Document:

EXHIBIT 10.1

 

EXECUTION
COPY

 

AMENDMENT
NO. 1 TO CREDIT AGREEMENT

 

AMENDMENT NO. 1 (the “Amendment”) dated as of October 17,
2005 to the Credit Agreement dated as of November 12, 1999 and amended and
restated as of November 23, 2004 (as amended, the “Credit Agreement”), among GEORGIA GULF
CORPORATION (the “Company”), the
ELIGIBLE SUBSIDIARIES party thereto, the LENDERS party thereto (the “Lenders”) and JPMORGAN CHASE BANK, N.A., as
Administrative Agent (the “Administrative
Agent”).

 

W
I T N E S S E T H :

 

WHEREAS, the Company and the
Lenders wish to increase the revolving commitments, add additional lenders,
permit additional commitment increases in the future, clarify the covenant
limiting the amendment of material documents and amend the capital expenditures
covenant and permit the transfer of all or substantially all of the assets and
the subsequent dissolution of GG Terminal Management Corporation (“GGTMC”), in each case as more fully set forth below;

 

NOW, THEREFORE, the parties
hereto agree as follows:

 

Section 1.  Definitions; References.  Unless otherwise specifically
defined in the recitals above, each term used herein which is defined in the
Credit Agreement shall have the meaning assigned to such term in the Credit
Agreement, as amended hereby.

 

Section 2.  Amendment of Section 1.01,
Schedule 2.01 and Section 2.01; Additional Lenders.

 

(a)           The definition of “Lenders” in Section 1.01
of the Credit Agreement is amended to read in its entirety as follows:

 

“Lenders”
means the Persons listed on Schedule 2.01 and any other Person that shall
have become a party hereto pursuant to Section 2.01 or an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto
pursuant to an Assignment and Acceptance.

 

(b)           The definition of “Revolving Commitment” in Section 1.01 of the Credit Agreement
is amended to read in its entirety as follows:

 

“Revolving Commitment” means, with
respect to each Lender, the commitment, if any, of such Lender to make Loans
and to acquire participations

 

 

in
Letters of Credit hereunder, expressed as an amount representing the maximum
aggregate amount of such Lender’s Revolving Exposure hereunder, as such
commitment may be (a) increased from time to time pursuant to Section 2.01,
(b) reduced from time to time pursuant to Section 2.07 and (b) reduced
or increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 10.04.  The
initial amount of each Lender’s Revolving Commitment is set forth on Schedule 2.01
under the heading “Revolving Commitment” or in the instrument of assumption or
the Assignment and Acceptance pursuant to which such Lender shall have assumed
its Revolving Commitment, as applicable. 
The aggregate amount of the Lenders’ Revolving Commitments as of October 17,
2005 is $240,000,000.

 

(c)           The Northern Trust Company hereby becomes a
party to the Credit Agreement and a “Lender” for all purposes thereof and
hereof, entitled to all rights and subject to all duties thereunder and
hereunder.  Each Lender’s Revolving
Commitment as of the date hereof is the amount set forth opposite its name on Schedule 2.01,
which is amended to read in its entirety as set forth on Schedule 2.01
hereto.  Each Lender’s participation in
any Letter of Credit outstanding prior to the Amendment Effective Date and the
related LC Exposure is automatically adjusted on and as of the Amendment
Effective Date to reflect such Lender’s new Applicable Percentage.  On the Amendment Effective Date, the
principal amount of each Lender’s outstanding Loans shall be adjusted, and such
Lender shall make or receive payments to or from the other Lenders, and such
other adjustments shall be made, as may be required to reflect such Lender’s
new Applicable Percentage.

 

(d)           Section 2.01 of the Credit Agreement is
amended by adding the following paragraph at the end thereof:

 

At any time and from time to
time during the Revolving Availability Period, if no Default shall have
occurred and be continuing at such time, the Company may, if it so elects,
increase the aggregate amount of the Revolving Commitments, either by
designating one or more Persons not theretofore Lenders and acceptable to the
Administrative Agent to become Lenders or by agreeing with one or more existing
Lenders that such Lenders’ Revolving Commitments shall be increased.  Upon execution and delivery by the Company,
the Borrowers and such Lenders of one or more instruments of assumption in form
and amount satisfactory to the Administrative Agent, each such existing Lender
shall have a Revolving Commitment as therein set forth or each such other
Person shall become a Lender with a Revolving Commitment as therein set forth
and all the rights and obligations of a Lender with such a Revolving Commitment
hereunder; provided that (i) the Company shall
provide prompt notice of such increase to the Administrative Agent, which shall
promptly notify the other Lenders, (ii) the aggregate amount of each such
increase which is effective on any day shall be at least $10,000,000 and (iii) the
aggregate amount of the Revolving Commitments

 

2

 

shall
at no time exceed $250,000,000.  Upon any
increase in the aggregate amount of the Revolving Commitments pursuant to this
Section, (i) each Lender’s participation in any Letter of Credit shall
automatically be adjusted to reflect such Lender’s new Applicable Percentage,
and (ii) within five Business Days in the case of each ABR Borrowing
outstanding, and within five Business Days if requested by the Required Lenders
(acting through the Administrative Agent) and otherwise at the end of the then
current Interest Period with respect thereto in the case of each Eurodollar
Borrowing then outstanding, the Borrowers shall prepay such Borrowing in its
entirety, and, to the extent a Borrower elects to do so and subject to the
conditions specified in Section 4.02, such Borrower shall reborrow Loans
from the Lenders in proportion to their respective Revolving Commitments after
giving effect to such increase, until such time as all outstanding Loans are
held by the Lenders in such proportion.

 

Section 3.  Amendment Of Section 6.10.  The last sentence of Section 6.10
is amended to insert the following proviso before the period at the end
thereof:

 

; provided, however, that
nothing herein shall be deemed to prohibit, or require the prior written
consent of the Required Lenders to, amendments or modifications to the
documents relating to the Permitted Receivables Transaction, so long as such
amendments or modifications do not (a) reduce the extent to which the
subordinated notes issued pursuant to such documents are subordinated to other
Indebtedness or (b) otherwise directly or indirectly cause or result in
any violation of any other provision of this Agreement

 

Section 4.  Amendment of Section 6.14.  Section 6.14 is amended to
read in its entirety as follows:

 

SECTION 6.14.  Capital Expenditures.  For any fiscal year of the Company, Capital
Expenditures shall not exceed the sum of:

 

(i)            $40,000,000, plus

 

(ii)           for each fiscal year beginning on or after January 1,
2006, 50% of Excess Cash Flow for the prior fiscal year, plus

 

(iii)          an amount equal to the excess (if any) of (A) the
sum of $225,000,000 and the aggregate amount of Capital Expenditures permitted
by clauses (i) – (ii) above for all fiscal years of the Company
beginning on or after January 1, 2005 and ending prior to such fiscal year
over (B) the aggregate amount of Capital Expenditures made in all fiscal
years of the Company beginning on or after January 1, 2005 and ending
prior to such fiscal year.

 

3

 

For purposes of this Section 6.14,
“Capital Expenditures” shall not include
expenditures otherwise permitted under this Agreement to purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any
other Person constituting a business unit.

