Registration Rights Agreement

Registration Rights Agreement

by Gardenburger
January 17th, 2002

                          REGISTRATION RIGHTS AGREEMENT


            THIS REGISTRATION  RIGHTS AGREEMENT (this "Agreement") is made as of
January 10, 2002, by and among  Gardenburger,  Inc., an Oregon  corporation (the
"Company"),  and the persons and entities  listed on the  signature  pages below
("Preferred Stockholders").

                                    RECITALS

      A. The Company has agreed to issue to Preferred Stockholders shares of its
Series C Convertible  Preferred  Stock ("Series C Stock"),  Series D Convertible
Preferred  Stock  ("Series D Stock")  and  warrants  to  purchase  Common  Stock
("Warrants")  pursuant to the Preferred  Stock  Exchange  Agreement  between the
Company  and  Preferred  Stockholders  of  even  date  herewith  (the  "Exchange
Agreement").

      B.  As a  condition  to  Preferred  Stockholders'  obligations  under  the
Exchange  Agreement,  the  Company  has agreed to grant  Preferred  Stockholders
registration rights as described herein.

            NOW,  THEREFORE,   in  consideration  of  the  premises  and  mutual
agreements set forth herein, the parties agree as follows:

Section 1.  DEFINITIONS.  As used in this  Agreement,  the following terms shall
have the meanings given:

            (a)  "Affiliate"  means with respect to any particular  person,  any
other  person  controlling,  controlled  by or under  common  control  with such
person, and "control" means the possession, directly or indirectly, of the power
to direct the  management and policies of a person  whether  through  ownership,
contract, or otherwise.

            (b) "Board" or "Board of Directors"  means the board of directors of
the Company as constituted from time to time.

            (c) "Commission"  means the Securities and Exchange  Commission,  or
any other federal agency at the time administering the Securities Act.

            (d) "Common Stock" includes (a) the Company's  Common Stock, and (b)
any other  securities into which or for which any of the Company's  Common Stock
may  be  converted  or  exchanged  pursuant  to  a  plan  of   recapitalization,
reorganization, merger, sale of assets, or otherwise.

            (e)  "Exchange  Act" means the  Securities  Exchange Act of 1934, as
amended,   or  any  similar  federal  statute  and  the  rules  and  regulations
thereunder, all as the same shall be in effect at the time.

            (f) "Fair Market  Value" means (i) the average of the closing  sales
prices of Common Stock on all domestic securities  exchanges on which the Common
Stock is listed,  (ii) if there have been no sales,  the average of the high bid
and low ask prices on all such exchanges at



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the end of such day,  (iii) if on any day the  Common  Stock is not listed on an
exchange,  the sales  price for the Common  Stock as of 4 p.m.  Eastern  time as
reported  on the Nasdaq  National  Market,  or (iv) if the  Common  Stock is not
listed on an exchange or reported on the Nasdaq National Market,  the average of
representative bid and ask quotations for the Common Stock as of 4 p.m., Eastern
time,  as reported on the Nasdaq  inter dealer  quotation  system or any similar
successor  organization,  in each case averaged over a period of 10  consecutive
trading  days,  including  the  day as of  which  Fair  Market  Value  is  being
determined.  Notwithstanding the foregoing,  if at any time of determination the
Common  Stock is not  registered  pursuant to Section 12 of the Exchange Act and
either (x) listed on a national  securities exchange or authorized for quotation
in the Nasdaq  system or (y) less than 25% of the  outstanding  Common  Stock is
held by the public free of transfer  restrictions  under the  Securities  Act of
1933, as amended, then Fair Market Value shall mean the price that would be paid
per share for the entire  common  equity  interest  in the Company in an orderly
sales  transaction  between a willing  buyer and a willing  seller as determined
pursuant to good faith  negotiations  between the Company and Preferred  Holders
Designees.  In the event the parties  cannot  agree on Fair Market  Value,  Fair
Market  Value will be  determined  by an  independent  investment  banking  firm
mutually  acceptable to the Company and the Preferred Holders  Designees,  which
firm shall submit to the Company and the Holders a written  report setting forth
such  determination.  The  expenses  of such firm will be borne by the  Company,
provided  that in the event  Fair  Market  Value as  determined  by such firm is
within 10 percent of the value  determined  in good faith by the Board  prior to
appraisal,  expenses  will be paid one-half by the Company and one-half pro rata
by all affected Holders.

            (g) "Holder" means any holder of outstanding  Registrable Securities
or anyone who holds outstanding  Registrable Securities to whom the registration
rights conferred by this Agreement have been transferred in compliance with this
Agreement.

            (h)  "Initiating  Holders"  means any  Holder or Holders of at least
thirty percent (30%) of the Registrable Securities then outstanding.

            (i) "Potential  Material Event" means any of the following:  (a) the
possession by the Company of material  information  not ripe for disclosure in a
registration  statement,  which shall be evidenced by written  determination  in
good faith by the Board of  Directors  of the Company  that  disclosure  of such
information in the  registration  statement would be detrimental to the business
and affairs of the Company;  or (b) any material  engagement  or activity by the
Company  which would,  in the good faith written  determination  of the Board of
Directors of the Company,  be adversely affected by disclosure in a registration
statement at such time, which determination shall be accompanied by a good faith
written  determination  by the  Board  of  Directors  of the  Company  that  the
registration  statement would be materially  misleading  absent the inclusion of
such information.

