EXHIBIT 10.4

 

SECOND AMENDED AND RESTATED RETENTION AGREEMENT

 

THIS SECOND AMENDED AND RESTATED RETENTION AGREEMENT (the “Agreement”), is made
on this 19th day of July, 2005 (the “Effective Date”), by and between
GARDENBURGER, INC., an Oregon Corporation (the “Company”) and Robert Dixon (the
“Executive”).

 

WHEREAS, the Executive serves as a valued employee of the Company and along with
other key members of management of the Company (collectively, the “Executives”)
provides essential services to the Company; and

 

WHEREAS, the Company and the Executive have entered into that certain Employment
Agreement dated February 26, 2004, and an Amendment to Employment Agreement
dated March 24, 2005, pursuant to which the Executive serves as the Vice
President, Sales of the Company (collectively, the “Employment Agreement”); and

 

WHEREAS, in addition to the benefits that the Executive may be entitled to
receive under the Employment Agreement, the Company and the Executive are
parties to an Amended and Restated Retention Agreement, dated May 4, 2005 (which
amended and restated a prior Retention Agreement, dated January 27, 2005, and an
Amendment to Retention Agreement, dated March 24, 2005), pursuant to which the
Company has endeavored to establish an incentive for the Executive to continue
to be employed by the Company through and following the execution of a
definitive agreement relating to a Change in Control (as defined in Section 2.4)
or a Going Private Transaction (as defined in Section 2.7); and

 

WHEREAS, the Amended and Restated Retention Agreement did not contemplate the
possibility of a Change in Control occurring through means other than the
execution of a definitive agreement, and the Company and the Executive wish to
provide for such possibility; and

 

WHEREAS, the Executive has previously informed (and now reaffirms) the Company
that the Executive will be unable to devote Executive’s complete unimpaired
attention to continue providing services to the Company to assist the Company in
negotiating a transaction which contemplates a Change in Control or Going
Private Transaction and will be forced to consider other employment
opportunities, due to the personal financial risks that such a Change in Control
or Going Private Transaction imposes on the Executive, unless the Company agrees
to modify the terms of the Amended and Restated Retention Agreement; and

 

WHEREAS, the Company is aware that the Executives are being recruited by other
potential employers and that certain of the Executives have already received
offers regarding alternative employment opportunities; and

 

WHEREAS, the Company has determined that Executive’s continued services with the
Company are important to the Company’s efforts to maximize value pursuant to a

 

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Change in Control or Going Private Transaction and that the Company would suffer
adverse consequences if Executive’s employment with the Company terminated.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
promises contained herein, and intending to be legally bound hereby, the parties
agree as follows:

 

1.             RETENTION BONUS.

 

1.1. BONUS AMOUNT AND CONDITIONS. SUBJECT TO SECTIONS 1.2, 3, 4 AND 5.1, THE
COMPANY SHALL PAY TO THE EXECUTIVE THE RETENTION BONUS (AS DEFINED IN
SECTION 2.9) TO THE EXECUTIVE IF: PROMPTLY, UPON REQUEST OF THE COMPANY, THE
EXECUTIVE EXECUTES AND DELIVERS A RELEASE OF CLAIMS AGAINST THE COMPANY, WHICH
RELEASE SHALL BE IN THE SAME FORM AS PARAGRAPH 9 TO THE SEPARATION AGREEMENT
ATTACHED TO THE EMPLOYMENT AGREEMENT BETWEEN THE EXECUTIVE AND THE COMPANY; AND
THE EARLIER TO OCCUR OF:

 

(A)           THE EXECUTIVE HAS REMAINED CONTINUOUSLY EMPLOYED BY THE COMPANY
THROUGH THE EARLIER OF:  (I) THE DATE OF A FULL AND COMPLETE EXECUTION OF A SALE
TRANSACTION; (II) THE DATE A CHANGE IN CONTROL OCCURS; OR (III) JANUARY 27,
2007; OR

 

(B)           THE EXECUTIVE’S EMPLOYMENT BY THE COMPANY IS TERMINATED BY THE
COMPANY WITHOUT CAUSE (AS DEFINED IN SECTION 2.3) OTHER THAN IN CONNECTION WITH
EXECUTIVE’S DEATH OR DISABILITY (AS DEFINED IN SECTION 2.6).

