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                                                                    EXHIBIT 10.3

                           EDEN BIOSCIENCE CORPORATION

           1995 COMBINED INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN

                               SECTION 1. PURPOSE

        The purpose of the 1995 Combined Incentive and Nonqualified Stock Option
Plan (the "Plan") is to enable Eden Bioscience Corporation (the "Company") to
attract and retain the services of people with training, experience and ability
and to provide additional incentive to such persons by granting them an
opportunity to participate in the ownership of the Company.

                        SECTION 2. STOCK SUBJECT TO PLAN

        The stock subject to this Plan shall be the Company's Common Stock, par
value $.0025 per share (the "Common Stock"), presently authorized but unissued
or now held or subsequently acquired by the Company as treasury shares. Subject
to adjustment as provided in Section 10, the aggregate amount of Common Stock
reserved for issuance or delivery upon exercise of all options granted under
this Plan shall not exceed 3,250,000 shares of Common Stock, as constituted on
the date of adoption of this Plan by the Board of Directors. If any option
granted under this Plan shall expire or terminate for any reason without having
been exercised in full, the unpurchased shares subject thereto shall thereupon
again be available for purposes of this Plan.

                            SECTION 3. ADMINISTRATION

        The Plan shall be administered by the Board of Directors of the Company,
in accordance with the following terms and conditions:

        3.1 General Authority. Subject to the express provisions of the Plan,
the Board of Directors shall have the authority, in its discretion, to determine
all matters relating to options to be granted under the Plan, including the
selection of individuals to be granted options, the number of shares to be
subject to each option, the exercise price, the term, whether such options shall
be immediately exercisable or shall become exercisable in increments over time,
and all other terms and conditions thereof. Grants under this Plan to persons
eligible need not be identical in any respect, even when made simultaneously.
The Board of Directors may from time to time adopt rules and regulations
relating to the administration of the Plan. The interpretation and construction
by the Board of Directors of any terms or provisions of this Plan or any option
issued hereunder, or of any rule or regulation promulgated in connection
herewith, or of any rule or regulation promulgated in

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connection herewith, shall be conclusive and binding on all interested parties.
The Board of Directors in its sole discretion, may grant incentive stock options
("Incentive Stock Options") as such term is defined in Section 422 of the
Internal Revenue Code of 1986, as amended, (the "Code") and/or nonqualified
stock options ("Nonqualified Stock Options"). A Nonqualified Stock Option is a
stock option which is not an Incentive Stock Option. The type of option granted,
whether an Incentive Stock Option or a Nonqualified Stock Option shall be
clearly identified by the Board of Directors when granted. The term option when
used in this Plan refers to Incentive Stock Options and Nonqualified Stock
Options, collectively.

        3.2 Directors. A member of the Board of Directors shall be eligible to
participate in or receive or hold options under this Plan; provided, however,
that no member of the Board of Directors shall vote with respect to the granting
of an option hereunder to himself or herself, as the case may be.

        3.3 Delegation to a Committee. Notwithstanding the foregoing, the Board
of Directors, if it so determines, may delegate to a committee of the Board of
Directors any or all authority for the administration of the Plan, and
thereafter references to the Board of Directors in this Plan shall be deemed to
be references to the committee to the extent provided in the resolution
establishing the committee.

        3.4 Persons Subject to Section 16(b). Notwithstanding anything in the
Plan to the contrary, the of Directors, in its absolute discretion, may
bifurcate the Plan so as to restrict, limit or condition the use of any
provision of the Plan to participants who are officers or directors subject to
Section 16(b) of the Securities Exchange Act of 1934, as amended, (the "1934
Act") without so restricting, limiting or conditioning the Plan with respect to
other participants.

