EXHIBIT 10.7


 


EMPLOYMENT
AGREEMENT


 


THIS AGREEMENT is entered into as of February 26, 2004 by and
between GARDENBURGER, INC. an Oregon
Corporation (the “Company”) and Lori Luke (the “Executive”).  In consideration of the mutual covenants and
the other terms and conditions set forth in this Agreement, the parties agree
as follows:


 


I.                                         DEFINITIONS.


 


As used herein:


 


“Cause” for termination of Executive’s employment means
(i) any fraud or dishonesty by Executive involving the Company;
(ii) willful misconduct or gross negligence by Executive in connection
with Executive’s performance of his duties for the Company;
(iii) Executive’s conviction for having committed a felony; (iv) the
commission by Executive of any act in direct competition with or materially
detrimental to the best interests of the Company; or (v) willful and
continued failure by Executive substantially to perform his/her duties provided
herein after a written demand for substantial performance is delivered to
Executive by the CEO of the Company, which demand identifies with reasonable
specificity the manner in which Executive has not substantially performed
his/her duties.


 


“Change in Control” shall
mean any of the following:


 


(a)                                  The acquisition by
any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”))
(a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of either (i) the then outstanding
shares of common stock of the Company (the “Outstanding Company Common Stock”)
or (ii) the combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that the following acquisitions
shall not constitute a Change in Control: 
(w) any acquisition directly from the Company (excluding an acquisition
by virtue of the exercise of a conversion privilege, other than a conversion
privilege in existence as of the date of this agreement), (x) any acquisition
by the Company, (y) any acquisition by any Employee Benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company, or (z) any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if, following such reorganization,
merger or consolidation, the conditions described in clauses (i), (ii) and
(iii) of subsection (c) of this Section are satisfied; or


 


(b)                                 Individuals who, as of
the date of this Agreement, constitute the Board (the “Incumbent Board”) cease
for any reason to constitute at least a majority of the Board; provided,


 


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however, that any individual becoming a director subsequent to the date
of this Agreement whose election, or nomination for election by the Company’s
shareholders was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office as a director
of the Company occurs as a result of either an actual or a threatened election
contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board; or


 


(c)                                  Approval by the
shareholders of the Company of a reorganization, merger or consolidation, in
each case, unless, following such reorganization, merger or consolidation,
(i) more than 50% of, respectively, the then outstanding shares of common
stock of the corporation resulting from such reorganization, merger or
consolidation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such reorganization, merger or
consolidation in substantially the same proportions, as their ownership,
immediately prior to such reorganization, merger or consolidation, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be, (ii) no Person (excluding the Company, any Employee Benefit
plan (or related trust) of the Company or such corporation resulting from such
reorganization, merger or consolidation and any Person beneficially owning,
immediately prior to such reorganization, merger or consolidation, directly or
indirectly, 50% or more of the Outstanding Company Common Stock or Outstanding
Company Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 50% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors and (iii) at least a majority of the members of the board of
directors of the corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at the time of the execution
of the initial agreement providing for such reorganization, merger or
consolidation; or


 


(d)                                 Approval by the
shareholders of the Company of (i) a complete liquidation or dissolution of the
Company or (ii) the sale or other disposition of all or substantially all of
the assets of the Company, other than to a corporation, with respect to which following
such sale or other disposition, (A) more than 50% of, respectively, the then
outstanding shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other disposition, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be, (B) no Person (excluding the Company and any Employee benefit
plan (or related trust) of the Company or such corporation and any Person
beneficially owning,


 


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immediately prior to such sale or other disposition, directly or
indirectly, 50% or more of the Outstanding Company Common Stock or Outstanding
Company Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 50% or more of, respectively, the then outstanding shares of common
stock or such corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors and (C) at least a majority of the members of the board of
directors of such corporation were members of the Incumbent Board at the time
of the execution of the initial agreement or action of the Board providing for
such sale or other disposition of assets of the Company.


 


No Change of Control shall be
deemed to have occurred as a result of any acquisition, reorganization, merger,
consolidation or other transaction described above unless, as a result of such
transaction, the subordinated debt and preferred stock of the Company
outstanding as of the date of this Agreement, as the same may be amended or
modified, shall be retired for cash.


 


“Confidential Information” is all nonpublic information relating to the
Company or its business that is disclosed to Executive, that Executive
produces, or that Executive otherwise obtains during employment.  “Confidential Information” also includes
information received from third parties that the Company has agreed to treat as
confidential.  Examples of Confidential
Information are:  marketing plans,
customer lists, product design and manufacturing information, and financial
information.


