GARDENBURGER INC
EXHIBIT 10.2 SECOND AMENDMENT TO NOTE
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>5
<FILENAME>gb2am.txt
<DESCRIPTION>EXHIBIT 10.2 SECOND AMENDMENT TO NOTE
<TEXT>


                                                                  EXECUTION COPY


                                    SECOND AMENDMENT TO
                                  NOTE PURCHASE AGREEMENT


            THIS SECOND  AMENDMENT (this  "AMENDMENT"),  dated as of January 10,
2002, to the Note Purchase  Agreement,  dated as of March 27, 1998, by and among
DRESDNER  KLEINWORT  BENSON  PRIVATE  EQUITY  PARTNERS  LP, a  Delaware  limited
partnership (the  "PURCHASER"),  and GARDENBURGER,  INC., an Oregon  corporation
(the "COMPANY").

            WHEREAS,   the  parties   hereto  entered  into  the  Note  Purchase
Agreement,  dated as of March 27, 1998 (the "AGREEMENT"),  and a First Amendment
to  Note  Purchase   Agreement  dated  as  of  December  23,  1999  (the  "FIRST
AMENDMENT");  unless otherwise defined herein, all capitalized terms used herein
(including the recitals  hereto) shall have the meanings  assigned to such terms
in the Agreement, as amended by the First Amendment and hereby;

            WHEREAS,  the Company has entered  into a Revolving  Credit and Term
Loan Agreement dated as of January 10, 2002 (as amended,  the "NEW SENIOR CREDIT
AGREEMENT")   with   CapitalSource   Finance  LLC  as  a  lender  and  as  agent
("CAPITALSOURCE")  pursuant to which,  among  other  things,  the  Company  will
refinance its obligations of the existing Senior Credit Agreement (as defined in
the  Agreement  after giving  effect to the First  Amendment but prior to giving
effect to this Amendment,  the "EXISTING  CREDIT  AGREEMENT") and will receive a
credit facility with an aggregate maximum borrowing availability of $15,000,000;

            WHEREAS,  the Company has  requested  the  Purchaser to exchange the
existing  Convertible  Note  for an  Amended  and  Restated  Convertible  Senior
Subordinated  Note in the forma  attached  hereto as EXHIBIT A (the "NEW NOTE"),
and amend the Agreement on the terms and conditions set forth in this Amendment;

            NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants contained herein, the parties hereto agree as follows.

            1.  CONSENTS.  Subject to the terms and conditions set forth herein,
the Purchaser hereby consents, pursuant to paragraph 2N of the Agreement, to the
Company entering into the New Senior Credit Agreement.  Nothing contained herein
shall be deemed to  constitute  a waiver of any other Event of Default  that may
heretofore  or hereafter  occur or have  occurred and be continuing or to modify
any provision of the Agreement except as expressly set forth herein.  No consent
or waiver and, except as otherwise specifically provided herein, no other change
of the terms or  provisions  of the  Agreement  is  intended  or  implied.  This
Amendment  shall not constitute a waiver by the Lender of any existing  defaults
under the Agreement, whether or not the Purchaser has knowledge of the same, and
shall not constitute a waiver of any future defaults.

            2. AMENDMENTS.

                 (a)  SECTION  2C(a)(vii)  of the  Agreement,  as amended by the
       First  Amendment,  is hereby amended and restated in its entirety to read
       as follows:

                                       1
<PAGE>

                  (vii) subject to the Senior Credit  Agreement,  become subject
            to,  or  permit  any  of  its  Subsidiaries  to  become  subject  to
            (including,   without   limitation,   by  way  of  amendment  to  or
            modification  of) any  agreement  or  instrument  which by its terms
            would  (under  any  circumstances)  restrict  (a) the  right  of any
            Subsidiary to make loans or advances or pay  dividends to,  transfer
            property  to, or repay any  Indebtedness  owed to,  the  Company  or
            another  Subsidiary  or (b)  the  Company's  right  to  perform  the
            provisions   of   any   Investment   Document,   the   Articles   of
            Incorporation or the Company's bylaws;

                 (b) Subparagraph 2C(a)(ix) of the Agreement,  as amended by the
       First  Amendment,  is  hereby  amended  by  replacing  the  reference  to
       "$27,500,000" therein with "$21,000,000."

                 (c)  SECTION  2D(b) of the  Agreement,  as amended by the First
       Amendment,  is hereby  amended and  restated  in its  entirety to read as
       follows:

                  "The  Company  shall  not  violate  the  following   financial
            covenants:

                  (i)   LEVERAGE RATIO

                  The Leverage Ratio shall not exceed (i)  3.025:1.00,  upon the
            making  of the  Initial  Advance  and the Term  Loan  (under  and as
            defined in the Senior Credit  Agreement) and for each Quarterly Test
            Period  through the fiscal  quarter  ending June 30, 2002,  and (ii)
            2.75:1.00, for each Quarterly Test Period after June 30, 2002.

