EXECUTION COPY
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of January 10, 2002, by and between
DRESDNER KLEINWORT XXXXXX PRIVATE EQUITY PARTNERS LP, a Delaware limited
partnership (the "PURCHASER"), and GARDENBURGER, INC., an Oregon corporation
(the "COMPANY"). Capitalized terms used herein shall have the meanings given to
such terms in SECTION IV(A) hereof.
WHEREAS, the Purchaser is acquiring from the Company a warrant in
the form attached as EXHIBIT A hereto (the "WARRANT"), representing the right to
purchase from the Company a certain number of Warrant Shares (as adjusted from
time to time pursuant to the provisions of the Warrant) on the terms and
conditions set forth in the Warrant; and
WHEREAS, the Warrant is being issued as an inducement and partial
consideration for the Purchaser to enter into the Second Amendment to the Note
Purchase Agreement dated as of the date hereof by and between the Purchaser and
the Company (the "AMENDMENT"), and without such issuance, the Purchaser will not
enter into the Amendment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
I. CLOSING.
A. CLOSING. The closing of the issuance of the Warrant to the
Purchaser (the "CLOSING") shall take place simultaneously with the closing
pursuant to the Amendment. The date of such Closing is hereinafter referred to
as the "CLOSING DATE."
B. TRANSACTIONS ON CLOSING DATE. At the Closing, the Company
shall deliver to the Purchaser the duly issued Warrant.
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Purchaser as follows:
A. ORGANIZATION. The Company is a corporation duly organized
and validly existing under the laws of the State of Oregon.
B. AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has all
requisite corporate power and authority to enter into and perform its
obligations under this Agreement and to issue and deliver the Warrant to the
Purchaser. The execution, delivery, and performance by the Company of its
obligations under this Agreement, including the issuance and delivery of the
Warrant to the Purchaser, have been duly authorized by all necessary corporate
action on the part of the Company. This Agreement has been duly executed and
delivered by the Company and (assuming due execution and delivery by the
Purchaser) is a legal, valid, and binding obligation of the Company and is
enforceable against the Company in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy laws or similar laws
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affecting creditors rights generally and except as available equitable remedies
may be limited by applicable law from time to time.
C. NO CONFLICT OR VIOLATION. The execution and delivery of this
Agreement by the Company, the performance by the Company of its terms and the
issuance and delivery of the Warrant to the Purchaser will not, on the Closing
Date, conflict with or result in a violation of (i) the Articles of
Incorporation or Bylaws of the Company as in effect on the Closing Date, or (ii)
any agreement, instrument, law, rule, regulation, order, writ, judgment, or
decree to which the Company is a party or is subject; provided, that the
representations and warranties of Purchaser in SECTION III hereof are true,
complete and correct.
D. VALIDITY OF ISSUANCE; CAPITALIZATION. The Warrant to be
issued to the Purchaser pursuant to this Agreement and the Warrant Shares issued
upon exercise of the Warrant will, when issued, be duly and validly issued,
fully paid and nonassessable (assuming in the case of the Warrant Shares,
payment of the exercise price is made in accordance with the terms of the
Warrant). As of the date hereof, the Warrant Shares issuable upon full exercise
of the Warrant represent 5% of the Company's Common Stock outstanding, including
for this purpose all securities convertible into Common Stock and all options,
warrants and other rights to purchase Common Stock issued and outstanding on the
date hereof, in each case with a conversion or exercise price equal to or less
than $0.60 per share of Common Stock (as adjusted for any stock splits, stock
dividends, mergers, consolidations or other reorganizations) and after giving
effect to the issuance of the Warrant, and warrants to purchase Common Stock to
be issued to the holders of the Company's Series A Convertible Preferred Stock
("SERIES A PREFERRED") and Series B Convertible Preferred Stock ("SERIES B
PREFERRED") as consideration for the exchange of such Series A Preferred and
Series B Preferred for newly issued preferred stock of the Company.
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
hereby represents and warrants to the Company as follows:
A. INVESTMENT INTENTION. The Purchaser is acquiring the
Warrant, and if any portion of the Warrant is exercised, the Warrant Shares, for
investment solely for its own account and not with a view to, or for resale in
connection with, the distribution or other disposition thereof. The Purchaser
agrees and acknowledges that it will not, directly or indirectly, offer,
transfer, or sell the Warrant or any Warrant Shares, or solicit any offers to
purchase or acquire the Warrant or any Warrant Shares, unless the transfer or
sale is (i) pursuant to an effective registration statement under the Securities
Act of 1933, as amended, and the rules and regulations thereunder (the
"SECURITIES ACT") and has been registered under any applicable state securities
or "blue sky" laws, or (ii) pursuant to an exemption from registration under the
Securities Act and applicable state securities or "blue sky" laws.
B. LEGEND. The Purchaser has been advised by the Company that
the certificates representing the Warrant will bear the following legend:
THIS WARRANT WAS ORIGINALLY ISSUED ON JANUARY 10, 2002 AND HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS
THEREUNDER OR THE PROVISIONS OF
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THIS WARRANT. THIS WARRANT IS ALSO SUBJECT TO A WARRANT AGREEMENT
DATED AS OF JANUARY 10, 2002 BY AND BETWEEN THE ISSUER HEREOF (THE
"COMPANY") AND THE ORIGINAL HOLDER HEREOF. A COPY OF SUCH AGREEMENT
WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF
UPON REQUEST.