 


“Confidential Information” does not include
information which (a) is or becomes generally available to the public
other than as a result of a disclosure by Executive; (b) becomes available
to Executive on a nonconfidential basis from a source other than the Company or
its representatives, provided that such source is not known by Executive to be
bound by a confidentiality agreement with the Company or its representatives or
otherwise prohibited from transmitting the information to Executive by a
contractual, legal, or fiduciary obligation; (c) can be demonstrated by
written or other convincing evidence to have been known by Executive on a
nonconfidential basis prior to its disclosure to Executive by the Company or
one of its representatives; or (d) can be demonstrated by written or other
convincing evidence to have been developed by Executive in good faith and
independent of the use of Confidential Information.


 


“Disability” has the meaning in the Company’s then current
disability plan or program or, if no such plan or program is then in effect,
Disability means the condition of being permanently unable to perform Executive’s
duties for the Company by reason of a medically determinable physical or mental
impairment that can be expected to result in death or that has lasted or can be
reasonably expected to last for a continuous period of at least 12 months.


 


 “Good Reason” means the
undertaking of any of the following without Executive’s consent:  (i) relocation of Executive’s place of
employment more than 25 miles from the location Executive is performing duties
as of the date hereof, (ii) the reduction by more than 10% of Executive’s base
compensation not related to a reduction in the salaries of all executive
officers of the Company, or (iii) the significant change or reduction of
Executive’s duties that results in any diminution or adverse change of
Executive’s position, status or circumstances.


 


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“Sale Transaction” for
purposes of the Sale Bonus means a single transaction or a series of related
transactions approved by the Board of Directors of the Company resulting in:


 


(a)          A sale of other disposition by the Company of
all or substantially all of its assets;


 


(b)         A sale, stock exchange,
or other disposition of all or substantially all the capital stock of the
Company;


 


(c)          A merger, consolidation
or other corporate transaction with a third party in which the Company’s
shareholders receive cash, stock, securities, or any other consideration (or
any combination of the foregoing) in exchange for their stock in the Company.


 


(d)         No Sale Transaction shall
be deemed to have occurred as a result of any sale, stock exchange,
acquisition, reorganization, merger, consolidation or other transaction
described above unless, as a result of such transaction, the subordinated debt
and preferred stock of the Company outstanding as of the date of this
Agreement, as the same may be amended or modified, shall be retired for cash.


 


“Total Consideration” for
purposes of the Sale Bonus, in connection with a Sale Transaction, means:


 


(a)          The amount of cash and
the aggregate market value of all other consideration received by the Company
in connection with a sale or other disposition of its assets (exclusive of any
indebtedness or liabilities of the Company to which the assets taken are
subject or which are assumed by the purchaser or other acquirer of the Company’s
assets); or


 


(b)         The aggregate amount of
cash and the aggregate market value of all other consideration received by the
Company’s shareholders in any sale, share exchange, or other disposition of the
Company’s stock or any merger, consolidation, or similar transaction.


 


II.                                     EMPLOYMENT.


 


The Company agrees to continue to employ Executive as the Vice
President of Marketing, and Executive agrees to continue such employment.  Executive shall devote substantially the
whole of his/her business time to the business and affairs of, and to advance
the best interests of, the Company, shall have such powers and duties
appropriate to his/her office as may be provided by the articles and/or bylaws
of the Company and as determined by the Board of Directors of the Company from
time to time.  Executive will at all
times discharge his/her duties in consultation with and under the supervision
and direction of the President & CEO of the Company or designee.  Executive’s duties may be changed from time
to time at the sole discretion of the Board of Directors of the Company.  Executive and the Company understand and
acknowledge that Executive’s employment with the Company constitutes “at-will”
employment and that subject to the Company’s obligation to provide severance
benefits as specified herein, the employment relationship and compensation may
be terminated at any time, upon written notice to the other party, with or
without Cause or Good Reason and for any or no cause or reason, at the option
of either the Company or Executive.


 


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III.                                 COMPENSATION
AND BENEFITS.


 


(a)                                  Base Salary.


 


As compensation for services under this Agreement, the Company will pay
to Executive an annual salary of $200,000 (the “Base Salary”) payable in
accordance with the usual payroll practices of the Company.  During Executive’s employment under this
Agreement, the CEO and Compensation Committee will review Executive’s Base
Salary at least annually.  The Board of
Directors of the Company may in its sole discretion adjust Executive’s Base
Salary from time to time.


 


(b)                                 Benefit Plans.


 


To the extent eligible Executive will be entitled to receive or
participate in all such other benefits, including without limitation pension
plans, stock option plans and health and welfare plans as may from time to time
be made available to other senior management employees of the Company, all in
accordance with the terms thereof as in effect from time to time.


 


(c)                                  Vacation.


