EXHIBIT 10.3


 


EMPLOYMENT AGREEMENT


 


THIS
AGREEMENT is entered into as of February 26, 2004 by and between GARDENBURGER,
INC. an Oregon Corporation (the “Company”) and Jim Linford (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, 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 


 


1

















 


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,
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.


 


2

















 


“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.


 


“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 Chief Operating Officer,
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 Chief Executive Officer 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.


 


III.                                 COMPENSATION AND BENEFITS.


 


(a)                                  Base Salary.


 


As
compensation for services under this Agreement, the Company will pay to
Executive an annual salary of $202,800 (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


 


3

















 


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 four 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 Chief Operating Officer 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
(i) 0.25 percent of the portion of the “Total Consideration” equal to or
less than $100 million, plus (ii) 0.50 percent of the portion of the
Total Consideration in excess of $100 million.


 


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.


 


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.


 


 


4

















 


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 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.


 


5

















 


(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.


 


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.


 


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


 


6

















 


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/
  Jim Linford

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  /s/
  Scott Wallace

  	
   

  
	
  Jim
  Linford

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Scott
  Wallace

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  President
  & Chief Executive Officer

  



 


7

















 


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 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.


 


8

















 


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, 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 Releases, 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


 


9

















 


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.


 


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 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.


 


10

















 


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.


 


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.


 


 


11

















 


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.


 


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.


 


12

















 


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.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jim
  Linford

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Scott
  Wallace

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  President
  & Chief Executive Officer

  	
   

  	
   

  	
   

  	
   

  



 


13