GARDENBURGER, INC.

                            2001 STOCK INCENTIVE PLAN


                           Effective February 13, 2001

                                  (as revised)

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                               GARDENBURGER, INC.
                            2001 STOCK INCENTIVE PLAN

                                   ARTICLE 1
                            ESTABLISHMENT AND PURPOSE

1.1 ESTABLISHMENT. Gardenburger, Inc., an Oregon corporation ("Corporation"),
hereby establishes the Gardenburger, Inc. 2001 Stock Incentive Plan (the "Plan")
effective February 13, 2001, subject to shareholder approval as provided in
Article 17.

1.2 PURPOSE. The purpose of the Plan is to promote and advance the interests of
Corporation and its shareholders by enabling Corporation to attract, retain, and
reward key employees, directors, and outside consultants of Corporation and its
subsidiaries. The Plan also is intended to strengthen the mutuality of interests
between such employees, directors, and consultants and Corporation's
shareholders. The Plan is designed to serve these purposes by offering stock
options and other equity-based incentive awards, thereby providing a proprietary
interest in pursuing the long-term growth, profitability, and financial success
of Corporation.

1.3 PRIOR PLAN. The Plan will be separate from the Gardenburger 1992 Combination
Stock Option Plan (the "Prior Plan"). The adoption and operation of the Plan
will neither affect nor be affected by the continued existence of the Prior Plan
except that:

(a)      After the effective date of the Plan, no further stock options will be
         granted under the Prior Plan; and

(b)      The number of Shares which may be made subject to Awards under the Plan
         will be adjusted pursuant to Section 4.2 to reflect cancellation,
         termination, or expiration of stock options previously granted under
         the Prior Plan.

                                    ARTICLE 2
                                   DEFINITIONS

2.1 DEFINED TERMS. For purposes of the Plan, the following terms have the
meanings set forth below:

                  "AWARD" means an award or grant made to a Participant of
         Options, Stock Appreciation Rights, Restricted Awards, Performance
         Awards, or Other Stock-Based Awards pursuant to the Plan.

                  "AWARD AGREEMENT" means an agreement as described in Section
6.4.

                  "BOARD" means the Board of Directors of Corporation.

                  "CODE" means the Internal Revenue Code of 1986, as amended and
         in effect from time to time, or any successor thereto, together with
         rules, regulations, and interpretations promulgated thereunder. Where
         the context so requires, any reference to a particular Code section
         will be construed to refer to the successor provision to such Code
         section.

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                  "COMMITTEE" means the committee to which administration of the
         Plan may be delegated by the Board pursuant to Section 3.2.

                  "COMMON STOCK" means the no par value common stock of
         Corporation or any security of Corporation issued in substitution,
         exchange, or lieu of such common stock.

                  "CONSULTANT" means any consultant or adviser to Corporation or
         a Subsidiary selected by the Committee, who is neither an employee of
         Corporation or a Subsidiary nor a Non-Employee Director.

                  "CONTINUING RESTRICTION" means a Restriction contained in
         Sections 6.7, 6.8, and 16.4 of the Plan and any other Restrictions
         expressly designated by the Committee in an Award Agreement as a
         Continuing Restriction.

                  "CORPORATION" means Gardenburger, Inc., an Oregon corporation,
         or any successor corporation.

                  "DEFERRED COMPENSATION OPTION" means a Nonqualified Option
         granted in lieu of a specified amount of other compensation pursuant to
         Section 7.8 of the Plan.

                  "DISABILITY" means the condition of being permanently
         "disabled" within the meaning of Section 22(e)(3) of the Code, namely
         being unable to engage in any substantial gainful activity by reason of
         any medically determinable physical or mental impairment which can be
         expected to result in death or which has lasted or can be expected to
         last for a continuous period of not less than 12 months. However, the
         Committee may change the foregoing definition of "Disability" or may
         adopt a different definition for purposes of specific Awards.

                  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
         amended and in effect from time to time, or any successor statute.
         Where the context so requires, any reference to a particular section of
         the Exchange Act, or to any rule promulgated under the Exchange Act,
         will be construed to refer to successor provisions to such section or
         rule.

                  "FAIR MARKET VALUE" means on any given date, the fair market
         value per share of the Common Stock determined as follows:

                  (a) If the Common Stock is traded on an established securities
         exchange, the mean between the reported high and low sale prices of
         Common Stock as reported for such day by the principal exchange on
         which Common Stock is traded (as determined by the Committee) or, if
         Common Stock was not traded on such date, on the next preceding day on
         which Common Stock was traded;

                  (b) If trading activity in Common Stock is reported in the
         NASDAQ National Market System, the mean between the reported high and
         low sale prices of Common Stock as reported for such day by the NASDAQ
         or, if Common Stock trades were not reported on such date, on the next
         preceding day on which Common Stock trades were reported by the NASDAQ;

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                  (c) If trading activity in Common Stock is reported in the
         NASDAQ Bid and Asked Quotations, the mean between the bid price and
         asked price quote for such day as reported by the NASDAQ or, if there
         are no such quotes for Common Stock for such date, on the next
         preceding day for which bid and asked price quotes for Common Stock
         were reported by NASDAQ; or

                  (d) If there is no market for Common Stock or if trading
         activities for Common Stock are not reported in one of the manners
         described above, the fair market value will be as determined by the
         Committee after taking into consideration all factors that the
         Committee deems appropriate.

                  "INCENTIVE STOCK OPTION" or "ISO" means any Option granted
         pursuant to the Plan that is intended to be and is specifically
         designated in its Award Agreement as an "incentive stock option" within
         the meaning of Section 422 of the Code.

                  "NON-EMPLOYEE DIRECTOR" means a member of the Board who is not
         an employee of Corporation or any Subsidiary.

                  "NONQUALIFIED OPTION" or "NQO" means any Option, including a
         Deferred Compensation Option, granted pursuant to the Plan that is not
         an Incentive Stock Option.

                  "OPTION" means an ISO or an NQO (including a Deferred
         Compensation Option).

                  "OTHER STOCK-BASED AWARD" means an Award as defined in Section
         11.1.

