EXHIBIT 10.2


 


FIFTH AMENDMENT TO

NOTE PURCHASE AGREEMENT


 


THIS FIFTH AMENDMENT
(this “Amendment”), dated as of December 29, 2003, to the Note
Purchase Agreement, dated as of March 27, 1998, by and among DRESDNER
KLEINWORT BENSON PRIVATE EQUITY PARTNERS LP, a Delaware limited partnership
(the “Purchaser”), and GARDENBURGER, INC., an Oregon corporation (the “Company”).


 


WHEREAS, the parties
hereto have entered into the Note Purchase Agreement, dated as of
March 27, 1998 (as amended, modified or restated from time to time, the “Agreement”),
a First Amendment to Note Purchase Agreement dated as of December 23, 1999
(the “First Amendment”), a Second Amendment to Note Purchase Agreement
dated as of January 10, 2002 (the “Second Amendment”), a Third
Amendment to Note Purchase Agreement dated as of September 20, 2002 (the “Third
Amendment”), and a Fourth Amendment to Note Purchase Agreement dated as of
December 31, 2002 (the “Fourth Amendment”); unless otherwise
defined herein, all capitalized terms used herein (including the recitals)
shall have the meanings assigned to such terms in the Agreement, as amended by
the First, Second, Third, and Fourth Amendments and hereby;


 


WHEREAS, the Company has
entered into a Revolving Credit and Term Loan Agreement dated as of January 10,
2002, with CapitalSource Finance LLC as a lender and as agent (“CapitalSource”);


 


WHEREAS, the Company and
CapitalSource are contemporaneously entering into a Fourth Amendment to
Revolving Credit and Term Loan Agreement dated as of December 29, 2003, in
substantially the form attached hereto as Exhibit A (the “CapitalSource
Fourth Amendment”); and


 


WHEREAS, the Company has
requested the Purchaser to amend the Agreement on the terms and conditions set
forth in this Amendment and to enter into a First Amendment to Amended and
Restated Convertible Senior Subordinated Note dated January 10, 2002,
extending the Maturity Date as specified therein (the “Note Amendment”);


 


NOW, THEREFORE, in
consideration of the premises and the agreements, provisions, and covenants
contained herein, the parties hereto agree as follows:


 


1.               Amendments.  Effective as of December 31, 2003, the
Agreement is amended as follows:


 


(a)          The
financial covenants contained in subparagraph 2D(b) of the Agreement as amended
by the Second and Fourth Amendments are hereby amended and restated in their
entirety to read as follows:


 


“(i)                               LEVERAGE
RATIO


 


The Leverage Ratio shall
not exceed (i) 3.15:1.00 for the Quarterly Test Period ending December 31,
2003, (ii) 3.95:1.00 for the Quarterly Test Period


 

















 


ending March 31, 2004, (iii) 3.80:1.00 for the
Quarterly Test Period ending June 30, 2004, and (iv) 2.75:1.00 for
each Quarterly Test Period after June 30, 2004.


 


(ii)                                  MINIMUM
ADJUSTED EBITDA


 


Adjusted EBITDA for each
Quarterly Test Period set forth below shall not be less than the amounts
specified below:


 


	
  Quarterly Test Period

  	
   

  	
  Amount

  	
   

  
	
  December 31, 2003

  	
   

  	
  $

  	
  3,050,000

  	
   

  
	
  March 31, 2004

  	
   

  	
  $

  	
  2,950,000

  	
   

  
	
  June 30, 2004

  	
   

  	
  $

  	
  2,700,000

  	
   

  
	
  September 30, 2004

  	
   

  	
  $

  	
  4,400,000

  	
   

  
	
  December 31, 2004

  	
   

  	
  $

  	
  4,500,000

  	
   

  
	
  March 31, 2005

  	
   

  	
  $

  	
  4,550,000

  	
   

  
	
  June 30, 2005

  	
   

  	
  $

  	
  5,100,000

  	
   

  
	
  September 30, 2005
  and thereafter

  	
   

  	
  $

  	
  5,400,000

  	
   

  



 


(iii)                               SENIOR FIXED CHARGE COVERAGE RATIO


 


The Senior Fixed Charge Coverage Ratio for each
Quarterly Test Period set forth below shall be not less than the ratios
specified below:


 


	
  Quarterly
  Test Period

  	
   

  	
  Amount

  	
   

  
	
  December 31, 2003

  	
   

  	
  0.90:1.00

  	
   

  
	
  March 31, 2004

  	
   

  	
  0.90:1.00

  	
   

  
	
  June 30, 2004

  	
   

  	
  0.81:1.00

  	
   

  
	
  September 30, 2004

  	
   

  	
  1.215:1.00

  	
   

  
	
  December 31, 2004

  	
   

  	
  1.215:1.00

  	
   

  
	
  March 31, 2005

  	
   

  	
  1.33:1.00

  	
   

  
	
  June 30, 2005

  	
   

  	
  1.41:1.00

  	
   

  



 


(iv)                              FIXED
CHARGE COVERAGE RATIO


 


The Fixed Charge Coverage
Ratio for each Quarterly Test Period set forth below shall be not less than the
ratios specified below:


 


	
  Quarterly Test Period

  	
   

  	
  Amount

  	
   

  
	
  September 30, 2005

  	
   

  	
  0.990:1.00

  	
   

  
	
  December 31, 2005 and thereafter

  	
   

  	
  1.125:1.00

  	
   

  



 


(v)                                 CAPITAL
EXPENDITURES


 


The Company shall not
permit its Capital Expenditures in the aggregate to exceed (i) $1,320,000
for the fiscal year ending on September 30, 2004,  and (ii) $1,200,000 for each fiscal
year ending on or after September 30, 2005.


