**EXHIBIT 10.17**

 

**SIXTHAMENDMENT TO**

**NOTEPURCHASE AGREEMENT**

 

THIS SIXTH AMENDMENT (this “Amendment”), datedas of August 13, 2004, to the Note Purchase Agreement, dated as of March 27,1998, by and among DRESDNER KLEINWORT BENSON PRIVATE EQUITY PARTNERS LP, aDelaware limited partnership (the “Purchaser”), and GARDENBURGER, INC.,an Oregon corporation (the “Company”).

 

WHEREAS, the parties hereto have entered into the NotePurchase Agreement, dated as of March 27, 1998 (as amended, modified orrestated from time to time, the “Agreement”), a First Amendment to NotePurchase Agreement dated as of December 23, 1999 (the “First Amendment”),a Second Amendment to Note Purchase Agreement dated as of January 10, 2002(the “Second Amendment”), a Third Amendment to Note Purchase Agreementdated as of September 20, 2002 (the “Third Amendment”), and aFourth Amendment to Note Purchase Agreement dated as of December 31, 2002(the “Fourth Amendment”), and a Fifth Amendment to Note PurchaseAgreement dated as of December 29, 2003 (the “FifthAmendment”);unless otherwise defined herein, all capitalized terms used herein (includingthe recitals) shall have the meanings assigned to such terms in the Agreement,as amended by the First, Second, Third, Fourth and Fifth Amendments and hereby;

 

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

 

WHEREAS, the Company and CapitalSourceare contemporaneously entering into a Sixth Amendment to Revolving Credit andTerm Loan Agreement dated as of August    , 2004, insubstantially the form attached hereto as Exhibit A (the “CapitalSource Sixth Amendment”); and

 

WHEREAS, the Company has requested the Purchaser toamend the Agreement on the terms and conditions set forth in this Amendment;

 

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

 

1.     Amendments.  Effective as of August    ,2004, subject to the conditions herein, the Agreement is amended as follows:

 

(a)   The financial covenant contained insubparagraph 2D(b)(iii) of the Agreement as amended bythe Second, Fourth and Fifth Amendments is hereby amended and restated in itsentirety to read as follows:

 

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“(iii)                         SENIORFIXED CHARGE COVERAGE RATIO

 

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

 
| **Quarterly  Test Period** | ** ** | **Amount**      | ** ** |
|----------------------------|------------|-----------------|------------|
| September 30, 2004         |       | 1.215:1.00      |       |
| December 31, 2004          |       | 1.13:1.00       |       |
| March 31, 2005             |       | 1.33:1.00       |       |
| June 30, 2005              |       | 1.41:1.00” |       |

 

(b)   The financial covenant contained insubparagraph 2D(b)(v) of the Agreement as amended by the Second, Fourth andFifth Amendments is hereby amended and restated in its entirety to read asfollows:

 

“(v)                           CAPITALEXPENDITURES

 

The Company shall notpermit its Capital Expenditures in the aggregate to exceed (i) $1,600,000for the fiscal year ending on September 30, 2004,  and (ii) $1,200,000 for eachfiscal year ending on or after September 30, 2005.”

 

2.     Conditions.  This Amendment shall be subject tosatisfaction of the following conditions precedent, after giving effect to thisAmendment, including the waivers contained in Section 3 below:  (a) the Company shall have delivered to thePurchaser an executed original copy of this Amendment and each other agreement,document or instrument reasonably requested by the Purchaser in connection withthis Amendment; and (b) CapitalSource and the Companyshall have executed the CapitalSource SixthAmendment.

 

3.     Waivers.  The Purchaser hereby acknowledges that, as ofJune 30, 2004, the Company has been in breach of one or more financialcovenants contained in subparagraph 2(D)(b) of the Agreement, and herebywaives all such breaches and noncompliance by the Company withsubparagraph 2(D)(b) occurring prior to the date of this Amendment.  This waiver does not apply to any breach orEvent of Default under the Agreement or the Convertible Notes to the extent itcomes into or continues in existence on or after the date of this Amendment.

