UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
GARDENBURGER, INC.
(Exact Name of Registrant as Specified In Its Charter)
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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<PAGE>
GARDENBURGER, INC.
1411 SW MORRISON STREET, SUITE 400
PORTLAND, OREGON 97205
January 10, 2000
Dear Shareholders:
Our Annual Meeting of Shareholders will be held on Monday, February 14, 2000, at
1:00 p.m. Mountain Standard Time, at the Little America Hotel and Towers, 500
South Main Street, Salt Lake City, Utah, 84101. You are invited to attend this
meeting to give us an opportunity to meet you personally, to allow us to
introduce to you the key management of your Company and its Directors, and to
answer questions you may have.
The formal Notice of Meeting, the Proxy Statement, the proxy card and a copy of
the Annual Report to Shareholders describing the Company's operations for the
nine months ended September 30, 1999 are enclosed.
I hope that you will be able to attend the meeting in person. Whether or not you
plan to attend the meeting, please sign and return the enclosed proxy card
promptly. A prepaid return envelope is provided for this purpose. Your shares
will be voted at the meeting in accordance with your proxy.
If you have shares in more than one name, or if your stock is registered in more
than one way, you may receive multiple copies of the proxy materials. If so,
please sign and return each proxy card you receive so that all of your shares
may be voted. I look forward to meeting you at the Annual Meeting.
Yours for Better Health,
GARDENBURGER, INC.
E. Kay Stepp
CHAIRMAN OF THE BOARD OF DIRECTORS
<PAGE>
GARDENBURGER, INC.
1411 SW MORRISON STREET, SUITE 400
PORTLAND, OREGON 97205
----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 14, 2000
-----------------------
To the Shareholders of Gardenburger, Inc.:
The Annual Meeting of Shareholders of GARDENBURGER, INC. (the "Company"), an
Oregon corporation, will be held Monday, February 14, 2000, at 1:00 p.m.
Mountain Standard Time, at the Little America Hotel and Towers, 500 South Main
Street, Salt Lake City, Utah, 84101. The purposes of the Annual Meeting will be:
1. To elect ten Directors to serve until the next Annual Meeting of
Shareholders (holders of the Series A Convertible Preferred Stock, voting as a
separate group, are entitled to elect two of ten Directors); and
2. To consider and act upon any other matter which may properly come
before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on Thursday, December 30,
1999, as the record date for determining shareholders entitled to notice of and
to vote at the meeting or any adjournment thereof. Only holders of record of
common stock or preferred stock of the Company at the close of business on the
record date will be entitled to notice of and to vote at the meeting and any
adjournment thereof.
All shareholders are cordially invited to attend the Annual Meeting. A review of
the Company's operations for the nine months ended September 30, 1999 will be
presented. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND
PROMPTLY RETURN THE ENCLOSED PROXY CARD, WHICH YOU MAY REVOKE AT ANY TIME PRIOR
TO ITS USE. A prepaid, self-addressed envelope is enclosed for your convenience.
Your shares will be voted at the meeting in accordance with your proxy. If you
attend the meeting, you may revoke your proxy and vote in person.
By Order of the Board of Directors:
E. KAY STEPP
CHAIRMAN OF THE BOARD OF DIRECTORS
Portland, Oregon
January 10, 2000
<PAGE>
GARDENBURGER, INC.
1411 SW MORRISON STREET, SUITE 400
PORTLAND, OREGON 97205
-----------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 14, 2000
----------------------
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement and the accompanying Annual Report to Shareholders, the
Notice of Annual Meeting and proxy card are being furnished to the shareholders
of Gardenburger, Inc. (the "Company"), an Oregon corporation, in connection with
the solicitation of proxies by the Company's Board of Directors for use at the
Company's 2000 Annual Meeting of Shareholders (the "Annual Meeting") to be held
Monday, February 14, 2000, at 1:00 p.m. Mountain Standard Time, at the Little
America Hotel and Towers, 500 South Main Street, Salt Lake City, Utah, 84101,
and any adjournment thereof. The solicitation of proxies by mail may be followed
by personal solicitation of certain shareholders by officers or regular
employees of the Company without additional compensation for such services. All
expenses of the Company associated with this solicitation will be borne by the
Company. In addition, the Company reserves the right to utilize the services of
an independent proxy solicitation firm to assist with the solicitation of
proxies at an estimated cost of $5,000.
The two persons named as proxies on the enclosed proxy card, E. Kay Stepp and
Richard C. Dietz, were designated by the Board of Directors. All properly
executed proxies will be voted (except to the extent that authority to vote has
been withheld) and where a choice has been specified by the shareholder as
provided in the proxy card, it will be voted in accordance with the
specification so made. Proxies submitted without specification will be voted FOR
the election of all of the nominees for Directors proposed by the Board of
Directors for which the holders are entitled to vote.
A proxy may be revoked by a shareholder prior to its exercise by written notice
to the Secretary of the Company, by submission of another proxy bearing a later
date or by voting in person at the Annual Meeting. Such notice or later proxy
will not affect a vote on any matter taken prior to the receipt thereof by the
Company.
These proxy materials and the Company's 1999 Annual Report to Shareholders are
first being mailed on or about January 10, 2000 to shareholders of record of the
Company's common stock on December 30, 1999. The address of the principal
executive office as well as the mailing address of the Company is 1411 SW
Morrison Street, Suite 400, Portland, Oregon 97205.
1
<PAGE>
VOTING AT THE MEETING
In accordance with the Company's bylaws, the stock transfer records were
compiled on December 30, 1999, the record date set by the Board of Directors for
determining the shareholders entitled to notice of, and to vote at, the Annual
Meeting and any adjournment thereof. On that date, there were 8,850,451 shares
of Common Stock, 2,762,500 shares of Series A Convertible Preferred Stock
("Series A Shares") and 487,500 shares of Series B Convertible Preferred Stock
("Series B Shares") outstanding and entitled to vote.
Each share of common and preferred stock outstanding on the record date is
entitled to one vote per share on all matters presented at the Annual Meeting,
except for the election of two directors, which holders of the Series A Shares,
voting as a separate voting group, are entitled to elect. If a quorum is present
at the Annual Meeting, the persons nominated for election as Directors who
receive the greatest number of votes cast in person or by proxy for the election
of Directors by the shares entitled to vote thereon will be elected Directors.
Directors are elected by a plurality of the votes cast and only votes cast in
favor of a nominee will have an effect on the outcome. Abstention from voting or
nonvoting by brokers will have no effect on the election. A broker "nonvote"
occurs when a nominee holding shares for a beneficial owner votes on one
proposal, but does not vote on another proposal because the nominee does not
have discretionary voting power and has not received instructions from the
beneficial owner.