 


Executive will be entitled to three weeks annual vacation payable in
accordance with the standard policies of the Company.


 


IV.                                SALE
BONUS


 


After the completion of a Sale Transaction, and subject to the
provisions of Section XVII, the Company will pay Executive a Sale Bonus,
as described below, provided Executive remains as Vice President of Marketing
of the Company during the negotiation of and through the closing of the Sale
Transaction.  The Sale Bonus will be
payable to Executive after all post-closing adjustments in connection with the
Sale Transaction have been determined.


 


The “Sale Bonus” is an amount equal to the sum of  0.25% of the “Total Consideration.”


 


Executive will have the right, in his/her sole discretion, to waive
receipt of the whole or any portion of the Sale Bonus otherwise due to
Executive pursuant to this Agreement if and to the extent that Executive
determines that reduction in the amount of the Sale Bonus or waiver of the Sale
Bonus would give Executive an income tax benefit.  Any reduction by Executive of the amount of
Sale Bonus received as provided in this Agreement will not affect Executive’s other
rights to the Sale Bonus.  Any waiver or
reduction in the amount of the Sale Bonus will not affect Executive’s rights to
other provisions of this Agreement.


 


All amounts payable by the Company to Executive pursuant to this
Agreement, including without limitation all cash compensation, any Sale Bonus,
and any settlement of stock options, are subject to and will be reduced by
amounts the Company is required to withhold for all applicable federal, state,
and local income, payroll and other taxes.


 


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V.                                    TERMINATION RELATED TO A CHANGE
IN CONTROL.


 


If a Change in Control occurs while this Agreement is in effect, and at
any time during the nine month period beginning on the date of the first
occurrence of such Change in Control either (i.) Executive’s employment is
terminated by the Company for any reason other than Cause or the Executive’s
Death or Disability, or (ii.) Executive terminates his or her employment for
Good Reason, , the Company will pay
Executive a Change in Control Severance Benefit as follows PROVIDED THAT
Executive first fulfills the requirements of Section XVII:


 


(a)                                  An amount equal to Executive’s annual base salary
as in effect on the date of termination or, if higher, the annual base salary as
in effect prior to any reduction within the twelve (12) months preceding
termination, payable as a lump sum on the later of the closing date on
which a Change in Control transaction is completed, or 48 hours after the termination;


 


(b)                                 Continuation (or reimbursement for the cost of)
all health and welfare benefits for Executive and his/her dependents for a
period of 12 months following termination at the same or comparable levels of
coverage.


 


VI.                                TERMINATION
OTHER THAN IN CONNECTION WITH A CHANGE IN CONTROL.


 


For any termination other than a termination
related to a Change in Control, the Company shall pay Executive a Severance
Benefit as follows PROVIDED THAT Executive first fulfill the requirements of Section XVII.


 


Severance Payment.


 


Upon an involuntary termination by the
Company of Executive’s employment (other than for “Cause,” or in connection
with Executive’s Death or Disability) the Company will pay Executive his/her
Base Salary through the date of termination and will pay Executive:


 


(a)                                  An amount equal to Executive’s annual base salary
as in effect on the date of termination payable over a 12-month period in
accordance with the Company’s normal payroll practices.


 


(b)                                 Continuation (or reimbursement for the cost of)
all health and welfare benefits for Executive and his/her dependents for a
period of 12 months following termination at the same or comparable levels of
coverage.


 


VII.                            MATERIALS PREPARED AND INVENTIONS MADE DURING EMPLOYMENT


 


The Company shall be the exclusive owner of
all materials, concepts, and inventions Executive prepares, develops, or makes
(whether alone or jointly with others) within the scope of his employment, and
of all related rights (including copyrights, trademarks, and patents) and
proceeds.  Without limitation, materials,
concepts, and inventions that (a) relate to the


 


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Company’s business or actual or demonstrably
anticipated research or development, or (b) result from any work performed
by Executive for the Company, shall be considered within the scope of Executive’s
employment.  Executive shall promptly
disclose all such materials, concepts, and inventions to the Company.  Executive shall take all action reasonably
requested by the Company to vest ownership of such materials, consents, and
inventions in the Company and to permit the Company to obtain copyright,
trademark, patent, or similar protection in its name.  Notwithstanding anything herein, this
obligation is subject to the provisions of s. 2870 of the California Labor Code
and does not apply to any invention that qualifies fully as an excluded
invention under s. 2870.


 


VIII.                        CONFIDENTIAL INFORMATION.


 


(a)                                  Access to Information.


 


Executive acknowledges that in the course of
his employment he will have access to Confidential Information, that such
information is a valuable asset of the Company, and that its disclosure or
unauthorized use will cause the Company substantial harm.


 


(b)                                 Ownership.


