REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
January 10, 2002, by and among Gardenburger, Inc., an Oregon corporation (the
"Company"), and the persons and entities listed on the signature pages below
("Preferred Stockholders").
RECITALS
A. The Company has agreed to issue to Preferred Stockholders shares of its
Series C Convertible Preferred Stock ("Series C Stock"), Series D Convertible
Preferred Stock ("Series D Stock") and warrants to purchase Common Stock
("Warrants") pursuant to the Preferred Stock Exchange Agreement between the
Company and Preferred Stockholders of even date herewith (the "Exchange
Agreement").
B. As a condition to Preferred Stockholders' obligations under the
Exchange Agreement, the Company has agreed to grant Preferred Stockholders
registration rights as described herein.
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth herein, the parties agree as follows:
Section 1. DEFINITIONS. As used in this Agreement, the following terms shall
have the meanings given:
(a) "Affiliate" means with respect to any particular person, any
other person controlling, controlled by or under common control with such
person, and "control" means the possession, directly or indirectly, of the power
to direct the management and policies of a person whether through ownership,
contract, or otherwise.
(b) "Board" or "Board of Directors" means the board of directors of
the Company as constituted from time to time.
(c) "Commission" means the Securities and Exchange Commission, or
any other federal agency at the time administering the Securities Act.
(d) "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.
(e) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
(f) "Fair Market Value" means (i) the average of the closing sales
prices of Common Stock on all domestic securities exchanges on which the Common
Stock is listed, (ii) if there have been no sales, the average of the high bid
and low ask prices on all such exchanges at
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the end of such day, (iii) if on any day the Common Stock is not listed on an
exchange, the sales price for the Common Stock as of 4 p.m. Eastern time as
reported on the Nasdaq National Market, or (iv) if the Common Stock is not
listed on an exchange or reported on the Nasdaq National Market, the average of
representative bid and ask quotations for the Common Stock as of 4 p.m., Eastern
time, as reported on the Nasdaq inter dealer quotation system or any similar
successor organization, in each case averaged over a period of 10 consecutive
trading days, including the day as of which Fair Market Value is being
determined. Notwithstanding the foregoing, if at any time of determination the
Common Stock is not registered pursuant to Section 12 of the Exchange Act and
either (x) listed on a national securities exchange or authorized for quotation
in the Nasdaq system or (y) less than 25% of the outstanding Common Stock is
held by the public free of transfer restrictions under the Securities Act of
1933, as amended, then Fair Market Value shall mean the price that would be paid
per share for the entire common equity interest in the Company in an orderly
sales transaction between a willing buyer and a willing seller as determined
pursuant to good faith negotiations between the Company and Preferred Holders
Designees. In the event the parties cannot agree on Fair Market Value, Fair
Market Value will be determined by an independent investment banking firm
mutually acceptable to the Company and the Preferred Holders Designees, which
firm shall submit to the Company and the Holders a written report setting forth
such determination. The expenses of such firm will be borne by the Company,
provided that in the event Fair Market Value as determined by such firm is
within 10 percent of the value determined in good faith by the Board prior to
appraisal, expenses will be paid one-half by the Company and one-half pro rata
by all affected Holders.
(g) "Holder" means any holder of outstanding Registrable Securities
or anyone who holds outstanding Registrable Securities to whom the registration
rights conferred by this Agreement have been transferred in compliance with this
Agreement.
(h) "Initiating Holders" means any Holder or Holders of at least
thirty percent (30%) of the Registrable Securities then outstanding.
(i) "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 written determination 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 written 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
written determination by the Board of Directors of the Company that the
registration statement would be materially misleading absent the inclusion of
such information.
(j) "Preferred Holders Designees" means the two individuals selected
by the holders of a majority of the Series C Stock and Series D Stock, acting
together.
(k) "Register," "registered" and "registration" refers to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement, and compliance with applicable
state securities laws of such states in which Holders notify the Company of
their intention to offer Registrable Securities.