        3.5 Full-Recourse Loans to Optionees. The Board of Directors, in its
absolute discretion, may provide that the Company loan to Optionees sufficient
funds to exercise any option granted under the Plan and/or to pay withholding
tax due upon exercise of such option. The Board of Directors shall have the
authority to make such determinations at the time of grant or exercise and shall
establish repayment terms thereof, including installments, maturity and interest
rate; provided, however, that repayment of any Company loan to the Optionee
shall be secured by delivery of a full-recourse promissory note for the loan
amount executed by the Optionee, together with any other form of security
determined by the Board of Directors. The amount of any full-recourse promissory
note delivered in connection with an Incentive Stock Option shall bear interest
at a rate specified by the Board of Directors but in no case less than the rate
required to avoid imputation of interest (taking into account any


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exceptions to the imputed interest rules) for federal income tax purposes.

                             SECTION 4. ELIGIBILITY

        Options may be granted only to persons who, at the time the option is
granted, are employees or directors of, or consultants or independent
contractors to, the Company or any of its present or future parent or subsidiary
corporations (as those terms are used in Section 422(a)(2) and (d)(1) and
Section 424(e) and (f) of the Code, hereafter a "Parent" or "Subsidiary"). Any
individual to whom an option is granted under this Plan shall be referred to
hereinafter as "Optionee". Any Optionee may receive one or more grants for
options as the Board of Directors as shall from time to time determine, and such
determinations may be different as to different Optionees and may vary as to
different grants. Optionees who are not employees will only be eligible to
receive Nonqualified Stock Options.

                   SECTION 5. TERMS AND CONDITIONS OF OPTIONS

        Options granted under this Plan shall be evidenced by written agreements
which shall contain such terms, conditions, limitations and restrictions as the
Board of Directors shall deem advisable and which are not inconsistent with this
Plan. Each option granted hereunder shall clearly indicate whether it is an
Incentive Stock Option or Nonqualified Stock Option. Notwithstanding the
foregoing, all such options shall include or incorporate by reference the
following terms and conditions:

        5.1 Number of Shares; Price. The maximum number of shares that may be
purchased pursuant to the exercise of each option and the price per share at
which such option is exercisable (the "exercise price") shall be as established
by the Board of Directors, provided that the exercise price of Incentive Stock
Options shall not be less than the fair market value per share of the Common
Stock at the time the option is granted, as determined in good faith by the
Board of Directors. The exercise price of Nonqualified Stock Options may be
greater or less than the fair market value per share of the Common Stock at the
time the option is granted.

        5.2 Duration of Options. Subject to the restrictions contained in
Section 9, the term of each option shall be established by the Board of
Directors and, if not so established, shall be ten years from the date it is
granted, but in no event shall the term of any Incentive Stock Option exceed ten
years.

        5.3 Exercisability. Each option shall prescribe the installments, if
any, in which an option granted under the Plan shall become exercisable. The
Board of Directors, in its absolute discretion, may waive or accelerate any
installment requirement contained in outstanding options. In no case may an
option be exercised


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as to less than 100 shares at any one time (or the remaining shares covered by
the option if less than 100) during the term of the option. Only whole shares
shall be issued pursuant to the exercise of any option.

        5.4 Incentive Stock Option. Any option which is issued as an Incentive
Stock Option under this Plan, shall, notwithstanding any other provisions of
this Plan or the option terms to the contrary, contain all of the terms,
conditions, restrictions, rights and limitations required to be an Incentive
Stock Option, and any provision to the contrary shall be disregarded.

                    SECTION 6. NONTRANSFERABILITY OF OPTIONS

        Options granted under this Plan and the rights and privileges conferred
hereby may not be transferred, assigned, pledged or hypothecated in any manner
(whether by operation of law or otherwise) other than by will or the applicable
laws of descent and distribution, and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of any option under this Plan or any right or
privilege conferred hereby, contrary to the provisions hereof, or upon the sale
or levy or any attachment or similar process, such option thereupon shall
terminate and become null and void. During an Optionee's lifetime, any options
granted under this Plan are personal to him or her and are exercisable solely by
such Optionee. Notwithstanding the foregoing, and to the extent permitted by
Section 422 of the Code, the Board of Directors, in its sole discretion, may
permit such transfer, assignment and exercisability and may permit an Optionee
to designate a beneficiary who may exercise the option after the Optionee's
death; provided, however, that any option so transferred or assigned shall be
subject to all the same terms and conditions contained in the instrument
evidencing the option.

