THIS WARRANT WAS ORIGINALLY ISSUED ON JANUARY 10,
2002, AND HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THIS
WARRANT AND THE SECURITIES UNDERLYING THE WARRANT MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR OTHERWISE
TRANSFERRED EXCEPT IN COMPLIANCE WITH THE
REGISTRATION AND QUALIFICATION REQUIREMENTS OF STATE
AND FEDERAL SECURITIES LAWS, IN COMPLIANCE WITH RULE
144 PROMULGATED UNDER THE ACT, OR PURSUANT TO AN
OPINION OF COUNSEL, SATISFACTORY TO THE CORPORATION,
THAT SUCH REGISTRATION OR COMPLIANCE IS NOT REQUIRED
AS TO SUCH SALE, OFFER, PLEDGE, OR OTHER TRANSFER.
FORM OF
STOCK PURCHASE WARRANT
Date of Issuance: January 10, 2002 Certificate No. W-
For value received, GARDENBURGER, INC., an Oregon corporation
(the "COMPANY"), hereby grants to , a
------- --------------------------------------
-------------------------- (the "INITIAL PURCHASER"), or its transferees
and assigns, the right to purchase from the Company a total of
------------
Warrant Shares (as defined herein) at a price equal to $0.28 per share
(such price per share, the "INITIAL EXERCISE PRICE"). This Warrant is one
of the warrants (including any warrants issued in exchange or substitution
therefor, collectively, the "WARRANTS") issued pursuant to the terms of the
Agreement, dated as of January 10, 2002 (as amended, restated or
----------
modified from time to time, the " Agreement"), by and among the
----------
Company and the . The exercise price and number of Warrant Shares
---------------
(and the amount and kind of other securities) for which this Warrant is
exercisable shall be subject to adjustment as provided herein. Certain
capitalized terms used herein are defined in SECTION 5 hereof.
This Warrant is subject to the following provisions:
SECTION 1. EXERCISE OF WARRANT.
1A. EXERCISE PERIOD. The purchase rights represented by this Warrant
may be exercised, in whole or in part, at any time and from time to time after
the date hereof to and including 5:00 p.m., New York time, on January 10, 2012
or, if such day is not a business day, on the next preceding business day (the
"EXERCISE PERIOD").
1
1B. EXERCISE PROCEDURE.
(i) This Warrant shall be deemed to have been exercised when
all of the following items have been delivered to the Company (the "EXERCISE
TIME"):
(a) a completed Exercise Agreement, as described in
SECTION 1C below, executed by the Person exercising all or part of the
purchase rights represented by this Warrant (the "PURCHASER");
(b) this Warrant; and
(c) either (i) a check payable to the Company in an amount
equal to the product of the Exercise Price (as defined in SECTION 2)
multiplied by the number of Warrant Shares being purchased upon such
exercise (the "AGGREGATE EXERCISE PRICE"), (ii) the surrender to the
Company of securities of the Company or its subsidiaries having a value
equal to the Aggregate Exercise Price of the Warrant Shares being
purchased upon such exercise (which value in the case of debt securities
shall be deemed to be equal to the aggregate outstanding principal amount
thereof plus all accrued and unpaid interest thereon, and in the case of
shares of Common Stock shall be the Fair Market Value thereof), or (iii)
the delivery of a notice to the Company that the Purchaser is exercising
the Warrant by authorizing the Company to reduce the number of Warrant
Shares subject to the Warrant by the number of shares having an aggregate
Fair Market Value equal to the Aggregate Exercise Price.
(ii) Certificates for Warrant Shares purchased upon exercise of
this Warrant shall be delivered by the Company to the Purchaser within five days
after the date of the Exercise Time together with any cash payable in lieu of a
fraction of a share pursuant to SECTION 13 hereof. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such five-day period, deliver such
new Warrant to the Person designated for delivery in the Exercise Agreement.