            (j) "Preferred Holders Designees" means the two individuals selected
by the  holders of a majority  of the Series C Stock and Series D Stock,  acting
together.

            (k)  "Register,"   "registered"  and  "registration"   refers  to  a
registration  effected  by  preparing  and filing a  registration  statement  in
compliance  with the  Securities  Act,  and the  declaration  or ordering of the
effectiveness  of such  registration  statement,  and compliance with applicable
state  securities  laws of such  states in which  Holders  notify the Company of
their intention to offer Registrable Securities.

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            (l) "Registrable Securities" means all shares of Common Stock of the
Company  issued or issuable  upon  exercise of the Warrants or conversion of the
Series C Stock or Series D Stock, including any shares of Common Stock issued or
issuable as a dividend or other distribution with respect to, or in exchange for
or in replacement  of, such Common Stock issued or issuable upon the exercise of
the  Warrants  or  conversion  of  such  Series  C  Stock  or  Series  D  Stock.
Notwithstanding  the  foregoing,   Registrable   Securities  shall  not  include
otherwise Registrable  Securities (i) sold by a person in a transaction in which
rights under this Agreement are not properly assigned; (ii) sold in a registered
transaction or in a transaction exempt from the registration requirements of the
Securities  Act under  Rule  144,  Rule  144A or other  exemption;  or (iii) the
registration  rights associated with which have been terminated  pursuant to the
terms of this Agreement.

            (m)  "Registration  Expenses"  means all  expenses  incurred  by the
Company in effecting any  registration  pursuant to this  Agreement,  including,
without  limitation,  all registration,  qualification and filing fees, printing
expenses,  escrow fees, fees and disbursements of counsel for the Company,  blue
sky fees and  expenses,  and the  expense of any special  audits  incident to or
required by any such registration.

            (n) "Rule  144" and "Rule  144A"  shall mean Rule 144 and Rule 144A,
respectively,  under the Securities Act or any successor or similar rules as may
be enacted by the Commission from time to time.

            (o)  "Securities  Act" shall  mean the  Securities  Act of 1933,  as
amended,   or  any  similar  federal  statute  and  the  rules  and  regulations
thereunder, all as the same shall be in effect at the time.

Section 2.  RESTRICTIONS  ON  TRANSFERABILITY.  The  Registrable  Securities (as
defined herein) shall not be sold, assigned,  transferred or pledged except upon
the conditions  specified in this  Agreement,  which  conditions are intended to
ensure  compliance  with the provisions of the Securities  Act. Each Holder will
cause  any  proposed  purchaser,   assignee,   transferee,  or  pledgee  of  the
Registrable  Securities  held by a  Holder  to  agree  to  take  and  hold  such
securities  subject to the provisions and upon the conditions  specified in this
Agreement.

Section 3. RESTRICTIONS ON TRANSFER.


            (a) Each  certificate  representing  Registrable  Securities will be
imprinted with a legend substantially in the following form:

            THE SHARES OF THE CORPORATION REPRESENTED BY THIS
      CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE FEDERAL OR STATE
      SECURITIES LAWS.  THESE SHARES MAY NOT BE OFFERED FOR SALE, SOLD,
      OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
      AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT AN
      EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

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            Each Holder consents to the Company making a notation on its records
and giving  instructions to any transfer agent of the Registrable  Securities in
order to implement the restrictions on transfer established in this Agreement.

            (b) NOTICE.  Each Holder of a certificate  representing  Registrable
Securities,  by acceptance thereof, agrees not to make any disposition of all or
any portion of any Registrable Securities unless and until:

                 (1)  There is in  effect a  registration  statement  under  the
Securities Act covering such proposed  disposition and such  disposition is made
in accordance with such registration statement;

                 (2)  Either  Rule  144(k)  or Rule 144A  promulgated  under the
Securities Act is available and complied with in any such disposition; or

                 (3) (A) Such Holder shall have  notified the Company in writing
of the proposed  disposition and furnished the Company with a detailed statement
of the circumstances surrounding the proposed disposition, and

                     (B) If  reasonably  requested by the  Company,  such Holder
shall furnish the Company with an opinion of counsel, reasonably satisfactory to
the Company,  that such disposition will not require  registration of securities
under the Securities Act.

            (c) EXCEPTIONS. Notwithstanding the provisions of paragraphs (a) and
(b) above,  no  registration  statement or opinion of counsel shall be necessary
for a transfer by a Holder to an Affiliate thereof.

Section 4. DEMAND REGISTRATION.