                  "PARTICIPANT" means an employee or a Consultant of Corporation
         or a Subsidiary, or a Non-Employee Director who is granted an Award
         under the Plan.

                  "PERFORMANCE AWARD" means an Award granted pursuant to the
         provisions of Article 10 of the Plan, the Vesting of which is
         contingent on performance attainment.

                  "PERFORMANCE CYCLE" means a designated performance period
         pursuant to the provisions of Section 10.3 of the Plan.

                  "PERFORMANCE GOAL" means a designated performance objective
         pursuant to the provisions of Section 10.4 of the Plan.

                  "PLAN" means this Gardenburger, Inc. 2001 Stock Incentive
         Plan, as set forth in this Plan document and as it may be amended from
         time to time.

                  "REPORTING PERSON" means a Participant who is subject to the
         reporting requirements of Section 16(a) of the Exchange Act.

                  "RESTRICTED AWARD" means a Restricted Share or a Restricted
         Unit granted pursuant to Article 9 of the Plan.

                  "RESTRICTED SHARE" means an Award described in Section 9.1(a)
         of the Plan.

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                  "RESTRICTED UNIT" means an Award of units representing Shares
         described in Section 9.1(b) of the Plan.

                  "RESTRICTION" means a provision in the Plan or in an Award
         Agreement which limits the exercisability or transferability, or which
         governs the forfeiture, of an Award or the Shares, cash, or other
         property payable pursuant to an Award.

                  "RETIREMENT" means:

                  (a) For Participants who are employees, retirement from active
         employment with Corporation and its Subsidiaries on or after age 65, or
         such earlier retirement date as approved by the Committee for purposes
         of the Plan;

                  (b) For Participants who are Non-Employee Directors, ceasing
         to serve as a member of the Board after (1) serving at least 5 years on
         the Board, and (2) attaining a retirement age specified by the Board
         for purposes of an Award to such Non-Employee Director; or

                  (c) For Participants who are Consultants, termination of
         service as a Consultant after attaining a retirement age specified by
         the Committee for purposes of an Award to such Consultant.

                  However, the Committee may change the foregoing definition of
         "Retirement" or may adopt a different definition for purposes of
         specific Awards.

                  "SHARE" means a share of Common Stock.

                  "STOCK APPRECIATION RIGHT" or "SAR" means an Award to benefit
         from the appreciation of Common Stock granted pursuant to the
         provisions of Article 8 of the Plan.

                  "SUBSIDIARY" means a "subsidiary corporation" of Corporation,
         within the meaning of Section 425 of the Code, namely any corporation
         in which Corporation directly or indirectly controls 50 percent or more
         of the total combined voting power of all classes of stock having
         voting power.

                  "VEST" or "VESTED" means:

                  (a) In the case of an Award that requires exercise, to be or
         to become immediately and fully exercisable and free of all
         Restrictions (other than Continuing Restrictions);

                  (b) In the case of an Award that is subject to forfeiture, to
         be or to become nonforfeitable, freely transferable, and free of all
         Restrictions (other than Continuing Restrictions);

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                  (c) In the case of an Award that is required to be earned by
         attaining specified Performance Goals, to be or to become earned and
         nonforfeitable, freely transferable, and free of all Restrictions
         (other than Continuing Restrictions); or

                  (d) In the case of any other Award as to which payment is not
         dependent solely upon the exercise of a right, election, exercise, or
         option, to be or to become immediately payable and free of all
         Restrictions (except Continuing Restrictions).

2.2 GENDER AND NUMBER. Except where otherwise indicated by the context, any
masculine or feminine terminology used in the Plan will also include the
opposite gender; and the definition of any term in Section 2.1 in the singular
will also include the plural, and vice versa.

                                   ARTICLE 3
                                 ADMINISTRATION

3.1 AUTHORITY OF THE BOARD.  The Board retains exclusive authority with respect
to Awards granted to Non-Employee Directors, including the authority to:

                  (a) Select the Non-Employee Directors who will be granted
         Awards; and

                  (b) With respect to all Awards to Participants who are Non-
         Employee Directors, to determine:

                      (i) The number and types of Awards to be granted to each
                  Participant;

                     (ii) The number of Shares, or Share equivalents, to be
                  subject to each Award;

                    (iii) The option price, purchase price, base price, or
                  similar feature;

                     (iv) All the terms and conditions of all Award Agreements,
                  consistent with the requirements of the Plan.

References in the Plan to the authority or discretion of the Committee will also
apply to the Board for purposes of Awards granted to Non-Employee Directors.
Members of the Board who either (i) are eligible to receive Awards pursuant to
the Plan or (ii) have been granted Awards may vote on any matters affecting the
administration of the Plan or the grant of any Awards pursuant to the Plan,
except that no such member shall act upon the granting of Awards to himself or
herself, but any such member may be counted in determining the existence of a
quorum at any meeting of the Board during which action is taken with respect to
the granting to such member of Awards.

3.2 GENERAL. Except as provided in Section 3.1, the Plan will be administered by
the Board or by the Committee, which shall consist of two or more "outside
directors" (as that term is defined in applicable regulations promulgated under
Code Section 162(m)).

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3.3 AUTHORITY OF THE COMMITTEE. Except as provided in Section 3.1, the Committee
has full power and authority (subject to such orders or resolutions as may be
issued or adopted from time to time by the Board) to administer the Plan in its
sole discretion, including the authority to:

                  (a) Construe and interpret the Plan and any Award Agreement;

                  (b) Promulgate, amend, and rescind rules and procedures
              relating to the implementation of the Plan;

                  (c) Select the employees and Consultants who will be granted
              Awards;

                  (d) Determine the number and types of Awards to be granted to
              each such Participant;

                  (e) Determine the number of Shares, or Share equivalents,
              to be subject to each Award;

                  (f) Determine the option price, purchase price, base price,
              or similar feature for any Award; and

                  (g) Determine all the terms and conditions of all Award
              Agreements, consistent with the requirements of the Plan.

         Decisions of the Committee, or any delegate as permitted by the Plan,
will be final, conclusive, and binding on all Participants.

3.4 ACTION BY THE COMMITTEE. A majority of the members of the Committee will
constitute a quorum for the transaction of business. Action approved by a
majority of the members present at any meeting at which a quorum is present, or
action in writing by a majority of the members of the Committee, will be the
valid acts of the Committee.

