modify any stock option plan or employee stock
ownership plan;
(j) authorize or issue shares of any class or series of equity
security the issuance of which would result in an adjustment in, or require
a shareholder vote in order to adjust, the Conversion Price under Section
7(e);
(k) enter into any agreement or engage in any transaction which would
impair or reduce the rights and preferences of the holders of Series A
Preferred (except for increasing the number of authorized shares of Common
Stock);
(l) enter into any transaction (or series of transactions), including
loans, with any officer or director of the Company, or with their
affiliates and/or family members, involving $100,000 or more individually
in any one year or $500,000 or more in the aggregate in any one year,
except as may be contemplated by currently existing contractual
commitments;
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<PAGE>
(m) change the primary business of the Corporation as it is presently
conducted;
(n) acquire any stock or assets of any corporation or any other
business entity for an aggregate consideration in excess of $5,000,000;
(o) increase the authorized number of directors of the Corporation
above ten; and
(p) amend the Rights Agreement dated as of April 25, 1996, as amended
through the Original Issuance Date (the "Rights Agreement").
7. Conversion. Each share of Series A Preferred shall be convertible into
Common Shares as follows:
(a) Conversion Ratio. Shares of Series A Preferred shall be
convertible into such number of fully paid and nonassessable Common Shares
as is determined by dividing the Original Issue Price ($10.00 per share) by
the Conversion Price applicable to such share (determined as provided
below) in effect on the date the shares are surrendered for conversion. The
initial Conversion Price per share for shares of Series A Preferred shall
be $10.00 (the "Conversion Price"), subject to adjustment as set forth in
Section 7(e).
(b) Optional Conversion. Each share of Series A Preferred shall be
convertible into Common Shares, at the option of the holder thereof, at any
time after the Original Issuance Date, at the offices of the Corporation or
of any transfer agent for the Common Shares.
(c) Mandatory Conversion. Each share of Series A Preferred shall be
converted automatically into Common Shares at the then current Conversion
Price immediately upon the vote or written consent of 66.7% of the then
outstanding shares of Series A Preferred. Upon the occurrence of an event
specified in this Section 7(c), the outstanding shares of Series A
Preferred shall be converted whether or not the certificates representing
such shares are surrendered to the Corporation or its transfer agent. Upon
the conversion of the Series A Preferred, the holders thereof shall
surrender the certificate or certificates representing such shares, duly
endorsed, at the principal office of the Corporation or of any transfer
agent for the Common Shares or the holder shall notify the Corporation or
such transfer agent that such certificate has been lost, stolen, or
destroyed and execute an agreement satisfactory to the Corporation to
indemnify the Corporation against any loss incurred by it in connection
therewith. Thereupon, the Corporation shall promptly issue and deliver to
such holder, in the holder's name as shown on such surrendered certificate
or certificates, a certificate or certificates for the number of Common
Shares into which the surrendered shares of Series A Preferred were
converted.
(d) Mechanics of Conversion. Before any holder of Series A Preferred
will be entitled to convert shares of Series A Preferred into Common Shares
(except as set forth in Section 7(c)), such holder shall surrender the
certificate therefor, duly endorsed, at the office of the Corporation or
its transfer agent for the Common Shares, and shall give written notice by
mail, postage prepaid, to the Corporation, at its principal corporate
office, of the
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<PAGE>
election to convert shares of Series A Preferred and shall state in the
notice the name in which the certificate for Common Shares should be
issued. In the event of a missing certificate, the holder may notify the
Corporation or such transfer agent that such certificate has been lost,
stolen, or destroyed and execute an agreement satisfactory to the
Corporation to indemnify the Corporation against any loss incurred by it in
connection therewith. The Corporation will promptly thereafter, issue and
deliver to such holder a certificate for the number of Common Shares to
which such holder shall be entitled after the conversion. The conversion
will be deemed to have been completed immediately prior to the close of
business on the date of the surrender of the shares of Series A Preferred
to be converted and the person entitled to receive the Common Shares
issuable upon such conversion shall be treated as the record holder of such
Common Shares as of such date.
(e) Conversion Price Adjustments. The Conversion Price of a share of
Series A Preferred shall be subject to adjustment from time to time as
described below. Capitalized terms used in this section but not otherwise
defined have the meanings given to them in the definitions in Section
7(e)(vii).
(i) Adjustments for Common Share Issuances Below Conversion
Price. Subject to shareholder approval if required at the time of
adjustment, the Conversion Price will be subject to adjustment if and
whenever on or after the Original Issuance Date, the Corporation
issues or sells or in accordance with Section 7(e)(i)(A) or 7(e)(i)(B)
is deemed to have issued or sold, any Common Shares for a
consideration per share which is less than the Conversion Price in
effect immediately prior to such issuance or sale. Upon such an event
and subject to shareholder approval if required, the adjusted
Conversion Price shall be determined by dividing (1) an amount equal
to the sum of (x) the product derived by multiplying the Conversion
Price in effect immediately prior to such issue or sale or deemed
issue or sale by the number of Common Shares Deemed Outstanding
immediately prior to such issue or sale or deemed issue or sale, plus
(y) the consideration, if any, received or deemed received by the
Corporation upon such issue or sale, by (2) the number of Common
Shares Deemed Outstanding immediately after such issue or sale or
deemed issue or sale; provided that no adjustment in the Conversion
Price will be made pursuant to this Section 7(e)(i) in connection with
any Exempt Issuance. If any adjustment to the Conversion Price is made
upon the issuance of Options or Convertible Securities and such
Options or Convertible Securities expire without being converted or
exercised, then the Conversion Price shall be readjusted to the amount
that would have been in effect had such Options or Convertible
Securities never been issued or sold; provided that no readjustment
provided for in Section 7(e) shall have the effect of increasing the
Conversion Price to an amount which exceeds the lower of (i) the
Conversion Price on the original adjustment date (immediately prior to
the adjustment), or (ii) the Conversion Price that results from any
actual issuance of additional Common Shares between the original
adjustment date and such readjustment date. Conversion Price
adjustments under this Section 7(e) shall be calculated based on the
following provisions in the event Options or Convertible Securities
are issued.
(A) Issuance of Options. If the Corporation in any manner grants
or sells any Options and the price per share for which Common Shares
are issuable upon the exercise of such Options, or upon the conversion
or exchange of any Convertible Securities issuable upon the exercise
of such Options, is less than the Conversion Price in effect
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<PAGE>
immediately prior to the time of the granting or sale of such Options,
then the maximum number of Common Shares issuable upon the exercise of
such Options, or upon conversion or exchange of the maximum amount of
such Convertible Securities issuable upon the exercise of such
Options, will be deemed to be outstanding and to have been issued and
sold by the Corporation at the time of the granting or sale of such
Options for such price per share. For purposes of this Section
(7)(e)(i)(A), the "price per share for which Common Shares are
issuable upon the exercise of such Options, or upon conversion or
exchange of any Convertible Securities issuable upon exercise of such
Options" will be determined by dividing (A) the total amount, if any,
received or receivable by the Corporation as consideration for the
granting or sale of such Options, plus the minimum aggregate amount of
additional consideration payable to the Corporation upon the exercise
of all such Options, plus in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the issuance or
sale of such Convertible Securities and the conversion or exchange
thereof, by (B) the maximum number of Common Shares issuable upon the
exercise of such Options or upon the conversion or exchange of all
such Convertible Securities issuable upon the exercise of such
Options. No further adjustment of the Conversion Price will be made
upon the actual issuance of Common Shares or of such Convertible
Securities upon the exercise of such Options or upon the issuance of
Common Shares upon conversion or exchange of such Convertible
Securities.
(B) Effect of Issuance of Convertible Securities. If the
Corporation in any manner issues or sells any Convertible Securities
and the price per share for which Common Shares are issuable upon the
conversion or exchange thereof is less than the Conversion Price in
effect immediately prior to the time of such issue or sale, then the
maximum number of Common Shares issuable upon conversion or exchange
of all such Convertible Securities will be deemed to be outstanding
and to have been issued and sold by the Corporation at the time of the
issuance or sale of such Convertible Securities for such price per
share. For the purposes of this Section (7)(e)(i)(B), the "price per
share for which Common Shares are issuable upon conversion or exchange
thereof" will be determined by dividing (A) the total amount received
or receivable by the Corporation as consideration for the issue or
sale of such Convertible Securities, plus the minimum aggregate amount
of additional consideration, if any, payable to the Corporation upon
the conversion or exchange thereof, by (B) the maximum number of
Common Shares issuable upon the exchange of all such Convertible
Securities. No further adjustment of the Conversion Price will be made
upon the actual issuance of such Common Shares upon conversion or
exchange of such Convertible Securities, and if any such issue or sale
of such Convertible Securities is made upon exercise of any Options
for which adjustments of the Conversion Price had been or are to be
made pursuant to other provisions of this Section (7)(e), no further
adjustment of the Conversion Price will be made by reason of such
issue or sale.
(C) Integrated Transaction. If Options or Convertible Securities
are issued in connection with the issue or sale of other securities of
the Corporation, together comprising one integrated transaction in
which no specific consideration is allocated to such Options or
Convertible Securities by the parties thereto, the Options or
Convertible Securities will be deemed to have been issued without
consideration.
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<PAGE>
(D) Calculation of Consideration Received. If any Common Shares,
Options, or Convertible Securities are issued or sold or deemed to
have been issued or sold for cash, then the consideration received
therefor will be deemed to be the net amount received by the
Corporation. If any Common Shares, Options, or Convertible Securities
are issued or sold for a consideration other than cash, then the
amount of the consideration other than cash received by the
Corporation will be the fair value of such consideration as determined
in good faith by the Board, except where such consideration consists
of securities, in which case the amount of consideration received by
the Corporation will be the Market Price thereof as of the date of
receipt. If any Common Shares, Options, or Convertible Securities are
issued to the owners of the non-surviving entity in connection with
any merger in which the Corporation is the surviving entity, then the
amount of consideration therefor will be deemed to be the fair value
of such portion of the net assets and business of the non-surviving
entity as is attributable to such Common Shares, Options or
Convertible Securities, as the case may be.
(ii) Record Date for Dividend or Split. In the event the
Corporation should fix a record date for (1) a split or subdivision of
the outstanding Common Shares or (2) a dividend or other distribution
payable in Common Shares or Options or Convertible Securities without
payment of any consideration, then, as of such record date the
Conversion Price shall be appropriately decreased so the number of
Common Shares issuable on conversion of each share of Series A
Preferred shall be increased in proportion to such increase in the
aggregate number of Common Shares outstanding or issuable with respect
to such Options or Convertible Securities.
(iii) Combinations. If the number of Common Shares outstanding is
decreased by a combination of the outstanding Common Shares, then, as
of the record date of such combination, the Conversion Price for the
Series A Preferred shall be appropriately increased so the number of
Common Shares issuable on conversion of each share of such series
shall be decreased in proportion to such decrease in outstanding
Common Shares.
(iv) Recapitalization, Consolidation, Merger, Etc. In case of any
change in the Common Shares through recapitalization,
reclassification, or other change in the capital structure of the
Corporation (other than a combination of shares or the issuance of
additional Common Shares by stock split or stock dividend) or through
any merger or consolidation which is effected such that holders of
Common Shares are entitled to receive stock, securities, cash, or
other assets in exchange for Common Shares, then, as a condition of
the change in capital structure or merger, provision shall be made so
that the holders of the Series A Preferred will have the right
thereafter to receive upon conversion the kind and amount of shares of
stock or other securities or property to which such holders would have
been entitled if, immediately prior to such change in capital
structure, such holder had held the number of Common Shares issuable
upon conversion of the Series A Preferred. In addition, appropriate
provision will be made with respect to the holder's rights and
interests to ensure that the provisions in this Section 7 will
thereafter be applicable in relation to any shares of stock,
securities, cash, or other assets thereafter deliverable upon the
conversion of Series A Preferred.
