Exhibit 10.1

 

RATIFICATION AND AMENDMENT AGREEMENT

 

THIS RATIFICATION AND AMENDMENT AGREEMENT dated as of October 17, 2005 (the
“Amendment”), is entered into by and between CAPITALSOURCE FINANCE LLC, a
Delaware limited liability company, in its capacity as “Agent” and “Lender”
under the Loan Agreement referenced below (in such capacities, collectively, the
“Lender”), and GARDENBURGER, INC., an Oregon corporation (“Borrower”). 
Capitalized terms used and not otherwise defined herein are used as defined in
the Loan Agreement (as defined below).

 

A.            Lender and Borrower have entered into that certain Revolving
Credit and Term Loan Agreement dated as of January 10, 2002, as amended by a
First Amendment to Revolving Credit and Term Loan Agreement dated as of
September 30, 2002, a Second Amendment to Revolving Credit and Term Loan
Agreement dated as of December 31, 2002, a Third Amendment to Revolving Credit
and Term Loan Agreement dated as of March 31, 2003, a Fourth Amendment to
Revolving Credit and Term Loan Agreement dated as of December 29, 2003, a Fifth
Amendment to Revolving Credit and Term Loan Agreement dated as of April 8, 2004,
a Sixth Amendment to Revolving Credit and Term Loan Agreement dated as of
August 13, 2004, a Seventh Amendment to Revolving Credit and Term Loan Agreement
dated as of November 29, 2004, an Eighth Amendment to Revolving Credit and Term
Loan Agreement dated as of February 18, 2005 and a Ninth Amendment to Revolving
Credit and Term Loan Agreement dated as of August 9, 2005 (as amended,
supplemented, modified and/or restated from time to time, the “Loan Agreement”);

 

B.            On October 14, 2005, Borrower, as debtor and debtor-in-possession,
filed a voluntary petition in a case (Case No. 05-19539-JB) (the “Chapter 11
Case”) for relief under Chapter 11 of the United States Bankruptcy Code (the
“Bankruptcy Code”) in the United States Bankruptcy Court for the Central
District of California (the “Bankruptcy Court”); and

 

C.            Borrower has moved for an Interim Order and a Final Order to be
entered by the Bankruptcy Court permitting secured post-petition,
debtor-in-possession financing of Borrower pursuant to the Loan Agreement, as
amended hereby.

 

NOW, THEREFORE, in consideration of the premises and the other mutual covenants
contained herein, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

 

SECTION 1.           ACKNOWLEDGEMENTS.

 

(A)           BORROWER HEREBY ACKNOWLEDGES AND AGREES THAT BASED ON THE
SPECIFIED EVENTS OF DEFAULT, IT IS UNCONDITIONALLY LIABLE TO LENDER UNDER THE
TERMS OF THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS FOR THE FULL AND
IMMEDIATE PAYMENT OF ALL OF THE OBLIGATIONS INCLUDING, WITHOUT LIMITATION, THOSE
OBLIGATIONS SET FORTH ON SCHEDULE A ATTACHED HERETO AND INCORPORATED HEREIN BY
REFERENCE, PLUS ALL INTEREST (INCLUDING, WITHOUT LIMITATION, INTEREST ACCRUING
AT THE DEFAULT RATE UNDER AND IN ACCORDANCE WITH THE TERMS AND PROVISIONS OF THE
LOAN DOCUMENTS), CHARGES, FEES, COSTS, AND EXPENSES THAT MAY ARISE UNDER THE
LOAN AGREEMENT AND OTHER LOAN DOCUMENTS PLUS ALL REASONABLE ATTORNEYS’ FEES,
DISBURSEMENTS AND COSTS OF COLLECTION INCURRED IN CONNECTION WITH SUCH
OBLIGATIONS BY LENDER AND THAT BORROWER HAS NO DEFENSES, COUNTERCLAIMS OR
SET-OFFS WITH RESPECT TO THE FULL AND IMMEDIATE PAYMENT AND PERFORMANCE OF ANY
OR ALL OBLIGATIONS UNDER THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS.

 

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(B)           BORROWER ACKNOWLEDGES AND AGREES THAT (I) THE SPECIFIED EVENTS OF
DEFAULT UNDER THE LOAN AGREEMENT CONSTITUTE MATERIAL DEFAULTS UNDER THE LOAN
AGREEMENT AND THE OTHER LOAN DOCUMENTS, (II) ANY GRACE PERIODS OR CURE PERIODS
WHICH MUST EXPIRE PRIOR TO THE LENDER EXERCISING ANY OF ITS RIGHTS AND REMEDIES
IN CONNECTION WITH THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS, HAVE BEEN
GIVEN, COMPLIED WITH AND EXPIRED AND, IN ANY EVENT, ARE HEREBY WAIVED AND
RELINQUISHED BY BORROWER, AND (III) AS A CONSEQUENCE, THE LENDER IS NOW ENTITLED
TO IMMEDIATELY EXERCISE ALL OF ITS RIGHTS AND REMEDIES UNDER THE LOAN AGREEMENT,
THE OTHER LOAN DOCUMENTS, AT LAW OR IN EQUITY, INCLUDING, WITHOUT LIMITATION,
ITS RIGHTS TO DECLARE ALL OBLIGATIONS TO BE IMMEDIATELY DUE, PAYABLE AND
PERFORMABLE, WITHOUT NOTICE, EXCEPT TO THE EXTENT THAT THE LENDER HAS AGREED TO
FORBEAR FROM EXERCISING THOSE RIGHTS AND REMEDIES IN THIS AMENDMENT OR TO THE
EXTENT LENDER IS PRECLUDED FROM DOING SO UNDER THE BANKRUPTCY CODE.

 

(C)           BORROWER FURTHER ACKNOWLEDGES AND AGREES THAT AS A RESULT OF THE
SPECIFIED EVENTS OF DEFAULT, THE LENDER HAS NO COMMITMENTS, OBLIGATIONS OR
AGREEMENTS TO MAKE LOANS OR ADVANCES OR OTHER FINANCIAL ACCOMMODATIONS TO
BORROWER, ALL SUCH COMMITMENTS, OBLIGATIONS, AND AGREEMENTS HAVING TERMINATED,
EXCEPT TO THE EXTENT THAT THE LENDER HAS AGREED TO CONTINUE TO MAKE LOANS,
ADVANCES OR OTHER FINANCIAL ACCOMMODATIONS PURSUANT TO THIS AMENDMENT.

 

(D)           BORROWER ACKNOWLEDGES, CONFIRMS AND AGREES THAT THE LENDER HAS AND
HAS HAD A VALID, ENFORCEABLE AND PERFECTED FIRST PRIORITY SECURITY INTEREST AND
LIEN UPON ALL OF THE PRE-PETITION COLLATERAL GRANTED BY THE BORROWER TO THE
LENDER PURSUANT TO THE LOAN DOCUMENTS TO SECURE ALL OF THE OBLIGATIONS, SUBJECT
ONLY TO LIENS OR SECURITY INTERESTS PERMITTED IN THE LOAN AGREEMENT.  IN
FURTHERANCE AND NOT IN LIMITATION OF THE INTERIM FINANCING ORDER, THE BORROWER
GRANTS OR REAFFIRMS ITS GRANT, AS THE CASE MAY BE, PLEDGES AND ASSIGNS TO LENDER
A CONTINUING SECURITY INTEREST AND LIEN UPON, AND RIGHTS OF SETOFF AGAINST THE
POST-PETITION COLLATERAL TO SECURE ALL OF THE POST-PETITION OBLIGATIONS.

 

(E)           BORROWER ACKNOWLEDGES AND AGREES THAT THE RECITALS TO THIS
AMENDMENT ARE TRUE AND ACCURATE AND ARE INCORPORATED HEREIN BY REFERENCE.

 

SECTION 2.           LIMITED FORBEARANCE.  ALL RIGHTS AND REMEDIES OF LENDER IN
CONNECTION WITH THE SPECIFIED EVENTS OF DEFAULT UNDER THE LOAN AGREEMENT AND THE
OTHER LOAN DOCUMENTS AND APPLICABLE LAW ARE HEREBY RESERVED BUT, EXCEPT AS
OTHERWISE SPECIFICALLY PROVIDED HEREIN AND IN THE FINANCING ORDER, LENDER AGREES
TO MAKE LOANS, ADVANCES AND OTHER FINANCIAL ACCOMMODATIONS AND TO FORBEAR FROM
EXERCISING ITS RIGHTS AND REMEDIES IN CONNECTION WITH THE SPECIFIED EVENTS OF
DEFAULT UNDER THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS UNTIL THE EARLIER
TO OCCUR OF ANY OF THE FOLLOWING (EACH A “TERMINATION EVENT”):  (I) THE
TERMINATION DATE (AS DEFINED IN THE INTERIM FINANCING ORDER) UNDER THE INTERIM
FINANCING ORDER; OR (II) THE OCCURRENCE OF A “NEW DEFAULT” (AS DEFINED BELOW);
OR (III) AT SUCH TIME AS BORROWER, ANNEX HOLDINGS I L.P. (“ANNEX” OR
“SUBORDINATED LENDER”), WELLS FARGO BANK, NATIONAL ASSOCIATION ACTING THROUGH
ITS OPERATING DIVISION, WELLS FARGO BUSINESS CREDIT (“WFBC”), GB RETAIL FUNDING,
LLC (“GB”), ANY SUCCESSOR OF BORROWER, ANNEX, WFBC OR GB, OR ANY OWNER OR
SHAREHOLDER OF BORROWER, OR ANY AFFILIATE OF ANY OF THEM, COMMENCES ANY LEGAL
ACTION, SUIT, OR PROCEEDING AGAINST LENDER OR CONTESTING OR CHALLENGING THE
VALIDITY OR ENFORCEABILITY OF THIS AMENDMENT, THE LOAN AGREEMENT, OR ANY OF THE
OTHER LOAN DOCUMENTS OR THE OBLIGATIONS OR THE VALIDITY,

