Document:

<PAGE>
EXHIBIT 4.2

                         YAMHILL VALLEY VINEYARDS, INC.

                                PURCHASE WARRANT

                                   Issued to:

                        PAULSON INVESTMENT COMPANY, INC.

                             Exercisable to Purchase

                         100,000 Shares of Common Stock

                      THIS WARRANT HAS NOT BEEN REGISTERED
                        UNDER THE SECURITIES ACT OF 1933
                             AND IS NOT TRANSFERABLE
                            EXCEPT AS PROVIDED HEREIN

                           Void after           , 2008
                                      ----------
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         This is to certify that, for value received and subject to the terms
and conditions set forth below, the Warrantholder (hereinafter defined) is
entitled to purchase, and the Company promises and agrees to sell and issue to
the Warrantholder, at any time on or after        , 2004 and on or before      ,
2008, up to 100,000 Shares (hereinafter defined) at the Exercise Price
(hereinafter defined).

                  This Warrant Certificate is issued subject to the following
terms and conditions:

         1. Definitions of Certain Terms. Except as may be otherwise clearly
required by the context, the following terms have the following meanings:

                  (a) "Act" means the Securities Act of 1933, as amended.

                  (b) "Closing Date" means the date on which the Offering is
closed.

                  (c) "Commission" means the Securities and Exchange Commission.

                  (d) "Common Stock" means the shares of common stock, $__ par
value per share, of the Company.

                  (e) "Company" means Yamhill Valley Vineyards, Inc., an Oregon
corporation.

                  (f) "Company's Expenses" means any and all expenses payable by
the Company or the Warrantholder in connection with an offering described in
Section 6 hereof, except Warrantholder's Expenses.

                  (g) "Effective Date" means the date on which the Registration
Statement is declared effective by the Commission.

                  (h) "Exercise Price" means the price at which the
Warrantholder may purchase one share of Common Stock (or Securities obtainable
in lieu of one Share) upon exercise of Warrants as determined from time to time
pursuant to the provisions hereof. The initial Exercise Price is $     per Share
(120% of the initial public offering price of a Share).

                  (i) "Offering" means the public offering of Shares made
pursuant to the Registration Statement.

                  (j) "Participating Underwriter" means any underwriter
participating in the sale of the Securities pursuant to a registration under
Section 6 of this Warrant Certificate.

                  (k) "Registration Statement" means the Company's registration
statement (File No. 333-___________), as amended on the Closing Date.

                  (l) "Rules and Regulations" means the rules and regulations of
the Commission adopted under the Act.
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                  (m) "Securities" means the securities obtained or obtainable
upon exercise of the Warrant or securities obtained or obtainable upon exercise,
exchange or conversion of such securities.

                  (n) "Share" means one share of the Company's Common Stock.

                  (o) "Warrant Certificate" means a certificate evidencing the
Warrant.

                  (p) "Warrantholder" means a record holder of the Warrant or
Securities. The initial Warrantholder is Paulson Investment Company, Inc.

                  (q) "Warrantholder's Expenses" means the sum of (i) the
aggregate amount of cash payments made to an underwriter, underwriting
syndicate, or agent in connection with an offering described in Section 6 hereof
multiplied by a fraction, the numerator of which is the aggregate sales price of
the Securities sold by such underwriter, underwriting syndicate, or agent in
such offering on behalf of the Warrantholder and the denominator of which is the
aggregate sales price of all of the securities sold by such underwriter,
underwriting syndicate, or agent in such offering and (ii) all out-of-pocket
expenses of the Warrantholder, except for the fees and disbursements of one firm
retained as legal counsel for the Warrantholder on behalf of all of the
Warrantholders that will be paid by the Company.

                  (r) "Warrant" means the warrant evidenced by this certificate,
any similar certificate issued in connection with the Offering, or any
certificate obtained upon transfer or partial exercise of the Warrant evidenced
by any such certificate.

         2. Exercise of Warrants. All or any part of the Warrant may be
exercised commencing on the first anniversary of the Effective Date and ending
at 5:00 p.m. (Pacific Time) on the fifth anniversary of the Effective Date by
surrendering this Warrant Certificate, together with appropriate instructions,
duly executed by the Warrantholder or by its duly authorized attorney, at the
office of the Company, 16250 S.W. Oldsville Road, McMinnville, Oregon 97258, or
at such other office or agency as the Company may designate. Upon receipt of
notice of exercise, the Company shall immediately instruct its transfer agent to
prepare certificates for the Securities to be received by the Warrantholder upon
completion of the Warrant exercise. When such certificates are prepared, the
Company shall notify the Warrantholder and deliver such certificates to the
Warrantholder or as per the Warrantholder's instructions immediately upon
payment in full by the Warrantholder, in lawful money of the United States, of
the Exercise Price payable with respect to the Securities being purchased. If
the Warrantholder shall represent and warrant that all applicable registration
and prospectus delivery requirements for their sale have been complied with upon
sale of the securities received upon exercise of the Warrant, such certificates
shall not bear a legend with respect to the Act.

         If fewer than all the Securities purchasable under the Warrant are
purchased, the Company will, upon such partial exercise, execute and deliver to
the Warrantholder a new Warrant Certificate (dated the date hereof), in form and
tenor similar to this Warrant Certificate, evidencing that portion of the
Warrant not exercised. The Securities to be obtained on exercise of the Warrant
will be deemed to have been issued, and any person exercising the Warrants will
be deemed to have become a holder of record of those Securities, as of the date
of the payment of the Exercise Price.

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         3. Adjustments in Certain Events. The number, class, and price of
Securities for which this Warrant Certificate may be exercised are subject to
adjustment from time to time upon the happening of certain events as follows:

                  (a) If the outstanding shares of the Company's Common Stock
are divided into a greater number of shares or a dividend in stock is paid on
the Common Stock, the number of shares of Common Stock for which the Warrant is
then exercisable will be proportionately increased and the Exercise Price will
be proportionately reduced; and, conversely, if the outstanding shares of Common
Stock are combined into a smaller number of shares of Common Stock, the number
of shares of Common Stock for which the Warrant is then exercisable will be
proportionately reduced and the Exercise Price will be proportionately
increased. The increases and reductions provided for in this subsection 3(a)
will be made with the intent and, as nearly as practicable, the effect that
neither the percentage of the total equity of the Company obtainable on exercise
of the Warrants nor the price payable for such percentage upon such exercise
will be affected by any event described in this subsection 3(a).