                  (ii)  MINIMUM ADJUSTED EBITDA

                  Adjusted  EBITDA for each Quarterly Test Period,  shall not be
            less than (i)  $4,500,000  for each  Quarterly Test Period ending on
            or before June 30,  2002,  and (ii)  $5,400,000  for each  Quarterly
            Test Period after June 30, 2002.

                  (iii) FIXED CHARGE COVERAGE RATIO

                  The  Fixed  Charge  Coverage  Ratio  for each  Quarterly  Test
            Period shall not be less than 1.125:1.00.

                  (iv)  CAPITAL EXPENDITURES

                  For any  Quarterly  Test Period,  the Company shall not permit
            its Capital  Expenditures  in the aggregate to exceed (i) $1,925,000
            for each  Quarterly  Test Period  ending on or before  September 30,
            2002,  and (ii)  $1,210,000  for each  Quarterly  Test Period  after
            September 30, 2002.

                                       2
<PAGE>

For purposes of the  financial  covenants set forth in this SECTION  2D(B),  the
terms listed below shall have the following meanings:

            "ADJUSTED  EBITDA"  shall mean EBITDA plus the amounts  listed below
for the applicable Quarterly Test Period.

 -------------------------------------------------------------------------------
 DESCRIPTION             Q2FY01    Q3FY01    Q4FY01   Q1FY02    Q2FY02    TOTAL
 -------------------------------------------------------------------------------
 Operating Lease        754,250   754,250  754,250   754,250           3,017,000
 Expense
 -------------------------------------------------------------------------------
 Severance Expense      150,110    20,650   38,510    77,368             286,638
 -------------------------------------------------------------------------------
 Relocation Expense     105,000              4,000    18,950             127,950
 -------------------------------------------------------------------------------
 Recapitalization                  14,000  175,000                       189,000
 Expenses
 -------------------------------------------------------------------------------
 Refinancing Expenses                                        (as
                                                             agreed
                                                             to by
                                                             Agent in
                                                             its sole
                                                             discretion)
 -------------------------------------------------------------------------------
      Total           1,009,360   788,900  971,760   850,568           3,620,588
 -------------------------------------------------------------------------------

            "CAPITAL  EXPENDITURES"  shall mean,  for any Quarterly Test Period,
the sum  (without  duplication)  of all  expenditures  (whether  paid in cash or
accrued as  liabilities)  during the Quarterly Test Period that are or should be
treated as capital expenditures under GAAP.

            "CAPITAL  LEASE"  shall  mean,  as to any  Person,  a  lease  of any
interest  in any kind of  property  or asset by that  Person as lessee  that is,
should be or should have been recorded as a "capital  lease" in accordance  with
GAAP.

            "EBITDA" shall mean, for any Quarterly Test Period, the sum, without
duplication,   of  the  following  for  the  Company,   on  a  consolidated  and
consolidating  basis:  Net Income  determined in accordance with GAAP, plus, (a)
Interest Expense,  (b) taxes on income,  whether paid,  payable or accrued,  (c)
depreciation  expense,  (d)  amortization  expense,  (e)  non-cash  dividends on
preferred stock, and (f) all other non-cash, non-recurring charges and expenses,
excluding  accruals for cash expenses  made in the ordinary  course of business,
all of the foregoing  determined in accordance  with GAAP, less (f) all non-cash
income.

            "FIXED   CHARGE   COVERAGE   RATIO"  shall  mean,  at  any  date  of
determination,  for the Company  individually and collectively on a consolidated
and consolidating basis, the ratio of (a) Adjusted EBITDA for the Quarterly Test
Period  most  recently  ended  before  such date,  to (b) Fixed  Charges for the
Quarterly  Test Period most recently  ended before such date, in each case taken
as one accounting period.

            "FIXED  CHARGES"  shall  mean,  on any  calculation  date,  for  any
Quarterly  Test Period,  the sum of the following for the Company,  individually
and  collectively,  on a consolidated  and  consolidating  basis: (a) Total Debt
Service for such period, (b) Capital Expenditures during such period, (c) income
taxes paid in cash or accrued  during such  period,  and (d)  dividends  paid or
declared during such period.

            "GAAP" shall mean generally  accepted  accounting  principles in the
United  States of America in effect  from time to time as applied by  nationally
recognized accounting firms.


                                       3
<PAGE>


            "INTEREST EXPENSE" shall mean, for any Quarterly Test Period,  total
interest  expense  (including  attributable to Capital Leases in accordance with
GAAP) of the  Company  individually  and  collectively,  on a  consolidated  and
consolidating  basis with  respect  to all  outstanding  Indebtedness  including
capitalized  interest but excluding  commissions,  discounts and other fees owed
with  respect to letters of credit and  bankers'  acceptance  financing  and net
costs under Interest Rate Agreements.

            "INTEREST RATE AGREEMENT"  shall mean any interest rate swap, cap or
collar agreement or other similar agreement or arrangement designed to hedge the
position with respect to interest rates.