ELECTION OF DIRECTORS
Eight Directors are to be elected by the holders of the common and preferred
stock at the Annual Meeting and two additional Directors are to be elected by
the holders of the Series A Shares. Directors are elected on an annual basis.
Each Director will serve until the next annual meeting of shareholders and until
his successor is duly elected and qualified.
NOMINEES FOR DIRECTOR TO BE ELECTED BY HOLDERS OF COMMON AND PREFERRED STOCK
The names and certain information concerning the persons to be nominated by the
Board of Directors for election at the Annual Meeting are set forth below. THE
BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE ELECTION OF EACH OF THE NOMINEES
NAMED BELOW. Shares represented by proxies will be voted for the election to the
Board of Directors of the persons named below unless authority to vote for a
particular Director or Directors has been withheld in the proxy. All nominees
have consented to serve as Directors for the ensuing year.
The Board of Directors has no reason to believe that any of the nominees will be
unable to serve as a Director. In the event of the death or unavailability of
any nominee or nominees, the proxy holders will have discretionary authority
under the proxy to vote for a suitable substitute nominee as the Board of
Directors may recommend. Proxies may not be voted for more than eight nominees,
except that proxies representing Series A Shares may be voted for a maximum of
ten nominees.
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<PAGE>
The Board of Directors has nominated the persons named in the following table
for election as Directors:
<TABLE>
<CAPTION>
NAME POSITION AGE DIRECTOR SINCE
- ---- -------- --- --------------
<S> <C> <C> <C>
Lyle G. Hubbard President, Chief Executive Officer and 48 1996
Director
Alexander P. Coleman Director 32 1998
Ronald C. Kesselman Director 56 1998
Richard L. Mazer Director 53 1998
Mary O. McWilliams Director 50 1995
Michael L. Ray Director 60 1995
E. Kay Stepp Chairman of the Board of Directors 54 1995
Paul F. Wenner Founder, Chief Creative Officer and Director 52 1985
</TABLE>
LYLE G. HUBBARD joined the Company in April 1996 as President and Chief
Executive Officer. In November 1996, Mr. Hubbard was elected as a Director of
the Company. Prior to his employment with the Company, Mr. Hubbard spent 15
years with The Quaker Oats Company ("Quaker"), a food products company, in
Chicago, Illinois. During his tenure at Quaker, Mr. Hubbard was President of the
$500 million Convenience Foods Retail Division and Senior Vice President and
Chief Marketing Officer for the $1.8 billion Gatorade and Snapple Beverages,
North America Division. Mr. Hubbard holds an M.B.A. with a specialization in
marketing from the University of Chicago and a B.A. degree in Psychology from
Lake Forest College.
ALEXANDER P. COLEMAN has been an investment partner of Dresdner Kleinwort Benson
Private Equity LLC and a Vice President of Dresdner Kleinwort Benson North
America LLC, each financial investment firms, since January 1996. From 1989 to
1995, Mr. Coleman held various positions with Citicorp and its subsidiaries,
including Citicorp Venture Capital Ltd. Mr. Coleman has been designated as a
nominee for election as a Director pursuant to the agreement between the Company
and Dresdner Kleinwort Benson Private Equity Partners LP ("Dresdner") under
which Dresdner acquired $15,000,000 principal amount of the Company's 7%
Convertible Senior Subordinated Notes (the "Convertible Notes") in March 1998.
Mr. Coleman received an M.B.A. from the University of Cambridge and a B.A. in
Economics from the University of Vermont. He is also a director of Tritel
Communications, Inc.
RONALD C. KESSELMAN has been Chairman and Chief Executive Officer of Elmer's
Products and Executive Vice President of Borden Holdings, Inc., each food
products companies, since 1996. He was also Chairman and Chief Executive Officer
of Wise Foods from 1996 until May 1998 and was Group Vice President of Borden,
Inc. from 1992 to 1996. Mr. Kesselman received an M.B.A. in Marketing from the
Kellogg Graduate School of Management at Northwestern University and a B.A.
degree in Economics from the University of Wisconsin.
3
<PAGE>
RICHARD L. MAZER has been Executive Vice President and Chief Operating Officer
of Ventura Foods, LLC, a food processor, since December 1997. Mr. Mazer has been
involved in the food industry for the past 15 years, including through his
strategic and financial consulting company, The Mazer Group, from 1992 to 1997.
Mr. Mazer is on the Board of Trustees of Food for All (formerly Food Industry
Crusade Against Hunger). Mr. Mazer received B.S. degrees in Economics and
Management from Massachusetts Institute of Technology.
MARY O. MCWILLIAMS has been Senior Vice President of Health Care Services and
Boeing for Regence BlueShield, a health insurer, since 1997. Ms. McWilliams was
previously President and Chief Executive Officer of PacifiCare of Washington
beginning in 1994. She also assumed responsibility for the Northwest Region of
PacifiCare Health Systems in 1995 and held these positions through 1996. Prior
to joining PacifiCare, she served as Chief Executive Officer for Sisters of
Providence Health Plans in Oregon for 11 years. Ms. McWilliams earned a B.A.
from Wesleyan University, where she also is a Trustee Emeritus. She has an M.A.
in Health Administration from the University of Colorado.
MICHAEL L. RAY has been on the faculty at Stanford University since 1967 and is
the John G. McCoy-Banc One Corporation Professor of Creativity and Innovation
and of Marketing Emeritus at Stanford University's Graduate School of Business.
He is a specialist in new paradigm business, creativity, innovation, marketing
communication, advertising and the behavioral science approach to marketing
problems. Mr. Ray is a psychologist with training and extensive experience in
advertising and marketing management and has co-authored several business
oriented books. Mr. Ray is also a director of The Men's Wearhouse and is a
founder, director and President of Insight Out Collaborations Inc., a company
that offers training courses in creativity for corporations.
E. KAY STEPP formed, in 1994, and now operates Executive Solutions, Inc., a
consulting firm which provides consulting services to senior executives and
boards of directors. In 1995, Ms. Stepp was appointed Chairman of the Board of
the Company. From 1989 to 1992, Ms. Stepp held the position of President and
Chief Operating Officer of Portland General Electric Company ("PGE"), a
utilities company. Ms. Stepp currently serves on the boards of directors of
StanCorp Financial Group, Inc., Franklin Covey Co. and Planar Systems, Inc. She
is a former director of the Federal Reserve Bank of San Francisco.
PAUL F. WENNER, presently the Company's Chief Creative Officer, founded the
Company in 1985 as a sole proprietorship and acted as its Vice President from
the date of its incorporation until December 1989, when he became the Company's
President, Chief Executive Officer and Chairman of the Board. In 1994, Mr.