 

1.2. TIMING AND FORM OF PAYMENT.

 

(A)           IF PAYMENT TO THE EXECUTIVE IS DUE AS A RESULT OF
SECTION 1.1(A)(I), THE COMPANY SHALL PAY TO THE EXECUTIVE:

 

(I)            SEVENTY-FIVE PERCENT (75%) OF THE RETENTION BONUS IN A LUMP SUM
AS SOON AS ADMINISTRATIVELY FEASIBLE FOLLOWING THE DATE OF A FULL AND COMPLETE
EXECUTION OF A SALE TRANSACTION (THE “SIGNING”); PROVIDED, HOWEVER, THAT
EXECUTIVE SHALL NOT BE ENTITLED TO THE PAYMENT CONTEMPLATED IN THIS PARAGRAPH
1.2(A)(I) UNLESS THE EXECUTIVE EXERCISES ALL REASONABLE EFFORTS TO SUPPORT A
SIGNING WHICH CONTEMPLATES A SALE TRANSACTION; AND

 

(II)           THE REMAINING TWENTY-FIVE PERCENT (25%) OF THE RETENTION BONUS IN
A LUMP SUM AS SOON AS ADMINISTRATIVELY FEASIBLE FOLLOWING THE EARLIER OF: 
(A) THE DATE OF THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THE SALE
TRANSACTION; OR (B) JANUARY 27, 2007, PROVIDED, HOWEVER, THAT EXECUTIVE SHALL
NOT BE ENTITLED TO THE PAYMENT CONTEMPLATED IN THIS PARAGRAPH 1.2(A)(II) UNLESS
THE EXECUTIVE, AFTER THE SIGNING, EXERCISES ALL REASONABLE EFFORTS TO SUPPORT
THE CONSUMMATION OF THE SALE TRANSACTION AND TO COOPERATE WITH THE COMPANY TO
CONSUMMATE THE SALE TRANSACTION (INCLUDING, IF SO REQUESTED BY THE COMPANY,
PROVIDING ASSISTANCE TO THE PROSPECTIVE BUYER IN OBTAINING FINANCING FOR THE
SALE TRANSACTION.

 

(B)           IF PAYMENT TO THE EXECUTIVE IS DUE AS A RESULT OF
SECTION 1.1(A)(II), THE COMPANY SHALL PAY TO THE EXECUTIVE THE RETENTION BONUS
IN A LUMP SUM AS SOON AS ADMINISTRATIVELY FEASIBLE FOLLOWING THE DATE A CHANGE
IN CONTROL OCCURS.

 

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(C)           IF PAYMENT TO THE EXECUTIVE IS DUE AS A RESULT OF
SECTION 1.1(A)(III), THE COMPANY SHALL PAY TO THE EXECUTIVE THE RETENTION BONUS
IN A LUMP SUM AS SOON AS ADMINISTRATIVELY FEASIBLE FOLLOWING JANUARY 27, 2007.

 

(D)           IF PAYMENT TO THE EXECUTIVE IS DUE AS A RESULT OF SECTION 1.1(B),
THE COMPANY SHALL PAY TO THE EXECUTIVE THE RETENTION BONUS IN A LUMP SUM AS SET
FORTH IN SECTION 2.9(C) OR SECTION 2.9(D), AS APPLICABLE.

 

2.             CERTAIN DEFINITIONS. AS USED HEREIN:

 

2.1. “AFFILIATE” MEANS, WITH RESPECT TO A PERSON (AS DEFINED BELOW), ANOTHER
PERSON THAT DIRECTLY OR INDIRECTLY CONTROLS, OR IS CONTROLLED BY, OR IS UNDER
COMMON CONTROL WITH SUCH PERSON.