 


Executive acknowledges that all Confidential
Information shall continue to be the exclusive property of the Company (or the
third party that disclosed it to the Company), whether or not prepared in whole
or in part by Executive and whether or not disclosed to Executive or entrusted
to his/her custody in connection with his/her employment by the Company.


 


(c)                                  Nondisclosure and Nonuse.


 


Unless authorized or instructed in writing by
the Company, or required by legally constituted authority, Executive will not,
except as required in the course of the Company’s business, during or after
his/her employment, disclose to others or use any Confidential Information,
unless and until, and then only to the extent that, such items become available
to the public through no fault of Executive.


 


(d)                                 Return of Confidential Information.


 


Upon request by the Company during or after
his employment, and without request upon termination of employment pursuant to
this Agreement, Executive will deliver immediately to the Company all written
or tangible materials containing Confidential Information without retaining any
excerpts or copies.


 


(e)                                  Duration.


 


The obligations set forth in this Section will
continue beyond the term of employment of Executive by the Company and for so
long as Executive possesses Confidential Information.


 


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IX.                                EFFECT
OF AGREEMENT.


 


This Agreement supersedes and replaces any and all prior agreements and
understandings concerning Executive’s employment relationship with the Company
entered into prior to the date hereof, but not any written agreements entered
into simultaneous with this Agreement or thereafter.


 


X.                                    ASSIGNMENT.


 


This Agreement
shall inure to the benefit of and shall be binding upon the parties hereto and
their respective executors, administrators, heirs, personal representatives and
successors, but, except as hereinafter provided, neither this Agreement nor any
right hereunder may be assigned or transferred by either party hereto, or by
any beneficiary or any other person, nor be subject to alienation, anticipation
sale, pledge, encumbrance, execution, levy or other legal process of any kind
against Employee, Employee’s beneficiary or any other person.  Notwithstanding the foregoing, any person or
business succeeding to all or substantially all of the business of the Company
by stock purchase, merger, consolidation, purchase of assets or otherwise,
shall be bound by and shall adopt and assume this Agreement, and the Company
shall obtain the express assumption of this Agreement by such successor.


 


XI.                                NO
OBLIGATION TO FUND.


 


The agreement
of the Company (and/or its successor) to make payments to Executive hereunder
shall represent the unsecured obligation of the Company (and/or its successor),
except to the extent (i) the terms of any other agreement, plan or arrangement
pertaining to the parties provide for funding; or (ii) the Company (or its
successor) in its sole discretion elects in whole or in part to fund the
Company’s obligations under this Agreement pursuant to a trust arrangement or
otherwise.


 


XII.                            GOVERNING
LAW.


 


This Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of Utah, except to the extent otherwise expressly provided in this
Agreement.  The parties hereto expressly
consent to the personal jurisdiction of the state and federal courts located in
Utah for any action or proceeding arising from or relating to this Agreement or
relating to any arbitration in which the parties are participants.


 


XIII.                        CONSULTNG
AND SUBSEQUENT EMPLOYMENT.


 


Nothing in
this Agreement shall preclude the Company or its successors from employing
Executive in a consulting or regular employment capacity following termination
of employment or other periods in which Executive provides consulting services
under this or any other agreement.


 


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XIV.                       AMENDMENT.


 


This Agreement
may only be amended by a written instrument signed by the parties hereto, which
makes specific reference to this Agreement.


 


XV.                           SEVERABILITY.


 


The Parties agree that any provision of this Agreement that is held to
be illegal, invalid, or unenforceable under present or future laws shall be
fully severable.  The Parties further
agree that this Agreement shall be construed and enforced as if the illegal,
invalid, or unenforceable provision had never been a part of this Agreement and
the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance from this Agreement.  Furthermore, a provision as similar to the
illegal, invalid, or unenforceable provision as is possible and legal, valid,
and enforceable shall be automatically added to this Agreement in lieu of the
illegal, invalid, or unenforceable provision.


 


XVI.                       OTHER BENEFITS.


 


Except as set
forth herein, nothing in this Agreement shall limit or replace the compensation
or benefits payable to Executive, or otherwise adversely affect Executive’s
rights, under any other benefit plan, program or agreement to which Executive
is a party.


 


XVII.                   RELEASE OF
CLAIMS REQUIRED FOR CERTAIN BENEFITS.


 


As an express prerequisite to receipt of any Severance or other
post-termination Benefits provided in this Agreement, Executive acknowledges
and understands that he/she must sign a Separation Agreement, including a
release of claims.  Such Agreement shall
be substantially similar to the Agreement attached as Addendum A.  Executive understands that he/she will not be
entitled to receive any payments until he/she executes and delivers the signed
Agreement, and the revocation period set forth in the Waiver and Release of
Claims Agreement has run.