 

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PERFECTION, OR PRIORITY OF ANY LIEN GRANTED TO LENDER.  FOR PURPOSES OF THIS
AMENDMENT, THE TERM “NEW DEFAULT” SHALL MEAN ANY FAILURE OF BORROWER IN THE
PERFORMANCE OF ANY OF THE TERMS OR CONDITIONS OF, OR ANY BREACH OF ANY
REPRESENTATION OR WARRANTY UNDER, OR ANY OTHER DEFAULT OR EVENT OF DEFAULT UNDER
THIS AMENDMENT, THE LOAN AGREEMENT, THE OTHER LOAN DOCUMENTS, ANY FINANCING
ORDER OR ANY OTHER AGREEMENTS, INSTRUMENTS, DOCUMENTS OR SIDE LETTERS ENTERED
INTO IN CONNECTION HEREWITH OR THEREWITH, EXCEPT THAT NO SPECIFIED EVENT OF
DEFAULT SHALL BE DEEMED A “NEW DEFAULT” HEREUNDER.  UPON A TERMINATION EVENT,
THE LENDER’S AGREEMENT HEREUNDER TO MAKE LOANS, ADVANCES OR OTHER FINANCIAL
ACCOMMODATIONS TO BORROWER AND TO FORBEAR FROM EXERCISING ITS RIGHTS OR REMEDIES
UNDER THE LOAN DOCUMENTS SHALL TERMINATE, AND THE LENDER MAY AT ANY TIME
THEREAFTER TERMINATE THE LOAN AGREEMENT, THE OTHER LOAN DOCUMENTS AND/OR PROCEED
TO EXERCISE ANY AND ALL OF ITS RIGHTS AND REMEDIES, INCLUDING WITHOUT
LIMITATION, ITS RIGHTS AND REMEDIES IN CONNECTION WITH THE SPECIFIED EVENTS OF
DEFAULT AND ANY OTHER DEFAULTS AND/OR EVENTS OF DEFAULT UNDER THE INTERIM
FINANCING ORDER, ANY OTHER FINANCING ORDER AND LOAN DOCUMENTS, ALL OF WHICH ARE
HEREBY RESERVED.

 

SECTION 3.           AMENDMENTS.

 

(A)           AMENDMENTS TO LOAN AGREEMENT.  THE LOAN AGREEMENT SHALL BE AND
HEREBY IS AMENDED AS FOLLOWS:

 

(I)            SECTION 2.1(A) (THE REVOLVING FACILITY) OF THE LOAN AGREEMENT
SHALL BE AND HEREBY IS AMENDED AND RESTATED IN THE ENTIRETY AS FOLLOWS:

 

“(a)         Subject to the provisions of this Agreement, each Lender agrees to
make available its Pro Rata Share of Advances to Borrower under the Revolving
Facility from time to time during the Revolving Facility Term; provided, that
(i) the Pro Rata Share of the Advances of any Lender shall not at any time
exceed its separate Commitment, and (ii) the aggregate amount of all Advances at
any time outstanding under the Revolving Facility shall not exceed the lesser of
(A) the Facility Cap and (B) (1) the value, in Dollars, of (i) eighty-five
percent (85%) of the Borrowing Base for Eligible Receivables, and (ii) sixty
percent (60%) of the Borrowing Base for Eligible Inventory Costs, minus, (a) the
Ratification And Amendment Agreement Reserve and (b) if applicable, additional
amounts reserved pursuant to this Agreement plus (2) the Ninth Amendment
Amortizing Advance Amount (such amount calculated pursuant to
subsection (B) being referred to herein as the “Availability”).  The aggregate
amount of Advances at any time outstanding under the Revolving Facility shall
not be less than $1,000,000.  The obligations of Lenders hereunder shall be
several and not joint up to the amount of the Commitments.  The Revolving
Facility is a revolving credit facility, which may be drawn, repaid and redrawn,
from time to time as permitted under this Agreement.  Any determination as to
whether there is availability within the Borrowing Base for Advances shall be
made by Agent in its Permitted Discretion and is final and binding upon
Borrower.  Unless otherwise permitted by Agent, each Advance shall be in an
amount of at least $50,000.  Advances under the Revolving Facility automatically
shall be made for the payment of interest on the Revolving Notes and other
Obligations on the date when due to the extent available and as provided for
herein.”

 

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(II)           SECTION 6.1(H) (DEPOSIT ACCOUNTS, OTHER ACCOUNTS AND INVESTMENT
PROPERTY) OF THE LOAN AGREEMENT SHALL BE AND HEREBY IS AMENDED AND RESTATED IN
THE ENTIRETY AS FOLLOWS:

 

“(h)         Deposit Accounts, Other Accounts and Investment Property.  Borrower
shall (i) promptly, and in any event within five (5) calendar days after
Borrower (A) establishes any Deposit Account, securities account, money market
account or any similar account, or (B) becomes the owner of any investment
property, notify Lender of such, and thereafter (ii) deliver to Lender, within
fifteen (15) Business Days, documentation to perfect Lender’s Lien thereon, in
form and substance reasonably acceptable to Lender.  Schedule 6.1(h) lists all
of Borrower’s Deposit Accounts, securities accounts, money market accounts and
similar accounts.”

 

(III)          NEW SECTIONS 6.1(I) THROUGH 6.1(L) SHALL BE AND HEREBY ARE ADDED
TO THE LOAN AGREEMENT AS FOLLOWS:

 

“6.1(I)     BUDGET.  THE BORROWER SHALL MEET AND COMPLY, IN ALL RESPECTS, WITH
THE EXPENDITURE LIMITATIONS SET FORTH IN THE BUDGET.  IN ADDITION TO THE BUDGET
ATTACHED HERETO AS SCHEDULE 6.1(I), THE BORROWER SHALL FURNISH TO LENDER ON
WEDNESDAY OF EACH WEEK, OR IF WEDNESDAY IS NOT A BUSINESS DAY, THEN ON THE NEXT
SUCCEEDING BUSINESS DAY, A THIRTEEN (13) WEEK “ROLL-FORWARD” BUDGET SETTING
FORTH FOR THE IMMEDIATELY PRECEDING WEEK A COMPARISON OF THE ACTUAL CASH
RECEIPTS AND DISBURSEMENTS TO THE PROJECTED (OR BUDGETED) CASH RECEIPTS AND
DISBURSEMENTS FOR SUCH WEEKLY PERIODS SET FORTH IN THE BUDGET ON A CUMULATIVE,
WEEKLY ROLL-FORWARD BASIS, WHICH SHALL INCLUDE EXPENDITURE LIMITS THAT ARE
SATISFACTORY TO LENDER IN ITS SOLE DISCRETION.

 

6.1(J) REFINANCE OF BORROWER.  THE BORROWER SHALL USE ITS BEST EFFORTS TO
REFINANCE THE OBLIGATIONS AS PROMPTLY AS POSSIBLE.

 

6.1(K) ROLLING SALES REPORT.  IN ADDITION TO THE FINANCIAL REPORTING
REQUIREMENTS SET FORTH IN THIS AGREEMENT, THE BORROWER SHALL DELIVER TO LENDER A
WEEKLY REPORT, IN FORM AND SUBSTANCE SATISFACTORY TO LENDER IN ITS SOLE
DISCRETION, TO BE PROVIDED NO LATER THAN WEDNESDAY OF EACH WEEK, OR IF WEDNESDAY
IS NOT A BUSINESS DAY, THEN ON THE NEXT SUCCEEDING BUSINESS DAY, WHICH SETS
FORTH FOR THE IMMEDIATELY PRECEDING WEEK A DETAILED RECONCILIATION ANALYSIS OF
WEEKLY SALES AS COMPARED TO PROJECTED SALES FOR SUCH PERIOD (TOGETHER WITH AN
EXPLANATION OF ALL VARIANCES) AND ACTUAL SALES FOR THE SAME WEEK DURING
BORROWER’S PRIOR FISCAL YEAR.

 

6.1(L)       BANKRUPTCY COURT REPORTS AND RELATED ITEMS.  IN ADDITION TO THE
FINANCIAL REPORTING REQUIREMENTS SET FORTH IN THIS AGREEMENT, UNTIL THE
OBLIGATIONS HAVE BEEN INDEFEASIBLY REPAID IN FULL IN CASH, THE BORROWER SHALL
PROMPTLY PROVIDE LENDER WITH COPIES OF ALL FINANCIAL REPORTS, SCHEDULES AND
OTHER MATERIALS AND INFORMATION RELATED TO THE COLLATERAL AT ANY TIME FURNISHED
BY THE BORROWER, OR ON ITS BEHALF, TO THE BANKRUPTCY COURT, THE UNITED STATES
TRUSTEE, THE ANY REPLACEMENT LENDER, EXIT LENDER OR ANY CREDITORS’ COMMITTEE OR
ANY OF THE BORROWER’S SHAREHOLDERS, CONCURRENTLY WITH THE DELIVERY THEREOF.”