                  (b) In case of any change in the Common Stock through merger,
consolidation, reclassification, reorganization, partial or complete
liquidation, purchase of substantially all the assets of the Company, or other
change in the capital structure of the Company, then, as a condition of such
change, lawful and adequate provision will be made so that the holder of this
Warrant Certificate will have the right thereafter to receive upon the exercise
of the Warrant the kind and amount of shares of stock or other securities or
property to which he would have been entitled if, immediately prior to such
event, he had held the number of shares of Common Stock obtainable upon the
exercise of the Warrant. In any such case, appropriate adjustment will be made
in the application of the provisions set forth herein with respect to the rights
and interest thereafter of the Warrantholder, to the end that the provisions set
forth herein will thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other property thereafter deliverable upon
the exercise of the Warrant. The Company will not permit any change in its
capital structure to occur unless the issuer of the shares of stock or other
securities to be received by the holder of this Warrant Certificate, if not the
Company, agrees to be bound by and comply with the provisions of this Warrant
Certificate.

                  (c) When any adjustment is required to be made in the number
of shares of Common Stock, other securities, or the property purchasable upon
exercise of the Warrant, the Company will promptly determine the new number of
such shares or other securities or property purchasable upon exercise of the
Warrant and (i) prepare and retain on file a statement describing in reasonable
detail the method used in arriving at the new number of such shares or other
securities or property purchasable upon exercise of the Warrant and (ii) cause a
copy of such statement to be mailed to the Warrantholder within thirty (30) days
after the date of the event giving rise to the adjustment.

                  (d) No fractional shares of Common Stock or other securities
will be issued in connection with the exercise of the Warrant, but the Company
will pay, in lieu of fractional shares, a cash payment therefor on the basis of
the mean between the bid and asked prices of the Common Stock in the
over-the-counter market or the last sale price of the Common Stock on The Nasdaq
SmallCap Market or a national securities exchange on the day immediately prior
to exercise.

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11/5/02
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                  (e) If securities of the Company or securities of any
subsidiary of the Company are distributed pro rata to holders of Common Stock,
such number of securities will be distributed to the Warrantholder or his
assignee upon exercise of his rights hereunder as such Warrantholder or assignee
would have been entitled to if this Warrant Certificate had been exercised prior
to the record date for such distribution. The provisions with respect to
adjustment of the Common Stock provided in this Section 3 will also apply to the
securities to which the Warrantholder or his assignee is entitled under this
subsection 3(e).

                  (f) Notwithstanding anything herein to the contrary, there
will be no adjustment made hereunder on account of the sale by the Company of
the Common Stock or other Securities purchasable upon exercise of the Warrant.

         4. Reservation of Securities. The Company agrees that the number of
shares of Common Stock or other Securities sufficient to provide for the
exercise of the Warrant upon the basis set forth above will at all times during
the term of the Warrant be reserved for issuance upon exercise of the Warrant.

         5. Validity of Securities. All Securities delivered upon the exercise
of the Warrant will be duly and validly issued in accordance with their terms,
and the Company will pay all documentary and transfer taxes, if any, in respect
of the original issuance thereof upon exercise of the Warrant.

         6. Registration of Securities Issuable on Exercise of Warrant
Certificate.

                  (a) The Company will register the Securities with the
Commission pursuant to the Act so as to allow the unrestricted sale of the
Securities to the public from time to time commencing on the first anniversary
of the Effective Date and ending at 5:00 p.m. (Pacific Time) on the fifth
anniversary of the Effective Date (the "Registration Period"). The Company will
also file such applications and other documents necessary to permit the sale of
the Securities to the public during the Registration Period in those states
designated by the Warrantholders among those in which the Shares were qualified
for sale in the Offering or in such other states as the Company and the
Warrantholder agree to. In order to comply with the provisions of this Section
6(a), the Company is not required to file more than one registration statement
in addition to the Registration Statement.

                  (b) The Company will pay all of the Company's Expenses and
each Warrantholder will pay its pro rata share of the Warrantholder's Expenses
relating to the registration, offer and sale of the Securities.

                  (c) Except as specifically provided herein, the manner and
conduct of the registration, including the contents of the registration
statement, will be entirely in the control and at the discretion of the Company.
The Company will file such post-effective amendments and supplements as may be
necessary to maintain the currency of the registration statement during the
Registration Period. In addition, if the Warrantholder participating in the
registration is advised by counsel that the registration statement, in their
opinion, is deficient in any material respect, the Company will use its best
efforts to cause the registration statement to be amended to eliminate the
concerns raised.

Page 5 - Representative's Warrant
11/5/02
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                  (d) The Company will furnish to the Warrantholder the number
of copies of a prospectus, including a preliminary prospectus, in conformity
with the requirements of the Act, and such other documents as it may reasonably
request in order to facilitate the disposition of Securities owned by it.

                  (e) The Company will, at the request of Warrantholders holding
at least 50 percent of the then outstanding Warrants, (i) furnish an opinion of
the counsel representing the Company for the purposes of the registration
pursuant to this Section 6, addressed to the Warrantholders and any
Participating Underwriter, (ii) in the event of an underwritten offering,
furnish an appropriate letter from the independent public accountants of the
Company, addressed to the Warrantholders and any Participating Underwriter, and
(iii) make such representations and warranties to the Warrantholders and any
Participating Underwriter as are customarily given to underwriters of public
offerings of equity securities in connection with such offerings. A request
pursuant to this subsection (e) may be made on one occasion. The documents
required to be delivered pursuant to this subsection (e) will be dated within
ten days of the request and will be, in form and substance, equivalent to
similar documents furnished to the underwriters in connection with the Offering,
with such changes as may be appropriate in light of changed circumstances.

         7. Indemnification in Connection with Registration.

                  (a) If any of the Securities are registered, the Company will
indemnify and hold harmless each selling Warrantholder, any person who controls
any selling Warrantholder within the meaning of the Act, and any Participating
Underwriter against any losses, claims, damages, or liabilities, joint or
several, to which any Warrantholder, controlling person, or Participating
Underwriter may be subject under the Act or otherwise; and it will reimburse
each Warrantholder, each controlling person, and each Participating Underwriter
for any legal or other expenses reasonably incurred by the Warrantholder,
controlling person, or Participating Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action,
insofar as such losses, claims, damages, or liabilities, joint or several (or
actions in respect thereof), arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained, on the effective
date thereof, in any such registration statement or any preliminary prospectus
or final prospectus, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Company will not be liable in any case
to the extent that any loss, claim, damage, or liability arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in any registration statement, preliminary prospectus,
final prospectus, or any amendment or supplement thereto, in reliance upon and
in conformity with written information furnished by a Warrantholder for use in
the preparation thereof. The indemnity agreement contained in this subsection
(a) will not apply to amounts paid to any claimant in settlement of any suit or
claim unless such payment is first approved by the Company, such approval not to
be unreasonably withheld.