            (a)  NOTICE OF  REGISTRATION;  REGISTRATION.  If the  Company  shall
receive from  Initiating  Holders a written  request that the Company effect any
registration  with  respect  to  all or at  least  one-half  of the  Registrable
Securities held by Initiating Holders, the Company shall:

                 (i) promptly give written  notice of the proposed  registration
to all  other  Holders;  and  (ii)  as  soon  as  practicable  use  commercially
reasonable efforts to register (including,  without limitation, the execution of
an undertaking  to file  post-effective  amendments  and any other  governmental
requirements) all Registrable Securities which the Initiating Holders request to
be registered  within 30 days after written  notice from the Company;  provided,
that  the  Company  shall  not be  obligated  to file a  registration  statement
pursuant to this Section 4:

      (A) prior to six months following the date of this Agreement;

      (B) in any  particular  state in which the  Company  would be  required to
execute a general consent to service of process in effecting such registration;

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      (C)  within  120  days  following  the  effective  date of any  registered
offering of the Company's  securities to the general public in which the Holders
of  Registrable  Securities  shall have been able  effectively  to register  all
Registrable Securities as to which registration shall have been requested;

      (D) in  any  registration  having  an  aggregate  offering  price  (before
deduction  of  underwriting  discounts  and  expenses  of  sale)  of  less  than
$1,000,000;

      (E) after the Company has effected two such registrations pursuant to this
Section 4 and such registrations have been declared or ordered effective, except
as provided in Section 5, and provided further, that a registration declared and
ordered effective in which less than 80% of the number of Registrable Securities
that were initially covered in the preliminary  prospectus for such registration
are ultimately  disposed of shall not be counted as a  registration  pursuant to
this Section 4; or

      (F) if  the  Company's  audited  financial  statements  would  need  to be
supplemented  with audited  financials  covering stub periods in order to comply
with the Securities Act.

Subject to the  foregoing  clauses (A)  through  (F),  the Company  shall file a
registration  statement  covering the Registrable  Securities so requested to be
registered as soon as  practical,  but in any event within 90 days after receipt
of the request or requests of the Initiating Holders, and shall use commercially
reasonable  efforts  to  have  such  registration  statement  promptly  declared
effective by the Commission,  and in any event within 90 days after such filing,
whether or not all  Registrable  Securities  requested to be  registered  can be
included; provided, however, that if the Company shall furnish to such Holders a
certificate  authorized  in writing by the Board and signed by the  President of
the Company  stating that in the  good-faith  judgment of the Board of Directors
either (i) it would be seriously detrimental to the Company and its shareholders
for such registration  statement to be filed within such 90-day period and it is
therefore advisable to defer the filing of such registration  statement, or (ii)
that there exists at the time a Potential Material Event, the Company shall have
an  additional  period of not more  than 60 days  after  the  expiration  of the
initial  90-day  period  within  which  to  file  such  registration  statement;
provided,  that  during  such  time  the  Company  may not  file a  registration
statement  for  securities  to be  issued  and  sold  for its own  account,  and
provided,  further,  that the  Company  shall  not  extend  the  filing  of such
registration more than one time in any twelve-month period.

            (b)  UNDERWRITTEN  OFFERING.  If the  Initiating  Holders  intend to
distribute the  Registrable  Securities  covered by their request by means of an
underwriting,  they shall so advise the Company as a part of their  request.  In
such event,  the Company shall include such  information  in the written  notice
referred to in subsection 4(a)(i).  If requested by the Company,  the Initiating
Holders shall negotiate with an underwriter  selected by the Company with regard
to the underwriting of such requested registration; provided, however, that if a
majority  in  interest  of the  Initiating  Holders  have not  agreed  with such
underwriter  as to the terms and conditions of such  underwriting  within twenty
(20) days following commencement of such negotiations, a majority in interest of
the Initiating  Holders may select an underwriter of their choice.  The right of
any Holder to registration  pursuant to Section 4 shall be conditioned upon such
Holder's  participation in such  underwriting and the inclusion of such Holder's
Registrable Securities in the


                                       5


underwriting.  The  Company  shall  (together  with  all  Holders  proposing  to
distribute  their   securities   through  such   underwriting)   enter  into  an
underwriting  agreement in customary form with the  underwriter or  underwriters
selected  for such  underwriting.  Notwithstanding  any other  provision of this
Section 4, if the managing underwriter advises the Initiating Holders in writing
that  marketing  factors  require  a  limitation  of the  number of shares to be
underwritten,  the Company  shall so advise all Holders and  Dresdner  Kleinwort
Benson  Private  Equity  Partners  LP  ("Dresdner")  in the  event  Dresdner  is
exercising its piggyback  rights  pursuant to that certain  Registration  Rights
Agreement  between the Company  and  Dresdner,  dated March 27, 1998 (as amended
from  time to time)  (the  "Dresdner  Agreement"),  and the  number of shares of
Registrable  Securities  (which,  for the purpose of this  Section  4(b),  shall
include any registrable  securities governed by the Dresdner Agreement) that may
be included in the registration  and  underwriting  shall be allocated among all
Holders  thereof in  proportion,  as nearly as  practicable,  to the  respective
amounts of Registrable Securities held by such Holders; provided,  however, that
securities  to be  included  in  such  registration  statement  as a  result  of
piggyback  registration  rights  (other  than  Registrable  Securities  held  by
Dresdner) as well as any  securities to be offered by the Company,  its officers
and employees  shall be excluded from the  registration  statement  prior to the
exclusion  of any  Registrable  Securities  held by the  Holders.  If any Holder
disapproves of the terms of the underwriting, he may elect to withdraw therefrom
by written notice to the Company,  the managing  underwriter  and the Initiating
Holders. If, by the withdrawal of such Registrable Securities,  a greater number
of  Registrable  Securities  held  by  other  Holders  may be  included  in such
registration  (up to the limit  imposed by the  underwriters)  the Company shall
offer  to  all  Holders  who  have  included   Registrable   Securities  in  the
registration the right to include additional  Registrable Securities in the same
proportion  used  in  determining  the  limitation  as  set  forth  above.   Any
Registrable Securities which are excluded from the underwriting by reason of the
underwriter's  marketing limitation or withdrawn from such underwriting shall be
withdrawn from such registration.