 

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(IV)          APPENDIX A TO THE LOAN AGREEMENT SHALL BE AND HEREBY IS AMENDED TO
ADD THE FOLLOWING DEFINITIONS IN PROPER ALPHABETICAL ORDER:

 

(A)           “BANKRUPTCY CODE” SHALL MEAN THE UNITED STATES BANKRUPTCY CODE,
BEING TITLE 11 OF THE UNITED STATES BANKRUPTCY CODE AS ENACTED IN 1978, AS THE
SAME HAS HERETOFORE BEEN OR MAY HEREAFTER BE AMENDED, RECODIFIED, MODIFIED OR
SUPPLEMENTED, TOGETHER WITH ALL RULES, REGULATIONS AND INTERPRETATIONS
THEREUNDER OR RELATED THERETO.

 

(B)           “BANKRUPTCY COURT” SHALL MEAN THE UNITED STATES DISTRICT COURT FOR
THE CENTRAL DISTRICT OF CALIFORNIA OR ANY OTHER COURT HAVING JURISDICTION OVER
THE CHAPTER 11 CASE FROM TIME TO TIME.

 

(C)           “BUDGET” SHALL MEAN THE BUDGET PREPARED BY THE BORROWER AND
ATTACHED HERETO AS SCHEDULE 6.1(I), SETTING FORTH INFORMATION FOR ANY SUBSEQUENT
PERIOD OR PERIODS.

 

(D)           “DEBTOR” SHALL MEAN GARDENBURGER, INC., AS DEBTOR AND
DEBTOR-IN-POSSESSION, AND ITS SUCCESSORS AND ASSIGNS (INCLUDING, WITHOUT
LIMITATION, ANY TRUSTEE OR OTHER FIDUCIARY HEREAFTER APPOINTED AS ITS LEGAL
REPRESENTATIVE OR WITH RESPECT TO THE PROPERTY OF THE ESTATE OF SUCH CORPORATION
WHETHER UNDER CHAPTER 11 OF THE BANKRUPTCY CODE OR ANY SUBSEQUENT CHAPTER 7 CASE
AND ITS SUCCESSOR UPON CONCLUSION OF THE CHAPTER 11 CASE OF SUCH CORPORATION).

 

(E)           “FILING DATE” SHALL MEAN THE DATE OF THE COMMENCEMENT OF THE
CHAPTER 11 CASE.

 

(F)            “FINANCING ORDER” SHALL MEAN, COLLECTIVELY, THE INTERIM FINANCING
ORDER AND SUCH OTHER ORDERS RELATING THERETO OR AUTHORIZING THE GRANTING OF
CREDIT BY LENDER TO THE DEBTOR ON AN EMERGENCY, INTERIM OR PERMANENT BASIS,
PURSUANT TO SECTION 364 OF THE BANKRUPTCY CODE AS MAY BE ISSUED OR ENTERED BY
THE BANKRUPTCY COURT IN THE CHAPTER 11 CASE.

 

(G)           “INTERIM FINANCING ORDER” SHALL MEAN THAT CERTAIN INTERIM
FINANCING ORDER (ACCEPTABLE IN FORM AND SUBSTANCE TO THE LENDER) ENTERED BY THE
BANKRUPTCY COURT AUTHORIZING THE SECURED FINANCING UNDER THE LOAN DOCUMENTS.

 

(H)           “POST-PETITION AGREEMENTS” SHALL MEAN THE LOAN DOCUMENTS AS IN
EFFECT IMMEDIATELY FOLLOWING THE FILING DATE, AND SHALL INCLUDE, WITHOUT
LIMITATION, THE RATIFICATION AND AMENDMENT AGREEMENT.

 

(I)            “POST-PETITION COLLATERAL” SHALL MEAN, ALL NOW EXISTING OR
HEREAFTER ACQUIRED REAL AND PERSONAL PROPERTY (INCLUDING, WITHOUT LIMITATION,
AND BY WAY OF GENERAL DESCRIPTION ONLY, INVENTORY, ACCOUNTS RECEIVABLE,
MACHINERY, EQUIPMENT, FURNITURE AND FIXTURES, REAL PROPERTY, GENERAL INTANGIBLES
AND THE CASH AND NON-CASH PROCEEDS THEREOF) OF THE DEBTOR AND THE DEBTOR’S
ESTATE, WHEREVER LOCATED, OF ANY KIND OR NATURE, UPON

 

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WHICH THE LENDER IS GRANTED A SECURITY INTEREST OR LIEN PURSUANT TO THE LOAN
DOCUMENTS OR THE INTERIM FINANCING ORDER OR ANY OTHER ORDER ENTERED OR ISSUED BY
THE BANKRUPTCY COURT (AND ANY OTHER ITEMS INCLUDED WITHIN THE DEFINITION OF
“POST-PETITION COLLATERAL” AS SET FORTH IN ANY FINANCING ORDER OR ANY OTHER SUCH
ORDERS).

 

(J)            “POST-PETITION OBLIGATIONS” SHALL MEAN ALL OF THE DEBTOR’S
LIABILITIES AND OBLIGATIONS UNDER THE POST-PETITION AGREEMENTS, INCLUDING,
WITHOUT LIMITATION, WITH RESPECT TO THE LOANS TO BE MADE AFTER THE COMMENCEMENT
OF THE CHAPTER 11 CASE, INCLUDING, WITHOUT LIMITATION, THE OBLIGATIONS TO PAY
ALL PRINCIPAL, INTEREST THEREON (INCLUDING, WITHOUT LIMITATION, INTEREST
ACCRUING THEREON AT THE DEFAULT RATE), FEES AND EXPENSES, AND TO PROVIDE LENDER
WITH ADEQUATE PROTECTION OF ITS INTERESTS IN THE PRE-PETITION COLLATERAL AND
OTHER PROPERTY TO BE USED, SOLD, LEASED OR OTHERWISE DISPOSED OF BY THE DEBTOR
AFTER THE COMMENCEMENT OF THE CHAPTER 11 CASE UNDER THE TERMS OF THE FINANCING
ORDER (INCLUDING, WITHOUT LIMITATION, COVERAGE AS TO THE ACCOUNT OF ANY LOSS,
DAMAGES, DEPLETION, DIMINUTION OR DEPRECIATION RESULTING FROM THE DEBTOR’S USE
(OR IN THE CASE OF INVENTORY, SALE) OF SUCH PROPERTY.

 

(K)           “PRE-PETITION COLLATERAL” SHALL MEAN ALL OF THE COLLATERAL, WHICH
INCLUDES ALL OF THE DEBTOR’S PROPERTY, INCLUDING, WITHOUT LIMITATION, AND BY WAY
OF GENERAL DESCRIPTION ONLY, INVENTORY, ACCOUNTS RECEIVABLE, MACHINERY,
EQUIPMENT, FURNITURE AND FIXTURES, REAL PROPERTY, GENERAL INTANGIBLES AND THE
CASH AND NON-CASH PROCEEDS THEREOF.

 

(L)            “PRE-PETITION FINANCING AGREEMENTS” SHALL MEAN THE LOAN DOCUMENTS
AS IN EFFECT IMMEDIATELY PRIOR TO THE FILING DATE.

 

(M)          “PRE-PETITION OBLIGATIONS” SHALL MEAN THE LOANS MADE BY THE LENDER
TO BORROWER UNDER THE PRE-PETITION FINANCING AGREEMENTS IN THE AGGREGATE UNPAID
PRINCIPAL AMOUNT OF $8,026,345.15, AS OF THE FILING DATE PLUS ACCRUED AND
ACCRUING INTEREST, FEES, COSTS AND EXPENSES, INCLUDING, WITHOUT LIMITATION,
REASONABLE ATTORNEYS’ FEES AND EXPENSES EARNED OR INCURRED BY LENDER UNDER THE
PRE-PETITION FINANCING AGREEMENTS, AND ALL OTHER DEBTS, LIABILITIES AND
OBLIGATIONS OF BORROWER THEREUNDER.

 

(N)           “RATIFICATION AND AMENDMENT AGREEMENT” SHALL MEAN THAT CERTAIN
RATIFICATION AND AMENDMENT AGREEMENT DATED AS OF OCTOBER     , 2005 AMONG
BORROWER AND LENDER, INCLUDING AS AMENDED, SUPPLEMENTED, MODIFIED AND/OR
RESTATED FROM TIME TO TIME.

 

(O)           “RATIFICATION AND AMENDMENT AGREEMENT RESERVE” SHALL MEAN AN
AMOUNT EQUAL TO $120,000.

 

(P)           “SPECIFIED EVENTS OF DEFAULT” SHALL MEAN THE FOLLOWING DEFAULTS
AND EVENTS OF DEFAULT THAT ARE OCCURRING AND CONTINUING UNDER THE LOAN AGREEMENT
AND LOAN DOCUMENTS: (I) BORROWER’S FAILURE TO COMPLY WITH THE

 

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MINIMUM ADJUSTED EBITDA COVENANT SET FORTH ON ANNEX I TO THE LOAN AGREEMENT FOR
THE QUARTERLY TEST PERIOD ENDING JUNE 30, 2005 IN VIOLATION OF SUBSECTION (C) OF
ARTICLE VIII OF THE LOAN AGREEMENT; (II) BORROWER’S COMMENCEMENT OF THE CHAPTER
11 CASE IN VIOLATION OF SUBSECTIONS (G) AND (H) OF ARTICLE VIII OF THE LOAN
AGREEMENT; AND (III) BORROWER’S FAILURE TO TIMELY DELIVER THE ROLLING
THIRTEEN-WEEK CASH FLOW FORECAST REQUIRED TO BE DELIVERED PURSUANT TO
SECTION 6.1(J) OF THE LOAN AGREEMENT ON ONE OR MORE OCCASIONS PRIOR TO THE
COMMENCEMENT OF THE CHAPTER 11 CASE.