 

Section 5.  Consent to Liquidate and
Dissolve GGTMC.  The Company
wishes to transfer all or substantially all of the assets of GGTMC to the
Company or another Subsidiary Loan Party and, thereafter, to dissolve GGTMC’s
corporate existence, as permitted by Section 6.03 of the Credit
Agreement.  The Lenders confirm and agree
that (a) GGTMC may, in anticipation of its dissolution, transfer all or
substantially all of its assets to the Company or another Subsidiary Loan
Party, (b) upon such transfer, GGTMC shall be deemed to be released in
toto from its obligations as a Lien Grantor and Subsidiary Guarantor under the
Collateral Agreement, and (c) the Company may thereafter dissolve GGTMC’s
corporate existence.  The Company agrees
that it (i) shall cause the dissolution of GGTMC within 180 days of the
date on which GGTMC transfers all or substantially all of its assets to the
Company or another Subsidiary Loan Party and (ii) shall not permit GGTMC,
following its release from the Collateral Agreement, to purchase or acquire any
assets except in a de minimis amount to the extent necessary to facilitate the
dissolution of GGTMC’s corporate existence.

 

Section 6.  Representations of
Company.  The Company
represents and warrants that (i) the representations and warranties of
each Loan Party set forth in the Loan Documents shall be true on and as of the
Amendment Effective Date (as hereinafter defined) to the same extent as they
would be required to be under Section 4.02 on the occasion of any Loan or
issuance of any Letter of Credit and (ii) no Default will have occurred
and be continuing on such date.

 

Section 7.  Governing Law.  THIS
AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

Section 8.  Counterparts;
Effectiveness.  This Amendment
may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument.  This Amendment
shall become effective as of the date first above written (the “Amendment Effective Date”) when the
Administrative Agent shall have received:

 

(i)            from the Company for the account of each new
Lender and each existing Lender which has increased its Revolving Commitment,
an amendment fee equal to .125% to .20% of such Lender’s new or additional
Revolving Commitment, as the case may be, depending on the amount thereof,

 

4

 

(ii)           each of the Company and the Required Lenders
a counterpart hereof signed by such party or facsimile or other written
confirmation (in form satisfactory to the Administrative Agent) that such party has signed a
counterpart hereof,

 

(iii)          a favorable written opinion (addressed to the
Administrative Agent and the Lenders and dated the Amendment Effective Date) of
Jones Day, counsel for the Loan Parties, substantially in the form of Exhibit B
to the Credit Agreement, with such changes and modifications as are acceptable
to the Administrative Agent and its counsel. 
The Company hereby requests Jones Day to deliver such opinion, and

 

(iv)          such documents and certificates as the
Administrative Agent or its counsel may reasonably request relating to the
organization, existence and good standing of each Loan Party, and any other
legal matters relating to the Loan Parties or the Loan Documents, all in form
and substance satisfactory to the Administrative Agent and its counsel.

 

5

 

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

 

 

	
   

  	
  GEORGIA GULF CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOEL I. BEERMAN

  	
   

  
	
   

  	
  Name: Joel I.
  Beerman

  
	
   

  	
  Title: Vice
  President, General Counsel and

  Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GEORGIA GULF CHEMICALS &

  VINYLS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOEL I. BEERMAN

  	
   

  
	
   

  	
  Name: Joel I.
  Beerman

  
	
   

  	
  Title: Vice
  President, General Counsel and

  Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GEORGIA GULF LAKE CHARLES,
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOEL I. BEERMAN

  	
   

  
	
   

  	
  Name: Joel I.
  Beerman

  
	
   

  	
  Title: Vice
  President, General Counsel and

  Secretary

  

 

6

 

	
  LENDERS

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Peter A. Dedousis

  
	
   

  	
   

  	
  Name:

  	
  Peter A.
  Dedousis

  
	
   

  	
   

  	
  Title: 

  	
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Colleen M. Briscoe

  
	
   

  	
   

  	
  Name:

  	
  Colleen M.
  Briscoe

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK OF TOKYO-MITSUBISHI

  TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Christopher J. DeLauro

  
	
   

  	
   

  	
  Name:

  	
  Christopher J.
  DeLauro

  
	
   

  	
   

  	
  Title:

  	
  Assistant Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LASALLE BANK NATIONAL

  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ W. P. Fischer

  
	
   

  	
   

  	
  Name:

  	
  W. P. Fischer

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MIZUHO CORPORATE BANK,
  LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Raymond Ventura

  
	
   

  	
   

  	
  Name:

  	
  Raymond Ventura

  
	
   

  	
   

  	
  Title:

  	
  Deputy General Manager

  

 

7

 

	
   

  	
  SUNTRUST BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Kelly Gunter

  
	
   

  	
   

  	
  Name:

  	
  Kelly Gunter

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WACHOVIA BANK, NATIONAL

  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Patrick D. Finn

  
	
   

  	
   

  	
  Name:

  	
  Patrick D. Finn

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
  PNC BANK, NATIONAL

  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Dorothy G. W. Brailer

  
	
   

  	
   

  	
  Name:

  	
  Dorothy G. W.
  Brailer

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  RBC CENTURA BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ William B. Nixon

  
	
   

  	
   

  	
  Name:

  	
  William B. Nixon

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
  UFJ BANK LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Stephen C. Small

  
	
   

  	
   

  	
  Name:

  	
  Stephen C. Small

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  

 

8

 

	
   

  	
  THE NORTHERN TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ John C. Canty

  
	
   

  	
   

  	
  Name:

  	
  John C. Canty

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

9

 

Schedule 2.01

Commitment Schedule

 

	
   

  	
   

  	
  Revolving

  Commitments

  	
   

  
	
  JPMorgan Chase Bank, N.A.

  	
   

  	
  $

  	
  30,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  30,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Mizuho Corporate Bank, Ltd.

  	
   

  	
  $

  	
  27,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SunTrust Bank

  	
   

  	
  $

  	
  27,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Wachovia Bank, National Association

  	
   

  	
  $

  	
  27,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  LaSalle Bank, N.A.

  	
   

  	
  $

  	
  22,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Bank of Tokyo-Mitsubishi Trust Company

  	
   

  	
  $

  	
  17,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  PNC Bank, National Association

  	
   

  	
  $

  	
  15,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  RBC Centura Bank

  	
   

  	
  $

  	
  15,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  UFJ Bank Limited

  	
   

  	
  $

  	
  15,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The Northern Trust Company

  	
   

  	
  $

  	
  15,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  240,000,000.00Exhibit 10.1

 

RATIFICATION
AND AMENDMENT AGREEMENT

 

THIS
RATIFICATION AND AMENDMENT AGREEMENT dated as of October 17, 2005 (the “Amendment”),
is entered into by and between CAPITALSOURCE FINANCE LLC, a Delaware limited
liability company, in its capacity as “Agent” and “Lender” under the Loan
Agreement referenced below (in such capacities, collectively, the “Lender”),
and GARDENBURGER, INC., an Oregon corporation (“Borrower”).  Capitalized terms used and not otherwise
defined herein are used as defined in the Loan Agreement (as defined below).

