EXHIBIT 10.4




SECOND AMENDMENT TO


REVOLVING CREDIT AND TERM LOAN AGREEMENT




THIS SECOND AMENDMENT TO REVOLVING CREDIT AND TERM

LOAN AGREEMENT dated as of December 31, 2002 (the “Amendment”), is entered

into by and between CAPITALSOURCE FINANCE LLC, a Delaware limited liability

company, in its capacity as administrative agent and collateral agent for the

Lenders under the Agreement referenced below (“Agent”), the Lenders party

thereto, and GARDENBURGER, INC., an Oregon corporation (“Borrower”).  Capitalized terms used and not otherwise

defined herein are used as defined in the Agreement (as defined below).




WHEREAS, the Agent, Lenders and Borrower have entered

into that certain Revolving Credit and Term Loan Agreement dated as of

January 10, 2002 (as amended, supplemented, modified and/or restated from

time to time, the “Agreement”), together with a First Amendment to the

Agreement dated as of September 30, 2002;




WHEREAS, the Borrower has requested that Agent and

Lenders amend certain provisions of the Agreement, all as provided herein; and




WHEREAS, subject to satisfaction of the conditions set

forth herein, Agent and the Lenders are willing to amend the Agreement as

provided herein;




NOW, THEREFORE, in consideration of the premises and

the other mutual covenants contained herein, the receipt and sufficiency of

which are hereby acknowledged, the parties hereto agree as follows:




SECTION 1.           Amendment.  For purposes of the covenants set forth in

Annex I of the Agreement and for no other purpose, the definition of “Capital

Expenditures” shall be and hereby is amended and restated and replaced in its

entirety effective as of December 31, 2002, to read in full as follows:




“‘CAPITAL EXPENDITURES’ shall mean, for any Quarterly

Test Period, the sum (without duplication) of all expenditures (whether paid in

cash or accrued as liabilities) during the Quarterly Test Period that are or

should be treated as capital expenditures under GAAP, other than expenditures,

in an amount not to exceed $1,200,000.00, incurred on or after September 1, 2002,

relating to expansion of the Company’s refrigerator system capacity and

acquisition of the Entrée/Tiromat line equipment and a mixer for the No. 3

production line.”




SECTION 2.           Conditions.  This Amendment shall be subject to

satisfaction of the following conditions precedent, after giving effect to this

Amendment:  (a) the representations

and warranties contained herein and in all other Loan Documents shall be true

and correct in all material respects as of the date hereof, except for such

representations and warranties limited by their terms to a specific date;

(b) no Default or Event of Default shall be in existence;




 





























 




(c) Borrower shall

have delivered to the Agent an executed original copy of this Amendment and

each other agreement, document or instrument reasonably requested by the Agent

in connection with this Amendment; (d) (i) the holders of the

Subordinated Debt and Borrower shall have amended Section 2D(b) of the

Note Purchase Agreement so that the definition of “Capital Expenditures”

contained therein is the same as the definition contained in Annex I of

the Agreement as amended hereby, all in form and substance satisfactory to

Agent, and (ii) the holders of the Subordinated Debt shall have consented

in writing to this Amendment, in form and substance satisfactory to Agent, and

none of the provisions of this Amendment shall be a default or event of default

under the Note Purchase Agreement or with respect to the Subordinated Debt;

(e) Borrower shall have paid to Agent all fees, costs and expenses owed to

and/or incurred by the Agent and Lenders arising in connection with the Loan

Documents and/or this Amendment; and (f) all proceedings taken in

connection with the transactions contemplated by this Amendment and all

documentation and other legal matters incident thereto shall be satisfactory to

the Agent.




SECTION 3.           Agreement in Full Force and Effect

as Amended.  Except as specifically

amended hereby, the Agreement and other Loan Documents shall remain in full

force and effect and are hereby ratified and confirmed as so amended.  Except as expressly set forth herein, this

Amendment shall not be deemed to be a waiver, amendment or modification of any

provisions of the Agreement or any other Loan Document or any right, power or

remedy of Agent or Lenders, or constitute a waiver of any provision of the

Agreement or any other Loan Document, or any other document, instrument and/or

agreement executed or delivered in connection therewith or of any Default or

Event of Default under any of the foregoing, in each case whether arising

before or after the date hereof or as a result of performance hereunder or

thereunder.  This Amendment also shall

not preclude the future exercise of any right, remedy, power, or privilege

available to Agent and/or Lenders whether under the Agreement, the other Loan

Documents, at law or otherwise.  All

references to the Agreement shall be deemed to mean the Agreement as modified

hereby.  This Amendment shall not

constitute a novation or satisfaction and accord of the Agreement and/or other

Loan Documents, but shall constitute an amendment thereof.  The parties hereto agree to be bound by the

terms and conditions of the Agreement and Loan Documents as amended by this

Amendment, as though such terms and conditions were set forth herein.  Each reference in the Agreement to “this

Agreement,” “hereunder,” “hereof,” “herein” or words of similar import shall

mean and be a reference to the Agreement as amended by this Amendment, and each

reference herein or in any other Loan Documents to the “Loan Agreement” or

“Credit Agreement” shall mean and be a reference to the Agreement as amended

and modified by this Amendment.




