EXECUTION COPY
SECOND AMENDMENT TO
NOTE PURCHASE AGREEMENT
THIS SECOND AMENDMENT (this "AMENDMENT"), dated as of January 10,
2002, 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 entered into the Note Purchase
Agreement, dated as of March 27, 1998 (the "AGREEMENT"), and a First Amendment
to Note Purchase Agreement dated as of December 23, 1999 (the "FIRST
AMENDMENT"); 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 by the First Amendment and hereby;
WHEREAS, the Company has entered into a Revolving Credit and Term
Loan Agreement dated as of January 10, 2002 (as amended, the "NEW SENIOR CREDIT
AGREEMENT") with CapitalSource Finance LLC as a lender and as agent
("CAPITALSOURCE") pursuant to which, among other things, the Company will
refinance its obligations of the existing Senior Credit Agreement (as defined in
the Agreement after giving effect to the First Amendment but prior to giving
effect to this Amendment, the "EXISTING CREDIT AGREEMENT") and will receive a
credit facility with an aggregate maximum borrowing availability of $15,000,000;
WHEREAS, the Company has requested the Purchaser to exchange the
existing Convertible Note for an Amended and Restated Convertible Senior
Subordinated Note in the forma attached hereto as EXHIBIT A (the "NEW NOTE"),
and amend the Agreement 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 Lender 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) SECTION 2C(a)(vii) of the Agreement, as amended by the
First Amendment, is hereby amended and restated in its entirety to read
as follows:
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(vii) subject to the Senior Credit Agreement, become subject
to, or permit any of its Subsidiaries to become subject to
(including, without limitation, by way of amendment to or
modification of) any agreement or instrument which by its terms
would (under any circumstances) restrict (a) the right of any
Subsidiary to make loans or advances or pay dividends to, transfer
property to, or repay any Indebtedness owed to, the Company or
another Subsidiary or (b) the Company's right to perform the
provisions of any Investment Document, the Articles of
Incorporation or the Company's bylaws;
(b) Subparagraph 2C(a)(ix) of the Agreement, as amended by the
First Amendment, is hereby amended by replacing the reference to
"$27,500,000" therein with "$21,000,000."
(c) SECTION 2D(b) of the Agreement, as amended by the First
Amendment, is hereby amended and restated in its entirety to read as
follows:
"The Company shall not violate the following financial
covenants:
(i) LEVERAGE RATIO
The Leverage Ratio shall not exceed (i) 3.025:1.00, upon the
making of the Initial Advance and the Term Loan (under and as
defined in the Senior Credit Agreement) and for each Quarterly Test
Period through the fiscal quarter ending June 30, 2002, and (ii)
2.75:1.00, for each Quarterly Test Period after June 30, 2002.
(ii) MINIMUM ADJUSTED EBITDA
Adjusted EBITDA for each Quarterly Test Period, shall not be
less than (i) $4,500,000 for each Quarterly Test Period ending on
or before June 30, 2002, and (ii) $5,400,000 for each Quarterly
Test Period after June 30, 2002.
(iii) FIXED CHARGE COVERAGE RATIO
The Fixed Charge Coverage Ratio for each Quarterly Test
Period shall not be less than 1.125:1.00.
(iv) CAPITAL EXPENDITURES
For any Quarterly Test Period, the Company shall not permit
its Capital Expenditures in the aggregate to exceed (i) $1,925,000
for each Quarterly Test Period ending on or before September 30,
2002, and (ii) $1,210,000 for each Quarterly Test Period after
September 30, 2002.
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For purposes of the financial covenants set forth in this SECTION 2D(B), the
terms listed below shall have the following meanings:
"ADJUSTED EBITDA" shall mean EBITDA plus the amounts listed below
for the applicable Quarterly Test Period.