(v) Special Conversion Price Adjustment. If the Common Shares
issuable upon conversion of Series A Preferred ("Registrable
Securities") are not, within 120 days of the issuance of such shares
("Penalty Date"), subject to an effective registration statement filed
with the Securities and Exchange Commission ("SEC"), then the
Conversion
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<PAGE>
Price of the Series A Preferred shall be reduced five percent (5%),
effective on the Penalty Date. Thereafter, for each ninety (90) day
period after the Penalty Date that such Common Shares remain
unregistered, the Conversion Price shall be reduced by an additional
five percent. No further Conversion Price adjustments provided for in
this Section 7(e)(v) shall be made once a registration statement
covering the Registrable Securities has been declared effective by the
SEC.
(vi) Protection Against Dilution. If any event occurs as to
which, in the opinion of the Board, the other provisions of this
Section 7(e) are not strictly applicable or would not fairly protect
the rights of the holders of Series A Preferred in accordance with the
intent of these anti-dilution provisions, then the Board shall make an
adjustment in accordance with the intent of these provisions to
protect the holders' rights in the Series A Preferred, but in no event
shall any adjustment have the effect of increasing the Conversion
Price (except in the case of a combination of Common Shares described
in Section 7(e)(iii)).
(vii) Definitions for Section 7(e).
"Common Shares Deemed Outstanding" means, at any given time, the
number of Common Shares actually outstanding at such time, plus the number
of Common Shares that would be issued if all outstanding Options and
Convertible Securities exercisable for Common Shares or for other Options
or Convertible Securities were exercised or converted regardless of whether
or not the applicable securities are actually exercisable at such time, but
excluding any Common Shares issuable upon conversion of the Series A
Preferred or any outstanding shares of Series B Preferred.
"Convertible Securities" means any securities or other rights to
acquire securities directly or indirectly convertible into or exchangeable
for Common Shares.
"Exempt Issuance" means the issuance of any Common Shares or other
securities (i) upon the exercise or conversion of Options or other
securities granted pursuant to plans existing on the Original Issuance
Date, (ii) upon exercise of Options granted or to be granted after the
Original Issuance Date under any employee benefit plan or plans adopted by
the Board, provided that the exercise price is not less than the fair
market value on the date of grant, (iii) upon conversion of outstanding
shares of Series A Preferred or Series B Preferred, or an adjustment to the
Conversion Price or the conversion price of the Series B Preferred, (iv)
which are restricted securities subject to a substantial risk of forfeiture
issued pursuant to benefit plans adopted by the Board, (v) pursuant to
employee benefit plans qualified under Section 401(k) or 423 of the
Internal Revenue Code, (vi) to satisfy semi-annual interest obligations to
holders of the Dresdner Notes outstanding on the Original Issuance Date, or
(vii) pursuant to the Rights Agreement, including the Rights contemplated
thereby.
"Market Price" of any security means the average of the closing prices
of such security's sales on all national securities exchanges or markets on
which such security may at the time be listed, or, if there has been no
sale on any such exchange or market on any day, or, if on any day such
security is not so listed, then the representative bid price of such
security quoted in the NASDAQ System as of 4:00 p.m., New York time, on
such day, or, if on any day such security is not quoted in the NASDAQ
System, then the highest bid price of such security
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<PAGE>
on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor
organization, in each such case, averaged over a period of five days
consisting of the day as of which "Market Price" is being determined and
the four consecutive business days prior to such day. If at any time such
security is not listed on any national securities exchange or market or
quoted in the NASDAQ System or the over-the-counter market, then the
"Market Price" will be the fair value thereof determined in good faith by
the Board.
"Options" means any securities or other rights to subscribe for or
purchase, directly or indirectly, Common Shares or Convertible Securities.
(f) Notice of Conversion Price Adjustments. When an adjustment or
readjustment of the Conversion Price is required pursuant to Section 7(e),
the Corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms of this Section 7 and prepare and
furnish to each holder of Series A Preferred a notice setting forth such
adjustment or readjustment and showing in reasonable detail the facts upon
which such adjustment or readjustment is based.
(g) Reservation of Shares. The Corporation shall at all times reserve
and keep available from its authorized but unissued Common Shares such
number of Common Shares as shall be sufficient to effect the conversion of
all outstanding shares of Series A Preferred; and if at any time the number
of authorized but unissued Common Shares shall not be sufficient to effect
the conversion of all then outstanding shares of Series A Preferred, the
Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued Common Shares
to such number of shares as shall be sufficient for such purposes,
including, without limitation, engaging in reasonable efforts to obtain the
requisite shareholder approval of any necessary amendment to the
Corporation's Articles of Incorporation.
(h) No Fractional Shares. No fractional shares shall be issued upon
the conversion of shares of Series A Preferred, and the number of Common
Shares to be issued shall be rounded to the nearest whole share.
8. Notices. Any notice required by the provisions of Section 7 to be given
to the holders of shares of Series A Preferred shall be deemed given if
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at the holder's address appearing on the books of the
Corporation. A holder of shares of Series A Preferred may change such address by
written notice to the Corporation.
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<PAGE>
Gardenburger, Inc.
------------------
Determination of Terms of Series B Convertible Preferred Stock
Series B Convertible Preferred Stock. The board of directors (the
"Board")of Gardenburger, Inc. (the "Corporation") hereby establishes out of
theauthorized and unissued shares of Preferred Stock, no par value, of the
Corporation (the "Preferred Stock") a series of Preferred Stock designated as
"Series B Convertible Preferred Stock." The authorized number of shares of
Series B Convertible Preferred Stock and the preferences, limitations, and
relative rights and other matters pertaining to Series B Convertible Preferred
Stock are as follows:
1. Number of Shares. The Series B Convertible Preferred Stock ("Series B
Preferred") shall consist of 487,500 shares. All shares of Series B Preferred
shall be identical with each other in all respects.
2. Dividends. Except as otherwise provided in this Section 2, the holders
of shares of Series B Preferred shall be entitled to receive out of any legally
available funds of the Corporation cumulative dividends at the rate of twelve
percent (12%) per annum ("12% Cumulative Dividends") commencing with the date of
original issuance of the shares of Series B Preferred (the "Original Issuance
Date") and payable only in the event of a liquidation or deemed liquidation of
the Corporation or the redemption of shares of Series B Preferred by the
Corporation in accordance with Section 4 below or as otherwise provided herein.
The 12% Cumulative Dividend per share shall be computed based upon a rate of
twelve percent (12%) on a base amount of $10.00 per share of Series B Preferred.
Any dividends declared upon shares of Series B Preferred shall be declared pro
rata per share among the series and pari passu among the shares of Series B
Preferred and all outstanding shares of Series A Convertible Preferred Stock
("Series A Preferred"), which is entitled to an identical dividend amount. No
dividend may be paid on shares of the Corporation's common stock ("Common
Shares") or shares of any other class or series of the Corporation's capital
stock (other than the Series A Preferred) (collectively, "Junior Shares") unless
dividends have been or contemporaneously are declared and paid on all
outstanding shares of Series B Preferred and on all outstanding shares of Series
A Preferred in an amount equal to the greater of (i) the 12% Cumulative
Dividends accrued on such shares through the record date for such dividend on
the Junior Shares and (ii) the amount per share of Series B Preferred equal, on
an as-converted basis, to the amount of the dividend then proposed to be
declared and paid on the Junior Shares (the "Junior Dividends"), in each case
less the amount of any 12% Cumulative Dividends previously paid with respect to
such shares of the Series A Preferred and Series B Preferred. No Junior Shares
shall be redeemed, purchased or otherwise acquired by the Corporation so long as
any shares of Series A Preferred or Series B Preferred remain outstanding
without the unanimous written consent of all holders of shares of Series A
Preferred and Series B Preferred then outstanding. Holders of Series A Preferred
and of Series B Preferred shall not be entitled to any dividend, whether payable
in cash, property or stock, in excess of the greater of the Junior Dividends and
the 12% Cumulative Dividends accumulated with respect to such shares. Upon
conversion of any shares of Series A Preferred or of Series B Preferred, any
dividends accrued and payable with respect to such shares shall be forfeited and
the Corporation shall have no further obligation to the holder of such shares
for such accumulated dividends; provided that such forfeiture shall not apply to
any dividends as to which
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<PAGE>
the Corporation has breached its payment obligation. No interest shall accrue on
accumulated dividends prior to payment or forfeiture.
3. Liquidation Preference. In the event of any liquidation, dissolution, or
winding up of the Corporation, or any distribution of assets to its
shareholders, whether voluntary or involuntary, the holders of outstanding
shares of Series B Preferred shall be entitled to receive for each share
thereof, out of any legally available assets of the Corporation, in preference
to the holders of Junior Shares but on a pari passu basis with the holders of
outstanding shares of Series A Preferred, an amount equal to $10.00 (the
"Original Issue Price") per share of Series B Preferred, plus any accumulated
and unpaid dividends (including any amounts payable in connection with the
payment of Junior Dividends) as of the date of liquidation, dissolution, or
winding up of the Corporation (the "Series B Liquidation Preference Amount"),
before any distribution shall be made to the holders of Junior Shares and
contemporaneously with the payment of the liquidation preference of the Series A
Preferred. After payment of the full amount to which such holders of shares of
Series B Preferred are entitled, the holders of such shares shall have no right
to any remaining assets of the Corporation. In the event that assets so
distributable to holders of Series A Preferred and Series B Preferred are
insufficient to permit payment of the full preferential amount to which holders
of such shares are entitled, the entire assets legally available for
distribution to shareholders shall be distributed ratably among the holders of
Series A Preferred and Series B Preferred in proportion to the aggregate
preferential amount to which each such holder is entitled. In case the
Corporation shall desire to liquidate, dissolve, or wind up the Corporation, it
shall give notice of such liquidation, dissolution, or winding up to holders of
the shares of Series B Preferred by first class mail to the last address as may
appear in the Corporation's records not less than 30 calendar days prior to the
date fixed for liquidation, dissolution, or winding up. Each holder of Series B
Preferred shall have the option to deem a merger or other business combination
in which the Corporation is not the surviving entity, a sale of all or
substantially all of the Corporation's assets, a capital reorganization of the
Corporation, or a reclassification of the Common Shares to be a liquidation for
purposes of this Section 3.
4. Redemption. The shares of Series B Preferred may not be redeemed before
December 31, 2004. Thereafter, the holders of a majority of the Series B
Preferred outstanding may request that their shares of Series B Preferred be
redeemed at a price equal to the Series B Liquidation Preference Amount;
provided, however, that if at least $5,000,000 in principal amount of the 7%
Convertible Senior Subordinated Notes ("Dresdner Notes") issued to Dresdner
Kleinwort Benson Private Equity Partners, L.P.("Dresdner") remain outstanding,
and Dresdner and its affiliates continue to own at least a majority of the
outstanding principal amount of Dresdner Notes, then the Corporation may not
redeem shares of Series B Preferred without the consent of the holders of a
majority of the then outstanding principal amount of Dresdner Notes, and the
right of redemption provided herein is subject to the receipt of such consent.