        SECTION 7. CERTAIN LIMITATIONS REGARDING INCENTIVE STOCK OPTIONS

        The grant of Incentive Stock Options shall be subject to the following
special limitations:

        7.1 Limitation on Amount of Grants. In no event shall any Optionee be
granted Incentive Stock Options that in the aggregate (together with all other
Incentive Stock Options granted by the Company or any Parents or Subsidiaries)
entitle the Optionee to purchase, in any calendar year during which such options
first become exercisable, stock of the Company, any Parent or any Subsidiary
having a fair market value (determined as of the time such options are granted)
in excess of $100,000. No limitation shall apply to Nonqualified Stock Options.


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        7.2 Grants to 10% Shareholders. Incentive Stock Options may be granted
to a person owning more than 10% of the total combined voting power of all
classes of stock of the Company and any Parent or Subsidiary only if (i) the
exercise price is at least 110% of the fair market value of the stock at the
time of grant, and (ii) the option is not exercisable after the expiration of
five years from the date of grant.

                         SECTION 8. EXERCISE OF OPTIONS

        Options shall be exercised in accordance with the following terms and
conditions:

        8.1 Procedure. Options shall be exercised by delivery to the Company of
written notice of the number of shares with respect to which the option is
exercised.

        8.2 Payment. Payment of the option price shall be made in full within
three business days of the notice of exercise of the option and shall be in cash
or bank-certified or cashier's checks, or personal check if permitted by the
Board of Directors. To the extent permitted by applicable laws and regulations
(including, but not limited to, federal tax and securities laws and
regulations), an option may be exercised by (a) tendering (either actually or,
if and so long as the Common Stock is registered under Section 12(b) or 12(g) of
the Exchange Act, by attestation) shares of Common Stock already owned by the
Optionee for at least six months (or any shorter period necessary to avoid a
charge to the Company's earnings for financial reporting purposes) having a fair
market value on the day prior to the exercise date equal to the aggregate option
exercise price or (b) if and so long as the Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act, delivery of a properly executed
exercise notice, together with irrevocable instructions, to (i) a brokerage firm
designated by the Company to deliver promptly to the Company the aggregate
amount of sale or loan proceeds to pay the option exercise price and any
withholding tax obligations that may arise in connection with the exercise and
(ii) the Company to deliver the certificates for such purchased shares directly
to such brokerage firm, all in accordance with the regulations of the Federal
Reserve Board. In addition, the exercise price for shares purchased under an
option may be paid, either singly or in combination with one or more of the
alternative forms of payment authorized by this Section 8.2, by such other
consideration as the Board of Directors may permit.

        8.3 Federal Withholding Tax Requirements. Upon exercise of an option,
the Optionee shall, upon notification of the amount due and prior to or
concurrently with the delivery of the certificates representing the shares, pay
to the Company amounts necessary to satisfy any applicable federal, state and
local withholding tax requirements or shall otherwise make arrangements
satisfactory to the Company for such requirements. Such arrangements may include
payment of the appropriate


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withholding tax in shares of stock of the Company having a fair market value
equal to such withholding tax, either through delivery of shares held by the
Optionee or by reduction in the number of shares to be delivered to the Optionee
upon exercise of such option.

           SECTION 9. TERMINATION OF EMPLOYMENT, DISABILITY AND DEATH

        9.1 General. If the employment of the Optionee by the Company, a Parent
or a Subsidiary shall terminate by retirement or for any reason other than
death, disability or cause as hereinafter provided, the option may be exercised
by the Optionee at any time prior to the expiration of three months after the
date of such termination of employment (unless by its terms the option sooner
terminates or expires), but only if, and to the extent the Optionee was entitled
to exercise the option at the date of such termination.

        9.2 Disability. If the employment of the Optionee by the Company, a
Parent or a Subsidiary is terminated because of the Optionee's disability (as
herein defined), the option may be exercised by the Optionee at any time prior
to the expiration of one year after the date of such termination (unless by its
terms the option sooner terminates or expires), but only if, and to the extent
the Optionee was entitled to exercise the Option at the date of such
termination. For purposes of this section, an Optionee will be considered to be
disabled if the Optionee is unable to engage in any substantial gainful activity
by reason of any medically determinable mental or physical impairment which can
be expected to result in death or which has lasted or can be expected to last a
continuous period of not less than 12 months.