 

(V)           APPENDIX A TO THE LOAN AGREEMENT SHALL BE AND HEREBY IS AMENDED TO
DELETE THE DEFINITIONS OF “COLLATERAL”, “ELIGIBLE RECEIVABLES”, “LOAN DOCUMENTS”
AND “OBLIGATIONS” SET FORTH THEREIN AND TO REPLACE THEM WITH THE FOLLOWING IN
PLACE THEREOF:

 

(A)           “COLLATERAL” SHALL MEAN, COLLECTIVELY AND EACH INDIVIDUALLY, ALL
COLLATERAL AND/OR SECURITY GRANTED TO LENDER, BY BORROWER AND/OR GUARANTORS
PURSUANT TO THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION ALL PRE-PETITION
COLLATERAL AND ALL POST-PETITION COLLATERAL.

 

(B)           “ELIGIBLE RECEIVABLES” SHALL MEAN EACH ACCOUNT ARISING IN THE
ORDINARY COURSE OF BORROWER’S BUSINESS FROM THE SALE OF GOODS OR RENDERING OF
SERVICES WHICH AGENT, IN ITS PERMITTED DISCRETION, DEEMS AN ELIGIBLE RECEIVABLE
UNLESS:

 

(A)           IT IS NOT SUBJECT TO A VALID PERFECTED FIRST PRIORITY SECURITY
INTEREST IN FAVOR OF AGENT, FOR THE BENEFIT OF ITSELF AND LENDERS, SUBJECT TO NO
OTHER LIEN OF EQUAL OR HIGHER PRIORITY;

 

(b)           it is not evidenced by an invoice, statement or other documentary
evidence satisfactory to Agent; provided, that Agent in its sole discretion may
from time to time include as Accounts that are not evidenced by an invoice,
statement or other documentary evidence satisfactory to Agent as Eligible
Receivables and determine the advance rate, liquidity factors and reserves
applicable to Advances made on any such Accounts;

 

(c)           it arises out of services rendered or a sale made to, or out of
any other transaction between with, one or more affiliates of Borrower;

 

(d)           it remains unpaid for longer than 90 calendar days after the
original invoice date;

 

(e)           with respect to all Accounts owed by any particular Account Debtor
and/or its affiliates, if more than 25% of the aggregate balance of all such
Accounts owing from such Account Debtor and/or its affiliates remain unpaid for
longer than 90 calendar days after the original invoice date;

 

(f)            with respect to all Accounts owed by any particular Account
Debtor and/or its affiliates, 25% or more of all such Accounts are not deemed
Eligible Receivables for any reason hereunder (which percentage may, in Agent’s
Permitted Discretion, be increased or decreased);

 

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(g)           with respect to all Accounts owed by any particular Account Debtor
and/or its affiliates, if such Accounts exceed 10% (such percentage or any other
percentage set forth below or hereafter established for any particular Account
Debtor, a “Concentration Limit”) (all of which Concentration Limits may, in
Agent’s Permitted Discretion, be increased or decreased) of all Accounts at any
one time; provided, that only the portion of Accounts which exceed the
Concentration Limit shall be deemed ineligible for purposes of this
subsection (g); and, further provided, that the Concentration Limit for each of
the following Account Debtors shall be as follows:  Sysco – 25%, Costco – 15%,
US Foodservice – 15%, DOT Foods – 20%;

 

(h)           any covenant, agreement, representation or warranty contained in
any Loan Document with respect to such Account has been breached and remains
uncured;

 

(i)            the Account Debtor for such Account has commenced a voluntary
case under any Debtor Relief Law or has made an assignment for the benefit of
creditors, or a decree or order for relief has been entered by a court having
jurisdiction in respect of such Account Debtor in an involuntary case under any
Debtor Relief Law, or any other petition or application for relief under any
Debtor Relief Law has been filed against such Account Debtor, or such Account
Debtor has failed, suspended business, ceased to be solvent, called a meeting of
its creditors, or has consented to or suffered a receiver, trustee, liquidator
or custodian to be appointed for it or for all or a significant portion of its
assets or affairs, or Borrower, in the ordinary course of business, should have
known of any of the foregoing;

 

(j)            it arises from the sale of property or services rendered to one
or more Account Debtors outside the continental United States or Canada or that
have their principal place of business or chief executive offices outside the
continental United States or Canada;

 

(k)           it represents the sale of goods or rendering of services to an
Account Debtor on a bill-and-hold, guaranteed sale, sale-and-return, sale on
approval, consignment or any other repurchase or return basis or is evidenced by
chattel paper or an instrument of any kind or has been reduced to judgment;

 

(l)            the applicable Account Debtor for such Account is any
Governmental Authority, unless rights to payment of such Account have been
assigned to Agent, for the benefit of itself and Lenders, pursuant to the
Assignment of Claims Act of 1940, as amended (31 U.S.C. Section 3727, et seq.
and 41 U.S.C. Section 15, et seq.), or otherwise all with applicable statutes or
regulations respecting the assignment of government Accounts have been complied
with;

 

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(m)          it is subject to any offset, credit (including any resource or
other income credit or offset), deduction, defense, discount, chargeback,
freight claim, allowance, adjustment, dispute or counterclaim, or is contingent
in any respect or for any reason;

 

(n)           there is any agreement with an Account Debtor for any deduction
from such Account, except for discounts or allowances made in the ordinary
course of business for prompt payment, all of which discounts or allowances are
reflected in the calculation of the face value of each invoice related thereto,
such that only the discounted amount of such Account after giving effect to such
discounts and allowances shall be considered an Eligible Receivable;

 

(o)           any return, rejection or repossession of goods or services related
to it has occurred;

 

(p)           it is not payable solely to Borrower;

 

(q)           Borrower has agreed to accept or has accepted any non-cash payment
for such Account;

 

(r)            with respect to any Account arising from the sale of goods, the
goods have not been shipped to the Account Debtor or its designee;

 

(s)           it constitutes a re-billing of an amount previously billed; or

 

(t)            it fails to meet such other specifications and requirements which
may from time to time be established by Agent or is not otherwise satisfactory
to Agent, as determined in Agent’s Permitted Discretion.

 

(C)           “LOAN DOCUMENTS” SHALL MEAN, COLLECTIVELY AND EACH INDIVIDUALLY,
THE AGREEMENT, THE NOTES, THE SECURITY DOCUMENTS, THE UNIFORM COMMERCIAL CODE
FINANCING STATEMENTS, THE LANDLORD WAIVER AND CONSENTS, THE BORROWING
CERTIFICATES, ALL PRE-PETITION FINANCING AGREEMENTS, ALL POST-PETITION FINANCING
AGREEMENTS AND ALL OTHER AGREEMENTS, DOCUMENTS, INSTRUMENTS AND CERTIFICATES
HERETOFORE OR HEREAFTER EXECUTED OR DELIVERED TO LENDER IN CONNECTION WITH ANY
OF THE FOREGOING OR THE LOANS, AS THE SAME MAY BE AMENDED, MODIFIED OR
SUPPLEMENTED FROM TIME TO TIME.

 

(D)           “OBLIGATIONS” SHALL MEAN ALL SHALL MEAN ALL PRESENT AND FUTURE
OBLIGATIONS, INDEBTEDNESS AND LIABILITIES OF BORROWER TO LENDER AT ANY TIME AND
FROM TIME TO TIME OF EVERY KIND, NATURE AND DESCRIPTION, DIRECT OR INDIRECT,
SECURED OR UNSECURED, JOINT AND SEVERAL, ABSOLUTE OR CONTINGENT, DUE OR TO
BECOME DUE, MATURED OR UNMATURED, NOW EXISTING OR HEREAFTER ARISING, CONTRACTUAL
OR TORTIOUS, LIQUIDATED OR UNLIQUIDATED, UNDER ANY OF THE LOAN DOCUMENTS OR
OTHERWISE RELATING TO NOTES AND/OR LOANS, INCLUDING, WITHOUT

 

9

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LIMITATION, ALL PRE-PETITION OBLIGATIONS, ALL POST-PETITION OBLIGATIONS AND ALL
APPLICABLE FEES, CHARGES AND EXPENSES AND/OR ALL AMOUNTS PAID OR ADVANCED BY
LENDER ON BEHALF OF OR FOR THE BENEFIT OF BORROWER AND/OR GUARANTOR FOR ANY
REASON AT ANY TIME, INCLUDING IN EACH CASE OBLIGATIONS OF PERFORMANCE AS WELL AS
OBLIGATIONS OF PAYMENT AND INTEREST THAT ACCRUE AFTER THE COMMENCEMENT OF ANY
PROCEEDING UNDER ANY DEBTOR RELIEF LAW BY OR AGAINST ANY SUCH PERSON.

