EPITOPE INC/OR/, S-4/A, 1997-01-15

EPITOPE INC/OR/
S-4/A, 1997-01-15
IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES

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Registration No. 333-15705

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 2
to
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

EPITOPE, INC.
(Exact name of registrant as specified in its charter)

Oregon 3841 93-0779127
(State of incorporation) (Primary Standard Industrial (IRS employer
Classification Code Number identification
number)

8505 S.W. Creekside Place, Beaverton, Oregon 97008
(503) 641-6115
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)

Adolph J. Ferro, Ph.D., PRESIDENT AND CHIEF EXECUTIVE OFFICER
Epitope, Inc.
8505 S.W. Creekside Place, Beaverton, Oregon 97008
(503) 641-6115
(Name and address, including zip code, and telephone number, including area
code, of agent for service)

Copies to:
Erich W. Merrill, Jr. Charles W. Mulaney, Jr.
Miller, Nash, Wiener, Hager & Carlsen LLP Rodd M. Schreiber
111 S.W. Fifth Avenue Skadden, Arps, Slate,
Portland, Oregon 97204-3699 Meagher & Flom (Illinois)
(503) 224-5858 333 W. Wacker Drive
Chicago, Illinois 60606
(312) 407-0700

Approximate date of commencement of proposed sale to the public: As soon as
possible after approval by shareholders.

If the securities being registered on this form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [ ]

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.

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1997 Annual Meeting: 9:00 a.m.
, 1997
Oregon Convention Center
777 N.E. Martin Luther King Jr. Blvd.
Portland, Oregon

Dear Shareholder:

We cordially invite you to attend the 1997 annual meeting of shareholders. At
the meeting, you will be asked to elect three Class I directors to serve until
the year 2000. You will also be asked to approve an important proposal to create
a new class of common stock. The proposal calls for the Company to:

- CREATE a new class of its common stock called Agritope Stock.
Agritope Stock is meant to reflect the value and track the performance
of Agritope, the Company's agribusiness and agricultural biotechnology
operations. The Company would be authorized to issue up to 40 million
shares of Agritope Stock.

- RENAME its existing common stock "Medical Products Stock."
Each share of common stock you hold would become one share of Medical
Products Stock without any further action on your part. Medical Products
Stock is meant to reflect the value and track the performance of Epitope
Medical Products, the Company's medical products business. The Company
would be authorized to issue up to 60 million shares of Medical Products
Stock.

- DISTRIBUTE about 6.9 million shares of Agritope Stock to
shareholders, one-half share of Agritope Stock for each outstanding
share of existing common stock. You would receive Agritope Stock for
common stock you hold at the close of business on the date the Company
amends its articles of incorporation (expected to be the annual meeting
date).

This proposal is intended to provide you with separate stocks, both issued by
the Company, reflecting the performance of Agritope and Epitope Medical
Products. The proposal also preserves the benefits of having the Company's
businesses be part of a consolidated enterprise. The proposal is intended to
enhance shareholder value over the long term by permitting separate market
valuations of Agritope and Epitope Medical Products and recognition of the
respective value of each group.

At the annual meeting, you will also be asked to approve changes to the
Company's stock option and stock purchase plans. Among other things, the changes
would increase the number of shares available for issuance, allow issuance of
Agritope Stock under the plans, and adjust outstanding options.

The Board of Directors has unanimously approved the nominees for Class I
directors and recommends that you vote FOR their election. The Board has also
unanimously approved the Agritope Stock proposal and stock plan proposals,
believes that they are in the best interests of the Company and its
shareholders, and unanimously recommends that you vote FOR their adoption.

YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the meeting,
please take the time to vote by completing the enclosed proxy card and mailing
it to us.

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If you have any questions regarding the annual meeting or need assistance in
voting, please contact our proxy solicitor, D. F. King & Co., Inc., at (800)
714-3312.

Sincerely yours,

Adolph J. Ferro, Ph.D.
President and Chief Executive Officer

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EPITOPE, INC.
8505 S.W. Creekside Place
Beaverton, Oregon 97008

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON , 1997

To the Shareholders of Epitope, Inc.:

The annual meeting of the holders of the common stock, no par value (the
"Common Stock"), of Epitope, Inc., an Oregon corporation (the "Company"), will
be held at the Oregon Convention Center, 777 N.E. Martin Luther King Jr.
Boulevard, Portland, Oregon, on , , 1997, at 9:00 a.m., for the following
purposes:

1. To elect three Class I directors to serve on the Board of Directors
until the year 2000 annual meeting of shareholders.

2. To consider and vote on a proposal (the "Agritope Stock Proposal") to
adopt certain amendments to the Company's Restated Articles of
Incorporation that would, among other things, increase the total
authorized common stock of the Company from 30 million shares to 100
million shares, create a new class of common stock to be designated
Agritope Common Stock ("Agritope Stock"), and redesignate the existing
Common Stock as Epitope Medical Products Common Stock ("Medical Products
Stock"), with each class having the voting, dividend, liquidation,
exchange, and other rights described in the accompanying
Prospectus/Proxy Statement.

3. To consider and vote on a proposal to amend the Epitope, Inc. 1991 Stock
Award Plan to, among other matters, increase the number of shares
available for issuance under the plan by 1 million shares of existing
Common Stock (Medical Products Stock if the Agritope Stock Proposal is
approved) and, contingent on approval of the Agritope Stock Proposal, 1
million shares of Agritope Stock; and to adjust outstanding options.

4. To consider and vote on a proposal to amend the Epitope, Inc. 1993
Employee Stock Purchase Plan to, among other matters, increase the
number of shares available for issuance under the plan by 250,000 shares
of existing Common Stock (Medical Products Stock if the Agritope Stock
Proposal is approved) and, contingent on approval of the Agritope Stock
Proposal, 250,000 shares of Agritope Stock.

5. To transact such other business as may properly come before the meeting.

The foregoing items of business are more fully described in the
Prospectus/Proxy Statement accompanying this Notice. Assuming that the proposals
in items 3 and 4 above are approved by the shareholders, the plan amendments
relating to Agritope Stock described in these items will be implemented only if
the Agritope Stock Proposal is approved by the shareholders.

Only holders of Common Stock of record at the close of business on ,
1997 will be entitled to vote at the annual meeting of shareholders and any
adjournments thereof.

By Order of the Board of Directors

Andrew S. Goldstein
Secretary

, 1997

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Beaverton, Oregon

YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE
URGED TO MARK, SIGN, DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE
ENVELOPE PROVIDED. RETURNING YOUR PROXY DOES NOT DEPRIVE YOU OF YOUR RIGHT TO
ATTEND THE MEETING AND TO VOTE YOUR SHARES IN PERSON.

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TABLE OF CONTENTS

Page

<S> <C>
PROSPECTUS/PROXY STATEMENT........................................................................................1

AVAILABLE INFORMATION.............................................................................................4

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...................................................................4

SUMMARY...........................................................................................................5

The Company...............................................................................................5
The Annual Meeting........................................................................................5
Election of Class I Directors.............................................................................6
The Agritope Stock Proposal...............................................................................6
Summary Comparison of Existing Epitope Common Stock with Terms of
Medical Products Stock and Agritope Stock .............................................................11
Stock Plan Proposals.....................................................................................14
Recommendations of the Board.............................................................................15
Recent Developments......................................................................................15
Selected Financial Data..................................................................................16
Comparative Per-Share Financial Information..............................................................18
Epitope Common Stock Price Range and Dividend Policy.....................................................18

RISK FACTORS.....................................................................................................19

NOTE REGARDING FORWARD-LOOKING STATEMENTS........................................................................28

THE ANNUAL MEETING...............................................................................................28

PROPOSAL 1: Election of Class I Directors.......................................................................30

PROPOSAL 2: The Agritope Stock Proposal.........................................................................34

General..................................................................................................34
The Distribution.........................................................................................35
Reasons for the Agritope Stock Proposal..................................................................36
Management and Accounting Policies.......................................................................37
Description of Medical Products Stock and Agritope Stock.................................................40
Dividend Policy..........................................................................................49
Stock Transfer Agent and Registrar.......................................................................49

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Quotation of Medical Products Stock and Agritope Stock...................................................50
Financial Advisor........................................................................................50
No Dissenters' Rights....................................................................................50
Effects on Convertible Securities........................................................................50
Certain Federal Income Tax Considerations................................................................50

GENERAL PROVISIONS REGARDING THE PROPOSED AMENDMENTS TO THE 1991 STOCK
AWARD PLAN AND 1993 EMPLOYEE STOCK PURCHASE PLAN ................................................................54

PROPOSAL 3: Amendment of 1991 Stock Award Plan .................................................................55

PROPOSAL 4: Amendment of 1993 Employee Stock Purchase Plan .....................................................62

EXECUTIVE OFFICERS...............................................................................................64

EXECUTIVE COMPENSATION...........................................................................................66

REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE...................................................................68

STOCK PRICE PERFORMANCE GRAPH....................................................................................70

PRINCIPAL SHAREHOLDERS...........................................................................................71

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..........................................................72

CERTAIN TRANSACTIONS.............................................................................................72

LEGAL OPINIONS...................................................................................................73

EXPERTS..........................................................................................................73

FINANCIAL ADVISOR................................................................................................73

INDEPENDENT ACCOUNTANTS..........................................................................................73

ANNUAL REPORT....................................................................................................73

DEADLINE FOR SHAREHOLDER PROPOSALS...............................................................................73

EXPENSES OF SOLICITATION.........................................................................................74

OTHER MATTERS....................................................................................................74
</TABLE>

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ANNEXES

Annex I Index of Defined Terms

Annex II Proposed Amendment to the Restated Articles of
Incorporation of Epitope, Inc.

Annex III The Company Description of Business Management's
Discussion and Analysis of Financial Condition and Results of
Operations Financial Statements and Supplementary Data

Annex IV Proposed Amendments to 1991 Stock Award Plan

Annex V Proposed Amendments to 1993 Employee Stock Purchase Plan

Annex VI Illustration of Certain Provisions

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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION. DATED , 1997

PROSPECTUS/PROXY STATEMENT
--------------------------

EPITOPE, INC.
8505 S.W. CREEKSIDE PLACE
BEAVERTON, OREGON 97008

PROSPECTUS PROXY STATEMENT
Agritope Common Stock, no par value 1997 Annual Meeting of Shareholders

This Prospectus and Proxy Statement (the "Prospectus/Proxy Statement")
is being furnished to shareholders of Epitope, Inc., an Oregon corporation (the
"Company" or "Epitope"), in connection with the solicitation of proxies by the
Board of Directors (the "Board") for the annual meeting of shareholders to be
held on , 1997, and any adjournments thereof (the "Annual Meeting").

At the Annual Meeting, shareholders will be asked to elect three Class I
directors to serve on the Board until the year 2000 annual meeting of
shareholders. In addition, Epitope will present a proposal (the "Agritope Stock
Proposal") to adopt an amendment to Epitope's Restated Articles of Incorporation
(the "Articles") that would, among other things, increase Epitope's authorized
common stock, no par value ("Epitope Common Stock"), from 30 million shares to
100 million shares, create a new class of common stock, Agritope Common Stock,
no par value (the "Agritope Stock"), and redesignate existing Epitope Common
Stock as Epitope Medical Products Common Stock ("Medical Products Stock"). At
the Annual Meeting, shareholders also will be asked to approve changes to the
1991 Stock Award Plan (the "Award Plan"), to the 1993 Employee Stock Purchase
Plan (the "Purchase Plan," and together with the Award Plan, the "Stock Plans"),
and to outstanding options. A detailed description of each proposal is included
in this Prospectus/Proxy Statement. An index showing the pages on which certain
terms used in this Prospectus/Proxy Statement are defined is attached as Annex
I.

If the Agritope Stock Proposal is approved, Epitope plans to make a
distribution (the "Distribution") of one-half share of Agritope Stock on each
outstanding share of Epitope Common Stock, or an aggregate of approximately 6.9
million shares of Agritope Stock, to the holders of record at the close of
business on the effective date of the amendment to the Articles (the "Effective
Date"). The Company expects that the Effective Date would be the date of the
Annual Meeting. The Agritope Stock issuable in connection with the Distribution
would be intended initially to represent 100 percent of the equity value of the
Company attributable to Agritope. Additional shares of Agritope Stock will be
reserved for issuance upon the exercise of outstanding stock options and
warrants and the conversion of outstanding convertible notes as a result of
antidilution adjustments relating to the Distribution. Shares of Epitope Common
Stock will be redesignated as Medical Products Stock on the Effective Date on a
one-for-one basis. Except as otherwise required by law or under certain limited
circumstances contained in the Articles as proposed to be amended, (i) the
holders of Medical Products Stock and the holders of Agritope Stock will vote
together as a single voting group and will have relative voting power based on
the respective market capitalizations of each such class of stock, determined as
of each applicable record date, and (ii) dividends on Medical Products Stock
will be limited to the Available Medical Products Dividend Amount and dividends
on Agritope Stock will be limited to the Available Agritope Dividend Amount. In
case of the liquidation of Epitope, holders of Medical Products Stock and

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Agritope Stock will be entitled to receive the assets, if any, remaining for
distribution to common shareholders on a per share basis in proportion to the
relative market capitalizations of each such class of stock. Each class of
common stock will be subject, under certain conditions, to both mandatory and
optional provisions for exchange.
See "Proposal 2: The Agritope Stock Proposal."

The Agritope Stock Proposal is intended to provide investors with
separate securities reflecting the performance of the Company's agribusiness and
agricultural biotechnology business ("Agritope") and medical products business
("Epitope Medical Products"), respectively, while preserving for the Company's
businesses the benefits of being part of a consolidated enterprise. The Agritope
Stock Proposal is intended to enhance shareholder value over the long term by
permitting separate market valuations of Agritope and Epitope Medical Products
and recognition of the respective value of each group. The Agritope Stock
Proposal is also intended to afford increased flexibility for each group to
raise capital, make acquisitions and investments, and enter into strategic
partnering transactions, using an equity security related specifically to that
group. See Annex III, "Description of Business," for a description of Agritope
and Epitope Medical Products.

HOLDERS OF BOTH AGRITOPE STOCK AND MEDICAL PRODUCTS STOCK WOULD BE
COMMON SHAREHOLDERS OF THE COMPANY AND WOULD BE SUBJECT TO RISKS ASSOCIATED WITH
AN INVESTMENT IN THE COMPANY AND ALL ITS BUSINESSES, ASSETS, AND LIABILITIES.
THE COMPANY CAN PROVIDE NO ASSURANCE AS TO THE DEGREE TO WHICH THE MARKET PRICE
OF STOCK RELATED TO EITHER AGRITOPE OR EPITOPE MEDICAL PRODUCTS WILL REFLECT THE
SEPARATE PERFORMANCE OF THE GROUP OR AS TO THE IMPACT OF THE PROPOSAL ON THE
MARKET PRICE OF MEDICAL PRODUCTS STOCK. IN ADDITION, IMPLEMENTATION OF THE
AGRITOPE STOCK PROPOSAL WILL, TO AN EXTENT, MAKE THE CAPITAL STRUCTURE OF THE
COMPANY MORE COMPLEX AND MAY GIVE RISE TO OCCASIONS WHEN THE INTERESTS OF THE
HOLDERS OF MEDICAL PRODUCTS STOCK AND THE HOLDERS OF AGRITOPE STOCK MAY DIVERGE
OR APPEAR TO DIVERGE.

Shares represented by a properly executed proxy will be voted in
accordance with the instructions given in the proxy. If no instructions are
given, shares will be voted according to the recommendations of the Board as
stated on the proxy. Shareholders may revoke the authority granted by their
proxies at any time before the meeting by notice in writing delivered to the
Secretary of the Company, by submitting a subsequently dated proxy, or by
attending the meeting, withdrawing the proxy, and voting in person.

Only Epitope shareholders of record at the close of business on , 1997
will be entitled to vote at the Annual Meeting. On that date, Epitope had
outstanding shares of Epitope Common Stock, its only outstanding class of stock.
A majority of the outstanding shares of Epitope Common Stock, represented in
person or by proxy, constitutes a quorum for the transaction of business.

AN INVESTMENT IN AGRITOPE STOCK AND MEDICAL PRODUCTS STOCK INVOLVES A
HIGH DEGREE OF RISK. SEE "RISK FACTORS."

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION ("COMMISSION") OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

No person is authorized to give any information or to make any
representation not contained in this Prospectus/Proxy Statement in connection
with the offering and solicitation made hereby and, if given or made, such
information or representation should not be relied upon as having been
authorized. This Prospectus/Proxy Statement does not constitute an offer to sell
or a solicitation of any offer to buy the securities offered by this
Prospectus/Proxy Statement or a solicitation of a proxy in any jurisdiction
where, or to or from any person to whom, it is unlawful to make such an offer or
solicitation of an offer or proxy solicitation. Neither the delivery of this
Prospectus/Proxy Statement nor any distribution of the securities offered
pursuant to this Prospectus/Proxy Statement shall create an

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implication that there has been no change in the affairs of the Company or that
the information in the documents incorporated herein by reference is correct as
of any time subsequent to the date hereof.

The date of this Prospectus/Proxy Statement is , 1997 and it is first
being mailed or delivered to Epitope shareholders on or about that date.

PLEASE MARK, SIGN, AND DATE THE ENCLOSED PROXY CARD, AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE PROVIDED FOR THIS PURPOSE.

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AVAILABLE INFORMATION

The Company has filed with the Commission a registration statement
(together with all amendments and exhibits, the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act") with respect to
Agritope Stock. This Prospectus/Proxy Statement does not contain all information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and Agritope Stock, reference is made to
the Registration Statement. Statements contained in this Prospectus/Proxy
Statement as to the contents of any contract or other document which is filed as
an exhibit to the Registration Statement are not necessarily complete, and each
such statement is qualified in its entirety by reference to the full text of
such contract or document.

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements, and other information with
the Commission. Reports, proxy statements, and other information filed by the
Company may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C.; 500
West Madison Street, Chicago, Illinois; and 7 World Trade Center, New York, New
York. Copies of such material can be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission maintains an Internet Web site that contains
reports, proxy and information statements, and other information regarding
reporting companies under the Exchange Act. The address of the Internet Web site
is http://www.sec.gov.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed with the Commission pursuant to the
Exchange Act are incorporated in this Prospectus/Proxy Statement by reference:
(i) the Company's Annual Report on Form 10-K for the year ended September 30,
1996, and (ii) the Company's Current Reports on Form 8-K dated September 17,
November 6, November 14, and December 12, 1996. In addition, all documents filed
by the Company pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange
Act after the date of this Prospectus/Proxy Statement and prior to the date of
the Annual Meeting shall be deemed to be incorporated by reference in this
Prospectus/Proxy Statement and to be a part hereof from the date of filing of
the documents (such documents, and the documents enumerated above, are
hereinafter referred to as "Incorporated Documents"). Any statement contained in
an Incorporated Document shall be deemed to be modified or superseded for
purposes of this Prospectus/Proxy Statement and the Registration Statement of
which it is a part to the extent that a statement contained herein or in any
other subsequently filed Incorporated Document or in an accompanying prospectus
supplement modifies or supersedes the statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus/Proxy Statement or the Registration
Statement.

THIS PROSPECTUS/PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS, OTHER
THAN EXHIBITS THERETO, ARE AVAILABLE WITHOUT CHARGE UPON REQUEST FROM GILBERT N.
MILLER, EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER,
EPITOPE, INC. 8505 S.W. CREEKSIDE PLACE, BEAVERTON, OREGON 97008, TELEPHONE
(503) 641-6115. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST
SHOULD BE MADE BY , 1997.

The information relating to the Company contained in this
Prospectus/Proxy Statement does not purport to be comprehensive and should be
read together with the information contained in the Incorporated Documents.

If you have any questions regarding the annual meeting or need
assistance in voting, please contact our proxy solicitor, D.F. King & Co., Inc.,
at (800) 714-3312.

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SUMMARY

THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE
IN THIS PROSPECTUS/PROXY STATEMENT. REFERENCE IS MADE TO, AND THIS SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION CONTAINED IN THIS
PROSPECTUS/PROXY STATEMENT AND THE ANNEXES. CAPITALIZED TERMS USED BUT NOT
DEFINED IN THIS SUMMARY HAVE THE MEANINGS GIVEN ELSEWHERE IN THIS
PROSPECTUS/PROXY STATEMENT. SEE ANNEX I, "INDEX OF TERMS." SHAREHOLDERS ARE
URGED TO READ THIS PROSPECTUS/PROXY STATEMENT AND THE ANNEXES IN THEIR ENTIRETY.

THE COMPANY

EPITOPE, INC.

Epitope, Inc. utilizes biotechnology to develop and market medical
diagnostic products, superior new plant varieties, and related products. The
executive offices of Epitope and of its Epitope Medical Products and Agritope
groups are located at 8505 S.W. Creekside Place, Beaverton, Oregon 97008,
telephone (503) 641-6115.

THE EPITOPE MEDICAL PRODUCTS GROUP

The Company's Epitope Medical Products group develops and markets
diagnostic tests and related devices for the detection of HIV, the principal
cause of AIDS, and for the detection of other medical conditions and analytes.
Its oral specimen HIV testing system is marketed under the names OraSure(R) and
EpiScreen(TM). Epitope Medical Products will encompass all of the Company's
medical products businesses. See Annex III, "The Company--Description of
Business--Epitope Medical Products."

THE AGRITOPE GROUP

The Company's Agritope group historically has focused its efforts on
the development of novel agricultural products using both plant genetic
engineering and other modern methods. Through the recent acquisition of Andrew
and Williamson Sales, Co. ("A&W") on December 12, 1996, and Agritope's majority
ownership of Vinifera, Inc. ("Vinifera"), Agritope now conducts operations in
each step of the production and distribution chain for a broad range of fruits,
vegetables and plants and has an infrastructure that will facilitate
commercialization of the Company's genetically engineered agricultural products.

Agritope consists of three major units: Agritope Research and
Development, A&W, and Vinifera. Agritope Research and Development contributes
biotechnology and product development efforts to A&W and Vinifera as well as to
its other business partners. Through A&W, Agritope produces, markets,
distributes and sells a wide variety of fruits and vegetables throughout North
America. Through Vinifera, Agritope believes that it offers one of the most
technically advanced grapevine plant propagation and disease screening and
elimination programs available to the worldwide wine and table grape production
industry. See Annex III, "The Company--Description of Business--Agritope."

THE ANNUAL MEETING

This Prospectus/Proxy Statement and enclosed proxy card are being
furnished in connection with the solicitation of proxies by the Board for use at
the Annual Meeting to be held on , 1997, at 9:00 a.m., Pacific time, at the
Oregon Convention Center, 777 N.E. Martin Luther King Jr. Boulevard, Portland,
Oregon, and at any adjournments thereof, pursuant to the accompanying Notice of
Annual Meeting of Shareholders. The Annual Meeting will be held to (i) elect
three Class I directors, (ii) consider the Agritope Stock Proposal and (iii)
consider the proposed amendments to the Stock Plans and outstanding options.

Each nominee for director will be elected if he receives a plurality of
the votes cast at the Annual Meeting. The Agritope Stock Proposal and each
proposal relating to Stock Plans will be approved if the votes cast in favor

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of the proposal at the Annual Meeting exceed the votes cast opposing the
proposal. Shareholders may expressly abstain from voting on the Agritope Stock
Proposal and the Stock Plan proposals. Neither abstentions nor shares
represented by duly executed and returned proxies of brokers or other nominees
that are expressly not voted on any matter to be presented at the Annual Meeting
will have any effect on the required vote on the matter.

Only Epitope shareholders of record at the close of business on ,
1997 (the "Record Date"), are entitled to notice of and to vote at the Annual
Meeting. At the close of business on the Record Date, shares of Epitope
Common Stock were outstanding. Each share of Epitope Common Stock is entitled to
one vote on any matter brought before the meeting. The executive officers and
directors of Epitope and their affiliates hold shares of Epitope Common Stock
representing approximately percent of the outstanding shares of Epitope Common
Stock (excluding shares that such persons have the right to acquire upon the
exercise of stock options). See "Principal Shareholders." A majority of the
shares of Epitope Common Stock outstanding as of the Record Date, represented in
person or by proxy at the Annual Meeting, will constitute a quorum for the
transaction of business.

ELECTION OF CLASS I DIRECTORS

W. Charles Armstrong, Adolph J. Ferro, Ph.D., and Roger L. Pringle have
been nominated for election as Class I directors, for a term of office expiring
at the Annual Meeting of Shareholders in the year 2000. The three nominees are
currently members of the Board. See "Proposal 1: Election of Class I Directors."

THE AGRITOPE STOCK PROPOSAL

GENERAL

Shareholders are being asked to consider and approve the Agritope Stock
Proposal, which if approved would authorize the amendment (the "Amendment") to
the Articles set forth in Annex II. The Amendment would increase Epitope's
authorized common stock from 30 million shares to 100 million shares, create
Agritope Stock as a new class of authorized common stock of Epitope and
redesignate the existing Epitope Common Stock as Medical Products Stock. Each
class would have the voting, dividend, liquidation, exchange, and other rights
described below. See "The Agritope Stock Proposal--Description of Medical
Products Stock and Agritope Stock."

Medical Products Stock and Agritope Stock are intended to reflect the
value and track the performance of Epitope Medical Products and Agritope,
respectively. See Annex III, "The Company--Description of Business," for a
description of Epitope Medical Products and Agritope, respectively.