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DESCRIPTION Q2FY01 Q3FY01 Q4FY01 Q1FY02 Q2FY02 TOTAL
-------------------------------------------------------------------------------
Operating Lease 754,250 754,250 754,250 754,250 3,017,000
Expense
-------------------------------------------------------------------------------
Severance Expense 150,110 20,650 38,510 77,368 286,638
-------------------------------------------------------------------------------
Relocation Expense 105,000 4,000 18,950 127,950
-------------------------------------------------------------------------------
Recapitalization 14,000 175,000 189,000
Expenses
-------------------------------------------------------------------------------
Refinancing Expenses (as
agreed
to by
Agent in
its sole
discretion)
-------------------------------------------------------------------------------
Total 1,009,360 788,900 971,760 850,568 3,620,588
-------------------------------------------------------------------------------
"CAPITAL EXPENDITURES" shall mean, for any Quarterly Test Period,
the sum (without duplication) of all expenditures (whether paid in cash or
accrued as liabilities) during the Quarterly Test Period that are or should be
treated as capital expenditures under GAAP.
"CAPITAL LEASE" shall mean, as to any Person, a lease of any
interest in any kind of property or asset by that Person as lessee that is,
should be or should have been recorded as a "capital lease" in accordance with
GAAP.
"EBITDA" shall mean, for any Quarterly Test Period, the sum, without
duplication, of the following for the Company, on a consolidated and
consolidating basis: Net Income determined in accordance with GAAP, plus, (a)
Interest Expense, (b) taxes on income, whether paid, payable or accrued, (c)
depreciation expense, (d) amortization expense, (e) non-cash dividends on
preferred stock, and (f) all other non-cash, non-recurring charges and expenses,
excluding accruals for cash expenses made in the ordinary course of business,
all of the foregoing determined in accordance with GAAP, less (f) all non-cash
income.
"FIXED CHARGE COVERAGE RATIO" shall mean, at any date of
determination, for the Company individually and collectively on a consolidated
and consolidating basis, the ratio of (a) Adjusted EBITDA for the Quarterly Test
Period most recently ended before such date, to (b) Fixed Charges for the
Quarterly Test Period most recently ended before such date, in each case taken
as one accounting period.
"FIXED CHARGES" shall mean, on any calculation date, for any
Quarterly Test Period, the sum of the following for the Company, individually
and collectively, on a consolidated and consolidating basis: (a) Total Debt
Service for such period, (b) Capital Expenditures during such period, (c) income
taxes paid in cash or accrued during such period, and (d) dividends paid or
declared during such period.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time as applied by nationally
recognized accounting firms.
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"INTEREST EXPENSE" shall mean, for any Quarterly Test Period, total
interest expense (including attributable to Capital Leases in accordance with
GAAP) of the Company individually and collectively, on a consolidated and
consolidating basis with respect to all outstanding Indebtedness including
capitalized interest but excluding commissions, discounts and other fees owed
with respect to letters of credit and bankers' acceptance financing and net
costs under Interest Rate Agreements.
"INTEREST RATE AGREEMENT" shall mean any interest rate swap, cap or
collar agreement or other similar agreement or arrangement designed to hedge the
position with respect to interest rates.
"LEVERAGE RATIO" shall mean, at any date of determination, for the
Company, the ratio of (i) the aggregate unpaid principal amount of all Loans
(under and as defined in the Senior Credit Agreement) on such date, plus the
aggregate liability of the Company pursuant to any letter of credit or surety
bond to (ii) Adjusted EBITDA.
"NET INCOME" shall mean, for any Quarterly Test Period, the net
income (or loss) of the Company individually and collectively on a consolidated
and consolidating basis for such period taken as a single accounting period
determined in conformity with GAAP; provided, that there shall be excluded (i)
the income (or loss) of any Person in which any other Person (other than the
Company) has a joint interest, except to the extent of the amount of dividends
or other distributions actually paid to the Company by such Person during such
period, (ii) the income (or loss) of any Person accrued prior to the date it
becomes the Company or is merged into or consolidated with the Company or that
Person's assets are acquired by the Company, (iii) the income of any Subsidiary
of the Company to the extent that the declaration or payment of dividends or
similar distributions of that income by that Subsidiary is not at the time
permitted by operation of the terms of the charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Subsidiary, (iv) compensation expense resulting from the issuance of
capital stock, stock options or stock appreciation rights issued to former or
current employees, including officers, of the Company, or the exercise of such
options or rights, in each case to the extent the obligation (if any) associated
therewith is not expected to be settled by the payment of cash by the Company or
any affiliate thereof, and (v) compensation expense resulting from the
repurchase of capital stock, options and rights described in clause (iv) of this
definition of Net Income.