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(l) "Registrable Securities" means all shares of Common Stock of the
Company issued or issuable upon exercise of the Warrants or conversion of the
Series C Stock or Series D Stock, including any shares of Common Stock issued or
issuable as a dividend or other distribution with respect to, or in exchange for
or in replacement of, such Common Stock issued or issuable upon the exercise of
the Warrants or conversion of such Series C Stock or Series D Stock.
Notwithstanding the foregoing, Registrable Securities shall not include
otherwise Registrable Securities (i) sold by a person in a transaction in which
rights under this Agreement are not properly assigned; (ii) sold in a registered
transaction or in a transaction exempt from the registration requirements of the
Securities Act under Rule 144, Rule 144A or other exemption; or (iii) the
registration rights associated with which have been terminated pursuant to the
terms of this Agreement.
(m) "Registration Expenses" means 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, and the expense of any special audits incident to or
required by any such registration.
(n) "Rule 144" and "Rule 144A" shall mean Rule 144 and Rule 144A,
respectively, under the Securities Act or any successor or similar rules as may
be enacted by the Commission from time to time.
(o) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
Section 2. RESTRICTIONS ON TRANSFERABILITY. The Registrable Securities (as
defined herein) shall not be sold, assigned, transferred or pledged except upon
the conditions specified in this Agreement, which conditions are intended to
ensure compliance with the provisions of the Securities Act. Each Holder will
cause any proposed purchaser, assignee, transferee, or pledgee of the
Registrable Securities held by a Holder to agree to take and hold such
securities subject to the provisions and upon the conditions specified in this
Agreement.
Section 3. RESTRICTIONS ON TRANSFER.
(a) Each certificate representing Registrable Securities will be
imprinted with a legend substantially in the following form:
THE SHARES OF THE CORPORATION REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE FEDERAL OR STATE
SECURITIES LAWS. THESE SHARES MAY NOT BE OFFERED FOR SALE, SOLD,
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
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Each Holder consents to the Company making a notation on its records
and giving instructions to any transfer agent of the Registrable Securities in
order to implement the restrictions on transfer established in this Agreement.
(b) NOTICE. Each Holder of a certificate representing Registrable
Securities, by acceptance thereof, agrees not to make any disposition of all or
any portion of any Registrable Securities unless and until:
(1) There is in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement;
(2) Either Rule 144(k) or Rule 144A promulgated under the
Securities Act is available and complied with in any such disposition; or
(3) (A) Such Holder shall have notified the Company in writing
of the proposed disposition and furnished the Company with a detailed statement
of the circumstances surrounding the proposed disposition, and
(B) If reasonably requested by the Company, such Holder
shall furnish the Company with an opinion of counsel, reasonably satisfactory to
the Company, that such disposition will not require registration of securities
under the Securities Act.
(c) EXCEPTIONS. Notwithstanding the provisions of paragraphs (a) and
(b) above, no registration statement or opinion of counsel shall be necessary
for a transfer by a Holder to an Affiliate thereof.
Section 4. DEMAND REGISTRATION.