            "LEVERAGE RATIO" shall mean, at any date of  determination,  for the
Company,  the ratio of (i) the aggregate  unpaid  principal  amount of all Loans
(under and as defined in the Senior  Credit  Agreement)  on such date,  plus the
aggregate  liability  of the Company  pursuant to any letter of credit or surety
bond to (ii) Adjusted EBITDA.

            "NET INCOME"  shall mean,  for any  Quarterly  Test Period,  the net
income (or loss) of the Company  individually and collectively on a consolidated
and  consolidating  basis for such period  taken as a single  accounting  period
determined in conformity with GAAP;  provided,  that there shall be excluded (i)
the  income (or loss) of any Person in which any other  Person  (other  than the
Company) has a joint  interest,  except to the extent of the amount of dividends
or other  distributions  actually paid to the Company by such Person during such
period,  (ii) the income (or loss) of any  Person  accrued  prior to the date it
becomes the Company or is merged into or  consolidated  with the Company or that
Person's assets are acquired by the Company,  (iii) the income of any Subsidiary
of the Company to the extent that the  declaration  or payment of  dividends  or
similar  distributions  of that  income  by that  Subsidiary  is not at the time
permitted by operation of the terms of the charter or any agreement, instrument,
judgment,  decree, order, statute, rule or governmental regulation applicable to
that  Subsidiary,  (iv)  compensation  expense  resulting  from the  issuance of
capital stock,  stock options or stock  appreciation  rights issued to former or
current employees,  including officers,  of the Company, or the exercise of such
options or rights, in each case to the extent the obligation (if any) associated
therewith is not expected to be settled by the payment of cash by the Company or
any  affiliate  thereof,   and  (v)  compensation  expense  resulting  from  the
repurchase of capital stock, options and rights described in clause (iv) of this
definition of Net Income.

            "QUARTERLY TEST PERIOD" shall mean the twelve month period ending on
the last day of each March, June, September and December of each year.

            "TOTAL  DEBT  SERVICE"  shall mean for any  period,  for the Company
individually and collectively on a consolidated and consolidating basis, the sum
of (i) scheduled or other required  payments of principal on Indebtedness,  (ii)
any other fees due or payable in  connection  with any  Indebtedness,  and (iii)
Interest Expense, in each case for such period."

                 (d)  Section  2N of the  Agreement,  as  amended  by the  First
       Amendment,  is hereby  amended and  restated  in its  entirety to read as
       follows:

                                       4
<PAGE>

                  2N. AMENDMENTS TO SENIOR  INDEBTEDNESS.  The Company will not,
            and will not  permit  any of its  Subsidiaries  to amend,  modify or
            restate  the  terms  of  Senior   Indebtedness  if  such  amendment,
            modification or restatement  would (i) increase the amount of Senior
            Indebtedness  (except as not prohibited by the definition of "Senior
            Indebtedness"  set forth  herein),  (ii) increase by more than 3.00%
            per annum the  applicable  margin on any interest rate on the Senior
            Indebtedness,  including  default  rates,  set  forth in the  Senior
            Credit  Agreement  as such Senior  Credit  Agreement is in effect on
            January 10, 2002 or (iii) change or amend Section 7.11 of the Senior
            Credit  Agreement in a manner which would be more restrictive on the
            Company's  ability  to fulfill  its  obligations  to the  Registered
            Holders.

                 (e) The  definition of "CHANGE OF CONTROL" in Section 5A of the
       Agreement  is hereby  amended  and  restated  in its  entirety to read as
       follows:

                  "CHANGE OF CONTROL"  means any sale or issuance  (or series of
            sales or issuances) of the Company's  Common Stock by the Company or
            any  holder  thereof  which  results  in  any  Person  or  group  of
            affiliated  Persons or  entities  or group of  Persons  or  entities
            acting together, owning more than 50% of the Common Stock on a fully
            diluted basis immediately after the time of such sale or issuance or
            series of issuances  (without giving effect to any  out-of-the-money
            Equity Securities).

                 (f) The definition of "MANAGEMENT  CHANGE" in Section 5A of the
       Agreement  is hereby  amended  and  restated  in its  entirety to read as
       follows:

                  "MANAGEMENT  CHANGE"  shall  occur  if Scott  Wallace  (or his
            successor as provided  herein)  ceases to be employed by the Company
            as  Chief  Executive  Officer  and a  successor,  who is  reasonably
            satisfactory  to the holders of a majority of the Underlying  Common
            Stock,  is not  employed  by the  Company  within  120  days of such
            cessation of employment.