"QUARTERLY TEST PERIOD" shall mean the twelve month period ending on
the last day of each March, June, September and December of each year.
"TOTAL DEBT SERVICE" shall mean for any period, for the Company
individually and collectively on a consolidated and consolidating basis, the sum
of (i) scheduled or other required payments of principal on Indebtedness, (ii)
any other fees due or payable in connection with any Indebtedness, and (iii)
Interest Expense, in each case for such period."
(d) Section 2N of the Agreement, as amended by the First
Amendment, is hereby amended and restated in its entirety to read as
follows:
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2N. AMENDMENTS TO SENIOR INDEBTEDNESS. The Company will not,
and will not permit any of its Subsidiaries to amend, modify or
restate the terms of Senior Indebtedness if such amendment,
modification or restatement would (i) increase the amount of Senior
Indebtedness (except as not prohibited by the definition of "Senior
Indebtedness" set forth herein), (ii) increase by more than 3.00%
per annum the applicable margin on any interest rate on the Senior
Indebtedness, including default rates, set forth in the Senior
Credit Agreement as such Senior Credit Agreement is in effect on
January 10, 2002 or (iii) change or amend Section 7.11 of the Senior
Credit Agreement in a manner which would be more restrictive on the
Company's ability to fulfill its obligations to the Registered
Holders.
(e) The definition of "CHANGE OF CONTROL" in Section 5A of the
Agreement is hereby amended and restated in its entirety to read as
follows:
"CHANGE OF CONTROL" means any sale or issuance (or series of
sales or issuances) of the Company's Common Stock by the Company or
any holder thereof which results in any Person or group of
affiliated Persons or entities or group of Persons or entities
acting together, owning more than 50% of the Common Stock on a fully
diluted basis immediately after the time of such sale or issuance or
series of issuances (without giving effect to any out-of-the-money
Equity Securities).
(f) The definition of "MANAGEMENT CHANGE" in Section 5A of the
Agreement is hereby amended and restated in its entirety to read as
follows:
"MANAGEMENT CHANGE" shall occur if Xxxxx Xxxxxxx (or his
successor as provided herein) ceases to be employed by the Company
as Chief Executive Officer and a successor, who is reasonably
satisfactory to the holders of a majority of the Underlying Common
Stock, is not employed by the Company within 120 days of such
cessation of employment.
(g) Subclause (v) of the definition of "PERMITTED LIENS" in
Section 5A of the Agreement, is hereby amended and its entirety to read
as follows:
(v) interests or title of a lessor under any lease which the
Company or any Subsidiary is not prohibited from entering into by
this Agreement;
(h) The definition of "SENIOR CREDIT AGREEMENT" in Section 5A
of the Agreement, as amended by the First Amendment, is hereby amended
and restated in its entirety to read as follows:
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"SENIOR CREDIT AGREEMENT" means the Revolving Credit and Term
Loan Agreement dated as of January 10, 2002 between the Company and
CapitalSource Finance LLC, as a lender (in such capacity, the
"Bank") and as Agent (in such capacity, the "Agent"), as such
agreement may be amended, restated, supplemented or otherwise
modified from time to time pursuant to and in accordance with
paragraph 2N hereof and by definition of "Senior Indebtedness"
contained herein; provided, that if the Company enters into a loan
agreement with a bank 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
a Senior Credit Agreement.