 

2.2. “BASE SALARY” MEANS THE ANNUAL AMOUNT EQUAL TO ONE HUNDRED AND SEVENTY
SEVEN THOUSAND DOLLARS ($177,000), AS ADJUSTED BY THE BOARD OF DIRECTORS OF THE
COMPANY FROM TIME TO TIME.

 

2.3. “CAUSE” SHALL HAVE THE MEANING SET FORTH IN ARTICLE I OF THE EMPLOYMENT
AGREEMENT.

 

2.4. “CHANGE IN CONTROL” SHALL HAVE THE MEANING SET FORTH IN ARTICLE I OF THE
EMPLOYMENT AGREEMENT, AS AMENDED.

 

2.5. [THIS SECTION INTENTIONALLY OMITTED.]

 

2.6. “DISABILITY” SHALL HAVE THE MEANING SET FORTH IN ARTICLE I OF THE
EMPLOYMENT AGREEMENT.

 

2.7. “GOING PRIVATE TRANSACTION” SHALL HAVE THE MEANING SET FORTH IN
SECTION (A)(3) OF RULE 13E-3 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED (THE “EXCHANGE ACT”).

 

2.8. “PERSON” MEANS ANY INDIVIDUAL, ENTITY OR GROUP (WITHIN THE MEANING OF
SECTION 13(D)(3) OR 14(D)(2) OF THE EXCHANGE ACT.

 

2.9. “RETENTION BONUS” MEANS THE AMOUNT EQUAL TO:

 

(A)           IF THE EXECUTIVE HAS REMAINED CONTINUOUSLY EMPLOYED BY THE COMPANY
THROUGH THE EARLIER OF:  (I) THE DATE OF THE SIGNING AND THE SIGNING OCCURS ON
OR BEFORE JULY 27, 2006, OR (II) THE DATE A CHANGE IN CONTROL OCCURS AND SUCH
DATE IS ON OR BEFORE JULY 27, 2006, AN AMOUNT EQUAL TO TWELVE (12) MONTHS OF
BASE SALARY IN EFFECT AT THE TIME OF THE PAYMENT PURSUANT TO SECTION 1.2; OR

 

(B)           IF THE EXECUTIVE HAS REMAINED CONTINUOUSLY EMPLOYED BY THE COMPANY
THROUGH THE EARLIER OF:  (I) THE DATE OF THE SIGNING, WHICH SIGNING OCCURS AFTER
JULY 27, 2006; (II) THE DATE A CHANGE IN CONTROL OCCURS AND SUCH DATE IS AFTER
JULY 27, 2006; OR

 

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(iii) January 27, 2007, an amount equal to sixteen (16) months of Base Salary in
effect at the time of the payment pursuant to Section 1.2; or

 

(C)           IF PAYMENT TO THE EXECUTIVE IS DUE AS A RESULT OF
SECTION 1.1(B) AND THE EXECUTIVE’S TERMINATION OF EMPLOYMENT OCCURS ON OR BEFORE
JULY 27, 2006, THE PRODUCT OF:  (I) THE AMOUNT EQUAL TO TWELVE (12) MONTHS OF
BASE SALARY IN EFFECT AT THE TIME OF THE EXECUTIVE’S TERMINATION OF EMPLOYMENT;
MULTIPLIED BY (II) THE QUOTIENT OF:  (A) THE NUMBER OF DAYS COMMENCING ON
JANUARY 27, 2005 AND ENDING ON THE DATE OF THE EXECUTIVE’S TERMINATION OF
EMPLOYMENT; DIVIDED BY (B) ONE OF THE FOLLOWING:  (1) IN THE EVENT OF A SIGNING,
THE NUMBER OF DAYS COMMENCING ON JANUARY 27, 2005 AND ENDING ON THE DATE OF THE
SIGNING; OR (2) IN THE EVENT OF A CHANGE IN CONTROL (WHICH IS NOT THE RESULT OF
A SIGNING), THE NUMBER OF DAYS COMMENCING ON JANUARY 27, 2005, AND ENDING ON THE
DATE OF THE CHANGE IN CONTROL; OR (3) IN THE EVENT NEITHER A SIGNING NOR A
CHANGE IN CONTROL OCCURS PRIOR TO JANUARY 27, 2007, THEN 730; OR