Wenner relinquished his duties as President in 1994 and as Chairman of the Board
in 1995. Mr. Wenner currently holds the title of Chief Creative Officer. From
1980 through 1984, he owned and operated the Garden House Restaurant and Gourmet
Cooking School (the "School"), where he developed the Gardenburger(R) veggie
patty. The School was affiliated with Mt. Hood Community College's evening
educational curriculum. Mr. Wenner received two Associate of Arts degrees from
Mt. Hood Community College.
4
<PAGE>
NOMINEES FOR DIRECTOR TO BE ELECTED BY HOLDERS OF SERIES A SHARES
In accordance with the terms of the Series A Shares, the Board of Directors has
nominated the persons named in the following table for election as Directors to
be voted on by holders of Series A Shares voting as a separate voting group:
NAME POSITION AGE DIRECTOR SINCE
- ---- -------- --- --------------
Kyle A. Anderson Director 43 1999
Jason M. Fish Director 41 1999
KYLE A. ANDERSON is a founding member of Rosewood Capital Associates, L.L.C.,
the general partner of Rosewood Capital III, L.P., a consumer oriented private
equity investment fund. Prior to joining Rosewood Capital Associates, L.L.C., in
1988, Mr. Anderson was a Vice President in the mergers and acquisitions
department at First Boston Corporation. Mr. Anderson serves on the Board of
Directors of Rubio's Restaurants, Inc.
JASON M. FISH has been a managing member of Farallon Capital Management, L.L.C.,
and Farallon Partners, L.L.C., since April 1996, when they were formed to serve
as management companies for affiliated investment funds. Mr. Fish was a managing
director of a predecessor entity, Farallon Capital Management, Inc., from
January 1993 through April 1996. Mr. Fish also serves on the Board of Directors
of Town Sports International, Inc.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held eight meetings and took action pursuant to three
unanimous written consents during the nine months ended September 30, 1999. The
Board of Directors has three standing committees: a Finance and Audit Committee,
an Executive Personnel and Compensation Committee and a Nominating and
Governance Committee. No Director attended fewer than 75 percent of the total of
the Board meetings and the meetings held by all committees of the Board on which
he or she served during the nine months ended September 30, 1999.
FINANCE AND AUDIT COMMITTEE The Finance and Audit Committee (the "Audit
Committee") is composed of Mr. Mazer (Committee Chair), Mr. Coleman, Mr.
Anderson and Ms. Stepp, who are all outside Directors of the Company. The Audit
Committee reviews the Company's financial and operational activities and seeks
to ensure that such activities are performed in accordance with all internal and
external auditing and accounting requirements. It also evaluates the Company's
relationship with its outside auditors and major financing initiatives proposed
by management. The Audit Committee held two meetings in the nine months ended
September 30, 1999.
5
<PAGE>
EXECUTIVE PERSONNEL AND COMPENSATION COMMITTEE The Executive Personnel and
Compensation Committee (the "Compensation Committee") is composed of Ms.
McWilliams (Committee Chair), Ms. Stepp, Mr. Coleman and Mr. Fish, who are
outside Directors of the Company. The Compensation Committee is responsible for
designing and administering the Company's executive and all other employee
compensation plans, including the 1992 First Amended and Restated Combination
Stock Option Plan (the "1992 Plan"), providing oversight of other compensation
matters, establishing officer salaries and bonuses, monitoring the performance
and outside activities of officers, and overseeing succession planning. The
Compensation Committee held four meetings and took action pursuant to four
unanimous written consents in the nine months ended September 30, 1999.
NOMINATING AND GOVERNANCE COMMITTEE The Nominating and Governance Committee (the
"Nominating Committee") is composed of Mr. Ray (Committee Chair), Mr. Hubbard,
Mr. Kesselman and Mr. Wenner. The Nominating Committee is responsible for
performing the Board's annual self evaluation, monitoring director performance,
locating potential candidates to fill Board vacancies, and selecting the
nominees to stand for election to the Board of Directors at each annual meeting
of shareholders. The Nominating Committee does not consider nominees recommended
by shareholders. The Nominating Committee held one meeting in the nine months
ended September 30, 1999.
The Company's bylaws provide that nominations for election to the Board of
Directors may be made only by the Board or a Board committee, or by any
shareholder of record entitled to vote in the election of directors at the
meeting. A shareholder who wishes to make a nomination must give written notice,
by personal delivery or mail, to the Secretary of the Company. In the case of an
annual meeting of shareholders, the notice must be received at the principal
executive offices of the Company at the address specified above not less than 60
days and not more than 90 days prior to the first anniversary of the preceding
year's annual meeting. The notice must include the information required by
Section 3.3 of the Company's bylaws.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
IN COMPENSATION DECISIONS
During 1999, Directors who served on the Compensation Committee included Mses.
Stepp and McWilliams and Messrs. Coleman, Mazer and Fish. None of these
individuals is an officer or employee of the Company.
On April 14, 1999, the Company sold 1,000,000 shares of preferred stock to
entities affiliated with Farallon Partners, L.L.C., for an aggregate purchase
price of $10,000,000. Jason M. Fish has been a managing member of Farallon
Partners, L.L.C. since April 1996. Mr. Fish became a Director and member of the
Compensation Committee following acquisition of the shares of preferred stock by
Farallon.