            (c)  PURCHASE  OPTION.  Notwithstanding  the  foregoing,  in lieu of
registering  securities  under the foregoing  provision,  the Company may in its
sole discretion  repurchase shares subject to a demand  registration at the then
current Fair Market Value thereof in cash,  less a reasonable  discount equal to
the  underwriting  spread that would have been  incurred in  connection  with an
underwritten  offering.  Fair  Market  Value will be  determined  as of the date
demand is received by the Company.  Any  election to purchase  shares under this
section  must be made within 30 days of the  expiration  of the 30-day  response
period for Holders  under  Section  4(a)(ii).  The Company will make payment for
securities  at the time of surrender of  certificates  representing  Registrable
Securities duly endorsed for transfer to the Company.

Section 5. PIGGYBACK REGISTRATION.


            (a)  NOTICE OF  REGISTRATION;  REGISTRATION.  If at any time or from
time to time, the Company shall determine to register any of its securities, for
its  own  account  or the  account  of any of  its  shareholders,  other  than a
registration  relating  solely  to  employee  benefit  plans,  to a SEC Rule 145
transaction,  or to a  transaction  relating  solely  to the  sale  of  debt  or
convertible debt instruments, the Company will:

                 (i)  give to each  Holder  written  notice  thereof  as soon as
practicable prior to filing the registration statement; and

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                 (ii)  include  in  such  registration  and in any  underwriting
involved therein, all the Registrable  Securities specified in a written request
or requests,  made within fifteen (15) days after receipt of such written notice
from the Company,  by any Holder or Holders,  except as set forth in  subsection
(b) below.

            (b) UNDERWRITTEN  OFFERING.  If the registration is for a registered
public  offering  involving  an  underwriting,  the Company  shall so advise the
Holders as a part of the written notice given pursuant to subsection 5(a)(i). In
such event, the right of any Holder to registration  pursuant to Section 5 shall
be conditioned  upon such Holder's  participation  in such  underwriting and the
inclusion of such Holder's  Registrable  Securities in the  underwriting  to the
extent provided  herein.  All Holders  proposing to distribute  their securities
through such underwriting shall (together with the Company and the other holders
distributing  their  securities   through  such  underwriting)   enter  into  an
underwriting  agreement in customary form with the  underwriter or  underwriters
selected  for  such  underwriting  by the  Company.  Notwithstanding  any  other
provision  of  this  Section  5, if the  managing  underwriter  determines  that
marketing   factors  require  a  limitation  of  the  number  of  shares  to  be
underwritten,  the  managing  underwriter  may limit the  number of  Registrable
Securities  (which,  for the purpose of this  Section  5(b),  shall  include any
Registrable Securities governed by the Dresdner Agreement) to be included in the
registration and underwriting in accordance with the following priority:

                 (i)  Registrable  Securities  hereunder,  allocated  among  all
Holders  thereof and Dresdner in proportion,  as nearly as  practicable,  to the
respective amounts of Registrable  Securities held by such Holders and Dresdner;
and

                 (ii) shares of Common Stock to be offered by stockholders other
than those described above.

The Company shall so advise all Holders and the other Holders distributing their
securities through such underwriting  pursuant to piggyback  registration rights
similar to this  Section 5. If any Holder  disapproves  of the terms of any such
underwriting,  he may  elect to  withdraw  therefrom  by  written  notice to the
Company and the managing underwriter.  If, by the withdrawal of such Registrable
Securities, a greater number of Registrable Securities held by other Holders may
be included in such registration (up to the limit imposed by the  underwriters),
the Company shall offer to all Holders who have included Registrable  Securities
in the registration the right to include additional Registrable Securities.  Any
Registrable  Securities  excluded or withdrawn from such  underwriting  shall be
withdrawn from registration.

Section 6.  EXPENSES OF  REGISTRATION.  All  Registration  Expenses  incurred in
connection  with  two  registrations  pursuant  to  Section  4  hereof  and  all
registrations  pursuant to Section 5 will be borne by the Company  including the
fees of one separate legal counsel of the Holders, except that the Company shall
not be required to pay underwriters' fees,  discounts or commissions relating to
Registrable Securities.