(iii) The Warrant Shares issuable upon the exercise of this
Warrant shall be deemed to have been issued to the Purchaser at the Exercise
Time, and the Purchaser shall be deemed for all purposes to have become the
Registered Holder of such Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
Warrant Shares.
(v) The Company shall not close its books against the transfer
of this Warrant or of any Warrant Shares issued or issuable upon the exercise of
this Warrant in any manner which interferes with the timely exercise of this
Warrant.
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(vi) The Company shall assist and cooperate with the Registered
Holder or any Purchaser required to make any governmental filings or obtain any
governmental approvals prior to or in connection with any exercise of this
Warrant.
(vii) Notwithstanding any other provision hereof, if an
exercise of any portion of this Warrant is to be made in connection with a
public offering or a Sales Event, such exercise may at the election of the
Registered Holder be conditioned upon the consummation of such transaction, in
which case such exercise shall not be deemed to be effective until immediately
prior to the consummation of such transaction.
(viii) The Company shall at all times reserve and keep
available out of its authorized but unissued Common Stock solely for the purpose
of issuance upon the exercise of the Warrants, the maximum number of Warrant
Shares issuable upon exercise of all outstanding Warrants. All Warrant Shares
which are so issuable shall, when issued and upon the payment of the applicable
Exercise Price, be duly and validly issued, fully paid and nonassessable and
free from all taxes, liens, adverse claims and charges. The Company shall take
all such actions as may be necessary to ensure that all such Warrant Shares may
be so issued without violation by the Company of any applicable law or
governmental regulation or any requirements of any domestic or foreign
securities exchange upon which shares of Common Stock, or other securities
constituting Warrant Shares, may be listed (except for official notice of
issuance which shall be immediately delivered by the Company upon each such
issuance). The Company shall use its best efforts to cause the Warrant Shares,
immediately upon such exercise, to be listed on any domestic or foreign
securities exchange upon which shares of Common Stock, or other securities
constituting Warrant Shares, are listed at the time of such exercise. The
Company shall not take any action which would cause the number of authorized but
unissued shares of Common Stock to be less than the number of shares required to
be reserved hereunder for issuance upon exercise of the Warrants.
(ix) If the Warrant Shares issuable by reason of exercise of
this Warrant are convertible into or exchangeable for any other stock or
securities of the Company, the Company shall, at the Purchaser's option and upon
surrender of this Warrant by such Purchaser as provided above together with any
notice, statement or payment required to effect such conversion or exchange of
Warrant Shares, deliver to such Purchaser (or as otherwise specified by such
Purchaser) a certificate or certificates representing the stock or securities
into which the Warrant Shares issuable by reason of such conversion are
convertible or exchangeable, registered in such name or names and in such
denomination or denominations as such Purchaser has specified.
(x) The Company shall not, and shall not permit its
subsidiaries to, directly or indirectly, by any action (including, without
limitation, reincorporating in a jurisdiction other than Oregon or Delaware,
amending its Articles of Incorporation or through any Organic Change (as defined
in SECTION 2D), the issuance or sale of securities or any other voluntary
action) avoid or seek to avoid the observance or performance of any of the terms
of this Warrant (except for any action which ratably affects all Warrant Shares
and shares of Common Stock), but shall at all times in good faith assist in the
carrying out of all such terms of this Warrant. Without limiting the generality
of the foregoing, the Company shall (a) obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
3
thereof as may be necessary to enable the Company to perform its obligations
under this Warrant and (b) not undertake any reverse stock split, combination,
reorganization or other reclassification of its capital stock which would have
the effect of making this Warrant exercisable for less than one share of Common
Stock. Notwithstanding the foregoing, the Registered Holders may waive any of
their rights under this Warrant, including without limitation, the antidilution
rights set forth in SECTION 2 below.