Also after December 31, 2004, shares of Series B Preferred shall be redeemable
at the option of the Corporation, in whole but not in part, at a redemption
price equal to 105% of the Original Issue Price, plus all accumulated and unpaid
dividends (including any amounts payable in connection with the payment of
Junior Dividends); provided that (i) a registration statement covering the
resale of the Common Shares issuable upon conversion of the Series A Preferred
and the Series B Preferred is effective as of the date of the redemption, or is
no longer required to be effective, and (ii) the closing price of the Common
Shares as quoted on a national securities
-2-
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<PAGE>
exchange or market is greater than or equal to 200% of the Conversion Price (as
defined in Section 7) for 60 consecutive trading days prior to notice of
redemption. In case the Corporation shall desire to exercise its right to redeem
all of the outstanding shares of Series B Preferred, it shall give notice of
such redemption to holders of such shares by first class mail to the last
address as may appear in the Corporation's records not less than 30 calendar
days prior to the date fixed for redemption. Each notice shall specify the
redemption date and the redemption price at which shares are to be redeemed. The
holders of Series B Preferred shall continue to have the conversion rights
specified in Section 7 until their shares of Series B Preferred are in fact
redeemed. Any shares of Series B Preferred redeemed pursuant to this Section 4
shall be redeemed subject to the right of shares of Series A Preferred to
participate pari passu in such redemption, the right of redemption of such
shares being equal. Any partial redemption of shares of Series B Preferred shall
be conducted pro rata among the series. Any shares that are redeemed or
otherwise acquired by the Corporation shall be retired and canceled and shall be
restored to the status of authorized but unissued shares of Preferred Stock
without designation as to series, and may thereafter be issued, but not as
shares of the Series B Preferred.
5. Voting Rights. Except as otherwise required by law and herein, each
holder of Series B Preferred shall be entitled to a number of votes equal to the
number of full Common Shares into which that holder's shares of Series B
Preferred may be converted (eliminating any fractional shares that may result)
and the Series B Preferred shall vote together with the Common Shares and the
Series A Preferred as a single voting group, including with respect to the
election of directors other than the two directors which the holders of the
Series A Preferred have the right to elect as a separate voting group.
Notwithstanding the foregoing, if the number of Common Shares into which shares
of Series B Preferred can be converted is increased pursuant to a Conversion
Adjustment under Section 7(e)(vi) below, the voting entitlement set forth herein
shall not be correspondingly increased and the voting rights of Series B
Preferred shall be calculated as if such Conversion Adjustment had not occurred.
6. Additional Class Votes by Series A Preferred and Series B Preferred.
Except to the extent otherwise required by law, so long as at least 97,500
shares of Series B Preferred remain outstanding, the Corporation may not,
without the consent of holders (voting together as a single voting group with
the Series A Preferred so long as such series has comparable rights, or acting
by unanimous written consent) of at least a majority of the shares of Series B
Preferred then outstanding, do any of the following:
(a) authorize or issue any additional shares of Series A Preferred or
Series B Preferred or any class of Preferred Stock on a parity with or
having priority over the Series A Preferred or Series B Preferred as to the
payment of dividends or the distribution of assets upon the liquidation or
dissolution of the Corporation;
(b) amend the Corporation's Articles of Incorporation or bylaws so as
to alter any existing provision relating to the Series A Preferred or
Series B Preferred or the holders thereof or adversely alter any of the
rights granted to holders of Series A Preferred or Series B Preferred
(other than to effect a reverse split of the Common Shares or to increase
the number of authorized Common Shares);
(c) effect a change of control, merger, liquidation or
recapitalization of the capital stock of the Corporation;
-3-
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<PAGE>
(d) sell or lease 25 percent or more of its assets, except in the
ordinary course of business;
(e) enter into any agreement, including any loan or credit agreement,
capital lease or joint venture which would obligate the Corporation to
incur capital lease obligations plus bank and other outstanding
indebtedness (including any renewals, extensions or amendments to any
obligations which exist on the Original Issuance Date) aggregating in
excess of $35,000,000;
(f) declare or pay any dividends or make any distributions with
respect to its capital stock other than dividends payable on the Series A
Preferred or the Series B Preferred;
(g) purchase, redeem or otherwise acquire any of its equity securities
other than the Dresdner Notes (in accordance with their terms), the Series
A Preferred or the Series B Preferred;
(h) issue additional securities to the Corporation's employees or
directors, except for 3,370,123 Common Shares issuable upon the exercise of
options granted pursuant to plans existing on the Original Issuance Date;
(i) adopt, amend, or modify any stock option plan or employee stock
ownership plan;
(j) authorize or issue shares of any class or series of equity
security the issuance of which would result in an adjustment in, or require
a shareholder vote in order to adjust, the Conversion Price under Section
7(e);
(k) enter into any agreement or engage in any transaction which would
impair or reduce the rights and preferences of the holders of Series B
Preferred (except for increasing the number of authorized shares of Common
Stock);
(l) enter into any transaction (or series of transactions), including
loans, with any officer or director of the Company, or with their
affiliates and/or family members, involving $100,000 or more individually
in any one year or $500,000 or more in the aggregate in any one year,
except as may be contemplated by currently existing contractual
commitments;
(m) change the primary business of the Corporation as it is presently
conducted;
(n) acquire any stock or assets of any corporation or any other
business entity for an aggregate consideration in excess of $5,000,000;
(o) increase the authorized number of directors of the Corporation
above ten; and
(p) amend the Rights Agreement dated as of April 25, 1996, as amended
through the Original Issuance Date (the "Rights Agreement").
-4-
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<PAGE>
7. Conversion. Each share of Series B Preferred shall be convertible into
Common Shares as follows:
(a) Conversion Ratio. Shares of Series B Preferred shall be
convertible into such number of fully paid and nonassessable Common Shares
as is determined by dividing the Original Issue Price ($10.00 per share) by
the Conversion Price applicable to such share (determined as provided
below) in effect on the date the shares are surrendered for conversion. The
initial Conversion Price per share for shares of Series B Preferred shall
be $10.00 (the "Conversion Price"), subject to adjustment as set forth in
Section 7(e).
(b) Optional Conversion. Each share of Series B Preferred shall be
convertible into Common Shares, at the option of the holder thereof, at any
time after the Original Issuance Date, at the offices of the Corporation or
of any transfer agent for the Common Shares.
(c) Mandatory Conversion. Each share of Series B Preferred shall be
converted automatically into Common Shares at the then current Conversion
Price immediately upon the vote or written consent of 66.7% of the then
outstanding shares of Series B Preferred. Upon the occurrence of an event
specified in this Section 7(c), the outstanding shares of Series B
Preferred shall be converted whether or not the certificates representing
such shares are surrendered to the Corporation or its transfer agent. Upon
the conversion of the Series B Preferred, the holders thereof shall
surrender the certificate or certificates representing such shares, duly
endorsed, at the principal office of the Corporation or of any transfer
agent for the Common Shares or the holder shall notify the Corporation or
such transfer agent that such certificate has been lost, stolen, or
destroyed and execute an agreement satisfactory to the Corporation to
indemnify the Corporation against any loss incurred by it in connection
therewith. Thereupon, the Corporation shall promptly issue and deliver to
such holder, in the holder's name as shown on such surrendered certificate
or certificates, a certificate or certificates for the number of Common
Shares into which the surrendered shares of Series B Preferred were
converted.
(d) Mechanics of Conversion. Before any holder of Series B Preferred
will be entitled to convert shares of Series B Preferred into Common Shares
(except as set forth in Section 7(c)), such holder shall surrender the
certificate therefor, duly endorsed, at the office of the Corporation or
its transfer agent for the Common Shares, and shall give written notice by
mail, postage prepaid, to the Corporation, at its principal corporate
office, of the election to convert shares of Series B Preferred and shall
state in the notice the name in which the certificate for Common Shares
should be issued. In the event of a missing certificate, the holder may
notify the Corporation or such transfer agent that such certificate has
been lost, stolen, or destroyed and execute an agreement satisfactory to
the Corporation to indemnify the Corporation against any loss incurred by
it in connection therewith. The Corporation will promptly thereafter, issue
and deliver to such holder a certificate for the number of Common Shares to
which such holder shall be entitled after the conversion. The conversion
will be deemed to have been completed immediately prior to the close of
business on the date of the surrender of the shares of Series B Preferred
to be converted and the person entitled to receive the Common Shares
issuable upon such conversion shall be treated as the record holder of such
Common Shares as of such date.
-5-
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<PAGE>
(e) Conversion Price Adjustments. The Conversion Price of a share of
Series B Preferred shall be subject to adjustment from time to time as
described below. Capitalized terms used in this section but not otherwise
defined have the meanings given to them in the definitions in Section
7(e)(viii).
(i) Adjustments for Common Share Issuances Below Conversion
Price. Subject to shareholder approval if required at the time of
adjustment, the Conversion Price will be subject to adjustment if and
whenever on or after the Original Issuance Date, the Corporation
issues or sells or in accordance with Section 7(e)(i)(A) or 7(e)(i)(B)
is deemed to have issued or sold, any Common Shares for a
consideration per share which is less than the Conversion Price in
effect immediately prior to such issuance or sale. Upon such an event
and subject to shareholder approval if required, the adjusted
Conversion Price shall be determined by dividing (1) an amount equal
to the sum of (x) the product derived by multiplying the Conversion
Price in effect immediately prior to such issue or sale or deemed
issue or sale by the number of Common Shares Deemed Outstanding
immediately prior to such issue or sale or deemed issue or sale, plus
(y) the consideration, if any, received or deemed received by the
Corporation upon such issue or sale, by (2) the number of Common
Shares Deemed Outstanding immediately after such issue or sale or
deemed issue or sale; provided that no adjustment in the Conversion
Price will be made pursuant to this Section 7(e)(i) in connection with
any Exempt Issuance. If any adjustment to the Conversion Price is made
upon the issuance of Options or Convertible Securities and such
Options or Convertible Securities expire without being converted or
exercised, then the Conversion Price shall be readjusted to the amount
that would have been in effect had such Options or Convertible
Securities never been issued or sold; provided that no readjustment
provided for in Section 7(e) shall have the effect of increasing the
Conversion Price to an amount which exceeds the lower of (i) the
Conversion Price on the original adjustment date (immediately prior to
the adjustment), or (ii) the Conversion Price that results from any
actual issuance of additional Common Shares between the original
adjustment date and such readjustment date. Conversion Price
adjustments under this Section 7(e) shall be calculated based on the
following provisions in the event Options or Convertible Securities
are issued.
(A) Issuance of Options. If the Corporation in any manner grants
or sells any Options and the price per share for which Common Shares
are issuable upon the exercise of such Options, or upon the conversion
or exchange of any Convertible Securities issuable upon the exercise
of such Options, is less than the Conversion Price in effect
immediately prior to the time of the granting or sale of such Options,
then the maximum number of Common Shares issuable upon the exercise of
such Options, or upon conversion or exchange of the maximum amount of
such Convertible Securities issuable upon the exercise of such
Options, will be deemed to be outstanding and to have been issued and
sold by the Corporation at the time of the granting or sale of such
Options for such price per share. For purposes of this Section
(7)(e)(i)(A), the "price per share for which Common Shares are
issuable upon the exercise of such Options, or upon conversion or
exchange of any Convertible Securities issuable upon exercise of such
Options" will be determined by dividing (A) the total amount, if any,
received or receivable by the Corporation as consideration for the
granting or sale of such Options, plus the minimum aggregate amount of
additional consideration payable to the Corporation upon the exercise
of all such Options, plus in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any,
-6-
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<PAGE>
payable to the Corporation upon the issuance or sale of such
Convertible Securities and the conversion or exchange thereof, by (B)
the maximum number of Common Shares issuable upon the exercise of such
Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options. No further
adjustment of the Conversion Price will be made upon the actual
issuance of Common Shares or of such Convertible Securities upon the
exercise of such Options or upon the issuance of Common Shares upon
conversion or exchange of such Convertible Securities.
(B) Effect of Issuance of Convertible Securities. If the
Corporation in any manner issues or sells any Convertible Securities
and the price per share for which Common Shares are issuable upon the
conversion or exchange thereof is less than the Conversion Price in
effect immediately prior to the time of such issue or sale, then the
maximum number of Common Shares issuable upon conversion or exchange
of all such Convertible Securities will be deemed to be outstanding
and to have been issued and sold by the Corporation at the time of the
issuance or sale of such Convertible Securities for such price per
share. For the purposes of this Section (7)(e)(i)(B), the "price per
share for which Common Shares are issuable upon conversion or exchange
thereof" will be determined by dividing (A) the total amount received
or receivable by the Corporation as consideration for the issue or
sale of such Convertible Securities, plus the minimum aggregate amount
of additional consideration, if any, payable to the Corporation upon
the conversion or exchange thereof, by (B) the maximum number of
Common Shares issuable upon the exchange of all such Convertible
Securities. No further adjustment of the Conversion Price will be made
upon the actual issuance of such Common Shares upon conversion or
exchange of such Convertible Securities, and if any such issue or sale
of such Convertible Securities is made upon exercise of any Options
for which adjustments of the Conversion Price had been or are to be
made pursuant to other provisions of this Section (7)(e), no further
adjustment of the Conversion Price will be made by reason of such
issue or sale.