 

(D)           IF PAYMENT TO THE EXECUTIVE IS DUE AS A RESULT OF
SECTION 1.1(B) AND THE EXECUTIVE’S TERMINATION OF EMPLOYMENT OCCURS AT ANYTIME
AFTER JULY 27, 2006, THE PRODUCT OF:  (I) THE AMOUNT EQUAL TO SIXTEEN (16)
MONTHS OF BASE SALARY IN EFFECT AT THE TIME OF THE EXECUTIVE’S TERMINATION OF
EMPLOYMENT; MULTIPLIED BY (II) THE QUOTIENT OF:  (A) THE NUMBER OF DAYS
COMMENCING ON JANUARY 27, 2005 AND ENDING ON THE DATE OF THE EXECUTIVE’S
TERMINATION OF EMPLOYMENT; DIVIDED BY (B) ONE OF THE FOLLOWING:  (1) IN THE
EVENT OF A SIGNING, THE NUMBER OF DAYS COMMENCING ON JANUARY 27, 2005, AND
ENDING ON THE DATE OF THE SIGNING; OR (2) IN THE EVENT OF A CHANGE IN CONTROL
(WHICH IS NOT THE RESULT OF A SIGNING), THE NUMBER OF DAYS COMMENCING ON
JANUARY 27, 2005, AND ENDING ON THE DATE OF THE CHANGE IN CONTROL; OR (3) IN THE
EVENT NEITHER A SIGNING NOR A CHANGE IN CONTROL OCCURS PRIOR TO JANUARY 27,
2007, THEN 730.

 

2.10. “SALE TRANSACTION” SHALL HAVE THE MEANING SET FORTH IN ARTICLE I OF THE
EMPLOYMENT AGREEMENT, AS AMENDED.

 

2.11. “SIGNING” SHALL HAVE THE MEANING ASSIGNED TO IT IN SECTION 1.2(A)(I) OF
THIS AGREEMENT.

 

3.             PARACHUTE PAYMENTS. PAYMENTS UNDER THIS AGREEMENT SHALL BE MADE
WITHOUT REGARD TO WHETHER THE DEDUCTIBILITY OF SUCH PAYMENTS (OR ANY OTHER
PAYMENTS) WOULD BE LIMITED OR PRECLUDED BY SECTION 280G OF THE INTERNAL REVENUE
CODE OF 1986 (THE “CODE”) AND WITHOUT REGARD TO WHETHER SUCH PAYMENTS WOULD
SUBJECT THE EXECUTIVE TO THE FEDERAL EXCISE TAX LEVIED ON CERTAIN “EXCESS
PARACHUTE PAYMENTS” UNDER SECTION 4999 OF THE CODE; PROVIDED, HOWEVER, THAT IF
THE TOTAL AFTER-TAX PAYMENTS (AS DEFINED BELOW) WOULD BE INCREASED BY THE
LIMITATION OR ELIMINATION OF ANY AMOUNT PAYABLE UNDER THIS AGREEMENT, THEN
AMOUNTS PAYABLE UNDER THIS AGREEMENT WILL BE REDUCED TO THE EXTENT NECESSARY TO
MAXIMIZE THE TOTAL AFTER-TAX PAYMENTS. THE DETERMINATION OF WHETHER AND TO WHAT
EXTENT PAYMENTS UNDER THIS AGREEMENT ARE REQUIRED TO BE REDUCED IN ACCORDANCE
WITH THE PRECEDING SENTENCE WILL BE MADE AT THE COMPANY’S EXPENSE BY AN
INDEPENDENT, CERTIFIED PUBLIC ACCOUNTANT SELECTED BY THE EXECUTIVE AND
REASONABLY ACCEPTABLE TO THE COMPANY. IN THE EVENT OF ANY UNDERPAYMENT OR
OVERPAYMENT UNDER THIS AGREEMENT (AS DETERMINED AFTER THE APPLICATION OF THIS
SECTION 3), THE AMOUNT OF SUCH UNDERPAYMENT OR OVERPAYMENT WILL BE IMMEDIATELY
PAID BY THE COMPANY TO THE EXECUTIVE OR REFUNDED BY THE EXECUTIVE TO THE
COMPANY, AS THE CASE MAY BE, WITH INTEREST AT THE APPLICABLE FEDERAL RATE
PROVIDED FOR IN SECTION 7872(F)(2) OF THE CODE. FOR PURPOSES OF THIS AGREEMENT,
“TOTAL AFTER-TAX