Mr. Coleman is an investment partner of Dresdner Kleinwort Benson Private Equity
LLC, the general partner of Dresdner, to which the Company is indebted in the
amount of $15,000,000 as the result of the issuance of the Convertible Notes to
Dresdner in March 1998.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of December 30, 1999, certain information
furnished to the Company with respect to beneficial ownership of the Company's
common stock and preferred stock by (i) each Director and Director nominee, (ii)
the "named executive officers" (as defined under "Executive Compensation"),
(iii) all persons known by the Company to be beneficial owners of more than 5%
of its outstanding common stock or preferred stock, and (iv) all executive
officers and Directors as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP (A)
- ------------------------------------ ---------------------------------------------
SHARES OF PERCENTAGE SHARES OF PERCENTAGE
COMMON OF PREFERRED OF
STOCK (B) CLASS STOCK CLASS
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Paul F. Wenner (C) 1,839,420 18.6% - -
Dresdner Kleinwort Benson Private Equity Partners LP (D) 1,342,120 13.3% - -
75 Wall Street
New York, New York 10005
Alexander P. Coleman (D) 3,000 * - -
Gruber & McBaine Capital Management LLC (E) 1,063,200 11.5% 400,000 12.3%
50 Osgood Place, Penthouse
San Francisco, California 94133
Farallon Partners, L.L.C. (F) 743,700 7.8% 740,000 22.8%
One Maritime Plaza, Suite 1325
San Francisco, California 94111
Farallon Capital Management, L.L.C. (F) 260,000 2.9% 260,000 8.0%
One Maritime Plaza, Suite 1325
San Francisco, California 94111
Jason M. Fish (F) - - - -
Rosewood Capital III, L.P. (G) 1,000,000 10.2% 1,000,000 30.8%
One Maritime Plaza, Suite 1330
San Francisco, California 94111
Kyle A. Anderson (G) - - - -
Deutsche Asset Management (Japan) Ltd. 658,500 7.4% - -
Tokyo Ginko Kyokai Building
1-3-1 Marunouchi, Chiyoda, Ku
Tokyo 100-0005
BT Capital Investors, L.P. (H) 650,000 6.8% 650,000 20.0%
130 Liberty Street, Mail Stop 2255
New York, New York 10006
Lyle G. Hubbard 416,883 4.5% - -
Richard C. Dietz 95,084 1.1% - -
E. Kay Stepp (I) 52,035 * - -
Michael L. Ray 16,000 * - -
Mary O. McWilliams 15,250 * - -
Richard L. Mazer 8,000 * - -
Ronald C. Kesselman 8,100 * - -
All executive officers and directors as a group (11 2,453,772 23.5% - -
persons) (J)
</TABLE>
*Less than one percent
(A) Applicable percentage of ownership is based on 8,850,451 shares of common
stock and 3,250,000 shares of preferred stock outstanding as of December
7
<PAGE>
30, 1999. Beneficial ownership is determined in accordance with the rules
of the Securities and Exchange Commission (the "SEC"), and is based on
voting and investment power with respect to shares. Shares of common stock
subject to options or warrants that are exercisable currently or within 60
days after December 30, 1999 and convertible securities that are
convertible currently or within 60 days after December 30, 1999, are deemed
outstanding for purposes of computing the percentage ownership of the
person or group holding such options, warrants or convertible securities,
but are not deemed outstanding for computing the percentage of any other
person. Unless otherwise indicated, to the Company's knowledge, each of the
persons named above has sole voting and investment power with respect to
all shares shown as being beneficially owned by them.
(B) Includes shares of common stock subject to options exercisable within 60
days after December 30, 1999, as follows: Mr. Wenner, 1,036,240 shares; Mr.
Hubbard, 378,583 shares; Mr. Dietz, 93,084 shares; Ms. Stepp, 42,000
shares; Mr. Ray, 15,000 shares; Ms. McWilliams, 12,000 shares; Mr. Mazer,
6,000 shares; Mr. Kesselman, 6,000 shares; and all current executive
officers and Directors as a group, 1,588,907 shares.
(C) Mr. Wenner's address is 1411 SW Morrison Street, Suite 400, Portland,
Oregon 97205. Mr. Wenner has shared voting and dispositive power as to
32,654 shares of common stock, which are held by the Paul F. Wenner
Charitable Foundation Trust.
(D) Includes 1,239,669 shares of common stock that Dresdner has the right to
acquire upon conversion of the Convertible Notes. Mr. Coleman is an
Authorized Person and an Investment Partner at Dresdner Kleinwort Benson
Private Equity LLC, the General Partner of Dresdner.
(E) Gruber & McBaine Capital Management, LLC ("GMCM"), has shared voting and
dispositive power with respect to 663,200 shares of common stock. Jon D.
Gruber and J. Patterson McBaine are the managers of GMCM, an investment
adviser, and Thomas O. Lloyd-Butler is a member of GMCM. GMCM and its
affiliates also own 400,000 shares of preferred stock convertible into an
equal number of shares of common stock.
(F) Each of the entities affiliated with Farallon Partners, L.L.C. ("FPLLC")
and the accounts managed by Farallon Capital Management, L.L.C. ("FCMLLC"),
a registered investment adviser (together such entities and accounts,
"Farallon"), that acquired shares of preferred stock holds such securities
directly in its own name. In addition, two of such entities own an
aggregate of 3,700 shares of common stock. FPLLC, as the general partner of
certain of such entities, and FCMLLC, pursuant to investment management
agreements, each may, for purposes of Rule 13d-3 under the Securities
Exchange Act of 1934 (the "Exchange Act"), be deemed to own beneficially
the shares held by such entities and accounts, as well as the shares of
common stock into which the shares of preferred stock are convertible. As a
managing member of FPLLC and FCMLLC, Jason M. Fish, together with the other
managing members of FPLLC and FCMLLC, may, for purposes of Rule 13d-3 under
the Exchange Act, be deemed to own beneficially the shares attributed to
FPLLC and FCMLLC. Each of FCMLLC and FPLLC, and each managing member
thereof, including Jason M. Fish, disclaims any beneficial ownership of
such shares. All of the above-mentioned entities and persons disclaim group
attribution.
(G) Includes 1,000,000 shares of common stock issuable upon conversion of
preferred stock. Kyle A. Anderson may be deemed to be a beneficial owner of
such shares based on his position as a founding member of Rosewood Capital
Associates, L.L.C., the general partner of Rosewood Capital III, L.P.
(together, "Rosewood"). Mr. Anderson disclaims beneficial ownership of all
such shares.
(H) Represents shares of preferred stock convertible into common stock.
(I) Includes 4,935 shares of common stock owned by Ms. Stepp's husband, as to
which Ms. Stepp has indirect ownership. Ms. Stepp disclaims any voting or
investment power with respect to all such shares.
(J) Excludes 1,342,120 shares beneficially owned by Dresdner, 1,003,700 shares
beneficially owned by Farallon, and 1,000,000 shares beneficially owned by
Rosewood, as to which Messrs. Coleman, Fish and Anderson, respectively, may
be deemed to have beneficial ownership.
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<PAGE>
EXECUTIVE OFFICERS
The following table identifies the executive officers of the Company as of
December 30, 1999, the positions they hold, and the year in which they began
serving in their respective capacities. Officers of the Company are elected by
the Board of Directors annually to hold office until their successors are
elected and qualified.
<TABLE>
<CAPTION>
POSITION HELD
NAME AGE CURRENT POSITION(S) WITH COMPANY SINCE
- ----------------------------- ------- ----------------------------------------------- ----------------
<S> <C> <C> <C>
Lyle G. Hubbard 48 President, Chief Executive Officer and 1996
Director
Richard C. Dietz 37 Executive Vice President, Chief Financial 1996
Officer, Treasurer and Secretary
</TABLE>
For information on the business background of Mr. Hubbard see "Nominees for
Director to be Elected by Holders of Common and Preferred Stock" above.
RICHARD C. DIETZ joined the Company in August 1994 as Executive Vice President,
Treasurer and Chief Financial Officer. In 1996, Mr. Dietz was also appointed
Secretary of the Company. From 1993 to July 1994, Mr. Dietz served as Vice
President and Chief Financial Officer of Fine Arts Graphics Corporation of
Oregon, a printing company. From 1990 to 1993, Mr. Dietz was the Chief Financial
Officer of Wyatt Software, Inc. Mr. Dietz received his public accounting
experience with Arthur Andersen LLP from 1983 to 1987. He received a B.S. in
Business Administration from Oregon State University in 1984 and an M.B.A. from
the University of Oregon in 1991 and has also attended the Executive Education
Series at the Harvard Business School.