3.5 LIABILITY OF BOARD AND COMMITTEE MEMBERS. No member either of the Board or
the Committee will be liable for any action or determination made in good faith
with respect to the Plan, any Award, or any Participant.

3.6 Costs of Plan. The costs and expenses of administering the Plan will be
borne by Corporation.

                                    Article 4
               DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN

4.1 DURATION OF THE PLAN. The Plan is effective February 13, 2001, subject to
approval by Corporation's shareholders as provided in Article 17. The Plan will
remain in effect until Awards have been granted covering all the available
Shares or the Plan is otherwise terminated by the Board. Termination of the Plan
will not affect outstanding Awards.

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4.2 SHARES SUBJECT TO THE PLAN. The shares which may be made subject to Awards
under the Plan are Shares of Common Stock, which may be either authorized and
unissued Shares or reacquired Shares. No fractional Shares may be issued under
the Plan. Subject to adjustment pursuant to Article 14, the maximum number of
Shares for which Awards may be granted under the Plan (the "Reserved Shares") is
1,400,000, plus the number of Shares that remain available for the grant of
stock options under the Prior Plan described in Section 1.3 as of the effective
date of the Plan. If an Award under the Plan (or any option previously granted
under the Prior Plan) is canceled or expires for any reason prior to having been
fully Vested or exercised by a Participant or is settled in cash in lieu of
Shares or is exchanged for other Awards, all Shares covered by such Awards will
be added back into the Reserved Shares and made available for future Awards
under the Plan.

                                    ARTICLE 5
                                   ELIGIBILITY

         Officers and other key employees of Corporation and its Subsidiaries
(including employees who may also be directors of Corporation or a Subsidiary),
Consultants, and Non-Employee Directors who are designated by the Committee will
be eligible to receive Awards under the Plan.

                                   ARTICLE 6
                                     AWARDS

6.1 Types of Awards. The types of Awards that may be granted under the Plan are:

                  (a) Options governed by Article 7 of the Plan;

                  (b) Stock Appreciation Rights governed by Article 8 of the
             Plan;

                  (c) Restricted Awards governed by Article 9 of the Plan;

                  (d) Performance Awards governed by Article 10 of the Plan; and

                  (e) Other Stock-Based Awards or combination awards governed by
             Article 11 of the Plan.

In the discretion of the Committee, any Award may be granted alone, in addition
to, or in tandem with other Awards under the Plan.

6.2 GENERAL. Subject to the limitations of the Plan, the Committee may cause
Corporation to grant Awards to such Participants, at such times, of such types,
in such amounts, for such periods, with such option prices, purchase prices, or
base prices, and subject to such terms, conditions, limitations, and
restrictions as the Committee, in its discretion, deems appropriate. Awards may
be granted as additional compensation to a Participant or in lieu of other
compensation to such Participant. A Participant may receive more than one Award
and more than one type of Award under the Plan.

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6.3 NONUNIFORM DETERMINATIONS. The Committee's determinations under the Plan or
under one or more Award Agreements, including without limitation, (a) the
selection of Participants to receive Awards, (b) the type, form, amount, and
timing of Awards, (c) the terms of specific Award Agreements, and (d) elections
and determinations made by the Committee with respect to exercise or payments of
Awards, need not be uniform and may be made by the Committee selectively among
Participants and Awards, whether or not Participants are similarly situated.

6.4 AWARD AGREEMENTS.  Each Award will be evidenced by a written Award Agreement
between Corporation and the Participant.  Award Agreements may, subject to the
provisions of the Plan, contain any provision approved by the Committee.

6.5 PROVISIONS GOVERNING ALL AWARDS. All Awards will be subject to the following
provisions:

                  (a) Alternative Awards. If any Awards are designated in their
             Award Agreements as alternative to each other, the exercise of all
             or part of one Award automatically will cause an immediate equal
             (or pro rata) corresponding termination of the alternative Award or
             Awards.

                  (b) Rights as Shareholders. No Participant will have any
             rights of a shareholder with respect to Shares subject to an Award
             until such Shares are issued in the name of the Participant.

                  (c) Employment Rights. Neither the adoption of the Plan, the
             granting of any Award, nor the entering into any Award Agreement
             will confer on any person the right to continued employment with
             Corporation or any Subsidiary or the right to remain as a director
             of Corporation or a Consultant to Corporation or any Subsidiary, as
             the case may be, nor will it interfere in any way with the right of
             Corporation or a Subsidiary to terminate such person's employment
             or to remove such person as a Consultant or as a director at any
             time for any reason, with or without cause.

                  (d) Restriction on Transfer. Unless otherwise expressly
             provided in an individual Award Agreement, each Award (other than
             Restricted Shares after they Vest) will not be transferable
             otherwise than by will or the laws of descent and distribution and
             will be exercisable (if exercise is required), during the lifetime
             of the Participant, only by the Participant or, in the event the
             Participant becomes legally incompetent, by the Participant's
             guardian or legal representative. Notwithstanding the foregoing,
             the Committee, in its discretion, may provide in any Award
             Agreement that the Award:

                    o   May be fully transferred;

                    o   May be freely transferred to a class of transferees
                        specified in the Award Agreement; or

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                    o   May be transferred, but only subject to any terms and
                        conditions specified in the Award Agreement (including,
                        without limitation, a condition that an Award may only
                        be transferred without payment of consideration).

             Furthermore, notwithstanding the foregoing, any Award may be
             surrendered to Corporation pursuant to Section 6.5(h) in connection
             with the payment of the purchase or option price of another Award
             or the payment of the Participant's federal, state, or local tax,
             or tax withholding obligation with respect to the exercise or
             payment of another Award.

                  (e) Termination Of Employment. The terms and conditions under
             which an Award may be exercised or may continue to become Vested,
             if at all, after a Participant's termination of employment or
             service as a Non-Employee Director or a Consultant will be
             determined by the Committee and specified in the applicable Award
             Agreement.

