Document:

Exhibit

10.5

 

AMENDMENT NO. 2 TO RIGHTS AGREEMENT

 

This Amendment No. 2, dated as of

January 10, 2002 (the “Amendment”), to the Amended and Restated Rights

Agreement (the “Rights Agreement”) dated as of July 15, 1999, as amended

by Amendment No. 1 dated January 2, 2002, by and between

Gardenburger, Inc. (the “Company”), and EquiServe Trust Company, N.A.

(successor to First Chicago Trust Company of New York) (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 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) Paul F. Wenner, together with all of his Affiliates and Associates,

including, without limitation, the Paul F. Wenner Charitable Foundation Trust

(collectively, “Wenner”); and (y) Dresdner Kleinwort Benson 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 Benson Private

Equity Partners LP (collectively, “Dresdner”). 

“Exempt Percentage” shall mean up to 25% 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 any Exempt

Person) or more of the Common Shares of the Company then outstanding, provided

that if a Person shall become the Beneficial Owner of 15%

 

1

 

(25% as to any Exempt Person) or more of the Common Shares of 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) or Holders (as defined in that

certain Preferred Stock Exchange Agreement dated as of January 10, 2002,

by and among the Company and the Holders), together with any one or more or all

of each Purchaser’s and Holder’s Affiliates and Associates (Purchasers and Holders,

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 C Convertible Preferred Stock or Series D 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. 

Rights

Agreement as Amended.  The

term “Rights 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 and all schedules or exhibits

thereto shall remain in full force and effect and be otherwise unaffected

hereby.

 

Section 3. 

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 4. 

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.

 

2

 

IN WITNESS WHEREOF, the parties hereto have caused

this Amendment to be duly executed in their names and on their behalf by and

through their duly authorized officers, as of the day and year first above

written.

 

	

   

  	

  GARDENBURGER, INC.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Lorraine Crawford

  	

   

  
	

   

  	

  Name:

  	

  Lorraine Crawford

  
	

   

  	

  Title:

  	

  Vice President of Finance

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  EQUISERVE TRUST COMPANY, N.A.

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Thomas McDonough

  	

   

  
	

   

  	

  Name:

  	

  Thomas McDonough

  
	

   

  	

  Title:

  	

  Senior Account Manager

  
					

 

3Exhibit

10.8

AMENDMENT NO. 1 TO

LOAN AGREEMENT

This AMENDMENT NO. 1 TO LOAN AGREEMENT effective as of

June 28, 2002 (this “First Amendment”) upon the satisfaction of the

conditions set forth herein, is hereby entered into among FOOTHILL CAPITAL

CORPORATION, a California corporation (“Lender”), and American

Restaurant Group, Inc., a Delaware corporation (“ARG”), ARG Enterprises,

Inc., a California corporation (“Enterprises”), ARG Property Management

Corporation, a California corporation (“Property Management”), and ARG

Terra, Inc., a Delaware corporation (“Terra”; ARG, Enterprises, Property

Management and Terra are collectively referred to as “Borrowers” and

individually as a “Borrower”).

RECITALS

WHEREAS, Borrowers and Lender have executed and

delivered that certain Loan Agreement dated as of  December 17, 2001 (as amended, modified or supplemented from time

to time, the “Loan Agreement”);

WHEREAS, Lender and Borrowers have agreed to

clarify the definition of “EBITDA” in the Loan Agreement, subject to the terms

and conditions of this First Amendment;

NOW,

THEREFORE, for

good and valuable consideration, the receipt and adequacy of which are hereby

acknowledged, Borrowers and Lender do hereby agree as follows:

SECTION 1.         RELATION

TO THE LOAN AGREEMENT; DEFINITIONS.

1.1  Relation

to Loan Agreement.  This First Amendment

constitutes an integral part of the Loan Agreement and shall be deemed to be a

Loan Document for all purposes.  Upon

the effectiveness of this First Amendment, on and after the date hereof each

reference in the Loan Agreement to “this Agreement,” “hereunder,” “hereof,” or

words of like import referring to the Loan Agreement, and each reference in the

other Loan Documents to “the Loan Agreement,” “thereunder,” “thereof” or words

of like import referring to the Loan Agreement, shall mean and be a reference

to the Loan Agreement as amended hereby.