                 (g)  Subclause (v) of the  definition  of "PERMITTED  LIENS" in
       Section 5A of the  Agreement,  is hereby amended and its entirety to read
       as follows:

                  (v)  interests  or title of a lessor under any lease which the
            Company or any  Subsidiary is not  prohibited  from entering into by
            this Agreement;

                 (h) The definition of "SENIOR  CREDIT  AGREEMENT" in Section 5A
       of the Agreement,  as amended by the First  Amendment,  is hereby amended
       and restated in its entirety to read as follows:


                                       5
<PAGE>

                  "SENIOR CREDIT  AGREEMENT" means the Revolving Credit and Term
            Loan Agreement  dated as of January 10, 2002 between the Company and
            CapitalSource  Finance  LLC,  as a  lender  (in such  capacity,  the
            "Bank")  and as  Agent  (in such  capacity,  the  "Agent"),  as such
            agreement  may  be  amended,  restated,  supplemented  or  otherwise
            modified  from  time  to time  pursuant  to and in  accordance  with
            paragraph  2N hereof  and by  definition  of  "Senior  Indebtedness"
            contained herein;  provided,  that if the Company enters into a loan
            agreement  with a bank  other than the Bank with terms that would be
            permitted  as  an  amendment  to  Senior  Indebtedness  pursuant  to
            paragraph 2N, such loan agreement  shall  thereafter be deemed to be
            a Senior Credit Agreement.

                 (i) The  definition of "SENIOR  INDEBTEDNESS"  in Section 5A of
       the Agreement,  as amended by the First Amendment,  is hereby amended and
       restated in its entirety to read as follows:

                  "SENIOR   INDEBTEDNESS"   means,   (a)  with  respect  to  the
            Indebtedness  and  "Obligations"  (as  defined in the Senior  Credit
            Agreement)  of  the  Company  and  any of  its  Subsidiaries  or any
            Guarantor  (as  defined in the Senior  Credit  Agreement)  under the
            Senior Credit  Agreement and any other "Loan  Documents" (as defined
            in the Senior  Credit  Agreement;  collectively,  the "SENIOR  DEBT
            DOCUMENTS"),   the  aggregate   principal   amount  thereof  now  or
            hereafter   outstanding,   together  with  any  fees,  expenses  and
            interest  (including  any fees and  expenses,  incurred  during  any
            Bankruptcy  Event,  case or other action relating to the bankruptcy,
            insolvency,   assignment   for   the   benefit   or   creditors   or
            reorganization  of the Company or such  Subsidiary or any Guarantor,
            and  any  interest  which  would  have  accrued  at  the  applicable
            interest  rate for such  Indebtedness  and  Obligations  but for the
            commencement of any Bankruptcy  Event, case or other action relating
            to  the  bankruptcy,  insolvency,  assignment  for  the  benefit  or
            creditors or  reorganization  of the Company or such  Subsidiary  or
            any Guarantor,  whether or not such fees,  expenses and interest are
            an allowable  claim in any such  proceeding)  or premium due thereon
            and any other  amount  payable  with  respect  thereto and all other
            Obligations;  and (b)  any  Indebtedness  of the  Company  and  each
            Guarantor  incurred in connection with a refinancing or refunding of
            any of the foregoing if any such  additional  Indebtedness  incurred
            in  connection  with such  refinancing  or  refunding is incurred in
            compliance with paragraph 2N;  provided,  that in no event shall the
            aggregate   principal   amount   of   Senior   Indebtedness   exceed
            $20,000,000.


                                       6
<PAGE>

                 (j)  Section  6P of the  Agreement,  as  amended  by the  First
       Amendment,  is hereby  amended and  restated  in its  entirety to read as
       follows:

                 6P. SUBORDINATION.

                  (i) CONVERTIBLE NOTES SUBORDINATE TO SENIOR INDEBTEDNESS.  The
            Company  covenants and agrees,  and the Registered  Holder  likewise
            covenants  and  agrees,  that,  to the  extent  and  in  the  manner
            hereinafter  set forth in this  paragraph  6P,  the  payment  of the
            principal of and interest on the  Convertible  Notes,  and all other
            sums or obligations due and payable by the Company to the Registered
            Holders  hereunder  (collectively  with the Convertible  Notes,  the
            "SUBORDINATED  OBLIGATIONS"),  are hereby expressly made subordinate
            and subject in right of payment to the prior payment in cash in full
            of all Senior Indebtedness.

                  (ii) PAYMENT OVER OF PROCEEDS UPON DISSOLUTION.

                              (a)   In  the  event  of  (x)  any  insolvency  or
            bankruptcy  case or proceeding,  or any  receivership,  liquidation,
            reorganization,  adjustment,  composition  or other  similar case or
            proceeding in connection  therewith,  relative to the Company or its
            Subsidiaries  or Guarantors or to its creditors,  as such, or to its
            assets,  or (y) any liquidation,  dissolution or other winding up of
            the Company or its Subsidiaries or Guarantors  whether  voluntary or
            involuntary  and whether or not involving  insolvency or bankruptcy,
            or (z) any  assignment  for the  benefit of  creditors  or any other
            marshaling  of  assets  and   liabilities  of  the  Company  or  its
            Subsidiaries  or  Guarantors  (collectively,  "BANKRUPTCY  EVENTS"),
            then and in any such event:

                                    (1)   the  holders  of  Senior  Indebtedness
            shall be  entitled to receive  indefeasible  payment in cash in full
            of all  amounts  due or to become  due on or in  respect of all such
            Senior  Indebtedness  before the Registered  Holders are entitled to
            receive any payment or distribution,  whether in cash, securities or
            other property, on account of Subordinated Obligations;