Section  7.  REGISTRATION  PROCEDURES.  For each  registration  effected  by the
Company  pursuant  to  this  Agreement,   the  Company  will  keep  each  Holder
participating  therein advised as



                                       7


to the initiation of each registration and as to the completion  thereof. At its
expense the Company will:

                 (i) use  its  commercially  reasonable  efforts  to  keep  such
registration  continuously effective for a period of 120 days or such reasonable
period necessary to permit the Holders to complete the distribution described in
the registration statement relating thereto, whichever first occurs;

                 (ii) prepare and file with the Commission  such  amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to comply with the  provisions  of the  Securities
Act, and to keep such registration  statement  effective for that period of time
specified in Section 7(i) above;

                 (iii) the Company  shall permit one or more counsel  designated
by the Preferred Holders Designees to review the Registration  Statement and all
amendments  and  supplements  thereto a reasonable  period of time (but not less
than three  business  days) prior to their filing with the  Commission,  and not
file any  document  in a form to which such  counsel  reasonably  objects;  (iv)
furnish  to  each  Holder  whose  Registrable  Securities  are  included  in the
Registration  Statement  and its legal counsel  identified  to the Company,  (i)
promptly  after the same is prepared  and publicly  distributed,  filed with the
Commission,  or received by the Company one copy of the registration  statement,
each  preliminary  prospectus and  prospectus,  and each amendment or supplement
thereto, and (ii) such number of copies of a prospectus,  and all amendments and
supplements  thereto and such other  documents,  as such  Holder may  reasonably
request in order to facilitate  the  disposition of the  Registrable  Securities
owned by such Holder;

                 (v) as promptly as  practicable  after  becoming aware thereof,
notify  each  Holder of the  happening  of any event of which  the  Company  has
knowledge,  as a result  of  which  the  prospectus  included  the  registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material  fact  required to be stated  therein or  necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading,  and use its best efforts promptly to prepare a supplement
or amendment to the registration  statement or other appropriate filing with the
Commission to correct such untrue statement or omission, and deliver a number of
copies  of such  supplement  or  amendment  to each  Holder as such  Holder  may
reasonably request;

                 (vi) subject to Section  4(a)(ii)(B),  register or qualify such
Registrable  Securities for offer and sale under the securities or blue sky laws
of such jurisdictions as any Holder or underwriter reasonably requires, and keep
such  registration  or  qualification  effective  during the period set forth in
Section 7(i) above;

                 (vii)  cause  all  Registrable   Securities   covered  by  such
registrations to be listed on each securities  exchange,  including  NASDAQ,  on
which similar securities issued by the Company are then listed;

                                       8



                 (viii) cause its  accountants to issue to the  underwriter,  if
any, comfort letters and updates thereof, in customary form and covering matters
of the type  customarily  covered in such letters  with respect to  underwritten
offerings,  and to cause its legal counsel to issue to the underwriter,  if any,
an opinion in customary form covering matters of the type customarily covered in
such opinions with respect to underwritten offerings;

                 (ix) as promptly as  practicable  after becoming aware thereof,
notify each Holder who holds Registrable Securities being sold (or, in the event
of an underwritten  offering,  the managing underwriters) of the issuance by the
Commission of any notice of  effectiveness or any stop order or other suspension
of the  effectiveness  of the  Registration  Statement at the earliest  possible
time;

                 (x)  provide a  transfer  agent and  registrar,  which may be a
single entity, for the Registrable  Securities not later than the effective date
of the registration statement;

                 (xi) cooperate with the Holders who hold Registrable Securities
being offered to facilitate the timely  preparation and delivery of certificates
for the  Registrable  Securities  to be  offered  pursuant  to the  registration
statement and enable such  certificates for the Registrable  Securities to be in
such denominations or amounts, as the case may be, as the Holders may reasonably
request,  and,  within three (3) business  days after a  registration  statement
which includes  Registrable  Securities is ordered  effective by the Commission,
the Company shall deliver, and shall cause legal counsel selected by the Company
to deliver, to the transfer agent for the Registrable Securities (with copies to
the Holders  whose  Registrable  Securities  are  included in such  registration
statement) an appropriate instruction and opinion of counsel; and

                 (xii) take such other actions as may be reasonably requested by
any Holder.

                 Notwithstanding  the foregoing,  if at any time or from time to
time after the date of effectiveness of the registration statement,  the Company
notifies the Holders of the existence of a Potential Material Event, the Holders
shall  not  offer or sell any  Registrable  Securities,  or  engage in any other
transaction involving or relating to the Registrable  Securities,  from the time
of the giving of notice with  respect to a Potential  Material  Event until such
Holder  receives  written notice from the Company that such  Potential  Material
Event  either  has been  disclosed  to the  public  or no longer  constitutes  a
Potential Material Event;  provided,  however,  that the Company may not suspend
the right to such holders of Registrable Securities for more than one sixty (60)
day period in the aggregate during any 12-month period.

Section 8. INDEMNIFICATION.