 

(VI)          THE FINANCIAL COVENANTS SET FORTH IN ANNEX I OF THE LOAN AGREEMENT
(LEVERAGE RATIO, MINIMUM EBITDA, FIXED CHARGE COVERAGE RATIO AND CAPITAL
EXPENDITURES) SHALL NOT BE TESTED AT ANY TIME PRIOR TO THE OCCURRENCE OF A
TERMINATION EVENT UNDER THIS AMENDMENT, EXCEPT THAT THE BORROWER’S TOTAL DEBT
RATIO SHALL BE CALCULATED FOR PURPOSES OF DETERMINING ANY APPLICABLE TOTAL DEBT
RATIO FEE UNDER SECTION 3.7 OF THE LOAN AGREEMENT.  IN ADDITION, BORROWER SHALL
COMPLY WITH THE FOLLOWING FINANCIAL COVENANTS AT ALL TIMES PRIOR TO THE
INDEFEASIBLE PAYMENT IN FULL IN CASH OF THE OBLIGATIONS:

 

(A)           MINIMUM AVAILABILITY COVENANT.  BORROWER SHALL MAINTAIN
AVAILABILITY OF NOT LESS THAN $1.00 OR SUCH LOWER AMOUNT AGREED TO BY LENDER IN
ITS SOLE DISCRETION (AS EVIDENCED BY LENDER’S WRITTEN CONSENT) AT ALL TIMES; AND

 

(B)           MINIMUM ROLLING EIGHT WEEK SALES COVENANT.  AS TESTED ON EACH OF
THE FOLLOWING TEST DATES FOR THE TRAILING EIGHT (8) WEEK PERIOD ENDED AS OF THE
PRIOR FRIDAY TAKEN AS ONE ACCOUNTING PERIOD (EACH A “MEASUREMENT PERIOD”),
BORROWER’S WEEKLY GROSS SALES SHALL NOT BE LESS THAN THE CORRESPONDING “MINIMUM
WEEKLY GROSS SALES” AMOUNT SET FORTH IN THE RIGHT HAND COLUMN BELOW:

 

Test Date

 

Measurement Period (in each
case, the trailing eight (8) week
period ended as of the date set
forth below)

 

Minimum Weekly Gross Sales

 

October 19, 2005

 

October 14, 2005

 

$

7,833,756

 

October 26, 2005

 

October 21, 2005

 

$

7,779,540

 

November 2, 2005

 

October 28, 2005

 

$

7,626,439

 

November 9, 2005

 

November 4, 2005

 

$

7,119,947

 

November 16, 2005

 

November 11, 2005

 

$

6,930,115

 

November 23, 2005

 

November 18, 2005

 

$

6,501,852

 

November 30, 2005

 

November 25, 2005

 

$

5,734,800

 

December 7, 2005

 

December 2, 2005

 

$

5,445,900

 

December 14, 2005

 

December 9, 2005

 

$

5,443,200

 

 

(VII)         A NEW SCHEDULE 6.1(H) (DEPOSIT ACCOUNTS, OTHER ACCOUNTS AND
INVESTMENT PROPERTY) SHALL BE AND HEREBY IS ADDED TO THE LOAN AGREEMENT IN THE
APPROPRIATE ORDER IN THE FORM OF SCHEDULE B ATTACHED HERETO.

 

(VIII)        A NEW SCHEDULE 6.1(H) (BUDGET) SHALL BE AND HEREBY IS ADDED TO THE
LOAN AGREEMENT IN THE APPROPRIATE ORDER IN THE FORM OF SCHEDULE C ATTACHED
HERETO.

 

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(IX)           SCHEDULE 6.8 (POST CLOSING REQUIREMENTS) OF THE LOAN AGREEMENT
SHALL BE AND HEREBY IS DELETED IN ITS ENTIRETY.

 

(X)            NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY
PROVISION OF THE LOAN AGREEMENT, FROM AND AFTER THE DATE HEREOF, THE PROCEEDS OF
THE LOANS SHALL BE USED BY BORROWER SOLELY FOR THE BORROWER’S WORKING CAPITAL
NEEDS IN CONNECTION WITH ITS VEGGIE BURGER AND MEAT ALTERNATIVE PRODUCTS
BUSINESS IN ACCORDANCE WITH AND SUBJECT IN ALL RESPECTS TO THE EXPENDITURE
LIMITATIONS SET FORTH IN THE BUDGET.

 

(B)           AMENDMENT TO SECURITY AGREEMENT.  THE SECURITY AGREEMENT SHALL BE
AND HEREBY IS AMENDED AS FOLLOWS:

 

Section 8.6 (Release of Collateral) of the Security Agreement shall be and
hereby is amended and restated in the entirety as follows:

 

“8.6         Release of Collateral.  Promptly following full performance and
satisfaction and indefeasible payment in full in cash of all Obligations and the
termination of the Loan Agreement, and the execution and delivery of a written
release by the Debtor of all claims against Secured Party and the Lender, and so
long as no suits, actions, proceedings, or claims are pending or threatened
against any Indemnified Person asserting any damages, losses or liabilities that
are indemnified liabilities under the Loan Agreement, then the security
interests and Liens created hereby shall terminate and Secured Party shall
execute and deliver such documents, at the Debtor’s expense, as are necessary to
release Secured Party’s security interests and Liens in the Collateral and shall
return the Collateral to Debtor at the address of Debtor set forth herein or at
such other address as Debtor may direct in writing; provided, however, that the
parties agree that, notwithstanding any such termination or release or the
execution, delivery or filing of any such documents or the return of any
Collateral, if and to the extent that any such payment made or received with
respect to the Obligations is subsequently invalidated, determined to be
fraudulent or preferential, set aside, defeased or required to be repaid to a
trustee, debtor in possession, receiver, custodian or any other Person under any
Debtor Relief Law, common law or equitable cause or any other law, then the
Obligations intended to be satisfied by such payment shall be revived and shall
continue as if such payment had not been received by Secured Party or any
Lender.  Neither Secured Party nor any Lender shall be deemed to have made any
representation or warranty with respect to any Collateral so delivered, except
that such Collateral is free and clear, on the date of such delivery, of any and
all liens, charges and encumbrances arising from Secured Party’s own acts.”

 

SECTION 4.           CERTAIN FEES; DEFAULT RATE.

 

(A)           RATIFICATION AND AMENDMENT FEE.  BORROWER ACKNOWLEDGES AND AGREES
THAT, AS PARTIAL CONSIDERATION FOR THE LENDER’S AGREEMENTS AND COMMITMENTS UNDER
THIS AMENDMENT, WITHIN THREE (3) DAYS OF THE BANKRUPTCY COURT’S APPROVAL OF THE
INTERIM FINANCING ORDER, THE BORROWER SHALL PAY TO LENDER $35,000 IN CASH AS A
FULLY EARNED, NON-REFUNDABLE FACILITY FEE (THE “RATIFICATION AND AMENDMENT
FEE”).

 

(B)           FIRST TOTAL DEBT RATIO FEE INSTALLMENT.  EACH OF BORROWER AND
LENDER ACKNOWLEDGES AND AGREES THAT NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN SECTION 3.7 (TOTAL DEBT RATIO FEE) OF THE LOAN AGREEMENT, THE TOTAL
DEBT RATIO FEE INSTALLMENT THAT WOULD

 

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OTHERWISE BE PAYABLE WITH RESPECT TO THE BORROWER’S QUARTERLY TEST PERIOD ENDING
ON SEPTEMBER 30, 2005 ON THE EARLIER TO OCCUR OF (A) THE DATE FIVE (5) CALENDAR
DAYS AFTER THE DATE OF DELIVERY TO LENDER OF BORROWER’S QUARTERLY FINANCIAL
STATEMENTS FOR THE QUARTERLY TEST PERIOD ENDING SEPTEMBER 30, 2005, AND (B) THE
DATE FIFTY (50) CALENDAR DAYS AFTER THE END OF THE QUARTERLY TEST PERIOD ENDING
SEPTEMBER 30, 2005 (THE “FIRST TOTAL DEBT RATIO FEE INSTALLMENT”), SHALL NOW BE
PAID ON THE EARLIER OF A TERMINATION EVENT AND THE DATE UPON WHICH THE
OBLIGATIONS ARE OTHERWISE DUE AND/OR REPAID IN FULL IN CASH.  ALL SUBSEQUENT
INSTALLMENTS OF THE TOTAL DEBT RATIO FEE (COLLECTIVELY, THE “SUBSEQUENT TOTAL
DEBT RATIO FEE INSTALLMENTS”) SHALL BE PAID ON THE DATES SPECIFIED IN
SECTION 3.7 OF THE LOAN AGREEMENT.  NOTWITHSTANDING THE FOREGOING, EACH OF
BORROWER AND LENDER ACKNOWLEDGE AND AGREE THAT THE FIRST TOTAL DEBT RATIO FEE
INSTALLMENT AND ALL SUBSEQUENT TOTAL DEBT RATIO FEE INSTALLMENTS SHALL BE WAIVED
IN ITS AND THEIR ENTIRETY AND SHALL NOT BE PAYABLE BY BORROWER IF THE
OBLIGATIONS HAVE BEEN INDEFEASIBLY REPAID IN FULL IN CASH ON OR BEFORE
DECEMBER 15, 2005.

 

(C)           DEFAULT RATE.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED
IN ANY PROVISION OF ANY LOAN DOCUMENT, EACH OF BORROWER AND LENDER ACKNOWLEDGES
AND AGREES THAT THE DEFAULT RATE SHALL BE WAIVED AND SHALL NOT BE CHARGED FROM
AND AFTER JUNE 30, 2005 (I.E., THE DATE OF THE OCCURRENCE OF THE EARLIEST
SPECIFIED EVENT OF DEFAULT) IF THE OBLIGATIONS HAVE BEEN INDEFEASIBLY REPAID IN
FULL IN CASH ON OR BEFORE DECEMBER 15, 2005; PROVIDED, HOWEVER, THAT IF THE
OBLIGATIONS HAVE NOT BEEN INDEFEASIBLY REPAID IN FULL IN CASH ON OR BEFORE
DECEMBER 15, 2005, THEN THE DEFAULT RATE SHALL BE CHARGED FROM AND AFTER
JUNE 30, 2005 AND UNTIL SUCH TIME AS THE SPECIFIED EVENTS OF DEFAULT AND ANY
OTHER THEN EXISTING EVENTS OF DEFAULT ARE WAIVED OR CURED IN ACCORDANCE WITH THE
TERMS AND PROVISIONS OF THE LOAN AGREEMENT.