                                    (2)   any payment or  distribution of assets
            of the Company of any kind or character,  whether in cash,  property
            or  securities,  by set-off or  otherwise,  to which the  Registered
            Holders would be entitled but for the  provisions of this  paragraph
            6P (except  for such  payment or  distribution  (x) of  property  or
            securities  authorized  by a final  non-appealable  order or  decree
            stating  that  effect is being  given to the  subordination  of



                                       7
<PAGE>

            such Subordinated Obligations to such Senior Indebtedness,  and made
            by a court of competent jurisdiction in a reorganization  proceeding
            under any applicable  bankruptcy law, or (y) of securities which are
            subordinated  to at  least  the  same  extent  as  the  Subordinated
            Obligations  to the  payment  of all Senior  Indebtedness  (any such
            property or securities,  "JUNIOR  SECURITIES")) shall be paid by the
            liquidating  trustee or agent or other Person making such payment or
            distribution,  whether  a  trustee  in  bankruptcy,  a  receiver  or
            liquidating  trustee or  otherwise,  directly  to the holders of the
            Senior Indebtedness or their representative or representatives or to
            the  trustee  or  trustees  under  any  indenture  under  which  any
            instruments  evidencing any of the Senior Indebtedness may have been
            issued,  ratably according to the aggregate amounts remaining unpaid
            on  account  of the  principal  of,  and  interest  on,  the  Senior
            Indebtedness held or represented by each, to the extent necessary to
            make  indefeasible  payment  in  cash  in  full  of all  the  Senior
            Indebtedness remaining unpaid, after giving effect to any concurrent
            payment or distribution to the holders of Senior Indebtedness;

                                    (3)   in  the  event  that,  notwithstanding
            the  foregoing  provisions  of this  paragraph  6P,  the  Registered
            Holders  shall have  received  any such payment or  distribution  of
            assets of the  Company  of any kind or  character,  whether in cash,
            property or securities (but excluding any Junior  Securities) before
            all such Senior  Indebtedness is indefeasibly  paid in full in cash,
            then and in such event such  payment or  distribution  shall be held
            in trust by the  Registered  Holders  for the  holders of the Senior
            Indebtedness  and shall be paid over or  delivered  forthwith to the
            trustee in bankruptcy,  receiver,  liquidating  trustee,  custodian,
            assignee,  agent or other Person making payment or  distribution  of
            assets of the Company for  application  to the payment of all Senior
            Indebtedness   remaining   unpaid,   to  the  extent   necessary  to
            indefeasibly  pay all  such  Senior  Indebtedness  in full in  cash,
            after  giving  effect to any  concurrent  cash payment to or for the
            holders of such Senior Indebtedness;

                                    (4)   each    Registered    Holder    hereby
            irrevocably  authorizes  and  empowers  each  holder  of the  Senior
            Indebtedness  or  such  holder'  s  representative  to  collect  and
            receive  such  holder's  ratable  share  of all  such  payments  and
            distributions  and, if any  Registered  Holder fails to file a claim
            at least fifteen (15)  calendar  days prior to the date  established
            by rule of law or order of court for such filing,  to file and prove
            (but not to vote or otherwise control) such claims therefor; and

                                       8
<PAGE>

                                    (5)   the  Registered  Holders shall execute
            and  deliver to the Agent or its duly  appointed  representative  or
            representatives  all such further  instruments  (including proofs of
            claim  and   assignments   of  claim)   confirming,   and  otherwise
            reasonably  necessary to effectuate,  the authorization set forth in
            subclause (4) above.

                              (b)   If,  notwithstanding  the provisions of this
            Agreement,  there shall occur any consolidation of the Company with,
            or any  merger  of the  Company  into,  another  corporation  or the
            liquidation or dissolution of the Company  following any conveyance,
            transfer or lease of its properties and assets  substantially  as an
            entirety  to  another  corporation,  such  consolidation,  merger or
            liquidation  shall not be deemed a Bankruptcy Event for the purposes
            of this paragraph 6P.

                              (c)   In the event of any  Bankruptcy  Event,  the
            Registered  Holders  hereby  expressly  consent to the  granting  by
            Company to the holders of Senior  Indebtedness  of senior  liens and
            priorities in  connection  with any  post-petition  financing of the
            Company by such holders of Senior Indebtedness.

                  (iii) NO PAYMENT IN CERTAIN CIRCUMSTANCES.