                  (b) Each selling Warrantholder, as a condition of the
Company's registration obligation, will indemnify and hold harmless the Company,
each of its directors, each of its officers who have signed any registration
statement or other filing, or any amendment or supplement thereto, and any
person who controls the Company within the meaning of the Act,

Page 6 - Representative's Warrant
11/5/02
<PAGE>
against any losses, claims, damages, or liabilities to which the Company or any
such director, officer, or controlling person may become subject under the Act
or otherwise, and will reimburse any legal or other expenses reasonably incurred
by the Company or any such director, officer, or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability, or action, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue or
alleged untrue statement of any material fact contained in said registration
statement, any preliminary or final prospectus, or other filing or any amendment
or supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only to the
extent that such untrue statement or alleged untrue statement or omission or
alleged omission was made in said registration statement, preliminary or final
prospectus, or other filing, or amendment or supplement, in reliance upon and in
conformity with written information furnished by such Warrantholder for use in
the preparation thereof; provided, however, that the indemnity agreement
contained in this subsection (b) will not apply to amounts paid to any claimant
in settlement of any suit or claim unless such payment is first approved by the
Warrantholder, such approval not to be unreasonably withheld.

                  (c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, notify the indemnifying party of the commencement thereof;
but the omission to notify the indemnifying party will not relieve it from any
liability that it may have to any indemnified party otherwise than under
subsections (a) and (b).

                  (d) If any such action is brought against any indemnified
party and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such indemnified party;
and after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation.

         8. Restrictions on Transfer. This Warrant Certificate and the Warrant
may not be sold, transferred, assigned, pledged or hypothecated for a period of
one year following the Effective Date of the Offering, except transfers to
officers or partners (not directors) of the underwriters and members of the
selling group and/or their officers or partners or by will or operation of law.
The Warrant may be divided or combined, upon request to the Company by the
Warrantholder, into a certificate or certificates evidencing the same aggregate
number of Warrants.

         9. No Rights as a Shareholder. Except as otherwise provided herein, the
Warrantholder will not, by virtue of ownership of the Warrant, be entitled to
any rights of a shareholder of the Company but will, upon written request to the
Company, be entitled to receive such quarterly or annual reports as the Company
distributes to its shareholders.

Page 7 - Representative's Warrant
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<PAGE>
         10. Optional Conversion.

                  (a) In addition to and without limiting the right of any
Warrantholder under the terms of this Warrant, the Warrantholder shall have the
right (the "Conversion Right") to convert this Warrant or any portion thereof
into Securities as provided in this Section 10 at any time or from time-to-time
after the first anniversary of the date hereof and prior to its expiration. Upon
exercise of the Conversion Right with respect to a particular number of Shares
subject to this Warrant (the "Converted Securities"), the Company shall deliver
to the holder of this Warrant, without payment by the holder of any exercise
price or any cash or other consideration, that number of Shares equal to the
quotient obtained by dividing the Net Value (as hereinafter defined) of the
Converted Securities by the sum of the fair market value (as defined in
paragraph (c) below) of one share of Common Stock, determined as of the close of
business on the Conversion Date (as hereinafter defined). The "Net Value" of the
Converted Securities shall be determined by subtracting the aggregate Exercise
Price of the Converted Securities from the aggregate fair market value of the
Converted Securities. Notwithstanding anything in this Section 10 to the
contrary, the Conversion Right cannot be exercised with respect to a number of
Converted Securities having a Net Value below $100. No fractional shares shall
be issuable upon exercise of the Conversion Right, and if the number of shares
to be issued in accordance with the foregoing formula is other than a whole
number, the Company shall pay to the holder of this Warrant an amount in cash
equal to the fair market value of the resulting fractional share.

                  (b) The Conversion Right may be exercised by the holder of
this Warrant by the surrender of this Warrant at the principal office of the
Company together with a written statement specifying that the holder thereby
intends to exercise the Conversion Right and indicating the number of Securities
subject to this Warrant which are being surrendered (referred to in paragraph
(a) above as the Converted Securities) in exercise of the Conversion Right. Such
conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement, or on such later date as is
specified therein (the "Conversion Date"), but not later than the expiration
date of this Warrant. Certificates for the shares of Common Stock issuable upon
exercise of the Conversion Right, together with a check in payment of any
fractional share and, in the case of a partial exercise, a new Warrant
evidencing the Securities remaining subject to this Warrant, shall be issued as
of the Conversion Date, and shall be delivered to the holder of this Warrant
within seven days following the Conversion Date.

                  (c) For purposes of this Section 10, the "fair market value"
of a share of Common Stock as of a particular date shall be the mean between the
bid and asked price of the Common Stock as quoted in the over the counter
market, or, if applicable, the closing sale price of the Common Stock on the
Nasdaq Stock Market or a national exchange.

         11. Notice. Any notices required or permitted to be given hereunder
will be in writing and may be served personally or by mail addressed as follows:

                  If to the Company:

                           16250 S.W. Oldsville Road
                           McMinnville, Oregon 97128
                           Attn: Chief Executive Officer

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<PAGE>
                  If to the Warrantholder:

                           at the address furnished
                           by the Warrantholder to the
                           Company for the purpose of
                           notice.

         Any notice so given by mail will be deemed effectively given 48 hours
after mailing when deposited in the United States mail, registered or certified
mail, return receipt requested, postage prepaid and addressed as specified
above. Any party may by written notice to the other specify a different address
for notice purposes.

[Remainder of Page Intentionally Blank]

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<PAGE>
         12. Applicable Law. This Warrant Certificate will be governed by and
construed in accordance with the laws of the State of Oregon, without reference
to conflict of laws principles thereunder. All disputes relating to this Warrant
Certificate shall be tried before the courts of Oregon located in Multnomah
County, Oregon, to the exclusion of all other courts that might have
jurisdiction.

Dated as of              , 2003.
            -------------

YAMHILL VALLEY VINEYARDS, INC.

By:
     ------------------------------------
     Stephen Cary
     President and Chief Executive Officer

Agreed and Accepted as of             , 2003
                          ------------

PAULSON INVESTMENT COMPANY, INC.

By:
     ------------------------------------
     Authorized Officer

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11/5/02<PAGE>
EXHIBIT 10.1 --

                         YAMHILL VALLEY VINEYARDS, INC.