1C. EXERCISE AGREEMENT. Upon any exercise of this Warrant, the
Purchaser shall deliver to the Company an Exercise Agreement in substantially
the form set forth in Exhibit I hereto, except that if the Warrant Shares are
not to be issued in the name of the Registered Holder, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be issued does
not include all of the Warrant Shares purchasable hereunder, it shall also state
the name of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be issued.
1D. AUTOMATIC EXERCISE.
(i) This Warrant shall be deemed to have been exercised in
full automatically in a cashless exercise as described in SECTION
1B(i)(c)(iii) above upon the closing of a transaction constituting a Sales
Event.
(ii) If a Sales Event occurs in which the proceeds to the
holder of this Warrant exceed the aggregate Exercise Price for the Warrant
Shares, the exercise of this Warrant will be deemed to occur, and the
Exercise Time will be deemed to be, immediately prior to the closing of
such Sales Event; provided, that this Warrant shall be cancelled in the
event that the proceeds to the holder of this Warrant would be less than
or equal to the aggregate Exercise Price for the Warrant Shares. The
provisions of SECTION 1B(ii) through (x) will apply to such exercise.
SECTION 2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. In
order to prevent dilution of the rights granted under this Warrant, the Initial
Exercise Price shall be subject to adjustment from time to time as provided in
this SECTION 2 (as so adjusted, the "EXERCISE PRICE"), and the number of Warrant
Shares obtainable upon exercise of this Warrant shall be subject to adjustment
from time to time, each as provided in this SECTION 2.
2A. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES UPON ISSUANCE
OF COMMON STOCK.
(i) If and whenever, on or after the Date of Issuance, the
Company issues or sells, or in accordance with SECTION 2B is deemed to
have issued or sold (other than pursuant to a Permitted Issuance) any
shares of Common Stock for a consideration per share less than the per
share Exercise Price immediately prior to such issuance or sale, then
immediately upon such issuance or sale, the Exercise Price shall be
reduced to a price (calculated to the nearest cent) determined by
multiplying the Exercise Price in effect immediately prior to such
issuance or sale by a fraction, (a) the numerator of which shall be the
number of shares of Common Stock Deemed Outstanding immediately prior to
such issuance or sale plus the number of shares of Common Stock which the
aggregate consideration received by the Company for the
4
total number of additional shares of Common Stock actually so issued would
purchase at the Exercise Price in effect immediately prior to such
issuance or sale, and (b) the denominator of which will be the number of
shares of Common Stock Deemed Outstanding immediately prior to such
issuance or sale plus the number of additional shares of Common Stock
actually so issued.
(ii) Upon each such adjustment of the Exercise Price
hereunder, the number of Warrant Shares acquirable upon exercise of this
Warrant shall be adjusted to equal the number of shares determined by
multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares acquirable upon exercise of
this Warrant immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
2B. EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes of
determining the adjusted Exercise Price under SECTION 2A, the following shall be
applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If after the Date of
Issuance the Company in any manner grants any rights or options (other
than pursuant to a Permitted Issuance) to subscribe for or to purchase
Common Stock or any stock or other securities convertible into or
exchangeable for Common Stock (including without limitation convertible
common stock) (such rights or options being herein called "OPTIONS" and
such convertible or exchangeable stock or securities being herein called
"CONVERTIBLE SECURITIES") and the price per share for which Common Stock
is issuable upon the exercise of such Options or upon conversion or
exchange of such Convertible Securities is less than the Exercise Price
then in effect, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon conversion or exchange
of the total maximum amount of such Convertible Securities issuable upon
the exercise of such Options shall be deemed to be outstanding and to have
been issued and sold by the Company for such price per share. For purposes
of this paragraph, the "price per share for which Common Stock is issuable
upon exercise of such Options or upon conversion or exchange of such
Convertible Securities" is determined by dividing (A) the total amount, if
any, received or receivable by the Company as consideration for the
granting of such Options, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of all such
Options, plus in the case of such Options which relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the issuance or sale of such Convertible
Securities and the conversion or exchange thereof, by (B) the total
maximum number of shares of Common Stock issuable upon exercise of such
Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options. No further
adjustment of the Exercise Price shall be made upon the actual issuance of
such Common Stock or of such Convertible Securities upon the exercise of
such Options or upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If after the Date
of Issuance the Company in any manner issues or sells any Convertible
Securities (other than pursuant to a Permitted Issuance) and the price per
share for which Common Stock is issuable upon such conversion or exchange
thereof is less than the Exercise Price then in effect, then the maximum
number of shares of Common Stock issuable upon conversion or exchange of
such Convertible Securities shall be deemed to be outstanding and to have
been issued and sold by the Company
5
for such price per share. For the purposes of this paragraph, the "price
per share for which Common Stock is issuable upon such conversion or
exchange thereof" is determined by dividing (A) the total amount received
or receivable by the Company as consideration for the issuance or sale of
such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (B) the total maximum number of shares
of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities. No further adjustment of the Exercise Price shall
be made upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities, and if any such issuance or sale
of such Convertible Securities is made upon exercise of any Options for
which adjustments of the Exercise Price have been or are to be made
pursuant to other provisions of this SECTION 2B, no further adjustment of
the Exercise Price shall be made by reason of such issuance or sale.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If the
purchase price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock shall change at any
time, the Exercise Price in effect at the time of such change shall be
adjusted to the Exercise Price which would have been in effect at such
time had such Options or Convertible Securities still outstanding provided
for such changed purchase price, additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued
or sold and the number of Warrant Shares shall be correspondingly
readjusted.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED
CONVERTIBLE SECURITIES. Upon the expiration of any Option or the
termination of any right to convert or exchange any Convertible
Securities, in either case without the exercise of such Option or right,
the Exercise Price then in effect and the number of Warrant Shares
acquirable hereunder shall be adjusted to the Exercise Price and the
number of shares which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities, to
the extent outstanding immediately prior to such expiration or
termination, never been issued; provided, that in no event shall the
Exercise Price be adjusted to an amount greater than the Initial Exercise
Price.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any Common
Stock, Options or Convertible Securities are issued or sold or deemed to
have been issued or sold for cash, the consideration received therefor
shall be deemed to be the net amount received by the Company therefor. In
case any Common Stock, Options or Convertible Securities are issued or
sold for a consideration other than cash, the amount of the consideration
other than cash received by the Company shall be the fair value of such
consideration, except where such consideration consists of marketable
securities, in which case the amount of consideration received by the
Company shall be the market price thereof as of the date of receipt. In
case any Common Stock, Options or Convertible Securities are issued to the
owners of the non-surviving entity in connection with any merger,
amalgamation or other business combination or re-organization in which the
Company is the surviving entity, the amount of consideration therefor
shall be deemed to be the fair value of such portion of the net assets and
business of the non-surviving entity as is attributable to such Common
Stock, Options or Convertible Securities, as the case may be. The fair
value of any consideration other than cash or marketable securities shall
be determined
6
jointly by the Company and the Required Holders through good faith
negotiations. If such parties are unable to reach agreement within a
reasonable period of time, such fair value shall be determined by an
appraiser jointly selected by the Company and the Required Holders, whose
determination shall be final and binding on the Company, and the fees and
expenses of such appraiser shall be paid one-half by the Company and
one-half by the Required Holders on a pro rata basis.
(vi) INTEGRATED TRANSACTIONS. In case any Option is issued
in connection with the issue or sale of other securities of the Company,
together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the
Option shall be deemed to have been issued for no consideration.
(vii) TREASURY SHARES. The number of shares of Common
Stock outstanding at any given time does not include shares owned or held
by or for the account of the Company or any subsidiary of the Company and
the disposition of any shares so owned or held shall be considered an
issue or sale of Common Stock.