SECTION 4.           Representations.  Borrower hereby represents and warrants to

Agent and Lenders as follows:  (i) it is

duly incorporated or organized, validly existing and in good standing under the

laws of its jurisdiction of organization; (ii) the execution, delivery and

performance by it of this Amendment and all other Loan Documents executed

and/or delivered in connection herewith are within its powers, have been duly

authorized, and do not contravene (A) its articles of organization, operating

agreement, or other organizational documents, or (B) any applicable law; (iii)

no consent, license, permit, approval or authorization of, or registration,

filing or declaration with any Governmental Authority or other Person, is

required in connection with the execution, delivery, performance, validity or

enforceability of this Amendment or any other Loan Documents executed and/or delivered

in connection herewith by or against it; (iv) this 




 




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Amendment and all other

Loan Documents executed and/or delivered in connection herewith has been duly

executed and delivered by it; (v) this Amendment and all other Loan Documents

executed and/or delivered in connection herewith constitute its legal, valid

and binding obligation enforceable against it in accordance with its terms,

except as enforceability may be limited by applicable bankruptcy, insolvency,

reorganization, moratorium or similar laws affecting the enforcement of

creditors’ rights generally or by general principles of equity; (vi) after

giving effect to this Amendment, it is not in default under the Loan Documents

and no Default or Event of Default exists, has occurred and is continuing or

would result by the execution, delivery or performance of this Amendment; and

(vii) the representations and warranties contained in the Loan Documents are

true and correct in all material respects as of the date hereof as if made on

the date hereof, except for such representations and warranties limited by

their terms to a specific date.




SECTION 5.           Miscellaneous.




(a)   This Amendment may be executed in any number

of counterparts (including by facsimile), and by the different parties hereto

on the same or separate counterparts, each of which shall be deemed to be an

original instrument but all of which together shall constitute one and the same

agreement.  Each party agrees that it

will be bound by its own facsimile signature and that it accepts the facsimile

signature of each other party.  The

descriptive headings of the various sections of this Amendment are inserted for

convenience of reference only and shall not be deemed to affect the meaning or construction

of any of the provisions hereof or thereof. 

Whenever the context and construction so require, all words herein in

the singular number herein shall be deemed to have been used in the plural, and

vice versa, and the masculine gender shall include the feminine and neuter and

the neuter shall include the masculine and feminine.




(b)   This Amendment may not be changed, amended,

restated, waived, supplemented, discharged, canceled, terminated or otherwise

modified orally or by any course of dealing or in any manner other than as

provided in the Agreement.  This

Amendment shall be considered part of the Agreement and shall be a Loan

Document for all purposes under the Agreement and other Loan Documents.




(c)   This Amendment, the Agreement and the Loan

Documents constitute the final, entire agreement and understanding between the

parties with respect to the subject matter hereof and thereof and may not be

contradicted by evidence of prior, contemporaneous or subsequent oral

agreements between the parties, and shall be binding upon and inure to the

benefit of the successors and assigns of the parties hereto and thereto.  There are no unwritten oral agreements

between the parties with respect to the subject matter hereof and thereof.




(d)   THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS

OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND

INTERPRETED IN ACCORDANCE WITH THE CHOICE OF LAW PROVISIONS SET FORTH IN THE

AGREEMENT AND SHALL BE SUBJECT TO THE WAIVER OF JURY TRIAL AND NOTICE PROVISIONS

OF THE AGREEMENT.




(e)   Borrower may not assign, delegate or transfer

this Amendment or any of its rights or obligations hereunder.  No rights are intended to be created under

this Amendment for 




 




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the benefit of any third

party donee, creditor or incidental beneficiary of Borrower or any

Guarantor.  Nothing contained in this

Amendment shall be construed as a delegation to Agent or Lenders of Borrower’s

or any Guarantor’s duty of performance, including, without limitation, any

duties under any account or contract in which Agent has or Lenders have a

security interest or Lien.  This

Amendment shall be binding upon the Borrower and its respective successors and

assigns.




(f)    The Borrower shall pay all costs and expenses

incurred by Agent and Lenders or any of their affiliates, including, without

limitation, documentation and diligence fees and expenses, all search, audit,

appraisal, recording, professional and filing fees and expenses and all other

out-of-pocket charges and expenses (including, without limitation, UCC and

judgment and tax lien searches and UCC filings and fees for post-Closing UCC

and judgment and tax lien searches) and reasonable attorneys’ fees and

expenses, in connection with entering into, negotiating, preparing, reviewing

and executing this Amendment and the documents, agreements and instruments

contemplated hereby and all related agreements, documents and instruments, and

all of the same shall be part of the Obligations.  If Agent, any Lender or any of their affiliates uses in-house

counsel for any of the purposes set forth above the Borrower expressly agrees

that its Obligations include reasonable charges for such work commensurate with

the fees that would otherwise be charged by outside legal counsel selected by

such Person in its sole discretion for the work performed.




(g)   Borrower hereby (i) agrees that this

Amendment shall not limit or diminish the obligations of Borrower under the

Loan Documents, (ii) reaffirms its obligations under each of the Loan Documents

to which it is a party, and (iii) agrees that each of such Loan Documents

remains in full force and effect and is hereby ratified and confirmed.




(h)   All representations and warranties made in

this Amendment shall survive the execution and delivery of this Amendment and

no investigation by Agent or Lenders shall affect such representations or

warranties or the right of Agent or Lenders to rely upon them.




[SIGNATURES

APPEAR ON FOLLOWING PAGE]




 




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IN WITNESS WHEREOF, the parties have caused this

Second Amendment to Revolving Credit and Term Loan Agreement to be executed by

their respective officers thereunto duly authorized, as of the date first above

written.




 




LENDER/AGENT:




 




CAPITALSOURCE

FINANCE LLC




 




By:  /s/Joe Turitz




Name:     Joe Turitz




Title:       Senior Counsel




 




BORROWER:




 




GARDENBURGER,

INC.




 




By:  /s/Lorraine Crawford




Name:     Lorraine Crawford




Title:       Vice President,

Finance and Corporate Controller




 




 




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