The Board of Directors has adopted a resolution declaring a
distribution of one-half share of Agritope Stock on each share of Medical
Products Stock to holders of record at the close of business on the Effective
Date, subject to approval of the Agritope Stock Proposal by Epitope
shareholders. An aggregate of approximately 6.9 million shares of Agritope Stock
would be issued in the Distribution. On or about the sixth business day
following the Effective Date, certificates for shares of Agritope Stock will be
mailed to holders of record at the close of business on the Effective Date. The
Agritope Stock issuable in connection with the Distribution would be intended
initially to represent 100 percent of the equity value of the Company
attributable to Agritope. Additional shares of Agritope Stock will be reserved
for issuance upon the exercise of outstanding stock options and warrants and the
conversion of outstanding convertible notes as a result of antidilution
adjustments relating to the Distribution.

The Distribution ratio was determined by the Board in consultation with
Vector Securities International, Inc. ("Vector Securities"), the Company's
financial advisor in connection with the Agritope Stock Proposal. In determining
the Distribution ratio, the Company took into account, among other things, the
assets and liabilities of Agritope and Epitope Medical Products, their recent
historical financial performance relative to competitors that are publicly
traded, their future prospects and the current state of the capital markets.

- 6 -

<PAGE>

Except for the shareholder approval requirement described herein and
requirements of applicable securities laws, no federal or state regulatory
requirements must be complied with or approval obtained in connection with the
Distribution.

IF THE AGRITOPE STOCK PROPOSAL IS NOT APPROVED BY THE SHAREHOLDERS,
AGRITOPE STOCK WILL NOT BE CREATED AND ISSUED, AND THE DISTRIBUTION WILL NOT
OCCUR.

REASONS FOR THE AGRITOPE STOCK PROPOSAL

The Board believes that the investment community has historically
focused principally on the products and business of Epitope Medical Products and
has not given sufficient recognition to the value of Agritope's business.
The Agritope Stock Proposal is intended to enhance shareholder value over the
long term by permitting separate market valuations of Agritope and Epitope
Medical Products and recognition of the respective value of each group. There
can be no assurance, however, that the combined market values of the Medical
Products Stock and the Agritope Stock held by a shareholder after the Effective
Date will equal or exceed the market value of the existing Epitope Common Stock
held by the shareholder prior to the Effective Date.

The Agritope Stock Proposal is also intended to afford increased
flexibility for each group to raise capital, make acquisitions and investments,
and enter into strategic partnering transactions, using an equity security
related specifically to that group. For example, if capital is needed solely for
Agritope's business, the Company could issue Agritope Stock. Similarly, an
acquisition related to Epitope Medical Products or strategic partnering
transaction involving a partner interested solely in Epitope Medical Products
could be effected through the issuance of Medical Products Stock. See "Proposal
2: The Agritope Stock Proposal--Reasons for the Agritope Stock Proposal."

RISK FACTORS

Although the Board believes that the Agritope Stock Proposal is in the
best interests of the Company and its shareholders, the proposal is subject to a
number of risks and uncertainties. SHAREHOLDERS SHOULD CONSIDER THE RISKS
SUMMARIZED BELOW, AS WELL AS ALL RISKS DISCUSSED FULLY UNDER "RISK FACTORS," IN
EVALUATING THE AGRITOPE STOCK PROPOSAL.

NO ASSURANCE AS TO MARKET PERFORMANCE; IMPACT OF CERTAIN TERMS. Because
there has been no public market for Medical Products Stock (with respect solely
to the business of Epitope Medical Products, as proposed) or for Agritope Stock,
there can be no assurance as to the degree to which the market price of the
classes of common stock will accurately reflect the value and track the
performance of Epitope Medical Products and Agritope. In addition, Epitope
cannot predict the impact that certain terms of the securities will have on the
market prices of each class of common stock. There can be no assurance that the
combined market values of the Medical Products Stock and the Agritope Stock held
by a shareholder after the Effective Date will equal or exceed the market value
of the existing Epitope Common Stock held by the shareholder prior to the
Effective Date.

UNUSUAL USE OF TARGETED STOCK. "Targeted stock," such as Medical
Products Stock and Agritope Stock, is not a new concept. However, it has been
used in the past primarily by businesses with historical earnings. The proposed
changes in Epitope's capital structure may have substantially different
effects from those experienced by companies with more mature businesses with
targeted stock capital structures. See "Risk Factors--Risks Related to Two
Classes of Common Stock--Unusual Use of Targeted Stock."

- 7 -

<PAGE>

SHAREHOLDERS OF ONE COMPANY; FINANCIAL IMPACTS ON ONE GROUP COULD
AFFECT THE OTHER. Notwithstanding the allocation of revenues, costs, assets,
liabilities, and shareholders' equity between Epitope Medical Products and
Agritope for the purpose of preparing their respective financial statements,
both holders of Medical Products Stock and holders of Agritope Stock will be
shareholders of Epitope and will continue to be subject to all the risks
associated with an investment in Epitope. Financial effects arising out of
either group, including liabilities or contingencies, could affect the financial
condition and results of operations of the Company on a consolidated basis and
the other group, as well as the market price of both classes of common stock. In
addition, any net losses of either group, dividends or distributions on, or
repurchases of, Agritope Stock or Medical Products Stock, and dividends on or
repurchases of any preferred stock that may hereafter be outstanding, will
reduce funds of the Company legally available for the payment of dividends on
both Agritope Stock and Medical Products Stock. Accordingly, Epitope Medical
Products' and Agritope's financial information should be read in conjunction
with Epitope's consolidated financial information. See "Risk Factors--Risks
Related to Two Classes of Common Stock-Shareholders of One Company; Financial
Impacts on One Group Could Affect the Other."

FIDUCIARY DUTIES; POTENTIAL CONFLICTS. The existence of separate
classes of common stock may give rise to occasions when the interests of holders
of Medical Products Stock and holders of Agritope Stock may diverge or appear to
diverge. Under the Oregon Business Corporation Act (the "Corporation Act"),
Epitope's directors and officers are required to act in good faith, with the
care an ordinarily prudent person in a like position would exercise under
similar circumstances, and in a manner they reasonably believe to be in the best
interests of the Company. The generally do not have separate or additional
duties to any group of shareholders. The Company is not aware of any precedent
concerning the manner in which principles of Oregon law would be applied in the
context of the capital structure contemplated by the Agritope Stock Proposal.
Other than as described under "The Agritope Stock Proposal--Management and
Accounting Policies," no specific procedures have been adopted for consideration
of matters involving a divergence of interests between the holders of Agritope
Stock and Medical Products Stock. See "Risk Factors--Risks Related to Two
Classes of Common Stock--Fiduciary Duties; Potential Conflicts."

DESCRIPTION OF MEDICAL PRODUCTS STOCK AND AGRITOPE STOCK

If the Agritope Stock Proposal is approved, Epitope's Articles will be
amended to create Agritope Stock and to establish the following terms for
Medical Products Stock and Agritope Stock:

DIVIDENDS. Dividends on Medical Products Stock and Agritope Stock may
be declared and paid only out of the lesser of funds of Epitope legally
available therefor and the Available Medical Products Dividend Amount (with
respect to Medical Products Stock) or the Available Agritope Dividend Amount
(with respect to Agritope Stock). Subject to such limitations, the Board may, in
its sole discretion, declare and pay dividends on either class of common stock
without declaring or paying dividends on the other class, or may declare and pay
dividends on both classes in equal or unequal amounts, notwithstanding the
amounts available for payment of dividends on each class, the respective voting
and liquidation rights of each class, the amount of prior dividends declared on
each class, or any other factor. The Company has never paid any cash dividends
on shares of Epitope Common Stock. The Company currently intends to retain its
earnings to finance future growth and therefore does not anticipate paying any
cash dividends on any class of its common stock in the foreseeable future.

- 8 -

<PAGE>

EXCHANGE AT COMPANY'S OPTION. At any time after February 28, 1999,
the Company may exchange each outstanding share of Agritope Stock for any
combination of cash and Medical Products Stock at a 15 percent premium over the
average Market Value of Agritope Stock calculated over the 20-Trading Day period
prior to the first public announcement by the Company of the exchange.
Similarly, at any time after February 28, 1999, the Company may exchange each
outstanding share of Medical Products Stock for any combination of cash and
Agritope Stock at a 15 percent premium over the average Market Value of Medical
Products Stock calculated over the 20-Trading Day period prior to the first
public announcement by the Company of the exchange. See Annex VI for an
illustration of the exchange provisions of Agritope Stock and Medical Products
Stock.

MANDATORY DIVIDEND, REDEMPTION, OR EXCHANGE. With certain exceptions,
in the event of the Disposition by Epitope of all or substantially all (i.e., 80
percent or more on a current market value basis) the properties and assets
allocated to Agritope or Epitope Medical Products, as the case may be, Epitope
is required to either (i) distribute to holders of the relevant class of stock
an amount in cash and/or securities or other property equal to their
proportionate interest in the Fair Value of the Net Proceeds of such
Disposition, either by dividend or redemption of all or part of the outstanding
shares of such class of stock or (ii) exchange each outstanding share of the
relevant class of stock for the number of shares of common stock of the other
group equal to 115 percent of the ratio of the average Market Value of one share
of the relevant class of stock to the average Market Value of one share of the
other group's stock calculated over the ten-Trading Day period beginning on the
16th Trading Day after consummation of the Disposition. See Annex VI for an
illustration of certain redemption or exchange provisions of Agritope Stock and
Medical Products Stock.

EXCHANGE FOR STOCK OF SUBSIDIARY. The Company may exchange all of the
outstanding shares of Agritope Stock or Medical Products Stock for stock of one
or more wholly owned subsidiaries, if the subsidiaries hold all the assets and
liabilities of the Affected Group. If the Company elected to make such an
exchange, each share of the Affected Group's Stock would be exchanged for a
number of shares of common stock of the subsidiary or subsidiaries equal to the
product of the Outstanding Interest Fraction of the Affected Group multiplied by
the number of shares of subsidiary common stock that will be outstanding
immediately after the exchange (excluding shares owned before the exchange by
unaffiliated parties), divided by the number of shares of the Affected Group's
stock outstanding.

VOTING RIGHTS. Holders of shares of Medical Products Stock and Agritope
Stock will vote together as a single voting group on all matters as to which
holders of common stock generally are entitled to vote, except as otherwise
required by law or as provided in the Articles as proposed to be amended. On all
such matters, each share of Medical Products Stock will have one vote, and each
share of Agritope Stock will have a variable number of votes (which could be
more than, less than or equal to one) per share equal to the ratio of the
average Market Value of one share of Agritope Stock to the average Market Value
of one share of Medical Products Stock calculated over the 20-Trading Day period
preceding the record date for the matter to be acted upon. As a result, the two
classes of stock will have relative aggregate voting power proportional to the
respective market capitalizations of each group. The voting rights of either
class of stock would also be appropriately adjusted in the event of certain
stock dividends, stock splits or other recapitalizations. The Company
anticipates that Medical Products Stock would initially represent a majority of
the voting power of all classes entitled to vote in the election of directors.
Under the Articles as proposed to be amended and under Oregon law, certain
corporate actions would require the approval of the holders of the affected
class of common stock voting as a separate voting group. For a more detailed
description of these actions, see "Proposal 2: The Agritope Stock
Proposal--Description of Medical Products Stock and Agritope Stock--Voting
Rights." See Annex VI for an illustration of the calculation of voting rights.

LIQUIDATION. In the event of a dissolution, liquidation, or winding up
of the Company, whether voluntary or involuntary, holders of outstanding shares
of Medical Products Stock and Agritope Stock will be entitled to receive the
assets, if any, remaining for distribution to common shareholders on a per-share
basis in proportion to the relative market capitalizations of each such class of
stock.

INTER-GROUP INTERESTS. The shares of Agritope Stock issuable in
connection with the Distribution would be intended initially to represent 100
percent of the equity value of the Company attributable to Agritope and,

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<PAGE>

accordingly, Epitope Medical Products will not have an Inter-Group Interest in
Agritope. Similarly, Agritope will not initially have an Inter-Group Interest in
Epitope Medical Products. An Inter-Group Interest would be created only if a
subsequent transfer of cash, assets, products, programs or other property from
Agritope or Epitope Medical Products to the other group is specifically
designated by the Board as creating an Inter-Group Interest (in contrast to
transfers made for other consideration such as transfers as loans or in purchase
and sale transactions) or if outstanding shares of Agritope Stock or Epitope
Medical Products Stock are retired or otherwise cease to be outstanding
following their purchase with funds attributed to the other group. See Annex VI
for an illustration of the calculation of Inter-Group Interests.

The amount of any Inter-Group Interest would be expressed in terms of
the number of "Inter-Group Shares Issuable" with respect to an Inter-Group
Interest, which is intended to provide a measure of the Inter-Group Interest on
a basis comparable to an investment in shares of Agritope Stock or Medical
Products Stock, as the case may be. In general, if an Inter-Group Interest is
created by a transfer of cash, assets, products, programs or other property from
Agritope or Epitope Medical Products to the other group, the Inter-Group Shares
Issuable with respect to the Inter-Group Interest in the group receiving such
cash, assets, products, programs or other property would be increased or the
Inter-Group Interest of the receiving group in the other group, if any, would be
reduced at the election of the Board, by an amount determined by dividing the
Fair Value of the cash, assets, products, programs, or other property
transferred by the average Market Value of one share of Agritope Stock or
Medical Products Stock, as the case may be, calculated over the 20-Trading Day
period preceding the date of transfer. To the extent that outstanding shares of
Agritope Stock or Medical Products Stock, as the case may be, are retired or
otherwise cease to be outstanding following their purchase with funds attributed
to the other group, the Inter-Group Shares Issuable with respect to the
Inter-Group Interest in the group represented by the retired shares would
increase on a share-for-share basis. Shares of Agritope Stock or Medical
Products Stock, as the case may be, purchased with funds attributed to the other
group which remain outstanding (as a result of being held by a subsidiary
included in the group) would not create an Inter-Group Interest or increase any
then-existing Inter-Group Interest but would represent an outstanding interest
in the equity value of the Company attributable to Agritope or Epitope Medical
Products, as the case may be. Issuances of shares of Agritope Stock or Medical
Products Stock, as the case may be, designated by the Board as reducing an
Inter-Group Interest then existing would reduce the Inter-Group Shares Issuable
with respect to the Inter-Group Interest in the issuing group on a
share-for-share basis (with any proceeds of such issuances being credited to the
group holding the Inter-Group Interest).

The existence of an Inter-Group Interest in a group will, among other
things, reduce the amount available for payment of dividends to holders of that
group's outstanding stock by a ratio known as the Outstanding Interest Fraction.
The "Outstanding Interest Fraction" means the percentage interest in the equity
value of the Company attributable to a group that is represented at any time by
the outstanding shares of the class of stock for that group, and the
"Inter-Group Interest Fraction" means any remaining percentage interest in the
equity value of the Company attributable to the group that is represented by an
Inter-Group Interest held by the other group. The sum of the Outstanding
Interest Fraction and the Inter-Group Interest Fraction for a group will always
equal 100 percent for the group.

For further information, see "Proposal 2: The Agritope Stock
Proposal--Description of Medical Products Stock and Agritope Stock--Inter-Group
Interests."

MANAGEMENT AND ACCOUNTING POLICIES

The Board has adopted certain policies with regard to accounting and
tax allocations, acquisitions or dispositions of programs, products or assets,
and other matters to govern the management of Agritope and Epitope Medical
Products. With certain exceptions, the Board may change these policies without a
shareholder vote, although it has no present intention to do so. See "Proposal
2: The Agritope Stock Proposal--Management and Accounting Policies."

QUOTATION OF MEDICAL PRODUCTS STOCK AND AGRITOPE STOCK

Epitope Common Stock is currently traded on the National Market tier of
The Nasdaq Stock Market (the "Nasdaq National Market") under the symbol "EPTO."
Agritope Stock has been approved for inclusion on the

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<PAGE>

Nasdaq National Market under the symbol "AGTO." Prior to the Effective Date,
there will be no public market for Agritope Stock. See "Proposal 2: The Agritope
Stock Proposal--Quotation of Medical Products Stock and Agritope Stock."

NO DISSENTERS' RIGHTS

Under Oregon law and the Articles, shareholders will not have any
dissenters' rights of appraisal in connection with the Agritope Stock Proposal.

TAX CONSIDERATIONS

Epitope has been advised by tax counsel that no gain or loss will be
recognized by either Epitope or its shareholders upon implementation of either
the Agritope Stock Proposal or the Distribution. However, there are no court
decisions bearing directly on transactions similar to the Agritope Stock
Proposal, and the Internal Revenue Service has had under study since 1987 the
federal income tax consequences of transactions similar to the Agritope Stock
Proposal. See "Proposal 2: The Agritope Stock Proposal--Certain Federal Income
Tax Considerations."

FRACTIONAL SHARES

Fractional shares of Agritope Stock will not be issued in the
Distribution. If the number of shares of Agritope Stock to be issued to any
record holder of Medical Products Stock includes a fraction of a whole share,
the Company will pay an amount in cash for the fractional share. See "Proposal
2: The Agritope Stock Proposal-- Fractional Shares."

SUMMARY COMPARISON OF EXISTING EPITOPE COMMON STOCK
WITH TERMS OF MEDICAL PRODUCTS STOCK AND AGRITOPE STOCK

The following summary is intended only to highlight certain of the
terms of the outstanding Epitope Common Stock and the comparable terms of the
Agritope Stock and Medical Products Stock, if the Agritope Stock Proposal is
approved by shareholders. The following summary is not intended to be complete
and is qualified in its entirety by the detailed information appearing elsewhere
in this Prospectus/Proxy Statement, the annexes hereto, and the documents
incorporated by reference or otherwise referred to herein.

<TABLE>

EXISTING AGRITOPE STOCK PROPOSAL
ATTRIBUTE COMMON STOCK MEDICAL PRODUCTS STOCK AGRITOPE STOCK
<S> <C> <C> <C>

Business All businesses Medical products Agribusiness and
of the Company. business. agricultural
biotechnology
operations.

Distribution - - Existing shares of One-half share of
Epitope Common Agritope Stock will
Stock will be be distributed for
redesignated as each share of
Medical Products Epitope Common
Stock on a one- Stock outstanding
for-one basis. on the Effective Date.

- 11 -

<PAGE>

EXISTING AGRITOPE STOCK PROPOSAL
ATTRIBUTE COMMON STOCK MEDICAL PRODUCTS STOCK AGRITOPE STOCK

Shares 13,713,565 13,713,565 6,856,782
outstanding as of
December 31,
1996 (assuming
the Distribution
had occurred
on that date)

Authorized 30,000,000 60,000,000 40,000,000
shares

Voting rights One vote per One vote per A variable number
share. share; generally of votes per share
voting with the equal to the ratio
Agritope Stock as of the average
a single voting Market Value of one
group. share of Agritope
Stock to the average
Market Value of one
share of Medical Products
Stock calculated over
the 20-Trading Day period
preceding the applicable
record date; generally
voting with the Medical
Products Stock as a
single voting group.

Dividends Dividends are Dividends are Dividends are
payable out of limited to the limited to the
assets legally lesser of assets lesser of assets
available legally available legally available
therefor. No therefor and the therefor and the
dividends have Available Medical Available Agritope
been paid or are Products Dividend Dividend Amount.
anticipated for Amount. No No dividends are
the foreseeable dividends are anticipated for the
future. anticipated for foreseeable future.
the foreseeable Any dividends on
future. Any Medical Products
dividends on Stock and Agritope
Medical Products Stock may be
Stock and Agritope declared and paid
Stock may be in equal or unequal
declared and paid amounts. Dividends

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<PAGE>

EXISTING AGRITOPE STOCK PROPOSAL
ATTRIBUTE COMMON STOCK MEDICAL PRODUCTS STOCK AGRITOPE STOCK

in equal or on Agritope Stock may
unequal amounts. be limited or eliminated
Dividends on Medical because of losses
Products Stock may attributed to either
be limited or group.
eliminated because
of losses attributed
to either group.

Liquidation Entitled to net Entitled with Entitled with
rights assets available holders of holders of Medical
for distribution Agritope Stock to Products Stock to
to common net assets net assets
shareholders available for available for
upon distribution to distribution to
liquidation. common common
shareholders upon upon liquidation,
liquidation, in in proportion to
proportion to the the relative market
relative market capitalizations of
capitalizations of Agritope Stock and
Medical Products Medical Products
Stock and Agritope Stock.
Stock.

Exchange at None. Exchangeable at Exchangeable at the
Company's the Company's Company's option
option option after after February 28,
February 28, 1999, 1999, for any
for any combination of cash
combination of and Medical
cash and Agritope Products Stock at a
Stock at a 15 percent premium
15 percent premium over the average
over the average Market Value of one
Market Value of share of Agritope
one share of Stock calculated
Medical Products over the 20-Trading
Stock calculated Day period prior to
over the 20- public announcement
Trading Day period of the exchange.
prior to public
announcement of
the exchange.

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<PAGE>

EXISTING AGRITOPE STOCK PROPOSAL
ATTRIBUTE COMMON STOCK MEDICAL PRODUCTS STOCK AGRITOPE STOCK

Mandatory None. If 80% or more of If 80% or more of
exchange Epitope Medical Agritope's assets
Products' assets are are sold, the Company
sold, the Company must either (i)
must either (i) distribute to
distribute to the the holders of Agritope
holders of Medical Stock cash, securities
Products Stock cash, and/or other property
securities and/or equal to their proportionate
other property equal share of the Fair
to their proportionate Value of the Net Proceeds,
share of the Fair either by dividend
Value of the Net or redemption of all
proceeds, either or part of the
by dividend or outstanding Agritope Stock
redemption of all or or (ii) exchange all
part of the outstanding outstanding Agritope Stock
Medical Products Stock for Medical Products Stock
or (ii) exchange all at a 15% premium over
outstanding Medical the average Market Value of
Products Stock for Medical Products Stock
Agritope Stock at a 15% calculated over the
premium over the ten-Trading Day
average Market Value period beginning on
of Agritope Stock the 16th Trading
calculated over the Day after consummation
ten-Trading Day of the Disposition.
period beginning
on the 16th Trading Day
after consummation of
the Disposition.

Listing Nasdaq National Nasdaq National Nasdaq National
Market. Symbol Market. Symbol Market. Symbol "AGTO."
Symbol "EPTO." "EPTO."
</TABLE>

STOCK PLAN PROPOSALS

At the Annual Meeting, shareholders will also be asked to consider and
approve two proposals to amend the Award Plan and Purchase Plan to authorize
increases in the number of shares available for issuance under the Stock Plans,
to authorize the granting of stock options, awards and purchase rights in either
Medical Products Stock, Agritope Stock or both, and to make other changes. The
proposal to amend the Award Plan also provides for adjustment of outstanding
options under the Award Plan, Incentive Stock Option Plan for Key Employees
("ISOP") and Agritope, Inc., 1992 Stock Award Plan ("1992 Plan") to provide for
the issuance of Agritope Stock. Shareholders are being asked to approve the
increases in shares available under the Stock Plans and other proposed changes
regardless of whether the Agritope Stock Proposal is approved. If the proposals
relating to the Stock Plans

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<PAGE>

are approved by the shareholders but the Agritope Stock Proposal is not
approved, the plan amendments relating to Agritope Stock, including the
increases in shares relating to awards in Agritope Stock, will not be
implemented.

It is currently anticipated that options to purchase a total of
approximately 95,000 shares of Agritope Stock will have been granted to certain
officers and employees of A&W under the Award Plan prior to the Effective Date,
subject to approval of the Agritope Stock Proposal and the proposed amendments
to the Award Plan. This number excludes options to purchase Agritope Stock that
result from antidilution adjustments to options previously granted to purchase
shares of the existing Epitope Common Stock. See "Proposal 3: Amendment of 1991
Stock Award Plan" and "Proposal 4: Amendment of 1993 Employee Stock Purchase
Plan."

RECOMMENDATIONS OF THE BOARD

THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE NOMINEES FOR CLASS
I DIRECTORS AND RECOMMENDS THAT SHAREHOLDERS VOTE FOR THEIR ELECTION TO THE
BOARD OF DIRECTORS.

THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE AGRITOPE STOCK
PROPOSAL AND THE STOCK PLAN PROPOSALS AND BELIEVES THAT THEIR ADOPTION IS IN THE
BEST INTERESTS OF EPITOPE AND ITS SHAREHOLDERS. ACCORDINGLY, THE BOARD
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF THE AGRITOPE STOCK
PROPOSAL AND THE STOCK PLAN PROPOSALS.

RECENT DEVELOPMENTS

On December 12, 1996, the Company completed a merger with Andrew and
Williamson Sales, Co. in exchange for 520,000 shares of Epitope Common Stock.
The merger has been accounted for as a pooling of interests. A&W, founded in
1986, is a fruit and vegetable producer and provides sales and distribution
services for growers from mainland and Baja, Mexico and the San Joaquin Valley
in California. Fred L. Williamson, a founder and president of A&W, is expected
to become an executive officer of the Company. He and the other A&W principals
entered into three-year employment agreements with the Company. For additional
information about the acquisition, see Annex III, "Description of
Business--Agritope--Andrew and Williamson Sales, Co."