                  (f) Change in Control. The Committee, in its discretion, may
             provide in any Award Agreement that in the event of a change in
             control of Corporation (as the Committee may define such term in
             that Award Agreement), as of the date of such change in control (or
             as of a specified event following a change in control):

                       (i) All, or a specified portion of, Awards requiring
                  exercise will become fully and immediately exercisable,
                  notwithstanding any other limitations on exercise;

                       (ii) All, or a specified portion of, Awards subject to
                  Restrictions will become fully Vested; and

                       (iii) All, or a specified portion of, Awards subject to
                  Performance Goals will be deemed to have been fully earned.

             Unless the Committee specifically provides otherwise in the change
             in control provision for a specific Award Agreement, Awards will
             become exercisable, become Vested, or become earned as of a change
             in control date (or as of a specified event following a change in
             control) only if, or to the extent, such acceleration in the
             exercisability, Vesting, or becoming earned of the Awards does not
             result in an "excess parachute payment" within the meaning of
             Section 280G(b) of the Code. The Committee, in its discretion, may
             include change in control provisions in some Award Agreements and
             not in others, may include different change in control provisions
             in different Award Agreements, and may include change in control
             provisions for some Awards or some Participants and not for others.

                  (g) Conditioning or Accelerating Benefits. The Committee, in
             its discretion, may include in any Award Agreement a provision
             conditioning or accelerating the Vesting of an Award or the receipt
             of benefits pursuant to an Award, either automatically or in the
             discretion of the Committee, upon the occurrence of specified
             events including, without limitation, a change in control of
             Corporation (subject to the foregoing paragraph (f)), a sale of all
             or substantially all the property and assets of Corporation, or an
             event of the type described in Article 14 of this Plan.

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             Furthermore, whether or not specified in any Award Agreement
             (unless an Award Agreement expressly provides otherwise), the
             Committee may at any time, in its discretion, accelerate the
             Vesting of any or all Awards.

                  (h) Payment of Purchase Price and Withholding. The Committee,
             in its discretion, may include in any Award Agreement a provision
             permitting the Participant to pay the purchase or option price, if
             any, for the Shares or other property issuable pursuant to the
             Award, the Participant's federal, state, or local tax, or tax
             withholding, obligation with respect to such issuance, or both, in
             whole or in part by any one or more of the following: (i) By
             delivering previously owned Shares (including Restricted Shares,
             whether or not vested);

                       (ii) By surrendering other outstanding Vested Awards
                  under the Plan denominated in Shares or in Share equivalent
                  units;

                       (iii) By reducing the number of Shares or other property
                  otherwise Vested and issuable pursuant to the Award;

                       (iv) By delivering to Corporation a promissory note
                  payable on such terms and over such period as the Committee
                  determines;

                       (v) By delivery (in a form approved by the Committee) of
                  an irrevocable direction to a securities broker acceptable to
                  the Committee:

                            (A) To sell Shares subject to the Option and to
                       deliver all or a part of the sales proceeds to
                       Corporation in payment of all or a part of the option
                       price and taxes or withholding taxes attributable to the
                       issuance; or

                            (B) To pledge Shares subject to the Option to the
                       broker as security for a loan and to deliver all or a
                       part of the loan proceeds to Corporation in payment of
                       all or a part of the option price and taxes or
                       withholding taxes attributable to the issuance; or

                       (vi) In any combination of the foregoing or in any other
                  form approved by the Committee.

             If Restricted Shares are surrendered in full or partial payment of
             the purchase or option price of Shares issuable under an Award, a
             corresponding number of the Shares issued upon exercise of the
             Award will be Restricted Shares subject to the same Restrictions as
             the surrendered Restricted Shares. Shares withheld or surrendered
             as described above will be valued based on their Fair Market Value
             on the date of the transaction. Any Shares withheld or surrendered
             with respect to a Reporting Person will be subject to such
             additional conditions and limitations as the Committee may impose
             to comply with the requirements of the Exchange Act.

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                       (i) Reporting Persons. With respect to all Awards granted
                  to Reporting Persons:

                            (i) Awards requiring exercise will not be
                       exercisable until at least six months after the date the
                       Award was granted, except in the case of the death or
                       Disability of the Participant; and

                            (ii) Shares issued pursuant to any other Award may
                       not be sold by the Participant for at least six months
                       after acquisition, except in the case of the death or
                       Disability of the Participant;

                  provided, however, that (unless an Award Agreement provides
                  otherwise) the limitation of this Section 6.5(i) will apply
                  only if or to the extent required by Rule 16b-3 under the
                  Exchange Act. Award Agreements for Awards to Reporting Persons
                  will also comply with any future restrictions imposed by such
                  Rule 16b-3.

                       (j) Service Periods. At the time of granting Awards, the
                  Committee may specify, by resolution or in the Award
                  Agreement, the period or periods of service performed or to be
                  performed by the Participant in connection with the grant of
                  the Award.

                       (k) Form of Payment upon Settlement of Awards. Payment to
                  a Participant upon settlement of an Award may be in Shares,
                  cash (either in a lump sum or in installment payments, with or
                  without interest, over a period specified in the Award
                  Agreement), by issuance of a Deferred Compensation Option, or
                  in any combination of the above, or in any other form the
                  Committee determines.

6.6 TAX WITHHOLDING. Corporation will have the right to deduct from any
settlement of any Award under the Plan, including the delivery or vesting of
Shares, any federal, state, or local taxes of any kind required by law to be
withheld with respect to such payments or to take such other action as may be
necessary in the opinion of Corporation to satisfy all obligations for the
payment of such taxes. The recipient of any payment or distribution under the
Plan must make arrangements satisfactory to Corporation for the satisfaction of
any such withholding tax obligations. Corporation will not be required to make
any such payment or distribution under the Plan until such obligations are
satisfied.

6.7 ANNULMENT OF AWARDS. Any Award Agreement may, in the Committee's discretion,
provide that the grant of an Award payable in cash is revocable until cash is
paid in settlement of the Award or that the grant of an Award payable in Shares
is revocable until the Participant becomes entitled to a stock certificate in
settlement of the Award. In the event the employment (or service as a
Non-Employee Director or a Consultant) of a Participant is terminated for cause
(as defined below), any Award which is revocable will be annulled as of the date
of such termination for cause. For the purpose of this Section 6.7, the term
"for cause" will have the meaning set forth in the Participant's employment
agreement, if any, or otherwise means any discharge (or removal) for material or
flagrant violation of the policies and procedures of Corporation or for other
job performance or conduct which is materially detrimental to the best interests
of Corporation, as determined by the Committee.