(viii) RECORD DATE. If the Company takes a record of the
holders of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock, Options or
Convertible Securities or (B) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date shall be deemed
to be the date of the issue or sale of the shares of Common Stock deemed
to have been issued or sold upon the declaration of such dividend or the
making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
2C. SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) the Common Stock into a greater number of shares or pays a dividend
or makes a distribution to holders of the Common Stock in the form of shares of
Common Stock, the Exercise Price in effect immediately prior to such subdivision
shall be proportionately reduced and the number of Warrant Shares obtainable
upon exercise of this Warrant shall be proportionately increased. Subject to
clause (b) of SECTION 1B(x), if the Company at any time combines (by reverse
stock split or otherwise) the Common Stock into a smaller number of shares, the
Exercise Price in effect immediately prior to such combination shall be
proportionately increased and the number of Warrant Shares obtainable upon
exercise of this Warrant shall be proportionately decreased.
2D. ORGANIC CHANGE. Any recapitalization, reorganization,
reclassification or other transaction which does not constitute a Sales Event
and is effected in such a way that holders of Common Stock are entitled to
receive (either directly or upon subsequent liquidation) stock, securities or
assets with respect to or in exchange for Common Stock is referred to herein as
an "ORGANIC CHANGE". Prior to the consummation of any Organic Change, the
Company shall make appropriate provision to ensure that each Registered Holder
of Warrants shall thereafter have the right to acquire and receive upon exercise
thereof, in lieu of or addition to (as the case may be) the Warrant Shares
immediately theretofore acquirable and receivable upon exercise of such
Registered Holder's Warrants, such shares of stock, securities or assets as may
be issued or payable with respect to or in exchange for the number of Warrant
Shares immediately theretofore acquirable and receivable upon exercise of such
Registered Holder's Warrants had such Organic
7
Change not taken place. In any such case, the Company shall make appropriate
provision (in form and substance satisfactory to the Required Holders) with
respect to such Registered Holder's rights and interests to insure that the
provisions hereof (including SECTIONS 2, 3 and 4 hereof) shall thereafter be
applicable to the Warrants (including, in the case of any such Organic Change in
which the successor entity or purchasing entity is other than the Company, an
immediate adjustment of the Exercise Price to the value for the Common Stock
reflected by the terms of such Organic Change and a corresponding immediate
adjustment in the number of Warrant Shares acquirable and receivable upon
exercise of the Warrants, if the value so reflected is less than the Exercise
Price in effect immediately prior to such Organic Change). The Company shall not
effect any such Organic Change unless, prior to the consummation thereof, the
successor entity (if other than the Company) resulting from such Organic Change
(including a purchaser of all or substantially all the Company's assets) assumes
by written instrument (in form and substance satisfactory to the Required
Holders) the obligation to deliver to each Registered Holder of the Warrants
such shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Registered Holder may be entitled to acquire.
2E. CERTAIN EVENTS. If any event occurs of the type contemplated by
the provisions of this SECTION 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features but excluding
any Permitted Issuance), then the Company's Board of Directors and the Required
Holders shall negotiate in good faith and agree on an appropriate adjustment in
the Exercise Price and the number of Warrant Shares obtainable upon exercise of
this Warrant so as to protect the rights of the Registered Holder of this
Warrant.
2F. NOTICES.
(i) Promptly upon any adjustment of the Exercise Price,
the Company shall give written notice thereof to the Registered Holder,
setting forth in reasonable detail and certifying the calculation of such
adjustment.
(ii) The Company shall give written notice to the
Registered Holder at least 30 days prior to the date on which the Company
closes its books or takes a record (A) with respect to any dividend or
distribution upon the Common Stock, (B) with respect to any pro rata
subscription offer to holders of Common Stock, or (C) for determining
rights to vote with respect to any Organic Change, dissolution or
liquidation.
(iii) The Company shall also give written notice to the
Registered Holder at least 30 days prior to the date on which any Organic
Change, dissolution or liquidation shall take place.