            (a) BY COMPANY.  To the extent  permitted  by law, in the event of a
registration of any of the Registrable  Securities under the Securities Act, the
Company will  indemnify  and hold  harmless  each Holder,  each  underwriter  of
Registrable Securities,  each of Holder's partners,  directors and officers, and
each other person, if any, who "controls" such Holder or underwriter  within the
meaning  of  the  Securities  Act,  against  any  losses,   claims,  damages  or
liabilities,  to which they may become  subject  under the  Securities  Act, the
Exchange  Act,  or  otherwise,  insofar  as  such  losses,  claims,  damages  or
liabilities  arise out of or are based upon (i) any untrue  statement or alleged
untrue  statement of any material fact contained in any


                                       9


registration  statement under which such Registrable  Securities were registered
under  the  Securities  Act,  any  preliminary  prospectus  or final  prospectus
contained therein, or any amendment or supplement thereof,  (ii) the omission or
alleged  omission to state therein a material fact required to be stated therein
or  necessary  to make the  statements  therein  not  misleading,  or (iii)  any
violation  or  alleged  violation  by the  Company  of any  rule  or  regulation
promulgated  under the Securities Act or any state  securities law applicable to
the  Company  or  relating  to action or  inaction  required  of the  Company in
connection with any such registration, and will reimburse each such Holder, each
of its  officers,  directors  and  partners,  and each person  controlling  such
Holder, each such underwriter and each person who controls any such underwriter,
for any  reasonable  legal  and  other  expenses  incurred  in  connection  with
investigating,  defending or settling any such loss, claim, damage, liability or
action; provided,  however, that the Company will not be liable in any such case
to the extent that amounts are paid in settlement if such settlement is effected
without the  consent of the  Company  (which  consent  will not be  unreasonably
withheld),  nor will the Company be liable for any such claim,  loss,  damage or
liability arising out of or based on any untrue statement or omission based upon
written information furnished to the Company by a Holder specifically for use in
connection with such registration.

            (b) BY HOLDERS. To the extent permitted by law, each Holder will, if
Registrable  Securities  held by or issuable to such Holder are  included in the
securities as to which such  registration is being effected,  indemnify and hold
harmless the Company, each of its directors and officers,  each underwriter,  if
any, of the Company's securities covered by such a registration statement,  each
person who controls the Company and each  underwriter  within the meaning of the
Securities Act, and each other such Holder, each of its officers,  directors and
partners and each person  controlling such Holder,  against all claims,  losses,
expenses, damages and liabilities (or actions in respect thereof) arising out of
or based on (i) any untrue  statement or alleged untrue  statement of a material
fact contained in any registration statement,  prospectus,  offering circular or
any  amendment,  supplement,  or other  document  related  thereto,  or (ii) any
omission or alleged  omission to state  therein a material  fact  required to be
stated therein or necessary to make the statements  therein not misleading,  and
will  reimburse  the  Company,  such  Holders,  and  such  directors,  officers,
partners, persons or underwriters for any reasonable legal or any other expenses
incurred in connection with investigating, defending or settling any such claim,
loss,  damage,  liability or action, in each case to the extent, but only to the
extent,  that such untrue  statement or alleged untrue  statement or omission or
alleged omission is made in such registration  statement,  prospectus,  offering
circular or other  document  in reliance  upon and in  conformity  with  written
information furnished to the Company by the Holder specifically for use therein;
provided,  however,  the  total  amount  for  which any  Holder,  its  officers,
directors and partners,  and any person controlling such Holder, shall be liable
under this Section 8(b) shall not in any event exceed the net proceeds  received
by such Holder from the sale of  Registrable  Securities  sold by such Holder in
such registration.

            (c) NOTICE PROVISIONS.  Each party entitled to indemnification under
this Section 8 (the "Indemnified Party") shall give notice to the party required
to  provide  indemnification  (the  "Indemnifying  Party")  promptly  after such
Indemnified  Party has actual  knowledge of any claims as to which indemnity may
be sought,  and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom,  provided that counsel for the
Indemnifying  Party,  who shall conduct the defense of such claim or


                                       10


litigation, shall be approved by the Indemnified Party (whose approval shall not
be unreasonably  withheld),  and the  Indemnified  Party may participate in such
defense at such party's  expense,  and provided  further that the failure of any
Indemnified  Party to give  notice as  provided  herein  shall not  relieve  the
Indemnifying Party of its obligations hereunder, unless such failure resulted in
actual  detriment to the  Indemnifying  Party.  No  Indemnifying  Party,  in the
defense of any such claim or litigation,  shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which  does not  include  as an  unconditional  term  thereof  the giving by the
claimant or plaintiff to such Indemnified  Party of a release from all liability
in respect of such claim or litigation.

            (d) CONFLICT WITH UNDERWRITING.  Notwithstanding  the foregoing,  to
the extent that the provisions on indemnification  contained in the underwriting
agreements  entered  into  among  the  selling  Holders,  the  Company  and  the
underwriters in connection with an underwritten  public offering are in conflict
with the foregoing  provisions,  the provisions in the this  Agreement  shall be
controlling as to the Registrable Securities included in the public offering.

