EXHIBIT
10.4


AMENDMENT
NO. 3 TO RIGHTS AGREEMENT


 


This Amendment No. 3, dated as of April 29,
2002 (the “Amendment”), to the Amended and Restated Rights Agreement (the
“Rights Agreement”) dated as of July 15, 1999, as amended by Amendment
Nos. 1 and 2, by and between Gardenburger, Inc. (the “Company”), and
EquiServe Trust Company, N.A. (the “Rights Agent”).


WITNESSETH:


WHEREAS, the Company and the Rights Agent have entered
into the Rights Agreement; and


WHEREAS, the Board of Directors of the Company, in accordance
with Section 26 of the Rights Agreement, has determined it desirable and
in the best interests of the Company and its shareholders to supplement and
amend certain provisions of the Rights Agreement.


NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties agree as follows:


Section 1. 
Amendment
to Section 1.1. 
Section 1.1 of the Rights Agreement is amended to read in its
entirety as follows:


“1.1         “Acquiring
Person” shall mean any Person (as such term is hereinafter defined) who or
which, together with all Affiliates and Associates (as such terms are
hereinafter defined) of such Person, shall be the Beneficial Owner (as such
term is hereinafter defined) of 15% or more of the Common Shares of the Company
then outstanding, but shall not include: 
(i) the Company; (ii) any Subsidiary of the Company;
(iii) any employee benefit plan of the Company or of any Subsidiary of the
Company or any entity holding shares of capital stock of the Company for or
pursuant to the terms of any such plan, in its capacity as an agent or trustee
for any such plan; or (iv) any Exempt Person, unless such Exempt Person
becomes the Beneficial Owner of more than the Exempt Percentage of the Common
Shares of the Company then outstanding. 
“Exempt Person” shall mean (x) Paul F. Wenner, together with
all of his Affiliates and Associates, including, without limitation, the
Paul F. Wenner Charitable Foundation Trust (collectively, “Wenner”);
(y) Dresdner Kleinwort Benson Private Equity Partners LP, together with
all of its Affiliates and Associates, or any one or more of the Affiliates and
Associates of Dresdner Kleinwort Benson Private Equity Partners LP
(collectively, “Dresdner”); and (z) Gruber & McBaine Capital
Management, LLC, together with all of its Affiliates and Associates, or any one
or more of the Affiliates and Associates of Gruber & McBaine Capital
Management, LLC (collectively, “Gruber & McBaine”).  “Exempt Percentage” shall mean up to 25% of
the Common Shares of the Company then outstanding.  Notwithstanding the foregoing, (a) no Person shall become an
“Acquiring Person” as the result of an acquisition of Common Shares by the
Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15% (25% as
to any Exempt Person) or more of the Common Shares of the Company then
outstanding, provided that if a Person shall become the Beneficial Owner
of 15% (25% as to any 


 


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Exempt Person) or more of the Common Shares of the
Company then outstanding solely by reason of share purchases by the Company and
shall, after such purchases by the Company, become the Beneficial Owner of any
additional Common Shares of the Company, then such Person shall be deemed to be
an “Acquiring Person;” (b) if the Board of Directors of the Company determines
in good faith that a Person who would otherwise be an “Acquiring Person,” as
defined pursuant to the foregoing provisions of this Section 1.1,
has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that such Person would no
longer be an Acquiring Person, as defined pursuant to the foregoing provisions
of this Section 1.1, then such Person shall not be deemed to be an
“Acquiring Person” for any purposes of this Agreement (so long as such Person
does not become an Acquiring Person after such divestiture); and (c) none of
the Purchasers (as defined in that certain Stock Purchase Agreement dated as of
March 29, 1999, by and among the Company and the Purchasers, as amended by
letter agreement dated April 14, 1999) or Holders (as defined in that
certain Preferred Stock Exchange Agreement dated as of January 10, 2002, by
and among the Company and the Holders), together with any one or more or all of
each Purchaser’s and Holder’s Affiliates and Associates (Purchasers and
Holders, collectively, the “Preferred Investors”), shall become or be deemed to
be an “Acquiring Person,” either singly or as a group, solely by reason of
being or becoming the Beneficial Owner of any number of the Company’s shares of
Series C Convertible Preferred Stock or Series D Convertible
Preferred Stock (together, the “Convertible Preferred Shares”), or any of the
Common Shares into which such Convertible Preferred Shares are converted or may
become convertible.”


Section 2. 
Rights
Agreement as Amended.  The
term “Rights Agreement” as used in the Rights Agreement shall be deemed to
refer to the Rights Agreement as amended hereby.  This Amendment shall be effective as of the date hereof and,
except as set forth herein, the Rights Agreement and all schedules or exhibits
thereto shall remain in full force and effect and be otherwise unaffected
hereby.


Section 3. 
Officer’s
Certificate.  In accordance
with Section 26 of the Rights Agreement, the Company has provided the
Rights Agent a certificate executed by an authorized officer of the Company,
stating that the Amendment is in compliance with the terms of Section 26
of the Rights Agreement.


Section 4. 
Counterparts.  This Amendment may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all of such counterparts shall together constitute but
one and the same instrument.


 


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IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be duly executed in their names
and on their behalf by and through their duly authorized officers, as of the
day and year first above written.


 


	
   

  	
  GARDENBURGER,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lorraine
  Crawford

  
	
   

  	
  Name:

  	
  Lorraine
  Crawford

  
	
   

  	
  Title:

  	
  Vice President
  of Finance

  



 


 


	
   

  	
  EQUISERVE TRUST
  COMPANY, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tom
  McDonough

  
	
   

  	
  Name:

  	
  Tom McDonough

  
	
   

  	
  Title:

  	
   

  



 


 


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