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<PAGE>

SELECTED FINANCIAL DATA
HISTORICAL COMPARATIVE FINANCIAL DATA
(In thousands, except net profit (loss) per share)

The following table sets forth selected historical consolidated income
and balance sheet data of Epitope, Inc. and its subsidiaries; selected
historical combined income and balance sheet data of Epitope Medical Products;
and selected historical combined income and balance sheet data of Agritope. The
balance sheet data at September 30, 1996 and 1995 and the operating results data
for the years ended September 30, 1996, 1995, and 1994 have been derived from
audited consolidated financial statements and notes thereto included in this
Prospectus/Proxy Statement. The balance sheet data at September 30, 1994, 1993
and 1992 and operating results data for the years ended September 30, 1993 and
1992 are unaudited, but, in the opinion of management, include all adjustments
necessary for fair presentation. Net income (loss) per share for Epitope Medical
Products and Agritope is presented on a proforma basis assuming that the
distribution of Agritope Stock and redesignation of Epitope Common Stock as
Medical Products Stock pursuant to the Agritope Stock Proposal had occurred on
October 1, 1991. The following historical financial information has not been
restated to give effect to the merger with Andrew and Williamson Sales, Co. on
December 12, 1996. The merger has been accounted for as a pooling of interests.
See Supplemental Comparative Financial Data below.

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30 1996 1995 1994 1993 1992
EPITOPE MEDICAL PRODUCTS
<S> <C> <C> <C> <C> <C>
Combined operating results
Revenues..................................$ 5,594 $ 2,856 $ 2,605 $ 2,759 $ 2,985
Operating costs and expenses ............. 10,881 14,463 8,890 9,376 8,311
Other income (expense), net .............. 6,027 756 236 (1,276) 221
Net profit (loss) ........................ 739 (10,851) (6,048) (7,893) (5,106)
Proforma net profit (loss) per share ..... .06 (.91) (.60) (.89) (.59)
Proforma shares used in per share
calculations ............................. 13,440 11,886 10,050 8,828 8,628
Combined balance sheet data
Working capital ..........................$ 20,366 $ 15,449 $ 13,474 $ 7,029 $ 5,255
Total assets ............................. 24,350 21,831 17,183 10,381 7,954
Accumulated deficit ...................... (41,705) (42,444) (31,593) (25,545) (17,652)
Group equity ............................. 22,532 18,035 15,661 9,280 7,178

AGRITOPE
Combined operating results
Revenues .................................$ 585 $ 2,110 $ 2,213 $ 524 $ 58
Operating costs and expenses ............. 2,821 9,920 11,703 7,331 2,790
Other income (expense), net .............. 97 166 (94) (29) 72
Net loss ................................. (2,139) (7,645) (9,584) (6,836) (2,660)
Proforma net loss per share .............. (.34) (1.29) (1.91) (1.55) (.62)
Proforma shares used in per share
calculations ............................. 6,331 5,943 5,025 4,414 4,314
Combined balance sheet data
Working capital ..........................$ 1,264 $ 5,082 $ 3,710 $ 1,673 $ 4,368
Total assets ............................. 10,097 8,303 7,372 3,764 6,177
Long-term debt ........................... - 22 38 57 -
Convertible notes, due 1997 .............. 3,620 3,620 4,070 4,630 5,495
Accumulated deficit ...................... (31,280) (29,141) (21,497) (11,912) (5,076)
Group equity (deficit) ................... 5,435 4,312 2,810 (1,310) 482

EPITOPE, INC. AND SUBSIDIARIES
Consolidated operating results
Revenues ................................. $ 6,179 $ 4,965 $ 4,819 $ 3,283 $ 3,043
Operating costs and expenses ............. 13,702 24,383 20,593 16,707 11,102
Other income (expense), net .............. 6,123 922 141 (1,305) 293
Net loss ................................. (1,400) (18,496) (15,633) (14,729) (7,765)
Net loss per share ....................... (.11) (1.56) (1.56) (1.67) (.90)
Shares used in per share calculations .... 12,661 11,886 10,050 8,828 8,628
Consolidated balance sheet data
Working capital ..........................$ 21,630 $ 20,532 $ 17,184 $ 8,703 $ 9,623
Total assets ............................. 34,447 30,134 24,555 14,145 14,130
Long-term debt ........................... - 22 38 57 -
Convertible notes, due 1997 .............. 3,620 3,620 4,070 4,630 5,495
Accumulated deficit ...................... (72,985) (71,585) (53,090) (37,457) (22,728)
Shareholders' equity ..................... 27,967 22,347 18,470 7,970 7,660

- 16 -

<PAGE>

SUPPLEMENTAL COMPARATIVE FINANCIAL DATA
(In thousands, except net profit (loss) and dividends per share)

The following table sets forth selected supplemental consolidated
income and balance sheet data of Epitope, Inc. and its subsidiaries; selected
supplemental combined income and balance sheet data of Epitope Medical Products;
and selected supplemental combined income and balance sheet data of Agritope.
The balance sheet data at September 30, 1996 and 1995 and the operating results
data for the years ended September 30, 1996, 1995, and 1994 have been derived
from audited consolidated financial statements and notes thereto included in
this Prospectus/Proxy Statement. The balance sheet data at September 30, 1994,
1993 and 1992 and operating results data for the years ended September 30, 1993
and 1992 are unaudited, but, in the opinion of management, include all
adjustments necessary for fair presentation. Net income (loss) per share for
Epitope Medical Products and Agritope is presented on a proforma basis assuming
that the distribution of Agritope Stock and redesignation of Epitope Common
Stock as Medical Products Stock pursuant to the Agritope Stock Proposal had
occurred on October 1, 1991. The following supplemental financial information
has been restated to give effect to the merger with Andrew and Williamson Sales,
Co. on December 12, 1996. The merger has been accounted for as a pooling of
interests.

YEAR ENDED SEPTEMBER 30 1996 1995 1994 1993 1992
EPITOPE MEDICAL PRODUCTS
Combined operating results
Revenues ................................. $ 5,594 $ 2,856 $ 2,605 $ 2,759 $ 2,985
Operating costs and expenses ............. 10,881 14,463 8,890 9,376 8,311
Other income (expense), net .............. 6,027 756 236 (1,276) 221
Net profit (loss) ........................ 739 (10,851) (6,048) (7,893) (5,106)
Proforma net profit (loss) per share ..... .05 (.87) (.57) (.84) (.56)
Proforma shares used in per share
calculations............................ 13,960 12,406 10,570 9,348 9,148
Combined balance sheet data
Working capital .......................... $ 20,366 $ 15,449 $ 13,474 $ 7,029 $ 5,255
Total assets ............................. 24,350 21,831 17,183 10,381 7,954
Accumulated deficit ...................... (41,705) (42,444) (31,593) (25,545) (17,652)
Group equity ............................. 22,532 18,035 15,661 9,280 7,178

AGRITOPE
Combined operating results
Revenues ................................. $ 63,057 $ 54,289 $ 62,918 $ 39,796 $30,348
Operating costs and expenses ............. 63,390 62,059 71,024 45,503 32,745
Other income (expense), net .............. (671) (252) (444) (184) (76)
Net loss ................................. (1,004) (8,022) (8,550) (5,891) (2,473)
Proforma net loss per share .............. (.15) (1.29) (1.62) (1.26) (.54)
Proforma dividends per share ............. .20 .05 .10 .15 .03
Proforma shares used in per share
calculations ........................... 6,591 6,203 5,285 4,674 4,574
Combined balance sheet data
Working capital .......................... $ 754 $ 5,765 $ 5,185 $ 2,553 $ 4,845
Total assets ............................. 20,861 15,597 11,500 9,554 10,103
Long-term debt ........................... 528 1,648 1,714 1,648 1,080
Convertible notes, due 1997 .............. 3,620 3,620 4,070 4,630 5,495
Accumulated deficit ...................... (30,585) (28,255) (19,900) (10,809) (4,219)
Group equity (deficit) ................... 6,152 5,219 4,429 (186) 1,360

EPITOPE, INC. AND SUBSIDIARIES
Consolidated operating results
Revenues ................................. $68,650 $ 57,144 $ 65,523 $ 42,554 $ 33,333
Operating costs and expenses ............. 74,271 76,522 79,913 54,878 41,057
Other income (expense), net .............. 5,356 504 (208) (1,460) 145
Net loss ................................. (265) (18,874) (14,598) (13,784) (7,578)
Net loss per share ....................... (.02) (1.52) (1.38) (1.47) (.83)
Dividends per share ...................... .10 .03 .05 .07 .02
Shares used in per share calculations .... 13,181 12,406 10,570 9,348 9,148
Consolidated balance sheet data
Working capital .......................... $ 21,120 $ 21,214 $ 18,659 $ 9,583 $ 10,100
Total assets ............................. 45,211 37,427 28,682 19,935 18,056
Long-term debt ........................... 528 1,648 1,714 1,648 1,080
Convertible notes, due 1997 .............. 3,620 3,620 4,070 4,630 5,495
Accumulated deficit ...................... (72,290) (70,700) (51,492) (36,354) (21,871)
Shareholders' equity ..................... 28,684 23,254 20,089 9,095 8,539
</TABLE>

- 17 -

<PAGE>

COMPARATIVE PER-SHARE FINANCIAL INFORMATION

The following unaudited information reflects certain comparative
per-share data related to book value and net income (loss) from continuing
operations (i) on a restated basis for the Company after giving effect to the
merger with A&W accounted for as a pooling of interests and (ii) on a proforma
basis per share of Medical Products Stock and Agritope Stock after giving effect
to the merger with A&W accounted for as a pooling of interests and the proposed
Distribution. The Company has not paid any cash dividends on Epitope Common
Stock.

The information shown below should be read in conjunction with the
financial statements included in this Prospectus/Proxy Statement.
<TABLE>
<CAPTION>

COMMON STOCK MEDICAL PRODUCTS STOCK AGRITOPE STOCK
(HISTORICAL) (PROFORMA) (PROFORMA)

<S> <C> <C> <C>
Net income (loss) per
share for the year ended
September 30, 1996 . . . . . . . . . . . . . . . ($ .02) $ .05 ($ .15)

Book value per share
as of September 30, 1996 . . . . . . . . . . . . $ 2.13 $ 1.67 $ .91
</TABLE>

EPITOPE COMMON STOCK PRICE RANGE AND DIVIDEND POLICY

Epitope Common Stock is traded on the Nasdaq National Market under the
symbol "EPTO." Prior to 1997, Epitope Common Stock was traded on the American
Stock Exchange ("AMEX"). High and low sales prices reported by AMEX during the
periods indicated are shown below.

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30 1996 1995
- -------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C>
Sales price per share High Low High Low

First Quarter . . . . . . . . . . . . . . $ 18 $ 9-1/2 $ 26 $ 18-1/2

Second Quarter . . . . . . . . . . . . . 19-1/2 13-7/8 21-7/8 13-5/8

Third Quarter . . . . . . . . . . . . . . 22-7/8 15-1/2 18-3/8 13-5/8

Fourth Quarter . . . . . . . . . . . . . 16-1/8 11-3/4 18 13-3/4
</TABLE>

On November 6, 1996, the trading day prior to the Company's
announcement of the Agritope Stock Proposal, the closing price of Epitope Common
Stock as reported on AMEX was $15.25. On , 1997, the closing price of Epitope
Common Stock as reported on the Nasdaq National Market was $ . On November 30,
1996, there were 1,080 holders of record of Epitope Common Stock. The Company
has never paid any cash dividends, and the Board of Directors does not
anticipate paying cash dividends in the foreseeable future. The Company intends
to retain any future earnings to provide funds for the operation and expansion
of its business.

- 18 -

<PAGE>

RISK FACTORS

Shareholders should carefully consider the matters set forth below, as
well as the other information provided elsewhere in this Prospectus/Proxy
Statement, in evaluating the Agritope Stock Proposal. The Prospectus/Proxy
Statement contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. See "Note Regarding
Forward-Looking Statements."

RISKS RELATED TO TWO CLASSES OF COMMON STOCK

AS A RESULT OF THE AGRITOPE STOCK PROPOSAL, EPITOPE WILL HAVE TWO
CLASSES OF COMMON STOCK OUTSTANDING. CURRENT SHAREHOLDERS WILL KEEP THEIR
EXISTING EPITOPE COMMON STOCK, WHICH WILL BE REDESIGNATED AS MEDICAL PRODUCTS
STOCK, AND WILL ALSO RECEIVE SHARES OF AGRITOPE STOCK AS A DISTRIBUTION
FOLLOWING APPROVAL OF THE AGRITOPE STOCK PROPOSAL. SHAREHOLDERS SHOULD CAREFULLY
CONSIDER THE FOLLOWING FACTORS IN EVALUATING THE AGRITOPE STOCK PROPOSAL.

NO ASSURANCE AS TO MARKET PERFORMANCE; IMPACT OF CERTAIN TERMS. As
discussed above, Medical Products Stock and Agritope Stock are intended to
reflect the value and track the performance of Epitope Medical Products and
Agritope, respectively. Because there has been no public market for Medical
Products Stock (with respect solely to the business of Epitope Medical Products,
as proposed) or for Agritope Stock, there can be no assurance as to the degree
to which the market price of the classes of common stock will accurately reflect
the value and track the performance of Epitope Medical Products and Agritope, as
reflected in their respective financial statements. In addition, Epitope cannot
predict the impact that certain terms of the securities, such as the ability of
the Company to exchange each share of Medical Products Stock or Agritope Stock
for any combination of cash and stock of the other group, or the discretion of
the Board to make certain determinations affecting one or the other classes of
stock, will have on the market prices of each class of common stock.
Furthermore, the Board expects that holders of Agritope Stock will initially
hold a minority of the total voting power of the Company's capital stock.
This minority voting power could adversely affect the market price of Agritope
Stock. There can be no assurance that the combined market values of the Medical
Products Stock and the Agritope Stock held by a shareholder after the Effective
Date will equal or exceed the market value of the existing Epitope Common Stock
held by the shareholder prior to the Effective Date.

UNUSUAL USE OF TARGETED STOCK. Although "targeted stock," such as
Medical Products Stock and Agritope Stock, is not a new concept, it has been
used in the past primarily by businesses with historical earnings. Because the
methods of stock valuation used for companies with new and developing businesses
with a history of operating losses differ from those used for companies with
more mature businesses and because there are greater uncertainties associated
with developing businesses, the proposed changes in Epitope's capital structure
may have substantially different effects from those experienced by other
companies with targeted stock capital structures.

SHAREHOLDERS OF ONE COMPANY; FINANCIAL IMPACTS ON ONE GROUP COULD
AFFECT THE OTHER. Notwithstanding the allocation of revenues, costs, assets,
liabilities, and shareholders' equity between Epitope Medical Products and
Agritope for the purpose of preparing their respective financial statements,
both holders of Medical Products Stock and holders of Agritope Stock will be
shareholders of Epitope and will continue to be subject to all the risks
associated with an investment in Epitope. The allocation and the change in the
equity structure of Epitope contemplated by the Agritope Stock Proposal will not
affect title to the assets or responsibility for the liabilities of Epitope.
Financial effects arising out of either group, including liabilities or
contingencies, could affect the financial condition and results of operations of
the Company on a consolidated basis and the other group, as well as the market
price of both classes of common stock. For example, liabilities that may arise
out of the operations of one group, such as product liabilities, may affect the
assets or operations of the other group. Therefore, the financial statements of
either group may not completely reflect the financial condition of that group
due to contingencies or commitments associated with the other group that affect
the holders of all classes of stock.

- 19 -

<PAGE>

In addition, any net losses of either group, dividends or distributions
on, or repurchases of, Agritope Stock or Medical Products Stock, and dividends
on or repurchases of any preferred stock that may hereafter be outstanding, will
reduce funds of the Company legally available for the payment of dividends on
both Agritope Stock and Medical Products Stock. Accordingly, Epitope Medical
Products' and Agritope's financial information should be read in conjunction
with Epitope's consolidated financial information. Epitope will continue to
prepare consolidated financial statements and will provide consolidated
financial statements, management's discussion and analysis, and other relevant
information to the holders of Medical Products Stock and Agritope Stock along
with separate financial statements, management's discussion and analysis, and
other relevant information relating to Epitope Medical Products or Agritope, as
applicable. See the financial information, management's discussion and analysis,
and other relevant information regarding Epitope, Epitope Medical Products and
Agritope set forth in Annex III. The combined financial statements of each group
will principally reflect the combined financial position, results of operations,
and cash flows of the businesses included therein. However, each group's
financial information could also include allocated portions of assets and
liabilities that are not separately identified with the operations of a specific
group.

FIDUCIARY DUTIES; POTENTIAL CONFLICTS. The existence of separate
classes of common stock may give rise to occasions when the interests of holders
of Medical Products Stock and holders of Agritope Stock may diverge or appear to
diverge. For example, the Board could decide to (i) convert each outstanding
share of Agritope Stock into shares of Medical Products Stock, or vice versa,
(ii) approve the disposition of all or substantially all the properties and
assets of Agritope or Epitope Medical Products, (iii) allocate consideration to
be received by holders of different classes of Epitope Common Stock, (iv)
allocate resources and financial support to or pursue business opportunities or
operational strategies through one group instead of the other group, (v) if and
to the extent that there is an Inter-Group Interest, allocate the proceeds of
issuances of a class of common stock in respect of the decrease in an
Inter-Group Interest, (vi) pay or omit dividends on Agritope Stock or Medical
Products Stock, or (vii) approve transactions involving the transfer of cash,
assets, products, programs or other property from one group to the other, either
through the creation of or reduction in an Inter-Group Interest or otherwise, or
make other operational or financial decisions with respect to one group that
could be considered to be detrimental to the other group.

Under the Corporation Act, Epitope's directors and officers are
required to act in good faith, with the care an ordinarily prudent person in a
like position would exercise under similar circumstances, and in a manner they
reasonably believe to be in the best interests of the Company. They generally do
not have separate or additional duties to any group of shareholders. At a time
when either Epitope Medical Products or Agritope represents a substantially
smaller portion of Epitope's business, there is a likelihood that the Board's
decisions made in conformity with the foregoing duties will favor the larger
group to the possible disadvantage of the holders of stock representing the
smaller group. A good faith determination by a disinterested and adequately
informed Board that an action is in the Company's best interests would likely be
a defense to any claim that the action could have a disparate effect on holders
of one class of stock.

The Company is not aware of any precedent concerning the manner in
which principles of Oregon law would be applied in the context of the capital
structure contemplated by the Agritope Stock Proposal. An Oregon court hearing a
case involving director duties in the context of a targeted stock capital
structure could apply the foregoing principles or may fashion new principles of
Oregon law in order to decide such a case, which would be a case of first
impression.

In dealing with matters involving actual or potential conflicts of
interest between Medical Products Stock and Agritope Stock, the Board may
solicit advice from its legal counsel and other advisors relating to the
discharge of its fiduciary duties. Other than as described under "The Agritope
Stock Proposal--Management and Accounting Policies," no specific procedures have
been adopted for the Board's consideration of such matters. The described
procedures may be changed at any time, although the Board has no present
intention of doing so. The Board also may, but is not required to, establish
from time to time one or more committees of the Board to review matters
presented to the Board that raise conflict issues and to report to the Board on
such matters.

- 20 -

<PAGE>

NO SEPARATE VOTING RIGHTS. Under the Agritope Stock Proposal, holders
of Medical Products Stock and holders of Agritope Stock would vote together as a
single voting group on all matters as to which holders of common stock generally
are entitled to vote. Except in certain limited circumstances as provided under
Oregon law and in Epitope's Articles as proposed to be amended, holders of each
class of common stock will have no rights to vote on matters as a separate
voting group. Separate meetings of the holders of each class of common stock
will not be held. See "Proposal 2: The Agritope Stock Proposal--Description of
Medical Products Stock and Agritope Stock--Voting Rights" below. Accordingly,
except in limited circumstances, holders of shares of one class of common stock
could not bring a proposal to a vote of the holders of that class of common
stock only, but would be required to bring any proposal to a vote of both
classes of common stock.

Certain matters as to which the holders of common stock are entitled to
vote may involve a divergence or the appearance of a divergence of the interests
of holders of Medical Products Stock and holders of Agritope Stock. The relative
aggregate voting power of Agritope Stock and Medical Products Stock will be
adjusted to reflect the relative market capitalizations on each record date for
a meeting of shareholders. The Company anticipates that Medical Products Stock
would initially represent a majority of the voting power of all classes entitled
to vote in the election of directors. The market capitalizations could be
influenced by many factors, including results of operations of the Company and
each of the groups, results of product development programs, competition,
regulatory matters, intellectual property developments, trading volume, share
issuances and repurchases, and general economic and market conditions. When a
matter is submitted to the shareholders that does not require voting by separate
classes, the holders of either class may not be able to affect the outcome if
the holders of the other class are in substantial agreement as to the matter and
such other group has enough voting power to approve the matter.

EXCHANGE OF MEDICAL PRODUCTS STOCK AND AGRITOPE STOCK AT COMPANY'S
OPTION. The Board may, in its sole discretion, determine to exchange shares of
either class of common stock for cash or shares of the other class of common
stock (or any combination thereof) at a 15 percent premium at any time after
February 28, 1999. Any such optional exchange could be made at a time when
either Agritope Stock or Medical Products Stock or both of may be considered to
be overvalued or undervalued. In addition, any such conversion in common stock
at any premium would dilute the interests in the Company of the holders of the
class of common stock not subject to exchange and would preclude holders of both
classes of common stock from retaining their investment in a security that is
intended to reflect separately the performance of the relevant group. In
determining whether to exchange one class of common stock into the other class
of common stock, the Board would act in accordance with its good faith business
judgment that any such exchange is in the best interests of the Company and all
of its shareholders as a whole. See "Proposal 2: The Agritope Stock
Proposal--Description of Medical Products Stock and Agritope Stock--Exchange
Rights" below.

DISPOSITION OF GROUP ASSETS WITHOUT SHAREHOLDER APPROVAL. As long as
the assets of a group continue to represent less than substantially all of the
properties and assets of the Company, the Board may approve sales and other
dispositions of any amount of the properties and assets of such group without
shareholder approval, because under the Corporation Act and the Articles as
proposed to be amended, shareholder approval is required only for a Disposition
of all or substantially all of the properties and assets of the entire Company.
The Amendment, however, contains provisions which, in the event of a Disposition
of all or substantially all of the properties and assets of Agritope or Epitope
Medical Products in one transaction or a series of related transactions, and
other than in connection with the Disposition of all or substantially all of the
assets of the entire Company, require the Company, at its option, either to (i)
distribute by dividend or redemption to the holders of Agritope Stock or Medical
Products Stock, as the case may be, an amount in cash and/or securities or other
property equal to their proportionate interest in the Fair Value of the Net
Proceeds of such Disposition or (ii) exchange outstanding shares of Agritope
Stock or Medical Products Stock, as the case may be, for shares of stock of the
other group at a 15 percent premium. The provisions of the Amendment do not
require the Board to select the option which would result in the distribution
with the highest value or with the smallest effect on the other group. The Board
would elect the option based upon its good faith business judgment. The
Amendment does not require the Company to take such actions upon sales or other
dispositions of less than substantially all of the properties and assets of a
group.

- 21 -

<PAGE>

BOARD DISCRETION AS TO TRANSFER OF FUNDS BETWEEN GROUPS. To the extent
that cash needs of a group exceed its cash balances, the other group may
transfer funds to the group. Such transfers of funds between groups will be
reflected as borrowings or, if determined by the Board, reflected as the
creation of, or an increase or a reduction in any Inter-Group Interest. There
are no specific criteria for determining when a transfer will be reflected as a
borrowing or as the creation of, or an increase or reduction in, any Inter-Group
Interest. The Board expects to make such determinations, either in specific
instances or by setting generally applicable policies from time to time, after
consideration of such factors as it deems relevant, including, without
limitation, the needs of the Company, the financing needs and objectives of the
groups, the investment objectives of the groups, the availability, cost and time
associated with alternative financing sources, prevailing interest rates and
general economic conditions. In addition, although any increase or decrease in
an Inter-Group Interest resulting from a transfer of funds, or a transfer of
assets, products, programs or other property would be determined by reference to
the then current Market Value of the relevant class of stock, such an increase
could occur at a time when the shares could be considered undervalued and such a
decrease could occur at a time when the shares could be considered overvalued.

POTENTIAL EFFECTS OF POSSIBLE DISPOSITION OF ASSETS ATTRIBUTED TO A
GROUP. In connection with a Disposition of all or substantially all the
properties and assets of Agritope or Epitope Medical Products, the Net Proceeds
that may be distributed to holders of the affected class of stock are determined
by deducting certain costs from the gross proceeds. If Agritope or Epitope
Medical Products were a separate independent company and its shares were
acquired by another person, certain of these costs, including corporate level
taxes, might not be payable in connection with such a Disposition. As a result,
the consideration that would be received by shareholders of such a separate
independent company in connection with such a stock acquisition might be greater
than the Net Proceeds that would be received by holders of Agritope or Epitope
Medical Products. In addition, no assurance can be given that the Net Proceeds
per share of Agritope Stock or Medical Products Stock, as the case may be, to be
received in connection with a Disposition of all or substantially all of the
properties and assets of Agritope or Epitope Medical Products will be equal to
or more than the market value per share of Agritope Stock or Medical Products
Stock, as the case may be, prior to or after announcement of the Disposition.

MANAGEMENT AND ACCOUNTING POLICIES SUBJECT TO CHANGE. The Board has
adopted certain management and accounting policies described herein applicable
to the preparation of the financial statements of both groups, the allocation of
corporate expenses, assets and liabilities and other accounting matters, the
reallocation of assets between groups and other matters. These policies may,
except as stated therein, be modified or rescinded in the sole discretion of the
Board without the approval of shareholders, subject to the Board's fiduciary
duty to all holders of Epitope's capital stock, although there is no present
intention to do so. The Board may also adopt additional policies depending on
circumstances prevailing in the future.