            (e)  CONTRIBUTION  IN  LIEU  OF  INDEMNITY.  If the  indemnification
provided for in this Section 8 is held by a court of competent  jurisdiction  to
be  unavailable  to an  indemnified  party with respect to any loss,  liability,
claim,  damage or expense referred to therein,  then the indemnifying  party, in
lieu of indemnifying such indemnified party thereunder,  shall contribute to the
amount  paid or  payable  by such  indemnified  party as a result of such  loss,
liability,  claim,  damage or expense in such  proportion as is  appropriate  to
reflect the relative fault of the indemnifying  party on the one hand and of the
indemnified  party  on the  other  hand in  connection  with the  statements  or
omissions which resulted in such loss,  liability,  claim,  damage or expense as
well  as  any  other  relevant  equitable  considerations.  Notwithstanding  the
foregoing,  the amount any Holder shall be obligated to  contribute  pursuant to
this  Section  8(e) shall be limited to an amount  equal to the net  proceeds to
such Holder.

            (f)  SURVIVAL OF  INDEMNITY.  The  indemnification  provided by this
Section 8 shall be a continuing  right to  indemnification  and will survive the
registration   and  sale  of  any   securities   by  any  person   entitled   to
indemnification hereunder and the expiration or termination of this Agreement.

Section  9.  INFORMATION  BY  HOLDER.  The  Holder  or  Holders  of  Registrable
Securities  included in any  registration  shall promptly furnish to the Company
such information  regarding such Holder or Holders and the distribution proposed
by such  Holder or Holders as the  Company may request in writing or as shall be
required in connection with any registration referred to herein.

Section 10. RULE 144 REPORTING.  With a view to making  available to Holders the
benefits of Rule 144, the Company will:

            (a) make and keep public information  available,  as those terms are
understood and defined in Rule 144;

                                       11



            (b) use its best  efforts  to file with the  Commission  in a timely
manner  all  reports  and other  documents  required  of the  Company  under the
Securities Act and the Exchange Act; and

            (c)  furnish a Holder,  so long as the Holder  owns any  Registrable
Securities,  upon request, (i) a written statement that it has complied with the
reporting  requirements  of Rule 144,  (ii) a copy of the most recent  annual or
quarterly  report of the Company,  and such other reports and documents filed by
the Company with the Commission as may be reasonably  requested,  and (iii) such
other  information  as may be  reasonably  requested  by any Holder in  availing
itself of any rule or regulation of the Commission  which permits the selling of
any securities without registration.

Section 11. TRANSFER OF REGISTRATION  RIGHTS. The rights to cause the Company to
register  Registrable  Securities of a Holder granted to a Holder by the Company
under  Sections 4 and 5 may be  assigned  by a Holder to any  Affiliate,  to any
other Holder, or to a transferee or assignee who receives at least 25,000 shares
of Registrable Securities (as adjusted for stock splits and the like); provided,
that the Company is given written notice by the Holder a reasonable  time before
said transfer,  stating the name and address of said  transferee or assignee and
identifying  the securities with respect to which such  registration  rights are
being assigned, and the Holder complies with the provisions of this Agreement.

Section 12. LIMITATIONS ON SUBSEQUENT  REGISTRATION  RIGHTS.  From and after the
date these registration  rights are granted,  the Company shall not, without the
prior written consent of the Holders of a majority of the Registrable Securities
then held by Holders,  enter into any agreement  with any holder or  prospective
holder of any securities of the Company which provides such holder or holders of
securities comparable rights to the rights of any Holder hereunder.

Section 13.  MARKET  STANDOFF-AGREEMENT.  Each Holder hereby agrees that it will
not, to the extent requested by the Company and any underwriter of securities of
the Company, sell or otherwise transfer or dispose of any Registrable Securities
to the public,  except  Common  Stock  included in such  registration,  during a
90-day period  following the effective date of a  registration  statement of the
Company  filed  under  the  Securities  Act,  provided  that  all  persons  with
registration rights and all officers, directors and holders of 5 percent or more
of the then  outstanding  voting capital stock of the Company enter into similar
agreements.  In order to enforce the foregoing provision, the Company may impose
stock transfer  instructions with respect to the Registrable  Securities of each
Holder until the end of such 90-day period.

Section 14.  TERMINATION OF RIGHTS. The rights of any particular Holder to cause
the Company to register  securities  under this  Agreement  will  terminate with
respect to such  Holder at such time as such Holder is able to dispose of all of
his Registrable  Securities in one three-month period pursuant to the provisions
of Rule 144.

Section 15. MISCELLANEOUS.

            (a)  AMENDMENTS.  This  Agreement  may be amended  only by a writing
signed  by the  Holders  of more than  fifty  percent  (50%) of the  Registrable
Securities,  as  constituted  from


                                       12


time to time,  provided that any amendment to this Agreement that materially and
adversely  affects a Holder  shall  also  require  the  written  consent of such
affected Holder.

            (b)  COUNTERPARTS.  This  Agreement may be executed in any number of
counterparts, all of which shall constitute a single instrument.