1.2  Capitalized

Terms.  For all purposes of this First Amendment,

capitalized terms used herein without definition shall have the meanings

specified in the Loan Agreement.

SECTION 2.         AMENDMENT TO LOAN AGREEMENT.

2.1  Amendment to Definition of “EBITDA”.

The definition of “EBITDA”

contained in Section 1.1 of the Loan Agreement is hereby amended from and after

the date hereof by deleting such definition in its entirety and replacing it

with the following:

“EBITDA” means, with respect to any fiscal

quarter period being measured, Borrowers’ and Subsidiary Guarantors’

consolidated net earnings (or loss) from operations, minus (a) to the extent

included in computing net earnings (loss) from operations, extraordinary gains,

plus (b) without duplication, to the extent deducted in computing net earnings

(loss) from operations, interest expense (net of interest income), income

taxes, extraordinary losses, depreciation, amortization and non-cash charges

for the following items incurred by Borrowers or Subsidiary Guarantors in

connection with changes to Borrowers’ and Subsidiary Guarantors’ financial

statements because of GAAP requirements: 

vacation accrual, asset impairment, gift certificate accrual and

litigation accrual; provided, however, that such non-cash charges shall not

exceed (w) $62,500 for the first fiscal quarter of any fiscal year, (x) $62,500

for the second fiscal quarter of any fiscal year, (y) $187,500 for the third

fiscal quarter of any fiscal year and (z) $187,500 for the fourth fiscal

quarter of any fiscal year.  All of the

foregoing shall, in each case and for each aspect of this calculation, be

determined in accordance with GAAP with respect only to the applicable fiscal

period.

 

 

 

 

 

SECTION 3.         REPRESENTATIONS AND WARRANTIES OF BORROWERS.

3.1  Corporate Organization and Authority.

(a)   Each Borrower is a corporation duly organized

and existing and in good standing under the laws of its jurisdiction of formation

and is duly qualified to do business and in good standing in every jurisdiction

in which the nature of the business done or the property owned by it would make

such qualification necessary.

(b)   Each Borrower has all requisite power and

authority to own and operate its properties, and to conduct its business as

currently conducted and as currently proposed to be conducted.  Each Borrower has all requisite power and

authority necessary to enter into this First Amendment and to perform its

obligations under this First Amendment.

3.2  Corporate

Proceedings; Validity of Amendment.  Each Borrower

has taken all corporate action necessary to be taken by it to authorize the

execution and delivery of this First Amendment.   This First Amendment has been duly executed and delivered by

each Borrower and constitutes the legal, valid and binding obligation of each

Borrower, enforceable against each Borrower in accordance with its terms.

3.3  No

Default or Event of Default.  No event has

occurred and no condition exists which constitutes a Default or an Event of

Default under the Loan Agreement or the other Loan Documents.

3.4  No

Violations, Consents or Approvals.  The

execution, delivery, and performance by each Borrower of this First Amendment

do not and will not (i) violate any provision of federal, state, or local law

or regulation applicable to such Borrower, the Governing Documents of such

Borrower, or any order, judgment, or decree of any court or other Governmental

Authority binding on such Borrower, (ii) conflict with, result in a breach of,

or constitute (with due notice or lapse of time or both) a default under any

material contractual obligation of such Borrower, or (iii) require any approval

of such Borrower’s stockholders or any approval or consent of any Person under

any material contractual obligation of such Borrower

3.5  Ratification and Confirmation of Loan

Documents.  The Loan Agreement and all other Loan

Documents and all representations, warranties, terms and conditions therein

 

 

2

 

remain in full force and effect, and each Borrower hereby confirms and

ratifies each of the provisions of the Loan Agreement and the other Loan

Documents.

 

SECTION 4.         MISCELLANEOUS.