(C) Integrated Transaction. If Options or Convertible Securities
are issued in connection with the issue or sale of other securities of
the Corporation, together comprising one integrated transaction in
which no specific consideration is allocated to such Options or
Convertible Securities by the parties thereto, the Options or
Convertible Securities will be deemed to have been issued without
consideration.
(D) Calculation of Consideration Received. If any Common Shares,
Options, or Convertible Securities are issued or sold or deemed to
have been issued or sold for cash, then the consideration received
therefor will be deemed to be the net amount received by the
Corporation. If any Common Shares, Options, or Convertible Securities
are issued or sold for a consideration other than cash, then the
amount of the consideration other than cash received by the
Corporation will be the fair value of such consideration as determined
in good faith by the Board, except where such consideration consists
of securities, in which case the amount of consideration received by
the Corporation will be the Market Price thereof as of the date of
receipt. If any Common Shares, Options, or Convertible Securities are
issued to the owners of the non-surviving entity in connection with
any merger in which the Corporation is the surviving entity, then the
amount of consideration therefor will be deemed to be the fair value
of such portion of the net assets and business of the non-surviving
entity as is attributable to such Common Shares, Options or
Convertible Securities, as the case may be.
-7-
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<PAGE>
(ii) Record Date for Dividend or Split. In the event the
Corporation should fix a record date for (1) a split or subdivision of
the outstanding Common Shares or (2) a dividend or other distribution
payable in Common Shares or Options or Convertible Securities without
payment of any consideration, then, as of such record date the
Conversion Price shall be appropriately decreased so the number of
Common Shares issuable on conversion of each share of Series B
Preferred shall be increased in proportion to such increase in the
aggregate number of Common Shares outstanding or issuable with respect
to such Options or Convertible Securities.
(iii) Combinations. If the number of Common Shares outstanding is
decreased by a combination of the outstanding Common Shares, then, as
of the record date of such combination, the Conversion Price for the
Series B Preferred shall be appropriately increased so the number of
Common Shares issuable on conversion of each share of such series
shall be decreased in proportion to such decrease in outstanding
Common Shares.
(iv) Recapitalization, Consolidation, Merger, Etc. In case of any
change in the Common Shares through recapitalization,
reclassification, or other change in the capital structure of the
Corporation (other than a combination of shares or the issuance of
additional Common Shares by stock split or stock dividend) or through
any merger or consolidation which is effected such that holders of
Common Shares are entitled to receive stock, securities, cash, or
other assets in exchange for Common Shares, then, as a condition of
the change in capital structure or merger, provision shall be made so
that the holders of the Series B Preferred will have the right
thereafter to receive upon conversion the kind and amount of shares of
stock or other securities or property to which such holders would have
been entitled if, immediately prior to such change in capital
structure, such holder had held the number of Common Shares issuable
upon conversion of the Series B Preferred. In addition, appropriate
provision will be made with respect to the holder's rights and
interests to ensure that the provisions in this Section 7 will
thereafter be applicable in relation to any shares of stock,
securities, cash, or other assets thereafter deliverable upon the
conversion of Series B Preferred.
(v) Special Conversion Price Adjustment. If the Common Shares
issuable upon conversion of Series B Preferred ("Registrable
Securities") are not, within 120 days of the issuance of such shares
("Penalty Date"), subject to an effective registration statement filed
with the Securities and Exchange Commission ("SEC"), then the
Conversion Price of the Series B Preferred shall be reduced five
percent (5%), effective on the Penalty Date. Thereafter, for each
ninety (90) day period after the Penalty Date that such Common Shares
remain unregistered, the Conversion Price shall be reduced by an
additional five percent. No further Conversion Price adjustments
provided for in this Section 7(e)(v) shall be made once a registration
statement covering the Registrable Securities has been declared
effective by the SEC.
(vi) Reset Provision. In the event that the Corporation does not
achieve (i) net sales of at least $135,000,000 and an operating loss,
if any, of less than $1,000,000 for fiscal year 1999 and (ii) net
sales of at least $180,000,000 and operating income of at least
$18,000,000 for fiscal year 2000 (each a "Performance Target"), then
the Conversion Price promptly following the determination of a failure
to achieve a Performance Target based on the audited financial
statements of the Corporation, shall be reduced to an amount which
will allow all outstanding shares of Series B Preferred to be
converted as of the date of such
-8-
Page 85 of 122 Pages
<PAGE>
adjustment into 1,300,000 Common Shares ("Conversion Adjustment"),
subject to any adjustments made to the Conversion Price prior to a
Conversion Adjustment. If a Conversion Adjustment occurs, the
Corporation will provide notice to each holder of Series B Preferred
setting forth such adjustment, the calculation of the new Conversion
Price for the Series B Preferred, and in reasonable detail the facts
upon which such Conversion Adjustment is based.
(vii) Protection Against Dilution. If any event occurs as to
which, in the opinion of the Board, the other provisions of this
Section 7(e) are not strictly applicable or would not fairly protect
the rights of the holders of Series B Preferred in accordance with the
intent of these anti-dilution provisions, then the Board shall make an
adjustment in accordance with the intent of these provisions to
protect the holders' rights in the Series B Preferred, but in no event
shall any adjustment have the effect of increasing the Conversion
Price (except in the case of a combination of Common Shares described
in Section 7(e)(iii)).
(viii) Definitions for Section 7(e).
"Common Shares Deemed Outstanding" means, at any given time, the
number of Common Shares actually outstanding at such time, plus the number
of Common Shares that would be issued if all outstanding Options and
Convertible Securities exercisable for Common Shares or for other Options
or Convertible Securities were exercised or converted regardless of whether
or not the applicable securities are actually exercisable at such time, but
excluding any Common Shares issuable upon conversion of the Series B
Preferred or any outstanding shares of Series A Preferred.
"Convertible Securities" means any securities or other rights to
acquire securities directly or indirectly convertible into or exchangeable
for Common Shares.
"Exempt Issuance" means the issuance of any Common Shares or other
securities (i) upon the exercise or conversion of Options or other
securities granted pursuant to plans existing on the Original Issuance
Date, (ii) upon exercise of Options granted or to be granted after the
Original Issuance Date under any employee benefit plan or plans adopted by
the Board, provided that the exercise price is not less than the fair
market value on the date of grant, (iii) upon conversion of outstanding
shares of Series A Preferred or Series B Preferred, or an adjustment to the
Conversion Price or the conversion price of the Series A Preferred, (iv)
which are restricted securities subject to a substantial risk of forfeiture
issued pursuant to benefit plans adopted by the Board, (v) pursuant to
employee benefit plans qualified under Section 401(k) or 423 of the
Internal Revenue Code, (vi) to satisfy semi-annual interest obligations to
holders of the Dresdner Notes outstanding on the Original Issuance Date, or
(vii) pursuant to the Rights Agreement, including the Rights contemplated
thereby .
"Market Price" of any security means the average of the closing prices
of such security's sales on all national securities exchanges or markets on
which such security may at the time be listed, or, if there has been no
sale on any such exchange or market on any day, or, if on any day such
security is not so listed, then the representative bid price of such
security quoted in the NASDAQ System as of 4:00 p.m., New York time, on
such day, or, if on any day such security is not quoted in the NASDAQ
System, then the highest bid price of such security on such day in the
domestic over-the-counter market as reported by the National Quotation
-9-
Page 86 of 122 Pages
<PAGE>
Bureau, Incorporated, or any similar successor organization, in each such
case, averaged over a period of five days consisting of the day as of which
"Market Price" is being determined and the four consecutive business days
prior to such day. If at any time such security is not listed on any
national securities exchange or market or quoted in the NASDAQ System or
the over-the-counter market, then the "Market Price" will be the fair value
thereof determined in good faith by the Board.
"Options" means any securities or other rights to subscribe for or
purchase, directly or indirectly, Common Shares or Convertible Securities.
(f) Notice of Conversion Price Adjustments. When an adjustment or
readjustment of the Conversion Price is required pursuant to Section 7(e),
the Corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms of this Section 7 and prepare and
furnish to each holder of Series B Preferred a notice setting forth such
adjustment or readjustment and showing in reasonable detail the facts upon
which such adjustment or readjustment is based.
(g) Reservation of Shares. The Corporation shall at all times reserve
and keep available from its authorized but unissued Common Shares such
number of Common Shares as shall be sufficient to effect the conversion of
all outstanding shares of Series B Preferred, including pursuant to Section
7(e)(vi) hereof, and if at any time the number of authorized but unissued
Common Shares shall not be sufficient to effect the conversion of all then
outstanding shares of Series B Preferred, the Corporation will take such
corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued Common Shares to such number of shares
as shall be sufficient for such purposes, including, without limitation,
engaging in reasonable efforts to obtain the requisite shareholder approval
of any necessary amendment to the Corporation's Articles of Incorporation.
(h) No Fractional Shares. No fractional shares shall be issued upon
the conversion of shares of Series B Preferred, and the number of Common
Shares to be issued shall be rounded to the nearest whole share.
8. Notices. Any notice required by the provisions of Section 7 to be given
to the holders of shares of Series B Preferred shall be deemed given if
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at the holder's address appearing on the books of the
Corporation. A holder of shares of Series B Preferred may change such address by
written notice to the Corporation.
-10-
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<PAGE>
EXHIBIT 3
to
SCHEDULE 13D
------------------------------------
GARDENBURGER, INC.
INVESTOR RIGHTS AGREEMENT
April 14, 1999
------------------------------------
Page 88 of 122 Pages
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. Definitions and Accounting Terms.....................................1
1.1 Certain Defined Terms..........................................1
1.2 Accounting Terms...............................................4
2. Covenants of the Company.............................................4
2.1 Affirmative Covenants of the Company Other Than Reporting
Requirements...................................................4
2.2 Reporting Requirements of the Company..........................5
2.3 Inspection of Property.........................................6
2.4 Confidentiality................................................6
3. Registration.........................................................7
3.1 Mandatory Registration.........................................7
3.2 Conversion by the Company......................................8
3.3 Piggyback Registration.........................................8
3.4 Expenses of Registration.......................................9
3.5 Further Obligations of the Company.............................9
3.6 Further Information Furnished by Holders......................11
3.7 Indemnification...............................................11
3.8 Rule 144 Reporting............................................13
3.9 Transfer of Registration Rights...............................14
3.10 Subsequent Registration Rights................................14
3.11 `Market Stand-off'Agreement...................................14
3.12 Delay of Registration.........................................14
4. Miscellaneous.......................................................15
4.1 Governing Law.................................................15
4.2 Survival......................................................15
4.3 Successors and Assigns........................................15
4.4 Entire Agreement..............................................15
4.5 Amendments; Waivers...........................................15
4.6 Notices.......................................................15
4.7 Attorneys'Fees................................................16
4.8 Delays or Omissions...........................................16
4.9 Severability of this Agreement................................16
4.10 Titles and Subtitles..........................................16
4.11 Counterparts..................................................16
4.12 Gender........................................................16
-i-
Page 89 of 122 Pages
<PAGE>
EXHIBITS
Initial Exhibit
------- -------
A Schedule of Investors
-ii-
Page 90 of 122 Pages
<PAGE>
GARDENBURGER, INC.