 

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PAYMENTS” MEANS THE TOTAL OF ALL “PARACHUTE PAYMENTS” (AS THAT TERM IS DEFINED
IN SECTION 280G(B)(2) OF THE CODE) MADE TO OR FOR THE BENEFIT OF THE EXECUTIVE
(WHETHER MADE HEREUNDER OR OTHERWISE), AFTER REDUCTION FOR ALL APPLICABLE
FEDERAL TAXES (INCLUDING, WITHOUT LIMITATION, THE TAX DESCRIBED IN SECTION 4999
OF THE CODE).

 

4.             CERTAIN LIMITATIONS.

 

4.1. CASH FLOW LIMITATION. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT
TO THE CONTRARY, THE AGGREGATE AMOUNT OF ANY PAYMENTS DUE UNDER THIS AGREEMENT
OR ANY SIMILAR RETENTION AGREEMENTS EXECUTED NOW OR IN THE FUTURE WITH ANY OTHER
EMPLOYEE OF THE COMPANY OR ANY OF ITS AFFILIATES (EACH A, “KEY EMPLOYEE”) TO THE
EXECUTIVE AND ONE OR MORE KEY EMPLOYEES IN A SINGLE FISCAL YEAR SHALL BE LIMITED
SO THAT IN NO EVENT SHALL THE AGGREGATE AMOUNT TO BE PAID IN CASH CAUSE THE
COMPANY’S AVAILABLE CREDIT PLUS CASH TO FALL BELOW $1,500,000 (“CASH FLOW
CEILING”); AND IN THE EVENT THE AVAILABLE CREDIT PLUS CASH WOULD FALL BELOW SUCH
AMOUNT, THE COMPANY SHALL DELIVER TO THE EXECUTIVE TO THE EXTENT REQUIRED BY
THIS AGREEMENT A PAYMENT IN AN AMOUNT EQUAL TO THE PRODUCT OF (I) THE CASH FLOW
CEILING MULTIPLIED BY (II) A FRACTION, THE NUMERATOR OF WHICH IS THE AGGREGATE
AMOUNT OF SUCH EXECUTIVE’S FULL PAYMENT HEREUNDER FOR THE FISCAL YEAR AND THE
DENOMINATOR OF WHICH IS THE AGGREGATE AMOUNT OF ALL PAYMENTS DUE TO THE
EXECUTIVE AND ALL OTHER KEY EMPLOYEES IN SUCH FISCAL YEAR (“CASH FLOW PERMITTED
AMOUNT”). TO THE EXTENT THAT PAYMENTS UNDER THIS AGREEMENT TO THE EXECUTIVE IN A
SINGLE FISCAL YEAR WOULD EXCEED THE CASH FLOW CEILING (“CASH FLOW SHORTFALL”),
THE COMPANY SHALL PAY THE CASH FLOW PERMITTED AMOUNT TO THE EXECUTIVE AND SHALL
PAY THE CASH FLOW SHORTFALL (IN WHOLE OR IN PART) AS RAPIDLY AS PERMITTED BY THE
TERMS OF THIS SECTION 4.1. THE OBLIGATION TO PAY THE CASH FLOW SHORTFALL SHALL
CONSTITUTE SUBORDINATED DEBT OF THE COMPANY UNTIL PAID. THE COMPANY MAY, IN THE
SOLE DISCRETION OF THE BOARD, ELECT TO WAIVE THE ANNUAL CASH FLOW LIMITATION SET
FORTH ABOVE, AND ABSENT SUCH A WAIVER, THE LIMITATION SHALL APPLY TO PAYMENTS
DUE UNDER THIS AGREEMENT. FOR PURPOSES OF THIS SECTION 4.1, “AVAILABLE CREDIT
PLUS CASH” MEANS CREDIT AVAILABLE TO THE COMPANY AS CALCULATED BY THE CHIEF
FINANCIAL OFFICER OR AN ACCEPTABLE DESIGNEE USING THE BORROWING WORKSHEET
SUPPLIED BY THE COMPANY’S SENIOR LENDER PLUS THE TOTAL AMOUNT OF CASH IN THE
COMPANY’S BANK ACCOUNT(S).