 

A.            Lender and Borrower have entered into that
certain Revolving Credit and Term Loan Agreement dated as of January 10,
2002, as amended by a First Amendment to Revolving Credit and Term Loan
Agreement dated as of September 30, 2002, a Second Amendment to Revolving
Credit and Term Loan Agreement dated as of December 31, 2002, a Third
Amendment to Revolving Credit and Term Loan Agreement dated as of March 31,
2003, a Fourth Amendment to Revolving Credit and Term Loan Agreement dated as
of December 29, 2003, a Fifth Amendment to Revolving Credit and Term Loan
Agreement dated as of April 8, 2004, a Sixth Amendment to Revolving Credit
and Term Loan Agreement dated as of August 13, 2004, a Seventh Amendment
to Revolving Credit and Term Loan Agreement dated as of November 29, 2004,
an Eighth Amendment to Revolving Credit and Term Loan Agreement dated as of February 18,
2005 and a Ninth Amendment to Revolving Credit and Term Loan Agreement dated as
of August 9, 2005 (as amended, supplemented, modified and/or restated from
time to time, the “Loan Agreement”);

 

B.            On October 14, 2005, Borrower, as debtor
and debtor-in-possession, filed a voluntary petition in a case (Case No. 05-19539-JB)
(the “Chapter 11 Case”) for relief under Chapter 11 of the United States
Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy
Court for the Central District of California (the “Bankruptcy Court”);
and

 

C.            Borrower has moved for an Interim Order and a
Final Order to be entered by the Bankruptcy Court permitting secured
post-petition, debtor-in-possession financing of Borrower pursuant to the Loan
Agreement, as amended hereby.

 

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.           Acknowledgements.

 

(a)           Borrower hereby acknowledges and agrees that
based on the Specified Events of Default, it is unconditionally liable to
Lender under the terms of the Loan Agreement and the other Loan Documents for
the full and immediate payment of all of the Obligations including, without
limitation, those Obligations set forth on Schedule A attached
hereto and incorporated herein by reference, plus all interest (including,
without limitation, interest accruing at the Default Rate under and in
accordance with the terms and provisions of the Loan Documents), charges, fees,
costs, and expenses that may arise under the Loan Agreement and other Loan Documents
plus all reasonable attorneys’ fees, disbursements and costs of collection
incurred in connection with such Obligations by Lender and that Borrower has no
defenses, counterclaims or set-offs with respect to the full and immediate
payment and performance of any or all Obligations under the Loan Agreement and
the other Loan Documents.

 

 

(b)           Borrower acknowledges and agrees that (i) the
Specified Events of Default under the Loan Agreement constitute material
defaults under the Loan Agreement and the other Loan Documents, (ii) any
grace periods or cure periods which must expire prior to the Lender exercising
any of its rights and remedies in connection with the Loan Agreement and the
other Loan Documents, have been given, complied with and expired and, in any
event, are hereby waived and relinquished by Borrower, and (iii) as a
consequence, the Lender is now entitled to immediately exercise all of its
rights and remedies under the Loan Agreement, the other Loan Documents, at law
or in equity, including, without limitation, its rights to declare all
Obligations to be immediately due, payable and performable, without notice, except
to the extent that the Lender has agreed to forbear from exercising those
rights and remedies in this Amendment or to the extent Lender is precluded from
doing so under the Bankruptcy Code.

 

(c)           Borrower further acknowledges and agrees that
as a result of the Specified Events of Default, the Lender has no commitments,
obligations or agreements to make Loans or advances or other financial
accommodations to Borrower, all such commitments, obligations, and agreements
having terminated, except to the extent that the Lender has agreed to
continue to make Loans, advances or other financial accommodations pursuant to
this Amendment.

 

(d)           Borrower acknowledges, confirms and agrees
that the Lender has and has had a valid, enforceable and perfected first
priority security interest and Lien upon all of the Pre-Petition Collateral
granted by the Borrower to the Lender pursuant to the Loan Documents to secure
all of the Obligations, subject only to Liens or security interests permitted
in the Loan Agreement.  In furtherance
and not in limitation of the Interim Financing Order, the Borrower grants or
reaffirms its grant, as the case may be, pledges and assigns to Lender a
continuing security interest and Lien upon, and rights of setoff against the
Post-Petition Collateral to secure all of the Post-Petition Obligations.

 

(e)           Borrower acknowledges and agrees that the
Recitals to this Amendment are true and accurate and are incorporated herein by
reference.

 

SECTION 2.           Limited Forbearance.  All rights and remedies of Lender in
connection with the Specified Events of Default under the Loan Agreement and
the other Loan Documents and applicable law are hereby reserved but, except as
otherwise specifically provided herein and in the Financing Order, Lender
agrees to make Loans, advances and other financial accommodations and to
forbear from exercising its rights and remedies in connection with the
Specified Events of Default under the Loan Agreement and the other Loan
Documents until the earlier to occur of any of the following (each a “Termination
Event”):  (i) the Termination
Date (as defined in the Interim Financing Order) under the Interim Financing
Order; or (ii) the occurrence of a “New Default” (as defined below); or (iii) at
such time as Borrower, Annex Holdings I L.P. (“Annex” or “Subordinated
Lender”), Wells Fargo Bank, National Association acting through its
operating division, Wells Fargo Business Credit (“WFBC”), GB Retail
Funding, LLC (“GB”), any successor of Borrower, Annex, WFBC or GB, or
any owner or shareholder of Borrower, or any Affiliate of any of them,
commences any legal action, suit, or proceeding against Lender or contesting or
challenging the validity or enforceability of this Amendment, the Loan
Agreement, or any of the other Loan Documents or the Obligations or the
validity,

 

2

 

perfection,
or priority of any Lien granted to Lender. 
For purposes of this Amendment, the term “New Default” shall mean
any failure of Borrower in the performance of any of the terms or conditions
of, or any breach of any representation or warranty under, or any other Default
or Event of Default under this Amendment, the Loan Agreement, the other Loan
Documents, any Financing Order or any other agreements, instruments, documents
or side letters entered into in connection herewith or therewith, except that
no Specified Event of Default shall be deemed a “New Default”
hereunder.  Upon a Termination Event, the
Lender’s agreement hereunder to make Loans, advances or other financial
accommodations to Borrower and to forbear from exercising its rights or
remedies under the Loan Documents shall terminate, and the Lender may at any
time thereafter terminate the Loan Agreement, the other Loan Documents and/or
proceed to exercise any and all of its rights and remedies, including without
limitation, its rights and remedies in connection with the Specified Events of
Default and any other Defaults and/or Events of Default under the Interim
Financing Order, any other Financing Order and Loan Documents, all of which are
hereby reserved.

 

SECTION 3.           Amendments.