 

SECTION 5.           CONDITIONS PRECEDENT.  THIS AMENDMENT SHALL BE EFFECTIVE
UPON THE SATISFACTION OF THE FOLLOWING CONDITIONS PRECEDENT:

 

(A)           THE REPRESENTATIONS AND WARRANTIES CONTAINED HEREIN, IN THE LOAN
AGREEMENT AND IN ALL OTHER LOAN DOCUMENTS SHALL BE TRUE AND CORRECT AS OF THE
DATE HEREOF, AND ALL COVENANTS AND OTHER AGREEMENTS HEREIN, IN THE LOAN
AGREEMENT AND IN ALL OTHER LOAN DOCUMENTS SHALL BE AND ARE HEREBY CONFIRMED AND
RATIFIED IN ALL RESPECTS;

 

(B)           NO DEFAULT OR EVENT OF DEFAULT SHALL BE IN EXISTENCE AS OF THE
DATE HEREOF, EXCEPT FOR THE SPECIFIED EVENTS OF DEFAULT;

 

(C)           BORROWER (I) SHALL HAVE DELIVERED TO THE LENDER AN EXECUTED
ORIGINAL COPY OF THIS AMENDMENT AND EACH OTHER AGREEMENT, DOCUMENT OR INSTRUMENT
REASONABLY REQUESTED BY THE LENDER IN CONNECTION WITH THIS AMENDMENT; AND
(II) SHALL HAVE DELIVERED TO THE LENDER AMENDED AND RESTATED DISCLOSURE
SCHEDULES, WHICH SHALL BE IN FORM AND SUBSTANCE SATISFACTORY TO THE LENDER IN
ITS PERMITTED DISCRETION AND SHALL BE ATTACHED HERETO AS EXHIBIT 5(C) (THE
“AMENDED AND RESTATED DISCLOSURE SCHEDULES”);

 

(D)           THE BORROWER SHALL BE IN COMPLIANCE WITH THE NOTICE AND OTHER
REQUIREMENTS OF THE BANKRUPTCY CODE AND THE APPLICABLE RULES (AS DEFINED IN THE
INTERIM FINANCING ORDER) WITH RESPECT TO ANY RELEVANT FINANCING ORDER IN A
MANNER ACCEPTABLE TO LENDER AND ITS COUNSEL;

 

(E)           THE INTERIM FINANCING ORDER SHALL HAVE BEEN ENTERED BY THE
BANKRUPTCY COURT, IN THE FORM ATTACHED HERETO AS EXHIBIT 5(E), AUTHORIZING THE
SECURED FINANCING UNDER THE LOAN DOCUMENTS ON THE TERMS AND CONDITIONS SET FORTH
HEREIN AND IN THE INTERIM FINANCING ORDER, AND GRANTING SUPER-PRIORITY EXPENSE
CLAIMS TO LENDER WITH RESPECT TO ALL OBLIGATIONS DUE LENDER AND THE SAME IS NOT
SUBJECT TO ANY OTHER ORDER THAT IMPAIRS ITS EFFECTIVENESS;

 

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(F)            THE SUBORDINATED LENDER AND BORROWER SHALL HAVE EXECUTED A
CONSENT IN THE FORM ATTACHED HERETO AS EXHIBIT 5(F) (THE “ANNEX CONSENT”), WHICH
ANNEX CONSENT: (1) SHALL PROVIDE THAT UNTIL THE DATE UPON WHICH THE OBLIGATIONS
OWED TO THE LENDER HAVE BEEN IRREVOCABLY REPAID IN FULL IN CASH BORROWER MAY NOT
MAKE AND THE SUBORDINATED LENDER MAY NOT RECEIVE OR RETAIN ANY PAYMENT OR
DISTRIBUTION (IN CASH, IN KIND, IN PROPERTIES OR SECURITIES, BY SET OFF OR
OTHERWISE, EXCEPT THAT THE SUBORDINATED LENDER MAY ACCRUE PAYMENT-IN-KIND
INTEREST AND FEES) IN RESPECT OF THE SUBORDINATED DEBT; (2) SHALL OTHERWISE
CONFIRM THAT THE SUBORDINATION PROVISIONS SET FORTH IN SECTION 6P OF THE NOTE
PURCHASE AGREEMENT, AS AMENDED, REMAIN IN FULL FORCE AND EFFECT IN ALL RESPECTS
IN ACCORDANCE WITH THEIR TERMS; AND (3) SHALL CONSENT TO THE BORROWER’S
EXECUTION OF THIS AMENDMENT AND OTHERWISE CONFIRM THAT NONE OF THE PROVISIONS OF
THIS AMENDMENT SHALL CONSTITUTE A BREACH, DEFAULT OR EVENT OF DEFAULT UNDER THE
NOTE PURCHASE AGREEMENT OR UNDER THE SUBORDINATED DEBT;

 

(G)           BORROWER SHALL HAVE DELIVERED TO LENDER UPDATED COPIES OF ANY AND
ALL PREMIUM FINANCE ARRANGEMENTS, TOGETHER WITH A WRITTEN SUMMARY OF SUCH
ARRANGEMENTS, WHICH WRITTEN SUMMARY SHALL BE SATISFACTORY TO LENDER IN ITS
PERMITTED DISCRETION;

 

(H)           BORROWER SHALL HAVE DELIVERED TO LENDER A WRITTEN OPINION OR
OPINIONS OF COUNSEL FOR THE BORROWER IN FORM AND CONTENT SATISFACTORY TO THE
LENDER IN ITS SOLE DISCRETION, ADDRESSED TO THE LENDER AND ITS COUNSEL, AND
COVERING SUCH MATTERS RELATED TO THE TRANSACTIONS CONTEMPLATED HEREBY AS THE
LENDER MAY REQUEST (INCLUDING, WITHOUT LIMITATION, AS TO ENFORCEABILITY,
AUTHORITY AND EXISTENCE);

 

(I)            BORROWER SHALL HAVE PAID TO LENDER ALL LEGAL REASONABLY
ATTORNEYS’ FEES, CHARGES AND EXPENSES INCURRED BY THE LENDER IN CONNECTION WITH
THE DRAFTING, NEGOTIATION AND EXECUTION OF THIS AMENDMENT;

 

(J)            BORROWER SHALL HAVE DELIVERED TO LENDER A CERTIFICATE OF THE
PRESIDENT OF BORROWER DATED AS OF THE DATE OF THIS AMENDMENT ON BEHALF OF
BORROWER, IN SUBSTANTIALLY THE FORM OF EXHIBIT 5(K) ATTACHED HERETO; AND

 

(K)           ALL PROCEEDINGS TAKEN IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED BY THIS AMENDMENT AND ALL DOCUMENTATION AND OTHER LEGAL MATTERS
INCIDENT THERETO SHALL BE SATISFACTORY TO THE LENDER.

 

SECTION 6.           ADDITIONAL EVENTS OF DEFAULT.  IN ADDITION TO AND WITHOUT
IN ANY WAY LIMITING OR SUBSTITUTING FOR THE EVENTS OF DEFAULT OUTLINED IN THE
LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS, THE FOLLOWING SHALL CONSTITUTE
ADDITIONAL EVENTS OF DEFAULT:

 

(A)           BORROWER’S BREACH, DEFAULT, VIOLATION OR FAILURE TO TIMELY AND
FULLY COMPLY WITH ANY COVENANT OR AGREEMENT SET FORTH IN THIS AMENDMENT OR ANY
OTHER AGREEMENT, DOCUMENT OR INSTRUMENT EXECUTED IN CONNECTION HEREWITH, EXCEPT
THAT THERE SHALL BE A SEVEN (7) CALENDAR DAY CURE PERIOD COMMENCING FROM THE
EARLIER OF (I) RECEIPT BY BORROWER OF WRITTEN NOTICE OF SUCH BREACH, DEFAULT,
VIOLATION OR FAILURE, AND (II) THE TIME AT WHICH BORROWER OR ANY AUTHORIZED
OFFICER THEREOF KNEW OR BECAME AWARE OF SUCH FAILURE, VIOLATION, BREACH OR
DEFAULT (NOTWITHSTANDING ANY SUCH NOTICE AND GRACE AND/OR CURE PERIODS IN THE
LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS, ALL OF WHICH ARE EXPRESSLY WAIVED
WITH RESPECT TO PROVISIONS OF THIS AMENDMENT AND THE PROVISIONS OF THE LOAN
AGREEMENT THAT ARE AMENDED HEREBY);

 

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(B)           BORROWER’S BREACH, DEFAULT, VIOLATION OR FAILURE TO COMPLY IN ANY
RESPECT WITH THE EXPENDITURE LIMITATIONS SET FORTH IN THE BUDGET OR WITH THE
TERMS AND CONDITIONS OF ANY FINANCING ORDER, IN EACH CASE WITHOUT ANY NOTICE,
GRACE AND/OR CURE PERIOD OF ANY KIND;

 

(C)           THE OCCURRENCE OF ANY CONDITION OR EVENT THAT PERMITS LENDER TO
EXERCISE ANY OF THE REMEDIES SET FORTH IN THE FINANCING ORDER, INCLUDING,
WITHOUT LIMITATION, ANY EVENT WHICH CAUSES THE OCCURRENCE OF THE “TERMINATION
DATE” AS SUCH TERM IS DEFINED IN THE FINANCING ORDER, IN EACH CASE WITHOUT ANY
NOTICE, GRACE AND/OR CURE PERIOD OF ANY KIND;

