FIRST AMENDMENT TO
NOTE PURCHASE AGREEMENT
THIS FIRST AMENDMENT (this "AMENDMENT"), dated as of December __,
1999, to the Note Purchase Agreement, dated as of March 27, 1998, by and among
DRESDNER KLEINWORT XXXXXX PRIVATE EQUITY PARTNERS LP, a Delaware limited
partnership ("the PURCHASER"), and GARDENBURGER, INC., an Oregon corporation
(the "COMPANY").
WHEREAS, the parties hereto have entered into the Note Purchase
Agreement, dated as of March 27, 1998 (the "AGREEMENT"); unless otherwise
defined herein, all capitalized terms used herein (including the recitals
hereto) shall have the meanings assigned to such terms in the Agreement, as
amended hereby;
WHEREAS, the Company has entered into a Loan and Security Agreement
dated as of December 23, 1999 (the "NEW SENIOR CREDIT AGREEMENT") with Banc of
America Commercial Finance Corporation through its Commercial Funding Division
("BOFA") pursuant to which, among other things, the Company will refinance its
obligations under the existing Senior Credit Agreement (as defined in the
Agreement prior to giving effect to this Amendment) and will receive a credit
facility with an aggregate maximum borrowing availability of $25,000,000;
WHEREAS, the Company has requested the Purchaser to amend the
Agreement and the Convertible Notes on the terms and conditions set forth in
this Amendment;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants contained herein, the parties hereto agree as follows.
1. CONSENTS. Subject to the terms and conditions set forth herein, the
Purchaser hereby consents, pursuant to paragraph 2N of the Agreement, to the
Company entering into the New Senior Credit Agreement. Nothing contained herein
shall be deemed to constitute a waiver of any other Event of Default that may
heretofore or hereafter occur or have occurred and be continuing or to modify
any provision of the Agreement except as expressly set forth herein. No consent
or waiver and, except as otherwise specifically provided herein, no other change
of the terms or provisions of the Agreement is intended or implied. This
Amendment shall not constitute a waiver by the Purchaser of any existing
defaults under the Agreement, whether or not the Purchaser has knowledge of the
same, and shall not constitute a waiver of any future defaults.
2. AMENDMENTS.
(a) Subparagraph 2C(ix) of the Agreement is hereby amended by
replacing the reference to "$20,000,000" therein with "$27,500,000".
(b) The definition of "Senior Credit Agreement" in the Agreement is
hereby amended and restated in its entirety to read as follows:
"SENIOR CREDIT AGREEMENT" means the Loan and Security Agreement
dated as of December 23, 1999 among the Company and Banc of America
Commercial Finance Corporation through its Commercial Funding Division
(the "Bank"), as such agreement may be amended, restated, supplemented
or otherwise modified from time to time pursuant to and in accordance
with paragraph 2N hereof; provided that if the Company enters into a
loan agreement with a financial institution other than the Bank with
terms that would be permitted as an amendment to Senior Indebtedness
pursuant to paragraph 2N, such loan agreement shall thereafter be
deemed to be the Senior Credit Agreement.
(c) The definition of "Senior Indebtedness" in the Agreement is hereby
amended by replacing the reference to "20,000,000" therein with
"27,500,000."
(d) The following provision is hereby added at the end of subparagraph
6P(ii) of the Agreement as clause (c):
(c) In the event of any Bankruptcy Event, the Registered Holders
hereby expressly consent to the granting by Company to the holders of
Senior Indebtedness of senior liens and priorities in connection with
any post-petition financing of the Company by such holders of Senior
Indebtedness.