OTHER KEY MANAGEMENT EMPLOYEES
MARY N. DILLON joined the Company in July 1996 as Vice President of Retail
Marketing. Ms. Dillon was most recently a Director of Marketing at Quaker, where
she was employed from 1984 to 1996. During that time, she focused on consumer
marketing and general management across many product categories and was a senior
manager for products such as snacks, pet foods, and beverages. Ms. Dillon
received a B.A. in Marketing and Asian Studies at the University of Illinois at
Chicago.
CARTER S. ELENZ joined the Company in July 1996 as Vice President of Retail
Sales. From 1987 to 1996, Mr. Elenz held positions of increasing responsibility
with Quaker, including sales management, marketing and general management at
Quaker headquarters and multiple field locations. From 1985 to 1987, Mr. Elenz
was an Account Executive with Gaines Foods. He graduated with a B.S. in Business
Administration from Valaparaiso University.
DAVID W. GATES joined the Company in July 1996 as Vice President of Sales and
was promoted in 1998 to Senior Vice President. Prior to his employment with the
Company, Mr. Gates spent over 30 years with Quaker, where he held various
leadership positions in sales and served as General Manager of the Pritikin
Foods Unit.
9
<PAGE>
JAMES W. LINFORD joined the Company in March 1997 as Vice President of Supply
Chain. He was Vice President and General Manager of CH2M Hill Food Group from
1995 to 1997, Director of Manufacturing for Ocean Spray Cranberries from 1993 to
1995 and General Manager of Operations for Ore-Ida Foods, a division of the
Heinz Company, from 1987 to 1993. Mr. Linford received his B.S.
degree from the University of Idaho.
JERRY SUTTON joined the Company in October 1998 as Vice President of Food
Service Sales. In February 1999, his responsibilities were expanded to include
the day-to-day management of food service marketing. From 1988 to 1998, Mr.
Sutton held positions of increasing responsibility with The Kellogg Company. His
responsibilities included sales management and general management at Kellogg
headquarters and field locations. From 1985 to 1988, Mr. Sutton was a sales
manager with Nation Pizza Products. Mr. Sutton received his B.S. degree in
Industrial Technology from Illinois State University.
EXECUTIVE COMPENSATION
Due to a change in the Company's fiscal year during 1999 to a fiscal year ending
September 30 rather than December 31, all 1999 information reflects only nine
months of activity, whereas 1998 and 1997 information reflects a full 12 months.
SUMMARY COMPENSATION TABLE
The following table provides information for the years indicated concerning
compensation earned by the Company's Chief Executive Officer and the other
executive officer of the Company whose salary and bonus during fiscal 1999
exceeded $100,000 (collectively referred to as the "named executive officers").
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
----------------------------- ---------------
Securities All Other
Underlying Compen-
Name and Principal Position Year Salary (A) Bonus Options ( #) sation (B)
- -------------------------------- ------ ------------ ------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Lyle G. Hubbard, President, 1999 $240,588 $ - 174,812 $ 2,980
Chief Executive Officer and 1998 287,149 213,000 40,000 14,824
Director 1997 239,365 113,896 11,250 3,322
Richard C. Dietz, Executive 1999 121,757 - 37,353 3,055
Vice President, Chief 1998 148,207 90,000 20,000 3,788
Financial
Officer, Treasurer and 1997 130,000 39,729 9,750 2,600
Secretary
</TABLE>
(A) Amounts shown include cash compensation earned in each respective year,
including amounts deferred at the election of the named executive officer
pursuant to the Company's 401(k) Plan.
(B) Amounts included in this column for 1999 are as follows:
LIFE INSURANCE
NAME 401(K) MATCHING PREMIUMS
---- --------------- --------
Mr. Hubbard $1,454 $1,526
Mr. Dietz 2,462 593
10
<PAGE>
STOCK OPTIONS
The following table contains information concerning the grant of stock options
under the Company's 1992 Plan to the named executive officers in fiscal 1999.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Potential
Realizable Value
At Assumed Annual
Rates of Stock Price
Appreciation for
Individual Grants Option Term (B)
------------------------------------------------------------ ----------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted (A) Fiscal Year Price ($/Sh.) Date 5% 10%
- ---------------------- ---------------- --------------- -------------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lyle G. Hubbard 40,000 6.71% $11.625 02/19/09 $ 300,580 $754,059
134,812 22.63 10.0625 03/29/09 866,849 2,183,839
------- -----
174,812 29.34
Richard C. Dietz 10,000 1.68 11.625 02/19/09 75,145 188,515
27,353 4.59 10.0625 03/29/09 175,881 443,095
------ ----
37,353 6.27
</TABLE>
(A) Options granted during fiscal 1999 to the named executive officers vest as
to 33.4 percent on the first anniversary of the grant date and as to an
additional 33.3 percent on each of the second and third anniversaries
thereof. See "Change-in-Control Arrangements."
(B) These calculations are based on certain assumed annual rates of
appreciation as required by executive compensation disclosure rules adopted
by the SEC. Under these rules, an assumption is made that the shares
underlying the stock options shown in this table will appreciate at rates
of 5% and 10% per annum on a compounded basis over the ten-year term of the
stock options. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Company's common stock and
overall stock market conditions. There is no assurance that amounts
reflected in this table will be achieved.
OPTION EXERCISES AND HOLDINGS
The following table provides information concerning unexercised options held at
September 30, 1999 with respect to the named executive officers. No named
executive officer exercised any options during fiscal 1999.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of
Securities Underlying Value of Unexercised
Unexercised Options In-The-Money Options
At September 30, 1999 (#) At September 30, 1999 (A)
Name Exercisable Unexercisable Exercisable Unexercisable
----------------------------- ----------------------------------- ---------------------------------
<S> <C> <C> <C> <C>
Lyle G. Hubbard 357,250 318,812 $8,438 $ --
Richard C. Dietz 83,750 53,353 14,438 --
</TABLE>
(A) Calculated based on the difference between the market value of the
underlying securities at September 30, 1999, $7.02 per share, and the
exercise price of the unexercised options.
11
<PAGE>
DIRECTOR COMPENSATION
During fiscal 1999, four non-employee Directors of the Company, Ms. McWilliams
and Messrs. Kesselman, Mazer and Ray, received an annual retainer of $9,000 paid
in three equal quarterly installments; Messrs. Anderson, Coleman, Fish, Hubbard
and Wenner are not paid a retainer. Ms. Stepp is paid an annual retainer of
$20,000 in equal quarterly installments for performing her duties as Chairman of
the Board. Non-employee Directors are also reimbursed for their expenses
incurred in attending meetings of the Board of Directors. Each non-employee
Director also automatically receives an annual stock option grant under the 1992
Plan covering 6,000 shares of the Company's common stock on the date of each
Annual Meeting of Shareholders.