SECTION 3. DIVIDENDS; SHAREHOLDERS RIGHTS. If the Company pays a
dividend or distribution upon the Common Stock, other than dividends or
distributions described in SECTION 2C, then the Company shall pay to the holder
of this Warrant, at the time of payment thereof, such dividend or distribution
which would have been paid to such holder had this Warrant been fully exercised
immediately prior to the date on which a record is taken for such dividend or
distribution or, if no record is taken, the date as of which the record holders
of Common Stock entitled to said dividends or distributions are to be
determined. Except as set
8
forth herein, this Warrant does not entitle the holder of this Warrant to any of
the rights of a stockholder of the Company until such holder has exercised or is
deemed to have exercised this Warrant in accordance with the terms hereof.
SECTION 4. PURCHASE RIGHTS. If at any time the Company grants,
issues or sells any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of the
Common Stock (the "PURCHASE RIGHTS"), then the Company shall grant, issue or
sell (as the case may be) to the Registered Holder the aggregate Purchase Rights
which such Registered Holder would have acquired if such Registered Holder had
held the maximum number of Warrant Shares acquirable upon complete exercise of
this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.
SECTION 5. DEFINITIONS. The following terms have the meanings set
forth below:
"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 the distribution of assets upon any liquidation, dissolution or winding up of
the Company.
"COMMON STOCK DEEMED OUTSTANDING" means, at any given time, the
number of shares of all classes of the Common Stock outstanding at such time,
calculated on a fully diluted basis to give effect to the conversion of all
outstanding Preferred Stock into Common Stock and any other securities
convertible or exchangeable into Common Stock, and the exercise of all
outstanding rights, options and warrants to subscribe for or purchase Common
Stock, regardless, in each case, of whether such securities are actually
convertible, exchangeable or exercisable at such time, but excluding any Warrant
Shares.
"DATE OF ISSUANCE" means January 10, 2002.
"FAIR MARKET VALUE" means (i) the average of the closing sales
prices of the Common Stock on all domestic securities exchanges on which the
Common Stock is listed, or (ii) if there have been no sales, the average of the
high bid and low ask prices on all such exchanges at the end of such day, or
(iii) if on any day the Common Stock is not so listed on an exchange, the sales
price for the Common Stock as of 4:00 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 the representative bid
and ask quotations for the Common Stock as of 4:00 P.M., Eastern time, as
reported on the Nasdaq interdealer quotation system or any similar successor
organization, in each such case averaged over a period of ten consecutive
trading days, including the day as of which "FAIR MARKET VALUE" is being
determined. Notwithstanding the foregoing, if at any time of determination
either (x) the Common Stock is not registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended, and either 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
9
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 sale transaction between a
willing buyer and a willing seller, using valuation techniques then prevailing
in the securities industry and assuming full disclosure of all relevant
information and a reasonable period of time for effectuating such sale, as
determined pursuant to good faith negotiations between the Board and the Warrant
holders. In the event the parties cannot agree on Fair Market Value, the
Required Holders shall have the right to require that an independent investment
banking firm mutually acceptable to the Company and the Required Holders
determine Fair Market Value, which firm shall submit to the Company and the
Warrant holders a written report setting forth such determination. The expenses
of such firm will be borne one-half by the Company and one-half by such holders
on a pro rata basis, and the determination of such firm will be final and
binding upon all parties.
"INDEPENDENT THIRD PARTY" means any Person who, immediately prior to
the contemplated transaction, does not own in excess of 5% of the Company's
Common Stock on a fully-diluted basis (a "5% OWNER"), who is not controlling,
controlled by or under common control with any such 5% Owner and who is not the
spouse or descendent (by birth or adoption) of any such 5% Owner or a trust for
the benefit of such 5% Owner and/or such other Persons.