ALLOCATION OF TAX BENEFITS. The Agritope Stock Proposal provides that
to the extent that either group is unable to utilize its operating losses to
reduce its current or deferred income tax expense, the losses may be reallocated
to the other group. Accordingly, although the actual payment of taxes is a
corporate liability of the Company as a whole, separate financial statements
will be prepared for each group and any such losses that cannot be utilized by a
group might not be carried forward to reduce the taxes allocable to that group's
earnings in the future. This arrangement could result in a group bearing a
disproportionate share of the total corporate tax liability and reporting lower
earnings after taxes in the future than would have been the case if the group
had retained its losses in the form of a net operating loss carry-forward.

Any projected tax benefit attributable to either group that cannot be
utilized by that group to offset or reduce its current or deferred income tax
expense may be allocated to the other group without any compensating payment or
allocation. Therefore, earnings (for calculating earnings per share)
attributable to each group would generally equal the group's net income or loss
for the relevant period determined in accordance with generally accepted
accounting principles in effect at such time, adjusted by the amount of tax
benefits allocated to or from the group pursuant to the accounting policies
adopted by the Company.

LIMITATIONS ON POTENTIAL UNSOLICITED ACQUISITIONS. If Agritope or
Epitope Medical Products were stand- alone companies, any person interested in
acquiring either of such companies without negotiation with management could
seek control of the outstanding stock of such company by means of a tender offer
or proxy contest. Although

- 22 -

<PAGE>

the Agritope Stock Proposal would create two classes of common stock that are
intended to reflect the separate performance of the groups, a person interested
in acquiring only one group without negotiation with the Company's management
would still be required to seek control of the voting power represented by all
of the outstanding common stock of the Company entitled to vote on the
acquisition, including the class of common stock related to the other group.

ALLOCATION OF PROCEEDS OF MERGERS OR CONSOLIDATIONS. The Amendment does
not contain any provisions governing how consideration to be received by the
Company's shareholders in connection with a merger or consolidation involving
the Company (in which the common stock is to be converted into other securities,
cash, or other property) is to be allocated among holders of Agritope Stock and
Medical Products Stock. In any such merger or consolidation, the allocation of
consideration to each class of stock would be determined by the Board and may be
materially greater or less than that which might have been allocated to the
holders had the Board chosen a different method of allocation.

RISKS RELATED TO THE COMPANY

NEED FOR ADDITIONAL FUNDS. The Company will allocate $ million in cash
to Agritope on the Effective Date. The allocation of cash will be treated as a
capital contribution and, accordingly, will result in an increase in the group
equity of Agritope and a corresponding decrease in the group equity of Epitope
Medical Products. The allocation will not be deemed to create an Inter-Group
Interest or loan between groups. Epitope anticipates that product revenues and
cash allocated to Agritope and Epitope Medical Products will be sufficient to
fund their respective operations for at least two years, based on currently
expected future cash requirements. There can be no assurance that the
Company's projection of anticipated cash requirements will prove to be
accurate. The Company is not required to allocate any additional funds to either
group after the Effective Date. The actual future liquidity and capital
requirements of Agritope and Epitope Medical Products, however, will depend on
numerous factors, including the costs and timing of expansion of manufacturing
capacity, the success of development efforts, the costs and timing of expansion
of sales and marketing activities, the extent to which existing and new products
gain market acceptance, competing technological and market developments, product
sales and royalties, the costs involved in preparing, filing, prosecuting,
maintaining and enforcing patent claims and other intellectual property rights,
the availability of third party funding for research projects, developments
related to regulatory and third party reimbursement matters and other factors.
In the event that additional financing is needed, Agritope or Epitope Medical
Products, as the case may be, may seek to raise additional funds through public
or private financings, collaborative relationships or other arrangements or the
Board may in its discretion allocate funds from one group to the other group
through a loan or through the creation of or an increase or decrease in an
Inter-Group Interest. Any additional equity financing may be dilutive to
shareholders, and debt financing, if available, may involve restrictive
covenants. Collaborative arrangements, if necessary to raise additional funds,
may require the Company to relinquish its rights to certain of its technologies,
products or marketing territories. The failure of Agritope or Epitope Medical
Products, as the case may be, to raise capital when needed could require it to
scale back, delay or eliminate certain of its programs and could have a material
adverse effect on its respective business, financial condition and results of
operations. There can be no assurance that financing, if required, will be
available on satisfactory terms, if at all.

UNCERTAINTIES RELATING TO PATENTS AND PROPRIETARY INFORMATION. The
Company has obtained certain patents, has license rights under other patents,
and has filed a number of patent applications. The Company anticipates filing
patent applications for protection of future products and technology. There can
be no assurance that patents applied for will be obtained, that existing patents
to which the Company has rights will not be challenged, or that the issuance of
a patent will give the Company any material advantage over its competitors in
connection with any of its products. Competitors may be able to produce products
competing with a patented Company product without infringing on the Company's
patent rights. The issuance of a patent to the Company or to a licensor is not
conclusive as to validity or as to the enforceable scope of claims therein. The
validity and enforceability of a patent can be challenged by litigation after
its issuance and, if the outcome of the litigation is adverse to the owner of
the patent, the owner's rights could be diminished or withdrawn.

- 23 -

<PAGE>

The patent laws of other countries may differ from those of the United
States as to the patentability of the Company's products and processes.
Moreover, the degree of protection afforded by foreign patents may be different
from that of United States patents. The Company intends to obtain patent
protection in only a limited number of foreign countries.

The technologies used by the Company may infringe the patents or
proprietary technology of others. The cost of enforcing the Company's patent
rights in lawsuits that the Company may bring against infringers or of defending
itself against infringement charges by other patent holders may be high and
could interfere with the Company's operations.

Trade secrets and confidential know-how are important to the Company's
scientific and commercial success. Although the Company seeks to protect its
proprietary information through confidentiality agreements and appropriate
contractual provisions, there can be no assurance that others will not develop
independently the same or similar information or gain access to proprietary
information of the Company. The work of members of the Company's Scientific
Advisory Board in their respective university laboratories entails contact with
persons outside the Company that could result in certain information becoming
available to others.

DEPENDENCE ON COMMERCIAL AND OTHER RELATIONSHIPS. The Company expects
some of the development, manufacturing and marketing costs of certain of its
products to be paid for by other parties, primarily pharmaceutical and
agricultural companies, through license agreements, joint ventures or other
arrangements. These arrangements, together with revenues from operations, may
not be sufficient to allow the Company to develop, manufacture and market
certain of its planned products. Additionally, the Company currently distributes
and intends to continue distributing a substantial portion of its products under
agreements with other companies. While the Company believes those companies will
have an economic incentive to succeed in performing their obligations to the
Company, the companies will control the resources devoted to distribution and
may be subject to financial or other difficulties affecting their distribution
ability. The Company is attempting to establish additional research, development
and distribution relationships with major companies having expertise and
distribution capabilities compatible with the Company's current and planned
businesses. There can be no assurance that these relationships will be
established or if established will be profitable for the Company.

GOVERNMENT REGULATION. Many of the Company's products and activities
are subject to regulation by various local, state, and federal regulatory
authorities in the United States and by governmental authorities in foreign
countries where its products may be marketed. In particular, human therapeutic
and diagnostic products are subject to pre-marketing approval by the United
States Food and Drug Administration ("FDA") and comparable agencies in foreign
countries. The process of obtaining these approvals varies according to the
nature and use of the product and can involve lengthy and detailed laboratory
and clinical testing, sampling activities and other costly and time-consuming
procedures. Approval, if it can be obtained, may take several years. Compliance
with relevant regulations and other requirements may also be costly and
time-consuming, and no assurance can be given that the Company will be able to
comply with the applicable requirements or that necessary approvals will be
granted.

Agritope is devoting substantial effort to the development of
genetically engineered plants, using recombinant DNA methods. Many of Agritope's
proposed agricultural products are subject to regulation by both the United
States Department of Agriculture ("USDA") and the FDA and may be subject to
regulation by the Environmental Protection Agency ("EPA") and other federal,
state, local and foreign authorities. The extent of regulation depends on the
intended uses of the products, how they are derived, and how applicable statutes
and regulations are interpreted to apply to new genetic technologies and
products thereof. The regulatory approaches of the USDA, FDA, EPA and other
agencies are still evolving with respect to products of modern biotechnology,
such as those derived from the use of recombinant DNA methods. No assurance can
be given that any regulatory approvals, exemptions, permits or other clearances,
if required, can be obtained in a timely manner, if at all, either for research
or commercial activities. See Annex III, "The Company--Description of
Business--Epitope Medical Products--Government Regulation" and "The
Company--Description of Business--Agritope--Government Regulation."

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<PAGE>

PRODUCT LIABILITY AND RECALL RISK. The Company could be subject to
claims for personal injuries or other damages resulting from its products or
services or product recalls. In particular, the Company faces the risk of
litigation in the event of false positive or false negative results resulting
from its oral testing products. A successful claim or series of claims or a
recall of the Company's products could have a material adverse effect on the
Company. The Company carries liability insurance against the negligent acts of
certain of its employees and a general liability insurance policy that includes
coverage for product liability. In addition, the Company may require increased
product liability coverage as its products are commercially developed. Such
insurance is expensive and in the future may not be available on acceptable
terms, if at all. Also, no assurance can be given that such insurance will
adequately protect the Company against all such liabilities.

DEPENDENCE ON KEY PERSONNEL. The Company depends to a large extent on
the abilities and continued participation of its principal executive officers
and scientific personnel. The loss of a significant group of key personnel could
have a material adverse effect on the Company's business, financial condition
and results of operations. The Company's key personnel include, among
others, the individuals identified under "Executive Officers." Competition for
management and scientific staff in the biomedical and agricultural biotechnology
fields is intense. No assurance can be given that the Company will be able to
continue to attract and retain personnel with sufficient experience and
expertise to satisfy the Company's needs.

POSSIBLE VOLATILITY OF SHARE PRICE AND ABSENCE OF DIVIDENDS. The market
prices for securities of medical technology and agricultural biotechnology
companies, including Epitope Common Stock, historically have been volatile. See
"Summary--Common Stock Price Range and Dividend Policy" for information
regarding the price range in which Epitope Common Stock has traded. Factors such
as announcements of technological innovations or new commercial products by
Epitope or its competitors, governmental regulation, patent or proprietary
rights developments, industry alliances, public concern as to the safety or
other implications of products, and market conditions in general may have a
significant impact on the market price of Medical Products Stock and Agritope
Stock unrelated to their respective operations. No dividends have been paid on
Epitope Common Stock to date. Epitope does not anticipate paying cash dividends
on any class of common stock in the foreseeable future.

ANTITAKEOVER CONSIDERATIONS. The Oregon statutes applicable to business
corporations, including the Company, contain certain provisions that could make
it more difficult for a party to acquire, or discourage a party from attempting
to acquire, control of the Company without approval of the Board. In addition,
Epitope's Articles contain certain provisions designed to prevent sudden changes
in the composition of the Board and authorizing the Board to issue up to 1
million shares of preferred stock and to determine the price, rights,
preferences, and privileges of the shares without further shareholder action.
Also, awards made under the Award Plan will vest in full immediately in the
event of a change in control of the Company or similar event. These provisions
may discourage tender offers or other bids for Epitope Common Stock (or Medical
Products Stock and Agritope Stock) at a premium over the market prices of these
securities.

RISKS RELATED PRIMARILY TO EPITOPE MEDICAL PRODUCTS

HISTORY OF LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY. Epitope Medical
Products has experienced significant operating losses since inception and, as of
September 30, 1996, had an accumulated deficit of $41.7 million. Epitope Medical
Products' ability to increase revenues and achieve profitability and positive
cash flows from operations will depend in substantial part on successful
commercialization of its oral HIV testing system, of which there can be no
assurance. See "Risk Factors--Risks Related Primarily to Epitope Medical
Products--Dependence on Single Product Line; Uncertainty of Market Acceptance of
Oral HIV Testing." Epitope Medical Products' ability to increase revenues and
achieve profitability and positive cash flows from operations will also depend
on Epitope Medical Products' ability to complete the development of and
successfully introduce additional diagnostic tests, including those currently
under development. There can be no assurance that Epitope Medical Products'
development efforts will result in commercially available products, that Epitope
Medical Products will obtain required regulatory clearance or approvals for any
new tests, or that any new tests will achieve a significant level of market
acceptance. Thus, there can be no assurance that Epitope Medical Products will
achieve or sustain profitability in the future.

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<PAGE>

DEPENDENCE ON SINGLE PRODUCT LINE; UNCERTAINTY OF MARKET ACCEPTANCE OF
ORAL HIV TESTING. In order for Epitope Medical Products to increase revenues and
achieve profitability and positive cash flows from operations, its oral HIV
testing system must achieve a significant degree of market acceptance among
health care professionals and insurers. The substantial majority of HIV tests
used by health care professionals are blood-based assays. Health care
professionals will not use the Epitope Medical Products oral HIV testing system
unless they determine that it is an attractive alternative to other means of HIV
testing. In addition, in order to successfully market the oral HIV testing
system for use in connection with screening insurance applicants, Epitope
Medical Products must be able to demonstrate that testing a larger population of
applicants can be done cost effectively using an oral HIV testing system given
the incidence of HIV in the general population and resulting cost to insurers.
There can be no assurance that Epitope Medical Products' oral HIV testing will
ever achieve a significant degree of market acceptance among either health care
professionals or insurers.

INTENSE COMPETITION AND RAPID TECHNOLOGICAL ADVANCES BY COMPETITORS.
Competition in the emerging market for HIV testing is intense and is expected to
increase. The Company believes that the principal competition will come from
existing blood-based HIV assays and from urine-based testing assays.
Furthermore, new testing methodologies could be developed in the future that
render Epitope Medical Products' oral-based HIV test impractical, uneconomical
or obsolete. Most of Epitope Medical Products' competitors have significantly
greater financial, manufacturing, technical, research, marketing, sales,
distribution and other resources. There can be no assurance that Epitope Medical
Products' competitors will not succeed in developing or marketing technologies
and products that are more effective than those developed by Epitope Medical
Products or that would render its technologies or products obsolete or otherwise
commercially unattractive. In addition, there can be no assurance that
competitors will not succeed in obtaining regulatory approval for these
products, or in introducing or commercializing them before Epitope Medical
Products. Such developments could have a material adverse effect on the
Company's and Epitope Medical Products' business, financial condition and
results of operations.

DEPENDENCE ON MARKETING PARTNER. Epitope Medical Products has
historically marketed most of its products by collaborating with pharmaceutical
and diagnostic companies and distributors. Epitope Medical Products has an
agreement with SmithKline Beecham plc ("SB") to market the group's oral specimen
collection device in specified markets and countries. The agreement also gives
SB an exclusive option to develop and market future bodily fluid diagnostic
products proposed by Epitope Medical Products. Accordingly, Epitope Medical
Products' sales, research and development, financial condition, and results of
operations depend to a substantial degree on the success of SB's marketing
efforts, changes in SB's business strategy, and other factors relating to SB
over which Epitope Medical Products has no control. In addition, SB has the
right to terminate its rights and obligations under the agreement upon 60 days'
prior notice. If SB terminates the agreement and the Company cannot enter into a
comparable distribution agreement with another partner, Epitope Medical
Products' business, financial condition and results of operations could be
materially adversely affected.

DEPENDENCE ON CONTRACT MANUFACTURER. The Company's OraSure/EpiScreen
device is manufactured by a third party under a manufacturing contract with the
Company. Either party may terminate the contract without cause on 180 days
written notice. Although the Company believes that alternative manufacturing
facilities could be established, any interruption of supply by the contract
manufacturer could have a material adverse effect on the Company's ability to
timely fill customers' orders until a new manufacturing facility could be
established and the required FDA clearances obtained. Any interruption or
reduction in the future supply of the OraSure/EpiScreen device could have a
material adverse effect on the Company's operating results and financial
condition.

RISKS RELATED PRIMARILY TO AGRITOPE

HISTORY OF LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY. Agritope has
experienced significant operating losses since inception and, as of September
30, 1996, had an accumulated deficit of $31.3 million. Agritope may continue to
experience significant operating losses as it continues its research and
development programs. Agritope's ability to increase revenues and achieve
profitability and positive cash flows from operations will depend in part on
successful completion of the development and commercialization of its
genetically engineered products. There can be no assurance that Agritope's
development efforts will result in commercially available genetically engineered
products, that Agritope's products will obtain required regulatory clearances or
approvals or that any

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<PAGE>

such products will achieve a significant level of market acceptance. Thus, there
can be no assurance that Agritope will achieve profitability in the future.

UNCERTAINTY OF PRODUCT DEVELOPMENT. Agritope's genetically engineered
products are at various stages of development. There are difficult scientific
objectives to be achieved in certain product development programs before the
technological or commercial feasibility of the products can be demonstrated.
Even the more advanced programs could encounter technological problems that may
significantly delay or prevent product development or product introduction. See
Annex III, "The Company--Description of Business--Agritope." There can be no
assurance that any of Agritope's products under development, if and when fully
developed and tested, will perform in accordance with Agritope's expectations,
that necessary regulatory approvals will be obtained in a timely manner, if at
all, or that these products can be successfully and profitably produced,
distributed and sold.

FLUCTUATION IN QUARTERLY OPERATING RESULTS. Agritope's revenues are
initially expected to derive primarily from the sale of produce and grape
plants. The seasonal nature of the produce and grapevine industries and A&W's
practice of making substantial cash advances to growers makes significant
quarterly fluctuations in Agritope's revenues and cash flows likely. Because
Agritope maintains extensive research and development and production facilities
and a staff of trained personnel, a significant portion of Agritope's costs are
fixed. Therefore, fluctuations in revenues and cash flows are likely to result
in significant fluctuations in quarterly operating results and financial
position.

NEED FOR PUBLIC ACCEPTANCE OF GENETICALLY ENGINEERED PRODUCTS. The
commercial success of Agritope's genetically engineered products will depend in
part on public acceptance of the cultivation and consumption of genetically
engineered plants and plant products. Public attitudes may be influenced by
claims that genetically engineered plant products are unsafe for consumption or
pose a danger to the environment. There can be no assurance that Agritope's
genetically engineered products, such as fresh market tomatoes, will gain public
acceptance.

TECHNOLOGICAL CHANGE AND COMPETITION. A number of companies are engaged
in research related to plant biotechnology, including companies that rely on the
use of recombinant DNA as a principal scientific strategy and companies that
rely on other technologies. Technological advances by others could render
Agritope's products less competitive. The Company believes that, despite
barriers to new competitors such as patent positions and substantial research
and development lead time, competition will intensify, particularly from
agricultural biotechnology firms and major agrichemical, seed and food companies
with biotechnology laboratories. Competition in the fresh produce market is
intense and is expected to increase as additional companies introduce products
with longer shelf life and improved quality developed with recombinant DNA or
other technologies. With regard to its nongenetically engineered products,
Agritope currently competes with numerous companies. Some of Agritope's
competitors have substantially greater financial, technical and marketing
resources than Agritope.

UNCERTAINTY OF COST RECOVERY; CHANGES IN SUPPLY AND DEMAND. The fresh
produce business is particularly sensitive to fluctuations in product supply and
demand. The supply of produce can be affected by a number of factors, including
weather, government subsidies, and import/export regulations. When supplies in
the market exceed the demand for such products, the market price may be driven
down below the cost of production. In these circumstances it may become
uneconomical to harvest and pack a crop, resulting in a loss of the costs
incurred in growing the crop. Even when market prices are sufficient to permit
recovery of direct harvesting and packing costs, market prices may not be high
enough to permit recovery of growing costs and/or overhead and other indirect
costs.

AGRICULTURAL RISKS: CROP DISEASE; PESTILENCE; WEATHER; OVERPRODUCTION.
Crop disease and pestilence can result in the loss of all or a substantial
portion of a particular crop for the growing season. Even when only a portion of
a crop is damaged, profits on the crop may be reduced or eliminated because the
costs to plant and cultivate the entire crop will have been incurred although
only a portion of it can be sold. While some crop diseases and pestilence are
preventable or treatable, the costs of prevention or treatment may be high. In
addition, weather conditions have a direct effect on the supply of fresh produce
that is brought to market and, accordingly, the prices received for produce.
Storms, frosts, droughts, and floods can damage or destroy crops resulting in
product that

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<PAGE>

is unsuitable for picking, packing, and sale. Conversely, favorable growing
conditions can result in overproduction of a particular crop and correspondingly
low market prices.

DEPENDENCE ON SEASONAL WORK FORCE. The production of fresh produce is
heavily dependent on the availability of a seasonal labor force in order to
harvest crops. The turnover rate among the labor force is high and the pool of
available workers is shrinking. To the extent that it becomes necessary to
increase wages to attract labor to farm work, labor costs can be expected to
increase, which may adversely affect Agritope's business, financial condition
and results of operations.

RISKS RELATED TO TRANSPORTING PRODUCE. The majority of fresh produce
produced by Agritope and Agritope-financed growers is shipped by truck and is
therefore susceptible to disturbances in the trucking industry both in the
United States and Mexico.

RISKS RELATED TO GROWER FINANCING. Agritope provides financing for the
majority of growers who produce the crops it sells. These financing arrangements
are generally short-term and are collateralized by the crop itself. In the event
of crop damage or failure, oversupply or poor market conditions, it may be
impossible to recover the total amount financed. Agritope maintains reserves
against such possible losses. However, there can be no assurance that these
reserves will be sufficient to cover all potential losses. Any losses in excess
of applicable reserves could have a material adverse effect on Agritope's
business, financial condition, and results of operations.

ACQUISITION-RELATED RISKS. On December 12, 1996, the Company acquired
A&W. See Annex III, "The Company--Description of Business--Agritope--Andrew and
Williamson Sales, Co." A&W operates as part of Agritope. Acquisitions involve a
number of risks, including the diversion of management's attention to the
assimilation of the operations and personnel of the acquired business,
integration of management information systems, retention of key management
personnel, renegotiation of bank credit lines, and adjustment of relationships
with customers and suppliers. No assurance can be given that the acquisition of
A&W will not materially adversely affect Agritope or that the acquisition will
enhance Agritope's performance.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Prospectus, including without
limitation statements containing the words "believes," "anticipates," "intends,"
"expects" and words of similar import, constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. The
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company or industry results to be materially different from any future
results, performance or achievements expressed or implied by the forward-looking
statements. These factors with respect to the Company include unexpected
interruption of supply or manufacturing operations, changes in marketing
partners' and customers' oral testing, changes in insurance industry practices,
unexpected delays or changes in the Company's business strategy, adverse growing
conditions affecting crops, and other risks and uncertainties described in this
Prospectus/Proxy Statement. Certain of these factors are discussed in more
detail elsewhere in this Prospectus, including without limitation under the
caption "Risk Factors." Given these uncertainties, shareholders are cautioned
not to place undue reliance on the forward-looking statements. The Company
disclaims any obligation to update any such factors or to publicly announce the
result of any revisions to any of the forward-looking statements contained
herein to reflect future events or developments.

THE ANNUAL MEETING

TIME AND PLACE

This Prospectus/Proxy Statement and enclosed proxy card are being
furnished to Epitope shareholders in connection with the solicitation of proxies
in the enclosed form ("Proxies") by the Board for use at the Annual Meeting to
be held on , 1997, at 9:00 a.m., Pacific Time, at the Oregon Convention Center,
777 N.E. Martin Luther King Jr. Boulevard, Portland, Oregon, and at any
adjournments thereof, pursuant to the accompanying Notice of Annual Meeting of
Shareholders.

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<PAGE>

PROXIES; MATTERS TO BE CONSIDERED

Shares represented by a properly executed Proxy will be voted in
accordance with the shareholders' instructions given in the Proxy. If no
instructions are given, shares will be voted FOR the election of the three
nominees for Class I Directors and FOR the Agritope Stock Proposal and the Stock
Plan proposals. Shareholders may revoke the authority granted by their Proxies
at any time before the meeting by notice in writing delivered to the Secretary
of the Company, by submitting a subsequently dated Proxy, or by attending the
meeting, withdrawing the Proxy, and voting in person.

At the meeting, action will be taken on the matters set forth in the
accompanying Notice of Annual Meeting of Shareholders and described in this
Prospectus/Proxy Statement. The Board knows of no other matters to be presented
for action at the meeting. If any other matters do properly come before the
meeting, the persons named on the Proxy will have discretionary authority to
vote thereon in accordance with their best judgment.

RECORD DATE; OUTSTANDING SECURITIES

Only Epitope shareholders of record at the close of business on , 1997,
are entitled to notice of and to vote at the Annual Meeting. At the close of
business on that date, the Company had outstanding and entitled to vote at the
Annual Meeting shares of Epitope Common Stock, its only outstanding class of
stock. Each share of Epitope Common Stock is entitled to one vote on any matter
brought before the meeting. The executive officers and directors of Epitope and
their affiliates hold shares of Epitope Common Stock representing approximately
percent of the outstanding shares of Epitope Common Stock (excluding shares
which such persons have the right to acquire upon the exercise of stock
options). See "Principal Shareholders."

QUORUM; VOTES REQUIRED

A majority of the shares of Epitope Common Stock outstanding as of the
Record Date, represented in person or by proxy at the Annual Meeting, will
constitute a quorum for the transaction of business. Shares represented by
Proxies that are marked "abstain" will be counted as shares present for purposes
of determining the presence of a quorum on all matters. Proxies relating to
"street name" shares for which the authority to vote is withheld ("broker
nonvotes") will nevertheless be treated as shares present for purposes of
determining the presence of a quorum on all matters, but will not be treated as
shares voted in favor of the Agritope Stock Proposal and the proposed amendments
to the Stock Plans.