        9.3 Death. In the event of the death of an Optionee while in the employ
of the Company, a Parent or a Subsidiary, the option shall be exercisable on or
prior to the expiration of one year after the date of such death (unless by its
terms the option sooner terminates and expires), but only if and to the extent
the Optionee was entitled to exercise the option at date of such death and only
by the Optionee's personal representative if then subject to administration as
part of the Optionee's estate, or by the person or persons to whom such
Optionee's rights under the option shall have passed by the Optionee's will or
by the applicable laws of descent and distribution.

        9.4 Termination for Cause. If the Optionee's employment with the
Company, a Parent or a Subsidiary is terminated for cause, any option granted
hereunder shall automatically terminate as of the first advice or discussion
thereof, and such Optionee shall thereupon have no right to purchase any shares
pursuant to such option. "Termination for Cause" shall mean dismissal for
dishonesty, conviction or confession of a crime punishable by law (except minor
violations), intoxication while at work,


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fraud, misconduct or disclosure of confidential information.

        9.5 Waiver or Extension of Time Periods. The Board of Directors shall
have the authority, prior to or within the times specified in this Section 9 for
the exercise of any such option, to extend such time period or waive in its
entirety any such time period to the extent that such time period expires prior
to the expiration of the term of such option. In addition, the Board of
Directors may grant, pursuant to a specific resolution adopted at the time of
grant, modify or eliminate the time periods specified in this Section 9.
However, no Incentive Stock Option may be exercised after the expiration of ten
years from the date such option is granted. If an Optionee holding an Incentive
Stock Option exercises such option, by permission, after the expiration of the
time period specified in this Section 9, the option will no longer be treated as
an Incentive Stock Option under the Code and shall automatically be converted
into a Nonqualified Stock Option.

        9.6 Termination of Options. To the extent that the option of any
deceased Optionee or of any Optionee whose employment is terminated shall not
have been exercised within the limited periods prescribed in this Section 9, all
further rights to purchase shares pursuant to such option shall cease and
terminate at the expiration of such period. No Incentive Stock Option may be
exercised after the expiration of ten (10) years from the date such option is
granted, notwithstanding any provision to the contrary.

        9.7 Non-Employee Optionees. Options granted to optionees who are not
employees of the Company, a Parent or a Subsidiary at the time of grant shall
not be subject to the provisions of this Section 9, except as specifically
provided in the option.


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                         SECTION 10. OPTION ADJUSTMENTS

        10.1 Adjustments Upon Changes in Capitalization. The aggregate number
and class of shares on which options may be granted under this Plan, the number
and class of shares covered by each outstanding option and the exercise price
per share thereof (but not the total price), and all such options, shall each be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock of the Company resulting from a split-up or consolidation
of shares or any like capital adjustment, or the payment of any stock dividend,
or any other increase or decrease in the number of shares of Common Stock of the
Company without the receipt of consideration by the Company.

        10.2 Effect of Certain Transactions. Except as provided in subsection
10.3, upon a merger, consolidation, acquisition of property or stock,
reorganization or liquidation of the Company, as a result of which the
shareholders of the Company receive cash, stock or other property in exchange
for their shares of Common Stock, any option granted hereunder shall terminate,
provided that the Optionee shall have the right immediately prior to any such
merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation to exercise his or her option in whole or in part
whether or not the vesting requirements set forth in the option agreement have
been satisfied.