(a) NOTICE OF REGISTRATION; REGISTRATION. If the Company shall
receive from Initiating Holders a written request that the Company effect any
registration with respect to all or at least one-half of the Registrable
Securities held by Initiating Holders, the Company shall:
(i) promptly give written notice of the proposed registration
to all other Holders; and (ii) as soon as practicable use commercially
reasonable efforts to register (including, without limitation, the execution of
an undertaking to file post-effective amendments and any other governmental
requirements) all Registrable Securities which the Initiating Holders request to
be registered within 30 days after written notice from the Company; provided,
that the Company shall not be obligated to file a registration statement
pursuant to this Section 4:
(A) prior to six months following the date of this Agreement;
(B) in any particular state in which the Company would be required to
execute a general consent to service of process in effecting such registration;
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(C) within 120 days following the effective date of any registered
offering of the Company's securities to the general public in which the Holders
of Registrable Securities shall have been able effectively to register all
Registrable Securities as to which registration shall have been requested;
(D) in any registration having an aggregate offering price (before
deduction of underwriting discounts and expenses of sale) of less than
$1,000,000;
(E) after the Company has effected two such registrations pursuant to this
Section 4 and such registrations have been declared or ordered effective, except
as provided in Section 5, and provided further, that a registration declared and
ordered effective in which less than 80% of the number of Registrable Securities
that were initially covered in the preliminary prospectus for such registration
are ultimately disposed of shall not be counted as a registration pursuant to
this Section 4; or
(F) if the Company's audited financial statements would need to be
supplemented with audited financials covering stub periods in order to comply
with the Securities Act.
Subject to the foregoing clauses (A) through (F), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practical, but in any event within 90 days after receipt
of the request or requests of the Initiating Holders, and shall use commercially
reasonable efforts to have such registration statement promptly declared
effective by the Commission, and in any event within 90 days after such filing,
whether or not all Registrable Securities requested to be registered can be
included; provided, however, that if the Company shall furnish to such Holders a
certificate authorized in writing by the Board and signed by the President of
the Company stating that in the good-faith judgment of the Board of Directors
either (i) it would be seriously detrimental to the Company and its shareholders
for such registration statement to be filed within such 90-day period and it is
therefore advisable to defer the filing of such registration statement, or (ii)
that there exists at the time a Potential Material Event, the Company shall have
an additional period of not more than 60 days after the expiration of the
initial 90-day period within which to file such registration statement;
provided, that during such time the Company may not file a registration
statement for securities to be issued and sold for its own account, and
provided, further, that the Company shall not extend the filing of such
registration more than one time in any twelve-month period.
(b) UNDERWRITTEN OFFERING. If the Initiating Holders intend to
distribute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request. In
such event, the Company shall include such information in the written notice
referred to in subsection 4(a)(i). If requested by the Company, the Initiating
Holders shall negotiate with an underwriter selected by the Company with regard
to the underwriting of such requested registration; provided, however, that if a
majority in interest of the Initiating Holders have not agreed with such
underwriter as to the terms and conditions of such underwriting within twenty
(20) days following commencement of such negotiations, a majority in interest of
the Initiating Holders may select an underwriter of their choice. The right of
any Holder to registration pursuant to Section 4 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the
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underwriting. The Company shall (together with all Holders proposing to
distribute their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this
Section 4, if the managing underwriter advises the Initiating Holders in writing
that marketing factors require a limitation of the number of shares to be
underwritten, the Company shall so advise all Holders and Dresdner Kleinwort
Xxxxxx Private Equity Partners LP ("Dresdner") in the event Dresdner is
exercising its piggyback rights pursuant to that certain Registration Rights
Agreement between the Company and Dresdner, dated March 27, 1998 (as amended
from time to time) (the "Dresdner Agreement"), and the number of shares of
Registrable Securities (which, for the purpose of this Section 4(b), shall
include any registrable securities governed by the Dresdner Agreement) that may
be included in the registration and underwriting shall be allocated among all
Holders thereof in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by such Holders; provided, however, that
securities to be included in such registration statement as a result of
piggyback registration rights (other than Registrable Securities held by
Dresdner) as well as any securities to be offered by the Company, its officers
and employees shall be excluded from the registration statement prior to the
exclusion of any Registrable Securities held by the Holders. If any Holder
disapproves of the terms of the underwriting, he may elect to withdraw therefrom
by written notice to the Company, the managing underwriter and the Initiating
Holders. If, by the withdrawal of such Registrable Securities, a greater number
of Registrable Securities held by other Holders may be included in such
registration (up to the limit imposed by the underwriters) the Company shall
offer to all Holders who have included Registrable Securities in the
registration the right to include additional Registrable Securities in the same
proportion used in determining the limitation as set forth above. Any
Registrable Securities which are excluded from the underwriting by reason of the
underwriter's marketing limitation or withdrawn from such underwriting shall be
withdrawn from such registration.