"PERMITTED ISSUANCE" means any issuance by the Company of shares of
Common Stock or other securities (i) upon the exercise or conversion of Options
or other securities granted pursuant to employee benefit plans or option
agreements existing on the Date of Issuance; provided, that the aggregate number
of Options and other securities so granted shall not exceed 4,651,000, (ii) upon
conversion of outstanding shares of the Preferred Stock, in each case to the
extent issued and outstanding on the Date of Issuance, (iii) which are
restricted securities subject to a substantial risk of forfeiture issued
pursuant to benefit plans adopted by the Board; provided, that the aggregate
number of restricted securities plus shares subject to Options shall not exceed
4,651,000, (iv) pursuant to employee benefit plans qualified under Section
401(k) or 423 of the Internal Revenue Code; provided, that the aggregate number
of such securities shall not exceed 250,000, (v) upon conversion of the Amended
and Restated Convertible Senior Subordinated Note issued to Dresdner Kleinwort
▇▇▇▇▇▇ Private Equity Partners LP, dated January 10, 2002 (the "DRESDNER NOTES")
pursuant to their terms as in effect on the Date of Issuance or to satisfy
semi-annual interest obligations to holders of the Dresdner Notes outstanding on
the Date of Issuance, (vi) upon exercise of warrants to purchase an aggregate of
up to 1,115,962 shares of Common Stock issued or to be issued to holders of the
Dresdner Notes, the Preferred Stock or their permitted transferees or assigns,
or (vii) pursuant to the Company's Rights Agreement as in effect on the Date of
Issuance, including the Rights as defined therein and contemplated thereby.
"PERSON" means any individual, partnership, limited liability
company, fund, joint venture, corporation, trust, unincorporated organization or
government or department or agency thereof.
"PREFERRED STOCK" means, collectively, (i) the Company's Series A
Convertible Preferred Stock, no par value and (ii) the Company's Series B
Convertible Preferred Stock, no par value and (iii) in each case, any capital
stock (other than Common Stock) issued in exchange, substitution, or replacement
therefor, including without limitation the Company's Series C
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Convertible Preferred Stock, no par value, and the Company's Series D
Convertible Preferred Stock, no par value.
"REGISTERED HOLDER" means the holder of this Warrant as reflected in
the records of the Company maintained pursuant to SECTION 12.
"REQUIRED HOLDERS" means the holders of a majority of the purchase
rights represented by all Warrants as originally issued which remain outstanding
and unexercised at the time of determination.
"SALES EVENT" means the sale of the Company to an Independent Third
Party or group of Independent Third Parties pursuant to which such party or
parties acquire (i) capital stock of the Company possessing the voting power
under normal circumstances to elect a majority of the Company's board of
directors (whether by merger, consolidation or sale or transfer of the Company's
capital stock) or (ii) all or substantially all of the Company's assets
determined on a consolidated basis.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"WARRANT SHARES" means shares of Common Stock issuable upon exercise
of the Warrant; provided, that if the securities issuable upon exercise of the
Warrants 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.
SECTION 6. RESTRICTION ON TRANSFERABILITY. This Warrant shall not be
sold, assigned, transferred or pledged except upon the conditions specified in
this Warrant, which conditions are intended to ensure compliance with the
provisions of the Securities Act. Each holder of this Warrant will cause any
proposed purchaser, assignee, transferee, or pledgee of this Warrant to agree to
take and hold such securities subject to the provisions and upon the conditions
specified in this Warrant.
SECTION 7. RESTRICTIONS ON TRANSFER.
(i) CONSENT TO RESTRICTION. Each holder consents to the
Company making a notation on its records and giving instructions to any
transfer agent of its Warrants in order to implement the restrictions on
transfer established in this Agreement.