        10.3 Conversion of Options on Stock for Stock Exchange. If the
shareholders of the Company receive capital stock of another corporation
("Exchange Stock") in exchange for their shares of Common Stock in any
transaction involving a merger, consolidation, acquisition of property or stock
or reorganization, all options granted hereunder shall terminate in accordance
with the provision of subsection 10.2 unless the Board of Directors and the
corporation issuing the Exchange Stock, in their sole discretion and subject to
any required action by the shareholders of the Company and such corporation,
agree that all such options granted hereunder are converted into options to
purchase shares of Exchange Stock. The amount and price of such options shall be
determined by adjusting the amount and price of the options granted hereunder in
the same proportion as used for determining the number of shares of Exchange
Stock the holders of the Common Stock receive in such merger, consolidation,
acquisition of property or stock, separation or reorganization. The vesting
schedule set forth in the option agreement shall continue to apply to the
options granted for the Exchange Stock.

        10.4 Acceleration. Except as otherwise provided in the instrument
evidencing the option, any options that are converted into options to purchase
shares of Exchange Stock shall automatically become 100% vested and exercisable
in the event that an Optionee's employment or service relationship should
terminate in contemplation of or


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within three years after a transaction in which shareholders of the Company
receive Exchange Stock, unless such employment or service relationship is
terminated for Cause (as defined below) or by the Participant voluntarily
without Good Reason (as defined below).

        For purposes of the foregoing, "Cause" means, unless otherwise defined
in an employment or services agreement between the Company and an Optionee,
dishonesty, fraud, misconduct, unauthorized use or disclosure of confidential
information or trade secrets, or conviction or confession of a crime punishable
by law (except minor violations), in each case as determined by the Board of
Directors, and its determination shall be conclusive and binding.

        "Good Reason" means the occurrence of any of the following events or
conditions and the failure of another corporation to a transaction (the
"Successor Corporation") to cure such event or condition within 30 days after
receipt of written notice from the Optionee:

        (a) a change in the Optionee's status, title, position or
responsibilities (including reporting responsibilities) that, in the Optionee's
reasonable judgment, represents a substantial reduction in the status, title,
position or responsibilities as in effect immediately prior thereto; the
assignment to the Optionee of any duties or responsibilities that, in the
Optionee's reasonable judgment, are materially inconsistent with such status,
title, position or responsibilities; or any removal of the Optionee from or
failure to reappoint or reelect the Optionee to any of such positions, except in
connection with the termination of the Optionee's employment for Cause, as a
result of his or her disability or death, or by the Optionee other than for Good
Reason;

        (b) a reduction in the Optionee's annual base salary;

        (c) the Successor Corporation's requiring the Optionee (without the
Optionee's consent) to be based at any place outside a 50-mile radius of his or
her place of employment prior to a transaction, except for reasonably required
travel on the Successor Corporation's business that is not materially greater
than such travel requirements prior to the transaction;

        (d) the Successor Corporation's failure to (i) continue in effect any
material compensation or benefit plan (or the substantial equivalent thereof) in
which the Optionee was participating at the time of a transaction, including,
but not limited to, the Plan, or (ii) provide the Optionee with compensation and
benefits substantially


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equivalent (in terms of benefit levels and/or reward opportunities) to those
provided for under each material employee benefit plan, program and practice as
in effect immediately prior to the transaction;

        (e) any material breach by the Successor Corporation of its obligations
to the Optionee under the Plan or any substantially equivalent plan of the
Successor Corporation; or

        (f) any purported termination of the Optionee's employment or service
relationship for Cause by the Successor Corporation that is not in accordance
with the definition of Cause under the Plan.

        10.5 Fractional Shares. In the event of any adjustment in the number of
shares covered by any option, any fractional shares resulting from such
adjustment shall be disregarded and each such option shall cover only the number
of full shares resulting from such adjustment.

        10.6 Determination of Board f Directors to be Final. All such
adjustments shall be made by the Board of Directors and its determination as to
what adjustments shall be made, and the extent thereof, shall be final, binding
and conclusive.

                       SECTION 11. SECURITIES REGULATIONS

        11.1 Compliance. Shares shall not be issued with respect to an option
granted under this Plan unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, any applicable state
securities laws, the Securities Act of 1933, as amended, the 1934 Act, the rules
and regulations promulgated thereunder, and the requirements of any stock
exchange upon which the shares may then be listed, and shall further be subject
to the approval of counsel for the company with respect to such compliance.
Inability of the Company to obtain from any regulatory body having jurisdiction,
the authority deemed by the Company's counsel to be necessary for the lawful
issuance and sale of any shares hereunder, shall relieve the Company of any
liability in respect of the nonissuance or sale of such shares as to which such
requisite authority shall not have been obtained.