 


XVIII.               ARBITRATION.


 


Any dispute between the Parties concerning the interpretation,
application, or claimed breach of this Agreement shall be submitted to binding,
confidential arbitration.  Such
arbitration shall be conducted pursuant to the rules of the American
Arbitration Association governing employment disputes, before an arbitrator
licensed to practice law in Utah and familiar with employment law
disputes.  Prior to submitting the matter
to arbitration, the parties shall first attempt to resolve the matter by the
claimant notifying the other party in writing of the claim; by giving the other
party the opportunity to respond in writing to the claim within ten (10) days
of receipt of the claim; and by giving the other party the opportunity to meet
and confer.  If the matter is not
resolved in this manner, the dispute may then proceed to arbitration at the request
of either party.  The parties shall bear
equally the arbitrator’s fees and expenses, as well as the administrative
costs, if any, assessed by the American Arbitration Association.  The prevailing party in any such proceeding
shall be entitled to recover costs, expenses, and attorney’s fees incurred as a
result of such arbitration or as awarded by the arbitrator including all
arbitration costs.  Should any party
institute any court action against the other with respect to any claim released
by this Agreement, or pursue any arbitrable dispute by any method other than
arbitration as provided for in this paragraph, the responding party shall be
entitled to recover from the initiating party all damages, costs, expenses, and
attorney’s fees incurred as a result of such action.


 


	
   

  	
  GARDENBURGER, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
    /s/ Lori Luke

  	
   

  	
    /s/ Scott Wallace

  	
   

  
	
  Lori Luke

  	
  Scott Wallace

  
	
   

  	
  President & Chief Executive Officer

  
				



 


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Addendum A


SEPARATION
AGREEMENT


 


THIS
Separation Agreement and Release (this “Agreement”) is made and entered into
this       day of                   
and between GARDENBURGER, INC., an Oregon corporation (the “Company”), and                      
(“Executive”) in order to provide for an orderly separation of employment and
establish the terms and conditions of Executive’s separation from
employment.  This Agreement also fully
and completely resolves any and all issues that Executive might have in
connection with his/her employment with the Company or the termination of that
employment.  This is a negotiated
agreement establishing the terms and conditions of Executive’s separation from
employment with the Company and it terminates, extinguishes and supersedes the
benefits, terms and conditions of employment between Executive and the Company
except to the extent prohibited by law.


 


NOW,
THEREFORE, in consideration of the mutual promises and conditions contained
herein, the parties agree as follows:


 


1.                                       Separation.


 


Executive’s
employment will end effective            
(the “Termination Date”).  Executive
shall simultaneously resign from employment and tender a resignation from
his/her position as an officer of the Company. 
Executive acknowledges that he/she has been and is subject to certain
laws governing trading by corporate insiders, and will engage in no trading
activities in violation of those laws. 
Nothing herein shall affect any right Executive may have to
indemnification for acts as an officer of the Company available to him/her
under applicable law, the Company’s bylaws, and/or Company acquired liability
coverage for directors and officers to the extent that coverage was or is in
place at the time this Agreement is signed.


 


2.                                       Acknowledgement
that Wages Received.


 


Executive
acknowledges that the payments made to the date of this Agreement, and payments
identified in this Agreement, represent timely and full payment of all wages
and compensation owing to him/her as a result of his/her employment including
but not limited to accrued vacation pay, bonuses, and other forms of accrued
compensation excepting amounts owing under a deferred compensation plan, and
include sums in addition to that amount.


 


3.                                       Severance
Pay.


 


In
consideration for Executive’s execution and non-revocation of this Separation
Agreement, the Company will provide Executive the sum of $           
(gross) as severance pay, to be paid in accordance with the Company’s usual and
customary payroll practices commencing upon expiration of the right to revoke
this Agreement provided that Executive has not exercised the right to
revoke.  This amount shall be subject to
required withholding for federal, state and local


 


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taxes, and
usual and customary payroll deductions. Executive agrees and acknowledges that
but for this Separation Agreement he/she is not entitled to these sums.


 


4.                                       Stock
Options.


 


To the extent Executive is a participant in the Company’s Stock Option
Plan, his/her rights under that Plan shall be determined by the terms of the
Plan and not otherwise.  Nothing in this
Agreement is intended to affect any vested rights he/she may have, or in any
way alter the rights and obligations specified in the Option Agreements and
Plan.


 


5.                                       Benefit
Plans.


 


Executive’s participation in all employee benefit plans and programs of
the Company shall end effective the Termination Date.  Executive’s entitlement to any benefits
afforded by any Company benefit plans are governed solely by the applicable
plans and policies, which are incorporated herein by this reference.