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6.8 ENGAGING IN COMPETITION WITH THE CORPORATION. Any Award Agreement may, in
the Committee's discretion, provide that if a Participant terminates employment
(or service as a Non-Employee Director or a Consultant) with Corporation or a
Subsidiary for any reason whatsoever, and within a period of time (as specified
in the Award Agreement) after the date of such termination accepts employment
with any competitor of (or otherwise engages in competition with) Corporation,
the Committee, in its sole discretion, may require such Participant to return to
Corporation the economic value of any Award that was realized or obtained
(measured at the date of exercise, Vesting, or payment) by such Participant at
any time during the period beginning on the date that is six months prior to the
date of such Participant's termination of employment (or service as a
Non-Employee Director or a Consultant) with Corporation.

                                    ARTICLE 7
                                     OPTIONS

7.1 TYPES OF OPTIONS. Options granted under the Plan may be in the form of
Incentive Stock Options or Nonqualified Options (including Deferred Compensation
Options). The grant of each Option and the Award Agreement governing each Option
will identify the Option as an ISO or an NQO. In the event the Code is amended
to provide for tax-favored forms of stock options other than or in addition to
Incentive Stock Options, the Committee may grant Options under the Plan meeting
the requirements of such forms of options.

7.2 GENERAL. Options will be subject to the terms and conditions set forth in
Article 6 and this Article 7 and Award Agreements governing Options may contain
such additional terms and conditions, not inconsistent with the express
provisions of the Plan, as the Committee deems desirable.

7.3 OPTION PRICE.  Each Award Agreement for Options will state the option
exercise price per Share of Common Stock purchasable under the Option, which may
not be less than:

                  (a) 25 percent of the Fair Market Value of a Share on the date
             of grant in the case of a Deferred Compensation Option;

                  (b) 75 percent of the Fair Market Value of a Share on the date
             of grant for all other Nonqualified Options; or

                  (c) 100 percent of the Fair Market Value of a Share on the
             date of grant for all Incentive Stock Options.

7.4 OPTION TERM. The Award Agreement for each Option will specify the term of
each Option, which may be unlimited or may have a specified period during which
the Option may be exercised, as determined by the Committee.

7.5 TIME OF EXERCISE.  The Award Agreement for each Option will specify, as
determined by the Committee:

                  (a) The time or times when the Option becomes exercisable and
             whether the Option becomes exercisable in full or in graduated
             amounts based on: (i) continuation of employment over a period

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             specified in the Award Agreement, (ii) satisfaction of performance
             goals or criteria specified in the Award Agreement, or (iii) a
             combination of continuation of employment and satisfaction of
             performance goals or criteria;

                  (b) Such other terms, conditions, and restrictions as to when
             the Option may be exercised as determined by the Committee; and

                  (c) The extent, if any, that the Option will remain
             exercisable after the Participant ceases to be an employee,
             Consultant, or director of Corporation or a Subsidiary.

An Award Agreement for an Option may, in the discretion of the Committee,
provide whether, and to what extent, the time when an Option becomes exercisable
will be accelerated or otherwise modified (i) in the event of the death,
Disability, or Retirement of the Participant, or (ii) upon the occurrence of a
change in control of Corporation. The Committee may, at any time in its
discretion, accelerate the time when all or any portion of an outstanding Option
becomes exercisable.

7.6 SPECIAL RULES FOR INCENTIVE STOCK OPTIONS. In the case of an Option
designated as an Incentive Stock Option, the terms of the Option and the Award
Agreement will conform with the statutory and regulatory requirements specified
pursuant to Section 422 of the Code, as in effect on the date such ISO is
granted. ISOs may be granted only to employees of Corporation or a Subsidiary.
ISOs may not be granted under the Plan after ten years following the date
specified in Section 4.1, unless the ten-year limitation of Section 422(b)(2) of
the Code is removed or extended. Without limiting the foregoing, all ISO Awards
will be subject to the following terms and conditions (unless the Committee
determines that such restrictions are no longer necessary in order for an Award
to meet ISO requirements):

                  (a) The term of the ISO may not exceed 10 years from the date
             the ISO is granted (and may not exceed 5 years for ISOs granted to
             an employee who, as of the date of the grant, owns stock possessing
             more than 10 percent of the total combined voting power of all
             classes of stock of Corporation (a "10 Percent Shareholder"));

                  (b) The option exercise price for an ISO may not be lower than
             100 percent of the Fair Market Value of a Share as of the date the
             ISO is granted (and may not be lower than 110 percent of such Fair
             Market Value for an ISO granted to a 10 Percent Shareholder); and

                  (c) The aggregate Fair Market Value (determined as of the date
             an Option is granted) of the Shares subject to all ISOs granted to
             any Participant under the Plan and any other plans maintained by
             Corporation with respect to which the ISOs first become exercisable
             during any calendar year may not exceed $100,000 (the "$100,000
             Limitation"). If and to the extent an Option granted under the Plan
             that is otherwise designated as or intended to be an ISO exceeds
             the $100,000 Limitation, the Option will be treated as two Options
             granted under the Plan, an ISO with respect to the portion of the
             Option that satisfies the $100,000 Limitation, and a separate
             Nonqualified Option with respect to the portion of the Option that
             exceeds the $100,000 Limitation.

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7.7 RESTRICTED SHARES.  In the discretion of the Committee, the Shares issuable
upon exercise of an Option may be Restricted Shares if so provided in the Award
Agreement for the Option.

7.8 DEFERRED COMPENSATION OPTIONS. The Committee may, in its discretion, grant
Deferred Compensation Options with an option price less than Fair Market Value
to provide a means for deferral to future dates of compensation otherwise
payable to a Participant. The option price will be determined by the Committee
subject to Section 7.3(a) of the Plan. The number of Shares subject to a
Deferred Compensation Option will be determined by the Committee, in its
discretion, by dividing the amount of compensation to be deferred by the
difference between the Fair Market Value of a Share on the date of grant and the
option price of the Deferred Compensation Option. Amounts of compensation
deferred with Deferred Compensation Options may include amounts payable under
Awards granted under the Plan or under any other compensation program or
arrangement of Corporation as permitted by the Committee. The Committee may
grant Deferred Compensation Options only if it reasonably determines that the
recipient of such an Option is not likely to be deemed to be in constructive
receipt for income tax purposes of the income being deferred.