(c) PURCHASE OPTION. Notwithstanding the foregoing, in lieu of
registering securities under the foregoing provision, the Company may in its
sole discretion repurchase shares subject to a demand registration at the then
current Fair Market Value thereof in cash, less a reasonable discount equal to
the underwriting spread that would have been incurred in connection with an
underwritten offering. Fair Market Value will be determined as of the date
demand is received by the Company. Any election to purchase shares under this
section must be made within 30 days of the expiration of the 30-day response
period for Holders under Section 4(a)(ii). The Company will make payment for
securities at the time of surrender of certificates representing Registrable
Securities duly endorsed for transfer to the Company.
Section 5. PIGGYBACK REGISTRATION.
(a) NOTICE OF REGISTRATION; 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 the account of any of its shareholders, other than a
registration relating solely to employee benefit plans, to a SEC Rule 145
transaction, or to a transaction relating solely to the sale of debt or
convertible debt instruments, the Company will:
(i) give to each Holder written notice thereof as soon as
practicable prior to filing the registration statement; and
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(ii) include in such registration and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within fifteen (15) days after receipt of such written notice
from the Company, by any Holder or Holders, except as set forth in subsection
(b) below.
(b) UNDERWRITTEN OFFERING. If the registration 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 subsection 5(a)(i). In
such event, the right of any Holder to registration pursuant to Section 5 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 securities
through such underwriting shall (together with the Company and the other holders
distributing their securities through such underwriting) 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 5, if the managing underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the number of Registrable
Securities (which, for the purpose of this Section 5(b), shall include any
Registrable Securities governed by the Dresdner Agreement) to be included in the
registration and underwriting in accordance with the following priority:
(i) Registrable Securities hereunder, allocated among all
Holders thereof and Dresdner in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by such Holders and Dresdner;
and
(ii) shares of Common Stock to be offered by stockholders other
than those described above.
The Company shall so advise all Holders and the other Holders distributing their
securities through such underwriting pursuant to piggyback registration rights
similar to this Section 5. If any Holder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to the
Company and the managing underwriter. If, by the withdrawal of such Registrable
Securities, a greater number of Registrable Securities held by other Holders may
be included in such registration (up to the limit imposed by the underwriters),
the Company shall offer to all Holders who have included Registrable Securities
in the registration the right to include additional Registrable Securities. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from registration.
Section 6. EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with two registrations pursuant to Section 4 hereof and all
registrations pursuant to Section 5 will be borne by the Company including the
fees of one separate legal counsel of the Holders, except that the Company shall
not be required to pay underwriters' fees, discounts or commissions relating to
Registrable Securities.