INVESTOR RIGHTS AGREEMENT
-------------------------
THIS INVESTOR RIGHTS AGREEMENT ("Agreement") is made as of the 14th day of
April, 1999, by and among GARDENBURGER, INC., an Oregon corporation (the
"Company"), and the investors identified on Exhibit A attached hereto
(collectively, the "Investors").
R E C I T A L S:
----------------
A. The Company and the Investors have entered into the Stock Purchase
Agreement dated March 29, 1999 (the "Stock Purchase Agreement"), pursuant to
which the Investors have purchased an aggregate of two million seven hundred
sixty two thousand five hundred (2,762,500) shares of Series A Convertible
Preferred Stock of the Company and four hundred eighty seven thousand five
hundred (487,500) shares of Series B Convertible Preferred Stock of the Company.
B. As a condition to the Investors' obligations under the Stock Purchase
Agreement, the Company desires to grant the Investors certain rights as set
forth herein.
A G R E E M E N T:
------------------
Now, therefore, in consideration of the foregoing premises and the mutual
covenants set forth herein, the parties agree as follows:
1. Definitions and Accounting Terms.
1.1 Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Agreement" means this Investor Rights Agreement as from time to time
amended and in effect between the parties.
"Board" or "Board of Directors" means the board of directors of the
Company as constituted from time to time.
"Common Stock" includes (a) the Company's Common Stock, and (b) any
other securities into which or for which any of the Company's Common Stock
may be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
"Directors" means the members from time to time of the Board of
Directors.
"Holder" shall mean any person who holds Registrable Securities or the
rights to hold Registrable Securities which have not been sold to the
public, or any Person to whom any
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Holder shall sell or transfer pursuant to Section 3.9 of this Agreement its
Registrable Securities and expressly transfer its rights hereunder.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Potential Material Event" means any of the following: (a) the
possession by the Company of material information not ripe for disclosure
in a registration statement, which shall be evidenced by determinations in
good faith by the Board of Directors of the Company that disclosure of such
information in the registration statement would be detrimental to the
business and affairs of the Company; or (b) any material engagement or
activity by the Company which would, in the good faith determination of the
Board of Directors of the Company, be adversely affected by disclosure in a
registration statement at such time, which determination shall be
accompanied by a good faith determination by the Board of Directors of the
Company that the registration statement would be materially misleading
absent the inclusion of such information.
"Preferred Holder" means the Investors and any Person to whom an
Investor shall sell or transfer its Shares pursuant to the terms of this
Agreement and expressly transfer its rights hereunder whether or not Shares
are converted.
"Preferred Holders Designees" means the two members of the Board of
Directors of the Company elected by the Preferred Holders, in accordance
with the Company's Restated Articles.
"Preferred Stock" means the Shares.
"Registrable Securities" shall mean and include all shares of Common
Stock issued or issuable upon conversion of the Preferred Stock or any
security issued in exchange or replacement for the Preferred Stock;
provided, however, that (a) Registrable Securities shall cease to be
Registrable Securities upon the consummation of any sale of such securities
pursuant to a registration statement or Rule 144 under the Securities Act
and (b) shall cease to be Registrable Securities if sold in a transaction
in which rights under Article 3 of this Agreement are not assigned.
"Register", "registered" and "registration" refer to a registration
effected through the preparation and filing of a registration statement or
similar document in compliance with the Securities Act and the declaration
or ordering of effectiveness of such registration statement or document.
"Registration Expenses" shall mean all expenses incurred by the
Company in effecting any registration pursuant to this Agreement,
including, without limitation, all registration, qualification and filing
fees, printing expenses, escrow fees, fees and disbursements of counsel for
the Company, blue sky fees and expenses, the expense of any special audits
incident to or required by any such registration and the reasonable fees
and disbursements of one
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special legal counsel to represent all of the Holders together (but
excluding the compensation of regular employees of the Company which shall
be paid in any event by the Company).
"Registration Statement" means a registration statement on Form S-3
(if prepared pursuant to Section 3.1) or any other appropriate form (if
prepared pursuant to Section 3.3) prepared and filed with the Securities
and Exchange Commission by the Company pursuant to Section 3 of this
Agreement.
"Restated Articles" means the Company's Restated Articles of
Incorporation, as amended, as of the Closing Date as defined in the Stock
Purchase Agreement.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Securities
and Exchange Commission thereunder, all as the same shall be in effect at
the time.
"Securities and Exchange Commission" means the United States
Securities and Exchange Commission including any governmental body or
agency succeeding to the functions thereof.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended, or any similar Federal statute, and the rules and regulations
of the Securities and Exchange Commission thereunder, all as the same shall
be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the Registrable
Securities.
"Series A Stock" means the Series A Convertible Preferred Stock of the
Company.
"Series B Stock" means the Series B Convertible Preferred Stock of the
Company.
"Shares" means the two million seven hundred sixty two thousand five
hundred (2,762,500) shares of Series A Stock and four hundred eighty seven
thousand five hundred (487,500) shares of Series B Stock purchased by the
Investors pursuant to the Stock Purchase Agreement and any securities of
the Company which the Investors or Preferred Holders shall be entitled to
receive, or shall have received, because of the Investors' ownership of
such securities, such as additional securities received upon stock
dividends, stock splits, recapitalizations and the like.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business
entity of which (i) if a corporation, a majority of the total voting power
of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a
combination thereof, or (ii) if a limited liability company,
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partnership, association or other business entity, a majority of the
partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof,
a Person or Persons shall be deemed to have a majority ownership interest
in a limited liability company, partnership, association or other business
entity if such Person or Persons shall be allocated a majority of limited
liability company, partnership, association or other business entity gains
or losses or shall be or control any managing director or general partner
of such limited liability company, partnership, association or other
business entity. Where not otherwise indicated, the term "Subsidiary"
refers to a Subsidiary of the Company.
1.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistently applied, and all financial data submitted pursuant
to this Agreement shall be prepared in accordance with such principles.
2. Covenants of the Company.
2.1 Affirmative Covenants of the Company Other Than Reporting
Requirements. Except to the extent the following covenants and provisions
of this Section 2.1 are waived in any instance by a majority of the
Preferred Holders, the Company covenants and agrees that so long as not
less than three hundred fifty thousand (350,000) shares of the Preferred
Stock outstanding as of the date hereof remain outstanding, it will perform
and observe the following covenants and provisions:
(a) Meeting of Directors and Committees. The Company's Board of
Directors shall hold meetings at least quarterly.
(b) Indemnification. The Company shall at all times maintain
provisions in its Bylaws or Articles exculpating and indemnifying all
Directors from and against liability to the maximum extent permitted
under the laws of the state of its incorporation.
(c) Expenses of Directors. The Company shall promptly reimburse
in full the Preferred Holders Designees for all of his reasonable
out-of-pocket expenses incurred in attending each meeting of the Board
of Directors of the Company or any committee thereof.
(d) Shareholder Approval. The Company shall promptly seek
shareholder approval for any adjustment to the conversion price of the
Series A Stock or Series B Stock required under the terms of the
Restated Articles, including, but not limited to, the preparation of
any proxy statement which shall include, subject to the exercise of
fiduciary obligations, a unanimous recommendation by the Board to
approve any such adjustments.
(e) Available Shares. The Company shall have at all times
authorized and reserved for issuance, free from preemptive rights,
shares of Common Stock sufficient to yield the number of shares of
Common Stock issuable at conversion as may be required to satisfy the
conversion rights of the Investors pursuant to the terms and
conditions of the Preferred Stock, including the maximum conversion of
Series B Stock under the Restated Articles.
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2.2 Reporting Requirements of the Company. Until less than three
hundred fifty thousand (350,000) shares of Preferred Stock is outstanding,
the Company will furnish the following to Rosewood Capital III, L.P. and
Farallon Capital Management LLC, so long as such Investor (or their
affiliates) continues to own shares of Preferred Stock:
(a) Monthly Reports. As soon as available but in any event within
30 days after the end of each monthly accounting period in each fiscal
year, unaudited consolidating and consolidated statements of income of
the Company and its Subsidiaries for such monthly period and for the
period from the beginning of the fiscal year to the end of such month,
and unaudited consolidating and consolidated balance sheets of the
Company and its Subsidiaries as of the end of such monthly period,
setting forth in each case comparisons to the Company's annual budget
and to the corresponding period in the preceding fiscal year, and all
such statements shall be prepared in accordance with generally
accepted accounting principles, consistently applied, subject to the
absence of footnote disclosures and to normal year-end adjustments,
and shall be certified by the Company's chief financial officer.
(b) No Default. Accompanying the financial statements referred to
in subsection 2.2(a) is an officer's certificate stating that there is
no event of default in existence and that neither the Company nor any
of its Subsidiaries is in default under any of its other material
agreements or, if any event of default or any such default exists,
specifying the nature and period of existence thereof and what actions
the Company and its Subsidiaries have taken and propose to take with
respect thereto.
(c) Annual Reports. Within 90 days after the end of each fiscal
year, consolidating and consolidated statements of income and cash
flows of the Company and its Subsidiaries for such fiscal year, and
consolidating and consolidated balance sheets of the Company and its
Subsidiaries as of the end of such fiscal year, all prepared in
accordance with generally accepted accounting principles, consistently
applied, setting forth in each case comparisons to the Company's
annual budget and to the preceding fiscal year, and accompanied by (a)
with respect to the consolidated portions of such statements, an
opinion of an independent accounting firm of recognized national
standing, (b) a certificate from such accounting firm, addressed to
the Company's board of directors, stating that in the course of its
examination nothing came to its attention that caused it to believe
that there was an event of default in existence or that there was any
other default by the Company or any Subsidiary under any material
agreement to which the Company or any Subsidiary is a party or, if
such accountants have reason to believe any event of default or other
default by the Company or any Subsidiary exists, a certificate
specifying the nature and period of existence thereof, and (c) a copy
of such firm's annual management letter to the board of directors.
(d) Auditor Reports. Promptly upon receipt thereof, any
additional reports, management letters or other detailed information
concerning significant aspects of the Company's or any Subsidiary's
operations or financial affairs given to the Company or any Subsidiary
by its independent accountants (and not otherwise contained in other
materials provided hereunder).
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(e) Annual Budget. At least 30 days but not more than 90 days
prior to the beginning of each fiscal year, an annual budget prepared
on a monthly basis for the Company and its Subsidiaries for such
fiscal year (displaying anticipated statements of income and cash
flows and balance sheets), and promptly upon preparation thereof any
other significant budgets prepared by the Company or any Subsidiary
and any revisions of such annual or other budgets, and within 30 days
after any monthly period in which there is a material adverse
deviation from the annual budget, an officer's certificate explaining
the deviation and what actions the Company and its Subsidiaries have
taken and propose to take with respect thereto.
(f) Default Notice. Promptly (but in any event within five
business days) after the discovery or receipt of notice of any event
of default or any default under any material agreement to which the
Company or any of its Subsidiaries is a party or any other material
adverse change, event or circumstance affecting the Company or any
Subsidiary, an officer's certificate specifying the nature and period
of existence thereof and what actions the Company and its Subsidiaries
have taken and propose to take with respect thereto.
(g) Stockholder Information. Within two days after transmission
thereof, copies of all financial statements, proxy statements, reports
and any other general written communications which the Company sends
to its stockholders and copies of all registration statements and all
regular, special or periodic reports which it files, or any of its
officers or directors file with respect to the Company, with the
Securities and Exchange Commission or with any securities exchange on
which any of its securities are then listed, and copies of all press
releases and other statements made available generally by the Company
to the public concerning material developments in the Company's and
its Subsidiaries' businesses.
(h) Other Information. With reasonable promptness, such other
information and financial data concerning the Company and its
Subsidiaries as any Investor may reasonably request. Any financial
statements provided in accordance with Section 2.2 shall be true and
correct in all material respects as of the dates and for the periods
stated therein, subject in the case of the unaudited financial
statements to changes resulting from normal year-end adjustments.