                             2002 STOCK OPTION PLAN
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
<S>                                                                         <C>
Section 1.   Purpose......................................................    1

Section 2.   Definitions..................................................    1

Section 3.   Stock Subject to This Plan...................................    2

Section 4.   Administration...............................................    3

Section 5.   Options and Eligible Participants............................    4

Section 6.   Provisions Applicable to All Options.........................    4

Section 7.   Provisions applicable to ISOs Only...........................    5

Section 8.   Employment with Related Entities.............................    6

Section 9.   Termination of Relationship with Company.....................    6

Section 10.  Options Not Transferable.....................................    8

Section 11.  Changes in Company's Capital Structure.......................    8

Section 12.  Securities Regulation and Other Required Approvals...........    9

Section 13.  Withholding Tax Requirement..................................   10

Section 14.  Status of Shareholder........................................   11

Section 15.  Rights and Relationships.....................................   11

Section 16.  Amendment and Termination....................................   11

Section 17.  Applicable Law...............................................   12

Section 18.  Effectiveness of This Plan...................................   12
</TABLE>

                                       i
<PAGE>
                         YAMHILL VALLEY VINEYARDS, INC.

                             2002 STOCK OPTION PLAN

      SECTION 1. PURPOSE. The purpose of this Yamhill Valley Vineyards, Inc.
2002 Stock Option Plan (this "Plan") is to provide a means for Yamhill Valley
Vineyards, Inc. (the "Company") and related entities to continue to attract,
motivate and retain key employees, consultants and other independent contractors
and directors, and to provide these individuals with greater incentive for their
service to the Company (and related entities) by linking their interests in the
Company's success with those of the Company and its shareholders.

      SECTION 2. DEFINITIONS. When used in this Plan the following terms are
defined as set forth below:

            "ADMINISTRATOR" has the meaning provided in Section 4.

            "BOARD" means the Board of Directors of the Company.

            "CAPITALIZATION CHANGE" has the meaning provided in Section 11.1.

            "CAUSE" has the meaning provided in Section 9.1.2.

            "CODE" means the Internal Revenue Code of 1986, as amended.

            "COMMON STOCK" has the meaning provided in Section 3.

            "COMPANY" means Yamhill Valley Vineyards, Inc.

            "EFFECTIVE DATE" has the meaning provided in Section 17.

            "ELIGIBLE PARTICIPANTS" has the meaning provided in Section 5.2.

            "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

            "EXERCISE PRICE" means the amount to be paid by an Optionee to
exercise an Option.

            "FAIR MARKET VALUE" of a share of Common Stock is the fair market
value established in good faith by the Administrator, unless one of the
following applies: (a) If the Common Stock is listed on the Nasdaq National
Market, then the Fair Market Value is the closing sales price for the Common
Stock as recorded by the Nasdaq SmallCap or National Market for the immediately
preceding trading day; (b) if the Common Stock is listed on the New York Stock
Exchange or the American Stock Exchange, then the Fair Market Value is the
closing sales price for the Common Stock as such price is officially quoted in
the composite tape of transactions on such exchange for the immediately
preceding trading day; or (c) if the Common Stock is publicly traded but there
is no reported closing sales price on Nasdaq or the applicable exchange for the
date in question, then such price on the last preceding date for which a closing
sales price exists shall be determinative of Fair Market Value.

PAGE 1 - 2002 STOCK OPTION PLAN
<PAGE>
            "GRANT DATE" means the date on which the Administrator completes the
corporate action relating to the grant of an Option and all conditions precedent
to the grant have been satisfied, provided that conditions relating to
exercisability or vesting of an Option shall not defer the Grant Date.

            "ISO" or "INCENTIVE STOCK OPTION" has the meaning provided in
Section 4.1.

            "NQSO" or "NONQUALIFIED STOCK OPTION" has the meaning provided in
Section 5.1.

            "OPTION" means an option granted pursuant to this Plan for the
purchase of shares of Common Stock.

            "OPTION AGREEMENT" means a written agreement that details the terms
and conditions of a particular Option.

            "OPTIONEE" means an individual or entity who has received an Option
under this Plan.

            "PLAN" means this Yamhill Valley Vineyards, Inc. 2002 Stock Option
Plan.

            "RELATED ENTITY" means any entity that, directly or indirectly, is
in control of, or is controlled by, or under common control with the Company.

            "SALES EVENT" has the meaning provided in Section 11.2.1.

            "SECURITIES ACT" means the Securities Act of 1933, as amended.

            "TOTAL DISABILITY" has the meaning provided in Section 9.2.

      SECTION 3. STOCK SUBJECT TO THIS PLAN. The stock issuable under this Plan
is the Company's Common Stock, with voting rights, either authorized but
unissued or reacquired by the Company.

            3.1   AMOUNT. Subject to adjustment under Section 11.1, the maximum
amount of Common Stock that may be issued for Options under this Plan is 250,000
shares, as such Common Stock was constituted on the Effective Date.

            3.2   RETURNED SHARES. If any outstanding Option expires, or is
exchanged, canceled or terminated for any reason without having been exercised
or realized in full, then the unpurchased or unissued shares subject to such
Options will again be available for issuance under this Plan. If the Company
repurchases shares of Common Stock issued pursuant to an Option, then the
repurchased shares will not be available again for issuance under this Plan,
unless the shares relate to an Option (or portion of an Option) that was
exercised prior to becoming vested, which shares are then repurchased by the
Company, for the Optionee's Exercise Price, in conjunction with the Optionee
terminating employment or services with the Company prior to satisfaction of the
underlying vesting schedule, in which case the repurchased shares will again be
available for issuance under this Plan; provided, that the aggregate number

PAGE 2 - 2002 STOCK OPTION PLAN
<PAGE>
of shares that may be issued upon the exercise of ISOs will in no event exceed
280,000, subject to adjustment from time to time as provided in Section 11.1.

      SECTION 4. ADMINISTRATION.

            4.1   ADMINISTRATOR. The Board of Directors of the Company will
administer this Plan, except to the extent that it delegates administrative
responsibilities to a committee or subcommittee. The body charged with
administering the Plan is referred to as the "Administrator." Notwithstanding
the delegation of administrative authority, the Board has exclusive authority to
(a) amend or terminate this Plan as provided in Section 16, and (b) remove
members from and add members to the Administrator. The Administrator may further
delegate administrative duties to those officers and managers of the Company as
it so determines.