(i) The definition of "SENIOR INDEBTEDNESS" in Section 5A of
the Agreement, as amended by the First Amendment, is hereby amended and
restated in its entirety to read as follows:
"SENIOR INDEBTEDNESS" means, (a) with respect to the
Indebtedness and "Obligations" (as defined in the Senior Credit
Agreement) of the Company and any of its Subsidiaries or any
Guarantor (as defined in the Senior Credit Agreement) under the
Senior Credit Agreement and any other "Loan Documents" (as defined
in the Senior Credit Agreement; collectively, the "SENIOR DEBT
DOCUMENTS"), the aggregate principal amount thereof now or
hereafter outstanding, together with any fees, expenses and
interest (including any fees and expenses, incurred during any
Bankruptcy Event, case or other action relating to the bankruptcy,
insolvency, assignment for the benefit or creditors or
reorganization of the Company or such Subsidiary or any Guarantor,
and any interest which would have accrued at the applicable
interest rate for such Indebtedness and Obligations but for the
commencement of any Bankruptcy Event, case or other action relating
to the bankruptcy, insolvency, assignment for the benefit or
creditors or reorganization of the Company or such Subsidiary or
any Guarantor, whether or not such fees, expenses and interest are
an allowable claim in any such proceeding) or premium due thereon
and any other amount payable with respect thereto and all other
Obligations; and (b) any Indebtedness of the Company and each
Guarantor incurred in connection with a refinancing or refunding of
any of the foregoing if any such additional Indebtedness incurred
in connection with such refinancing or refunding is incurred in
compliance with paragraph 2N; provided, that in no event shall the
aggregate principal amount of Senior Indebtedness exceed
$20,000,000.
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(j) Section 6P of the Agreement, as amended by the First
Amendment, is hereby amended and restated in its entirety to read as
follows:
6P. SUBORDINATION.
(i) CONVERTIBLE NOTES SUBORDINATE TO SENIOR INDEBTEDNESS. The
Company covenants and agrees, and the Registered Holder likewise
covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this paragraph 6P, the payment of the
principal of and interest on the Convertible Notes, and all other
sums or obligations due and payable by the Company to the Registered
Holders hereunder (collectively with the Convertible Notes, the
"SUBORDINATED OBLIGATIONS"), are hereby expressly made subordinate
and subject in right of payment to the prior payment in cash in full
of all Senior Indebtedness.
(ii) PAYMENT OVER OF PROCEEDS UPON DISSOLUTION.
(a) In the event of (x) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation,
reorganization, adjustment, composition or other similar case or
proceeding in connection therewith, relative to the Company or its
Subsidiaries or Guarantors or to its creditors, as such, or to its
assets, or (y) any liquidation, dissolution or other winding up of
the Company or its Subsidiaries or Guarantors whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy,
or (z) any assignment for the benefit of creditors or any other
marshaling of assets and liabilities of the Company or its
Subsidiaries or Guarantors (collectively, "BANKRUPTCY EVENTS"),
then and in any such event:
(1) the holders of Senior Indebtedness
shall be entitled to receive indefeasible payment in cash in full
of all amounts due or to become due on or in respect of all such
Senior Indebtedness before the Registered Holders are entitled to
receive any payment or distribution, whether in cash, securities or
other property, on account of Subordinated Obligations;
(2) any payment or distribution of assets
of the Company of any kind or character, whether in cash, property
or securities, by set-off or otherwise, to which the Registered
Holders would be entitled but for the provisions of this paragraph
6P (except for such payment or distribution (x) of property or
securities authorized by a final non-appealable order or decree
stating that effect is being given to the subordination of
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such Subordinated Obligations to such Senior Indebtedness, and made
by a court of competent jurisdiction in a reorganization proceeding
under any applicable bankruptcy law, or (y) of securities which are
subordinated to at least the same extent as the Subordinated
Obligations to the payment of all Senior Indebtedness (any such
property or securities, "JUNIOR SECURITIES")) shall be paid by the
liquidating trustee or agent or other Person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the holders of the
Senior Indebtedness or their representative or representatives or to
the trustee or trustees under any indenture under which any
instruments evidencing any of the Senior Indebtedness may have been
issued, ratably according to the aggregate amounts remaining unpaid
on account of the principal of, and interest on, the Senior
Indebtedness held or represented by each, to the extent necessary to
make indefeasible payment in cash in full of all the Senior
Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of Senior Indebtedness;
(3) in the event that, notwithstanding
the foregoing provisions of this paragraph 6P, the Registered
Holders shall have received any such payment or distribution of
assets of the Company of any kind or character, whether in cash,
property or securities (but excluding any Junior Securities) before
all such Senior Indebtedness is indefeasibly paid in full in cash,
then and in such event such payment or distribution shall be held
in trust by the Registered Holders for the holders of the Senior
Indebtedness and shall be paid over or delivered forthwith to the
trustee in bankruptcy, receiver, liquidating trustee, custodian,
assignee, agent or other Person making payment or distribution of
assets of the Company for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to
indefeasibly pay all such Senior Indebtedness in full in cash,
after giving effect to any concurrent cash payment to or for the
holders of such Senior Indebtedness;
(4) each Registered Holder hereby
irrevocably authorizes and empowers each holder of the Senior
Indebtedness or such holder' s representative to collect and
receive such holder's ratable share of all such payments and
distributions and, if any Registered Holder fails to file a claim
at least fifteen (15) calendar days prior to the date established
by rule of law or order of court for such filing, to file and prove
(but not to vote or otherwise control) such claims therefor; and
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(5) the Registered Holders shall execute
and deliver to the Agent or its duly appointed representative or
representatives all such further instruments (including proofs of
claim and assignments of claim) confirming, and otherwise
reasonably necessary to effectuate, the authorization set forth in
subclause (4) above.