EMPLOYMENT CONTRACTS AND SEVERANCE AND CHANGE-IN-CONTROL ARRANGEMENTS
EMPLOYMENT CONTRACT WITH LYLE G. HUBBARD
In April 1996, Lyle G. Hubbard entered into an employment agreement with the
Company to serve as its Chief Executive Officer for a three-year term. The
employment agreement was amended in November 1998, March 1999, and December
1999. The agreement and the amendments are together referred to as the
"Employment Agreement."
The Employment Agreement required the Company's Board of Directors to review Mr.
Hubbard's performance within 60 days prior to the end of the second year of Mr.
Hubbard's employment and decide whether to extend the term for an additional
year, and to conduct similar reviews of Mr. Hubbard's performance within 60 days
prior to the end of each successive year of the term of the Employment
Agreement. Pursuant to this provision, the term of the Employment Agreement has
been extended to April 15, 2001.
The Employment Agreement provided for initial base compensation of $225,000 per
year, plus performance-based bonus awards. The Board of Directors periodically
reviews Mr. Hubbard's base compensation and may increase, but not decrease, the
amount of such compensation. Mr. Hubbard's base salary was $315,000 during 1999.
The Employment Agreement also provides that, in the event Mr. Hubbard's
employment is terminated by virtue of death or disability or "without cause" in
the absence of a "change in control" (as defined in the Employment Agreement),
he will be entitled to severance pay equal to the greater of one and one-half
times his annual base compensation in effect as of the date of termination or
the base compensation remaining to be paid to him for the duration of the term
of the Employment Agreement, plus one and one-half times the average of the
incentive bonuses received by Mr. Hubbard for the two calendar years preceding
the calendar year in which the termination occurs. "Change in control" is
defined substantially as described under "Severance and Change-in-Control
Arrangements" below. If Mr. Hubbard's employment is terminated either by Mr.
Hubbard with "good reason" (as defined in the Employment Agreement) or by the
Company without cause within two years after a change in control of the Company
for a share price greater than certain minimum levels, Mr. Hubbard's severance
pay will consist of an amount equal to 2.99 times the sum of the average annual
base compensation paid to Mr. Hubbard during the "Base Period" as defined by
Internal Revenue Code Section 280G(d)(2) and the average of the annual incentive
bonuses received by Mr. Hubbard during the "Base Period" (but excluding from the
"Base Period" for purposes of calculating the average of the annual incentive
bonuses any period ending prior to January 1, 1997). If Mr. Hubbard's employment
12
<PAGE>
is terminated for "good reason" or "without cause" within two years after a
change in control of the Company for a share price less than certain minimum
levels, his severance pay will consist of one and one-half times the higher of
his annual base compensation in effect as of the date of termination of his
employment or the date immediately prior to the change in control, plus an
amount equal to one and one-half times the higher of his annual target incentive
bonus in effect as of the date of termination or the date immediately prior to
the date of the change in control.
The Employment Agreement contains a noncompetition covenant that prohibits Mr.
Hubbard, during his employment and for a two-year period after the date of
termination of his employment with the Company, from engaging in or assisting
any business that competes with the Company in the production, marketing or sale
of meat substitute vegetarian food products. Under the Employment Agreement, if
Mr. Hubbard's employment is terminated in connection with a change in control of
the Company, the Company, for an 18-month period following the termination, will
pay for life, accident and health insurance benefits substantially similar in
all material respects to those which Mr. Hubbard was receiving immediately prior
to the date of termination.
RETENTION BONUSES
In November 1999, the Company authorized the payment of a one-time retention
bonus to Mr. Hubbard if he continues to be an employee of the Company through
December 31, 2000, or the date of an earlier change in control of the Company,
provided that his employment has not theretofore been terminated for cause. The
amount of the retention bonus will be $500,000.
The Company also authorized the payment of a one-time retention bonus to each
current member of the Company's senior management team other than Mr. Hubbard if
such person continues to be an employee of the Company through December 31,
2000, or the date of an earlier change in control of the Company. The amount of
each bonus will be equal to the employee's 1999 base salary.
SEVERANCE AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company has entered into a severance agreement with Mr. Dietz pursuant to
which he is entitled to receive, in connection with involuntary termination of
employment other than for cause, six months' salary and benefits, as well as up
to an additional six months' salary and benefits until new employment is found.
In addition, all unvested options held by Mr. Dietz will become immediately
exercisable and will have a five-year term from the date of involuntary
termination. If Mr. Dietz's employment is terminated by the Company (or its
successor) without cause or by Mr. Dietz for good reason within two years of a
change in control of the Company occurring prior to December 31, 2001 (subject
to extension), Mr. Dietz will receive a payment equal to one and one-half times
the sum of the higher of his annual base salary as of the date of termination or
the date immediately prior to the change in control, and the higher of his
annual incentive target bonus in effect as of the date of termination or the
date immediately prior to the change in control. Mr. Dietz will also be entitled
to receive group health and life insurance benefits for 18 months following
termination. Termination for "good reason" includes such actions as a
substantial adverse change in the nature or status of the employee's
responsibilities or a reduction in salary, and "cause" includes conviction for
commission of a felony, failure to substantially perform assigned duties,
intentional or grossly negligent conduct that harms the Company, violation
13
<PAGE>
of a key Company policy, or diversion of corporate opportunities to the
Company's detriment.
Certain options granted to the named executive officers of the Company after May
24, 1995 contain provisions to the effect that such options will immediately
become exercisable as to shares not previously vested upon (i) termination of
employment by the Company without cause, or as a result of the optionee's death
or disability; or (ii) a change in control of the Company. A change in control
will be deemed to have occurred upon the earlier of:
(a) the date that any person becomes a beneficial owner, directly or
indirectly, of securities of the Company representing 25 percent or more of the
combined voting power of the Company's then outstanding securities; or
(b) the date of any annual or special meeting of shareholders at which a
majority of the Directors then elected are not individuals nominated by the
Company's then incumbent Board; or
(c) the date of approval by the shareholders of the Company of (i) a plan
of merger or consolidation of the Company in which such shareholders will not
hold at least 75 percent of the combined voting power of the resulting entity
immediately following such merger or consolidation, or (ii) a plan of complete
liquidation of the Company or an agreement for the sale of substantially all of
the Company's assets.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors approves all of the
policies under which compensation is paid or awarded to the Company's executive
officers. The Board of Directors is responsible for reviewing executive officer
compensation in accordance with policies approved by the Board. Executive
officers who serve on the Board of Directors do not participate in decisions
concerning their own compensation. Awards to executive officers under the
Company's 1992 First Amended and Restated Combination Stock Option Plan are made
by the Compensation Committee.