            4.2   PROCEDURES. The Administrator may hold meetings at such times
and places as it determines, and from time to time adopt and amend rules and
regulations relating to the administration of this Plan, provided that absent
the adoption of any formal rules, the acts of a majority of the members of the
Administrator at a meeting, or acts approved in writing by all Administrator
members, are valid acts of the Administrator.

            4.3   RESPONSIBILITIES. Except as stated elsewhere in this Plan, the
Administrator has full discretionary authority to determine all matters relating
to Options, including but not limited to (a) the selection of Eligible
Participants to receive Options, (b) the number of shares subject to each
Option, (c) the Exercise Price to be paid for any Option, (d) any vesting or
forfeiture schedule, (e) the acceleration of the exercise date, and (f) the
extension of the exercise period. In exercising its authority to set the terms
and conditions of an Option, and subject only to the limits of applicable law,
the Administrator shall be under no obligation or duty to treat similarly
situated Optionees in the same manner, and any action taken by the Administrator
with respect to the grant of an Option to one individual shall in no way
obligate the Administrator to take the same or similar action with respect to
any other individual. The Administrator may exercise its discretion in a manner
such that Options granted to individuals who are foreign nationals or are
employed outside the United States contain terms and conditions that are
different from the provisions otherwise anticipated in this Plan, but which are
consistent with the tax and other laws of applicable foreign jurisdictions and
consistent with the Company's objectives in establishing this Plan.

            4.4   PLAN CONSTRUCTION AND INTERPRETATION. Subject to Section 4.5,
the Administrator may correct any defect, supply any omission, or reconcile any
inconsistency (a) within this Plan, (b) between this Plan and any related
agreement, or (c) between this Plan and any rule or regulation promulgated under
this Plan, in the manner and to the extent the Administrator deems appropriate
to carry out this Plan. The Administrator's interpretation or construction of
any such Plan provision, related agreement, rule or regulation shall be final,
conclusive and binding on all interested parties.

            4.5   AMENDMENT OF OPTIONS. The Administrator may modify or amend
outstanding Options granted under this Plan. The modification or amendment of an
outstanding Option shall not, without the consent of the Optionee, impair,
diminish or terminate any of the rights of the Optionee or any of the
obligations of the Company under the Option, except as

PAGE 3 - 2002 STOCK OPTION PLAN
<PAGE>
otherwise provided in this Plan, or as required to comply with applicable law.
Unless the Optionee agrees otherwise, any changes or adjustments made to
outstanding ISOs granted under this Plan will be made in a manner so as not to
constitute a "modification," as defined in Code Section 424(h), and so as not to
cause any ISO to fail to continue to qualify under Code Section 422(b).

      SECTION 5. OPTIONS AND ELIGIBLE PARTICIPANTS.

            5.1   TYPES. Subject to Section 4, the Administrator may, from time
to time, grant under this Plan (i) incentive stock options (also referred to as
"ISOs"), as defined in Code Section 422, or (ii) options that do not qualify as
ISOs (referred to as "nonqualified stock options" or "NQSOs"). ISOs and NQSOs
may be granted singly or in combination.

            5.2   ELIGIBLE PARTICIPANTS. The Administrator, as it determines
from time to time, may grant Options to officers, directors and employees of the
Company and its Related Entities. The Administrator may also grant Options to
consultants, agents, advisors and independent contractors who provide services
to the Company or its Related Entities, or both, provided that such Option
recipients (a) render bona fide services that are not in connection with the
offer and sale of the Company's securities in a capital-raising transaction, and
(b) render bona fide services that do not directly or indirectly promote or
maintain a market for the Company's securities.

            5.3   TERMS AND CONDITIONS. The terms and conditions of Options
granted under this Plan need not be identical in any respect, even when grants
are made simultaneously or to persons with the same or similar status.

      SECTION 6. PROVISIONS APPLICABLE TO ALL OPTIONS. The provisions of this
Section 6 apply to both ISOs and NQSOs.

            6.1   OPTION AGREEMENT. Each Option will be evidenced by an Option
Agreement that incorporates this Plan by reference and describes the terms and
conditions of the Option. In particular, the Option Agreement will specify the
number of shares of Company Stock that may be purchased, whether the Option is
an ISO or a NQSO, the Option's expiration date, the schedule (if any) under
which the Option may be exercised, the Exercise Price, and any other terms,
conditions, restrictions, representations or warranties required by the
Administrator.

            6.2   EXERCISE PRICE. The Administrator will determine the Exercise
Price of NQSOs and ISOs, provided that subject to the requirements of Section 7,
the per share Exercise Price with respect to an ISO will be at least the Fair
Market Value of a share of the Common Stock as of the Grant Date.

            6.3   TERM. The term of each Option will be ten years from the Grant
Date, unless a shorter period is required under Section 7 or the Administrator
establishes a shorter period of time.

            6.4   VESTING. To ensure the Company achieves the purposes and
receives the benefits contemplated in this Plan, any Option granted under this
Plan shall, unless the condition of this Section 6.4 is waived or modified in
the Option Agreement or by action of the Administrator, be exercisable according
to the following schedule:

PAGE 4 - 2002 STOCK OPTION PLAN
<PAGE>
<TABLE>
<CAPTION>
            Period of Optionee's Continuous
             Service Relationship With the
               Company or Related Entity                Portion of Total Option
                  From The Grant Date                     That Is Exercisable
                  -------------------                     -------------------
<S>                                                     <C>
                  Less than 1 year                                         0%
                  Completion of 1 year                                    25%
                  Each additional month                   An additional 1/48th
                  After 4 years                                          100%
</TABLE>

            For purposes of calculating an "additional month," the Administrator
will measure from the anniversary date of the one-year period (or other
applicable date) and go to the same date of the following month (or if there is
not the same date in the following month, then to the last day of the following
month).

            6.5   EXERCISE. The Recipient may exercise Options by delivering
written notice to the Administrator of the number of shares sought to be
exercised, together with payment of the Exercise Price. The Administrator may
specify the form of such notice and the manner of its delivery. Subject to any
vesting schedule in the Option Agreement and to any additional holding period
required by law, the Optionee may exercise each Option in whole or in part,
except that only whole shares of Common Stock will be issued pursuant to the
exercise of any Option.

            6.6   PAYMENT OF EXERCISE PRICE. An Optionee must pay the Exercise
Price in full at the time of exercise. Payment of the Exercise Price shall be in
cash, by bank certified or cashier's check or by personal check (unless at the
time of exercise the Administrator in a particular case determines not to accept
a personal check). The Administrator may determine in its complete discretion,
as of the Grant Date for ISOs or at any time before exercise for NQSOs, that
alternative forms of payment will be permitted, including but not limited to
installment payments on such terms as the Administrator may determine or various
cashless exercise arrangements. Unless otherwise provided by the Administrator,
an Option may not be exercised by tender to the Company, or attestation to the
ownership, of shares of Common Stock unless the shares either have been owned by
the Optionee for more than six months (and were not used for another Option
exercise by attestation during that period) or were not acquired, directly or
indirectly, from the Company.