(b) If, notwithstanding the provisions of this
Agreement, there shall occur any consolidation of the Company with,
or any merger of the Company into, another corporation or the
liquidation or dissolution of the Company following any conveyance,
transfer or lease of its properties and assets substantially as an
entirety to another corporation, such consolidation, merger or
liquidation shall not be deemed a Bankruptcy Event for the purposes
of this paragraph 6P.
(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.
(iii) NO PAYMENT IN CERTAIN CIRCUMSTANCES.
(a) In the event that (i) the Company shall
fail to pay when due (after giving effect to any applicable grace
periods), upon acceleration or otherwise, any principal, interest
or fees or any other amounts with respect to Senior Indebtedness or
pursuant to the Obligations or Senior Debt Documents (a "PAYMENT
DEFAULT") which Payment Default shall not have been cured or
waived, or (ii) an "Event of Default" (as defined in the Senior
Credit Agreement) shall have occurred, which Event of Default shall
not have been cured or waived (such Event of Default, excluding a
Payment Default, a "NON-PAYMENT DEFAULT"), and the Company and the
Registered Holders receive written notice of such Non-Payment
Default from the Agent (a "BLOCKAGE NOTICE"), then no payment shall
be made by the Company or any Subsidiary or Guarantor on account of
the Subordinated Obligations (x) in the case of any Payment
Default, unless and until such Senior Indebtedness shall have been
indefeasibly paid in cash in full or until such Payment Default
shall have been cured or waived, or (y) in the case of any
Non-Payment Default, from the date the Company and the Registered
Holders shall have received such Blockage Notice until the earlier
of (1) 179 days after such date and (2) the date, if any, on which
the Senior Indebtedness is discharged or indefeasibly paid in cash
in full or such Non-Payment Default is waived by Agent or otherwise
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cured (a "BLOCKAGE PERIOD"); provided, that (A) no Blockage Period
shall continue in effect during any period of 365 consecutive days
for a period which, together with all other Blockage Periods in
effect during such 365 consecutive-day period, would aggregate more
than 179 days, and (B) no Non-Payment Default that previously
served as the basis for a Blockage Notice or that was in existence
at the time of such Blockage Notice may serve as the basis for any
other Blockage Notice.
(b) In the event that any Registered Holder
shall receive any payment or distribution of any kind or character,
whether in cash, property or securities (other than Junior
Securities) in contravention of this paragraph 6P, then and in such
event such payment or distribution shall be held in trust for the
benefit of, and shall be paid over and delivered forthwith to, the
Agent for the benefit of the holders of Senior Indebtedness. In
the event of the failure of any Registered Holder to endorse or
assign any such payment or distribution, any holder of the Senior
Indebtedness or such holder's representative is hereby irrevocably
authorized to endorse or assign the same.
(iv) ACCELERATION RIGHTS; REMEDIES.