COMPENSATION PHILOSOPHY AND POLICIES
The Company's philosophy is to structure executive officer compensation so that
it will attract, motivate and retain senior management by providing an
opportunity for competitive compensation based on the performance of the
Company. Executive officer compensation includes market competitive base
salaries, annual performance-based bonuses, 401(k) contributions and long-term
stock-based incentive opportunities in the form of options exercisable to
purchase the Company's common stock. Section 162(m) of the Internal Revenue Code
places a limit on the amount of compensation that may be deducted by the Company
in any year with respect to each of the Company's named executive officers. It
is the policy of the Board of Directors that, to the extent possible,
compensation will be structured so that it meets the "performance-based"
criteria as defined by Section 162(m) and therefore is not subject to federal
income tax deduction limitations. The Board of Directors has the right to waive
pre-established performance criteria in granting awards.
14
<PAGE>
BASE SALARIES
In setting the salaries for 1999 of the executive officers listed in the Summary
Compensation Table above, the Company utilized a study prepared by Towers
Perrin. The study surveyed companies within the Company's industry and looked at
factors such as annual revenues and expected growth rates. Some of the companies
included in the above mentioned survey are also included in the indices used in
the Performance Graph included in this Proxy Statement. Base salaries are
targeted to be near the 50th percentile of the comparison companies. Based on
this target, Mr. Hubbard's 1999 base salary level was established at $315,000.
ANNUAL BONUSES
The Company's 1999 Executive Bonus Plan provided for performance-based bonuses
based on achieving certain revenue growth targets while not exceeding certain
operating loss objectives. Target bonus amounts were 55 percent of base salary
for the Chief Executive Officer and 45 percent of base salary for the Company's
other executive officers. The bonus target is based 25 percent on achievement of
key strategic objectives that vary by position and 75 percent on attaining sales
growth and profitability targets. An unlimited payout is possible for exceeding
the sales growth targets. Towers Perrin assisted the Compensation Committee in
the determination of bonus criteria and target amounts relative to annual base
salary. No amounts were paid under the 1999 Executive Bonus Plan.
CAPITAL ACCUMULATION/RETIREMENT PLANS
The Company offers its employees the opportunity to participate in a defined
contribution retirement (401(k)) plan designed to allow employees, including
executive officers, to accumulate retirement funds. The first two percent of
each employee's compensation is eligible for a pro-rata matching contribution by
the Company.
STOCK OPTION AWARDS FOR 1999
The Company's 1992 First Amended and Restated Combination Stock Option Plan
provides for the issuance of stock options to officers and employees of the
Company to purchase shares of the Company's common stock. Options are granted at
an exercise price equal to 100% of the fair market value of the Company's common
stock on the date of grant. Stock options are granted to aid in attracting and
retaining key employees and to align the interests of key employees with those
of shareholders by providing an economic incentive to maximize shareholder
value. Stock options have value for employees only if the price of the Company's
stock increases above the fair market value on the date the option is granted.
The number of shares subject to stock options granted to an employee is based on
the employee's ability to affect corporate results, which generally depends on
the level and amount of responsibility of the employee's position. See the
"Option Grants in Last Fiscal Year" table for a summary of stock options granted
to the named executive officers in 1999.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS:
Mary O. McWilliams (Chair) Jason M. Fish
Alexander P. Coleman E. Kay Stepp
15
<PAGE>
STOCK PERFORMANCE GRAPH
The SEC requires that public companies include in their proxy statements a
line-graph presentation comparing cumulative five-year shareholder returns on an
indexed basis, assuming a $100 initial investment and reinvestment of dividends,
of (a) the company, (b) a broad-based equity market index and (c) an
industry-specific index. The broad-based market index used by the Company is the
Nasdaq Stock Market Total Return Index - U.S. and the industry-specific index
used is the Standard & Poors MidCap Foods Index.
[STOCK PERFORMANCE GRAPH DIAGRAM]
<TABLE>
<CAPTION>
Base Indexed Returns
Period Year Ended
-------------------------------------------------------------------
Company/Index 9/30/94 9/30/95 9/30/96 9/30/97 9/30/98 9/30/99
- ------------------------------ ----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Gardenburger, Inc. $100.00 $77.19 $ 56.14 $ 66.67 $ 79.82 $ 54.39
Nasdaq U.S. Index 100.00 138.07 163.84 224.97 228.77 371.52
S&P MidCap Foods Index 100.00 121.60 125.22 163.52 146.92 135.99
</TABLE>
<TABLE>
<CAPTION>
Annual Percentage Return
Year Ended
---------------------------------------------------------------------
Company/Index 9/30/95 9/30/96 9/30/97 9/30/98 9/30/99
- ------------------------------ ---------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Gardenburger, Inc. (22.81)% (27.27)% 18.75% 19.74% (31.87)%
Nasdaq U.S. Index 38.07 18.67 37.31 1.69 62.40
S&P MidCap Foods Index 21.60 2.98 30.58 (10.15) (7.44)
</TABLE>
16
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has selected Arthur Andersen LLP as its independent public
accountants for the fiscal year ended September 30, 2000. Arthur Andersen LLP
served as the Company's independent public accountants for the fiscal year ended
September 30, 1999. A representative from Arthur Andersen LLP is expected to be
present at the Company's Annual Meeting of Shareholders in order to respond to
appropriate questions and will have the opportunity to make a statement if he or
she desires to do so.
MANAGEMENT TRANSACTIONS
The Company's Board of Directors has adopted a policy that any transactions
between the Company and its officers, Directors, employees and affiliates will
be on terms no less favorable to the Company than can be obtained from
unaffiliated parties. Any such transactions will be subject to the approval of a
majority of the disinterested members of the Board of Directors.
On April 14, 1999, the Company sold 1,000,000 shares of preferred stock to
Rosewood Capital III, L.P. for an aggregate purchase price of $10,000,000. Kyle
A. Anderson, a founding member of the general partner of Rosewood Capital III,
L.P., became a Director at the time of the share purchase. Gruber & McBaine
Capital Management LLC, which owns more than 5 percent of the outstanding common
stock, purchased 400,000 shares of preferred stock in the same transaction for
an aggregate purchase price of $4,000,000. See also "Compensation Committee
Interlocks and Insider Participation in Compensation Decisions" above.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's Directors and executive
officers and persons who own more than 10 percent of the outstanding shares of
the Company's common stock ("10 percent shareholders"), to file with the SEC
initial reports of beneficial ownership and reports of changes in beneficial
ownership of shares of common stock and other equity securities of the Company.
To the Company's knowledge, based solely on review of the copies of such reports
furnished to the Company or otherwise in its files and on written
representations from its Directors, executive officers and 10 percent
shareholders, the Company's officers, Directors and 10 percent shareholders
complied with all applicable Section 16(a) filing requirements during 1999.