2.3 Inspection of Property. The Company shall permit any
representatives designated by any Preferred Holder of at least 25% of the
Preferred Stock originally issued, upon reasonable notice and during normal
business hours and at such other times as any such holder(s) may reasonably
request, to (i) visit and inspect any of the properties of the Company and
its Subsidiaries, (ii) examine the corporate and financial records of the
Company and its Subsidiaries and make copies thereof or extracts therefrom
and (iii) discuss the affairs, finances and accounts of the Company with
its directors, officers, and, upon notice to the Company, its independent
accountants.
2.4 Confidentiality. With respect to the information and other
material furnished under or in connection with this Agreement or any
Ancillary Agreement (whether furnished before, on or after the date hereof)
which constitutes or contains non-public business, financial or other
information of the Company ("Non-Public Information"), each Purchaser
covenants that it will use due care to prevent its officers, directors,
employees, counsel,
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accountants and other representatives from (x) disclosing any Non-Public
Information to Persons other than Purchaser's authorized employees,
counsel, accountants, financial advisors, shareholders, members, partners
and limited partners or (y) using Non-Public Information in any manner that
would constitute a violation of federal or state securities laws; provided,
however, that the Purchaser may disclose or deliver any Non-Public
Information if the Purchaser is advised by its counsel that such disclosure
or delivery is required by law, regulation or judicial or administrative
order. The Company shall notify the Purchasers of any restricted trading
periods under the Company's insider trading policy in effect from time to
time. For purposes of this Section 2.4, "due care" means at least the same
level of care that the Purchaser would use to protect the confidentiality
of its own sensitive or proprietary information, and this obligation shall
survive termination of this Agreement. A Purchaser shall not be prohibited
from transferring its beneficial interest in the Shares and after
reasonable notice to the Company, disclosing any Non-Public Information to
any Person who agrees to be bound by the provisions of this Section 2.4.
3. Registration.
3.1 Mandatory Registration. The Company shall prepare and file with
the Securities and Exchange Commission, no later than May 31, 1999, a
Registration Statement registering for resale by the Holders a sufficient
number of shares of Common Stock for the Preferred Holders to sell the
Registrable Securities into which the Preferred Stock would be convertible
at the time of filing of such Registration Statement (assuming for such
purposes that all shares of Preferred Stock had been converted into Common
Stock in accordance with their terms, including, with respect to the Series
B Stock, that the Company did not achieve the performance targets set forth
in the Designation of Terms of the Series B Stock attached to the Company's
Restated Articles). The Registration Statement (i) shall include only the
Registrable Securities and (ii) shall also state that, in accordance with
Rule 416 under the Securities Act, it also covers such indeterminate number
of additional shares of Common Stock as may become issuable upon conversion
of the Preferred Stock resulting from adjustment in the conversion price or
to prevent dilution resulting from stock splits or stock dividends. The
Company will use its reasonable best efforts to cause such Registration
Statement to be declared effective no later than the earlier of (x) five
(5) days after notice by the Securities and Exchange Commission that it may
be declared effective or (y) one hundred twenty (120) days after the
Closing Date as defined in the Stock Purchase Agreement (the "Required
Effective Date"). If at any time the number of shares of Common Stock into
which the Preferred Stock may be converted exceeds the aggregate number of
shares of Common Stock then registered, the Company shall either (i) amend
the Registration Statement filed by the Company pursuant to the preceding
provisions of this Section 3.1, if such Registration Statement has not been
declared effective by the Securities and Exchange Commission at that time,
to register all shares of Common Stock into which the Preferred Stock may
currently or in the future be converted, or (ii) if such Registration
Statement has been declared effective by the Securities and Exchange
Commission at that time, file with the Securities and Exchange Commission
an amendment to or an additional Registration Statement to register the
shares of Common Stock into which the Preferred Stock may currently or in
the future be converted that exceed the aggregate number of shares of
Common Stock already registered.
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3.2 Conversion by the Company. The Company's Restated Articles shall
provide that if the Registration Statement covering the Registrable
Securities is not effective by the Required Effective Date, then the
conversion price of the Preferred Stock shall be reduced five percent (5%)
for each ninety (90) day period or portion thereof after the Required
Effective Date that the Registration Statement is not effective; provided,
that this provision in the Restated Articles shall expire if the
Registration Statement covering the Registrable Securities is effective by
the Required Effective Date.
3.3 Piggyback Registration.
(a) Notice of Registration. If, at any time or from time to time
the Company shall determine to register any of its securities for its
own account or for the account of any person or shareholder in
connection with an offering of its securities to the general public
for cash on a form which would permit the registration of Registrable
Securities, the Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in
any underwriting involved therein, all the Registrable Securities
specified in a written request or requests, made within twenty
(20) days after mailing or personal delivery of such written
notice from the Company, by any Holders, except as set forth in
Section 3.3(b).
(b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting,
the Company shall so advise the Holders as a part of the written
notice given pursuant to Section 3.3(a)(i). In such event, the right
of any Holder to registration pursuant to this Section 3.3 shall be
conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to
distribute their Registrable Securities through such underwriting
shall (together with the Company) enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for
such underwriting by the Company. Notwithstanding any other provision
of this Section 3.3, if the underwriter determines that marketing
factors require a limitation of the number of shares to be
underwritten, the Company shall so advise all Holders whose securities
would otherwise be registered and underwritten pursuant hereto, and
the number of shares of Registrable Securities that may be included in
the registration and underwriting determined pursuant to the following
priority: (i) shares to be offered by the holders of the 7%
Convertible Senior Subordinated Notes dated March 27, 1998 (the
"Dresdner Notes"), (ii) shares to be offered by the holders of Series
A Preferred and Series B Preferred, on a pro rata basis in proportion
to the relative number of shares requested to be included by them and
(iii) shares of Common Stock to be offered by holders other than the
holders of the Dresdner Notes and/or the Series A Preferred and Series
B Preferred; or, if so determined by the underwriter, all Registrable
Securities shall be excluded from each registration and underwriting.
If any Holder disapproves of the terms of any such underwriting, the
Holder may elect to withdraw therefrom by written notice to the
Company and the underwriter. Any Registrable Securities excluded or
withdrawn from such underwriting shall
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not be transferred in a public distribution prior to ninety (90) days
after the effective date of such registration statement.
3.4 Expenses of Registration. All Registration Expenses incurred in
connection with any registration, filing, qualification or compliance
pursuant to Sections 3.1 or 3.3 shall be borne by the Company. Unless
otherwise stated, all Selling Expenses relating to securities registered by
the Holders shall be borne by the holders of such securities pro rata on
the basis of the number of shares so registered.
3.5 Further Obligations of the Company. For purposes of Sections
3.5(a) and (b), the term "Registration Statement" specifically refers to
the Registration Statement required by Section 3.1. For purposes of
Sections 3.5(c) and (d), the term "Registration Statement" specifically
refers to the Registration Statement required by Section 3.3. For all other
subsections in this Section 3.5, the term "Registration Statement" refers
to the Registration Statement required by either Sections 3.1 or 3.3, as
the case may be. Whenever required under this Section 3 to effect the
registration of any Registrable Securities, the Company shall, as
expeditiously and as reasonably possible:
(a) Use its reasonable efforts to keep the Registration Statement
effective at all times until the date the Holders no longer own any of
the Registrable Securities (the "Registration Period"), which
Registration Statement (including any amendments or supplements
thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading.
(b) Prepare and file with the Securities and Exchange Commission
such amendments (including post-effective amendments) and supplements
to the Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary to keep the
Registration Statement effective at all times during the Registration
Period, and, during the Registration Period, comply with the
provisions of the Securities Act with respect to the disposition of
all Registrable Securities of the Company covered by the Registration
Statement until such time as all of such Registrable Securities have
been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in the
Registration Statement.
(c) Prepare and file with the Securities and Exchange Commission
a Registration Statement with respect to such Registrable Securities
and use its best efforts to cause such Registration Statement to
become effective and, upon the request of the Holders of a majority of
the Registrable Securities registered thereunder, keep such
Registration Statement effective for up to one hundred twenty (120)
days or until the Holder or Holders have completed the distribution
described in the Registration Statement, whichever first occurs.
(d) Prepare and file with the Securities and Exchange Commission
such amendments and supplements to such Registration Statement and the
prospectus used in connection with such Registration Statement as may
be necessary to comply with the provisions
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of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement.
(e) The Company shall permit one or more counsel designated by
the Investors to review the Registration Statement and all amendments
and supplements thereto a reasonable period of time (but not less than
three (3) business days) prior to their filing with the Securities and
Exchange Commission, and not file any document in a form to which such
counsel reasonably objects.
(f) Furnish to each Investor whose Registrable Securities are
included in the Registration Statement and its legal counsel
identified to the Company, (i) promptly after the same is prepared and
publicly distributed, filed with the Securities and Exchange
Commission, or received by the Company, one (1) copy of the
Registration Statement, each preliminary prospectus and prospectus,
and each amendment or supplement thereto, and (ii) such number of
copies of a prospectus, and all amendments and supplements thereto and
such other documents, as such Investor may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by
such Investor.
(g) As promptly as practicable after becoming aware thereof,
notify each Investor of the happening of any event of which the
Company has knowledge, as a result of which the prospectus included in
the Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and use its best efforts promptly to prepare a supplement
or amendment to the Registration Statement or other appropriate filing
with the Securities and Exchange Commission to correct such untrue
statement or omission, and deliver a number of copies of such
supplement or amendment to each Investor as such Investor may
reasonably request.
(h) As promptly as practicable after becoming aware thereof,
notify each Investor who holds Registrable Securities being sold (or,
in the event of an underwritten offering, the managing underwriters)
of the issuance by the Securities and Exchange Commission of any
notice of effectiveness or any stop order or other suspension of the
effectiveness of the Registration Statement at the earliest possible
time.
(i) Notwithstanding the foregoing, if at any time or from time to
time after the date of effectiveness of the Registration Statement,
the Company notifies the Investors of the existence of a Potential
Material Event, the Investors shall not offer or sell any Registrable
Securities, or engage in any other transaction involving or relating
to the Registrable Securities, from the time of the giving of notice
with respect to a Potential Material Event until such Investor
receives written notice from the Company that such Potential Material
Event either has been disclosed to the public or no longer constitutes
a Potential Material Event; provided, however, that the Company may
not so suspend the right to such holders of Registrable Securities for
more than two thirty (30) day periods in the aggregate during any
12-month period with at least a ten (10) business day interval between
such periods, during the periods the Registration Statement is
required to be in effect.
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(j) Use its reasonable efforts to obtain and maintain designation
of all the Registrable Securities covered by the Registration
Statement on the "National Market" of the National Association of
Securities Dealers Automated Quotations System ("NASDAQ") within the
meaning of Rule 11Aa2-1 of the Securities and Exchange Commission
under the Securities Exchange Act, and the quotation of the
Registrable Securities on The NASDAQ National Market; or if, despite
the Company's reasonable efforts to satisfy the preceding clause, the
Company is unsuccessful in doing so, to secure NASDAQ/OTC Bulletin
Board authorization and quotation for such Registrable Securities and,
without limiting the generality of the foregoing, to arrange for at
least two market makers to register with the National Association of
Securities Dealers, Inc. as such with respect to such Registrable
Securities.
(k) Provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective
date of the Registration Statement.
(l) Cooperate with the Investors who hold Registrable Securities
being offered to facilitate the timely preparation and delivery of
certificates for the Registrable Securities to be offered pursuant to
the Registration Statement and enable such certificates for the
Registrable Securities to be in such denominations or amounts as the
case may be, as the Investors may reasonably request, and, within
three (3) business days after a Registration Statement which includes
Registrable Securities is ordered effective by the Securities and
Exchange Commission, the Company shall deliver, and shall cause legal
counsel selected by the Company to deliver, to the transfer agent for
the Registrable Securities (with copies to the Investors whose
Registrable Securities are included in such Registration Statement) an
appropriate instruction and opinion of such counsel.