Section 7. REGISTRATION PROCEDURES. For each registration effected by the
Company pursuant to this Agreement, the Company will keep each Holder
participating therein advised as
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to the initiation of each registration and as to the completion thereof. At its
expense the Company will:
(i) use its commercially reasonable efforts to keep such
registration continuously effective for a period of 120 days or such reasonable
period necessary to permit the Holders to complete the distribution described in
the registration statement relating thereto, whichever first occurs;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the Securities
Act, and to keep such registration statement effective for that period of time
specified in Section 7(i) above;
(iii) the Company shall permit one or more counsel designated
by the Preferred Holders Designees to review the Registration Statement and all
amendments and supplements thereto a reasonable period of time (but not less
than three business days) prior to their filing with the Commission, and not
file any document in a form to which such counsel reasonably objects; (iv)
furnish to each Holder 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
Commission, or received by the Company one 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 Holder may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Holder;
(v) as promptly as practicable after becoming aware thereof,
notify each Holder of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included 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
Commission to correct such untrue statement or omission, and deliver a number of
copies of such supplement or amendment to each Holder as such Holder may
reasonably request;
(vi) subject to Section 4(a)(ii)(B), register or qualify such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions as any Holder or underwriter reasonably requires, and keep
such registration or qualification effective during the period set forth in
Section 7(i) above;
(vii) cause all Registrable Securities covered by such
registrations to be listed on each securities exchange, including NASDAQ, on
which similar securities issued by the Company are then listed;
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(viii) cause its accountants to issue to the underwriter, if
any, comfort letters and updates thereof, in customary form and covering matters
of the type customarily covered in such letters with respect to underwritten
offerings, and to cause its legal counsel to issue to the underwriter, if any,
an opinion in customary form covering matters of the type customarily covered in
such opinions with respect to underwritten offerings;
(ix) as promptly as practicable after becoming aware thereof,
notify each Holder who holds Registrable Securities being sold (or, in the event
of an underwritten offering, the managing underwriters) of the issuance by the
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;
(x) 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;
(xi) cooperate with the Holders 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 Holders may reasonably
request, and, within three (3) business days after a registration statement
which includes Registrable Securities is ordered effective by the 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 Holders whose Registrable Securities are included in such registration
statement) an appropriate instruction and opinion of counsel; and
(xii) take such other actions as may be reasonably requested by
any Holder.
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 Holders of the existence of a Potential Material Event, the Holders
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
Holder 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 suspend
the right to such holders of Registrable Securities for more than one sixty (60)
day period in the aggregate during any 12-month period.
Section 8. INDEMNIFICATION.
(a) BY COMPANY. To the extent permitted by law, in the event of a
registration of any of the Registrable Securities under the Securities Act, the
Company will indemnify and hold harmless each Holder, each underwriter of
Registrable Securities, each of Holder's partners, directors and officers, and
each other person, if any, who "controls" such Holder or underwriter within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, to which they may become subject under the Securities Act, the
Exchange Act, or otherwise, insofar as such losses, claims, damages or
liabilities arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in any
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registration statement under which such Registrable Securities were registered
under the Securities Act, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, (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 any rule or regulation
promulgated under the Securities Act or any state securities law applicable to
the Company or relating to action or inaction required of the Company in
connection with any such registration, and will reimburse each such Holder, each
of its officers, directors and partners, and each person controlling such
Holder, each such underwriter and each person who controls any such underwriter,
for any reasonable legal and other expenses incurred in connection with
investigating, defending or settling any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any such case
to the extent that amounts are paid in settlement if such settlement is effected
without the consent of the Company (which consent will not be unreasonably
withheld), nor will the Company be liable for any such claim, loss, damage or
liability arising out of or based on any untrue statement or omission based upon
written information furnished to the Company by a Holder specifically for use in
connection with such registration.
(b) BY HOLDERS. To the extent permitted by law, each Holder will, if
Registrable Securities held by or issuable to such Holder are included in the
securities as to which such registration is being effected, indemnify and hold
harmless the Company, each of its directors and officers, each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company and each underwriter within the meaning of the
Securities Act, and each other such Holder, each of its officers, directors and
partners and each person controlling such Holder, against all claims, losses,
expenses, damages and liabilities (or actions in respect thereof) arising out of
or based on (i) any untrue statement or alleged untrue statement of a material
fact contained in any registration statement, prospectus, offering circular or
any amendment, supplement, or other document related thereto, or (ii) any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Company, such Holders, and such directors, officers,
partners, persons or underwriters for any reasonable legal or any other expenses
incurred in connection with investigating, defending or settling any such claim,
loss, damage, liability or action, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission is made in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity with written
information furnished to the Company by the Holder specifically for use therein;
provided, however, the total amount for which any Holder, its officers,
directors and partners, and any person controlling such Holder, shall be liable
under this Section 8(b) shall not in any event exceed the net proceeds received
by such Holder from the sale of Registrable Securities sold by such Holder in
such registration.