 


6.                                       Group
Health Care.


 


Executive
shall be entitled to continue his/her current group health care coverage in
accordance with the provisions of the Consolidated Omnibus Reconciliation Act (“COBRA”).  As consideration for this Agreement, the
Company shall reimburse Executive the cost of continuing these benefits for a
period of twelve (12) months.


 


7.                                       Outplacement.


 


As
consideration for this Agreement and upon Executive’s request, Executive will
be afforded outplacement assistance through a provider mutually acceptable to
Executive and the Company at a cost to the Company not to exceed $25,000,
provided that Executive commences outplacement assistance no later than thirty
(30) days following the Termination Date.


 


8.                                       Confidential
Information.


 


Executive is a
party to an Employment Agreement dated            
which imposes certain obligations to preserve the confidentiality of Company
information; Executive acknowledges that he/she remains bound by the obligation
notwithstanding his/her separation from employment.


 


9.                                       Release
of Claims.


 


Executive hereby releases and forever discharges the Company, its
predecessors, successors and assigns, and its past, present, and future
insurers, representatives, officers, trustees, shareholders, directors, agents,
attorneys, and employees, and their respective successors, assigns, executors,
and administrators (collectively, the “Releases”), of and from any and all
claims, charges, complaints, actions, causes of action, liability, damages,
costs, attorney fees, expenses of whatever nature, and demands of any kind
(including without limitation those based in tort,


 


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contract, or statue, including without limitation, applicable state
civil rights laws, Title VII of the Civil Rights Act of 1964, the Post-Civil
War Rights Act, the Age Discrimination in Employment Act, 29, USC 621 et seq,
the Americans with Disabilities Act, the Rehabilitation Act of 1973, the Equal
Pay Act of 1963, and any regulations under such laws) up to and including the
date set forth below, whether known or unknown, foreseen or unforeseen,
asserted or unasserted.


 


Without limitation on the foregoing, Executive hereby accepts the
payments set forth herein in full settlement and satisfaction of all claims,
charges, complaints, actions, causes of action, and demands against the Company
or any of the Releases of every nature and kind whatsoever, known or unknown,
suspected or unsuspected, past, present, or future on account of or in any way
related to or arising from the employment relationship existing between them or
the termination of that relationship. 
Executive agrees that he/she is lawfully entitled to no payments, wages,
compensation, or benefits from the Company except as set forth in this Agreement,
and except for any amounts to which he/she is entitled under the terms of the
Company 401(k) plan and under the stock option agreements entered into between
the Company and Executive.


 


Executive expressly waives all rights under Section 1542 of the
Civil Code of the State of California, 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.” 
Notwithstanding the provisions of Section 1542, and for the
purposes of implementing a full and complete release and discharge of the
Releasees, Executive expressly acknowledges that this Agreement is intended to
include and does include in its effect all claims which Executive does not know
or suspect to exist in Executive’s favor at the time Employee signed this
Agreement.  Executive intends this
Agreement to extinguish such claims.


 


Executive represents that he/she has no claims against or relating to
the Company pending or filed with any local, state, or federal agency as of the
date this Agreement is signed; and that if any such claims are pending or
filed, they will be immediately withdrawn or dismissed.  Except where prohibited by law, Executive
agrees that he/she will not assert any court action, lawsuit, or any amendment
to his/her claims against the Company or any other Releasees arising out of or
in connection with any of the foregoing released claims, including without
limitation any action, lawsuit, or claim arising out of or in connection with
the employment relationship existing between the Company and Executive or the
termination of that relationship other than one based upon an alleged violation
of this Agreement.  Where permitted by
operation of law, Executive agrees that his/her sole monetary relief for any
claim permitted to be made following execution of this Agreement shall be the
monetary relief already provided.


 


The Company hereby releases and forever discharges Executive and his/her
heirs, successors, beneficiaries, agents and attorneys, and their respective
successors, assigns, executors, and administrators, of and from any and all
charges, complaints, actions, causes of action, liability, damages, costs,
attorney fees, expenses of whatever nature and demands of any kind (including
without limitation those based in tort, contract, or statue) arising from or
based on claims of which any current member of the Company’s Board of Directors
has actual knowledge as of the date of this Agreement.


 


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10.                                 Right
to enforce agreement according to terms.


 


Notwithstanding anything herein, the parties retain all rights to
enforce this Agreement according to its terms.