 

(a)           Amendments to Loan Agreement.  The
Loan Agreement shall be and hereby is amended as follows:

 

(i)            Section 2.1(a) (The Revolving Facility) of the Loan
Agreement shall be and hereby is amended and restated in the entirety as
follows:

 

“(a)         Subject to the provisions of this Agreement,
each Lender agrees to make available its Pro Rata Share of Advances to Borrower
under the Revolving Facility from time to time during the Revolving Facility
Term; provided, that (i) the Pro Rata Share of the Advances of any
Lender shall not at any time exceed its separate Commitment, and (ii) the
aggregate amount of all Advances at any time outstanding under the Revolving
Facility shall not exceed the lesser  of (A) the Facility Cap
and (B) (1) the value, in Dollars, of (i) eighty-five percent
(85%) of the Borrowing Base for Eligible Receivables, and (ii) sixty
percent (60%) of the Borrowing Base for Eligible Inventory Costs, minus,
(a) the Ratification And Amendment Agreement Reserve and (b) if
applicable, additional amounts reserved pursuant to this Agreement plus (2) the
Ninth Amendment Amortizing Advance Amount (such amount calculated pursuant to
subsection (B) being referred to herein as the “Availability”).  The aggregate amount of Advances at any time
outstanding under the Revolving Facility shall not be less than
$1,000,000.  The obligations of Lenders
hereunder shall be several and not joint up to the amount of the
Commitments.  The Revolving Facility is a
revolving credit facility, which may be drawn, repaid and redrawn, from time to
time as permitted under this Agreement. 
Any determination as to whether there is availability within the
Borrowing Base for Advances shall be made by Agent in its Permitted Discretion
and is final and binding upon Borrower. 
Unless otherwise permitted by Agent, each Advance shall be in an amount
of at least $50,000.  Advances under the
Revolving Facility automatically shall be made for the payment of interest on
the Revolving Notes and other Obligations on the date when due to the extent
available and as provided for herein.”

 

3

 

(ii)           Section 6.1(h) (Deposit Accounts, Other Accounts and
Investment Property) of the Loan Agreement shall be and hereby is amended and
restated in the entirety as follows:

 

“(h)         Deposit Accounts, Other Accounts and
Investment Property.  Borrower shall (i) promptly, and in any
event within five (5) calendar days after Borrower (A) establishes
any Deposit Account, securities account, money market account or any similar
account, or (B) becomes the owner of any investment property, notify Lender
of such, and thereafter (ii) deliver to Lender, within fifteen (15)
Business Days, documentation to perfect Lender’s Lien thereon, in form and
substance reasonably acceptable to Lender. 
Schedule 6.1(h) lists all of Borrower’s Deposit
Accounts, securities accounts, money market accounts and similar accounts.”

 

(iii)          New Sections 6.1(i) through 6.1(l)
shall be and hereby are added to the Loan Agreement as follows:

 

“6.1(i)     Budget.  The Borrower shall meet and
comply, in all respects, with the expenditure limitations set forth in the
Budget.  In addition to the Budget
attached hereto as Schedule 6.1(i), the Borrower shall furnish to
Lender on Wednesday of each week, or if Wednesday is not a Business Day, then
on the next succeeding Business Day, a thirteen (13) week “roll-forward” Budget
setting forth for the immediately preceding week a comparison of the actual
cash receipts and disbursements to the projected (or budgeted) cash receipts
and disbursements for such weekly periods set forth in the Budget on a
cumulative, weekly roll-forward basis, which shall include expenditure limits
that are satisfactory to Lender in its sole discretion.

 

6.1(j) Refinance Of Borrower.  The Borrower shall use its best efforts to
refinance the Obligations as promptly as possible.

 

6.1(k) Rolling Sales Report.  In addition to the financial reporting
requirements set forth in this Agreement, the Borrower shall deliver to Lender
a weekly report, in form and substance satisfactory to Lender in its sole
discretion, to be provided no later than Wednesday of each week, or if
Wednesday is not a Business Day, then on the next succeeding Business Day,
which sets forth for the immediately preceding week a detailed reconciliation
analysis of weekly sales as compared to projected sales for such period
(together with an explanation of all variances) and actual sales for the same
week during Borrower’s prior fiscal year.

 

6.1(l)       Bankruptcy Court Reports and Related Items.  In
addition to the financial reporting requirements set forth in this Agreement,
until the Obligations have been indefeasibly repaid in full in cash, the
Borrower shall promptly provide Lender with copies of all financial reports,
schedules and other materials and information related to the Collateral at any
time furnished by the Borrower, or on its behalf, to the Bankruptcy Court, the
United States Trustee, the any replacement lender, exit lender or any creditors’
committee or any of the Borrower’s shareholders, concurrently with the delivery
thereof.”

 

4

 

(iv)          Appendix A to the Loan Agreement shall be and hereby is amended to add the
following definitions in proper alphabetical order:

 

(a)           “Bankruptcy Code” shall mean the
United States Bankruptcy Code, being Title 11 of the United States Bankruptcy
Code as enacted in 1978, as the same has heretofore been or may hereafter be
amended, recodified, modified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.

 

(b)           “Bankruptcy Court” shall mean the
United States District Court for the Central District of California or any
other court having jurisdiction over the Chapter 11 Case from time to time.

 

(c)           “Budget” shall mean the budget
prepared by the Borrower and attached hereto as Schedule 6.1(i),
setting forth information for any subsequent period or periods.

 

(d)           “Debtor” shall mean Gardenburger, Inc.,
as debtor and debtor-in-possession, and its successors and assigns (including,
without limitation, any trustee or other fiduciary hereafter appointed as its
legal representative or with respect to the property of the estate of such
corporation whether under Chapter 11 of the Bankruptcy Code or any subsequent
Chapter 7 case and its successor upon conclusion of the Chapter 11 Case of such
corporation).

 

(e)           “Filing Date” shall mean the date of
the commencement of the Chapter 11 Case.

 

(f)            “Financing Order” shall mean,
collectively, the Interim Financing Order and such other orders relating
thereto or authorizing the granting of credit by Lender to the Debtor on an
emergency, interim or permanent basis, pursuant to Section 364 of the
Bankruptcy Code as may be issued or entered by the Bankruptcy Court in the
Chapter 11 Case.

 

(g)           “Interim Financing Order” shall mean
that certain Interim Financing Order (acceptable in form and substance to the
Lender) entered by the Bankruptcy Court authorizing the secured financing under
the Loan Documents.

 

(h)           “Post-Petition Agreements” shall mean
the Loan Documents as in effect immediately following the Filing Date, and
shall include, without limitation, the Ratification and Amendment Agreement.

 

(i)            “Post-Petition Collateral” shall mean,
all now existing or hereafter acquired real and personal property (including,
without limitation, and by way of general description only, inventory, accounts
receivable, machinery, equipment, furniture and fixtures, real property,
general intangibles and the cash and non-cash proceeds thereof) of the Debtor
and the Debtor’s estate, wherever located, of any kind or nature, upon

 

5

 

which the Lender is granted a security
interest or Lien pursuant to the Loan Documents or the Interim Financing Order
or any other order entered or issued by the Bankruptcy Court (and any other
items included within the definition of “Post-Petition Collateral” as set forth
in any Financing Order or any other such orders).

 

(j)            “Post-Petition Obligations” shall mean
all of the Debtor’s liabilities and obligations under the Post-Petition
Agreements, including, without limitation, with respect to the Loans to be made
after the commencement of the Chapter 11 Case, including, without limitation,
the obligations to pay all principal, interest thereon (including, without
limitation, interest accruing thereon at the Default Rate), fees and expenses,
and to provide Lender with adequate protection of its interests in the
Pre-Petition Collateral and other property to be used, sold, leased or
otherwise disposed of by the Debtor after the commencement of the Chapter 11 Case
under the terms of the Financing Order (including, without limitation, coverage
as to the account of any loss, damages, depletion, diminution or depreciation
resulting from the Debtor’s use (or in the case of inventory, sale) of such
property.