 

4.2. DEBT LIMITATIONS. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO
THE CONTRARY, IF A PAYMENT OF ANY AMOUNT TO THE EXECUTIVE UNDER THIS AGREEMENT
WOULD, IF MADE, BE PROHIBITED PURSUANT TO ANY AGREEMENT TO WHICH THE COMPANY (AS
DEFINED BELOW) IS OR FROM TIME TO TIME BECOMES A PARTY, EVIDENCING OR GOVERNING
INDEBTEDNESS FOR BORROWED MONEY (EACH, A “DEBT AGREEMENT”), THE COMPANY SHALL
IDENTIFY TO THE EXECUTIVE THE PART, IF ANY, OF THE AMOUNT THAT THE COMPANY IS
PERMITTED TO PAY IN CASH UNDER THE DEBT AGREEMENT (THE “PERMITTED CASH AMOUNT”).
IF ANY AMOUNT IS PAYABLE UNDER THIS AGREEMENT IN EXCESS OF THE PERMITTED CASH
AMOUNT (THE “DEBT COVENANT SHORTFALL”) ON THE APPLICABLE PAYMENT DATE, THE
COMPANY SHALL PAY THE PERMITTED CASH AMOUNT AND SHALL PAY THE DEBT COVENANT
SHORTFALL (IN WHOLE OR IN PART) AS RAPIDLY AS PERMITTED BY AND IN ACCORDANCE
WITH THE TERMS OF THE DEBT AGREEMENT. THE OBLIGATION TO PAY THE DEBT COVENANT
SHORTFALL SHALL CONSTITUTE SUBORDINATED DEBT OF THE COMPANY UNTIL PAID. THE
COMPANY SHALL USE COMMERCIALLY REASONABLE EFFORTS TO OBTAIN A WAIVER OF ANY SUCH
PROHIBITION AS MAY BE CONTAINED IN ANY APPLICABLE DEBT AGREEMENT, BUT THE
COMPANY SHALL NOT BE OBLIGATED TO POST ADDITIONAL COLLATERAL OR TO ACCELERATE OR
INCREASE ITS DEBT PAYMENTS TO OBTAIN SUCH WAIVER.

 

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4.3. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, THE LIMITATIONS
CONTAINED IN SECTIONS 4.1 AND 4.2 OF THIS AGREEMENT ON THE PAYMENT OF MONIES TO
WHICH THE EXECUTIVE IS ENTITLED TO RECEIVE UNDER THIS AGREEMENT SHALL NOT APPLY
IF THE TRIGGERING EVENT THAT ENTITLES THE EXECUTIVE TO RECEIVE MONIES UNDER THIS
AGREEMENT IS A SIGNING WHICH CONTEMPLATES A SALE TRANSACTION OR A CONSUMMATION
OF A SALE TRANSACTION.