(m) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering.
Each Holder participating in such underwriting shall also enter into
and perform his or its obligations under such agreement.
(n) Take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of the Registrable Securities
pursuant to the Registration Statement.
3.6 Further Information Furnished by Holders. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to
this Section 3 that the Holders shall furnish to the Company such
information regarding themselves, the Registrable Securities held by them,
and the intended method of disposition of such securities as shall be
required to effect the registration of their Registrable Securities.
3.7 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 3:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, each of the officers, directors,
partners, legal counsel and other agents of each Holder, any
underwriter (as defined in the Securities Act) for such Holder and
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each person, if any, who controls such Holder or underwriter within
the meaning of the Securities Act or Securities Exchange Act, against
any losses, claims, damages or liabilities (joint or several) to which
they may become subject under the Securities Act, the Securities
Exchange Act or other federal or state law, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or
alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto;
(ii) the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements
therein not misleading; or (iii) any violation or alleged violation by
the Company of the Securities Act, the Securities Exchange Act, any
state securities law or any rule or regulation promulgated under the
Securities Act, the Securities Exchange Act or any state securities
law; and the Company will reimburse each such Holder, officer,
director, partner or agent, underwriter or controlling person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in
this Section 3.7(a) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability, or action if such settlement
is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any
such case for any such loss, claim, damage, liability, or action to
the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by
any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each Holder will, if
Registrable Securities held by such person are included in the
securities as to which such registration, qualification or compliance
is being effected, indemnify and hold harmless the Company, each of
its directors and officers, each legal counsel and independent
accountant of the Company, each person, if any, who controls the
Company within the meaning of the Securities Act, each underwriter
(within the meaning of the Securities Act) of the Company's securities
covered by such a registration statement, any person who controls such
underwriter, and any other Holder selling securities in such
registration statement and each of its directors, officers, partners
or agents or any person who controls such Holder, against any losses,
claims, damages, or liabilities (joint or several) to which the
Company or any such underwriter, other Holder, director, officer,
partner or agent or controlling person may become subject under the
Securities Act, the Securities Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in connection
with such registration, and each such Holder will reimburse any legal
or other expenses reasonably incurred by the Company or any such
underwriter, other Holder, officer, director, partner or agent or
controlling person in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this Section 3.7(b) shall
not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the
consent of the Holder which consent shall not be unreasonably
withheld, and provided, further, that the liability of any
-12-
Page 102 of 122 Pages
<PAGE>
Holder for indemnification pursuant to this Section 3.7(b) shall not
exceed the net cash proceeds from the offering received by such
Holder.
(c) Promptly after receipt by an indemnified party under this
Section 3.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under
this Section 3.7, notify the indemnifying party in writing of the
commencement thereof, and the indemnifying party shall have the right
to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof with counsel mutually satisfactory to
the parties; provided, however, that an indemnified party shall have
the right to retain its own counsel, with the fees and expenses to be
paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between
such indemnified party and any other party represented by such counsel
in such proceeding. The failure of any indemnified party to notify an
indemnifying party within a reasonable time of the commencement of any
such action, if prejudicial to its ability to defend such action,
shall relieve such indemnifying party of liability to the indemnified
party under this Section 3.7 only to the extent that such failure to
give notice shall materially prejudice the indemnifying party in the
defense of any such claim or any such litigation, but the omission so
to notify the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this
Section 3.7.
(d) Notwithstanding the conditions provided in this Section 3,
the Holders shall not be required to enter into an underwriting
agreement that contains indemnification and contribution provisions
which, in the sole discretion of the Holder, materially differ from
those contained in this Section 3.7.
3.8 Rule 144 Reporting. With a view to making available to the Holders
the benefits of Rule 144 promulgated under the Securities Act and any other
rule or regulation of the Securities and Exchange Commission that may at
any time permit a Holder to sell securities of the Company to the public
without registration or pursuant to a registration on Form S-3, the Company
agrees to:
(a) make and keep public information available as those terms are
understood and defined in the Securities and Exchange Commission Rule
144;
(b) use its best efforts to take such action, including the
voluntary registration of its Common Stock under Section 12 of the
Securities Exchange Act, as is necessary to enable the Holders to
utilize Form S-3 for the sale of their Registrable Securities;
(c) use its best efforts to file with the Securities and Exchange
Commission in a timely manner all reports and other documents required
of the Company under the Securities Act and the Securities Exchange
Act (at any time after it has become subject to such reporting
requirements); and
-13-
Page 103 of 122 Pages
<PAGE>
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of
Securities and Exchange Commission Rule 144 (at any time after ninety
(90) days after the effective date of the first registration statement
filed by the Company), the Securities Act and the Securities Exchange
Act (at any time after it has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities
may be resold pursuant to Form S-3 (at any time after it so
qualifies), (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the
Company and (iii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the
Securities and Exchange Commission which permits the selling of any
such securities without registration or pursuant to such form.
3.9 Transfer of Registration Rights. The rights to cause the Company
to register Registrable Securities pursuant to this Section 3 may be
assigned by a Holder to a transferee or assignee of such Holder's
Registrable Securities, provided that the Company is, prior to such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; provided, however, that the
transferee or assignee becomes a party to this Agreement.
3.10 Subsequent Registration Rights. From and after the date of this
Agreement and so long as at least 20% of the Shares (including the
Registrable Securities) originally issued remain outstanding, the Company
may not, without the prior written consent of the Holders of a majority of
the outstanding Registrable Securities, enter into any agreement with any
holder or prospective holder of any securities of the Company which
provides such holder or prospective holder of securities of the Company
comparable information and registration rights granted to the Holders
hereby.
3.11 "Market Stand-off" Agreement. Each Holder hereby agrees that it
will not, to the extent requested by the Company and an underwriter of
Common Stock (or other securities) of the Company sell or otherwise
transfer or dispose of any Registrable Securities to the public, except
Common Stock included in such registration, during the ninety (90) day
period following the effective date of a registration statement of the
Company filed under the Securities Act; provided, however, that all other
Persons with registration rights (whether or not pursuant to this
Agreement) and all officers, directors and holders of more than five
percent (5%) of the then outstanding voting capital stock of the Company
enter into similar agreements.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such 90-day period.
3.12 Delay of Registration. No Holder shall have any right to obtain
or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect
to the interpretation or implementation of this Section 3.
-14-
Page 104 of 122 Pages
<PAGE>
4. Miscellaneous.
4.1 Governing Law.This Agreement shall be governed in all respects by
the laws of the State of Oregon without application of principles of
conflicts of law.
4.2 Survival.The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the Purchasers and the
closing of the transactions contemplated hereby.
4.3 Successors and Assigns.Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
4.4 Entire Agreement.This Agreement delivered pursuant hereto
constitute the full and entire understanding and agreement between the
parties.
4.5 Amendments; Waivers.Any provision of this Agreement may be amended
and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively) by the
written consent provided (i) as to the Company, only by the Company, (ii)
as to the Preferred Holders, by persons holding more than fifty percent
(50%) in interest of the outstanding Preferred Stock (including any Common
Stock issued upon conversion thereof, and including shares transferred to
any assignee of the right or obligation to be amended or waived), provided,
however, that any Preferred Holder may waive any of his or its rights
hereunder without obtaining the consent of any other Preferred Holder. Any
amendment or waiver effected in accordance with this Section 4.5 excluding
the proviso in the previous sentence shall be binding upon each holder of
any of the Preferred Stock (including shares of Common Stock issued upon
conversion thereof), its successors and assigns and the Company.
4.6 Notices.All notices, requests, demands and other communications
required to or permitted to be given under this Agreement shall be in
writing and shall be conclusively deemed to have been duly given when hand
delivered to the other party; when received when sent by facsimile;
provided, however, that notices given by facsimile shall not be effective
unless either a duplicate copy of such facsimile notice is promptly given
by depositing same in a United States post office with first-class postage
prepaid, or the receiving party delivers a written confirmation of receipt
for such notice either by facsimile or any other method permitted under
this paragraph; additionally, any notice given by facsimile shall be deemed
received on the next business day if such notice is received after 5:00
p.m. (recipient's time) or on a non-business day; three (3) business days
after the same have been deposited in a United States post office with
first class or certified mail return receipt requested postage prepaid; or
the next business day after same have been deposited with a national
overnight delivery service, postage prepaid with next-business-day delivery
guaranteed; provided that the sending party receives a confirmation of
delivery from the delivery service provider. If notice is to be given to
the Investors, such notice will be given, delivered or sent to the address
appearing on Exhibit A, and if notice is to be given to the Company, such
notice will be given to Gardenburger, Inc., 1411 S.W. Morrison, Suite 400,
Portland, Oregon 97205, telephone number: (503) 205-1515, facsimile number:
(503) 205-1650, Attention: President.
-15-
Page 105 of 122 Pages
<PAGE>
Each party shall make an ordinary, good faith effort to ensure that it will
accept or receive notices that are given in accordance with this Section and
that any person to be given notice actually receives such notice. A party may
change or supplement its address for notice, or designate additional addresses,
for purposes of this Section by giving the other party written notice of the new
address in the manner set forth above.
4.7 Attorneys' Fees.If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements, at
trial and on appeal, in addition to any other relief to which each party may be
entitled.
4.8 Delays or Omissions.No delay or omission to exercise any right, power
or remedy accruing to any party, upon any breach or default of another party
under this Agreement, shall impair any such right, power or remedy of such
non-breaching party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, of any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of any party under this Agreement, or any waiver on the part of any
party of any provisions or conditions of this Agreement, must be in writing and
shall be effective only to the extent specifically set forth in such writing.
All remedies either under this Agreement, or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
4.9 Severability of this Agreement. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
4.10 Titles and Subtitles.The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
4.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
4.12 Gender. The use of the neuter gender herein shall be deemed to include
the masculine and feminine gender, if the context so requires.
-16-
Page 106 of 122 Pages
<PAGE>
IN WITNESS WHEREOF, the undersigned or each of their respective duly
authorized officers or representatives have executed this Agreement as of the
date first above written.
"THE COMPANY"
GARDENBURGER, INC.
By: /s/ Richard C. Dietz
Richard C. Dietz, Executive Vice
President and Chief Financial
Officer
"INVESTORS"
ROSEWOOD CAPITAL III, L.P.
By: Rosewood Capital Associates,
LLC, General Partner
By:
------------------------------
Kyle A. Anderson, Principal
FARALLON CAPITAL PARTNERS, L.P.
FARALLON CAPITAL INSTITUTIONAL
PARTNERS, L.P.
FARALLON CAPITAL INSTITUTIONAL
PARTNERS II, L.P.
FARALLON CAPITAL INSTITUTIONAL
PARTNERS III, L.P.
TINICUM PARTNERS, L.P.
FARALLON CAPITAL (CP) INVESTORS,
L.P.
By: Farallon Partners, L.L.C.,
its General Partner
By:
------------------------------
Managing Member
Investor Rights Agreement Signature Page
Page 107 of 122 Pages
<PAGE>
IN WITNESS WHEREOF, the undersigned or each of their respective duly
authorized officers or representatives have executed this Agreement as of the
date first above written.
"THE COMPANY"
GARDENBURGER, INC.
By:
-----------------------------------
Lyle G. Hubbard, President
"INVESTORS"
ROSEWOOD CAPITAL III, L.P.
By: Rosewood Capital Associates, LLC
General Partner
By: /s/ Kyle A. Anderson
Kyle A. Anderson, Managing
Member
Investors Rights Agreement Signature Page
Page 108 of 122 Pages
<PAGE>
IN WITNESS WHEREOF, the undersigned or each of their respective duly
authorized officers or representatives have executed this Agreement as of the
date first above written.
"THE COMPANY"
GARDENBURGER, INC.