(e) The introductory clause of subparagraph 2D(b) of the Agreement is
hereby amended and restated in its entirety to read as follows:
"So long as any Convertible Notes remain outstanding (provided that
during the Term as described in paragraph 2D(c) below, the following
covenants set forth in this subparagraph 2D(b) shall not be
effective), the Company agrees:"
(f) The following provision is hereby added following subparagraph
2D(b) of the Agreement as subparagraph 2D(c):
"During the period commencing with the effective date of the financing
arrangements pursuant to the Senior Credit Agreement as in effect on
the Amendment Effective Date (the "New Credit Facility"), and
continuing throughout the three-year term of the New Credit Facility
(hereinafter the "Term"), but only for so long as any Convertible
Notes remain outstanding, the Company will not incur cumulative 'net
cash losses' in excess of Five Million Dollars ($5,000,000). 'Net cash
losses' shall mean pre-tax income or loss, in each case as determined
in accordance with generally accepted accounting principles, (a) in
the case of pre-tax income, increased by any non-cash charges and cash
proceeds from new issuances of capital stock or subordinated debt and
decreased by any amounts paid as debt service, or (b) in the case of
pre-tax loss, increased by any amounts paid as debt service and
decreased (offset) by any non-cash charges and cash proceeds from new
issuances of capital stock or subordinated debt. Non-cash charges
include, but are not limited to, depreciation, amortization, and
accrued but unpaid interest or dividends. The covenant set forth in
this paragraph 2D(c) shall apply in lieu of the covenants set forth in
Section 2D(b) above throughout the Term."
(g) The following definition shall be added to paragraph 5A of the
Agreement immediately following the definition of affiliated therein:
"AMENDMENT EFFECTIVE DATE" means December 30, 1999."
(h) The first sentence of Section 2 of the Convertible Notes is hereby
amended and restated in its entirety to read as follows:
"Interest will accrue at the rate of seven percent (7%) per annum
(computed on the basis of a 360-day year, as appropriate, and the
actual number of days elapsed in any year) on the unpaid principal
amount of this Convertible Note outstanding from time to time;
provided that such rate shall be deemed automatically to be (i) eight
percent (8%) during any period in which the aggregate amount
outstanding under the Senior Credit Agreement exceeds $15,000,000, up
to and including $20,000,000 and (ii) nine percent (9%) during any
period in which the aggregate amount outstanding under the Senior
Credit Agreement exceeds $20,000,000; and provided further, that in no
event shall such rate be higher than the highest rate then permitted
under applicable law (it being further agreed that any increase in the
interest rate pursuant to this Section 2 will terminate as of the
close of business on the next Business Day on which the aggregate
amount outstanding under the Senior Credit Agreement declines below
the applicable threshold (subject to subsequent increases pursuant to
this Section 2) and the interest rate will revert to (a) seven percent
(7%) if such aggregate amount outstanding is below $15,000,001 and (b)
eight percent (8%) if such aggregate amount outstanding is above
$15,000,000 and below $20,000,001."
3. RATIFICATION OF AGREEMENT.
(a) To induce the Purchaser to enter into this Amendment, the Company
represents and warrants that after giving effect to this Amendment, no
violation of the terms of the Agreement exist.
(b) Except as expressly set forth in this Amendment, the terms,
provisions and conditions of the Agreement and the Investment Documents are
unchanged, and said agreements, as amended, shall remain in full force and
effect and are hereby confirmed and ratified.
4. CONDITIONS. This Amendment shall become effective as of the
Amendment Effective Date upon (i) the execution of the counterparts hereof by
the Company and the Purchaser, and (ii) the receipt by the Purchaser of evidence
of the effectiveness of the New Senior Credit Agreement.
5. BINDING ON SUCCESSORS AND ASSIGNS. All the terms and provisions of
this Amendment shall be binding upon and inure to the benefit of the parties
hereto, their respective successors, assigns and legal representatives. Whenever
in this Amendment any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party.
6. FURTHER ASSURANCES. Each of the Company and the Purchaser, as the
case may be, shall duly execute and deliver, or cause to be executed and
delivered, such further instruments and perform or cause to be performed such
further acts as may be necessary or proper in the reasonable opinion of the
Purchaser to carry out the provisions and purposes of this Amendment.
7. EFFECT OF AMENDMENT. To the extent any terms and conditions in the
Agreement shall contradict or be in conflict with any provisions of this
Amendment, the provisions of this Amendment shall govern.
8. EXPENSES. All expenses of the Purchaser incurred in connection with
this Amendment, including reasonable expenses of Purchaser's counsel, will be
paid by the Company.
9. COUNTERPARTS. This Amendment may be executed in separate
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
* * * * *
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of the date first written above.
DRESDNER KLEINWORT XXXXXX PRIVATE EQUITY PARTNERS LP
By: Dresdner Kleinwort Xxxxxx Private Equity LLC
Its: General Partner
By: /s/ Xxxxxxxxx X. Xxxxxxx
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Its: Authorized Person
GARDENBURGER, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Its: Executive Vice President and CFO