Each nominee for director will be elected if he receives a plurality of
the votes cast at the Annual Meeting. The Agritope Stock Proposal and each
proposal relating to the Stock Plans will be approved if the votes cast in favor
of the proposal at the Annual Meeting exceed the votes cast opposing the
proposal. Shareholders may expressly abstain from voting on the Agritope Stock
Proposal and the Stock Plan proposals. Neither abstentions nor broker nonvotes
will have any effect on the required vote on any matter to be presented at the
Annual Meeting.

If the proposed Stock Plan proposals are approved by the shareholders
but the Agritope Stock Proposal is not approved, the provisions of the Stock
Plan proposals relating to Agritope Stock will not be implemented. Accordingly a
vote against the Agritope Stock Proposal will have the effect of a vote against
only those provisions of the Stock Plan proposals dealing with Agritope Stock.
The other provisions of the Stock Plan proposals will be implemented if approved
by the shareholders, regardless of whether the Agritope Stock Proposal is
approved.

DISSENTERS' RIGHTS OF APPRAISAL

Under Oregon law and Epitope's Restated Articles of Incorporation,
shareholders will have no dissenters' rights of appraisal in connection with the
Agritope Stock Proposal or the other matters being submitted to the shareholders
at the Annual Meeting.

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<PAGE>

BOARD RECOMMENDATION

THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE NOMINEES FOR CLASS
I DIRECTORS AND RECOMMENDS THAT SHAREHOLDERS VOTE FOR THEIR ELECTION TO THE
BOARD OF DIRECTORS.

PROPOSAL 1: ELECTION OF CLASS I DIRECTORS

At the Annual Meeting, shareholders will be asked to elect three Class
I directors. The three nominees for election as Class I directors are currently
members of the Board. The term of office for which each nominee is a candidate
will expire at the annual meeting of shareholders in the year 2000.

In the absence of instructions to the contrary, shares of Epitope
Common Stock represented by properly executed proxies will be voted for the
three nominees, each of whom has consented to be named and to serve if elected.
If a quorum is present, each nominee will be elected if he receives a plurality
of the votes cast by holders of shares entitled to vote at the Annual Meeting.

The Company does not know of anything that would preclude any nominee
from serving. However, should any nominee for any reason become unable or
unwilling to serve as a director, the persons named on the enclosed proxy will
vote the shares represented by each proxy for such substitute nominee as the
Board may approve.

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<PAGE>

Certain information with respect to each person nominated for election
as a director and each person whose term of office as a director will continue
after the meeting is set forth below. The number of shares of Epitope Common
Stock beneficially owned by such persons is set forth under "Principal
Shareholders" below.

<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION AGE SINCE

<S> <C> <C> <C>
Class I (Nominees for Terms of Office to Expire in 2000):

W. Charles Armstrong Private Investor 52 1989

Adolph J. Ferro, Ph.D. President and Chief Executive 54 1990
Officer of the Company

Roger L. Pringle President of The Pringle Company, 56 1989
a management consulting firm,
Portland, Oregon

Class II (Directors Whose Terms of Office Expire in 1999):

Andrew S. Goldstein Senior Vice President of Advanced 48 1981
Technology Development -
Epitope Medical Products

R. Douglas Norby Senior Vice President and Chief 61 1989
Financial Officer of Mentor
Graphics Corporation, a computer
software manufacturer,
Wilsonville, Oregon

G. Patrick Sheaffer Chairman, President and Chief 57 1983
Executive Officer of Riverview
Savings Bank, Camas, Washington

Class III (Directors Whose Terms of Office Expire in 1998):

Richard K. Donahue Vice Chairman of NIKE, Inc., a 69 1991
sporting goods manufacturer,
Beaverton, Oregon

Margaret H. Jordan President and Chief Executive 54 1995
Officer of Dallas Medical
Resource, a not-for-profit
medical referral firm,
Dallas, Texas

Michael J. Paxton Chairman, President and Chief 50 1995
Executive Officer of
O'Cedar Holdings, Inc., a
manufacturer of household
cleaning products,
Springfield, Ohio
</TABLE>

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<PAGE>

W. Charles Armstrong is a director of Pacificorp. He was Chairman and
Chief Executive Officer of Bank of America Oregon from September 1992 until
September 1996. From April to September 1992, he was Chairman and Chief
Executive Officer of Bank of America Idaho. Mr. Armstrong served as President
and Chief Operating Officer of Honolulu Federal Savings Bank from February 1989
to April 1992. Prior to February 1989, he was President and Chief Executive
Officer of West One Bank, Oregon.

Richard K. Donahue has been Vice Chairman of NIKE, Inc. since June
1994. Mr. Donahue served as President and Chief Operating Officer of NIKE, Inc.
from 1990 to June 1994 and has served as a director of that company since 1977.
Mr. Donahue is also a partner in the law firm of Donahue & Donahue, Lowell,
Massachusetts, and a director of Courier Corp.

Adolph J. Ferro, Ph.D., has been President and Chief Executive Officer
of the Company since April 1990. Dr. Ferro was Senior Vice President from
November 1988 until April 1990. From July 1987 until November 1988, he was Vice
President of Research and Development. He was a cofounder of Agricultural
Genetic Systems, Inc., which the Company acquired in 1987. Dr. Ferro is also the
President of Agritope, Inc., the Company's wholly owned subsidiary. Prior to
joining the Company, he was a Professor in the Department of Microbiology at
Oregon State University ("OSU"). From 1981 to 1986, he was an Associate
Professor at OSU, and from 1978 to 1981, he was an Assistant Professor at OSU.
From 1975 to 1978, he was Assistant Professor at the University of Illinois at
Chicago in the Department of Biological Sciences. Dr. Ferro received a B.A.
degree from the University of Washington in 1965, an M.S. degree in biology from
Western Washington University in 1970, and a Ph.D. in bacteriology and public
health from Washington State University in 1973.

Andrew S. Goldstein is a Senior Vice President of the Company's Epitope
Medical Products group, a position he has held since June 1990. Prior to that
time, he had been Vice President of Product Development from December 1988, Vice
President of Scientific Affairs from July 1987 to December 1988, and Vice
President of Research and Development from 1981 until July 1987. He also has
served as Secretary from December 1988 to February 1993 and from November 1995
to the present and served as Treasurer until March 1991. Mr. Goldstein was
Research Associate and supervisor of the Histocompatibility Laboratory at the
Oregon Health Sciences University ("OHSU"), where he was engaged in paternity
testing and transplantation immunology, from 1974 to 1981. Mr. Goldstein
received a B.S. degree in microbiology from Cornell University in 1969 and an
M.S. degree in cytology from Fordham University in 1973.

Margaret H. Jordan joined Dallas Medical Resource ("DMR") as President
and Chief Executive Officer in February 1996. DMR is a not-for-profit alliance
of major medical organizations of Dallas, Texas, created to make Dallas a
regional, national and international center for medical referrals. Ms. Jordan
had been Vice President of Health Care & Employee Services at Southern
California Edison Co. since December 1992. She had been a Vice President and
Regional Manager with the Kaiser Foundation Health Plan of Texas, Inc. beginning
in 1986, and was an Associate Regional Manager of Kaiser Foundation Health Plan
of Georgia, Inc. from 1984 to 1986. Ms. Jordan received a B.S. degree in Nursing
from Georgetown University in 1964 and an M.S. degree in Public Health from the
University of California, Berkeley, in 1972. She also serves on the board of
directors of Eckerd Corporation.

R. Douglas Norby became Executive Vice President and Chief Financial
Officer of LSI Logic Corporation in October 1996. From July 1993 until assuming
his present position, he was Senior Vice President and Chief Financial Officer
of Mentor Graphics Corporation. Prior to joining Mentor Graphics Corporation, he
had been President and Chief Executive Officer of Pharmetrix Corporation, a
biopharmaceutical company in Menlo Park, California, since July 1992. Prior to
that time, he had been President of Lucasfilm, Ltd., since 1985 and President
and Chief Executive Officer of LucasArts Entertainment Company since 1990. Prior
to joining Lucasfilm, Ltd., Mr. Norby was Senior Vice President and Chief
Financial Officer of Syntex Corporation from 1979 to 1985.
Mr. Norby also serves on the board of directors of LSI Logic Corporation.

Michael J. Paxton became Chairman, President and Chief Executive
Officer of O'Cedar Holdings, Inc. in January 1996. From March 1992 until joining
O'Cedar Holdings, Inc., he was President and Chief Executive Officer of The
Haagen-Dazs Company, Inc. Prior to that he was President of the Baked Goods
Division of The Pillsbury Company. Both companies are subsidiaries of Grand
Metropolitan PLC. He has been a director of Agritope, Inc. since September 1992
and is also a director of Transport Corporation of America, Inc.

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Roger L. Pringle has been Chairman of the Board of the Company since
April 1990, and is also a director of Agritope, Inc. He is President of The
Pringle Company, a management consulting firm in Portland, Oregon, which he
founded in 1975.

G. Patrick Sheaffer has been President of Riverview Savings Bank in
Camas, Washington, since 1979, and has served as a director of the bank since
1983. In 1993, Mr. Sheaffer also became Chairman and Chief Executive Officer of
Riverview Savings Bank and Riverview Mutual Holding Company, a bank holding
company. He has been a director of the Washington Savings League since 1980.

DIRECTORS' MEETINGS

The Board held 13 meetings during the fiscal year ended September 30,
1996. Each director attended more than 75 percent of the combined total of
meetings of the Board and of committees of the Board on which the director
served at any time during the year.

COMMITTEES OF THE BOARD

The Board has designated an Executive Committee to assist in the
discharge of the Board's responsibilities. The Executive Committee is composed
of three directors, Roger L. Pringle, Chairman, G. Patrick Sheaffer, and Adolph
J. Ferro, Ph.D. The Executive Committee met once during the fiscal year ended
September 30, 1996. The Executive Committee may exercise all the authority and
powers of the Board in the management of the business and affairs of the
Company, except those reserved to the Board by the Oregon Business Corporation
Act and the authority to appoint or remove officers.

The Executive Compensation Committee of the Board establishes and
reviews from time to time compensation for executive officers of the Company,
administers the ISOP and the Award Plan, and performs other tasks as the Board
may direct. Members of the Executive Compensation Committee are W. Charles
Armstrong, Chairman, G. Patrick Sheaffer, and R. Douglas Norby. The Executive
Compensation Committee met eight times during the fiscal year ended September
30, 1996.

The Audit Committee of the Board reviews the performance and
independence of the Company's independent accountants. Members of the Audit
Committee are G. Patrick Sheaffer, Chairman, R. Douglas Norby, and Roger L.
Pringle. The Audit Committee met once during the fiscal year ended September 30,
1996.

The Board does not have a nominating committee.

PROPOSAL 1: BOARD RECOMMENDATION AND VOTE REQUIRED

The Board recommends a vote FOR the election of the nominees for Class
I directors. If a quorum is present at the Annual Meeting, each nominee will be
elected if he receives a plurality of the votes cast.

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PROPOSAL 2: THE AGRITOPE STOCK PROPOSAL

GENERAL

Shareholders are being asked to consider and approve the Agritope Stock
Proposal, which if approved would authorize the Amendment to the Articles in the
form set forth in Annex II. The Amendment would increase the number of shares of
authorized Epitope Common Stock from 30 million to 100 million, consisting of 60
million shares of Medical Products Stock and 40 million shares of Agritope
Stock, redesignate the existing Epitope Common Stock as Medical Products Stock,
and establish the powers and rights of the Agritope Stock and Medical Products
Stock, and the qualifications, limitations, or restrictions thereof.

Agritope Stock is intended to reflect the value and track the
performance of Agritope. The Company's Agritope group historically has focused
its efforts on the development of novel agricultural products using both plant
genetic engineering and other modern methods. Through the acquisition of A&W on
December 12, 1996, and majority ownership of Vinifera, Agritope now conducts
operations in each step of the production and distribution chain for a broad
range of fruits, vegetables and plants and has an infrastructure that will
facilitate commercialization of the Company's genetically engineered
agricultural products.

Agritope will operate as a distinct group within Epitope, but will have
access to the Company's offices, facilities, and administrative staff. On the
Effective Date, Agritope will have approximately 60 employees. In addition, $
million in cash will be allocated to Agritope on the Effective Date. The
allocation of cash will be treated as a capital contribution and, accordingly,
will result in an increase in the group equity of Agritope and a corresponding
decrease in the group equity of Epitope Medical Products. The allocation will
not create an Inter-Group Interest.

On the Effective Date, each outstanding share of Epitope Common Stock
will be redesignated as one share of Medical Products Stock without any action
by the holder. The market price of Medical Products Stock is intended to reflect
the value and track the performance of Epitope Medical Products. Epitope Medical
Products develops and markets diagnostic tests and related devices for the
detection of HIV, the principal cause of AIDS, and for the detection of other
medical conditions and analytes. Its oral specimen HIV testing system is
marketed under the names OraSure(R) and EpiScreen(TM). Medical Products Stock
will also reflect the value, if any, of any Inter-Group Interest in Agritope
attributable to Epitope Medical Products. Epitope Medical Products will
encompass all the Company's medical products businesses. See Annex III, "The
Company--Description of Business--Epitope Medical Products," for a more complete
description of Epitope Medical Products.

If shareholders approve the Agritope Stock Proposal, Epitope expects to
file the Amendment with the Secretary of State of Oregon on the date of the
Annual Meeting. At any time prior to filing the Amendment, before or after
approval of the Agritope Stock Proposal by the shareholders, the Board may
abandon the Agritope Stock Proposal without further action by the shareholders.
The Agritope Stock issuable in connection with the Distribution would be
intended initially to represent 100 percent of the equity value of the Company
attributable to Agritope. Additional shares of Agritope Stock will be reserved
for issuance upon the conversion of outstanding stock options and warrants and
as a result of antidilution adjustments related to the Distribution.

Following the Distribution, the Company may from time to time, by
action of its Board, (i) offer shares of Agritope Stock and Medical Products
Stock for cash in one or more public offerings, (ii) issue shares of Agritope
Stock and Medical Products Stock as consideration for acquisitions or
investments, (iii) issue shares of Agritope

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Stock and Medical Products Stock to employees of the Company pursuant to
employee benefit plans, or (iv) issue shares of Agritope Stock and Medical
Products Stock for any other proper corporate purpose. So long as sufficient
authorized shares are available, the timing, sequence, size, and terms of these
transactions would be determined by the Board, without further approval of the
shareholders, unless deemed advisable by the Board or required by applicable
law, regulation, or Nasdaq National Market requirements. Except in connection
with the creation of or increase or decrease in an Inter-Group Interest, the
Board must allocate the net proceeds or other benefits of issuing common stock
to the group represented by the class of stock issued, unless otherwise approved
by the holders of the affected class of common stock voting as a separate voting
group. See "Proposal 2: The Agritope Stock Proposal--Description of Medical
Products Stock and Agritope Stock."

Immediately following the Distribution, there will be no Inter-Group
Interests. An Inter-Group Interest would be created only if a subsequent
transfer of cash, assets, products or other property from Agritope or Epitope
Medical Products to the other is specifically designated by the Board as being
made to create an Inter-Group Interest (in contrast to transfers made for other
consideration such as transfers as loans or in purchase and sale transactions)
or if outstanding shares of Agritope Stock or Medical Products Stock are retired
or otherwise cease to be outstanding following their purchase with funds
attributable to the other group. Agritope Stock and Medical Products Stock are
intended to reflect, in addition to the value of Agritope and Epitope Medical
Products, respectively, the value of any Inter-Group Interest in the other
group.

THE DISTRIBUTION

The Board has adopted resolutions declaring a distribution of one-half
share of Agritope Stock on each outstanding share of Epitope Common Stock to
holders of record at the close of business on the Effective Date, subject to
shareholder approval of the Agritope Stock Proposal. An aggregate of
approximately 6.9 million shares of Agritope Stock would be issued in the
Distribution. On or about the sixth business day following the Effective Date,
certificates for shares of Agritope Stock will be mailed to holders of record on
the Effective Date.

The Distribution ratio was determined by the Board in consultation with
Vector Securities, the Company's financial advisor in connection with the
Agritope Stock Proposal. In determining the Distribution ratio, the Company took
into account, among other things, the assets and liabilities of Agritope and
Epitope Medical Products, their recent historical financial performance relative
to competitors that are publicly traded, their future prospects and the current
state of the capital markets.

Fractional shares of Agritope Stock will not be issued in the
Distribution. If more than one share of Epitope Common Stock is held by the same
holder of record, Epitope will aggregate the number of shares of Agritope Stock
issuable to that holder in the Distribution. If the aggregate number includes a
fraction of a whole share, Epitope will pay the cash value of the fractional
share to the holder, based on the Effective Date Trading Price. The "Effective
Date Trading Price" of a class of stock is either (i) the average of the high
and low reported sales prices of that class of stock on the Effective Date, or
(ii) if that class of stock is not traded on the Effective Date, the average of
the high and low reported sales prices of that class of stock on the first day
thereafter on which trading occurs, or (iii) if that class of stock does not
trade during the 20-day period following the Effective Date, the Fair Value of a
share of that class of stock as of the Effective Date as determined by the
Board, in consultation with its legal and financial advisors. Shareholders who
own their stock in "street name" through a broker or other nominee listed as the
holder of record will have their fractional shares handled according to the
practices of the broker or nominee, which may result in those shareholders
receiving a price for their fractional share interests that is higher or lower
than the price paid by the Company to shareholders of record.

IF THE AGRITOPE STOCK PROPOSAL IS NOT APPROVED BY THE SHAREHOLDERS,
AGRITOPE STOCK WILL NOT BE CREATED AND ISSUED, AND THE DISTRIBUTION WILL NOT
OCCUR.

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REASONS FOR THE AGRITOPE STOCK PROPOSAL

The Agritope Stock Proposal was adopted by the Board following its
review of various alternatives for enhancing shareholder value, creating
flexibility for the future growth of the Company and advancing the Company's
strategic objectives. The Board has been concerned that the investment community
has historically focused principally on the products and business of Epitope
Medical Products and has not given sufficient recognition to the value of
Agritope's business. The Agritope Stock Proposal is intended to enhance
shareholder value over the long term by permitting separate market valuations of
Agritope and Epitope Medical Products and recognition of the respective value of
each group. There can be no assurance, however, that the combined market values
of the Medical Products Stock and the Agritope Stock held by a shareholder after
the Effective Date will equal or exceed the market value of the existing Epitope
Common Stock held by the shareholder prior to the Effective Date.

The Agritope Stock Proposal is intended to provide investors with
separate securities reflecting the performance of Agritope and Epitope Medical
Products, respectively, while preserving for the Company's businesses the
benefits of being part of a consolidated enterprise. The Agritope Stock Proposal
is also intended to afford the Company increased flexibility for each group to
raise capital, make acquisitions and investments, and enter into strategic
partnering transactions, using an equity security related specifically to that
group. For example, if capital is needed solely for Agritope's business, the
Company could issue Agritope Stock. Similarly, an acquisition related to Epitope
Medical Products or strategic partnering transaction involving a partner
interested solely in Epitope Medical Products could be effected through the
issuance of Medical Products Stock. In contrast to shareholders of separate
publicly held corporations, however, holders of Agritope Stock and Medical
Products Stock will continue to be subject to all the risks associated with an
investment in the Company and all its businesses, assets and liabilities.

At the Board's request, management has from time to time explored
the alternatives available to the Company in view of its strategic objectives
and the capital needs of each of its businesses. These alternatives included (i)
preservation of the Company's existing capital structure; (ii) a spin-off to the
Company's shareholders of one or more of its businesses; (iii) the public
offering of common stock of Agritope, Inc.; and (iv) the creation of two classes
of common stock intended to reflect separately the businesses of Epitope Medical
Products and Agritope.

The Board reviewed these alternatives and, with the assistance of its
financial, legal, accounting and tax advisors, considered the following factors
in concluding that the Agritope Stock Proposal is in the best interests of the
Company and its shareholders:

1. The Company's current strategic objectives and the rationale
for a change in its capital structure, including the future
capital requirements of each of its businesses.

2. The Company's long-term strategic objectives given the market
opportunities provided by and competitive and regulatory
environments facing Epitope Medical Products and Agritope.

3. The investment community's principal focus on the products and
businesses of Epitope Medical Products and the lack of formal
research coverage for Epitope Common Stock.

4. The use by other companies of equity securities intended to
reflect separately the performance of specific businesses and
the market performance of such securities.

In arriving at its recommendation and determination, the Board
considered the advantages and disadvantages of the various proposals. Among the
principal advantages considered by the Board in reaching its determination were
the following:

1. Separate equity securities would enable investors to gain a
better understanding of the businesses of Epitope Medical
Products and Agritope. The separate reporting of their
financial results would

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<PAGE>

create a framework for increased and focused equity research
coverage by the investment community, which should encourage
proper valuation of the assets and businesses of each group.

2. Separate equity securities would enable investors to invest in
a security that tracks the performance of a single line of
business.

3. Separate equity securities would afford increased flexibility
for each group to raise capital, make acquisitions and
investments, and enter strategic partnering transactions,
using an equity security related specifically to that group.

4. Separate equity securities would provide a framework for
structuring incentive plans for employees of each group that
can be tied directly to both the business results and the
stock price performance of the group in which they are
employed.

5. The Agritope Stock Proposal preserves for both groups the
access to the skill and resources of senior management, the
Company's ability to continue filing consolidated tax returns,
and the benefit of lower administrative costs than would be
incurred by two separate, publicly owned entities. Each group
will benefit from the avoidance of duplicate overhead and
infrastructure that would be required if each group operated
on a stand-alone basis. Under the Agritope Stock Proposal each
group will receive, on a centralized basis, certain shared
services such as accounting, finance, general management
(including oversight from a single Board of Directors), human
resources, investor relations, information systems and payroll
services.

6. Counsel to Epitope advised the Board that the distribution of
Agritope Stock to the Company's shareholders may be effected
on a tax-free basis.

7. By permitting the Board to redeem the stock of either group
for stock of the other group, under certain conditions, the
Agritope Stock Proposal retains for the Board the flexibility
to consider possible future restructuring options.

The Board also evaluated the potential adverse consequences of the
Agritope Stock Proposal, including (i) the possibility that a more complex
capital structure could inhibit the efficient evaluation of either or both
classes of stock and, therefore, not have the intended effect of enhancing
shareholder value; (ii) the potential conflicting interests between the two
groups and the issues that could arise in resolving such conflicts; and (iii)
the risks discussed under "Risk Factors."

In reaching the decision to approve the Agritope Stock Proposal, the
Board did not assign any relative weight to the specific factors, advantages or
disadvantages considered and individual directors may have given different
weights to different factors, advantages or disadvantages. The Board determined
that, on balance, the potential advantages of the Agritope Stock Proposal
outweighed the potential adverse consequences and concluded that the Agritope
Stock Proposal was in the best interests of the Company and its shareholders.

MANAGEMENT AND ACCOUNTING POLICIES

The Board has adopted the following policies to govern the management
of Agritope and Epitope Medical Products. Except as otherwise stated below, the
policies may be modified or rescinded in the sole discretion of the Board
without approval of shareholders, subject only to the Board's fiduciary duty to
shareholders. The Board may also adopt additional policies depending on the
circumstances. Any determination of the Board to modify or rescind these
policies or to adopt additional policies, including any decision that would have
disparate impacts on holders of the two classes of common stock, would be
governed by the principles of Oregon law discussed under "Risk Factors--Risks
Related to Two Classes of Common Stock--Fiduciary Duties; Potential Conflicts."
In addition, generally accepted accounting principles require that any change in
accounting policy be preferable (in accordance with such principles) to the
previous policy.

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If the Agritope Stock Proposal is approved by shareholders, the Company
will prepare consolidated financial statements of the Company, combined
financial statements of Agritope and combined financial statements of Epitope
Medical Products. The combined financial statements of Agritope and the combined
financial statements of Epitope Medical Products, taken together, would
effectively comprise all the accounts reflected as consolidated financial
statements of the Company. The combined financial statements of Agritope and the
combined financial statements of Epitope Medical Products will principally
reflect the combined financial position, results of operations and cash flows of
the businesses included therein. Notwithstanding allocations of assets and
liabilities for the purpose of preparing group combined financial statements,
holders of both Agritope Stock and Medical Products Stock would continue to be
subject to all the risks associated with an investment in the Company and all
its businesses, assets, and liabilities. See "Risk Factors--Risks Related to Two
Classes of Common Stock--Shareholders of One Company; Financial Impacts on One
Group Could Affect the Other."

REVENUE ALLOCATION. Revenues from the sale of a group's products will
be credited to that group. The cost of research performed by one group for the
benefit of another group will be charged to the group for which the work is
performed in the manner described under "Expense Allocation" below.

EXPENSE ALLOCATION. All direct expenses will be charged to the group
for the benefit of which they are incurred. Corporate and general and
administrative expenses and other shared services or other indirect costs will
be allocated to each group in a reasonable and consistent manner based on
utilization by the group of the services to which the costs relate. To the
extent that transfers of funds between groups are treated as borrowings (as
opposed to the creation of or increase or decrease in an Inter-Group Interest),
inter-group accounts will be established with interest imputed at the rate then
available to the Company for short-term borrowings.

TAX ALLOCATIONS. Income taxes will be allocated to each group based on
the financial statement income, taxable income, credits and other amounts
properly allocable to the group under generally accepted accounting principles
as if each group were a separate taxpayer. Any projected tax benefit
attributable to either group, however, that cannot be utilized by the group to
offset or reduce its current or deferred income tax expense may be allocated to
the other group without any compensating payment or allocation.

ACQUISITIONS OF PROGRAMS, PRODUCTS OR ASSETS. Upon the acquisition by
Epitope from a third party of any additional programs, products or assets
(whether by acquisition of assets or stock, merger, consolidation or otherwise),
the aggregate cost of the acquisition and the programs, products or assets
acquired will be allocated among the groups of Epitope to which the programs,
products or assets are assigned. Such an assignment and allocation will be made
by the Board taking into account such matters as the Board and its financial
advisors, if any, deem relevant.