(ii) CONDITIONS OF TRANSFER. The holder of this Warrant,
by acceptance thereof, agrees not to make any disposition of all or any
portion of this Warrant unless and until such holder shall have notified
the Company in writing of the proposed disposition and furnished the
Company with (i) a detailed statement of the circumstances surrounding the
proposed disposition, (ii) a properly executed Assignment (in
substantially the form of EXHIBIT II hereto), (iii) this Warrant, and (iv)
if reasonably requested by the Company, an opinion of counsel, reasonably
satisfactory to the Company, that such disposition shall not require
registration under the Securities Act or qualification or registration
under state securities laws. Notwithstanding the
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foregoing, no such opinion of counsel shall be necessary for a transfer by
a holder of this Warrant to an Affiliate (as defined in the Securities
Act) of such holder.
SECTION 8. WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal executive offices of the Company, for new Warrants of like tenor
representing in the aggregate the purchase rights hereunder, and each of such
new Warrants shall represent such portion of such rights as is designated by the
Registered Holder at the time of such surrender. At the request of the
Registered Holder (pursuant to a transfer of Warrants or otherwise), this
Warrant may be exchanged for one or more Warrants to purchase Common Stock. The
date of issuance shall be deemed to be the Date of Issuance regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued.
SECTION 9. REPLACEMENT. Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the Registered Holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Company shall (at
its expense) execute and deliver in lieu of such certificate a new certificate
of like kind representing the same rights represented by such lost, stolen,
destroyed or mutilated certificate and dated the date of such lost, stolen,
destroyed or mutilated certificate.
SECTION 10. NOTICES. Except as otherwise expressly provided herein,
all notices and deliveries referred to in this Warrant shall be in writing,
shall be 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 shall be deemed to have been given when
so delivered (or when received, if delivered by any other method) if sent (i) to
the Company, at its principal executive offices and (ii) to a Registered Holder,
at such Registered ▇▇▇▇▇▇'s address as it appears in the records of the Company
(unless otherwise indicated by any such Registered Holder).
SECTION 11. AMENDMENT AND WAIVER. Except as otherwise provided
herein, the provisions of the Warrants may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the prior written consent of
the Required Holders.
SECTION 12. WARRANT REGISTER. The Company shall maintain at its
principal executive offices books for the registration and the registration of
transfer of Warrants. The Company may deem and treat the Registered Holder as
the absolute owner hereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes and shall not be affected by
any notice to the contrary.
SECTION 13. FRACTIONS OF SHARES. The Company may, but shall not be
required to, issue a fraction of a Warrant Share upon the exercise of this
Warrant in whole or in part. As
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to any fraction of a share which the Company elects not to issue, the Company
shall make a cash payment in respect of such fraction in an amount equal to the
same fraction of the Fair Market Value of a Warrant Share on the date of such
exercise.
SECTION 14. DESCRIPTIVE HEADINGS; GOVERNING LAW. The descriptive
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. THIS WARRANT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF OREGON, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW
PROVISION OR RULE (WHETHER OF THE STATE OF OREGON OR ANY OTHER JURISDICTION)
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN
THOSE OF THE STATE OF OREGON.
* * * * *
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer and to be dated as of the date hereof.
GARDENBURGER, INC.
By:
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
Attest:
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EXHIBIT I
EXERCISE AGREEMENT
To: Dated:
The undersigned, pursuant to the provisions set forth in the
attached Warrant (Certificate No. W- ), hereby agrees to subscribe for the
----
purchase of Warrant Shares (in the form of Common Stock covered by
--------
such Warrant) and makes payment herewith in full therefor at the price per
share provided by such Warrant.
Signature
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Address
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Exhibit I, Page 1
EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, hereby sells,
--------------------------------
assigns and transfers all of the rights of the undersigned under the attached
Warrant (Certificate No. W- ) with respect to the number of the Warrant
----
Shares covered thereby set forth below, unto:
NAMES OF ASSIGNEE ADDRESS NO. OF SHARES
----------------- ------- -------------
Dated: Signature
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Witness
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Exhibit II, Page 2