        11.2 Representations by Optionee. As a condition to the exercise of an
option, the Company may require the Optionee to represent and warrant at the
time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares,
if, in the opinion of counsel for the Company, such representation is required
by any relevant provision of the laws referred to in Section 11.1. At the option
of the Company, a stop transfer order


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against any records of the Company, and a legend indicating that the stock may
not be pledged, sold or otherwise transferred unless an opinion of counsel was
provided (concurred in by counsel for the Company) stating that such transfer is
not in violation of any applicable law or regulation, may be stamped on the
stock certificate in order to assure exemption from registration. The Board of
Directors may also require such other action or agreement by the Optionees as
may from time to time be necessary to comply with the federal and state
securities laws. This provision shall not obligate the Company to undertake
registration of options or stock hereunder.

                          SECTION 12. EMPLOYMENT RIGHTS

        Nothing in this Plan or any option or right granted pursuant hereto
shall confer upon any Optionee any right to be continued in the employment of
the Company, a Parent or any Subsidiary of the Company or to remain a director,
or to interfere in any way with the right of the Company, a Parent or any
Subsidiary, in its sole discretion, to terminate such Optionee's employment at
any time or to remove the Optionee as a director at any time.

                      SECTION 13. AMENDMENT AND TERMINATION

        13.1 Action by Shareholders. The Plan may be terminated, modified or
amended by the shareholders of the Company.

        13.2 Action by Board of Directors. The Board of Directors may also
terminate the Plan, or modify or amend the Plan in such respects as it shall
deem advisable in order to conform to any changes in law or regulation
applicable thereto, or in other respects; provided, however, that the Board of
Directors may not, without further approval by the shareholders of the Company:

               (i)       Change the number of shares in the aggregate which may
be sold pursuant to options granted under the Plan;

               (ii)      Except as provided in Section 9.5, increase the period
during which options may be granted or exercised; or

               (iii)     Change the terms of the Plan which causes the Plan to
lose its qualification as an incentive stock option plan under Section 422 of
the Code.

        No termination, suspension or amendment of the Plan may, without the
consent of each Optionee to whom any option shall theretofore have been granted,
adversely affect the rights of such Optionees under such options.

        13.3 Automatic Termination. Unless the Plan shall theretofore have been


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terminated as herein provided, this Plan shall terminate ten (10) years from the
earlier of: (i) the date on which the Plan is adopted; or (ii) the date on which
this Plan is approved by the shareholders of the Company. No option may be
granted after such termination, or during any suspension of this Plan. The
amendment or termination of this Plan shall not, without the consent of the
Optionee, alter or impair any rights or obligations under any option theretofore
granted under this Plan.

                     SECTION 14. EFFECTIVE DATE OF THE PLAN

        This Plan shall become effective on the date of its adoption by the
Board of Directors of the Company and options may be granted immediately
thereafter but no option may be exercised under the Plan unless and until the
Plan shall have been approved by the shareholders within 12 months after the
date of adoption of the Plan by the Board of Directors. If such approval is not
obtained within such period the Plan and any options granted thereunder shall be
null and void.

        Approved by the Board of Directors on April 11, 1995 and approved by
shareholders on May 8, 1995. Amendment to Section 2 to increase authorized
number of shares to 1,250,000 approved by the Board on March 20, 1997 and
approved by the shareholders on December 9, 1997; amendment to Section 2 to
increase authorized shares to 1,750,000 approved by the Board on July 27, 1998
and approved by the shareholders on December 29, 1998; amendment to Section 2 to
increase authorized shares to 2,250,000 approved by the Board on October 25,
1999 and approved by the shareholders on December 16, 1999; and further amended
and restated by the Board on July 6, 2000 to increase authorized shares to
3,250,000 and to make various other technical amendments. Amendments approved by
the shareholders on __________, 2000.

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