 

(k)           “Pre-Petition Collateral” shall mean
all of the Collateral, which includes all of the Debtor’s property, including,
without limitation, and by way of general description only, inventory, accounts
receivable, machinery, equipment, furniture and fixtures, real property,
general intangibles and the cash and non-cash proceeds thereof.

 

(l)            “Pre-Petition Financing Agreements”
shall mean the Loan Documents as in effect immediately prior to the Filing
Date.

 

(m)          “Pre-Petition Obligations” shall mean
the Loans made by the Lender to Borrower under the Pre-Petition Financing
Agreements in the aggregate unpaid principal amount of $8,026,345.15, as of the
Filing Date plus accrued and accruing interest, fees, costs and expenses,
including, without limitation, reasonable attorneys’ fees and expenses earned
or incurred by Lender under the Pre-Petition Financing Agreements, and all
other debts, liabilities and obligations of Borrower thereunder.

 

(n)           “Ratification and Amendment Agreement”
shall mean that certain Ratification and Amendment Agreement dated as of October     ,
2005 among Borrower and Lender, including as amended, supplemented, modified
and/or restated from time to time.

 

(o)           “Ratification and Amendment Agreement
Reserve” shall mean an amount equal to $120,000.

 

(p)           “Specified Events of Default” shall
mean the following Defaults and Events of Default that are occurring and
continuing under the Loan Agreement and Loan Documents: (i) Borrower’s
failure to comply with the

 

6

 

Minimum Adjusted EBITDA covenant set forth on
Annex I to the Loan Agreement for the Quarterly Test Period ending June 30,
2005 in violation of subsection (c) of Article VIII
of the Loan Agreement; (ii) Borrower’s commencement of the Chapter 11 Case
in violation of subsections (g) and (h) of Article VIII
of the Loan Agreement; and (iii) Borrower’s failure to timely deliver the
Rolling Thirteen-Week Cash Flow Forecast required to be delivered pursuant to Section 6.1(j)
of the Loan Agreement on one or more occasions prior to the commencement of the
Chapter 11 Case.

 

(v)           Appendix A to the Loan Agreement shall be and hereby is amended to delete the
definitions of “Collateral”, “Eligible Receivables”, “Loan
Documents” and “Obligations” set forth therein and to replace them
with the following in place thereof:

 

(a)           “Collateral” shall mean, collectively
and each individually, all collateral and/or security granted to Lender, by
Borrower and/or Guarantors pursuant to the Loan Documents, including, without
limitation all Pre-Petition Collateral and all Post-Petition Collateral.

 

(b)           “Eligible Receivables” shall mean each
Account arising in the ordinary course of Borrower’s business from the sale of
goods or rendering of services which Agent, in its Permitted Discretion, deems
an Eligible Receivable unless:

 

(a)           it is not subject to a valid perfected first
priority security interest in favor of Agent, for the benefit of itself and
Lenders, subject to no other Lien of equal or higher priority;

 

(b)           it is not evidenced by an invoice, statement
or other documentary evidence satisfactory to Agent; provided, that
Agent in its sole discretion may from time to time include as Accounts that are
not evidenced by an invoice, statement or other documentary evidence
satisfactory to Agent as Eligible Receivables and determine the advance rate,
liquidity factors and reserves applicable to Advances made on any such
Accounts;

 

(c)           it arises out of services rendered or a sale
made to, or out of any other transaction between with, one or more affiliates
of Borrower;

 

(d)           it remains unpaid for longer than 90 calendar days after the original invoice date;

 

(e)           with respect to all Accounts owed by any
particular Account Debtor and/or its affiliates, if more than 25% of the
aggregate balance of all such Accounts owing from such Account Debtor and/or
its affiliates remain unpaid for longer than 90 calendar days after the original invoice date;

 

(f)            with respect to all Accounts owed by any
particular Account Debtor and/or its affiliates, 25% or more of all such
Accounts are not deemed Eligible Receivables for any reason hereunder (which percentage
may, in Agent’s Permitted Discretion, be increased or decreased);

 

7

 

(g)           with respect to all Accounts owed by any
particular Account Debtor and/or its affiliates, if such Accounts exceed 10%
(such percentage or any other percentage set forth below or hereafter established
for any particular Account Debtor, a “Concentration Limit”) (all of
which Concentration Limits may, in Agent’s Permitted Discretion, be increased
or decreased) of all Accounts at any one time; provided, that only the
portion of Accounts which exceed the Concentration Limit shall be deemed
ineligible for purposes of this subsection (g); and, further
provided, that the Concentration Limit for each of the following Account
Debtors shall be as follows:  Sysco –
25%, Costco – 15%, US Foodservice – 15%, DOT Foods – 20%;

 

(h)           any covenant, agreement, representation or
warranty contained in any Loan Document with respect to such Account has been
breached and remains uncured;

 

(i)            the Account Debtor for such Account has
commenced a voluntary case under any Debtor Relief Law or has made an
assignment for the benefit of creditors, or a decree or order for relief has
been entered by a court having jurisdiction in respect of such Account Debtor
in an involuntary case under any Debtor Relief Law, or any other petition or application
for relief under any Debtor Relief Law has been filed against such Account
Debtor, or such Account Debtor has failed, suspended business, ceased to be
solvent, called a meeting of its creditors, or has consented to or suffered a
receiver, trustee, liquidator or custodian to be appointed for it or for all or
a significant portion of its assets or affairs, or Borrower, in the ordinary
course of business, should have known of any of the foregoing;

 

(j)            it arises from the sale of property or
services rendered to one or more Account Debtors outside the continental United
States or Canada or that have their principal place of business or chief
executive offices outside the continental United States or Canada;

 

(k)           it represents the sale of goods or rendering
of services to an Account Debtor on a bill-and-hold, guaranteed sale, sale-and-return,
sale on approval, consignment or any other repurchase or return basis or is evidenced
by chattel paper or an instrument of any kind or has been reduced to judgment;

 

(l)            the applicable Account Debtor for such
Account is any Governmental Authority, unless rights to payment of such Account
have been assigned to Agent, for the benefit of itself and Lenders, pursuant to
the Assignment of Claims Act of 1940, as amended (31 U.S.C. Section 3727,
et seq. and 41 U.S.C. Section 15, et seq.), or otherwise all with
applicable statutes or regulations respecting the assignment of government
Accounts have been complied with;

 

8

 

(m)          it is subject to any offset, credit
(including any resource or other income credit or offset), deduction, defense,
discount, chargeback, freight claim, allowance, adjustment, dispute or
counterclaim, or is contingent in any respect or for any reason;

 

(n)           there is any agreement with an Account Debtor
for any deduction from such Account, except for discounts or allowances made in
the ordinary course of business for prompt payment, all of which discounts or allowances
are reflected in the calculation of the face value of each invoice related
thereto, such that only the discounted amount of such Account after giving
effect to such discounts and allowances shall be considered an Eligible
Receivable;

 

(o)           any return, rejection or repossession of
goods or services related to it has occurred;

 

(p)           it is not payable solely to Borrower;

 

(q)           Borrower has agreed to accept or has accepted
any non-cash payment for such Account;

 

(r)            with respect to any Account arising from the
sale of goods, the goods have not been shipped to the Account Debtor or its
designee;

 

(s)           it constitutes a re-billing of an amount
previously billed; or

 

(t)            it fails to meet such other specifications
and requirements which may from time to time be established by Agent or is not
otherwise satisfactory to Agent, as determined in Agent’s Permitted Discretion.