                              (a)   In the  event  that  (i) the  Company  shall
            fail to pay when due (after  giving effect to any  applicable  grace
            periods),  upon acceleration or otherwise,  any principal,  interest
            or fees or any other amounts with respect to Senior  Indebtedness or
            pursuant to the  Obligations  or Senior Debt  Documents (a "PAYMENT
            DEFAULT")  which  Payment  Default  shall  not  have  been  cured or
            waived,  or (ii) an "Event of  Default"  (as  defined  in the Senior
            Credit Agreement) shall have occurred,  which Event of Default shall
            not have been cured or waived  (such Event of  Default,  excluding a
            Payment Default, a "NON-PAYMENT  DEFAULT"),  and the Company and the
            Registered  Holders  receive  written  notice  of  such  Non-Payment
            Default from the Agent (a "BLOCKAGE NOTICE"),  then no payment shall
            be made by the Company or any  Subsidiary or Guarantor on account of
            the  Subordinated  Obligations  (x)  in  the  case  of  any  Payment
            Default,  unless and until such Senior  Indebtedness shall have been
            indefeasibly  paid in cash in full or  until  such  Payment  Default
            shall  have  been  cured  or  waived,  or  (y) in  the  case  of any
            Non-Payment  Default,  from the date the Company and the  Registered
            Holders shall have  received such Blockage  Notice until the earlier
            of (1) 179 days after such date and (2) the date,  if any,  on which
            the Senior  Indebtedness is discharged or indefeasibly  paid in cash
            in full or such Non-Payment  Default is waived by Agent or otherwise


                                       9
<PAGE>

            cured (a "BLOCKAGE PERIOD");  provided,  that (A) no Blockage Period
            shall continue in effect during any period of 365  consecutive  days
            for a period  which,  together  with all other  Blockage  Periods in
            effect during such 365 consecutive-day  period, would aggregate more
            than  179  days,  and (B) no  Non-Payment  Default  that  previously
            served as the basis for a Blockage  Notice or that was in  existence
            at the time of such  Blockage  Notice may serve as the basis for any
            other Blockage Notice.

                              (b)   In the  event  that  any  Registered  Holder
            shall receive any payment or  distribution of any kind or character,
            whether  in  cash,   property  or  securities   (other  than  Junior
            Securities) in  contravention of this paragraph 6P, then and in such
            event such  payment or  distribution  shall be held in trust for the
            benefit of, and shall be paid over and  delivered  forthwith to, the
            Agent for the  benefit  of the  holders of Senior  Indebtedness.  In
            the event of the  failure  of any  Registered  Holder to  endorse or
            assign any such  payment or  distribution,  any holder of the Senior
            Indebtedness or such holder's  representative is hereby  irrevocably
            authorized to endorse or assign the same.

                  (iv) ACCELERATION RIGHTS; REMEDIES.

                              (a)   The  Registered  Holders  will not  exercise
            any  collection  and  enforcement  action  (by setoff  hereunder  or
            otherwise)  during the  continuance  of a Payment  Default or during
            any Blockage Period prior to the earliest to occur of:

                                    (i)   the  expiration of 179 days  following
            (A) the date of such  Payment  Default  or (B) the date  upon  which
            such Blockage  Period shall have  commenced on account of the giving
            of a Blockage Notice;

                                    (ii)  the  acceleration  of any  portion  or
            all of the Senior Indebtedness; or

                                    (iii) the   occurrence  of  any   Bankruptcy
            Event.

                              (b)   Each Registered  Holder agrees that prior to
            exercising  any  remedy  available  to it on account of any Event of
            Default  or  otherwise  under  any  document  or  applicable  law or
            equity,  such holder shall give not less than ten (10) Business Days
            prior written notice to the Agent.

                  (v) PAYMENTS  OTHERWISE  PERMITTED.  Except as  otherwise  set
            forth in the Senior Credit Agreement as in effect on

                                       10
<PAGE>

            January  10,  2002,  nothing  contained  in  this  paragraph  6P  or
            elsewhere  in  this  Agreement  or in the  Convertible  Notes  shall
            prevent the Company,  at any time except  during a Bankruptcy  Event
            as  set  forth  in  subparagraph  6P(ii)  or  under  the  conditions
            described in  subparagraph  6P(iii) or (iv), and except as set forth
            in Section 2 of the Convertible  Notes with respect to the existence
            of Excess  Availability (as defined in the Senior Credit Agreement),
            from making  payments at any time of  principal  of and  interest on
            the  Convertible  Notes  (including out of "EXCESS CASH FLOW" as set
            forth in the Convertible  Notes), or any other amount payable by the
            Company under the Convertible Notes or this Agreement.

                  (vi) SUBROGATION.  Subject to the indefeasible payment in cash
            in full of all Senior Indebtedness,  the Registered Holders shall be
            subrogated to the rights of the holders of such Senior  Indebtedness
            to  receive  payments  and  distributions  of  cash,   property  and
            securities   applicable  to  such  Senior   Indebtedness  until  the
            principal of and interest on the Convertible  Notes shall be paid in
            full in cash.  For  purposes  of such  subrogation,  no  payments or
            distributions  to the  holders of such  Senior  Indebtedness  of any
            cash,  property or securities to which the Registered  Holders would
            be entitled  except for the  provisions of this  paragraph 6P and no
            payments over pursuant to the provisions of this paragraph 6P to the
            holders of such Senior Indebtedness by the Registered Holders shall,
            as among the  Company,  its  creditors  (other than  holders of such
            Senior  Indebtedness)  and the Registered  Holders be deemed to be a
            payment or  distribution  by the  Company to or on account of any of
            the Convertible Notes.