            (c) NOTICES,  ETC. All notices and other communications  required or
permitted  hereunder  shall be in writing and may be sent initially by facsimile
transmission  and shall be mailed by registered  or certified  mail or overnight
courier,  postage  prepaid,  or  otherwise  delivered  by hand or by  messenger,
addressed (a) if to a Holder, at such Holder's address set forth on the books of
the Company, or at such other address as such Holder shall have furnished to the
Company in  writing,  or (b) if to the  Company,  one copy should be sent to the
Company's  current address at Suite 400, 1411 S.W.  Morrison  Street,  Portland,
Oregon 97205,  Attn:  Chief Financial  Officer,  or at such other address as the
Company  shall  have  furnished  to the  Holders.  Each  such  notice  or  other
communication  shall for all purposes of this  Agreement be treated as effective
or having been given when  delivered  if  delivered  personally,  or, if sent by
first class,  postage prepaid mail, at the earlier of its receipt or seventy-two
(72)  hours  after  the same has  been  deposited  in the  United  States  mail,
addressed and mailed as aforesaid.

            (d)  SEVERABILITY.  If any provision of this Agreement shall be held
to  be  illegal,  invalid  or  unenforceable,  such  illegality,  invalidity  or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal,  invalid or unenforceable  any other provision of this
Agreement,  and this  Agreement  shall be  carried  out as if any such  illegal,
invalid or unenforceable provision were not contained herein.

            (e)  CHANGE IN  CAPITAL  STOCK.  If,  and as often as,  there is any
change in the Common Stock by way of a stock split, stock dividend,  combination
or  reclassification,  or  through a merger,  consolidation,  reorganization  or
recapitalization, or by any other means, appropriate adjustment shall be made in
the  provisions  hereof so that the rights and  privileges  granted hereby shall
continue with respect to the Common Stock as so changed.

            (f) GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Oregon  without  regard to principles of conflict
of law.

                   Remainder of page intentionally blank





            IN WITNESS WHEREOF,  the undersigned have executed this Agreement as
of the date first above written.


THE COMPANY:                        GARDENBURGER, INC.

                                    By /s/ Scott C. Wallace
                                      ----------------------------------
                                      Scott C. Wallace, President


PREFERRED STOCKHOLDERS:             ROSEWOOD CAPITAL III, L.P.

                                    By:  Rosewood Capital Associates, LLC,
                                         General Partner

                                    By /s/ Kyle A. Anderson
                                      ----------------------------------
                                      Kyle A. Anderson, Managing Director

                                    FARALLON CAPITAL PARTNERS, L.P.
                                    FARALLON CAPITAL INSTITUTIONAL
                                       PARTNERS, L.P.
                                    FARALLON CAPITAL INSTITUTIONAL
                                       PARTNERS II, L.P.
                                    FARALLON CAPITAL INSTITUTIONAL
                                       PARTNERS III, L.P.
                                    TINICUM PARTNERS, L.P., and
                                    FARALLON CAPITAL (CP) INVESTORS, L.P.

                                    By:  Farallon Partners, L.L.C., each of its
                                         general partners

                                    By /s/ Mark C. Wehrly
                                      ----------------------------------
                                      Mark C. Wehrly,
                                      Managing Member

                                    FARALLON CAPITAL OFFSHORE INVESTORS, INC.

                                    By:  Farallon Capital Management, L.L.C.,
                                          Its Agent and Attorney-in-Fact

                                    By:  /s/ Mark C. Wehrly
                                         -------------------------------
                                         Mark C. Wehrly,
                                         Managing Partner

                                       13



                                    U.S. DEVELOPMENT CAPITAL PORTFOLIO
                                    COMPANY

                                    By [illegible]
                                      ----------------------------------
                                    Title  Secretary
                                          -----------------------

                                    DB CAPITAL INVESTORS, L.P.

                                    By /s/ Edward V. Dardani
                                      ----------------------------------
                                      Ted Dardani, Director

                                    CASTLEWOOD EXPANSION PARTNERS, L.P.

                                    By  BT Investment Partners, Inc.
                                         its general partner

                                    By /s/ Kristine Cicardo
                                      ----------------------------------
                                      Kristine Cicardo, Director
                                      January 10, 2002

                                     /s/ Arvin H. Kash
                                    -------------------------------------
                                    Arvin H. Kash

                                     /s/ William D. Smithberg
                                    -------------------------------------
                                    William D. Smithberg

                                    GRUBER & McBAINE INTERNATIONAL
                                    LAGUNITAS PARTNERS, L.P.
                                    LOCKHEED MARTIN
                                    HAMILTON COLLEGE


                                    By  /s/ J. Patterson McBaine
                                      ----------------------------------
                                      J. Patterson McBaine, Managing Member
                                      Gruber & McBaine Capital Management LLC
                                      executing in the following capacities:

                                    GRUBER & McBAINE INTERNATIONAL,
                                        Attorney-in-Fact
                                    LOCKHEED MARTIN, Attorney in Fact
                                    HAMILTON COLLEGE, Attorney in Fact and
                                    LAGUNITAS PARTNERS, L.P., General Partner