 


2

















 


(b)         The
definitions of “Capital Expenditures” and “Total Debt Service” contained in
subparagraph 2D(b) of the Agreement as amended by the Second and Third
Amendments are hereby amended and restated in their entirety to read as
follows:


 


“‘CAPITAL EXPENDITURES’ shall mean, for any fiscal
year, the sum (without duplication) of all expenditures (whether paid in cash
or accrued as liabilities) during such fiscal year that are or should be
treated as capital expenditures under GAAP.


 


“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 (excluding any non-cash charges
accrued for such period with respect to the fees and expenses paid by the Company
in connection with the January 10, 2002, closing of the Senior Credit
Agreement, the fees and expenses paid by the Company in connection with the
CapitalSource Fourth Amendment, and any exit fees payable under the Senior
Credit Agreement, and the closing fees and expenses and any premium paid or
payable with respect to the Convertible Notes).”


 


(c)          The
following definition of “Senior Fixed Charge Coverage Ratio” shall be added to
subparagraph 2D(b) of the Agreement to read in its entirety as follows:


 


“SENIOR 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 (less Interest Expense on the Convertible Notes and non-cash charges
relating to premium payable on the Convertible Notes) for the Quarterly Test
Period most recently ended before such date, in each case taken as one accounting
period.


 


(d)         Subparagraph
6P(v) of the Agreement as amended by the Second Amendment is hereby amended and
restated in its entirety to read as follows:


 


“(v)                           PAYMENTS
OTHERWISE PERMITTED.  Except as
otherwise set forth in the Senior Credit Agreement as amended through and in
effect on December 31, 2003, 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 the Convertible Notes as amended through
December 31, 2003, 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.”


 


3

















 


(e)          Schedule A-1
to the Second Amendment shall be and hereby is amended and restated and
replaced in its entirety as set forth on Schedule A-1 attached
hereto.


 


2.               Conditions.  This Amendment shall be subject to
satisfaction of the following conditions precedent, after giving effect to this
Amendment, including the waivers contained in Section 3 below:  (a) the Company shall have delivered to the
Purchaser an executed original copy of this Amendment, the Note Amendment
substantially in the form attached hereto as Exhibit B, and each
other agreement, document or instrument reasonably requested by the Purchaser
in connection with this Amendment; and (b) CapitalSource and the Company shall
have executed the CapitalSource Fourth Amendment.


 


3.               Waivers.  The Purchaser hereby acknowledges that the
Company has been in breach of one or more financial covenants contained in
subparagraph 2(D)(b) of the Agreement as of September 30, 2003, and
hereby waives all such breaches and noncompliance by the Company with
subparagraph 2(D)(b) occurring prior to the date of this Amendment to and
including December 30, 2003.  This
waiver does not apply to any breach or Event of Default under the Agreement or
the Convertible Notes to the extent it comes into or continues in existence on
or after December 31, 2003.


 


4.               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 Senior
Credit Agreement, (ii) disclosed in the Company’s reports filed with the
Securities and Exchange Commission, or (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)         Except
as expressly set forth in this Amendment and the Note 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.


 


5.               Consent
to CapitalSource Fourth Amendment. 
The Purchaser consents to the execution and delivery by the Company of
the CapitalSource Fourth Amendment and affirms that the provisions of the
CapitalSource Fourth Amendment do not constitute a breach or Event of Default
under the Agreement or the Convertible Notes.


 


6.               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.


 


4

















 


7.               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.


 


8.               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.


 


9.               Expenses.  All expenses of the Purchaser incurred in
connection with this Amendment, including reasonable expenses of the
Purchaser’s counsel, will be paid by the Company.


 


10.         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.


 


11.         Counterparts.  This Amendment may be executed in separate
counterparts, each of which shall be an original and all of which taken
together shall constitute one and the same agreement.


 


IN WITNESS WHEREOF, the
parties hereto have duly executed this Amendment as of the date first written
above.


 


	
   

  	
  DRESDNER KLEINWORT BENSON PRIVATE

  EQUITY PARTNERS LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Dresdner Kleinwort
  Capital LLC

  
	
   

  	
  Its:

  	
  General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Private Equity
  Employees LLC

  
	
   

  	
   

  	
  Its:

  	
  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Alexander P.
  Coleman

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
  Authorized Person

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GARDENBURGER, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott C. Wallace

  	
   

  
	
   

  	
   

  	
  Scott C. Wallace

  
	
   

  	
  Its:

  	
  President and Chief
  Executive Officer

  
							



 


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