(c) NOTICE PROVISIONS. Each party entitled to indemnification under
this Section 8 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claims as to which indemnity may
be sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or
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litigation, shall be approved by the Indemnified Party (whose approval shall not
be unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations hereunder, unless such failure resulted in
actual detriment to the Indemnifying Party. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect of such claim or litigation.
(d) CONFLICT WITH UNDERWRITING. Notwithstanding the foregoing, to
the extent that the provisions on indemnification contained in the underwriting
agreements entered into among the selling Holders, the Company and the
underwriters in connection with an underwritten public offering are in conflict
with the foregoing provisions, the provisions in the this Agreement shall be
controlling as to the Registrable Securities included in the public offering.
(e) CONTRIBUTION IN LIEU OF INDEMNITY. If the indemnification
provided for in this Section 8 is held by a court of competent jurisdiction to
be unavailable to an indemnified party with respect to any loss, liability,
claim, damage or expense referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such loss,
liability, claim, damage or expense in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other hand in connection with the statements or
omissions which resulted in such loss, liability, claim, damage or expense as
well as any other relevant equitable considerations. Notwithstanding the
foregoing, the amount any Holder shall be obligated to contribute pursuant to
this Section 8(e) shall be limited to an amount equal to the net proceeds to
such Holder.
(f) SURVIVAL OF INDEMNITY. The indemnification provided by this
Section 8 shall be a continuing right to indemnification and will survive the
registration and sale of any securities by any person entitled to
indemnification hereunder and the expiration or termination of this Agreement.
Section 9. INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall promptly furnish to the Company
such information regarding such Holder or Holders and the distribution proposed
by such Holder or Holders as the Company may request in writing or as shall be
required in connection with any registration referred to herein.
Section 10. RULE 144 REPORTING. With a view to making available to Holders the
benefits of Rule 144, the Company will:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
11
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) furnish a Holder, so long as the Holder owns any Registrable
Securities, upon request, (i) a written statement that it has complied with the
reporting requirements of Rule 144, (ii) a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents filed by
the Company with the Commission as may be reasonably requested, and (iii) such
other information as may be reasonably requested by any Holder in availing
itself of any rule or regulation of the Commission which permits the selling of
any securities without registration.
Section 11. TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to
register Registrable Securities of a Holder granted to a Holder by the Company
under Sections 4 and 5 may be assigned by a Holder to any Affiliate, to any
other Holder, or to a transferee or assignee who receives at least 25,000 shares
of Registrable Securities (as adjusted for stock splits and the like); provided,
that the Company is given written notice by the Holder a reasonable time before
said transfer, stating the name and address of said transferee or assignee and
identifying the securities with respect to which such registration rights are
being assigned, and the Holder complies with the provisions of this Agreement.
Section 12. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date these registration rights are granted, the Company shall not, without the
prior written consent of the Holders of a majority of the Registrable Securities
then held by Holders, enter into any agreement with any holder or prospective
holder of any securities of the Company which provides such holder or holders of
securities comparable rights to the rights of any Holder hereunder.
Section 13. MARKET STANDOFF-AGREEMENT. Each Holder hereby agrees that it will
not, to the extent requested by the Company and any underwriter of 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 a
90-day period following the effective date of a registration statement of the
Company filed under the Securities Act, provided that all persons with
registration rights and all officers, directors and holders of 5 percent or more
of the then outstanding voting capital stock of the Company enter into similar
agreements. In order to enforce the foregoing provision, the Company may impose
stock transfer instructions with respect to the Registrable Securities of each
Holder until the end of such 90-day period.
Section 14. TERMINATION OF RIGHTS. The rights of any particular Holder to cause
the Company to register securities under this Agreement will terminate with
respect to such Holder at such time as such Holder is able to dispose of all of
his Registrable Securities in one three-month period pursuant to the provisions
of Rule 144.