7.9 RELOAD OPTIONS. The Committee, in its discretion, may provide in an Award
Agreement for an Option that in the event all or a portion of the Option is
exercised by the Participant using previously acquired Shares, the Participant
will automatically be granted (subject to the available pool of Shares subject
to grants of Awards as specified in Section 4.2 of the Plan) a replacement
Option (with an option price equal to the Fair Market Value of a Share on the
date of such exercise) for a number of Shares equal to (or equal to a portion
specified in the original Award Agreement of) the number of shares surrendered
upon exercise of the Option. Such reload Option features may be subject to such
terms and conditions as the Committee determines, including without limitation,
a condition that the Participant retain the Shares issued upon exercise of the
Option for a specified period of time.

7.10 LIMITATION ON NUMBER OF SHARES SUBJECT TO OPTIONS. In no event may Options
be granted under the Plan for more than (a) 250,000 Shares in connection with
the hiring of a new Chief Executive Officer, or (b) 50,000 Shares for all other
situations to any individual during any one calendar year period.

                                   ARTICLE 8
                            STOCK APPRECIATION RIGHTS

8.1 GENERAL. Stock Appreciation Rights will be subject to the terms and
conditions set forth in Article 6 and this Article 8 and Award Agreements
governing Stock Appreciation Rights may contain such additional terms and
conditions, not inconsistent with the express terms of the Plan, as the
Committee deems desirable.

8.2 NATURE OF STOCK APPRECIATION RIGHT. A Stock Appreciation Right is an Award
entitling a Participant to receive an amount equal to the excess (or, if the
Committee so specifies in the Award Agreement, a portion of the excess) of the
Fair Market Value of a Share of Common Stock on the date of exercise of the SAR
over the base price, as described below, on the date of grant of the SAR,

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<PAGE>

multiplied by the number of Shares with respect to which the SAR will have been
exercised. The base price will be designated by the Committee in the Award
Agreement for the SAR and may be the Fair Market Value of a Share on the grant
date of the SAR or such other higher or lower price as the Committee determines.

8.3 EXERCISE. A Stock Appreciation Right may be exercised by a Participant in
accordance with procedures established by the Committee. The Committee may also
provide that a SAR will be automatically exercised on one or more specified
dates or upon the satisfaction of one or more specified conditions. In the case
of SARs granted to Reporting Persons, exercise of the SAR will be limited by the
Committee to the extent required to comply with the applicable requirements of
Rule 16b-3 under the Exchange Act.

8.4 LIMITATION ON NUMBER OF STOCK APPRECIATION RIGHTS.  In no event may more
than 10,000 Stock Appreciation Rights be granted to any individual under the
Plan during any one calendar year period.

                                   ARTICLE 9
                                RESTRICTED AWARDS

9.1 TYPES OF RESTRICTED AWARDS.  Restricted Awards granted under the Plan may be
in the form of either Restricted Shares or Restricted Units.

                  (a) Nature of Restricted Shares. A Restricted Share is an
             Award of Shares transferred to a Participant subject to such terms
             and conditions as the Committee deems appropriate, including,
             without limitation, restrictions on the sale, assignment, transfer,
             or other disposition of such Restricted Shares and may include a
             requirement that the Participant forfeit such Restricted Shares
             back to Corporation upon termination of Participant's employment
             (or service as a Non-Employee Director or a Consultant) for
             specified reasons within a specified period of time or upon other
             conditions, as set forth in the Award Agreement for such Restricted
             Shares. Each Participant receiving Restricted Shares will be issued
             a stock certificate in respect of such Shares, registered in the
             name of such Participant, and will be required to execute a stock
             power in blank with respect to the Shares evidenced by such
             certificate. The certificate evidencing such Restricted Shares and
             the stock power will be held in custody by Corporation until the
             Restrictions on those Shares have lapsed.

                  (b) Nature of Restricted Units. A Restricted Unit is an Award
             of units (with each unit having a value equivalent to one Share)
             granted to a Participant subject to such terms and conditions as
             the Committee deems appropriate, and may include a requirement that
             the Participant forfeit such Restricted Units upon termination of
             Participant's employment (or service as a Non-Employee Director or
             a Consultant) for specified reasons within a specified period of
             time or upon other conditions, as set forth in the Award Agreement
             for such Restricted Units.

9.2 GENERAL. Restricted Awards will be subject to the terms and conditions of
Article 6 and this Article 9 and Award Agreements governing Restricted Awards
may contain such additional terms and conditions, not inconsistent with the
express provisions of the Plan, as the Committee deems desirable.

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<PAGE>

9.3 RESTRICTION PERIOD. Award Agreements for Restricted Awards will provide that
Restricted Awards, and the Shares subject to Restricted Awards, may not be
transferred, and may provide that, in order for a Participant to Vest in such
Restricted Awards, the Participant must remain in the employment (or remain as a
Non-Employee Director or a Consultant) of Corporation or its Subsidiaries,
subject to relief for reasons specified in the Award Agreement, for a period
commencing on the grant date of the Award and ending on such later date or dates
as the Committee designates in the Award Agreement (the "Restriction Period").
During the Restriction Period, a Participant may not sell, assign, transfer,
pledge, encumber, or otherwise dispose of Shares received under or governed by a
Restricted Award grant. The Committee, in its sole discretion, may provide for
the lapse of restrictions in installments during the Restriction Period. Upon
expiration of the applicable Restriction Period (or lapse of Restrictions during
the Restriction Period where the Restrictions lapse in installments) the
Participant will be entitled to settlement of the Restricted Award or portion
thereof, as the case may be. Although Restricted Awards will usually Vest based
on continued employment (or service as a Non-Employee Director or a Consultant)
and Performance Awards under Article 10 will usually Vest based on attainment of
Performance Goals, the Committee, in its discretion, may condition Vesting of
Restricted Awards on attainment of Performance Goals as well as continued
employment (or service as a Non-Employee Director or a Consultant). In such
case, the Restriction Period for such a Restricted Award will include the period
prior to satisfaction of the Performance Goals.

