EXHIBIT 10.5
AMENDMENT NO. 2 TO RIGHTS AGREEMENT
This Amendment No. 2 dated as of April 14, 1999 (the
"Amendment"), to the Rights Agreement dated as of April 25, 1996, as amended by
Amendment No. 1 dated as of March 26, 1998 (referred to herein, as amended by
Amendment No. 1, as the "Rights Agreement"), between Gardenburger, Inc. (f/k/a
Wholesome & Hearty Foods, Inc.), an Oregon corporation (the "Company"), and
First Chicago Trust Company of New York, a New York corporation (the "Rights
Agent"),
WITNESSETH:
WHEREAS, the Company and the Rights Agent have entered into
the Rights Agreement; and
WHEREAS, the Board of Directors of the Company, in accordance
with Section 26 of the Rights Agreement, has determined it desirable and in the
best interests of the Company and its shareholders to supplement and amend
certain provisions of the Rights Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. AMENDMENT TO SECTION 1.1. Section 1.1 of the Rights
Agreement is amended to read in its entirety as follows:
"1.1 "ACQUIRING PERSON" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 15% or more of the Common Shares
of the Company then outstanding, but shall not include: (i) the Company; (ii)
any Subsidiary of the Company; (iii) any employee benefit plan of the Company or
of any Subsidiary of the Company or any entity holding shares of capital stock
of the Company for or pursuant to the terms of any such plan, in its capacity as
an agent or trustee for any such plan; or (iv) any Exempt Person, unless such
Exempt Person becomes the Beneficial Owner of more than the Exempt Percentage of
the Common Shares of the Company then outstanding. "Exempt Person" shall mean
(x) Xxxx X. Xxxxxx, together with all of his Affiliates and Associates,
including, without limitation, the Xxxx X. Xxxxxx Charitable Foundation Trust
(collectively, "Xxxxxx"); and (y) Dresdner Kleinwort Xxxxxx Private Equity
Partners LP, together with all of its Affiliates and Associates, or any one or
more of the Affiliates and Associates of Dresdner Kleinwort Xxxxxx Private
Equity Partners LP (collectively, "Dresdner"). "Exempt Percentage" shall mean,
with respect to Xxxxxx, up to 25% of the Common Shares of the Company then
outstanding and, with respect to Dresdner, up to 22% of the Common Shares of the
Company then outstanding. Notwithstanding the foregoing, (a) no Person shall
become an "Acquiring Person" as the result of an acquisition of Common Shares by
the Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15% (25% as
to Xxxxxx and 22% as to Dresdner) or more of the Common Shares of the Company
then outstanding, PROVIDED that if a Person shall become the Beneficial Owner of
15% (25% as to Xxxxxx and 22% as to Dresdner) or more of the Common Shares of
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the Company then outstanding solely by reason of share purchases by the Company
and shall, after such purchases by the Company, become the Beneficial Owner of
any additional Common Shares of the Company, then such Person shall be deemed to
be an "Acquiring Person;" (b) if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this SECTION 1.1,
has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that such Person would no
longer be an Acquiring Person, as defined pursuant to the foregoing provisions
of this SECTION 1.1, then such Person shall not be deemed to be an "Acquiring
Person" for any purposes of this Agreement (so long as such Person does not
become an Acquiring Person after such divestiture); and (c) none of the
Purchasers (as defined in that certain Stock Purchase Agreement dated as of
March 29, 1999, by and among the Company and the Purchasers, as amended by
letter agreement dated April 14, 1999), together with any one or more or all of
each Purchaser's Affiliates and Associates (collectively, the "Preferred
Investors"), shall become or be deemed to be an "Acquiring Person," either
singly or as a group, solely by reason of being or becoming the Beneficial Owner
of any number of the Company's shares of Series A Convertible Preferred Stock or
Series B Convertible Preferred Stock (together, the "Convertible Preferred
Shares"), or any of the Common Shares into which such Convertible Preferred
Shares are converted or may become convertible.