 

(c)           “Loan Documents” shall mean,
collectively and each individually, the Agreement, the Notes, the Security
Documents, the Uniform Commercial Code Financing Statements, the Landlord
Waiver and Consents, the Borrowing Certificates, all Pre-Petition Financing
Agreements, all Post-Petition Financing Agreements and all other agreements,
documents, instruments and certificates heretofore or hereafter executed or
delivered to Lender in connection with any of the foregoing or the Loans, as
the same may be amended, modified or supplemented from time to time.

 

(d)           “Obligations” shall mean all shall
mean all present and future obligations, Indebtedness and liabilities of
Borrower to Lender at any time and from time to time of every kind, nature and
description, direct or indirect, secured or unsecured, joint and several,
absolute or contingent, due or to become due, matured or unmatured, now
existing or hereafter arising, contractual or tortious, liquidated or
unliquidated, under any of the Loan Documents or otherwise relating to Notes
and/or Loans, including, without

 

9

 

limitation, all Pre-Petition Obligations, all
Post-Petition Obligations and all applicable fees, charges and expenses and/or
all amounts paid or advanced by Lender on behalf of or for the benefit of
Borrower and/or Guarantor for any reason at any time, including in each case
obligations of performance as well as obligations of payment and interest that
accrue after the commencement of any proceeding under any Debtor Relief Law by
or against any such Person.

 

(vi)          The financial covenants set forth in Annex I
of the Loan Agreement (Leverage Ratio, Minimum EBITDA, Fixed Charge Coverage
Ratio and Capital Expenditures) shall not be tested at any time prior to the
occurrence of a Termination Event under this Amendment, except that the
Borrower’s Total Debt Ratio shall be calculated for purposes of determining any
applicable Total Debt Ratio Fee under Section 3.7 of the Loan
Agreement.  In addition, Borrower shall
comply with the following financial covenants at all times prior to the
indefeasible payment in full in cash of the Obligations:

 

(a)           Minimum Availability Covenant. 
Borrower shall maintain Availability of not less than $1.00 or such
lower amount agreed to by Lender in its sole discretion (as evidenced by Lender’s
written consent) at all times; and

 

(b)           Minimum Rolling Eight Week Sales Covenant.  As
tested on each of the following test dates for the trailing eight (8) week
period ended as of the prior Friday taken as one accounting period (each a “Measurement
Period”), Borrower’s weekly gross sales shall not be less than the
corresponding “Minimum Weekly Gross  Sales” amount set forth in
the right hand column below:

 

	
  Test
  Date

  	
   

  	
  Measurement Period (in each

  case, the trailing eight (8) week

  period ended as of the date set

  forth below)

  	
   

  	
  Minimum Weekly Gross Sales

  	
   

  
	
  October 19, 2005

  	
   

  	
  October 14, 2005

  	
   

  	
  $

  	
  7,833,756

  	
   

  
	
  October 26, 2005

  	
   

  	
  October 21, 2005

  	
   

  	
  $

  	
  7,779,540

  	
   

  
	
  November 2, 2005

  	
   

  	
  October 28, 2005

  	
   

  	
  $

  	
  7,626,439

  	
   

  
	
  November 9, 2005

  	
   

  	
  November 4, 2005

  	
   

  	
  $

  	
  7,119,947

  	
   

  
	
  November 16, 2005

  	
   

  	
  November 11, 2005

  	
   

  	
  $

  	
  6,930,115

  	
   

  
	
  November 23, 2005

  	
   

  	
  November 18, 2005

  	
   

  	
  $

  	
  6,501,852

  	
   

  
	
  November 30, 2005

  	
   

  	
  November 25, 2005

  	
   

  	
  $

  	
  5,734,800

  	
   

  
	
  December 7, 2005

  	
   

  	
  December 2, 2005

  	
   

  	
  $

  	
  5,445,900

  	
   

  
	
  December 14, 2005

  	
   

  	
  December 9, 2005

  	
   

  	
  $

  	
  5,443,200

  	
   

  

 

(vii)         A new Schedule 6.1(h) (Deposit
Accounts, Other Accounts and Investment Property) shall be and hereby is added
to the Loan Agreement in the appropriate order in the form of Schedule B
attached hereto.

 

(viii)        A new Schedule 6.1(h) (Budget)
shall be and hereby is added to the Loan Agreement in the appropriate order in
the form of Schedule C attached hereto.

 

10

 

(ix)           Schedule 6.8 (Post Closing Requirements) of the Loan
Agreement shall be and hereby is deleted in its entirety.

 

(x)            Notwithstanding anything to the contrary set
forth in any provision of the Loan Agreement, from and after the date hereof,
the proceeds of the Loans shall be used by Borrower solely for the Borrower’s working
capital needs in connection with its veggie burger and meat alternative
products business in accordance with and subject in all respects to the
expenditure limitations set forth in the Budget.

 

(b)           Amendment to Security Agreement.  The
Security Agreement shall be and hereby is amended as follows:

 

Section 8.6 (Release of Collateral) of the Security
Agreement shall be and hereby is amended and restated in the entirety as
follows:

 

“8.6         Release of Collateral. 
Promptly following full performance and satisfaction and indefeasible
payment in full in cash of all Obligations and the termination of the Loan
Agreement, and the execution and delivery of a written release by the Debtor of
all claims against Secured Party and the Lender, and so long as no suits,
actions, proceedings, or claims are pending or threatened against any
Indemnified Person asserting any damages, losses or liabilities that are
indemnified liabilities under the Loan Agreement, then the security interests
and Liens created hereby shall terminate and Secured Party shall execute and
deliver such documents, at the Debtor’s expense, as are necessary to release
Secured Party’s security interests and Liens in the Collateral and shall return
the Collateral to Debtor at the address of Debtor set forth herein or at such
other address as Debtor may direct in writing; provided, however,
that the parties agree that, notwithstanding any such termination or release or
the execution, delivery or filing of any such documents or the return of any
Collateral, if and to the extent that any such payment made or received with
respect to the Obligations is subsequently invalidated, determined to be
fraudulent or preferential, set aside, defeased or required to be repaid to a
trustee, debtor in possession, receiver, custodian or any other Person under
any Debtor Relief Law, common law or equitable cause or any other law, then the
Obligations intended to be satisfied by such payment shall be revived and shall
continue as if such payment had not been received by Secured Party or any
Lender.  Neither Secured Party nor any
Lender shall be deemed to have made any representation or warranty with respect
to any Collateral so delivered, except that such Collateral is free and clear,
on the date of such delivery, of any and all liens, charges and encumbrances
arising from Secured Party’s own acts.”

 

SECTION 4.           Certain Fees; Default
Rate.

 

(a)           Ratification and Amendment Fee. 
Borrower acknowledges and agrees that, as partial consideration for the
Lender’s agreements and commitments under this Amendment, within three (3) days
of the Bankruptcy Court’s approval of the Interim Financing Order, the Borrower
shall pay to Lender $35,000 in cash as a fully earned, non-refundable facility
fee (the “Ratification and Amendment Fee”).