      SECTION 7. PROVISIONS APPLICABLE TO ISOS ONLY. ISOs are subject to the
following terms and conditions, in addition to the provisions of Section 6:

                  7.1.1 GREATER THAN 10% SHAREHOLDERS. If the Company grants
ISOs to an employee who owns more than 10% of the total combined voting power of
all classes of stock of the Company, with stock ownership to be determined in
light of the attribution rules set forth in Code Section 424(d), the term of
such ISO may not exceed five years and the Exercise Price may be not less than
110% of the Fair Market Value of the Common Stock on the ISO's Grant Date. To
the extent an Option purports to be an ISO but exceeds these limits, the Option
will be deemed to be a NQSO.

PAGE 5 - 2002 STOCK OPTION PLAN
<PAGE>
                  7.1.2 LIMITATION ON VALUE. The aggregate Fair Market Value of
all shares available under ISOs (under this Plan and any other incentive stock
option plan of the Company or a Related Entity) that are exercisable for the
first time in any calendar year may not exceed $100,000. For purposes of this
limit, Fair Market Value is measured as of the Grant Date of the applicable
Option. To the extent Options are granted as ISOs but exceed the $100,000
threshold, the Options beyond the $100,000 threshold (starting with the most
recent grants) shall be treated as NQSOs. If the Code is amended to provide for
a different limitation from that set forth in this Section 7.1.2, then that
different limitation will be deemed incorporated into this Plan, effective as of
the date and with respect to those Options as dictated by the applicable
amendment to the Code. If an Option is treated as possessing both ISOs and NQSOs
by virtue of the limitation of this Section 7.1.2, then upon exercise the
Optionee may designate whether the portion being exercised constitutes ISOs or
NQSOs (or both). In the absence of a designation by the Optionee, the Optionee
will be deemed to have first exercised the ISO portion of the Option. The Plan
Administrator may direct that separate certificates be issued to reflect the
exercise of ISOs versus the exercise of NQSOs.

      SECTION 8. EMPLOYMENT WITH RELATED ENTITIES. For purposes of this Plan,
being engaged in employment or other service relationship with a Related Entity
constitutes employment or other service relationship with the Company. In
particular, the provisions of Section 9, below, shall apply by using the terms
"Company" and "Related Entity" interchangeably. A transfer between the Company
and one or more Related Entities will not constitute a termination of employment
or other service relationship with the Company (provided that pursuant to
Section 9.5, a change in status from an employee to a non-employee worker will
constitute a termination of employment for federal tax purposes with respect to
ISOs).

      SECTION 9. TERMINATION OF RELATIONSHIP WITH COMPANY. Except as provided
otherwise in the applicable Option Agreement, all Options that are unvested
automatically expire upon termination of an Optionee's employment or other
service relationship with the Company for any reason. And except as provided
otherwise in the applicable Option Agreement, the effect of a termination of
employment or other service relationship upon vested Options is as follows:

            9.1   TERMINATION FOR CAUSE.

                  9.1.1 EFFECT UPON OPTIONS. If the Company terminates an
Optionee's employment or other service relationship for Cause, then, as of the
Company's first discovery of any of the grounds for termination for Cause, any
Option held by that Optionee shall automatically terminate. If an Optionee is
suspended pending an investigation of whether or not the Optionee will be
terminated for Cause, then all of the Optionee's rights under any Option will
also be suspended during the period of investigation.

                  9.1.2 DEFINITION OF CAUSE. Termination for "Cause" means the
Optionee's (a) willful refusal to perform his obligations to the Company, (b)
willful misconduct contrary to the interests of the Company, (c) commission of a
serious criminal act whether denominated a felony, misdemeanor or otherwise, or
(d) engaging in activities directly in competition or antithetical to the best
interests of the Company. To the extent an Optionee is a party to an employment
agreement or offer letter of employment with the Company that defines

PAGE 6 - 2002 STOCK OPTION PLAN
<PAGE>
"cause" or a similar term, then the meaning set forth in that agreement shall
also be considered "Cause" for purposes of this Plan.

            9.2   TERMINATION BECAUSE OF TOTAL DISABILITY. If an Optionee's
employment or other service relationship with the Company terminates because of
a "Total Disability," as defined below, then the Optionee's vested Options
(determined as of the termination) shall not expire (and any ISOs will not cease
to be treated as ISOs) until the sooner of (i) the end of the 12-month period
following such termination or (ii) the normal expiration date of the Option. For
purposes of this Plan, Total Disability means a mental or physical impairment
that (a) causes an individual to be unable to engage in any substantial gainful
activity, after reasonable accommodation, and (b) is expected to result in death
or has lasted or is expected to last for a continuous period of 12 months or
more. The status of Total Disability will be determined by the Administrator
and, if requested by the affected Optionee, two independent physicians, and
shall be deemed to exist on the first day after the Administrator (and the two
independent physicians, if applicable) reach the conclusion. The application of
this Section 9.2 will not accelerate the vesting of Options.

            9.3   TERMINATION BECAUSE OF, OR SHORTLY BEFORE, DEATH. If an
Optionee dies (a) while still engaged in a service relationship with the Company
or (b) within the 60-day period (or 12-month period in the case of Total
Disability) following cessation of such relationship, then any vested Options
may be exercised at any time prior to (i) the end of the 12-month period
following the death or (ii) the regular expiration date applicable to the
Option, whichever is earlier. The application of this Section 9.3 will not
accelerate the vesting of Options. The vested portion of the Option (determined
as of the Optionee's date of death) may be exercised by the personal
representative or the person to whom the Optionee's rights pass by will or by
the laws of descent and distribution.

            9.4   OTHER TERMINATIONS. If an Optionee's relationship with the
Company terminates for a reason other than Cause, death, or Total Disability,
the Optionee may exercise outstanding Options until the earlier of (a) the end
of the 60-day period following termination of an Optionee's employment or other
service relationship with the Company, or (b) the expiration date stated in the
Option Agreement, after which all unexercised Options will expire. However, the
Administrator may extend the exercise period, in its the sole discretion,
provided that ISOs exercised beyond the three-month period following termination
of an Optionee's employment with the Company will be treated as NQSOs. Unless
provided otherwise in an individual Option Agreement, an Optionee's change in
status from being an employee to a non-employee worker (such as a consultant)
will not constitute a termination of the Optionee's employment with the Company
for purposes of applying the provisions of this Section 9.4 to any ISOs held by
the Optionee, provided that the Optionee's exercise of any ISO beyond the
three-month period following the change of the Optionee's status from being an
employee to a non-employee worker will be treated as the exercise of a NQSO.