 

(D)           THE TERMINATION OR NON-RENEWAL OF THIS AMENDMENT OR THE FINANCING
ORDER AS A RESULT OF THE OBJECTION OF ANY THIRD PARTY BEING SUSTAINED, OR IF THE
FINANCING ORDER SHALL BE MODIFIED, REVERSED, REVOKED, REMANDED, STAYED,
RESCINDED, VACATED OR AMENDED ON APPEAL OR BY THE COURT WITHOUT THE PRIOR
WRITTEN CONSENT OF THE LENDER, IN EACH CASE WITHOUT ANY NOTICE, GRACE AND/OR
CURE PERIOD OF ANY KIND;

 

(E)           THE BORROWER EXPRESSES ITS INTENTION TO SUSPEND OR DISCONTINUE OR
IS ENJOINED BY ANY COURT OR GOVERNMENTAL AGENCY FROM CONTINUING TO CONDUCT ALL
OR ANY MATERIAL PART OF ITS BUSINESS OR IF A TRUSTEE, RECEIVER OR CUSTODIAN IS
APPOINTED FOR THE BORROWER OR ANY OF ITS PROPERTIES, IN EACH CASE WITHOUT ANY
NOTICE, GRACE AND/OR CURE PERIOD OF ANY KIND;

 

(F)            ANY ACT, CONDITION OR EVENT OCCURRING AFTER THE DATE OF THE
COMMENCEMENT OF THE CHAPTER 11 CASE THAT HAS A MATERIAL ADVERSE EFFECT UPON THE
ASSETS OF THE BORROWER OR THE COLLATERAL OR THE RIGHTS AND REMEDIES OF LENDER
UNDER THE LOAN AGREEMENT OR OTHER LOAN DOCUMENTS AS DETERMINED BY LENDER IN ITS
PERMITTED DISCRETION, IN EACH CASE WITHOUT ANY NOTICE, GRACE AND/OR CURE PERIOD
OF ANY KIND; AND

 

(G)           THE GRANT OF A LIEN ON OR OTHER INTEREST IN THE BORROWER’S
PROPERTY OR AN ADMINISTRATIVE EXPENSE CLAIM (OTHER THAN ANY SUCH ADMINISTRATIVE
EXPENSE CLAIM PERMITTED BY THE FINANCING ORDER OR THIS AMENDMENT) THAT IS
SUPERIOR OR PARI PASSU TO LENDER’S SECURITY INTEREST IN OR LIEN UPON THE
COLLATERAL OR ADMINISTRATIVE EXPENSE, IN EACH CASE WITHOUT ANY NOTICE, GRACE
AND/OR CURE PERIOD OF ANY KIND.

 

NOTHING CONTAINED IN THIS SECTION 6 SHALL BE DEEMED TO CONSTITUTE AN AMENDMENT
OR MODIFICATION OF THE GRACE AND/OR CURE PERIODS SET FORTH IN THE OTHER LOAN
DOCUMENTS INSOFAR AS SUCH GRACE AND/OR CURE PERIODS RELATE SOLELY TO PROVISIONS
SET FORTH IN THE OTHER LOAN DOCUMENTS (AS OPPOSED TO PROVISIONS SET FORTH IN
THIS AMENDMENT AND THE PROVISIONS OF THE LOAN AGREEMENT THAT ARE AMENDED
HEREBY).

 

SECTION 7.           CONSENT TO MODIFICATIONS OF AGREEMENTS WITH SUBORDINATED
LENDER.  LENDER HEREBY CONSENTS TO BORROWER’S EXECUTION AND DELIVERY OF THE
ANNEX CONSENT.

 

SECTION 8.           LOAN AGREEMENT IN FULL FORCE AND EFFECT AS AMENDED.  EXCEPT
AS SPECIFICALLY AMENDED HEREBY, BY THE INTERIM FINANCING ORDER OR BY ANY
AGREEMENT OR DOCUMENT EXECUTED BY BORROWER IN FAVOR OF LENDER IN CONNECTION
HEREWITH OR THEREWITH, THE LOAN

 

14

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AGREEMENT AND OTHER LOAN DOCUMENTS SHALL REMAIN IN FULL FORCE AND EFFECT AND ARE
HEREBY RATIFIED AND CONFIRMED AS SO AMENDED.  NEITHER THIS AMENDMENT NOR ANY
AGREEMENT OR DOCUMENT EXECUTED BY BORROWER IN FAVOR OF LENDER IN CONNECTION
HEREWITH SHALL CONSTITUTE A NOVATION, SATISFACTION AND ACCORD, CURE, RELEASE OR
SATISFACTION OF THE LOAN AGREEMENT AND/OR LOAN DOCUMENTS, BUT SHALL CONSTITUTE
AMENDMENTS AND WAIVERS OF CERTAIN PROVISIONS THEREOF.  EXCEPT AS EXPRESSLY SET
FORTH HEREIN, NEITHER THIS AMENDMENT NOR ANY AGREEMENT OR DOCUMENT EXECUTED BY
BORROWER ON BEHALF OF LENDER IN CONNECTION HEREWITH SHALL BE DEEMED TO BE A
WAIVER, AMENDMENT OR MODIFICATION OF ANY PROVISIONS OF THE LOAN AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR ANY RIGHT, POWER OR REMEDY OF LENDER, OR CONSTITUTE A
WAIVER OF ANY PROVISION OF THE LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
OTHER DOCUMENT, INSTRUMENT AND/OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
THEREWITH OR OF ANY DEFAULT OR EVENT OF DEFAULT UNDER ANY OF THE FOREGOING, IN
EACH CASE WHETHER ARISING BEFORE OR AFTER THE DATE HEREOF OR AS A RESULT OF
PERFORMANCE HEREUNDER OR THEREUNDER.  THIS AMENDMENT ALSO SHALL NOT PRECLUDE THE
FUTURE EXERCISE OF ANY RIGHT, REMEDY, POWER, OR PRIVILEGE AVAILABLE TO LENDER
WHETHER UNDER THE LOAN AGREEMENT, THE OTHER LOAN DOCUMENTS, AT LAW OR
OTHERWISE.  ALL REFERENCES TO THE LOAN AGREEMENT SHALL BE DEEMED TO MEAN THE
LOAN AGREEMENT AS MODIFIED HEREBY.  THE PARTIES HERETO AGREE TO BE BOUND BY THE
TERMS AND CONDITIONS OF THE LOAN AGREEMENT AND LOAN DOCUMENTS AS AMENDED BY THIS
AMENDMENT, AS THOUGH SUCH TERMS AND CONDITIONS WERE SET FORTH HEREIN.  EACH
REFERENCE IN THE LOAN AGREEMENT TO “THIS AGREEMENT,” “HEREUNDER,” “HEREOF,”
“HEREIN” OR WORDS OF SIMILAR IMPORT SHALL MEAN AND BE A REFERENCE TO THE LOAN
AGREEMENT AS AMENDED BY THIS AMENDMENT, AND EACH REFERENCE HEREIN OR IN ANY
OTHER LOAN DOCUMENTS TO THE “AGREEMENT”, “LOAN AGREEMENT” OR “CREDIT AGREEMENT”
SHALL MEAN AND BE A REFERENCE TO THE LOAN AGREEMENT AS AMENDED AND MODIFIED BY
THIS AMENDMENT.

 

SECTION 9.           REPRESENTATIONS.  BORROWER HEREBY REPRESENTS AND WARRANTS
TO LENDER AS FOLLOWS:  (I) IT IS DULY INCORPORATED OR ORGANIZED, VALIDLY
EXISTING AND IN GOOD STANDING UNDER THE LAWS OF ITS JURISDICTION OF
ORGANIZATION; (II) THE EXECUTION, DELIVERY AND PERFORMANCE BY IT OF THIS
AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED AND/OR DELIVERED IN CONNECTION
HEREWITH ARE WITHIN ITS POWERS, HAVE BEEN DULY AUTHORIZED, AND DO NOT CONTRAVENE
(A) ITS ARTICLES OF ORGANIZATION, OPERATING AGREEMENT, OR OTHER ORGANIZATIONAL
DOCUMENTS, OR (B) ANY APPLICABLE LAW; (III) EXCEPT AS PROVIDED UNDER THE INTERIM
FINANCING ORDER, ANNEX CONSENT, NO CONSENT, LICENSE, PERMIT, APPROVAL OR
AUTHORIZATION OF, OR REGISTRATION, FILING OR DECLARATION WITH ANY GOVERNMENTAL
AUTHORITY OR OTHER PERSON, IS REQUIRED IN CONNECTION WITH THE EXECUTION,
DELIVERY, PERFORMANCE, VALIDITY OR ENFORCEABILITY OF THIS AMENDMENT OR ANY OTHER
LOAN DOCUMENTS EXECUTED AND/OR DELIVERED IN CONNECTION HEREWITH BY OR AGAINST
IT; (IV) THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED AND/OR DELIVERED
IN CONNECTION HEREWITH HAVE BEEN DULY EXECUTED AND DELIVERED BY IT; (V) THIS
AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED AND/OR DELIVERED IN CONNECTION
HEREWITH CONSTITUTE ITS LEGAL, VALID AND BINDING OBLIGATION ENFORCEABLE AGAINST
IT IN ACCORDANCE WITH ITS TERMS; (VI) AFTER GIVING EFFECT TO THIS AMENDMENT, NO
DEFAULT OR EVENT OF DEFAULT EXISTS, HAS OCCURRED AND IS CONTINUING OR WOULD
RESULT BY THE EXECUTION, DELIVERY OR PERFORMANCE OF THIS AMENDMENT, EXCEPT FOR
THE SPECIFIED EVENTS OF DEFAULT; AND (VII) EXCEPT AS SET FORTH ON THE AMENDED
AND RESTATED DISCLOSURE SCHEDULES, THE REPRESENTATIONS AND WARRANTIES CONTAINED
IN THE LOAN DOCUMENTS ARE TRUE AND CORRECT IN ALL RESPECTS AS OF THE DATE HEREOF
AS IF MADE ON THE DATE HEREOF.