9.4 FORFEITURE. If a Participant ceases to be an employee (or Consultant or
Non-Employee Director) of Corporation or a Subsidiary during the Restriction
Period for any reason other than reasons which may be specified in an Award
Agreement (such as death, Disability, or Retirement) the Award Agreement may
require that all non-Vested Restricted Awards previously granted to the
Participant be forfeited and returned to Corporation.

9.5 SETTLEMENT OF RESTRICTED AWARDS.

                  (a) Restricted Shares. Upon Vesting of a Restricted Share
             Award, the legend on such Shares will be removed and the
             Participant's stock power will be returned and the Shares will no
             longer be Restricted Shares. The Committee may also, in its
             discretion, permit a Participant to receive, in lieu of
             unrestricted Shares at the conclusion of the Restriction Period,
             payment in any form described in Section 6.5(k).

                  (b) Restricted Units. Upon Vesting of a Restricted Unit Award,
             a Participant will be entitled to receive payment for Restricted
             Units in an amount equal to the aggregate Fair Market Value of the
             Shares covered by such Restricted Units at the expiration of the
             Applicable Restriction Period. Payment in settlement of a
             Restricted Unit in any form described in Section 6.5(k) will be
             made as soon as practicable following the conclusion of the
             applicable Restriction Period.

9.6 RIGHTS AS A SHAREHOLDER. A Participant will have, with respect to
unforfeited Shares received under a grant of Restricted Shares, all the rights
of a shareholder of Corporation, including the right to vote the shares, and the
right to receive any cash dividends. Stock dividends issued with respect to
Restricted Shares will be treated as additional Shares covered by the grant of
Restricted Shares and will be subject to the same Restrictions.

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<PAGE>

                                   ARTICLE 10
                               PERFORMANCE AWARDS

10.1 GENERAL. Performance Awards will be subject to the terms and conditions set
forth in Article 6 and this Article 10 and Award Agreements governing
Performance Awards may contain such other terms and conditions not inconsistent
with the express provisions of the Plan, as the Committee deems desirable.

10.2 NATURE OF PERFORMANCE AWARDS. A Performance Award is an Award of units
(with each unit having a value equivalent to one Share) granted to a Participant
subject to such terms and conditions as the Committee deems appropriate,
including, without limitation, the requirement that the Participant forfeit all
or a portion of such Performance Award in the event specified performance
criteria are not met within a designated period of time.

10.3 PERFORMANCE CYCLES. For each Performance Award, the Committee will
designate a performance period (the "Performance Cycle") with a duration to be
determined by the Committee in its discretion within which specified Performance
Goals are to be attained. There may be several Performance Cycles in existence
at any one time and the duration of Performance Cycles may differ from each
other.

10.4 Performance Goals. The Committee will establish Performance Goals for each
Performance Cycle on the basis of such criteria and to accomplish such
objectives as the Committee may from time to time select. Performance Goals may
be based on (i) performance criteria for Corporation, a Subsidiary, or an
operating group, (ii) a Participant's individual performance, or (iii) a
combination of both. Performance Goals may include objective and subjective
criteria. During any Performance Cycle, the Committee may adjust the Performance
Goals for such Performance Cycle as it deems equitable in recognition of unusual
or nonrecurring events affecting Corporation, changes in applicable tax laws or
accounting principles, or such other factors as the Committee may determine.

10.5 Determination of Awards. As soon as practicable after the end of a
Performance Cycle, the Committee will determine the extent to which Performance
Awards have been earned on the basis of performance in relation to the
established Performance Goals. Settlement of earned Performance Awards will be
made to the Participant as soon as practicable after the expiration of the
Performance Cycle and the Committee's determination under this Section 10.5, in
any form described in Section 6.5(k).

10.6 PERFORMANCE GOALS FOR EXECUTIVE OFFICERS.  The performance goals for
Performance Awards granted to executive officers of Corporation may relate to
corporate performance, business unit performance, or a combination of both.

     o   Corporate performance goals will be based on financial performance
         goals related to the performance of Corporation as a whole and may
         include one or more measures related to earnings, profitability,
         efficiency, or return to stockholders such as earnings per share,
         operating profit, stock price, costs of production, or other measures.

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<PAGE>

     o   Business unit performance goals will be based on a combination of
         financial goals and strategic goals related to the performance of an
         identified business unit for which a Participant has responsibility.
         Strategic goals for a business unit may include one or a combination of
         objective factors relating to success in implementing strategic plans
         or initiatives, introductory products, constructing facilities, or
         other identifiable objectives.  Financial goals for a business unit may
         include the degree to which the business unit achieves one or more
         objective measures related to its revenues, earnings, profitability,
         efficiency, operating profit, costs of production, or other measures.

     o   Any corporate or business unit goals may be expressed as absolute
         amounts or as ratios or percentages. Success may be measured against
         various standards, including budget targets, improvement over prior
         periods, and performance relative to other companies, business units,
         or industry groups.

10.7 AWARD LIMITATIONS.  The maximum number of Shares issuable with respect to
Performance Awards granted to any individual executive officer may not exceed
10,000 Shares for any one calendar year period.

                                   ARTICLE 11
                    OTHER STOCK BASED AND COMBINATION AWARDS

11.1 OTHER STOCK-BASED AWARDS. The Committee may grant other Awards under the
Plan pursuant to which Shares are or may in the future be acquired, or Awards
denominated in or measured by Share equivalent units, including Awards valued
using measures other than the market value of Shares. Other Stock-Based Awards
are not restricted to any specified form or structure and may include, without
limitation, Share purchase warrants, other rights to acquire Shares, and
securities convertible into or redeemable for Shares. Such Other Stock-Based
Awards may be granted either alone, in addition to, or in tandem with, any other
type of Award granted under the Plan.