 

(b)           First Total Debt Ratio Fee Installment.  Each
of Borrower and Lender acknowledges and agrees that notwithstanding anything to
the contrary contained in Section 3.7 (Total Debt Ratio Fee) of the
Loan Agreement, the Total Debt Ratio Fee Installment that would

 

11

 

otherwise be payable with
respect to the Borrower’s Quarterly Test Period ending on September 30,
2005 on the earlier to occur of (a) the date five (5) calendar days
after the date of delivery to Lender of Borrower’s quarterly financial
statements for the Quarterly Test Period ending September 30, 2005, and (b) the
date fifty (50) calendar days after the end of the Quarterly Test Period ending
September 30, 2005 (the “First Total Debt Ratio Fee Installment”),
shall now be paid on the earlier of a Termination Event and the date upon which
the Obligations are otherwise due and/or repaid in full in cash.  All subsequent installments of the Total Debt
Ratio Fee (collectively, the “Subsequent Total Debt Ratio Fee Installments”)
shall be paid on the dates specified in Section 3.7 of the Loan
Agreement.  Notwithstanding the
foregoing, each of Borrower and Lender acknowledge and agree that the First
Total Debt Ratio Fee Installment and all Subsequent Total Debt Ratio Fee
Installments shall be waived in its and their entirety and shall not be payable
by Borrower if the Obligations have been indefeasibly repaid in full in cash on
or before December 15, 2005.

 

(c)           Default Rate. 
Notwithstanding anything to the contrary contained in any provision of
any Loan Document, each of Borrower and Lender acknowledges and agrees that the
Default Rate shall be waived and shall not be charged from and after June 30,
2005 (i.e., the date of the occurrence of the earliest Specified Event of
Default) if the Obligations have been indefeasibly repaid in full in cash on or
before December 15, 2005; provided, however, that if the
Obligations have not been indefeasibly repaid in full in cash on or before December 15,
2005, then the Default Rate shall be charged from and after June 30, 2005
and until such time as the Specified Events of Default and any other then
existing Events of Default are waived or cured in accordance with the terms and
provisions of the Loan Agreement.

 

SECTION 5.           Conditions Precedent.  This Amendment shall be effective upon the
satisfaction of the following conditions precedent:

 

(a)           the representations and warranties contained
herein, in the Loan Agreement and in all other Loan Documents shall be true and
correct as of the date hereof, and all covenants and other agreements herein,
in the Loan Agreement and in all other Loan Documents shall be and are hereby
confirmed and ratified in all respects;

 

(b)           no Default or Event of Default shall be in
existence as of the date hereof, except for the Specified
Events of Default;

 

(c)           Borrower (i) shall have delivered to the
Lender an executed original copy of this Amendment and each other agreement,
document or instrument reasonably requested by the Lender in connection with this
Amendment; and (ii) shall have delivered to the Lender amended and
restated disclosure schedules, which shall be in form and substance
satisfactory to the Lender in its Permitted Discretion and shall be attached
hereto as Exhibit 5(c) (the “Amended and Restated
Disclosure Schedules”);

 

(d)           the Borrower shall be in compliance with the
notice and other requirements of the Bankruptcy Code and the applicable Rules (as
defined in the Interim Financing Order) with respect to any relevant Financing
Order in a manner acceptable to Lender and its counsel;

 

(e)           the
Interim Financing Order shall have been entered by the Bankruptcy Court, in the
form attached hereto as Exhibit 5(e), authorizing the secured
financing under the Loan Documents on
the terms and conditions set forth herein and in the Interim Financing Order,
and granting super-priority expense claims to Lender with respect to all
Obligations due Lender and the same is not subject to any other order that
impairs its effectiveness;

 

12

 

(f)            the Subordinated Lender and Borrower shall
have executed a Consent in the form attached hereto as Exhibit 5(f) (the
“Annex Consent”), which Annex Consent: (1) shall provide that until
the date upon which the Obligations owed to the Lender have been irrevocably
repaid in full in cash Borrower may not make and the Subordinated Lender may
not receive or retain any payment or distribution (in cash, in kind, in
properties or securities, by set off or otherwise, except that the Subordinated
Lender may accrue payment-in-kind interest and fees) in respect of the
Subordinated Debt; (2) shall otherwise confirm that the subordination
provisions set forth in Section 6P of the Note Purchase Agreement,
as amended, remain in full force and effect in all respects in accordance with
their terms; and (3) shall consent to the Borrower’s execution of this
Amendment and otherwise confirm that none of the provisions of this Amendment
shall constitute a breach, default or event of default under the Note Purchase
Agreement or under the Subordinated Debt;

 

(g)           Borrower shall have delivered to Lender
updated copies of any and all Premium Finance Arrangements, together with a
written summary of such arrangements, which written summary shall be
satisfactory to Lender in its Permitted Discretion;

 

(h)           Borrower shall have delivered to Lender a
written opinion or opinions of counsel for the Borrower in form and content
satisfactory to the Lender in its sole discretion, addressed to the Lender and
its counsel, and covering such matters related to the transactions contemplated
hereby as the Lender may request (including, without limitation, as to
enforceability, authority and existence);

 

(i)            Borrower shall have paid to Lender all legal
reasonably attorneys’ fees, charges and expenses incurred by the Lender in
connection with the drafting, negotiation and execution of this Amendment;

 

(j)            Borrower shall have delivered to Lender a
certificate of the president of Borrower dated as of the date of this Amendment
on behalf of Borrower, in substantially the form of Exhibit 5(k)
attached hereto; and

 

(k)           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 Lender.

 

SECTION 6.           Additional Events of
Default.  In addition to and without in any way
limiting or substituting for the Events of Default outlined in the Loan
Agreement and the other Loan Documents, the following shall constitute
additional Events of Default:

 

(a)           Borrower’s breach, default, violation or
failure to timely and fully comply with any covenant or agreement set forth in
this Amendment or any other agreement, document or instrument executed in
connection herewith, except that there shall be a seven (7) calendar day
cure period commencing from the earlier of (i) Receipt by Borrower of
written notice of such breach, default, violation or failure, and (ii) the
time at which Borrower or any authorized officer thereof knew or became aware of
such failure, violation, breach or default (notwithstanding any such notice and
grace and/or cure periods in the Loan Agreement or the other Loan Documents,
all of which are expressly waived with respect to provisions of this Amendment
and the provisions of the Loan Agreement that are amended hereby);

 

13

 

(b)           Borrower’s breach, default, violation or
failure to comply in any respect with the expenditure limitations set forth in
the Budget or with the terms and conditions of any Financing Order, in each
case without any notice, grace and/or cure period of any kind;

 

(c)           the occurrence of any condition or event that
permits Lender to exercise any of the remedies set forth in the Financing
Order, including, without limitation, any event which causes the occurrence of
the “Termination Date” as such term is defined in the Financing Order, in each
case without any notice, grace and/or cure period of any kind;

 

(d)           the termination or non-renewal of this
Amendment or the Financing Order as a result of the objection of any third
party being sustained, or if the Financing Order shall be modified, reversed,
revoked, remanded, stayed, rescinded, vacated or amended on appeal or by the
Court without the prior written consent of the Lender, in each case without any
notice, grace and/or cure period of any kind;

 

(e)           the Borrower expresses its intention to
suspend or discontinue or is enjoined by any court or governmental agency from
continuing to conduct all or any material part of its business or if a trustee,
receiver or custodian is appointed for the Borrower or any of its properties,
in each case without any notice, grace and/or cure period of any kind;

 

(f)            any act, condition or event occurring after
the date of the commencement of the Chapter 11 Case that has a Material Adverse
Effect upon the assets of the Borrower or the Collateral or the rights and
remedies of Lender under the Loan Agreement or other Loan Documents as
determined by Lender in its Permitted Discretion, in each case without any
notice, grace and/or cure period of any kind; and

 

(g)           the grant of a Lien on or other interest in
the Borrower’s property or an administrative expense claim (other than any such
administrative expense claim permitted by the Financing Order or this
Amendment) that is superior or pari  passu to Lender’s security
interest in or Lien upon the Collateral or administrative expense, in each case
without any notice, grace and/or cure period of any kind.