17
<PAGE>
SHAREHOLDER PROPOSALS
Any shareholder who wishes to have a proposal included in the Company's proxy
materials for its 2001 Annual Meeting must deliver the proposal to the Company
at its principal executive office no later than September 12, 2000. Any such
proposal must meet the informational and other requirements set forth in the
SEC's rules and regulations in order to be eligible for inclusion in the proxy
materials for that meeting.
The Company's bylaws also provide that a shareholder may not present a matter
for action at a meeting (other than matters included in the notice of the
meeting) unless the shareholder has delivered written notice thereof to the
Secretary not less than 60 days and not more than 90 days prior to the first
anniversary of the preceding year's annual meeting. In the case of the Company's
2001 Annual Meeting, this notice must be received by the Company no later than
December 16, 2000. The notice must include the information listed in the bylaw
provision.
TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors is not aware of
any other matters that may come before this meeting. It is the intention of the
persons named in the enclosed proxy to vote the proxy in accordance with their
best judgment if any other matters do properly come before the meeting.
Please return your proxy as soon as possible. Unless a quorum consisting of a
majority of the outstanding shares entitled to vote is represented at the
meeting, no business can be transacted. Therefore, please be sure to date and
sign your proxy exactly as your name appears on your stock certificate and
return it in the enclosed postage prepaid return envelope. Please act promptly
to ensure that you will be represented at this important meeting.
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, UPON THE WRITTEN REQUEST OF ANY
BENEFICIAL OWNER OF SHARES OF THE COMPANY'S COMMON STOCK ENTITLED TO VOTE AT THE
ANNUAL MEETING OF SHAREHOLDERS, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K AS FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION FOR THE COMPANY'S
FISCAL YEAR ENDED SEPTEMBER 30, 1999. WRITTEN REQUESTS SHOULD BE MAILED TO THE
SECRETARY, GARDENBURGER, INC., 1411 SW MORRISON STREET, SUITE 400, PORTLAND,
OREGON 97205.
By Order of the Board of Directors:
E. Kay Stepp
Dated: January 10, 2000 CHAIRMAN OF THE BOARD OF DIRECTORS
18
<PAGE>
GARDENBURGER, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 2000 ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints E. Kay Stepp and Richard C. Dietz as proxies,
each with power to act alone and with full power of substitution, to vote all of
the shares that the undersigned is entitled to vote at the Annual Meeting of
Shareholders of Gardenburger, Inc. to be held on February 14, 2000, at 1:00 p.m.
Mountain Standard Time, and any adjournments thereof, with all the powers that
the undersigned would possess if personally present.
PLEASE MARK, SIGN, AND RETURN THE PROXY CARD PROMPTLY
(Continued and to be signed on reverse side.)
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
Command Financial Press Corp.--New York (212)274-0070 Rev. 1.0 12:00 1/5/00
13936 Proxy,2
First Chicago Trust Company--Gardenburger
- --------------------------------------------------------------------------------
Please mark your
/X/ votes as in this
example.
THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFIC DIRECTION
IS GIVEN AS TO THE ITEM BELOW, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES
NAMED IN PROPOSAL 1. ---
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR EACH OF THE NOMINEES LISTED BELOW.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of Nominees:
Directors (Check / / / / Alexander P. Coleman, Lyle G. Hubbard,
only one box) Ronald C. Kesselman, Richard L. Mazer,
Mary O. McWilliams, Michael L. Ray,
E. Kay Stepp, Paul F. Wenner
Instructions: To withhold authority to vote for any individual nominee, mark
"For" above and write the individual's name on the line below.
In their discretion, the Proxies are
authorized to consider and act upon any
other matter which may properly come
before the meeting or any adjournment
thereof.
- ------------------------- The undersigned acknowledges receipt of
the 2000 Notice of Annual Meeting and
accompanying Proxy Statement and revokes
all prior proxies for said meeting.
SIGNATURE(S)___________________________ DATE______________________________
NOTE: Please sign exactly as name appears above. Joint owners each should
sign. Fiduciaries should add their full title to their signature.
Corporations should sign in full corporate name by an authorized officer.
Partnerships should sign in partnership name by an authorized person.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOU ARE CORDIALLY INVITED TO ATTEND THE
ANNUAL MEETING OF SHAREHOLDERS OF
GARDENBURGER, INC.
TO BE HELD
MONDAY, FEBRUARY 14, 2000
1:00 P.M. MOUNTAIN STANDARD TIME,
LITTLE AMERICA HOTEL AND TOWERS
500 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84101
<PAGE>
P R O X Y
GARDENBURGER, INC.
TO HOLDERS OF SERIES A CONVERTIBLE PREFERRED STOCK
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 2000 ANNUAL MEETING OF SHAREHOLDERS
The undersigned holder of Series A Convertible Preferred Stock of Gardenburger,
Inc. hereby appoints E. Kay Stepp and Richard C. Dietz as proxies, each with
power to act alone and with full power of substitution, to vote all of the
shares of Series A Convertible Preferred Stock that the undersigned is entitled
to vote at the Annual Meeting of Shareholders of Gardenburger, Inc. to be held
on February 14, 2000, at 1:00 p.m. Mountain Standard Time and any adjournments
thereof, with all the powers that the undersigned would possess if personally
present.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
(Continued and to be signed on reverse side.)
<PAGE>
THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN
THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFIC
DIRECTION IS GIVEN AS TO THE ITEM BELOW. THIS PROXY WILL BE VOTED FOR EACH OF
THE NOMINEES NAMED IN PROPOSAL 1. ---
FOR WITHHELD
/ / / /
1. Election of Nominees:
Directors Kyle A. Anderson, Alexander P. Coleman, Jason
M. Fish, Lyle G. Hubbard, Ronald C.
(Check only one box) Kesselman, Richard L. Mazer, Mary O.
McWilliams, Michael L. Ray, E. Kay Stepp,
Paul F. Wenner
Instruction: To withhold authority to vote for any individual nominee, mark
"FOR" above and write the individual's name on the line below.
_________________________________
________________________________________________________________________________
In their discretion, the proxies are authorized to consider and act upon any
other matter which may properly come before the meeting or any adjournment
thereof.
The undersigned acknowledges receipt of the 2000 Notice of Annual Meeting and
accompanying Proxy Statement and revokes all prior proxies for said meeting
relating to the Series A Convertible Preferred Stock.
SIGNATURE(S)____________________________________DATE____________________________
________________________________________________________________________________
NOTE: Please sign exactly as name appears above. Joint owners each should
sign. Fiduciaries should add their full title to their signature. Corporations
should sign in full corporation name by an authorized officer. Partnerships
should sign in partnership name by an authorized person.