Section 2. AMENDMENT TO SECTION 1.11. Section 1.11 of the
Rights Agreement is amended to read in its entirety as follows:
"1.11 A "TRIGGER EVENT" shall be deemed to have occurred upon
any Person becoming an Acquiring Person. Notwithstanding the foregoing, a
Trigger Event shall not be deemed to have occurred if the event causing the
ownership thresholds set forth in Section 1.1 to be crossed is (x) an
acquisition of Common Shares made pursuant to a cash tender offer made pursuant
to the rules and regulations under the Exchange Act and filed with the
Securities and Exchange Commission on Schedule 14D-1 (or any successor form) for
all outstanding Common Shares not beneficially owned by the Person making such
offer (or by its Affiliates or Associates) so long as the Board of Directors of
the Company determines, after receiving advice from one or more investment
banking firms, that such offer is (i) at a price and on terms which are fair to
stockholders (taking into account all factors which such members of the Board
deem relevant, including without limitation, prices which could reasonably be
achieved if the Company or its assets were sold on an orderly basis designed to
realize maximum value) and (ii) otherwise in the best interests of the Company
and its stockholders, or (y) an acquisition by a Person of Convertible Preferred
Shares and/or the Common Shares into which such Convertible Preferred Shares are
convertible from a Preferred Investor if the Board of Directors of the Company
determines in good faith that such acquisition by such Person is not contrary to
the best interests of the Company and its stockholders; PROVIDED, HOWEVER, that
there must be Continuing Directors then in office and any such determination
shall require the concurrence of a majority of such Continuing Directors. Any
Person acquiring Convertible Preferred Shares and/or Common Shares in an
acquisition approved by the Board of Directors in accordance with the preceding
sentence shall be deemed to be, together with all of such Person's Affiliates
and Associates, an Exempt Person within the meaning of Section 1.1, and such
Person's Exempt Percentage shall be the percentage of Common Shares that such
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Person, together with all of such Person's Affiliates and Associates,
beneficially owns upon completion of the approved acquisition."
Section 3. ADDITION OF SECTION 3.4. A new Section 3.4 to the
Rights Agreement shall be added to read in its entirety as follows:
"Section 3.4 CONVERTIBLE PREFERRED SHARES. The Convertible
Preferred Shares shall be entitled to the same rights and benefits (determined
on the basis of the number of Common Shares into which Convertible Preferred
Shares are convertible on the relevant Distribution Date) provided under this
Rights Agreement (as amended) or under any replacement or alternative rights
arrangements as are provided to the Common Shares. Each obligation of the
Company and the Rights Agent to the holders of Common Shares under this
Agreement shall apply equally (on such as-converted basis set forth in the prior
sentence) for the benefit of the holders of the Convertible Preferred Shares. As
soon as practicable after the Distribution Date, the Rights Agent will send, by
first-class, postage-prepaid mail, to each record holder of Convertible
Preferred Shares as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Company, one or more Right
Certificates, evidencing one Right (subject to adjustment as provided herein)
for each Common Share into which the Convertible Preferred Shares held by such
holder are then convertible. Any such Rights so issued with respect to such
Convertible Preferred Shares shall be subject to rights, terms and conditions
identical to those of the Rights evidenced by Right Certificates issued pursuant
to Section 3.1 hereof and such holder of Convertible Preferred Shares shall be
treated as a registered or record holder of such Rights."
Section 4. ACKNOWLEDGMENT THAT DISTRIBUTION DATE HAS NOT
OCCURRED. The parties hereto acknowledge that, up to and through the date of
this Amendment, no Person has become an Acquiring Person, no event has occurred
or with the passage of time will occur that has resulted or would result in the
occurrence of a Distribution Date, a Trigger Event, or an event described in
Section 11.1.2(A) of the Rights Agreement, and no such event has occurred or
will occur by reason of the issuance of the Convertible Preferred Shares, or any
of the Common Shares into which such Convertible Preferred Shares are
convertible, to the Preferred Investors.
Section 5. RIGHTS AGREEMENT AS AMENDED. The term "Agreement"
as used in the Rights Agreement shall be deemed to refer to the Rights Agreement
as amended hereby. This Amendment shall be effective as of the date hereof and,
except as set forth herein, the Rights Agreement shall remain in full force and
effect and be otherwise unaffected hereby.
Section 6. OFFICER'S CERTIFICATE. In accordance with Section
26 of the Rights Agreement, the Company has provided the Rights Agent a
certificate executed by an authorized officer of the Company, stating that the
Amendment is in compliance with the terms of Section 26 of the Rights Agreement.
Section 7. COUNTERPARTS. This Amendment may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all of such counterparts shall together constitute
but one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Amendment to
be duly executed and their respective corporate seals to be hereunto affixed,
all as of the day and year first above written.
GARDENBURGER, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President and
Chief Financial Officer
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By: /s/ Xxxxxx Xxxxxxxxxx
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Name: Xxxxxx Xxxxxxxxxx
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Title: Assistant Vice President
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