(a) The Registered Holders will not exercise
any collection and enforcement action (by setoff hereunder or
otherwise) during the continuance of a Payment Default or during
any Blockage Period prior to the earliest to occur of:
(i) the expiration of 179 days following
(A) the date of such Payment Default or (B) the date upon which
such Blockage Period shall have commenced on account of the giving
of a Blockage Notice;
(ii) the acceleration of any portion or
all of the Senior Indebtedness; or
(iii) the occurrence of any Bankruptcy
Event.
(b) Each Registered Holder agrees that prior to
exercising any remedy available to it on account of any Event of
Default or otherwise under any document or applicable law or
equity, such holder shall give not less than ten (10) Business Days
prior written notice to the Agent.
(v) PAYMENTS OTHERWISE PERMITTED. Except as otherwise set
forth in the Senior Credit Agreement as in effect on
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January 10, 2002, nothing contained in this paragraph 6P or
elsewhere in this Agreement or in the Convertible Notes shall
prevent the Company, at any time except during a Bankruptcy Event
as set forth in subparagraph 6P(ii) or under the conditions
described in subparagraph 6P(iii) or (iv), and except as set forth
in Section 2 of the Convertible Notes with respect to the existence
of Excess Availability (as defined in the Senior Credit Agreement),
from making payments at any time of principal of and interest on
the Convertible Notes (including out of "EXCESS CASH FLOW" as set
forth in the Convertible Notes), or any other amount payable by the
Company under the Convertible Notes or this Agreement.
(vi) SUBROGATION. Subject to the indefeasible payment in cash
in full of all Senior Indebtedness, the Registered Holders shall be
subrogated to the rights of the holders of such Senior Indebtedness
to receive payments and distributions of cash, property and
securities applicable to such Senior Indebtedness until the
principal of and interest on the Convertible Notes shall be paid in
full in cash. For purposes of such subrogation, no payments or
distributions to the holders of such Senior Indebtedness of any
cash, property or securities to which the Registered Holders would
be entitled except for the provisions of this paragraph 6P and no
payments over pursuant to the provisions of this paragraph 6P to the
holders of such Senior Indebtedness by the Registered Holders shall,
as among the Company, its creditors (other than holders of such
Senior Indebtedness) and the Registered Holders be deemed to be a
payment or distribution by the Company to or on account of any of
the Convertible Notes.
(vii) PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. The
provisions of this paragraph 6P are and are intended solely for the
purpose of defining the relative rights of the holders of the
Convertible Notes on the one hand and the Agent and holders of
Senior Indebtedness on the other hand. Nothing contained in this
paragraph 6P or elsewhere in this Agreement or in the Convertible
Notes is intended to or shall (A) impair, as among the Company, its
creditors (other than Agent and holders of Senior Indebtedness) and
the Registered Holders, the obligation of the Company, which is
absolute and unconditional, to pay to the Registered Holders the
principal of, and premium and interest on, and any other amount
payable by the Company under, the Convertible Notes or this
Agreement as and when the same shall become due and payable in
accordance with their terms; or (B) affect the relative rights
against the Company of the Registered Holders and its creditors
(other than the Agent and holders of Senior Indebtedness); or (C)
prevent the Registered Holders from accelerating the Convertible
Notes and exercising all other remedies otherwise permitted by
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applicable law upon default under this Agreement, subject to the
terms of subparagraph 6P(iv) and the rights, if any, under this
paragraph 6P of the Agent and holders of Senior Indebtedness (x)
upon the occurrence of a Bankruptcy Event, to receive, pursuant to
and in accordance with this paragraph 6P, cash, property and
securities otherwise payable or deliverable to the Registered
Holders, or (y) under the conditions specified in paragraph 6P, to
prevent any payment prohibited by such paragraph 6P.
(viii) AMENDMENT. This Agreement shall not be amended without
obtaining the prior written consent of the Agent and Requisite
Lenders (as defined in the Senior Credit Agreement) for (a) an
increase in the rate of interest or fees charged hereunder, (b) an
increase in the principal amount of the Convertible Notes (other
than as expressly provided for herein and therein), (c) shortening
any maturity date of any payment of principal or interest, (d)
providing for any additional financial covenants or events of
default or making more restrictive any existing covenants or events
of default applicable to the Company or any Subsidiary or Guarantor
as in effect on January 10, 2002, (e) any amendment to paragraph 2N
or 6P or any of the definitions of the terms used therein, or (f)
any other amendment which would have a material adverse effect on
the operations of the Company or any Subsidiary or Guarantor or
obligations owed by such Persons to any holders of Senior
Indebtedness.