DISPOSITION OF PROGRAMS, PRODUCTS OR ASSETS. Upon any sale, transfer,
assignment or other disposition by Epitope of any product, program or asset not
consisting of all or substantially all the assets of a group, all proceeds from
the disposition will be allocated to the group to which the program, product or
asset has been allocated unless the holders of that group's stock approve
allocation to the other group. If the program, product or asset was allocated to
more than one group, the proceeds of the disposition will be allocated among the
groups based on their respective interests in the program, product or asset.
Allocation will be made by the Board taking into account such matters as the
Board and its financial advisors, if any, deem relevant. This policy is not
subject to change without the approval of holders of both classes of common
stock, each voting as a separate voting group.

INTER-GROUP ASSET TRANSFERS. The Board may, at any time and from time
to time, transfer any program, product or other asset from one group to the
other group. All such transfers shall be effected at Fair Value, as determined
by the Board, taking into account, in the case of a program under development,
the commercial potential of the program, the phase of development of the
program, the expenses associated with realizing any income from the program, the
likelihood and timing of any such realization and other matters that the Board
and its financial advisors, if any, deem relevant. The consideration for the
transfer may be paid by one group to the other in cash or other property,
including the creation of or an increase in the Inter-Group Interest allocated
to the transferring group or a decrease in the Inter-Group Interest allocated to
the recipient group.

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ACCESS TO TECHNOLOGY AND KNOW-HOW. Agritope and Epitope Medical
Products will each have access to all technology and know-how of the other group
that may be useful in the group's business, subject to any obligations or
limitations imposed by agreements with third parties. Access by a group shall be
permitted without consideration with respect to technology or know-how of the
other group that existed at the Effective Date, and with respect to other
technology or know-how so long as it is used solely for research and development
purposes. Such access for commercial applications of technology or know-how that
did not exist at the Effective Date shall be permitted only at Fair Value, as
determined by the Board, unless access without such consideration is approved by
the holders of the class of stock representing the group that owns the
technology. The consideration for access, if any, may be paid by one group to
the other in cash or other property, including an increase or decrease, as
appropriate, in an Inter-Group Interest.

TREATMENT OF DIVIDENDS OR DISTRIBUTIONS. Financial impacts of dividends
or other distributions on Medical Products Stock will be attributed entirely to
Epitope Medical Products, and financial impacts of dividends or other
distributions on Agritope Stock will be attributed entirely to Agritope, except
that dividends or other distributions on Medical Products Stock or Agritope
Stock (including any dividend of Net Proceeds from the Disposition of all or
substantially all the properties and assets of a group), as the case may be,
will (if at the time there is an Inter-Group Interest) result in the other group
being credited, and the group paying the dividend being charged (in addition to
the charge for the dividend or the distribution paid), with an amount equal to
the product of (i) the aggregate amount of such dividend or other distribution
paid or distributed in respect of outstanding shares of common stock of the
group paying the dividend and (ii) a fraction the numerator of which is the
Inter-Group Interest Fraction relating to the group paying the dividend and the
denominator of which is the related Outstanding Interest Fraction. Financial
impacts of repurchases of common stock of a group the consideration for which is
charged to such group will to such extent be reflected in the combined financial
statements of such group, and financial impacts of repurchases of one group's
common stock the consideration for which is charged to the other group will to
such extent be reflected in the combined financial statements of such other
group and will result in the creation of, or an increase or decrease in any
then-existing, related Inter-Group Interest. This policy may be changed without
shareholder approval only to the extent the change would not require an
amendment to the Articles as in effect at the time of the change.

ISSUANCE OF ADDITIONAL SHARES OF ANY CLASS OF COMMON STOCK. If
additional shares of any class of common stock are issued and sold by Epitope,
the net proceeds will be allocated to and reflected in the financial statements
of the group to which they relate unless attributable to a reduction in an
Inter-Group Interest. This policy is not subject to change after the
Distribution without the approval of the holders of the affected group's stock,
voting as a separate voting group.

ALLOCATION OF BUSINESS OPPORTUNITIES/RESOURCES. The Board expects to
determine, either in specific instances or by adopting generally applicable
policies from time to time, whether to allocate resources and financial support
to, or to pursue business opportunities or operational strategies through,
Agritope or Epitope Medical Products, after consideration of such factors as it
deems relevant.

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DESCRIPTION OF MEDICAL PRODUCTS STOCK AND AGRITOPE STOCK

THE FOLLOWING DESCRIPTION IS QUALIFIED BY REFERENCE TO ANNEX II TO THIS
PROSPECTUS/PROXY STATEMENT, WHICH CONTAINS THE FULL TEXT OF THE VOTING,
DIVIDEND, LIQUIDATION, EXCHANGE, AND OTHER RIGHTS OF MEDICAL PRODUCTS STOCK AND
AGRITOPE STOCK.

GENERAL

The Articles currently provide that Epitope is authorized to issue 31
million shares of capital stock, consisting of 30 million shares of Epitope
Common Stock and 1 million shares of Preferred Stock. If the Agritope Stock
Proposal is approved, the Articles will be amended (i) to provide for an
increase in the authorized common stock to 100 million shares, (ii) to create a
new class of common stock, to be designated Agritope Common Stock, no par value,
consisting of 40 million authorized shares and (iii) to redesignate the existing
Epitope Common Stock as Epitope Medical Products Common Stock, no par value,
consisting of 60 million authorized shares. Each class of common stock will have
the voting, dividend, liquidation, exchange, and other rights described below.

The authorized but unissued shares of Medical Products Stock and
Agritope Stock will be available for issuance by the Company from time to time,
as determined by the Board, for any proper corporate purpose, which could
include raising capital, acquiring other companies or making investments or
providing compensation or benefits to employees. The issuance of such shares
would not be subject to approval by the shareholders of the Company, unless
deemed advisable by the Board or required by applicable law, regulation or
Nasdaq National Market requirements.

DIVIDENDS

The Articles currently provide that holders of Epitope Common Stock are
entitled to receive, to the extent permitted by law, such dividends as may from
time to time be declared by the Board. If the Agritope Stock Proposal is
approved, the Articles will be amended to provide that cash dividends on Medical
Products Stock and Agritope Stock may be declared and paid only out of the
lesser of (i) funds of Epitope legally available therefor and (ii) the Available
Medical Products Dividend Amount (with respect to Medical Products Stock) or the
Available Agritope Dividend Amount (with respect to Agritope Stock). Under the
Corporation Act, the payment of cash dividends is permitted only if after making
the payment, in the judgment of the Board: (a) the Company would be able to pay
its debts as they become due in the usual course of business; and (b) the
Company's total assets would at least equal the sum of its total liabilities
plus the amount that would be needed to satisfy the preferential rights of
shareholders upon dissolution. Subject to the limitations set forth in the
Articles as proposed to be amended and the Corporation Act, the Board may, in
its sole discretion, declare and pay cash dividends on either class of common
stock without declaring or paying dividends on the other class, or may declare
and pay dividends on both classes in equal or unequal amounts, notwithstanding
the amounts available for the payment of cash dividends on each class, the
respective voting and liquidation rights of each class, the amounts of prior
cash dividends declared on each class or any other factor.

If the Agritope Stock Proposal had been in effect at September 30,
1996, the total amount available for cash dividends on Medical Products Stock
and Agritope Stock on September 30, 1996, would have been approximately $ and $
, respectively. Epitope has never paid a cash dividend on any class of its
capital stock and currently intends to retain all earnings for use in its
business.

As stated above, in addition to the statutory limitations under the
Corporation Act, cash dividends on Medical Products Stock and Agritope Stock
would be limited as provided in the Articles to an amount not in excess of the
Available Medical Products Dividend Amount or the Available Agritope Dividend
Amount, respectively. The "Available Dividend Amount" with respect to a
particular class of common stock is defined to mean generally the greatest of
(a) the product of (i) the Outstanding Interest Fraction multiplied by (ii) an
amount equal to the Fair Value of the net assets allocated to the group
represented by that class of common stock, (b) the product of (i) the
Outstanding Interest Fraction multiplied by (ii) an amount equal to
shareholders' equity allocated to that group as

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of September 30, 1996, increased or decreased, as appropriate, to reflect, after
September 30, 1996, (X) the net income or loss of the group, (Y) any dividends
or other distributions (including by reclassification or exchange) declared or
paid with respect to, or repurchases or issuances of, any shares of capital
stock attributed to the group, but excluding dividends or other distributions
paid in shares of capital stock attributed to the group to the holders thereof,
and (Z) any other adjustments to the shareholders' equity of the group made in
accordance with generally accepted accounting principles, or (c) the amount
legally available for the payment of cash dividends determined in accordance
with the Corporation Act applied as if the group were a separate corporation.

At the time of any dividend or other distribution on the outstanding
shares of Medical Products Stock or Agritope Stock (including any dividend of
Net Proceeds from the Disposition of all or substantially all of the properties
and assets of Epitope Medical Products or Agritope), the other group will (if at
such time there is an Inter-Group Interest) be credited, and the group paying
the dividend will be charged (in addition to the charge for the dividend or
other distribution paid or distributed in respect of outstanding shares of
common stock of the group paying the dividend), with an amount equal to the
product of (i) the aggregate amount of such dividend or distribution paid or
distributed in respect of outstanding shares of common stock of the group paying
the dividend times (ii) a fraction the numerator of which is the Inter-Group
Interest Fraction relating to the group paying the dividends and the denominator
of which is the related Outstanding Interest Fraction.

EXCHANGE

The Articles currently do not provide for any exchange or redemption of
Epitope Common Stock. If the Agritope Stock Proposal is approved, the Articles
will provide that Agritope Stock or Medical Products Stock may be exchanged on
the terms described below. Epitope cannot predict the impact that its ability to
effect such exchanges may have on the market prices for Medical Products Stock
and Agritope Stock.

EXCHANGE AT COMPANY'S OPTION. At any time after February 28, 1999,
the Board may determine to exchange each outstanding share of a group's common
stock for (a) a number of fully paid and nonassessable shares of common stock of
the other group equal to (1) 115 percent of the average Market Value of one
share of common stock of the group subject to the exchange (the "Exchange
Amount") divided by (2) the average Market Value of one share of the common
stock of the other group, or (b) cash equal to the Exchange Amount or (c) any
combination of common stock of the other group and cash, as determined by the
Board, equal to the Exchange Amount. Average Market Value shall be calculated
for a share of common stock for the 20-Trading Day period preceding the public
announcement by the Company of the exchange. See Annex VI for an illustration of
the exchange provisions of Agritope Stock and Medical Products Stock.

The optional exchange provision allows Epitope the flexibility to
redeem all outstanding shares of Agritope Stock or Medical Products Stock and
leave outstanding one class of common stock that would represent the equity
interest in all Epitope's businesses. The optional exchange could occur at any
future time after February 28, 1999, if the Board determined that, under the
facts and circumstances then existing, an equity structure consisting of two
classes of common stock was no longer in the best interests of all Epitope's
shareholders. An exchange may be consummated at a time that is disadvantageous
to the holders of either Medical Products Stock or Agritope Stock. Epitope may
make open market purchases of shares of any class of its common stock in
accordance with applicable corporate and securities law requirements, without
payment of the 15 percent premium. See "Risk Factors--Risks Related to Two
Classes of Common Stock--No Rights or Additional Duties With Respect to the
Groups; Potential Conflicts."

MANDATORY DIVIDEND, REDEMPTION OR EXCHANGE OF COMMON STOCK. In the
event of the Disposition, in one transaction or a series of related
transactions, by Epitope of all or substantially all the properties and assets
of Agritope or of Epitope Medical Products (other than in connection with the
Disposition by Epitope of all or substantially all its properties and assets in
one transaction or a series of related transactions) to any person, entity or
group (other than (a) any entity which Epitope, directly or indirectly, owns all
the equity interest or (b) in

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connection with a Related Business Transaction), Epitope is required, on or
prior to the 85th Trading Day following the consummation of the Disposition, at
the election of the Company, to either

(1) provided that there are funds of the Company legally
available therefor:

(i) subject to the limitations on dividends set forth above,
declare and pay a dividend in cash, securities (other than common
stock) and/or other property to the holders of the Affected Group's
stock having a Fair Value as of the date of the consummation of the
Disposition in the aggregate equal to the product of the Outstanding
Interest Fraction of such group as of the record date for determining
the holders entitled to receive the dividend multiplied by the Fair
Value of the Net Proceeds of the Disposition; or

(ii)(A) if the Disposition involves all (not merely
substantially all) of the properties and assets of a group, redeem all
outstanding shares of the cash, securities (other than common stock)
and/or other property having a Fair Value as of the date of such
consummation in the aggregate amount equal to the product of the
Outstanding Interest Fraction of the group as of the date of such
redemption multiplied by the Fair Value of the Net Proceeds of the
Disposition; or

(ii)(B) if the Disposition involves substantially all (but not
all) of the properties and assets of a group, apply an aggregate amount
of cash, securities (other than common stock) and/or other property
having a Fair Value as of the date of such consummation in the
aggregate equal to the product of the Outstanding Interest Fraction of
the group as of the date shares are selected for redemption multiplied
by the Fair Value of the Net Proceeds of the Disposition as of the date
of such consummation, to the redemption of outstanding shares of common
stock of such group; the number of shares to be redeemed to equal the
lesser of (x) the whole number of shares nearest the number determined
by dividing the aggregate amount so applied to the redemption of such
common stock by the average Market Value of one share of the Affected
Group's stock during the ten-Trading Day period beginning on the 16th
Trading Day following the consummation of the Disposition and (y) the
number of shares of such class of stock outstanding; provided, however,
that the Company may only redeem shares of a class of common stock
pursuant to this paragraph (ii) if the amount to be paid in redemption
of such shares is less than or equal to the Available Dividend Amount
with respect to such class of common stock; or

(2) exchange each outstanding share of the Affected Group's
stock for a number of fully paid and nonassessable shares of stock of
the other group equal to 115 percent of the ratio of the average Market
Value of one share of the Affected Group's stock to the average Market
Value of one share of common stock of the other group during the
ten-Trading Day period referred to above. See Annex VI for an
illustration of the exchange or redemption provisions of Agritope Stock
and Medical Products Stock.

Consequently, holders of stock for the group subject to the Disposition
may receive a greater or lesser premium for their shares than any premium paid
by a third party buyer of the assets. In addition, any such exchange for shares
of stock for the remaining group could be made at a time when the stock being
surrendered is considered to be undervalued and the stock to be received by
shareholders is considered to be overvalued.

The option to convert Agritope Stock into Medical Products Stock and
vice-versa in the event of a Disposition provides the Company with additional
flexibility by allowing the Company to deliver consideration in the form of
shares of stock rather than cash or securities or other properties. This
alternative could be used, for example, in circumstances when the Company did
not have sufficient legally available assets under the Corporation Act to pay
the full amount of an otherwise required dividend or redemption or when the
Company desired to retain such proceeds.

If less than substantially all of the properties and assets of Agritope
or Epitope Medical Products, as the case may be, were disposed of by the Company
in one transaction (even if an additional transaction were consummated at a
later time in which additional properties and assets of Agritope or Epitope
Medical Products, as the case may be, were disposed of by the Company, which,
together with the properties and assets disposed of in the first transaction,
would have constituted substantially all of the properties and assets of
Agritope or Epitope Medical Products, as the case may be, at the time of the
first transaction), the Company would not be required to

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pay a dividend on, redeem or convert the outstanding shares of the relevant
class of stock, unless such transactions constituted a series of related
transactions. The second transaction, however, could trigger such a requirement
if, at the time of the second transaction, the properties and assets disposed of
in such transaction constituted at least substantially all of the properties and
assets of Agritope or Epitope Medical Products, as the case may be, at such
time. If less than substantially all of the properties and assets of Agritope or
Epitope Medical Products, as the case may be, were disposed of by the Company,
the holders of the relevant class of stock would not be entitled to receive any
dividend or have their shares redeemed or converted, although the Board could
determine, in its sole discretion, to pay a dividend in an amount related to the
proceeds of such Disposition.

EXCHANGE FOR STOCK OF SUBSIDIARY. The Company may exchange all of the
outstanding shares of Agritope Stock or Medical Products Stock for stock of one
or more wholly owned, direct subsidiaries, if the subsidiaries hold all the
assets and liabilities of the Affected Group. This provision is intended to give
the Company the flexibility to spin off a group as a separate entity, although
the Company has no present intention to do so.

If the Company elected to make such an exchange, each share of the
Affected Group's Stock would be exchanged for a number of shares of common stock
of the subsidiary or subsidiaries equal to the product of the Outstanding
Interest Fraction of the Affected Group multiplied by the number of shares of
subsidiary common stock that will be outstanding immediately after the exchange,
divided by the number of shares of the Affected Group's Stock outstanding. As a
result, the Company would continue to own an interest in each subsidiary if the
Outstanding Interest Fraction were less than 100 percent. If a subsidiary whose
stock is being distributed in the exchange in turn owns a second subsidiary, the
second subsidiary's stock would not be distributed in the exchange, but would
continue to be held by the subsidiary being spun off.

DISTRIBUTION OF INTER-GROUP SHARES ISSUABLE. If a class of stock of one
group is being exchanged at the Company's option or in connection with a
Disposition, redeemed in connection with a Disposition of all the group's
assets, or exchanged for stock of a subsidiary, and the Affected Group holds an
Inter-Group Interest in the other group, holders of the Affected Group's stock
will receive newly issued shares of the other group's stock corresponding to the
number of Inter-Group Shares Issuable, in addition to the shares, cash, or other
consideration to be distributed in connection with the exchange or redemption.
Each shareholder of the Affected Group would receive the shareholder's pro
rata interest in a number of newly issued shares of the other group's stock
equal to the product of the Outstanding Interest Fraction of the Affected Group,
multiplied by the number of Inter-Group Shares issuable with respect to the
Affected Group's Inter-Group Interest in the other group.

No such distribution of shares corresponding to an Inter-Group Interest
would be made in the case of a dividend paid in connection with a Disposition or
in the case of a redemption in connection with a Disposition of less than all
assets of a group. See Annex VI for an illustration of the distribution of
shares corresponding to an Inter-Group Interest in connection with an exchange
or redemption.

GENERAL EXCHANGE AND REDEMPTION PROVISIONS.

ELECTION OF DIVIDEND, REDEMPTION, OR EXCHANGE. Not later than the 10th
Trading Day following the consummation of a Disposition referred to above under
"-- Mandatory Dividend, Redemption or Exchange of Common Stock," the Company
will announce publicly by press release (i) the Net Proceeds of such
Disposition, (ii) the number of shares outstanding of the class of common stock
relating to the group subject to such Disposition, (iii) the number of shares of
such common stock into or for which Convertible Securities are then convertible,
exchangeable or exercisable and the conversion, exchange or exercise price
thereof and (iv) the applicable Outstanding Interest Fraction, if applicable, as
of a recent date preceding the date of such notice. Not earlier than the 26th
Trading Day and not later than the 30th Trading Day following the consummation
of such Disposition, the Company will announce publicly by press release which
of the actions specified in clause (1) or (2) of the first paragraph under "--
Mandatory Dividend, Redemption or Exchange of Common Stock" it has irrevocably
determined to take.

DIVIDEND NOTICE. If the Company determines to pay a dividend as
described in clause (1)(i) of the first paragraph under "-- Mandatory Dividend,
Redemption or Exchange of Common Stock," the Company is required,

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not later than the 30th Trading Day following the consummation of such
Disposition, to cause to be given to each holder of record of shares of the
class of common stock relating to the group subject to such Disposition and to
each holder of record of Convertible Securities convertible into or exchangeable
or exercisable for shares of such common stock (unless alternate provision for
notice to the holders of such Convertible Securities is made pursuant to the
terms of such Convertible Securities), a notice setting forth (i) the record
date for determining holders entitled to receive such dividend, which shall be
not earlier than the 40th Trading Day and not later than the 50th Trading Day
following the consummation of such Disposition, (ii) the anticipated payment
date of such dividend (which will not be more than 85 Trading Days following the
consummation of such Disposition), (iii) type of property to be paid on such
dividend in respect of outstanding shares of such common stock, (iv) the Net
Proceeds of such Disposition, (v) the Outstanding Interest Fraction as of a
recent date preceding the date of such notice, (vi) the number of outstanding
shares of such common stock and the number of shares of such common stock into
or for which outstanding Convertible Securities are then convertible,
exchangeable or exercisable and the conversion, exchange or exercise price
thereof and (vii) in the case of notice to be given to holders of Convertible
Securities, a statement to the effect that a holder of such Convertible
Securities will be entitled to receive such dividend only if such holder
properly converts, exchanges or exercises them on or prior to the record date
referred to in clause (1)(i) of this sentence. Such notice will be sent by
first-class mail, postage prepaid, to each such holder at such holder's address
as the same appears on the transfer books of the Company.

TOTAL REDEMPTION NOTICE. If the Company determines to undertake a
redemption pursuant to clause (1)(ii)(A) of the first paragraph under "--
Mandatory Dividend, Redemption or Exchange of Common Stock," the Company is
required, not earlier than the 45th Trading Day and not later than the 35th
Trading Day prior to the redemption date, to cause to be given to each holder of
record of shares of the Affected Group's stock, and to each holder of record of
Convertible Securities convertible into or exchangeable or exercisable for
shares of such class of common stock (unless alternate provision for the notice
to the holders of the Convertible Securities is made pursuant to the terms of
the Convertible Securities) a notice setting forth (i) a statement that all
shares of such common stock outstanding on the redemption date will be redeemed,
(ii) the redemption date (which shall not be more than 85 Trading Days following
the consummation of the Disposition), (iii) whether cash, securities and/or
other property will be paid as the redemption price for the shares to be
redeemed, (iv) the Net Proceeds of the Disposition, (v) the Outstanding Interest
Fraction of the Affected Group as of a recent date preceding the date of the
notice, (vi) the place or places where certificates for shares of such common
stock, properly endorsed or assigned for transfer (unless the Company waives
such requirement), are to be surrendered, (vii) the number of outstanding shares
of such class of common stock and the number of shares of such class of common
stock into or for which outstanding Convertible Securities are then convertible,
exchangeable or exercisable and the conversion, exchange or exercise prices
thereof, (viii) in the case of notice to holders of Convertible Securities, a
statement to the effect that a holder of the Convertible Securities will be
entitled to participate in the redemption only if the holder properly converts,
exchanges or exercises the Convertible Securities on or prior to the redemption
date referred to in clause (ii) of this sentence and a statement as to what, if
anything, holder will be entitled to receive if the holder converts, exchanges
or exercises the Convertible Securities after the redemption date and (ix) a
statement to the effect that, except as otherwise provided below, dividends on
such shares of such common stock shall cease to be paid as of the redemption
date. Such notice shall be sent by first-class mail, postage prepaid, to each
such holder at such holder's address as the same appears on the transfer books
of the Company.

PARTIAL REDEMPTION NOTICE. If the Company determines to undertake a
redemption pursuant to clause (1)(ii)(B) of the first paragraph under "--
Mandatory Dividend, Redemption or Exchange of Common Stock," the Company is
required, not later than the 30th Trading Day following consummation of the
Disposition, to cause to be given to each holder of record of shares of the
Affected Group's stock and to each holder of record of Convertible Securities
that are convertible into or exchangeable or exercisable for shares of such
common stock (unless alternate provision for notice to the holders of the
Convertible Securities is made pursuant to the terms of the Convertible
Securities), a notice setting forth (i) a date, not earlier than the 40th
Trading Day and not later than the 50th Trading Day following the consummation
of the Disposition, on which shares of such class of common stock will be
selected for redemption, (ii) the anticipated redemption date (which shall not
be more than 85 Trading Days following the consummation of the Disposition),
(iii) whether cash, securities and/or other property will be paid as the
redemption price for the shares to be redeemed, (iv) the Net Proceeds of the
Disposition, (v) the Outstanding Interest Fraction of the Affected Group as of a
recent date preceding the date of the notice, (vi) the

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number of outstanding shares of such common stock and the number of shares of
such common stock into or for which outstanding Convertible Securities are then
convertible, exchangeable, or exercisable and the conversion, exchange or
exercise prices thereof, and (vii) in the case of notice to holders of
Convertible Securities, a statement to the effect that a holder of the
Convertible Securities will be entitled to participate in the selection for
redemption only if the holder properly converts, exchanges or exercises them on
or prior to the date referred to in clause (i) of this sentence and a statement
as to what, if anything, the holder will be entitled to receive if the holder
converts, exchanges or exercises the Convertible Securities after that date.
Promptly following the Selection date, the Company is required to cause to be
given to each record holder of shares of such common stock to be so redeemed a
notice setting forth (1) the number of shares of such common stock held by the
holder to be redeemed, (2) a statement that such shares of such common stock
will be redeemed, (3) the redemption date, (4) the per share amount of cash,
securities and/or other property to be received by the holder with respect to
each share of such common stock to be redeemed, including details as to the
calculation thereof, (5) the place or places where certificates for shares of
such common stock, properly endorsed or assigned for transfer (unless the
Company waives the requirement) are to be surrendered, (6) if applicable, a
statement to the effect that the shares being redeemed may no longer be
transferred on the transfer books of the Company after the redemption date, and
(7) a statement to the effect that, except as otherwise provided below,
dividends on such shares of such common stock will cease to be paid as of the
redemption date. Such notices shall be sent by first-class mail, postage prepaid
to each such holder, at such holder's address as the same appears on the
transfer books of the Company.