                  (vii)  PROVISIONS  SOLELY  TO  DEFINE  RELATIVE  RIGHTS.   The
            provisions of this paragraph 6P are and are intended  solely for the
            purpose  of  defining  the  relative  rights of the  holders  of the
            Convertible  Notes on the one  hand and the  Agent  and  holders  of
            Senior  Indebtedness  on the other hand.  Nothing  contained in this
            paragraph 6P or elsewhere  in this  Agreement or in the  Convertible
            Notes is intended to or shall (A) impair, as among the Company,  its
            creditors (other than Agent and holders of Senior  Indebtedness) and
            the  Registered  Holders,  the  obligation of the Company,  which is
            absolute and  unconditional,  to pay to the  Registered  Holders the
            principal  of, and premium  and  interest  on, and any other  amount
            payable  by  the  Company  under,  the  Convertible  Notes  or  this
            Agreement  as and when the same  shall  become  due and  payable  in
            accordance  with their  terms;  or (B) affect  the  relative  rights
            against the  Company of the  Registered  Holders  and its  creditors
            (other  than the Agent and holders of Senior  Indebtedness);  or (C)
            prevent the Registered  Holders from  accelerating  the  Convertible
            Notes and  exercising  all other  remedies  otherwise  permitted  by


                                       11
<PAGE>
            applicable  law upon default  under this  Agreement,  subject to the
            terms of  subparagraph  6P(iv) and the  rights,  if any,  under this
            paragraph  6P of the Agent and  holders of Senior  Indebtedness  (x)
            upon the occurrence of a Bankruptcy  Event, to receive,  pursuant to
            and in  accordance  with  this  paragraph  6P,  cash,  property  and
            securities  otherwise  payable  or  deliverable  to  the  Registered
            Holders,  or (y) under the conditions  specified in paragraph 6P, to
            prevent any payment prohibited by such paragraph 6P.

                  (viii) AMENDMENT.  This Agreement shall not be amended without
            obtaining  the prior  written  consent  of the  Agent and  Requisite
            Lenders  (as  defined in the  Senior  Credit  Agreement)  for (a) an
            increase in the rate of interest or fees charged  hereunder,  (b) an
            increase in the  principal  amount of the  Convertible  Notes (other
            than as expressly  provided for herein and therein),  (c) shortening
            any  maturity  date of any payment of  principal  or  interest,  (d)
            providing  for any  additional  financial  covenants  or  events  of
            default or making more restrictive any existing  covenants or events
            of default  applicable to the Company or any Subsidiary or Guarantor
            as in effect on January 10, 2002,  (e) any amendment to paragraph 2N
            or 6P or any of the  definitions  of the terms used therein,  or (f)
            any other  amendment  which would have a material  adverse effect on
            the  operations  of the Company or any  Subsidiary  or  Guarantor or
            obligations   owed  by  such   Persons  to  any  holders  of  Senior
            Indebtedness.

                  (ix) RELIANCE BY HOLDERS OF SENIOR  INDEBTEDNESS;  WAIVER. The
            provisions of this paragraph 6P shall  constitute a continuing offer
            to all Persons who, in reliance upon such provisions, become holders
            of, or continue to hold, any Senior  Indebtedness.  Such  provisions
            are made for the benefit of the Agent and the holders of such Senior
            Indebtedness,  such  Agent and  holders  are  hereby  made  obligees
            hereunder  with the same  effect as if their  names were  written as
            such in  these  provisions  and any such  holder  or all of them may
            proceed to enforce such  provisions.  Each Registered  Holder hereby
            agrees not to challenge or contest the validity,  legality,  binding
            effect  or  enforceability  of the  provisions  set  forth  in  this
            paragraph 6P or the priority,  validity, legality, binding effect or
            enforceability  of the  terms  and  provisions  of the  Senior  Debt
            Documents or the rights of the holders of the Senior Indebtedness in
            the  property  and  assets  of  the  Company  or any  Subsidiary  or
            Guarantor  as  collateral  security  therefor  or any  Lien on or in
            respect   thereof.   Notwithstanding   anything   contained  in  the
            Convertible  Notes or this  Agreement  to the  contrary,  until  the
            Senior  Indebtedness has been indefeasibly paid in full in cash, the
            Registered Holders hereby agree that the Subordinate Obligations are
            not, and will not be,  secured in


                                       12
<PAGE>

            any  manner,  including  as a result  of any  cross-acceleration  or
            "dragnet" provisions in any agreement to which any Registered Holder
            is a party (except as set forth in  subparagraph  6P(vi);  provided,
            however, that the Registered Holders' rights under such subparagraph
            6P(vi)  shall  not  exist  until the  Senior  Indebtedness  has been
            indefeasibly paid in full in cash).