11.2 COMBINATION AWARDS. The Committee may also grant Awards under the Plan in
tandem or combination with other Awards or in exchange of Awards, or in tandem
or combination with, or as alternatives to, grants or rights under any other
employee plan of Corporation, including the plan of any acquired entity. No
action authorized by this Section 11.2 will reduce the amount of any existing
benefits or change the terms and conditions thereof without the Participant's
consent.

                                   ARTICLE 12
                               DEFERRAL ELECTIONS

         The Committee may permit a Participant to elect to defer receipt of the
payment of cash or the delivery of Shares that would otherwise be due to such
Participant by virtue of the exercise, earn out, or Vesting of an Award made
under the Plan. If any such election is permitted, the Committee will establish
rules and procedures for such payment deferrals, including, but not limited to:
(a) payment or crediting of reasonable interest or other growth or earnings
factor on such deferred amounts credited in cash, (b) the payment or crediting

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<PAGE>

of dividend equivalents in respect of deferrals credited in Share equivalent
units, or (c) granting of Deferred Compensation Options.

                                   ARTICLE 13
                              DIVIDEND EQUIVALENTS

         Any Awards may, at the discretion of the Committee, earn dividend
equivalents. In respect of any such Award which is outstanding on a dividend
record date for Common Stock, the Participant may be credited with an amount
equal to the amount of cash or stock dividends that would have been paid on the
Shares covered by such Award, had such covered Shares been issued and
outstanding on such dividend record date. The Committee will establish such
rules and procedures governing the crediting of dividend equivalents, including
the timing, form of payment, and payment contingencies of such dividend
equivalents, as it deems appropriate or necessary.

                                   ARTICLE 14
                ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC.

14.1 PLAN DOES NOT RESTRICT CORPORATION. The existence of the Plan and the
Awards granted under the Plan do not affect or restrict in any way the right or
power of the Board or the shareholders of Corporation to make or authorize any
adjustment, recapitalization, reorganization, or other change in Corporation's
capital structure or its business, any merger or consolidation of the
Corporation, any issue of bonds, debentures, preferred or prior preference
stocks ahead of or affecting Corporation's capital stock or the rights thereof,
the dissolution or liquidation of Corporation or any sale or transfer of all or
any part of its assets or business, or any other corporate act or proceeding.

14.2 ADJUSTMENTS BY THE COMMITTEE. In the event of any change in capitalization
affecting the Common Stock of Corporation, such as a stock dividend, stock
split, recapitalization, merger, consolidation, split-up, combination or
exchange of shares or other form of reorganization, or any other change
affecting the Common Stock, such proportionate adjustments, if any, as the
Committee, in its sole discretion, may deem appropriate to reflect such change,
will be made with respect to the aggregate number of Shares for which Awards may
be granted under the Plan, the maximum number of Shares which may be sold or
awarded to any Participant, the number of Shares covered by each outstanding
Award, and the base price or purchase price per Share in respect of outstanding
Awards. The Committee may also make such adjustments in the number of Shares
covered by, and price or other value of any outstanding Awards in the event of a
spin-off or other distribution (other than normal cash dividends), of
Corporation assets to shareholders.

                                   ARTICLE 15
                            AMENDMENT AND TERMINATION

         The Board may amend, suspend, or terminate the Plan or any portion of
the Plan at any time, provided no amendment may be made without shareholder

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<PAGE>

approval if such approval is required by applicable law or the requirements of
an applicable stock exchange or over the counter stock trading system.

                                   ARTICLE 16
                                  MISCELLANEOUS

16.1 UNFUNDED PLAN. The Plan is unfunded and Corporation will not be required to
segregate any assets that may at any time be represented by Awards under the
Plan. Any liability of Corporation to any person with respect to any Award under
the Plan will be based solely upon any contractual obligations that may be
effected pursuant to the Plan. No such obligation of Corporation will be deemed
to be secured by any pledge of or other encumbrance on any property of
Corporation.

16.2 PAYMENTS TO TRUST. The Committee is authorized (but not obligated) to cause
to be established a trust agreement or several trust agreements under which the
Committee may make payments of amounts due or to become due to Participants in
the Plan.

16.3 OTHER CORPORATION BENEFIT AND COMPENSATION PROGRAMS. Payments and other
benefits received by a Participant under an Award made pursuant to the Plan will
not be deemed a part of a Participant's regular, recurring compensation for
purposes of the termination indemnity or severance pay law of any state or
country and will not be included in, or have any effect on, the determination of
benefits under any other employee benefit plan or similar arrangement provided
by Corporation or a Subsidiary unless expressly so provided by such other plan
or arrangements, or except where the Committee expressly determines that an
Award or portion of an Award should be included to accurately reflect
competitive compensation practices or to recognize that an Award has been made
in lieu of a portion of cash compensation. Awards under the Plan may be made in
combination with or in tandem with, or as alternatives to, grants, awards, or
payments under any other Corporation or Subsidiary plans, arrangements, or
programs. The Plan notwithstanding, Corporation or any Subsidiary may adopt such
other compensation programs and additional compensation arrangements as it deems
necessary to attract, retain, and reward employees and directors for their
service with Corporation and its Subsidiaries.

16.4 securities law restrictions. No Shares may be issued under the Plan unless
counsel for Corporation is satisfied that such issuance will be in compliance
with applicable federal and state securities laws. Certificates for Shares
delivered under the Plan may be subject to such stop-transfer orders and other
restrictions as the Committee deems advisable under the rules, regulations, and
other requirements of the Securities and Exchange Commission, any stock exchange
upon which the Common Stock is then listed, and any applicable federal or state
securities law. The Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.

16.5 GOVERNING LAW.  Except with respect to references to the Code or federal
securities laws, the Plan and all actions taken thereunder will be governed by
and construed in accordance with the laws of the state of Oregon.

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<PAGE>

                                   ARTICLE 17
                              SHAREHOLDER APPROVAL

         The adoption of the Plan and the grant of Awards under the Plan are
expressly subject to the approval of the Plan by (a) the holders of the
outstanding shares of Corporation's capital stock in accordance with Oregon law
and (b) the affirmative vote of the holders of at least a majority of the
outstanding shares of Corporation's Series A Convertible Preferred Stock and
Series B Convertible Preferred Stock, voting as a single voting group.




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