            9.5   MILITARY LEAVE, SICK LEAVE AND BONA FIDE LEAVE OF ABSENCE. To
the extent determined by the Administrator, an Optionee's employment or other
working relationship with the Company may be deemed to continue while the
Optionee is on military leave, sick leave or other bona fide leave of absence.
However, with respect to ISOs,

PAGE 7 - 2002 STOCK OPTION PLAN
<PAGE>
employment will not be deemed to continue beyond the first 90 days of leave,
unless the individual's reemployment rights are guaranteed by statute or by
contract.

      SECTION 10. OPTIONS NOT TRANSFERABLE. Options are personal to the Optionee
during the Optionee's lifetime and may not be transferred, assigned, pledged,
attached or otherwise disposed of in any manner, except by will or the laws of
descent and distribution, and provided further that to the extent authorized by
the Administrator, on a case by case basis, an Optionee may transfer NQSOs into
a revocable trust created by the Optionee for the benefit of the Optionee's
descendants, to an immediate family member, or to a partnership in which only
immediate family members or such trusts are partners. Any attempt to transfer,
assign, pledge, attach or otherwise dispose of any Option contrary to this
Section 10 will be null and void.

      SECTION 11. CHANGES IN COMPANY'S CAPITAL STRUCTURE.

            11.1  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of
any merger, consolidation, reorganization, stock split, stock dividend or other
event causing a capital adjustment affecting the number of outstanding shares of
Common Stock ("Capitalization Change"), the Administrator will make
corresponding adjustments to preserve the relative value of Options. To that end
the Administrator will make adjustments, as necessary, in: (a) the aggregate
number or kind of shares for which Options may be granted under this Plan; (b)
the number or kind of shares covered by any outstanding Options under this Plan;
and (c) other terms of this Plan or outstanding Options that merit a change in
conjunction with the Capitalization Change. Any fractional shares resulting from
an adjustment will be disregarded. In the event the Company issues additional
shares of Common Stock for consideration (including non-cash consideration),
neither the total amount of shares subject to this Plan, nor the amount of
shares subject to any outstanding Option, will be adjusted. The Administrator's
determination as to what adjustments should be made and the extent of the
adjustments will be final, binding and conclusive.

            11.2  EFFECT OF SALE, MERGER OR EXCHANGE.

                  11.2.1 TERMINATION OF OPTIONS. Subject to Section 11.2.2, upon
the occurrence of a "Sales Event" (as defined below) any unexercised Options
will expire and cease to be effective, provided that Optionees will have advance
notice and an opportunity prior to the Sales Event to exercise any vested
Options. In the alternative, at the complete discretion of the Administrator,
the Company may (i) determine to cash out some or all of the unexercised, vested
Options by paying each affected Optionee an amount equal to the Fair Market
Value of a share of Common Stock (as determined for purposes of the Sales
Event), multiplied by the number of shares of Common Stock available under the
vested portion of the Optionee's Option, reduced by the aggregate Exercise Price
associated with that portion of the Option, or (ii) continue some or all of the
Options, subject to the same terms and conditions (including the vesting
schedule, if any) that applied prior to the Sales Event, modified as deemed
appropriate by the Administrator in conjunction with the Sales Event. For
purposes of this Plan a "Sales Event" will include (a) a complete liquidation of
the Company, (b) a sale of substantially all of the Company's assets, or (c) a
merger, consolidation, reorganization or other similar event (other than an
initial public offering) in which the Company is not the surviving entity.
Unless provided otherwise in the

PAGE 8 - 2002 STOCK OPTION PLAN
<PAGE>
applicable Option Agreements, or pursuant to an action of the Board, the vesting
schedules applicable to outstanding Options will not accelerate in connection
with a Sales Event.

                  11.2.2 CONVERSION ON STOCK FOR STOCK EXCHANGE. If pursuant to
a Sales Event the shareholders of the Company receive capital stock of another
corporation ("Exchange Stock") in exchange for their shares of Common Stock,
then the Company and the corporation issuing the Exchange Stock may (at their
discretion) provide that any unexercised Options under this Plan will be
converted into options to purchase shares of Exchange Stock. The number of
shares and exercise price of options for Exchange Stock will be determined by
adjusting the number of shares and Exercise Price of the unexercised Options in
the same proportion as used for determining the number of shares of Exchange
Stock that the shareholders of Common Stock receive in the transaction. Other
than the potential changes to the Exercise Price and number of shares of the
outstanding Options, all of the terms and conditions relating to the converted
Options under this Plan shall apply to options for the Exchange Stock, unless
otherwise determined by the Administrator.

            11.3  NO RESTRICTION ON ABILITY TO ACCOMPLISH CORPORATE CHANGES.
This Plan and Options granted hereunder will not in anyway limit the right or
power of the Company, or its stockholders, to make or authorize any or all
adjustments in connection with recapitalizations, reorganizations or other
changes in the Company's structure or its business, or any merger or
consolidation of the Company, or any issuance of stock or of options, warrants
or rights to purchase stock or bonds, debentures, preferred or prior preference
stocks whose rights are superior to or affect the Common Stock or rights of
holders thereof or which are convertible into or exchangeable for Common Stock,
the dissolution or liquidation of the Company, or any sale or transfer of all or
any part of its assets or business, or any corporate act or proceeding, whether
of a similar character or otherwise.

      SECTION 12. SECURITIES REGULATION AND OTHER REQUIRED APPROVALS. The
Company shall not issue shares subject to an Option unless the exercise,
issuance and delivery of such shares comply with all relevant provisions of law,
including any applicable state securities laws, the Securities Act, the Exchange
Act, any relevant securities rules and regulations, and the requirements of any
stock exchange upon which the shares may then be listed. The issuance of shares
shall be further subject to the approval of counsel for the Company with respect
to such compliance, including the availability of an exemption from registration
for the issuance and sale of any shares under this Plan.