EXCHANGE NOTICE. In the event of any exchange as described under "--
Exchange at Company's Option," "-- Mandatory Dividend, Redemption or
Exchange of Common Stock," or "--Exchange for Stock of Subsidiary," the Company
will cause to be given to each holder of record of shares of the Affected
Group's stock and to each holder of record of Convertible Securities that are
convertible into or exchangeable or exercisable for shares of such common stock
(unless alternate provision for notice to the holders is made pursuant to the
terms of the Convertible Securities), a notice setting forth (i) a statement
that all outstanding shares of such common stock will be exchanged, (ii) the
exchange date (which, in the case of an exchange after a Disposition, shall not
be more than 85 Trading Days following the consummation of the Disposition and,
in the case of an optional exchange, shall not be more than 85 Trading Days
after the date as of which average Market Value is determined), (iii) the per
share number of shares of stock and, if applicable, the amount of cash to be
received with respect to each share of such common stock, including details as
to the calculation thereof, (iv) the place or places where certificates for
shares of such common stock, properly endorsed or assigned for transfer (unless
the Company waives the requirement) are to be surrendered for delivery of
certificates for shares of such common stock, (v) the number of outstanding
shares of such common stock and the number of shares of such common stock into
or for which outstanding Convertible Securities are then convertible,
exchangeable or exercisable and the conversion, exchange or exercise prices
thereof, (vi) a statement to the effect that, except as otherwise provided
below, dividends on such shares of such common stock will cease to be paid as of
the exchange date and (vii) in the case of notice to holders of Convertible
Securities, a statement to the effect that a holder of the Convertible
Securities will be entitled to participate in the exchange only if the holder
properly converts, exchanges or exercises the Convertible Securities on or prior
to the exchange date referred to in clause (ii) of this sentence and a statement
as to what, if anything, the holder will be entitled to receive if the holder
converts, exchanges or exercises the Convertible Securities after the exchange
date. The notice shall be sent by first-class mail, postage prepaid, to each
such holder at such holder's address as the same appears on the transfer books
of the Company.

OTHER GENERAL PROVISIONS. Neither the failure to mail any notice
described above to any particular holder of shares of any class of common stock
or of any Convertible Securities nor any defect therein would affect the
sufficiency thereof with respect to any other holder of outstanding shares of
such common stock or of outstanding Convertible Securities, or the validity of
any such exchange or redemption.

If less than all the outstanding shares of stock are to be redeemed as
described above, shares shall be redeemed by the Company pro rata among the
holders of the relevant class of stock or by any method determined by the Board
to be equitable.

Before any holder of shares of Agritope Stock or Medical Products Stock
shall be entitled to receive certificates representing shares of any kind of
capital stock or cash and/or securities or other property to be received

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by the holder with respect to any exchange or redemption of the shares of the
class of common stock, the holder shall surrender at such place as the Company
shall specify certificates for the shares of common stock, properly endorsed or
assigned for transfer (unless the Company waives this requirement). As soon as
practicable after surrender of certificates for the shares of common stock, the
Company will deliver to the holder of the shares so surrendered the certificates
representing the number of whole shares of the kind of capital stock or cash
and/or securities or other property to which the holder is entitled, together
with any fractional payment referred to below. If less than all the shares
represented by any one certificate are to be redeemed, the Company will issue
and deliver a new certificate for the shares of stock not redeemed.

The Company shall not be required to issue or deliver fractional shares
of any class of capital stock or any fractional securities to any holder of
Agritope Stock or Medical Products Stock, as the case may be, upon any exchange,
redemption, dividend, or other distribution. If more than one share of Agritope
Stock or Medical Products Stock, as the case may be, shall be held at the same
time by the same holder of record, the Company may aggregate the number of
shares of any class of capital stock issuable or the amount of securities
deliverable to the holder upon exchange, redemption, dividend, or other
distribution (including any fractions of shares or securities). If the number of
shares of any class of capital stock or the amount of securities remaining to be
issued or delivered to any holder of record of Agritope Stock or Medical
Products Stock, as the case may be, is a fraction, the Company shall, if the
fraction is not issued or delivered to the holder, pay a cash adjustment in
respect of the fraction in an amount equal to the Fair Value of the fraction on
the fifth Trading Day prior to the date the payment is to be made.

CERTAIN OTHER EXCHANGE TERMS. The proposed amendment to the Articles
set forth in Annex II contains definitions of "Affected Group," "Disposition,"
"Exchange Date," "Fair Value," "Market Value," "Net Proceeds," "Outstanding
Interest Fraction," "Related Business Transactions," "substantially all the
properties and assets," and "Trading Day," as well as provisions with regard to
rights to dividends, payment of issue and transfer taxes, and the treatment of
convertible securities after the Exchange Date.

VOTING RIGHTS

Holders of Epitope Common Stock currently have the right to elect
directors and vote on all other matters requiring action by the shareholders or
submitted to the shareholders for action. Each share of existing Epitope Common
Stock entitles the holder to one vote. If the Agritope Stock Proposal is
approved, the Articles will be amended to provide that holders of shares of
Medical Products Stock and Agritope Stock will vote together as a single voting
group on all matters as to which common shareholders generally are entitled to
vote, except as otherwise required by the Corporation Act or the Articles as
proposed to be amended. On all such matters, each share of Medical Products
Stock will have one vote, and each share of Agritope Stock will have a variable
number of votes (which could be more than, equal to or less than one) based on
the ratio of the average Market Value of one share of Agritope Stock to the
average Market Value of one share of Medical Products Stock during the 20-
Trading Day period immediately preceding the record date for the matter to be
acted on. If shares of only one class of common stock were outstanding, or if
shares of any class of common stock were entitled to vote as a separate voting
group, each share of that class would have one vote. The Company will include a
statement of the respective votes to which shares of each class are entitled in
the announcement of the record date for each meeting. A statement of voting
rights of each class will also appear in each proxy statement. See Annex VI for
an illustration of the calculation of voting rights.

The Company anticipates that Medical Products Stock would initially
represent a majority of the voting power of all classes entitled to vote in the
election of directors. The relative voting rights of Medical Products Stock and
Agritope Stock are subject to adjustment from time to time as described above so
that a holder's voting rights may more closely reflect the market value of the
holder's equity investment in Epitope. Adjustments in the relative voting rights
of Medical Products Stock and Agritope Stock may influence an investor
interested in acquiring and maintaining a fixed percentage of Epitope's voting
power to acquire that percentage of both classes of common stock. An investor in
only one class of common stock or in unequal percentages of the outstanding
shares in each class will be able to ascertain his or her voting power with
respect to Epitope only after the relative voting rights of the two classes of
stock have been determined as of the relevant record date. The relative voting
power of

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Agritope Stock and Medical Products Stock could fluctuate and will be influenced
by many factors, including the results of operations of the Company and each of
the groups, results of product development programs, competition, regulatory
matters, intellectual property developments, trading volume, share issuances and
repurchases, and general economic and market conditions.

The Articles as proposed to be amended would require the approval by
the holders of the affected class of common stock to:

(1) allow any proceeds from the Disposition of the properties
or assets allocated to either group to be used in the business of the
other group without fair compensation;

(2) issue shares of either class of common stock, other than
in connection with transactions affecting an Inter-Group Interest,
without allocating the net proceeds of the issuance to the group
represented by the class of common stock.

In addition to the voting rights provided in the Articles as proposed
to be amended, the approval of the holders of the outstanding shares of a class
of stock, voting as a separate voting group, is required under the Corporation
Act to approve certain amendments to the Articles that would affect the rights
of the shares of the class, to approve certain mergers involving conversion of
or a change in the rights of the class, and in other limited circumstances. Most
matters brought to a shareholder vote, however, will require only the approval
of the holders of Epitope's outstanding capital stock entitled to vote on
matters (including both classes of Epitope's common stock) voting together as a
single voting group. If a shareholder vote is taken on any matter as to which
neither class is entitled to vote as a separate voting group and the holders of
one of the two classes have a total number of votes exceeding the maximum number
of votes required to approve the matter, the holders of that class would be able
to control the outcome of the matter. As noted above, the Company anticipates
that Medical Products Stock would initially represent a majority of the voting
power of all classes entitled to vote in the election of directors. See "Risk
Factors--Investment Risks Related to Two Classes of Common Stock--No Separate
Voting Rights."

LIQUIDATION RIGHTS

Under the Corporation Act and Epitope's existing Articles, in the event
of a voluntary or involuntary liquidation, dissolution or winding up of the
affairs of Epitope, holders of Epitope Common Stock are entitled to receive the
net assets, if any, of Epitope remaining for distribution after Epitope has
satisfied or made provision for its debts and obligations and for payment to the
holders of shares of any class or series of capital stock having preferential
rights to receive distributions of Epitope's net assets. If the Agritope Stock
Proposal is approved, the Articles will be amended to provide that holders of
outstanding shares of Medical Products Stock would share equally, on a
share-for-share basis, in a portion of the assets of the Company remaining for
distribution to its common shareholders equal to X/Z and the holders of the
outstanding shares of Agritope Stock will share equally, on a share-for-share
basis, in a portion of the assets of the Company remaining for distribution to
its common shareholders equal to Y/Z, where X is the aggregate Market
Capitalization of the Medical Products Stock, Y is the aggregate Market
Capitalization of the Agritope Stock, and Z is the aggregate Market
Capitalization of the Medical Products Stock and Agritope Stock combined
calculated over the 20-Trading Day period preceding the first public
announcement of the liquidation, dissolution, or winding up. A consolidation,
merger or sale of assets of the Company as a going concern will not be construed
to be a "liquidation," "dissolution," or "winding up."

No holder of Medical Products Stock or Agritope Stock shall have any
special right to receive specific assets of Epitope Medical Products or
Agritope, respectively, in the case of any dissolution, liquidation, or winding
up of the Company.

INTER-GROUP INTERESTS

Agritope Stock issuable pursuant to the Distribution would be intended
initially to represent 100 percent of the equity value of the Company
attributable to Agritope. Accordingly, neither Epitope Medical Products nor
Agritope will initially have an Inter-Group Interest in the other. However, if
at any time shares of Agritope Stock or Medical Products Stock representing less
than 100 percent of the equity value of the Company attributable to a

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group are outstanding, the remaining equity value will be attributed to the
other group as an Inter-Group Interest. An Inter-Group Interest will be created
only if a subsequent transfer of cash, assets, products, programs or other
property from a group to the other group is specifically designated by the Board
as being made to create an Inter-Group Interest (in contrast to transfers made
for other consideration such as transfers as loans or in purchase and sale
transactions) or if outstanding shares of the class of stock relating to a group
are retired or otherwise cease to be outstanding following their purchase with
funds attributed to the other group.

The number of "Inter-Group Shares Issuable" with respect to an
Inter-Group Interest means the number of shares of Agritope Stock or Medical
Products Stock, as the case may be, that could be issued or sold by the Company
for the account of (i) Agritope with respect to an Inter-Group Interest in
Epitope Medical Products and (ii) Epitope Medical Products with respect to an
Inter-Group Interest in Agritope. The "Outstanding Interest Fraction" means the
percentage interest in the equity value of the Company attributable to a group
that is represented at any time by the outstanding shares of the class of stock
for that group, and the "Inter-Group Interest Fraction" means any remaining
percentage interest in the equity value of the Company attributable to the group
that is represented by the other group as a result of an Inter-Group Interest
held by the other group. The sum of the Outstanding Interest Fraction and the
Inter-Group Interest Fraction for Agritope or Epitope Medical Products would
always equal 100 percent. The full definitions of "Inter-Group Shares Issuable,"
"Outstanding Interest Fraction," and "Inter-Group Interest Fraction" are set
forth in Annex II. See Annex VI for illustrations of certain calculations
relating to Inter-Group Interests.

Any Inter-Group Shares Issuable with respect to an Inter-Group Interest
would not be represented by shares of Agritope Stock or Medical Products Stock,
as the case may be, and, therefore, would not be entitled to any voting rights.
In addition, outstanding shares of Agritope Stock or Medical Products Stock that
are held by majority-owned subsidiaries of the Company (i.e., as to which the
Company owns a majority of the shares entitled to vote in the election of
directors) would not, in accordance with the Corporation Act, be entitled to
vote on matters presented to shareholders or be counted for quorum purposes.
Accordingly, the Company will not have any voting rights with respect to any
Inter-Group Interest, and the outcome of any vote of a class of stock would be
determined by the holders of the outstanding shares of the class (excluding any
shares held by such majority-owned subsidiaries of the Company).

For financial reporting purposes, shares of Agritope Stock or Medical
Products Stock acquired by consolidated subsidiaries of the Company which are
part of the other group which remain outstanding following their acquisition
would be combined with the Inter-Group Shares Issuable with respect to an
Inter-Group Interest and reported as such other group's investment in Agritope
or Epitope Medical Products, as the case may be. Any differences between the
reported investment and any then existing Inter-Group Interest would be
reconcilable by adding to any then existing Inter-Group Interest the number of
outstanding shares of Agritope Stock or Medical Products Stock held by
consolidated subsidiaries of the Company. Because these shares would still be
outstanding for purposes of the receipt of dividends and payment of redemption
or liquidation amounts, such other group would obtain substantially the same
economic benefits from the outstanding shares as it would have received had the
shares been retired or otherwise ceased to be outstanding following their
purchase and added to the Inter-Group Shares Issuable with respect to an
Inter-Group Interest.

The authorized shares of Agritope Stock or Medical Products Stock in
excess of the total number of shares outstanding will be available for issuance
or sale without further approval by the shareholders of the Company (except to
the extent that such approval is required by applicable law, regulation or
Nasdaq National Market requirements) and may be issued at any time at prices
that could dilute the value of the outstanding shares. If there is an
Inter-Group Interest attributed to Agritope with respect to Medical Products
Stock or Epitope Medical Products with respect to Agritope Stock, whenever
shares of Medical Products Stock or Agritope Stock, respectively, are
subsequently issued by the Company, it will determine (i) the number of shares
of Medical Products Stock or Agritope Stock, as the case may be, issued for the
account of the other group in respect of a reduction in any then existing
Inter-Group Interest, the net proceeds from the issuance of which will be
reflected in the combined financial statements of such other group, and (ii) the
number of such shares issued for the account of the issuing group as an
additional equity interest in the issuing group, the net proceeds of which will
be reflected in the combined financial statements of the issuing group. The
Board expects to make the determination, in its sole discretion, after
consideration of such factors as it deems relevant, including, without
limitation, the needs of the Company, the

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relative levels of internally generated cash flow of the groups, the capital
expenditure plans of and investment opportunities available to the groups, the
long-term business prospects for the groups and the availability, cost, and time
associated with alternative financing sources. See "Risk Factors--Risks Related
to Two Classes of Common Stock--Fiduciary Duties; Potential Conflicts." Whenever
additional shares of Agritope Stock or Medical Products Stock are issued by the
Company for the account of the other group in respect of a reduction in an
Inter-Group Interest attributable to such other group, the Inter-Group Shares
Issuable with respect to the Inter-Group Interest in the issuing group would
decrease on a share-for-share basis and the related Inter-Group Interest
Fraction would decrease and the related Outstanding Interest Fraction would
increase accordingly. If the Inter-Group Shares Issuable with respect to an
Inter-Group Interest is reduced to zero as a result of the issuance, shares of
Agritope Stock or Medical Products Stock, as the case may be, could no longer be
issued by the Company for the account of the other group unless an Inter-Group
Interest is again created. If the net proceeds of any issuance by the Company of
shares of (i) Agritope Stock are allocated to Agritope or (ii) Medical Products
Stock are allocated to Epitope Medical Products, the Inter-Group Shares Issuable
with respect to an Inter-Group Interest in the issuing group would not be
reduced, but the related Inter-Group Interest Fraction would decrease and the
related Outstanding Interest Fraction would increase accordingly.

If shares of Agritope Stock or Medical Products Stock are retired or
otherwise cease to be outstanding following their purchase with funds attributed
to the other group, the Inter-Group Shares Issuable with respect to the
Inter-Group Interest in the group represented by the retired shares would
increase on a share-for-share basis and the related Inter-Group Interest
Fraction would increase and the related Outstanding Interest Fraction would
decrease accordingly. If the purchase of shares of Agritope Stock or Medical
Products Stock were attributed to Agritope or Epitope Medical Products,
respectively, the Inter-Group Shares Issuable with respect to the Inter-Group
Interest in the group purchasing the shares would not be increased, but the
Inter-Group Interest Fraction would increase and the related Outstanding
Interest Fraction would decrease accordingly. The Board would, in its sole
discretion, determine whether purchases of Agritope Stock or Medical Products
Stock should be made with consideration attributed to Agritope or Epitope
Medical Products, taking into consideration such factors as it deems relevant,
including, without limitation, the needs of the Company, the relative levels of
internally generated cash flow of the groups, the capital expenditure plans of
the groups, the investment opportunities available to the groups, the long-term
business prospects for the groups and the availability, cost, and time
associated with alternative financing sources.

The Board could, in its sole discretion, determine from time to time to
contribute cash, assets, products, programs or other property of Agritope or
Epitope Medical Products as additional equity to the other group, which would
increase the Inter-Group Shares Issuable with respect to the Inter-Group
Interest in the group receiving such cash, assets, products, programs or other
property by the number determined by dividing the amount of cash or the Fair
Value of the assets, products, programs or other property contributed (as of the
date of contribution) by the average Market Value of one share of Agritope Stock
with respect to an Inter-Group Interest in Agritope attributed to Epitope
Medical Products or one share of Medical Products Stock with respect to an
Inter-Group Interest in Epitope Medical Products attributed to Agritope, in each
case determined during the 20-Trading Day period preceding the date of the
contribution. In such event, the related Inter-Group Interest Fraction will
increase and the related Outstanding Interest Fraction will decrease
accordingly. The Board could, in its sole discretion, also determine from time
to time to contribute cash, assets, products, programs or other property of
Agritope or Epitope Medical Products to the other group in respect of a
reduction in any then-existing Inter-Group Interest, in which case the
Inter-Group Shares Issuable with respect to the Inter-Group Interest in the
contributing group would be decreased by the number determined by dividing the
amount of cash or the Fair Value of the assets, products, programs or other
property contributed (as of the date of contribution) by the average Market
Value of one share of Agritope Stock with respect to an Inter-Group Interest in
Agritope attributed to Epitope Medical Products or Medical Products Stock with
respect to an Inter-Group Interest in Epitope Medical Products attributed to
Agritope, in each case determined during the 20-Trading Day period preceding the
date of the contribution. In such event, the related Inter-Group Interest
Fraction would decrease and the related Outstanding Interest Fraction would
increase accordingly. The Board could, in its sole discretion, determine to make
contributions or other transfers referred to in this paragraph taking into
consideration such factors as it deems relevant, including, without limitation,
the needs of the Company, the financing needs and objectives of the groups, the
investment objectives of the groups, the availability, cost, and time associated
with alternative financing sources, prevailing interest rates, and general
economic conditions.

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Agritope or Epitope Medical Products, as the case may be, will be
credited, and the other group will be charged, with an amount equal to the
product of (i) the Fair Value of any dividend or other distribution paid or
distributed in respect of outstanding shares of Agritope Stock or Medical
Products Stock, as the case may be (including any dividend of Net Proceeds from
the Disposition of all or substantially all the assets and properties of
Agritope or Epitope Medical Products, as the case may be), times (ii) a
fraction, the numerator of which is the related Inter-Group Interest Fraction on
the record date for such dividends or distribution and the denominator of which
is the relevant Outstanding Interest Fraction.

If all outstanding shares of either class of stock are redeemed or
exchanged at a time when the Affected Group holds an Inter-Group Interest in the
other group, each shareholder of the Affected Group would receive a number of
newly issued shares of the other group's stock corresponding to the
shareholder's pro rata interest in the Inter-Group Shares Issuable with respect
to the Inter-Group Interest. See "Proposal 2: The Agritope Stock
Proposal--Description of Medical Products Stock and Agritope
Stock--Exchange--Distribution of Inter-Group Shares Issuable."

OTHER RIGHTS

Neither the holders of Medical Products Stock nor the holders of
Agritope Stock will have any preemptive rights or any rights to convert their
shares into any other securities of Epitope.

DETERMINATIONS BY THE BOARD

Any determination made by the Board in good faith under any of the
provisions described above under "Description of Medical Products Stock and
Agritope Stock" will be final and binding on all shareholders of Epitope.

DIVIDEND POLICY

Epitope has never paid any cash dividends on shares of Epitope Common
Stock. Epitope currently intends to retain its earnings to finance future growth
and therefore does not anticipate paying any cash dividends on any class of its
common stock in the foreseeable future. For information concerning limitations
on the funds from which dividends on Medical Products Stock and Agritope Stock
may be paid, see "Proposal 2: The Agritope Stock Proposal--Description of
Medical Products Stock and Agritope Stock--Dividends."

Subject to the limitations in the Corporation Act and in the Articles
as proposed to be amended with respect to dividends on each of Medical Products
Stock and Agritope Stock, the Board would be able in its sole discretion to
declare and pay dividends exclusively on Medical Products Stock or exclusively
on Agritope Stock, or on both, in equal or unequal amounts, notwithstanding the
respective amount of funds available for dividends on each class, the respective
voting and liquidation rights of each class, the amount of prior dividends
declared on each class, or any other factor.

STOCK TRANSFER AGENT AND REGISTRAR

ChaseMellon Shareholder Services, L.L.C., Ridgefield Park, New Jersey,
will act as the registrar and transfer agent for both Medical Products Stock and
Agritope Stock.

QUOTATION OF MEDICAL PRODUCTS STOCK AND AGRITOPE STOCK

Epitope Common Stock is traded on the National Market tier of The
Nasdaq Stock Market under the symbol "EPTO." Following the Effective Date,
Medical Products Stock will be quoted on the Nasdaq National Market under the
symbol "EPTO" and Agritope Stock will be quoted on the Nasdaq National Market
under the symbol "AGTO." Epitope cannot predict to what extent a public market
will develop for the shares of Agritope Stock or the prices at which the shares
of Medical Products Stock and Agritope Stock may trade in that market or
otherwise.

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FINANCIAL ADVISOR

Vector Securities has acted as financial advisor to Epitope in
connection with the Agritope Stock Proposal. See "Financial Advisor."

NO DISSENTERS' RIGHTS

Under the Corporation Act and the Articles, shareholders will not have
any dissenters' rights of appraisal in connection with the Agritope Stock
Proposal.

EFFECTS ON CONVERTIBLE SECURITIES

The Distribution following the approval of the Agritope Stock Proposal
will require adjustments to the conversion rights of outstanding warrants to
purchase Epitope Common Stock (the "Warrants"). Generally, the Warrants provide
that the holder will be entitled to receive the number of shares of Agritope
Stock upon exercise of the Warrant that the holder would have received if the
holder had exercised the Warrant immediately prior to the Distribution.

Adjustments will also be made to the conversion rights of the Agritope,
Inc., 4% Convertible Notes due 1997 (the "Convertible Notes"). The conversion
privilege of the Convertible Notes will be adjusted so that the holder of a
Convertible Note converted after the Effective Date will receive, in addition to
the shares of Medical Products Stock into which the Convertible Note is
convertible, the same number of shares of Agritope Stock as the holder would
have received had the holder converted the Convertible Note immediately prior to
the Distribution.

The Distribution will also require adjustments to outstanding stock
options granted by Epitope to employees, consultants and directors of Epitope.
The Epitope Board has determined to adjust each option outstanding on the
Effective Date to provide for the division of the option into an option
exercisable for Medical Products Stock and an option exercisable for one share
of Agritope Stock for every two shares of Epitope Common Stock subject to the
original option (with any resultant fractional shares of Agritope Stock rounded
down to the nearest whole number).

The aggregate exercise price of each option and Warrant will be
allocated between Epitope Medical Products and Agritope in proportion to the
respective market capitalizations of Medical Products Stock and Agritope Stock,
based on the Effective Date Trading Price of the stock. All other terms and
conditions of the original options and Warrants will remain the same.

As of the Effective Date, approximately shares of
Agritope Stock will be reserved for issuance under the Stock Plans, ISOP, and
1992 Plan, or upon conversion of Agritope, Inc. 4% Convertible Notes due 1997
(the "Convertible Notes") or exercise of outstanding warrants. See "Proposal 3:
Amendment of 1991 Stock Award Plan" and "Proposal 4: Amendment of 1993 Employee
Stock Purchase Plan."

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

The following discussion summarizes the principal federal income tax
consequences of the adoption and implementation of the Agritope Stock Proposal
and the Distribution. The discussion is based on currently existing provisions
of the Internal Revenue Code of 1986, as amended to the date hereof (the
"Code"), Treasury Department regulations thereunder, published positions of the
Internal Revenue Service (the "IRS"), and court decisions. All the foregoing are
subject to change, and any such change could affect the continuing validity of
this discussion. In particular, Congress could enact legislation affecting the
treatment of stock with characteristics similar to Agritope Stock and Medical
Products Stock, or the Treasury Department could issue regulations that change
the current law, including regulations issued pursuant to its authority under
Section 337(d) of the Code. Any future legislation or regulations could be
enacted or promulgated so as to apply retroactively to the Agritope Stock
Proposal or the Distribution. In addition, this discussion and the opinions of
counsel to Epitope are based on the assumptions that the Agritope Stock Proposal
and the Distribution will be implemented as described herein and that the
existing

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Epitope Common Stock (and the Medical Products Stock and Agritope Stock to be
received) is held as a capital asset.

The IRS announced in 1987 that it will not issue advance rulings on the
classification of stock with characteristics similar to Agritope Stock and
Medical Products Stock. Accordingly, no rulings have been or will be requested
from the IRS with respect to any of the matters discussed herein. The opinions
of counsel described below are not binding on the IRS.