Upon reasonable request of the Company in connection with any transfer of the
Warrant or any Warrant Shares (other than a transfer pursuant to a public
offering registered under the Securities Act, pursuant to Rule 144 or Rule 144A
promulgated under the Securities Act (or any similar rules then in effect), or
to an affiliate of the Purchaser), the Purchaser will deliver, if requested by
the Company, an opinion of counsel knowledgeable in securities laws reasonably
satisfactory to the Company to the effect that such transfer may be effected
without registration under the Securities Act. The Company agrees to issue
certificates evidencing the Warrant Shares that do not contain such legend upon
receipt of an opinion of counsel, which opinion and counsel shall be reasonably
satisfactory to the Company, to the effect that registration under the
Securities Act is not required with respect to any transfer of the Warrant
Shares because of the availability of an exemption from such registration.
C. ADDITIONAL INVESTMENT REPRESENTATIONS. The Purchaser is an
"accredited investor" as such term is defined in Rule 501 promulgated under the
Securities Act.
IV. MISCELLANEOUS
A. DEFINITIONS. For the purposes of this Agreement, the
following terms shall have the following meanings:
"COMMON STOCK" means, collectively, the Company's Common Stock,
no par value, and any capital stock of any class of the Company hereafter
authorized which is not limited to a fixed sum or percentage of par or stated
value in respect of rights of the holders thereof to participate in dividends or
in distribution of assets upon any liquidation, dissolution or winding up of the
Company.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of March 27, 1998, by and between the Company and the
Purchaser, as amended, restated or modified from time to time.
"WARRANT SHARES" means shares of the Common Stock obtained or
obtainable upon exercise of the Warrant; provided, that if there is a change
such that the securities issuable upon exercise of the Warrant are issued by an
entity other than the Company or there is a change in the class of securities so
issuable, then the term "WARRANT SHARES" shall mean shares of the security
issuable upon exercise of the Warrants if such security is issuable in shares,
or shall mean the equivalent units in which such security is issuable if such
security is not issuable in shares.
B. REGISTRATION RIGHTS. The parties hereto acknowledge and
agree that upon the exercise of the Warrant, (i) the Warrant Shares shall be
deemed "REGISTRABLE
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SECURITIES" for all purposes of the Registration Rights Agreement, and (ii) the
Warrant Shares and the holders thereof shall be subject to the terms and
conditions of the Registration Rights Agreement as it may be amended, modified,
or restated from time to time in accordance with its respective terms. The
Registration Rights Agreement is deemed to be amended to the extent necessary to
effectuate the foregoing provisions of this SECTION IV(B).
C. NOTICES. All notices and other communications provided for
herein shall be dated and in writing and shall be deemed to have been duly given
(i) when delivered, if delivered personally, sent by registered or certified
mail, return receipt requested and postage prepaid, or sent via nationally
recognized overnight courier or via facsimile, and (ii) when received if
delivered otherwise, to the party to whom it is directed:
To the Company:
Gardenburger, Inc.
0000 X.X. Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile No: (000) 000-0000
To Purchaser:
Dresdner Kleinwort Xxxxxx Private Equity Partners LP
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
with a copy (which shall not constitute notice to
Purchaser) to:
Xxxxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxx, Esq.
Facsimile No.: (000) 000-0000
or to such other address as either party hereto shall have specified by notice
in writing to the others.
D. ASSIGNMENT. This Agreement and all the provisions hereof
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns, except that neither this
Agreement nor any rights or obligations hereunder shall be assigned by the
Company without the prior written consent of the Purchaser.
E. AMENDMENT. This Agreement may be amended only by a written
instrument signed by the Company and the Purchaser.
F. WAIVER. Either party hereto may (i) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(ii) waive any
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inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of the
agreements or conditions herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid as to such party if set forth in an
instrument in writing signed by such party.
G. SEVERABILITY. In the event that any one or more of the
provisions hereof, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, it being
intended that all rights, powers and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
H. APPLICABLE LAW. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than those of the
State of New York.
I. EXPENSES. All reasonable fees and expenses incurred by the
Purchaser in connection with the preparation of this Agreement and the
transactions referred to herein, including the reasonable fees of the
Purchaser's counsel, shall be paid by the Company, whether or not the issuance
of the Warrant, the execution and delivery of the Amendment or any other
transaction contemplated hereby is consummated.
J. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which together shall be deemed to be one and the same
agreement.
K. DESCRIPTIVE HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of the terms contained herein.
* * * * *
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WHEREOF, the parties hereto have caused this Warrant Agreement to be
signed and attested by its duly authorized officers under its corporate seal and
to be dated as of the date hereof.
GARDENBURGER, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President & CEO
DRESDNER KLEINWORT XXXXXX PRIVATE EQUITY
PARTNERS LP
By:Dresdner Kleinwort Xxxxxx Private Equity
LLC
Its: General Partner
By: /s/ Xxxxxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title: Managing Investment Partner
By: /s/ Xxxx Xxxxxx
------------------------------
Name: Xxxx Xxxxxx
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