(ix) RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS; WAIVER. The
provisions of this paragraph 6P shall constitute a continuing offer
to all Persons who, in reliance upon such provisions, become holders
of, or continue to hold, any Senior Indebtedness. Such provisions
are made for the benefit of the Agent and the holders of such Senior
Indebtedness, such Agent and holders are hereby made obligees
hereunder with the same effect as if their names were written as
such in these provisions and any such holder or all of them may
proceed to enforce such provisions. Each Registered Holder hereby
agrees not to challenge or contest the validity, legality, binding
effect or enforceability of the provisions set forth in this
paragraph 6P or the priority, validity, legality, binding effect or
enforceability of the terms and provisions of the Senior Debt
Documents or the rights of the holders of the Senior Indebtedness in
the property and assets of the Company or any Subsidiary or
Guarantor as collateral security therefor or any Lien on or in
respect thereof. Notwithstanding anything contained in the
Convertible Notes or this Agreement to the contrary, until the
Senior Indebtedness has been indefeasibly paid in full in cash, the
Registered Holders hereby agree that the Subordinate Obligations are
not, and will not be, secured in
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any manner, including as a result of any cross-acceleration or
"dragnet" provisions in any agreement to which any Registered Holder
is a party (except as set forth in subparagraph 6P(vi); provided,
however, that the Registered Holders' rights under such subparagraph
6P(vi) shall not exist until the Senior Indebtedness has been
indefeasibly paid in full in cash).
(x) RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT. Upon any payment or distribution of assets of the Company
referred to in this paragraph 6P, the Registered Holders shall be
entitled to rely upon any final non-appealable order or decree
entered by any court of competent jurisdiction in which such
insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending, or
a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered to the
Registered Holders for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders
of Senior Indebtedness and other Indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this
paragraph 6P; provided, that the foregoing shall only apply if (i)
such court or other Person has given effect to the provisions of
this paragraph 6P and (ii) the rights of the holders of Senior
Indebtedness are not altered without their consent in a manner
contrary to such provisions.
(k) All references to Convertible Note(s) in the Agreement
shall refer to the New Note.
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 and all
representations and warranties contained in the Agreement are true,
correct and complete in all material respects on and as of the date
hereof except as (i) reflected in any schedule to the New Senior Credit
Agreement, (ii) disclosed in the Company's reports filed with the
Securities and Exchange Commission, and (iii) disclosed to Purchaser's
representative on the Board during a meeting of the Board, and except to
the extent such representations and warranties specifically relate to an
earlier date in which case they were true, correct and complete in all
material respects on and as of such earlier date.
(b) Purchaser acknowledges the payment or other satisfaction of
all interest accrued on the existing Convertible Note to and including
September 30, 2001.
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(c) 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 date
hereof upon (i) the execution of the counterparts hereof by the Company and the
Purchaser, (ii) the execution and delivery by the Company of the New Note, a
Stock Purchase Warrant in the form attached hereto as EXHIBIT B, and a Warrant
Agreement between the Purchaser and the Company in the form attached hereto as
EXHIBIT C, (iii) the receipt by the Purchaser of evidence of the effectiveness
of the New Senior Credit Agreement substantially in the form attached hereto as
EXHIBIT D, (iv) the execution by the holders of at least ninety-five percent
(95%) of the outstanding shares of the Company's Series A Convertible Preferred
Stock and Series B Convertible Preferred Stock of a Preferred Stock Exchange
Agreement substantially in the form attached hereto as EXHIBIT E, and (v) the
receipt of an opinion of counsel on behalf of the Company in the form attached
hereto as EXHIBIT F.
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. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF
THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
10. 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.
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* * * * *
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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
------------------------------------
Its: Managing Investment Partner
GARDENBURGER, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Its: President and CEO
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