 

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SECTION 10.         MISCELLANEOUS.

 

(A)           THIS AMENDMENT MAY BE EXECUTED IN ANY NUMBER OF COUNTERPARTS
(INCLUDING BY FACSIMILE), AND BY THE DIFFERENT PARTIES HERETO ON THE SAME OR
SEPARATE COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED TO BE AN ORIGINAL
INSTRUMENT BUT ALL OF WHICH TOGETHER SHALL CONSTITUTE ONE AND THE SAME
AGREEMENT.  EACH PARTY AGREES THAT IT WILL BE BOUND BY ITS OWN FACSIMILE
SIGNATURE AND THAT IT ACCEPTS THE FACSIMILE SIGNATURE OF EACH OTHER PARTY.  THE
DESCRIPTIVE HEADINGS OF THE VARIOUS SECTIONS OF THIS AMENDMENT ARE INSERTED FOR
CONVENIENCE OF REFERENCE ONLY AND SHALL NOT BE DEEMED TO AFFECT THE MEANING OR
CONSTRUCTION OF ANY OF THE PROVISIONS HEREOF OR THEREOF.  WHENEVER THE CONTEXT
AND CONSTRUCTION SO REQUIRE, ALL WORDS HEREIN IN THE SINGULAR NUMBER HEREIN
SHALL BE DEEMED TO HAVE BEEN USED IN THE PLURAL, AND VICE VERSA, AND THE
MASCULINE GENDER SHALL INCLUDE THE FEMININE AND NEUTER AND THE NEUTER SHALL
INCLUDE THE MASCULINE AND FEMININE.

 

(B)           THIS AMENDMENT MAY NOT BE CHANGED, AMENDED, RESTATED, WAIVED,
SUPPLEMENTED, DISCHARGED, CANCELED, TERMINATED OR OTHERWISE MODIFIED ORALLY OR
BY ANY COURSE OF DEALING OR IN ANY MANNER OTHER THAN AS PROVIDED IN THE LOAN
AGREEMENT OR THE APPLICABLE LOAN DOCUMENT.  THIS AMENDMENT SHALL BE CONSIDERED
PART OF THE LOAN AGREEMENT AND SHALL BE A LOAN DOCUMENT FOR ALL PURPOSES UNDER
THE LOAN AGREEMENT AND OTHER LOAN DOCUMENTS.

 

(C)           THIS AMENDMENT, THE LOAN AGREEMENT AND THE LOAN DOCUMENTS
CONSTITUTE THE FINAL, ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES
WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
BETWEEN THE PARTIES, AND SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE
SUCCESSORS AND ASSIGNS OF THE PARTIES HERETO AND THERETO.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND THEREOF.

 

(D)           THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER
THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE CHOICE OF LAW PROVISIONS SET FORTH IN THE LOAN AGREEMENT AND SHALL BE
SUBJECT TO THE WAIVER OF JURY TRIAL AND NOTICE PROVISIONS OF THE LOAN AGREEMENT.

 

(E)           BORROWER MAY NOT ASSIGN, DELEGATE OR TRANSFER THIS AMENDMENT OR
ANY OF ITS RIGHTS OR OBLIGATIONS HEREUNDER.  NO RIGHTS ARE INTENDED TO BE
CREATED UNDER THIS AMENDMENT FOR THE BENEFIT OF ANY THIRD PARTY DONEE, CREDITOR
OR INCIDENTAL BENEFICIARY OF BORROWER OR ANY GUARANTOR.  NOTHING CONTAINED IN
THIS AMENDMENT SHALL BE CONSTRUED AS A DELEGATION TO LENDER OF BORROWER’S DUTY
OF PERFORMANCE, INCLUDING, WITHOUT LIMITATION, ANY DUTIES UNDER ANY ACCOUNT OR
CONTRACT IN WHICH LENDER HAS A SECURITY INTEREST OR LIEN.  THIS AMENDMENT SHALL
BE BINDING UPON THE BORROWER AND ITS RESPECTIVE SUCCESSORS AND ASSIGNS.

 

(F)            IN FURTHERANCE AND NOT IN LIMITATION OF ANYTHING SET FORTH IN THE
INTERIM FINANCING ORDER, ANY OTHER FINANCING ORDER OR THE LOAN DOCUMENTS,
BORROWER SHALL PAY ALL COSTS AND EXPENSES INCURRED BY LENDER OR ANY OF LENDER’S
AFFILIATES, INCLUDING, WITHOUT LIMITATION, DOCUMENTATION AND DILIGENCE FEES AND
EXPENSES, ALL SEARCH, AUDIT, APPRAISAL, RECORDING, AND FILING FEES AND EXPENSES
AND ALL OTHER OUT-OF-POCKET CHARGES AND EXPENSES (INCLUDING, WITHOUT LIMITATION,
UCC AND JUDGMENT AND TAX LIEN SEARCHES AND UCC FILINGS AND FEES FOR POST-CLOSING
UCC AND JUDGMENT AND TAX LIEN SEARCHES) AND REASONABLE FEES AND EXPENSES OF
OUTSIDE

 

16

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COUNSEL AND REASONABLE FEES AND EXPENSES OF IN-HOUSE COUNSEL, IN CONNECTION WITH
ENTERING INTO, NEGOTIATING, PREPARING, REVIEWING AND EXECUTING THIS AMENDMENT
AND THE DOCUMENTS, AGREEMENTS AND INSTRUMENTS CONTEMPLATED HEREBY AND ALL
RELATED AGREEMENTS, DOCUMENTS AND INSTRUMENTS, AND ALL OF THE SAME SHALL BE PART
OF THE OBLIGATIONS.

 

(G)           BORROWER HEREBY (I) AGREES THAT THIS AMENDMENT SHALL NOT LIMIT OR
DIMINISH THE OBLIGATIONS OF BORROWER UNDER THE LOAN DOCUMENTS, (II) REAFFIRMS
ITS OBLIGATIONS UNDER EACH OF THE LOAN DOCUMENTS TO WHICH IT IS A PARTY, AND
(III) AGREES THAT EACH OF SUCH LOAN DOCUMENTS REMAINS IN FULL FORCE AND EFFECT
AND IS HEREBY RATIFIED AND CONFIRMED.

 

(H)           ALL REPRESENTATIONS AND WARRANTIES MADE IN THIS AMENDMENT SHALL
SURVIVE THE EXECUTION AND DELIVERY OF THIS AMENDMENT AND NO INVESTIGATION BY
LENDER SHALL AFFECT SUCH REPRESENTATIONS OR WARRANTIES OR THE RIGHT OF LENDER TO
RELY UPON THEM.

 

(I)            BORROWER HEREBY ACKNOWLEDGES AND AGREES THAT IT KNOWS OF NO
DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR
NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF
ITS LIABILITY TO REPAY THE OBLIGATIONS OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES
OF ANY KIND OR NATURE FROM LENDER.  BORROWER HEREBY VOLUNTARILY AND KNOWINGLY
RELEASES AND FOREVER DISCHARGES LENDER AND EACH OF ITS PREDECESSORS, AGENTS,
EMPLOYEES, AFFILIATES, COUNSEL, SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE
“RELEASED PARTIES”) FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF
ACTION, DAMAGES, COSTS, EXPENSES AND LIABILITIES WHATSOEVER, FIXED, WHETHER
KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED,
CONTINGENT OR CONDITIONAL, OR AT LAW OR IN EQUITY, IN ANY CASE ORIGINATING IN
WHOLE OR PART ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED THAT BORROWER
MAY NOW OR HEREAFTER HAVE AGAINST THE RELEASED PARTIES, IF ANY, IRRESPECTIVE OF
WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR
REGULATIONS, OR OTHERWISE, AND THAT ARISE FROM ANY OF THE LOANS, THE EXERCISE OF
ANY RIGHTS AND REMEDIES UNDER THE LOAN AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS, AND/OR THE NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT,
INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING,
COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE
APPLICABLE.  NOTWITHSTANDING THE FOREGOING, NOTHING CONTAINED IN THIS SECTION 10
SHALL APPLY WITH RESPECT TO ANY WILLFUL MISCONDUCT OR BAD FAITH BY THE RELEASED
PARTIES.

 

[Signature Page Follows]

 

17

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IN WITNESS WHEREOF, the parties have caused this Ratification and Amendment
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.

 

 

 

LENDER:

 

 

 

 

 

CAPITALSOURCE FINANCE LLC

 

 

 

 

 

 

 

 

By:

 

/s/ Joseph Turitz

 

 

Name:

 

Joseph Turitz

 

 

Title:

 

General Counsel – Corporate Finance

 

 

 

 

 

 

 

 

BORROWER:

 

 

 

 

 

GARDENBURGER, INC.

 

 

 

 

 

 

 

 

By:

 

/s/ Scott C. Wallace

 

 

Name:

 

Scott C. Wallace

 

 

Title:

 

President and Chief Executive Officer

 

 

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