 


11.                                 Older
Worker Benefit Protection Act.


 


This Agreement is subject to the terms of the Older Workers Benefit
Protection Act of 1990 (“OWBPA”).  The
OWBPA provides that an individual cannot waive a right or claim under the Age
Discrimination in Employment Act (“ADEA”) unless the waiver is knowing and
voluntary.  Pursuant to the terms of the
OWBPA, Executive acknowledges and agrees that he/she has executed this
Agreement voluntarily, and with full knowledge of its consequences.  In addition, Executive hereby acknowledges
and agrees as follows:


 


a.                                       This
Agreement has been written in a manner that is calculated to be understood, and
is understood, by Executive;


 


b.                                      The
release provisions of this Agreement apply to any rights Executive may have
under the ADEA;


 


c.                                       The
release provisions of this Agreement do not apply to any rights or claims
Executive may have under the ADEA that arise after the date he/she executes
this Agreement;


 


d.                                      The
Company hereby advises Executive to consult with an attorney prior to executing
this Agreement;


 


e.                                       The
Company is giving Executive a period of up to twenty-one (21) days to consider
this Agreement.  Executive may accept and
sign this Agreement before the expiration of the twenty-one (21) day
time-period, but he is not required to do so by the Company; and


 


f.                                         For
a period of seven (7) days following the signing of this Agreement, Executive
may revoke this Agreement.  Executive
will provide written notice of any such revocation to the Company.  This Agreement shall become effective on the
eighth day after Executive signs it, if it has not been revoked during the
revocation period.


 


12.                                 Assistance
with Litigation and other Business.


 


The parties recognize that Executive may have specialized information
and knowledge that is or may be important to the Company in the event it is
involved in disputes, claims or litigation, or may have been involved in
incidents or events which relate to disputes, claims or litigation.  For the twelve months following the execution
of this Agreement, Executive agrees that he/she will make himself/herself
reasonably available to consult or assist the Company in any such matters.  The Company will reimburse any reasonable
expenses Executive incurs.  Thereafter,
the Company will reimburse Executive for any reasonable expenses and compensate
him/her for any


 


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time reasonably spent at his/her usual and customary fee for consulting
work, and shall provide such indemnification for that work as is available
under applicable law, the Company’s bylaws, and the Company’s liability
coverage.


 


13.                                 Nondisparagement.


 


The parties agree not to make any derogatory remarks of any nature
whatsoever at any time about each other, about past or present employees or the
Company’s products, publicly or privately, unless required by law.  Nothing here shall limit any party in the
giving of truthful testimony or information, where the party is under legal
compulsion to do so.


 


14.                                 Confidentiality
of Agreement.


 


Executive agrees that he/she will not disclose, disseminate, or
publicize, or cause or permit to be disclosed, disseminated, or publicized any
of the terms of this Agreement, subject to the following exceptions only: (i)
to the extent necessary to represent the Company’s interests in claims or
litigation where the Company authorizes disclosure; (ii) to the extent
necessary to report income to appropriate taxing authorities, provided any
person to whom the information is disclosed shall also be bound by this
confidentiality provision; (iii) in response to an order or subpoena of a court
or governmental agency of competent jurisdiction, provided, however, that
notice of receipt of such order or subpoena shall be immediately communicated
to the Company telephonically and in writing, so that the Company shall have an
opportunity to intervene and assert what rights it has to nondisclosure prior
to Executive’s response to such order or subpoena; (iv) to the extent necessary
to enforce this Agreement.  Executive may
also disclose the terms of this Agreement to his/her lawyers, accountants and
financial advisers, and as required to lenders or lending institutions for
consideration in applications for loans or credit.


 


The Company agrees that, except on a business need-to-know basis, it
will not disclose, disseminate or publicize, or cause or permit to be
disclosed, disseminated or publicized, any of the terms of this Agreement.  These obligations are subject to the
following exceptions only (i) to the extent necessary to represent its
interests in claims or litigation, (ii) to the extent necessary to comply with
government reporting obligations, including but not limited to the Company’s
proxy statements where required, (iii) in response to an order or subpoena of a
court or governmental agency of competent jurisdiction, provided, however, that
notice of receipt of such order or subpoena shall be immediately communicated
to Executive telephonically and in writing so that Executive shall have an
opportunity to intervene and assert what rights he/she has to nondisclosure
prior to the Company’s response to such order or subpoena; (iv) to the extent
necessary to enforce this Agreement.


 


15.                                 Return
of Property.


 


Executive is a party to an Employment Agreement which requires him/her
immediately upon termination to return Confidential Information to the
Company.  Executive acknowledges his/her
continuing obligations under that Agreement and represents that as of the
Termination Date he/she has complied fully with the obligation to return Company’s
Confidential Information.


 


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16.                                 Non-Competition.