 

NOTHING CONTAINED IN THIS SECTION 6 SHALL BE DEEMED TO
CONSTITUTE AN AMENDMENT OR MODIFICATION OF THE GRACE AND/OR CURE PERIODS SET
FORTH IN THE OTHER LOAN DOCUMENTS INSOFAR AS SUCH GRACE AND/OR CURE PERIODS
RELATE SOLELY TO PROVISIONS SET FORTH IN THE OTHER LOAN DOCUMENTS (AS OPPOSED
TO PROVISIONS SET FORTH IN THIS AMENDMENT AND THE PROVISIONS OF THE LOAN
AGREEMENT THAT ARE AMENDED HEREBY).

 

SECTION 7.           Consent to Modifications
of Agreements with Subordinated Lender.  Lender
hereby consents to Borrower’s execution and delivery of the Annex Consent.

 

SECTION 8.           Loan Agreement in Full
Force and Effect as Amended.  Except as
specifically amended hereby, by the Interim Financing Order or by any agreement
or document executed by Borrower in favor of Lender in connection herewith or
therewith, the Loan

 

14

 

Agreement
and other Loan Documents shall remain in full force and effect and are hereby
ratified and confirmed as so amended. 
Neither this Amendment nor any agreement or document executed by
Borrower in favor of Lender in connection herewith shall constitute a novation,
satisfaction and accord, cure, release or satisfaction of the Loan Agreement
and/or Loan Documents, but shall constitute amendments and waivers of certain
provisions thereof.  Except as expressly
set forth herein, neither this Amendment nor any agreement or document executed
by Borrower on behalf of Lender in connection herewith shall be deemed to be a
waiver, amendment or modification of any provisions of the Loan Agreement or
any other Loan Document or any right, power or remedy of Lender, or constitute
a waiver of any provision of the Loan 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 Lender whether under the Loan
Agreement, the other Loan Documents, at law or otherwise.  All references to the Loan Agreement shall be
deemed to mean the Loan Agreement as modified hereby.  The parties hereto agree to be bound by the
terms and conditions of the Loan Agreement and Loan Documents as amended by
this Amendment, as though such terms and conditions were set forth herein.  Each reference in the Loan Agreement to “this
Agreement,” “hereunder,” “hereof,” “herein” or words of similar import shall
mean and be a reference to the Loan Agreement as amended by this Amendment, and
each reference herein or in any other Loan Documents to the “Agreement”, “Loan
Agreement” or “Credit Agreement” shall mean and be a reference to the Loan
Agreement as amended and modified by this Amendment.

 

SECTION 9.           Representations.  Borrower hereby represents and warrants to
Lender 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) except as provided under the Interim Financing
Order, Annex Consent, 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
Amendment and all other Loan Documents executed and/or delivered in connection
herewith have 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; (vi) after giving effect to this Amendment, no
Default or Event of Default exists, has occurred and is continuing or would
result by the execution, delivery or performance of this Amendment, except for
the Specified Events of Default; and (vii) except as set forth on the
Amended and Restated Disclosure Schedules, the representations and warranties
contained in the Loan Documents are true and correct in all respects as of the
date hereof as if made on the date hereof.

 

15

 

SECTION 10.         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 Loan Agreement or the applicable Loan Document.  This Amendment shall be considered part of
the Loan Agreement and shall be a Loan Document for all purposes under the Loan
Agreement and other Loan Documents.

 

(c)           This Amendment, the Loan 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
LOAN AGREEMENT AND SHALL BE SUBJECT TO THE WAIVER OF JURY TRIAL AND NOTICE
PROVISIONS OF THE LOAN 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 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 Lender of Borrower’s duty of performance, including, without limitation, any
duties under any account or contract in which Lender has a security interest or
Lien.  This Amendment shall be binding
upon the Borrower and its respective successors and assigns.

 

(f)            In furtherance and not in limitation of
anything set forth in the Interim Financing Order, any other Financing Order or
the Loan Documents, Borrower shall pay all costs and expenses incurred by
Lender or any of Lender’s Affiliates, including, without limitation,
documentation and diligence fees and expenses, all search, audit, appraisal,
recording, 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 fees and expenses of outside

 

16

 

counsel and reasonable fees
and expenses of in-house counsel, 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.

 

(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 Lender shall affect such representations or warranties or
the right of Lender to rely upon them.

 

(i)            BORROWER HEREBY ACKNOWLEDGES AND AGREES THAT
IT KNOWS OF NO DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND
OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE
ALL OR ANY PART OF ITS LIABILITY TO REPAY THE OBLIGATIONS OR TO SEEK AFFIRMATIVE
RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM LENDER.  BORROWER HEREBY VOLUNTARILY AND KNOWINGLY
RELEASES AND FOREVER DISCHARGES LENDER AND EACH OF ITS PREDECESSORS, AGENTS,
EMPLOYEES, AFFILIATES, COUNSEL, SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE “RELEASED
PARTIES”) FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION,
DAMAGES, COSTS, EXPENSES AND LIABILITIES WHATSOEVER, FIXED, WHETHER KNOWN OR
UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, CONTINGENT OR
CONDITIONAL, OR AT LAW OR IN EQUITY, IN ANY CASE ORIGINATING IN WHOLE OR PART ON
OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED THAT BORROWER MAY NOW OR
HEREAFTER HAVE AGAINST THE RELEASED PARTIES, IF ANY, IRRESPECTIVE OF WHETHER
ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS,
OR OTHERWISE, AND THAT ARISE FROM ANY OF THE LOANS, THE EXERCISE OF ANY RIGHTS
AND REMEDIES UNDER THE LOAN AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
AND/OR THE NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT, INCLUDING, WITHOUT
LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR
RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE.  NOTWITHSTANDING THE FOREGOING, NOTHING
CONTAINED IN THIS SECTION 10 SHALL APPLY WITH RESPECT TO ANY WILLFUL
MISCONDUCT OR BAD FAITH BY THE RELEASED PARTIES.

 

[Signature Page Follows]

 

17

 

IN
WITNESS WHEREOF, the parties have caused this Ratification and Amendment
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.

 

 

	
   

  	
  LENDER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CAPITALSOURCE FINANCE LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Joseph Turitz

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Joseph Turitz

  	
   

  
	
   

  	
  Title:

  	
   

  	
  General Counsel – Corporate Finance

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BORROWER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GARDENBURGER, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Scott C. Wallace

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Scott C. Wallace

  	
   

  
	
   

  	
  Title:

  	
   

  	
  President and Chief Executive Officer

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