 

5.             MISCELLANEOUS.

 

5.1. NO LIABILITY OF OFFICERS AND DIRECTORS FOR SEVERANCE UPON INSOLVENCY.
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT AND INTENDING TO BE BOUND
BY THIS PROVISION, THE EXECUTIVE HEREBY (A) WAIVES ANY RIGHT TO CLAIM PAYMENT OF
AMOUNTS OWED TO HIM, NOW OR IN THE FUTURE, PURSUANT TO THIS AGREEMENT FROM
DIRECTORS OR OFFICERS OF THE COMPANY IF THE COMPANY BECOMES INSOLVENT AND/OR
FILES A PETITION FOR RELIEF UNDER THE UNITED STATES BANKRUPTCY CODE IN ANY STATE
OR FEDERAL COURT (AS DETERMINED IN GOOD FAITH BY THE BOARD), AND (B) FULLY AND
FOREVER RELEASES AND DISCHARGES THE COMPANY’S OFFICERS AND DIRECTORS FROM ANY
AND ALL CLAIMS, DEMANDS, LIENS, ACTIONS, SUITS, CAUSES OF ACTION OR JUDGMENTS
ARISING OUT OF ANY PRESENT OR FUTURE CLAIM FOR SUCH AMOUNTS.

 

5.2. WAIVER OF CIVIL CODE SECTION 1542. THE COMPANY AND THE EXECUTIVE EACH
UNDERSTAND AND AGREE THAT THE RELEASES PROVIDED HEREIN EXTEND TO ALL CLAIMS OF
EVERY NATURE AND KIND, WHETHER KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED. IT IS
EXPRESSLY UNDERSTOOD AND AGREED THAT THE PARTIES HEREBY WAIVE THE PROVISIONS OF
SECTION 1542 OF THE CALIFORNIA CIVIL CODE (AND ANY STATUTE OR LAW OF SIMILAR
CONSTRUCTION IN ANY OTHER JURISDICTION), WHICH PROVIDES AS FOLLOWS:

 

A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.

 

5.3. SUCCESSORS AND ASSIGNS. THE COMPANY MAY ASSIGN THIS AGREEMENT TO ANY
SUCCESSOR TO ALL OR SUBSTANTIALLY ALL OF ITS ASSETS AND BUSINESS BY MEANS OF
LIQUIDATION, DISSOLUTION, MERGER, CONSOLIDATION, TRANSFER OF ASSETS, OR
OTHERWISE. THE RIGHTS OF THE EXECUTIVE HEREUNDER ARE PERSONAL TO THE EXECUTIVE
AND MAY NOT BE ASSIGNED BY HIM.

 

5.4. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS.

 

5.5. ENFORCEMENT. ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT WILL BE INSTITUTED IN THE UNITED STATES DISTRICT COURT, CENTRAL
DISTRICT OF CALIFORNIA, SANTA ANA DIVISION, OR IF THAT COURT DOES NOT HAVE OR
WILL NOT ACCEPT JURISDICTION, IN ANY COURT OF GENERAL JURISDICTION IN THE STATE
OF CALIFORNIA, COUNTY OF ORANGE, AND THE EXECUTIVE AND THE COMPANY HEREBY
CONSENT TO THE PERSONAL AND EXCLUSIVE JURISDICTION OF SUCH COURT(S) AND HEREBY
WAIVE ANY OBJECTION(S) THAT THEY MAY HAVE TO PERSONAL JURISDICTION, THE LAYING
OF VENUE OF ANY SUCH PROCEEDING AND ANY CLAIM OR DEFENSE OF INCONVENIENT FORUM.