By:
-----------------------------------
Richard C. Dietz, Executive Vice
President and Chief Financial
Officer
"INVESTORS"
ROSEWOOD CAPITAL III, L.P.
By: Rosewood Capital Associates,
LLC, General Partner
By:
------------------------------
Kyle A. Anderson, Principal
FARALLON CAPITAL PARTNERS, L.P.
FARALLON CAPITAL INSTITUTIONAL
PARTNERS, L.P.
FARALLON CAPITAL INSTITUTIONAL
PARTNERS II, L.P.
FARALLON CAPITAL INSTITUTIONAL
PARTNERS III, L.P.
TINICUM PARTNERS, L.P.
FARALLON CAPITAL (CP) INVESTORS,
L.P.
By: Farallon Partners, L.L.C.,
its General Partner
By: /s/ Andrew Fremder
Managing Member
Investor Rights Agreement Signature Page
Page 109 of 122 Pages
<PAGE>
FARALLON CAPITAL OFFSHORE
INVESTORS, INC.
THE COMMON FUND
By: Farallon Capital Management,
L.L.C., its Agent and
Attorney-in-Fact
By: /s/ Andrew Fremder
Managing Member
U.S. Development Capital Investment
Company
By:
-----------------------------------
Ray Moss, Secretary
BT Capital Investors, L.P.
By:
-----------------------------------
Michael J. Batal, III, Partner
BT Investment Partners, Inc.
By:
-----------------------------------
Michael J. Batal, III, Partner
By:
-----------------------------------
Arvin H. Kash
By:
-----------------------------------
William D. Smithberg
Page 110 of 122 Pages
<PAGE>
FARALLON CAPITAL OFFSHORE
INVESTORS, INC.
THE COMMON FUND
By: Farallon Capital Management,
L.L.C., its Agent and
Attorney-in-Fact
By:
------------------------------
Managing Member
U.S. Development Capital Investment
Company
By: /s/ Ray Moss
Ray Moss, Secretary
BT Capital Investors, L.P.
By:
-----------------------------------
Michael J. Batal, III, Partner
BT Investment Partners, Inc.
By:
-----------------------------------
Michael J. Batal, III, Partner
By:
-----------------------------------
Arvin H. Kash
By:
-----------------------------------
William D. Smithberg
Investors Rights Signature Page
(continued)
Page 111 of 122 Pages
<PAGE>
FARALLON CAPITAL OFFSHORE
INVESTORS, INC.
THE COMMON FUND
By: Farallon Capital Management,
L.L.C., its Agent and
Attorney-in-Fact
By:
------------------------------
Managing Member
U.S. Development Capital Investment
Company
By:
--------------------------------
Ray Moss, Secretary
Lagunitas Partners, L.P.
Gruber & McBaine International
Lockheed Martin
Hamilton College
By: /s/ J. Patterson McBaine
J. Patterson McBaine,
Gruber & McBaine Capital Management
LLC,Member Manager
Lagunitas Partners, L.P. - General
Partner
Gruber & McBaine International -
Attorney in
Fact
Lockheed Martin - Attorney in Fact
Hamilton College - Attorney in Fact
BT Capital Investors, L.P.
By:
-----------------------------------
Edward V. Dardini, Jr., Principal
By:
-----------------------------------
Arvin H. Kash
By:
-----------------------------------
William D. Smithberg
Investor Rights Agreement Page
(continued)
Page 112 of 122 Pages
<PAGE>
FARALLON CAPITAL OFFSHORE
INVESTORS, INC.
THE COMMON FUND
By: Farallon Capital Management,
L.L.C., its Agent and
Attorney-in-Fact
By:
------------------------------
Managing Member
U.S. Development Capital Investment
Company
By:
-----------------------------------
Ray Moss, Secretary
BT Capital Investors, L.P.
By: /s/ Michael J. Batal, III
Michael J. Batal, III, Partner
BT Investment Partners, Inc.
By: /s/ Michael J. Batal, III
Michael J. Batal, III, Partner
By:
-----------------------------------
Arvin H. Kash
By:
-----------------------------------
William D. Smithberg
Investors Rights Signature Page
Page 113 of 122 Pages
<PAGE>
FARALLON CAPITAL OFFSHORE
INVESTORS, INC.
THE COMMON FUND
By: Farallon Capital Management,
L.L.C., its Agent and
Attorney-in-Fact
By:
------------------------------
Managing Member
U.S. Development Capital Investment
Company
By:
-----------------------------------
Ray Moss, Secretary
Gruber & McBaine Capital Mangagement,
L.L.C.
By:
-----------------------------------
J. Patterson McBaine, Managing
Member
BT Capital Investors, L.P.
By:
-----------------------------------
Edward V. Dardani, Jr., Principal
By: /s/ Arvin H. Kash
Arvin H. Kash
By:
-----------------------------------
William D. Smithberg
Investors Rights Signature Page
(continued)
Page 114 of 122 Pages
<PAGE>
FARALLON CAPITAL OFFSHORE
INVESTORS, INC.
THE COMMON FUND
By: Farallon Capital Management,
L.L.C., its Agent and
Attorney-in-Fact
By:
------------------------------
Managing Member
U.S. Development Capital Investment
Company
By:
-----------------------------------
Ray Moss, Secretary
Gruber & McBaine Capital Mangagement,
L.L.C.
By:
-----------------------------------
J. Patterson McBaine, Managing
Member
BT Capital Investors, L.P.
By:
-----------------------------------
Edward V. Dardani, Jr., Principal
By:
-----------------------------------
Arvin H. Kash
By: /s/ William D. Smithberg
William D. Smithberg
Investors Rights Signature Page
(continued)
Page 115 of 122 Pages
<PAGE>
EXHIBIT A
SCHEDULE OF INVESTORS
Total
Purchaser Name, No. of Shares No. of Shares Purchase
Address, Fax No. of Series A of Series B Amount
Stock Stock
Rosewood Capital III, L.P. 850,000 150,000 $10,000,000
One Maritime Plaza, Suite 1330
San Francisco, CA 94111
(415) 362-1192
Farallon Capital Partners, L.P* 238,000 42,000 $2,800,000
Farallon Capital Institutional 255,000 45,000 $3,000,000
Partners, L.P.*
Farallon Capital Institutional 42,500 7,500 $500,000
Partners II, L.P.*
Farallon Capital Offshore Investors, 212,500 37,500 $2,500,000
Inc.*
The Common Fund* 8,500 1,500 $100,000
Farallon Capital (CP) Investors, L.P.* 25,500 4,500 $300,000
Farallon Capital Institutional 51,000 9,000 $600,000
Partners III, L.P.*
Tinicum Partners, L.P.* 17,000 3,000 $200,000
BT Capital Investors, L.P. 425,000 75,000 $5,000,000
Attn: Michael J. Batal III
130 Liberty Street, Mailstop 2255
New York, NY 10006
Ph: 212-250-3402
Fax: 212-250-8375
BT Investment Partners, Inc. 127,500 22,500 $1,500,000
_____________________
*c/o Farallon Capital Management LLC, One Maritime Plaza, Suite 1325, San
Francisco, California 94111, Attn: Jason Fish and Susan Rubin, Facsimile:
(415) 421-2133.
A-1
Page 116 of 122 Pages
<PAGE>
Total
Purchaser Name, No. of Shares No. of Shares Purchase
Address, Fax No. of Series A of Series B Amount
Stock Stock
U.S. Development Capital Investment 127,500 22,500 $1,500,000
Company
Attn: Ray Moss, Secretary
400 Northpark Town Center, Suite 310
1000 Abernathy Road, N.E.
Atlanta, GA 30328
Ph: 770-481-7200
Fax: 770-481-7210
Lagunitas Partners, L.P. 191,250 33,750 $2,250,000
Attn: J. Patterson McBaine, Member
Manager
50 Osgood Place, Penthouse
San Francisco, CA 94133
Ph: 415-981-2101
Fax: 415-956-8769
Gruber & McBaine International 63,750 11,250 $750,000
Lockheed Martin 59,500 10,500 $700,000
Hamilton College 25,500 4,500 $300,000
Arvin H. Kash 21,250 3,750 $250,000
77 West Wacker Drive, 47th Floor
Chicago, IL 60601
Ph: 312- 425-3600
Fax: 312-425-3601
William D. Smithburg 21,250 3,750 $250,000
676 N. Michigan Avenue
Suite 3860
Chicago, IL 60611
Ph: 312- 867-5411
Fax: 312- 867-5415
Total 2,762,500 487,500 $32,500,000
A-2
Page 117 of 122 Pages
<PAGE>
EXHIBIT 4
to
SCHEDULE 13D
AMENDMENT NO. 2 TO RIGHTS AGREEMENT
This Amendment No. 2 dated as of April 14, 1999 (the "Amendment"), to the
Rights Agreement dated as of April 25, 1996, as amended by Amendment No. 1 dated
as of March 26, 1998 (referred to herein, as amended by Amendment No. 1, as the
"Rights Agreement"), between Gardenburger, Inc. (f/k/a Wholesome & Hearty Foods,
Inc.), an Oregon corporation (the "Company"), and First Chicago Trust Company of
New York, a New York corporation (the "Rights Agent"),
WITNESSETH:
WHEREAS, the Company and the Rights Agent have entered into the Rights
Agreement; and
WHEREAS, the Board of Directors of the Company, in accordance with Section
26 of the Rights Agreement, has determined it desirable and in the best
interests of the Company and its shareholders to supplement and amend certain
provisions of the Rights Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Amendment to Section 1.1. Section 1.1 of the Rights Agreement is
amended to read in its entirety as follows:
"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
15% (25% as to Wenner and 22% as to Dresdner) or more of the
-1-
Page 118 of 122 Pages
<PAGE>
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.
Section 2. Amendment to Section 1.11. Section 1.11 of the Rights Agreement
is amended to read in its entirety as follows:
"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; provided, however, that
there must be Continuing Directors then in office and any such determination
shall require the concurrence of a majority of such Continuing Directors. 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
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<PAGE>
Person's Affiliates and Associates, beneficially owns upon completion of the
approved acquisition."
Section 3. Addition of Section 3.4. A new Section 3.4 to the Rights
Agreement shall be added to read in its entirety as follows:
"Section 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. Acknowledgment that Distribution Date Has Not Occurred. The
parties hereto acknowledge that, up to and through the date of this Amendment,
no Person has become an Acquiring Person, no event has occurred or with the
passage of time will occur that has resulted or would result in the occurrence
of a Distribution Date, a Trigger Event, or an event described in Section
11.1.2(A) of the Rights Agreement, and no such event has occurred or will occur
by reason of the issuance of the Convertible Preferred Shares, or any of the
Common Shares into which such Convertible Preferred Shares are convertible, to
the Preferred Investors.
Section 5. Rights Agreement as Amended. The term "Agreement" as used in the
Rights Agreement shall be deemed to refer to the Rights Agreement as amended
hereby. This Amendment shall be effective as of the date hereof and, except as
set forth herein, the Rights Agreement shall remain in full force and effect and
be otherwise unaffected hereby.
Section 6. Officer's Certificate. In accordance with Section 26 of the
Rights Agreement, the Company has provided the Rights Agent a certificate
executed by an authorized officer of the Company, stating that the Amendment is
in compliance with the terms of Section 26 of the Rights Agreement.
Section 7. Counterparts. This Amendment 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 of such counterparts shall together constitute but one
and the same instrument.
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Page 120 of 122 Pages
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment 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 and
Chief Financial Officer
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By: /s/ Joanne Gorostiola
Name: Joanne Gorostiola
Title: Assistant Vice President
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Page 121 of 122 Pages
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment 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:
-----------------------------------------
Name: Richard C. Dietz
Title: Executive Vice President and
Chief Financial Officer
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By: /s/ Joanne Gorostiola
Name: Joanne Gorostiola
Title: Assistant Vice President
-4-
Page 122 of 122 Pages
<PAGE>