            12.1  EFFECT OF LACK OF AUTHORITY. The Company will use its best
efforts to obtain from the appropriate regulatory agencies any requisite
authorization in order to issue the number of shares of its Common Stock as
needed to satisfy the requirements of this Plan. The Company's inability to
obtain the authority that Company's counsel deems to be necessary for the lawful
issuance of any shares under this Plan, or the unavailability of an exemption
from registration for the issuance and sale of any shares under this Plan, shall
relieve the Company of any liability with respect to the non-issuance of such
shares.

            12.2  SECTION 16(B) COMPLIANCE; BIFURCATION OF PLAN. In the event
the Company registers any of its equity securities pursuant to Section 12(b) or
12(g) of the Exchange Act, this Plan and the Options granted under this Plan
shall comply in all respects with Rule 16b-

PAGE 9 - 2002 STOCK OPTION PLAN
<PAGE>
3 under the Exchange Act (or any successor rule). If any Plan provision is later
found not to be in compliance with Rule16b-3, the provision shall be deemed null
and void, or if possible construed in favor of its meeting the requirements of
Rule 16b-3. Notwithstanding anything in this Plan to the contrary, the
Administrator, in its absolute discretion, may bifurcate this Plan so as to
restrict, limit or condition the use of any provision of this Plan to Optionees
who are officers and directors subject to Section 16(b) of the Exchange Act
without so restricting, limiting or conditioning other Optionees. This provision
shall not obligate the Company to undertake registration of any of the Options
or shares of Common Stock.

            12.3  REPRESENTATIONS AND WARRANTIES. As a condition to granting any
Option, the Company may require the recipient to make any representation or
warranty to the Company as may be required, in the judgment of the Company,
including executing and delivering to the Company an agreement as may from time
to time be necessary to comply with federal and state securities laws. At the
election of the Company, a stop-transfer order against any shares of stock may
be placed on the official stock books and records of the Company, and a legend
may be stamped on stock certificates indicating that the stock may not be
pledged, sold or otherwise transferred unless an opinion of counsel is provided
(concurred in by counsel for the Company) stating that such transfer is not in
violation of any applicable law or regulation.

            12.4  LEGENDS ON OPTION AGREEMENTS AND STOCK CERTIFICATES. Unless an
appropriate registration statement is filed pursuant to the Securities Act, with
respect to the shares of Common Stock issued under this Plan, each certificate
representing such Common Stock shall be endorsed with the following legend or
its equivalent:

            The securities represented by this certificate have not been
            registered under the Securities Act of 1933, as amended (the "Act)
            and may not be sold, assigned, offered or otherwise transferred
            unless (a) there is an effective registration statement under the
            Act, or (b) the Company receives an opinion of legal counsel for the
            holder of these securities (concurred in by legal counsel for the
            Company) stating that the transaction is exempt from registration or
            the Company otherwise satisfies itself that the transaction is
            exempt from registration.

In addition to this legend, each Option Agreement and each certificate
representing shares of Common Stock acquired through an Option shall be endorsed
with all legends, if any, which are required by applicable state securities laws
and the Administrator.

      SECTION 13. WITHHOLDING TAX REQUIREMENT. The Company will have the right
to retain and withhold from any payment of cash, or shares of Common Stock, the
amount of taxes required by any government to be withheld. The Company may
require an individual receiving cash or shares of Common Stock under this Plan
to advance or reimburse the Company for any such taxes required to be withheld
and may withhold any distribution in whole or in part until the Company is so
reimbursed. In lieu of withholding or reimbursement, the Company has the right
to withhold from any other cash amounts due or to become due from the Company to
the individual in an amount equal to the taxes, or to retain and withhold a
number of shares having a

PAGE 10 - 2002 STOCK OPTION PLAN
<PAGE>
market value not less than the amount of the taxes required to be withheld as
reimbursement for any taxes and cancel (in whole or in part) any shares so
withheld.

      SECTION 14. STATUS OF SHAREHOLDER. No Optionee, nor any party to which an
Optionee's rights and privileges may pass, will have any of the rights or
privileges of a shareholder of the Company with respect to the shares related to
an Option unless, until and to the extent the Option has been properly exercised
for shares.

      SECTION 15. RIGHTS AND RELATIONSHIPS.

            15.1  THIS PLAN. This Plan is purely voluntary on the part of the
Company. The adoption or continuance of this Plan will not be deemed to
constitute a commitment to Eligible Participants by the Company to continue this
Plan.

            15.2  NO EMPLOYMENT CONTRACT. Nothing in this Plan, nor in any
Option granted pursuant to this Plan, shall give any Optionee any right to
continued employment with the Company or a Related Entity, or to interfere in
any way with the right of the Company (or Related Entity) to terminate the
Optionee's employment or service relationship with the Company at any time.

            15.3  OTHER AGREEMENTS. To the extent required by the Administrator,
each person who receives shares as a result of any Option shall agree to enter
into and be bound by the shareholders agreement then in effect, if any, or other
similar agreement between the Company and its shareholders relating to the
repurchase by the shareholders and/or the Company of outstanding shares of
Common Stock. In addition, as required by the Administrator, shares available
through Options may be subject to restrictions on the transfer of the shares or
commitments regarding the Company's repurchase of the Optionee's shares, which
restrictions or commitments may be a condition of the delivery of certificates
representing shares to the Optionee.

      SECTION 16. AMENDMENT AND TERMINATION.

            16.1  BOARD ACTION. The Board may at any time suspend, amend or
terminate this Plan, provided that the approval of the Company's shareholders is
necessary within 12 months before or after the adoption by the Board of any
amendment which will (a) increase the number of shares reserved for the issuance
of Options under this Plan; or (b) permit the granting of Options to a class of
persons other than those presently permitted to receive Options under this Plan.

            16.2  AUTOMATIC TERMINATION. Unless sooner terminated by the Board,
this Plan shall terminate ten years from the earlier of (a) the date on which
this Plan is adopted by the Board or (b) the date on which this Plan is approved
by the shareholders of the Company.

            16.3  EFFECT. No Option may be granted after the termination or
during any suspension of this Plan. In addition, no amendment, suspension or
termination of this Plan shall adversely affect Options granted on or prior to
the date thereof, without the consent of the Optionees, unless expressly
provided for in this Plan or a particular Option Agreement.

PAGE 11 - 2002 STOCK OPTION PLAN
<PAGE>
      SECTION 17. APPLICABLE LAW. This Plan shall be governed and construed in
accordance with the laws of the State of Oregon.

      SECTION 18. EFFECTIVENESS OF THIS PLAN. This Plan shall become effective
upon adoption by the Board, so long as it is approved by the Company's
shareholders any time within 12 months before or after the adoption of this
Plan.

PAGE 12 - 2002 STOCK OPTION PLAN

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