                  (x) RELIANCE ON JUDICIAL  ORDER OR  CERTIFICATE OF LIQUIDATING
            AGENT.  Upon any  payment or  distribution  of assets of the Company
            referred to in this  paragraph 6P, the  Registered  Holders shall be
            entitled  to rely  upon any  final  non-appealable  order or  decree
            entered  by any  court  of  competent  jurisdiction  in  which  such
            insolvency, bankruptcy, receivership,  liquidation,  reorganization,
            dissolution, winding up or similar case or proceeding is pending, or
            a certificate  of the trustee in bankruptcy,  receiver,  liquidating
            trustee, custodian,  assignee for the benefit of creditors, agent or
            other Person making such payment or  distribution,  delivered to the
            Registered  Holders  for the  purpose of  ascertaining  the  Persons
            entitled to participate in such payment or distribution, the holders
            of Senior  Indebtedness and other  Indebtedness of the Company,  the
            amount  thereof or payable  thereon,  the amount or amounts  paid or
            distributed thereon and all other facts pertinent thereto or to this
            paragraph 6P;  provided,  that the foregoing shall only apply if (i)
            such court or other  Person has given  effect to the  provisions  of
            this  paragraph  6P and (ii) the  rights  of the  holders  of Senior
            Indebtedness  are not  altered  without  their  consent  in a manner
            contrary to such provisions.

                 (k) All  references  to  Convertible  Note(s) in the  Agreement
       shall refer to the New Note.

            3. RATIFICATION OF AGREEMENT.


                 (a) To induce the Purchaser to enter into this  Amendment,  the
       Company  represents  and  warrants  that  after  giving  effect  to  this
       Amendment,  no  violation  of the  terms of the  Agreement  exist and all
       representations  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 New Senior Credit
       Agreement,  (ii)  disclosed  in the  Company's  reports  filed  with  the
       Securities and Exchange  Commission,  and (iii)  disclosed to Purchaser's
       representative  on the Board during a meeting of the Board, and except to
       the extent such representations and warranties  specifically relate to an
       earlier  date in which case they were true,  correct and  complete in all
       material respects on and as of such earlier date.

                 (b) Purchaser acknowledges the payment or other satisfaction of
       all interest  accrued on the existing  Convertible  Note to and including
       September 30, 2001.

                                       13
<PAGE>

                 (c) Except as expressly set forth in this Amendment, the terms,
       provisions and  conditions of the Agreement and the Investment  Documents
       are  unchanged,  and said  agreements,  as amended,  shall remain in full
       force and effect and are hereby confirmed and ratified.

            4. CONDITIONS.  This Amendment shall become effective as of the date
hereof upon (i) the execution of the counterparts  hereof by the Company and the
Purchaser,  (ii) the  execution  and  delivery by the Company of the New Note, a
Stock Purchase  Warrant in the form attached  hereto as EXHIBIT B, and a Warrant
Agreement  between the Purchaser and the Company in the form attached  hereto as
EXHIBIT C, (iii) the receipt by the  Purchaser of evidence of the  effectiveness
of the New Senior Credit Agreement  substantially in the form attached hereto as
EXHIBIT D, (iv) the  execution  by the holders of at least  ninety-five  percent
(95%) of the outstanding shares of the Company's Series A Convertible  Preferred
Stock and Series B Convertible  Preferred  Stock of a Preferred  Stock  Exchange
Agreement  substantially  in the form attached  hereto as EXHIBIT E, and (v) the
receipt of an opinion of counsel on behalf of the  Company in the form  attached
hereto as EXHIBIT F.

            5. BINDING ON SUCCESSORS  AND ASSIGNS.  All the terms and provisions
of this Amendment  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 parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party.

            6. FURTHER ASSURANCES. Each of the Company and the Purchaser, as the
case may be,  shall  duly  execute  and  deliver,  or cause to be  executed  and
delivered,  such further  instruments  and perform or cause to be performed such
further  acts as may be  necessary  or proper in the  reasonable  opinion of the
Purchaser to carry out the provisions and purposes of this Amendment.

            7. EFFECT OF  AMENDMENT.  To the extent any terms and  conditions in
the Agreement  shall  contradict  or be in conflict with any  provisions of this
Amendment, the provisions of this Amendment shall govern.

            8.  EXPENSES.  All expenses of the Purchaser  incurred in connection
with this Amendment,  including reasonable expenses of Purchaser's counsel, will
be paid by the Company.

            9. GOVERNING LAW. THIS AMENDMENT  SHALL BE GOVERNED BY, AND SHALL 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 OR  PROVISIONS  (WHETHER OF
THE  STATE  OF  NEW  YORK  OR ANY  OTHER  JURISDICTION)  THAT  WOULD  CAUSE  THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.

            10.  COUNTERPARTS.  This  Amendment  may  be  executed  in  separate
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same agreement.


                                       14
<PAGE>
                                   * * * * *


                                       15
<PAGE>



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

                            DRESDNER KLEINWORT BENSON PRIVATE EQUITY PARTNERS LP

                            By:  Dresdner Kleinwort Benson Private Equity LLC
                            Its: General Partner


                            By: /s/ Alexander P. Coleman
                                ------------------------------------
                            Its: Managing Investment Partner

                            GARDENBURGER, INC.


                            By:  /s/ Scott C. Wallace
                                ------------------------------------
                            Its: President and CEO


                                       16


</TEXT>
</DOCUMENT>