 

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5.6. WAIVERS; SEPARABILITY. THE WAIVER BY EITHER PARTY HERETO OF ANY RIGHT
HEREUNDER OR ANY FAILURE TO PERFORM OR BREACH BY THE OTHER PARTY HERETO WILL NOT
BE DEEMED A WAIVER OF ANY OTHER RIGHT HEREUNDER OR ANY OTHER FAILURE OR BREACH
BY THE OTHER PARTY HERETO, WHETHER OF THE SAME OR A SIMILAR NATURE OR OTHERWISE.
NO WAIVER WILL BE DEEMED TO HAVE OCCURRED UNLESS SET FORTH IN A WRITING EXECUTED
BY OR ON BEHALF OF THE WAIVING PARTY. NO SUCH WRITTEN WAIVER WILL BE DEEMED A
CONTINUING WAIVER UNLESS SPECIFICALLY STATED THEREIN, AND EACH SUCH WAIVER WILL
OPERATE ONLY AS TO THE SPECIFIC TERM OR CONDITION WAIVED. IF ANY PROVISION OF
THIS AGREEMENT IS DECLARED TO BE INVALID OR UNENFORCEABLE, IN WHOLE OR IN PART,
SUCH INVALIDITY OR UNENFORCEABILITY SHALL NOT AFFECT THE REMAINING PROVISIONS
HEREOF WHICH SHALL REMAIN IN FULL FORCE AND EFFECT.

 

5.7. NOTICES. ALL NOTICES AND COMMUNICATIONS THAT ARE REQUIRED OR PERMITTED TO
BE GIVEN HEREUNDER MUST BE IN WRITING AND WILL BE DEEMED TO HAVE BEEN DULY GIVEN
WHEN DELIVERED PERSONALLY OR UPON MAILING BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, RETURN RECEIPT REQUESTED, AS FOLLOWS:

 

If to the Company, to:

 

Gardenburger, Inc.
15615 Alton Parkway, Suite 350
Irvine, California 92618
Attention:  Robert Trebing

 

With a copy to:

 

Pepper Hamilton LLP
5 Park Plaza, Suite 1700
Irvine, California 92614
Attention:  Michael A. Rule, Esquire

 

If to Executive, to:

 

Mr. Robert Dixon
7010 Townsend Drive
Highlands Ranch, CO 80130

 

or to such other address as may be specified in a notice given by one party to
the other party hereunder.

 

5.8. ENTIRE AGREEMENT; AMENDMENTS. THIS AGREEMENT CONTAINS THE ENTIRE AGREEMENT
AND UNDERSTANDING OF THE PARTIES RELATING TO THE PROVISION OF A RETENTION BONUS
AND MERGES AND SUPERSEDES ALL PRIOR AND CONTEMPORANEOUS DISCUSSIONS, AGREEMENTS
AND UNDERSTANDINGS OF EVERY NATURE RELATING TO THAT SUBJECT. THIS AGREEMENT MAY
NOT BE CHANGED OR MODIFIED, EXCEPT BY AN AGREEMENT IN WRITING SIGNED BY EACH OF
THE PARTIES HERETO.

 

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5.9. WITHHOLDING. THE COMPANY WILL WITHHOLD FROM ANY PAYMENTS DUE TO EXECUTIVE
HEREUNDER, ALL TAXES, FICA OR OTHER AMOUNTS REQUIRED TO BE WITHHELD PURSUANT TO
ANY APPLICABLE LAW.

 

5.10. HEADINGS DESCRIPTIVE. THE HEADINGS OF SECTIONS AND PARAGRAPHS OF THIS
AGREEMENT ARE INSERTED FOR CONVENIENCE ONLY AND SHALL NOT IN ANY WAY AFFECT THE
MEANING OR CONSTRUCTION OF ANY PROVISION OF THIS AGREEMENT.

 

5.11. COUNTERPARTS. THIS AGREEMENT MAY BE EXECUTED IN MULTIPLE COUNTERPARTS,
EACH OF WHICH WILL BE DEEMED TO BE AN ORIGINAL, BUT ALL OF WHICH TOGETHER WILL
CONSTITUTE BUT ONE AND THE SAME INSTRUMENT.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
and year first above written.

 

 

GARDENBURGER, INC.

 

 

 

 

 

By:

/s/ Scott C. Wallace

 

 

 

 

 

Title:

Chief Executive Officer, President

 

 

and Chairman of the Board

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

/s/ Robert Dixon

 

 

Robert Dixon

 

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