 


Executive will not, throughout North America, Europe or Asia either
individually or as a director, officer, partner, employee, agent,
representative, or consultant with any business, directly or indirectly for
three years following the Termination Date:


 


(a)                                  Engage or prepare to
engage in the business of frozen or refrigerated products which contain
Imitation Meat products exclusively or as a primary ingredient.  Notwithstanding anything herein, Executive
shall not be restricted from engaging or preparing to engage in activities for
a business that has a separate product line or division that manufactures or
markets products that contain Imitation Meat products as described above, so long
as Executive does not personally work in that division or with that product
line;


 


(b)                                 Induce or attempt to
induce any person who is an employee of the Company to leave the employ of the
Company; or


 


(c)                                  Solicit, divert, or
accept orders for products or services that are substantially competitive with
the products or services sold by the Company from any customer of the Company,
or suggest, request, or encourage any suppliers or customers of the Company to
curtail, reduce, or cancel their business done with the Company, or otherwise
solicit for himself/herself or any other person or entity any business of the
Company.


 


While Executive acknowledges that the restrictions contained herein are
reasonable, if any term or condition of this Noncompetition provision is
determined to be unenforceable because of its scope, duration, geographical
area or similar factor, the court or arbitrator making such determination will
have the power to reduce or limit such scope, duration, area, or other factor,
and such covenant will then be enforceable in its reduced or limited form.


 


17.                                 No
Admission.


 


The Parties agree that, by entering into this Agreement, neither party
admits, and each Party specifically denies, any violation of any local, state,
or federal law, common or statutory.  The
Parties recognize that this Agreement has been entered into in order to achieve
an orderly separation and nothing contained herein shall be construed to be an
admission of liability or a concession of any kind.


 


17.                                 Consequences
of Breach.


 


If Executive materially breaches this Agreement, the Company shall be
relieved of any obligation to make any payment not yet made provided that an
arbitrator in a proceeding duly commenced by the Company pursuant to this
Agreement shall have determined that Executive has materially breached the
Agreement.  The Company may suspend any
payments due under the Agreement during the pendency of the Arbitration
proceeding but if the Arbitrator concludes there was no material breach, the
Company shall forthwith discharge all arrears together with interest accrued
from the date the payment was suspended payable at prime.


 


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18.                                 Integration.


 


The Parties agree that this Agreement (together with the documents
incorporated by reference) states the entire agreement of the Parties and
except as expressly provided, referenced or incorporated herein, supersedes all
prior and contemporaneous negotiations and agreements, oral or written.  Each Party expressly acknowledges that the
other Party did not, directly or indirectly, make any promises,
representations, or warranties whatsoever, express or implied, other than those
contained in this Agreement.  The Parties
further agree that this Agreement may be amended only by a subsequent writing
signed by both of the Parties.


 


19.                                 Waiver.


 


No waiver of any provision of this Agreement shall be deemed, or shall
constitute, a waiver of any other provisions, whether or not similar, nor shall
any waiver constitute a continuing waiver. 
No waiver shall be binding unless executed in writing by the party
making the waiver.


 


20.                                 Binding
Effect.


 


All rights, remedies and liabilities herein given to or imposed upon
the parties shall extend to, inure to the benefit of and bind, as the
circumstances may require, the parties and their respective heirs, personal
representatives, administrators, successors and permitted assigns; provided,
however, that the obligations of Executive are personal and shall not be
assigned by him/her.


 


21.                                 Severability.


 


The Parties agree that any provision of this Agreement that is held to
be illegal, invalid, or unenforceable under present or future laws shall be
fully severable.  The Parties further
agree that this Agreement shall be construed and enforced as if the illegal,
invalid, or unenforceable provision had never been a part of this Agreement and
the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance from this Agreement.  Furthermore, a provision as similar to the
illegal, invalid, or unenforceable provision as is possible and legal, valid,
and enforceable shall be automatically added to this Agreement in lieu of the
illegal, invalid, or unenforceable provision.


 


22.                                 Arbitration.


 


The parties agree that any dispute relating to this Separation
Agreement shall be resolved in accordance with the provisions governing
arbitration set forth in the Employment Agreement.


 


23.                                 Knowing
and Voluntary Agreement; No Pressure or Coercion.


 


Executive acknowledges and
agrees that the only consideration for this Agreement is the consideration
expressly described herein, that he/she has carefully read the entire
Agreement, that he/she has had the opportunity to review this Agreement and to
have it reviewed and explained to him/her by an attorney and financial counsel
of her choosing, that he/she fully understands its final and binding effect,
and that he/she is signing this Agreement voluntarily, with the full intent of
releasing the Company from all claims, without any undue pressure or coercion
from the Company.


 


	
   

  	
  GARDENBURGER, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Lori Luke

  	
  Scott Wallace

  	
   

  
	
   

  	
  President & Chief Executive Officer

  
				



 


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