4.1  Conditions

to Effectiveness.  This First Amendment shall not become

effective until counterparts of this First Amendment have been executed and

delivered by Lender and Borrowers.

4.2  Successors

and Assigns.  This First Amendment shall be binding upon

and inure to the benefit of the parties hereto and their respective successors

and assigns.

4.3  Counterparts. 

This First Amendment may be executed simultaneously in two or more

counterparts, each of which shall be deemed to be an original but all of which

shall constitute together but one and the same instrument.

4.4  GOVERNING

LAW. THE VALIDITY OF THIS FIRST AMENDMENT, THE CONSTRUCTION,

INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO

WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE

DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE

STATE OF CALIFORNIA

4.5  Expenses. 

Borrowers agree to pay the expenses of Lender in connection with the

transactions contemplated by this First Amendment (including, without

limitation, the fees and expenses of counsel for the Lender).

4.6  Release.

(a)   Each Borrower, their successors-in-title,

legal representatives and assignees and, to the extent the same is claimed by

right of, through or under any Borrower, for their past, present and future employees,

agents, representatives, officers, directors, shareholders, and trustees, do

hereby forever remise, release and discharge Lender, and Lender’s respective

successors-in-title, legal representatives and assignees, past, present and

future officers, directors, shareholders, trustees, agents, employees,

consultants, experts, advisors, attorneys and other professionals and all other

persons and entities to whom Lender would be liable if such persons or entities

were found to be liable to Borrowers, or any of them (collectively hereinafter

the “Lender Parties”), from any and all manner of action and actions, cause and

causes of action, counterclaims, suits, debts, dues, sums of money, accounts,

reckonings, bonds, bills, specialties, covenants, contracts, controversies,

damages, judgments, expenses, executions, liens, claims of liens, claims of

costs, penalties, attorneys’ fees, or any other compensation, recovery or

relief on account of any loss, liability, obligation, demand or cause of action

of whatever nature relating to, arising out of or in connection with the Loan

Agreement or any other Loan Document, including but not limited to, acts,

omissions to act, actions, negotiations, discussions and events resulting in

the finalization and execution of this First Amendment, as, among and between

the Borrowers and the Lender Parties, such claims whether now accrued and

whether now known or hereafter discovered, from the beginning of time through

the date hereof, and specifically including, without any limitation, any claims

of liability asserted or which could have been

 

 

3

 

asserted with respect to,

arising out of or in any manner whatsoever connected directly or indirectly

with any “lender liability-type” claim.

(b)   As to each and every claim released

hereunder, Borrowers represent that they have received the advice of legal

counsel with regard to the releases contained herein, and having been so

advised, each of them specifically waives the benefit of the provisions of

Section 1542 of the Civil Code of California which provide:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE

CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF

EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUSTS HAVE MATERIALLY AFFECTED HIS

SETTLEMENT WITH THE DEBTOR.”

4.7          Ratification.  Except as expressly amended, any conditions of the

Loan Documents shall remain unamended and unwaived.  The amendments set forth herein shall be limited precisely as

provided for herein to the provisions expressly amended herein and shall not

(i) be deemed to be a waiver of, amendment of, consent to or modification of

any other term or provision of any other document or of any transaction or

further action on the part of the Borrowers which would require the consent of

Lender under the Loan Agreement or (ii) create a course of conduct or dealing

among the parties hereto.

 

[remainder of page

intentionally blank]

 

4

 

IN

WITNESS WHEREOF,

each of the parties hereto have caused this First Amendment to be executed and

delivered by a duly authorized representative.

 

AMERICAN RESTAURANT GROUP, INC.

a Delaware

corporation

 

By:                                                                          

Title:

 

ARG ENTERPRISES, INC.

a California

corporation

 

By:                                                                          

Title:

 

ARG PROPERTY MANAGEMENT CORPORATION,

a California

corporation

 

By:                                                                          

Title:

 

ARG TERRA, INC.

a Delaware

corporation

 

By:                                                                          

Title:

 

 

FOOTHILL CAPITAL CORPORATION,

a California

corporation

 

By:                                                                          

Title:

 

 

 

5

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