Section 15. MISCELLANEOUS.
(a) AMENDMENTS. This Agreement may be amended only by a writing
signed by the Holders of more than fifty percent (50%) of the Registrable
Securities, as constituted from
12
time to time, provided that any amendment to this Agreement that materially and
adversely affects a Holder shall also require the written consent of such
affected Holder.
(b) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall constitute a single instrument.
(c) NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and may be sent initially by facsimile
transmission and shall be mailed by registered or certified mail or overnight
courier, postage prepaid, or otherwise delivered by hand or by messenger,
addressed (a) if to a Holder, at such Holder's address set forth on the books of
the Company, or at such other address as such Holder shall have furnished to the
Company in writing, or (b) if to the Company, one copy should be sent to the
Company's current address at Suite 400, 0000 X.X. Xxxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxx 00000, Attn: Chief Financial Officer, or at such other address as the
Company shall have furnished to the Holders. Each such notice or other
communication shall for all purposes of this Agreement be treated as effective
or having been given when delivered if delivered personally, or, if sent by
first class, postage prepaid mail, at the earlier of its receipt or seventy-two
(72) hours after the same has been deposited in the United States mail,
addressed and mailed as aforesaid.
(d) SEVERABILITY. If any provision of this Agreement shall be held
to be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
(e) CHANGE IN CAPITAL STOCK. If, and as often as, there is any
change in the Common Stock by way of a stock split, stock dividend, combination
or reclassification, or through a merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made in
the provisions hereof so that the rights and privileges granted hereby shall
continue with respect to the Common Stock as so changed.
(f) GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Oregon without regard to principles of conflict
of law.
Remainder of page intentionally blank
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first above written.
THE COMPANY: GARDENBURGER, INC.
By /s/ Xxxxx X. Xxxxxxx
----------------------------------
Xxxxx X. Xxxxxxx, President
PREFERRED STOCKHOLDERS: ROSEWOOD CAPITAL III, L.P.
By: Rosewood Capital Associates, LLC,
General Partner
By /s/ Xxxx X. Xxxxxxxx
----------------------------------
Xxxx X. Xxxxxxxx, Managing Director
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: Farallon Partners, L.L.C., each of its
general partners
By /s/ Xxxx X. Xxxxxx
----------------------------------
Xxxx X. Xxxxxx,
Managing Member
FARALLON CAPITAL OFFSHORE INVESTORS, INC.
By: Farallon Capital Management, L.L.C.,
Its Agent and Attorney-in-Fact
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Xxxx X. Xxxxxx,
Managing Partner
13
U.S. DEVELOPMENT CAPITAL PORTFOLIO
COMPANY
By [illegible]
----------------------------------
Title Secretary
-----------------------
DB CAPITAL INVESTORS, L.P.
By /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Xxx Xxxxxxx, Director
CASTLEWOOD EXPANSION PARTNERS, L.P.
By BT Investment Partners, Inc.
its general partner
By /s/ Xxxxxxxx Xxxxxxx
----------------------------------
Xxxxxxxx Xxxxxxx, Director
January 10, 2002
/s/ Xxxxx X. Xxxx
-------------------------------------
Xxxxx X. Xxxx
/s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxxxx
XXXXXX & McBAINE INTERNATIONAL
LAGUNITAS PARTNERS, L.P.
LOCKHEED XXXXXX
XXXXXXXX COLLEGE
By /s/ X. Xxxxxxxxx McBaine
----------------------------------
X. Xxxxxxxxx XxXxxxx, Managing Member
Xxxxxx & McBaine Capital Management LLC
executing in the following capacities:
XXXXXX & XxXXXXX INTERNATIONAL,
Attorney-in-Fact
LOCKHEED XXXXXX, Attorney in Fact
XXXXXXXX COLLEGE, Attorney in Fact and
LAGUNITAS PARTNERS, L.P., General Partner