 

4.     Ratification of Agreement.

 

(a)   To induce the Purchaser to enter into thisAmendment, the Company represents and warrants that, after giving effect to thisAmendment, no violation of the terms of the Agreement exist and allrepresentations and warranties contained in the Agreement are true, correct,and complete in all material respects on and as of the date hereof except as (i) reflected in any schedule to the Senior CreditAgreement, (ii) disclosed in the Company’s reports filed with the Securitiesand Exchange Commission, or (iii) disclosed to Purchaser’s representative onthe Board during a meeting of the Board, and except to the extent suchrepresentations and warranties specifically relate to an earlier date in whichcase they were true, correct, and complete in all material respects on and asof such earlier date.

 

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(b)   Except as expressly set forth in thisAmendment, the terms, provisions and conditions of the Agreement and theInvestment Documents are unchanged, and said agreements, as amended, shallremain in full force and effect and are hereby confirmed and ratified.

 

5.     Consent to CapitalSourceSixth Amendment.  The Purchaserconsents to the execution and delivery by the Company of the CapitalSource Sixth Amendment and affirms that theprovisions of the CapitalSource Sixth Amendment donot constitute a breach or Event of Default under the Agreement or theConvertible Notes.

 

6.     Binding on Successors and Assigns.  All the terms and provisions of thisAmendment shall be binding upon and inure to the benefit of the parties hereto,their respective successors, assigns and legal representatives.  Whenever in this Amendment any of the partieshereto is referred to, such reference shall be deemed to include the successorsand assigns of such party.

 

7.     Further Assurances.  Each of the Company and the Purchaser, as thecase may be, shall duly execute and deliver, or cause to be executed anddelivered, such further instruments and perform or cause to be performed suchfurther acts as may be necessary or proper in the reasonable opinion of thePurchaser to carry out the provisions and purposes of this Amendment.

 

8.     Effect of Amendment.  To the extent any terms and conditions in theAgreement shall contradict or be in conflict with any provisions of thisAmendment, the provisions of this Amendment shall govern.

 

9.     Expenses.  All expenses of the Purchaser incurred inconnection with this Amendment, including reasonable expenses of the Purchaser’scounsel, will be paid by the Company.

 

10.   Governing Law.  This Amendment shall be governed by, andshall be construed in accordance with, the laws of the state of New York,without giving effect to any choice of law or conflict of law rules orprovisions (whether of the state of New York or any other jurisdiction) thatwould cause the application of the laws of any jurisdiction other than thestate of New York.

 

11.   Counterparts.  This Amendment may be executed in separatecounterparts, each of which shall be an original and all of which takentogether shall constitute one and the same agreement.

 

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INWITNESS WHEREOF, the parties hereto have duly executed this Amendment as of thedate first written above.

 

 
| ** ** | **DRESDNER KLEINWORT BENSON PRIVATE  EQUITY PARTNERS LP** |
|------------|-----------------------------------------------------------|
|       |                                                      |
|       | By:                                                       | Dresdner Kleinwort Capital LLC |
|       | Its:                                                      | General Partner |
|       |                                                      |   |
|       |                                                      | By: | Private Equity Employees LLC |
|       |                                                      | Its: | Managing Member |
|       |                                                      |   |   |
|       |                                                      |   | By: | /s/ Alex Coleman |   |
|       |                                                      |   |   |
|       |                                                      |   | Its: | Managing Member |   |
|       |                                                      |   |
|       |                                                      |   |
| ** ** | **GARDENBURGER, INC.**                                    |
|       |                                                      |   |
|       |                                                      |   |
|       | By:                                                       | /s/Scott C. Wallace |   |
|       |                                                      | Scott C. Wallace |
|       | Its:                                                      | President and Chief Executive Officer |

 

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