Because there is uncertainty concerning some of the federal income tax
consequences discussed herein, and because the following discussion does not
describe all tax consequences that may be relevant to a particular shareholder,
shareholders are urged to consult their own tax advisors as to their respective
tax situations, including the applicability and effect of state, local, foreign
and other tax laws.

THE AGRITOPE STOCK PROPOSAL AND THE DISTRIBUTION

In the opinion of Miller, Nash, Wiener, Hager & Carlsen LLP ("Miller
Nash"), the adoption and implementation of the Agritope Stock Proposal and the
Distribution of Agritope Stock will not result in taxable income to Agritope,
Inc., Epitope or its shareholders for federal income tax purposes, except as
stated below.

TAX IMPLICATIONS TO EPITOPE SHAREHOLDERS

IMPLEMENTATION OF THE AGRITOPE STOCK PROPOSAL AND THE DISTRIBUTION. In
the opinion of Miller Nash, Agritope Stock and Medical Products Stock will be
treated as common stock of Epitope for federal income tax purposes, and Epitope
shareholders will not recognize income, gain or loss by reason of the
implementation of the Agritope Stock Proposal or the Distribution. The basis of
the existing Epitope Common Stock held by a shareholder immediately before the
adoption and implementation of the Agritope Stock Proposal will become the basis
of Medical Products Stock and Agritope Stock and will be allocated between
Medical Products Stock and Agritope Stock received in the Distribution in
proportion to the relative fair market values of Medical Products Stock and
Agritope Stock on the distribution date. The holding period of Agritope Stock
and Medical Products Stock will include the holding period of the existing
Epitope Common Stock immediately before the adoption and implementation of the
Agritope Stock Proposal and the Distribution.

Although it is the opinion of Miller Nash that the implementation of
the Agritope Stock Proposal and the Distribution will not result in the
recognition of income, gain or loss or the receipt of a taxable dividend by
Epitope shareholders, there are no federal income tax regulations, court
decisions, or published IRS rulings bearing directly on the effect of the
Distribution. It is possible that the IRS may claim that Agritope Stock or
Medical Products Stock represents property other than stock of Epitope. If
Agritope Stock or Medical Products Stock were treated as property other than
stock of Epitope, either the redesignation of the Epitope Common Stock as
Medical Products Stock or the Distribution of Agritope Stock could be taxed as a
dividend to Epitope shareholders in an amount equal to the fair market value of
the Medical Products Stock or the Agritope Stock, as the case may be, to the
extent of Epitope's current and accumulated earnings and profits, and possibly
as capital gain, to the extent that the fair market value of the Medical
Products Stock or the Agritope Stock distributed to a shareholder exceeded both
the holder's ratable share of such earnings and profits and the holder's tax
basis in Epitope Common Stock.

It is the opinion of Miller Nash that shareholders of Epitope who
receive cash in lieu of a fractional share interest in Agritope Stock as part of
the Distribution will be treated as having received the cash in redemption of
the fractional share interest. If the cash payment exceeds the shareholder's
basis in the fractional share interest deemed surrendered therefor, the
shareholder will realize gain to the extent of the excess cash. If the cash
payment is less than the shareholder's basis in the fractional share interest
exchanged, the shareholder will realize a loss. The gain or loss will be a
capital gain or loss, and will be a long-term capital gain or loss if the tacked
holding period of the fractional share interest is greater than one year.

SALE OF AGRITOPE STOCK OR MEDICAL PRODUCTS STOCK. Upon the taxable sale
of Agritope Stock or Medical Products Stock, a shareholder will recognize gain
or loss equal to the difference between (i) any cash received plus

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the fair market value of any other consideration received and (ii) the tax basis
of Agritope Stock or Medical Products Stock, as the case may be, that was sold.
Certain preferred stock which is distributed on a tax-free basis by a
corporation to its shareholders is treated as "Section 306 Stock." Generally,
part or all of the gain recognized when a shareholder sells or disposes of
Section 306 Stock must be treated as ordinary income rather than capital gain,
and shareholders are not permitted to recognize a loss on the sale or
disposition of Section 306 Stock. However, stock which is treated as common
stock for federal income tax purposes is not treated as Section 306 Stock. As
noted above, it is the opinion of Miller Nash that Agritope Stock and Medical
Products Stock will be treated as common stock of Epitope for federal income tax
purposes. Thus, in Miller Nash's opinion, Agritope Stock and Medical
Products Stock will not be treated as Section 306 Stock. Accordingly, any gain
or loss on the taxable sale or disposition of Agritope Stock or Medical Products
Stock will be a capital gain or loss.

EXCHANGE OF AGRITOPE STOCK OR MEDICAL PRODUCTS STOCK. Miller Nash is of
the opinion that any exchange of Agritope Stock solely for Medical Products
Stock or of Medical Products Stock solely for Agritope Stock, whether at the
option of Epitope or upon a mandatory exchange, will not result in the
recognition of gain or loss to the holders thereof, pursuant to Section 1036
and/or Sections 368(a)(1)(E) and 354 of the Code (except with respect to any
cash received in lieu of fractional share interests of Medical Products Stock or
Agritope Stock, as the case may be). Medical Products Stock or Agritope Stock
received upon any such exchange will have the same tax basis as the holder's
basis for the Agritope Stock or Medical Products Stock exchanged therefor, and
the holder's holding period for the Medical Products Stock or Agritope Stock
received will include the holding period of Agritope Stock or Medical Products
Stock exchanged therefor.

Any exchange of Agritope Stock or Medical Products Stock solely for
cash, whether at the option of Epitope or upon a mandatory exchange, will be
treated as a distribution in redemption of Agritope Stock or Medical Products
Stock and will be governed by the rules under Section 302 of the Code, including
the stock attribution rules of Section 318. Depending on the shareholder's
actual and constructive ownership of Medical Products Stock and Agritope Stock
at the time of the redemption, the cash received may be treated as a dividend
taxable as ordinary income to the extent of the shareholder's ratable share of
Epitope's earnings and profits.

If Agritope Stock is exchanged for a combination of cash and Medical
Products Stock or if Medical Products Stock is exchanged for a combination of
cash and Agritope Stock, a shareholder will realize gain equal to the excess, if
any, of (i) the sum of the cash plus the fair market value of Medical Products
Stock or the Agritope Stock received over (ii) the tax basis of Agritope Stock
or Medical Products Stock that was exchanged therefor. However, any such gain
will be recognized (and thus subject to tax) only to the extent of the cash
received. Any gain that is recognized by a shareholder will be a capital gain,
unless the receipt of cash by the shareholder has the effect of a distribution
of a dividend within the meaning of Section 356(a)(2) of the Code, in which case
it will be treated as a dividend taxable as ordinary income to the extent of the
shareholder's ratable share of the undistributed earnings and profits of
Epitope.

ANTIDILUTION ADJUSTMENTS TO CONVERTIBLE SECURITIES. In general, if a
corporation has outstanding convertible securities and distributes shares of its
stock to holders of the stock into which the convertible securities are
convertible, the distribution may result in a taxable stock dividend to the
participating shareholders if the distribution results in an increase in the
shareholders' proportionate interest in the assets or earnings and profits of
the corporation. A distribution of stock, however, will not result in a taxable
stock dividend to the shareholders if the exchange price or exchange ratio of
the convertible securities is fully adjusted to compensate for the dilution
caused by the stock distribution.

Pursuant to action by the Board or the antidilution provisions of the
convertible securities of Epitope, the conversion price and conversion ratio of
the convertible securities will be fully adjusted to reflect the Distribution.
In the opinion of Miller Nash, because of the adjustments, the Distribution will
not result in an increase in the shareholders' proportionate interest in the
assets or earnings and profits of Epitope and therefore the Distribution will
not result in a taxable stock distribution to shareholders.

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on, shares of Agritope Stock or Medical Products Stock in the same manner as the
holder is subject to United States federal income or withholding tax on gain
recognized on the taxable sale or exchange of, or dividend payments on, the
existing shares of Epitope Common Stock.

A "United States Alien" is any person who, for United States federal
income tax purposes, is a foreign corporation, a nonresident alien individual, a
nonresident alien fiduciary or a foreign estate or trust, or a foreign
partnership that includes as a member any of the foregoing persons.

BACKUP WITHHOLDING. Certain noncorporate holders of Agritope Stock or
Medical Products Stock may be subject to backup withholding at a rate of 31
percent on the payment of dividends on the stock. Backup withholding will apply
only if the holder (i) fails to furnish the holder's Taxpayer Identification
Number ("TIN"), which for an individual would be his or her Social Security
number, (ii) furnishes an incorrect TIN, (iii) is notified by the IRS that the
holder has failed to properly report payments of interest or dividends, or (iv)
under certain circumstances fails to certify under penalties of perjury that the
holder has furnished a correct TIN and has not been notified by the IRS that the
holder is subject to backup withholding for failure to report payments of
interest or dividends. Shareholders should consult their tax advisors regarding
their qualification for exemption from backup withholding and the procedures for
obtaining such an exemption, if applicable.

The amount of any backup withholding from a payment to a holder of
Agritope Stock or Medical Products Stock will be allowed as a credit against the
shareholder's federal income tax liability and may entitle the shareholder to a
refund, provided that the required information is furnished to the IRS.

TAX IMPLICATIONS TO EPITOPE

In the opinion of Miller Nash, Agritope Stock and Medical Products
Stock will be common stock of Epitope and no gain or loss will be recognized by
Epitope by reason of the adoption or implementation of the Agritope Stock
Proposal or the Distribution. If, however, Agritope Stock or Medical Products
Stock were treated as property other than stock of Epitope, Epitope could
recognize gain, either on the redesignation of Epitope Common Stock as Medical
Products Stock or on the Distribution of Agritope Stock, in an amount equal to
the difference between the fair market value of Medical Products Stock or
Agritope Stock, as the case may be, and its basis in that stock.

PROPOSAL 2: BOARD RECOMMENDATION AND VOTE REQUIRED

The Board recommends a vote FOR Proposal 2, the Agritope Stock
Proposal. If a quorum is present at the Annual Meeting, Proposal 2 will be
approved if the votes cast in favor of the proposal exceed the votes cast
opposing the action.

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GENERAL PROVISIONS REGARDING THE PROPOSED AMENDMENTS TO
THE 1991 STOCK AWARD PLAN AND 1993 EMPLOYEE STOCK PURCHASE PLAN

Epitope is proposing amendments to the Epitope, Inc. 1991 Stock Award
Plan and 1993 Employee Stock Purchase Plan which would, among other matters, (i)
increase the number of shares available for issuance under the respective Plans
and (ii) authorize the grant of awards, options and rights relating to Agritope
Stock in addition to Medical Products Stock (as redesignated) already authorized
under each Plan. Epitope believes it is desirable to maintain its flexibility to
use option grants to attract, retain and reward key personnel; to attract and
retain qualified persons who are not also officers or employees of Epitope to
serve as directors of Epitope; and to provide employees of Epitope with the
opportunity to purchase shares of either class of common stock of Epitope on
favorable terms. In light of the Agritope Stock Proposal, Epitope believes that
the usefulness of the Stock Plans in achieving these goals will be impaired if
the proposed amendments to the Stock Plans are not approved. Specifically,
Epitope believes that the grant of options for Agritope Stock under the Award
Plan will provide a more effective and direct incentive for the employees of
Agritope than would options for Medical Products Stock. Similarly, options
granted to directors and executive management for combinations of Agritope Stock
and Medical Products Stock will provide a more effective and direct incentive to
promote the success of Epitope as a whole than would options for Medical
Products Stock alone. Finally, the Board believes that rights to purchase
Agritope Stock under the Purchase Plan will provide a more attractive benefit to
Agritope employees than rights to purchase Medical Products Stock.

The proceeds from the issuance of shares of either class of common
stock on the exercise of options or rights granted under the Stock Plans after
the Effective Date will generally be allocated to the group represented by the
class of common stock issued. In the event that an outstanding option or right
expires or is canceled or forfeited, the shares of Agritope Stock or Medical
Products Stock covered thereby would again be available for the grant of options
or rights under the Stock Plans.

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PROPOSAL 3: AMENDMENT OF 1991 STOCK AWARD PLAN

GENERAL

Shareholders are being asked to consider and approve amendments to the
Epitope, Inc. 1991 Stock Award Plan as described below. The Award Plan was
initially approved by the shareholders at the 1991 annual meeting. Increases in
the number of shares available for issuance under the Award Plan were approved
by the shareholders at the annual meetings in 1993, 1994 and 1995. In December
1996, the Board adopted, subject to shareholder approval, amendments to provide,
among other matters, for the issuance of Agritope Stock under the Award Plan,
for a further increase in the number of shares available for issuance under the
Award Plan, and for adjustment of outstanding options under the Award Plan,
ISOP, and 1992 Plan to provide for the issuance of Agritope Stock. A summary
description of certain terms and provisions of the Award Plan and outstanding
options as proposed to be amended follows.

PURPOSE

The purpose of the Award Plan is to promote and advance the interests
of the Company and its shareholders by enabling the Company to attract, retain,
and reward key employees, outside advisors, and directors. The Award Plan is
intended to strengthen the mutuality of interests between such employees,
advisors, and directors and the Company's shareholders by offering
performance-based stock and cash incentives and other equity-based incentive
awards to promote a proprietary interest in pursuing the long-term growth,
profitability, and financial success of the Company.

AWARDS AND ELIGIBILITY

The Award Plan provides for stock-based awards to (i) employees of the
Company and its subsidiaries, (ii) members of scientific advisory committees or
other consultants to the Company or its subsidiaries ("Advisors"), and (iii)
nonemployee directors of the Company. Awards that may be granted under the Award
Plan include stock options, stock appreciation rights, restricted awards,
performance awards, and other stock-based awards (collectively, "Awards"). The
Executive Compensation Committee of the Board (the "Committee") administers the
Award Plan and determines the key employees and Advisors of the Company and its
subsidiaries who are to receive Awards under the plan and the types, amounts,
and terms of Awards. The Committee may delegate to one or more officers of the
Company the authority to grant Awards to recipients who are not executive
officers or directors of the Company and to determine the nature of the Awards
to be granted.

At September 30, 1996, 132 persons held options under the Award Plan,
including each of the Company's seven nonemployee directors and eight executive
officers, 111 other employees, and six Advisors. At that date, these persons
represented the pool of individuals considered to be eligible to participate in
the Award Plan. No stock appreciation rights, restricted awards, performance
awards, or other stock-based awards have been granted under the Award Plan.

Awards under the Award Plan, other than to nonemployee directors, are
granted at the discretion of the Committee, which determines the recipients and
establishes the terms and conditions of each Award, including the exercise
price, the form of payment of the exercise price, the number of shares subject
to options or other equity rights, and the date or dates on which the options
become exercisable. However, the exercise price of any incentive stock option
granted under the Award Plan may not be less than the fair market value of the
common stock on the date of grant. The exercise price of any nonqualified stock
option generally may not be less than 75 percent of the fair market value of the
common stock on the date of grant.

DESCRIPTION OF AMENDMENTS TO AWARD PLAN

On December 17, 1996, the Board approved the amendments to the Award
Plan and outstanding options described herein (the "Award Plan Amendments"),
subject to approval of the amendments by the shareholders. If the Agritope Stock
Proposal is not approved by the shareholders, the Award Plan Amendments relating
to Agritope

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<PAGE>

Stock will not be implemented and will be of no effect. The description of the
Award Plan Amendments set forth herein is qualified in its entirety by reference
to Annex IV, which contains the full text of the Award Plan as proposed to be
amended.

The Award Plan Amendments provide for an increase in the number of
shares of Epitope Common Stock (Medical Products Stock if the Agritope Stock
Proposal is approved) authorized for issuance under the Award Plan by 1,000,000
shares. The Award Plan Amendments also provide for the issuance of up to
1,000,000 shares of Agritope Stock pursuant to newly-granted Awards under the
Award Plan, plus an additional number of shares which will become subject to
"Adjustment Options," as defined below, to be issued to holders of outstanding
options under the Award Plan in a number presently estimated at approximately
1,321,650 shares, in each case provided that the Agritope Stock Proposal is
approved by shareholders. In addition, any shares subject to Awards under the
ISOP or the Award Plan that are canceled or expire prior to exercise, are
settled in cash or are exchanged for other Awards, together with shares used in
full or partial payment of the exercise price of an Award, will become available
for future Awards under the Award Plan. The number of shares issuable under the
Award Plan is also subject to adjustment for changes in capitalization. At
September 30, 1996, 382,526 shares had been issued under the Award Plan,
2,643,292 shares were subject to outstanding Awards, and 197,181 shares were
available for future grants of Awards.

The Committee would have the discretion to grant Awards relating to
Medical Products Stock, Agritope Stock, or a combination of both to participants
eligible to be granted Awards under the Award Plan. The Committee could grant
Awards relating to both classes of common stock in such proportion as the
Committee determined to be appropriate.

It is currently anticipated that options ("New Options") to purchase a
total of approximately 95,000 shares of Agritope Stock will be granted to
certain officers and employees of A&W under the Award Plan on or prior to the
Effective Date, subject to approval of the Agritope Stock Proposal and the Award
Plan Amendments. Each New Option will: (i) have an exercise price equal to the
Effective Date Trading Price of Agritope Stock, (ii) become exercisable as to 25
percent of the shares covered by such option on the first four anniversaries of
the Effective Date, and (iii) have a term of ten years.

The Award Plan Amendments also revise the provisions relating to Awards
made to nonemployee directors. As proposed to be amended, Article 14 of the
Award Plan regarding Awards to nonemployee directors would be deleted in its
entirety. Instead, Article 3 of the Award Plan would authorize the Board to
grant Awards to nonemployee directors from time to time in its discretion
subject to the provisions of the Award Plan and in accordance with its fiduciary
obligations to Epitope and its shareholders. See "Executive
Compensation-Compensation of Directors" for details regarding prior option
grants to nonemployee directors under the Award Plan.

If the Agritope Stock Proposal and the Award Plan Amendments are
approved, holders of outstanding options under the Award Plan will each receive
an option to purchase one share of Agritope Stock for every two shares of
Epitope Common Stock for which they hold an outstanding option on the Effective
Date (with any resultant fractional shares of Agritope Stock rounded down to the
nearest whole number). Outstanding options under the ISOP and the 1992 Plan will
be similarly adjusted such that holders of such options will receive an option
to purchase one share of Agritope Stock for every two shares of Epitope Common
Stock which they would be entitled to receive upon exercise of such options
outstanding on the Effective Date. The foregoing options to purchase Agritope
Stock are collectively referred to as "Adjustment Options." On the Effective
Date, outstanding options to purchase Epitope Common Stock will become options
to purchase Medical Products Stock and the shares presently eligible for
issuance under the Award Plan will become shares of Medical Products Stock. The
aggregate exercise price of the original Epitope Common Stock option will be
allocated between the Medical Products Stock option and the related Agritope
Stock option in proportion to the relative market capitalizations of Medical
Products Stock and Agritope Stock, based on the Effective Date Trading Prices of
the stock. Accordingly, the per-share exercise price of the Medical Products
Stock option will be determined by dividing the Effective Date Trading Price of
Medical Products Stock by the sum of the Effective Date Trading Price of Medical
Products Stock plus one-half the Effective Date Trading Price of Agritope Stock,
and multiplying the exercise price of the original option by the resulting
fraction. Similarly, the per-share exercise price of the Agritope Stock option
will be determined by

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<PAGE>

dividing the Effective Date Trading Price of Agritope Stock by the sum of the
Effective Date Trading Price of Medical Products Stock plus one-half the
Effective Date Trading Price of Agritope Stock, and multiplying the exercise
price of the original option by the resulting fraction. For example, if the
original per share exercise price was $10.00 and the closing prices for the
Agritope Stock and Medical Products Stock on the Effective Date were $6.00 and
$12.00, respectively, the Agritope Stock option exercise price would be $4.00
per share and the Medical Products Stock option price would be $8.00 per share.

In addition to the amendments to the Award Plan described above,
certain other changes have been approved by the Board that are not subject to
shareholder approval. The definition of fair market value in the Award Plan has
been changed to refer to trading prices on either a stock exchange or an
automated securities interdealer quotation system. Other changes have been
adopted in light of recent amendments promulgated by the Commission to the
insider trading and reporting rules under Section 16 of the Exchange Act. The
changes modify the requirements for the composition of the committee responsible
for approving Awards and administering the Award Plan (Section 3.2), delete the
limitations on transferability of Awards (Section 6.5), authorize the Committee
to approve forms of agreements for options granted to nonemployee directors
(Section 14.4), and alter the provisions relating to adoption of amendments to
the Award Plan to, among other things, require shareholder approval only of
amendments that would materially increase the aggregate number of shares of
common stock that may be issued under the Award Plan (Article 16).

The following table shows (i) the New Options that are expected to be
granted under the Award Plan as of the Effective Date, provided that the
Agritope Stock Proposal and the Award Plan Amendments are approved by the
shareholders, and (ii) the Adjustment Options that would have been issued under
the Award Plan, the ISOP and the 1992 Plan if the Effective Date had occurred on
September 30, 1996. No other grants of Awards under the Award Plan are now under
consideration.

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<PAGE>

<TABLE>
<CAPTION>
NEW PLAN BENEFITS
1991 STOCK AWARD PLAN

Number of Number of
New Adjustment
Name and Position Options Options
<S> <C> <C>

Adolph J. Ferro, Ph.D. -- 278,102
President and Chief
Executive Officer
Gilbert N. Miller -- 104,552
Executive Vice President
and Chief Financial Officer
Andrew S. Goldstein -- 97,000
Senior Vice President of
Advanced Technology Development--
Epitope Medical Products
John H. Fitchen, M.D. -- 94,400
Senior Vice President and
Chief Operating Officer--
Epitope Medical Products
Richard K. Bestwick, Ph.D. -- 38,052
Senior Vice President and
Chief Operating Officer--
Agritope
All Executive Officers as a Group 15,000 646,806
All Nonemployee Directors as a Group -- 244,302
All Employees as a Group, Excluding 80,000 725,506
Executive Officers
</TABLE>

DESCRIPTION OF TERMS OF AWARDS

Following is a brief summary of the various types of Awards that may be
granted under the Award Plan reflecting the effect of the Award Plan Amendments.

OPTIONS. Options granted under the Award Plan may be either incentive
stock options meeting the requirements of Section 422 of the Code or
nonqualified options, in each case, with respect to shares of Medical Products
Stock, Agritope Stock, or both. Incentive stock options may expire not more than
ten years from the date of grant. The Award Plan does not limit the maximum term
or amount of award for nonqualified options. The exercise price per share for
options granted under the Award Plan generally must be at least 100 percent (for
incentive stock options) or 75 percent (for nonqualified options) of the fair
market value of a share of the applicable class of common stock on the date the
option is granted. The Award Plan authorizes the Committee to issue deferred
compensation options with an option price substantially less than the fair
market value of a share of Medical Products Stock or Agritope Stock, as the case
may be, on the date of grant (but not less than $1 per share) for the purpose of
deferring a specified amount of income for a recipient. The Committee, in its
discretion, may provide in the agreement evidencing an option that, to the
extent that the option is exercised using previously acquired shares of the same
class of common stock, the option holder shall automatically be granted a
replacement ("reload") option for a number of shares of such class of common
stock equal to the number of shares delivered upon exercise with an option price
equal to the fair market value of a share of such class of common stock on the
date of exercise and subject to such other terms as the Committee determines. In
no event may options for more than 500,000 shares of either Agritope Stock or
Medical Products Stock be granted to any individual under the Award Plan during
any fiscal year period.

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<PAGE>

STOCK APPRECIATION RIGHTS. A recipient of stock appreciation rights
("SARs") will receive, upon exercise, a payment (in cash or in shares of
Agritope Stock or Medical Products Stock) based on the increase in the price of
a share of Agritope Stock or Medical Products Stock, as the case may be, between
the date of grant and the date of exercise. SARs may be granted in connection
with options or other Awards granted under the Award Plan or may be granted as
independent Awards.

RESTRICTED AWARDS. Restricted Awards may take the form of restricted
shares or restricted units. Restricted shares are shares of Agritope Stock or
Medical Products Stock that may be subject to forfeiture if the recipient
terminates employment or service as an Advisor during a specified period (the
"Restriction Period"). Stock certificates representing restricted shares are
issued in the name of the recipient, but are held by the Company until the
expiration of the Restriction Period. From the date of issuance of restricted
shares, the recipient is entitled to the rights of a shareholder with respect to
the shares, including voting and dividend rights.

Restricted units are Awards of units equivalent in value to a share of
Agritope Stock or Medical Products Stock, which similarly may be subject to
forfeiture if the recipient terminates employment or service as an Advisor
during a Restriction Period. At the expiration of the Restriction Period,
payment with respect to restricted units is made in an amount equal to the value
of the number of shares of Agritope Stock or Medical Products Stock covered by
the restricted units. Payment may be in cash, unrestricted shares of the
applicable class of common stock, or any other form approved by the Committee.

PERFORMANCE AWARDS. Performance Awards are designated in units
equivalent in value to a share of Agritope Stock or Medical Products Stock, as
the case may be. A performance Award is subject to forfeiture if or to the
extent that the Company, a subsidiary, an operating group, or the recipient, as
specified by the Committee in the Award, fails to meet performance goals
established for a designated performance cycle. Performance Awards earned by
attaining performance goals are paid at the end of a performance cycle in cash,
shares of the applicable class of common stock, or any other form approved by
the Committee.

OTHER STOCK-BASED AWARDS. The Committee may grant other Awards that
involve payments or grants of shares of Agritope Stock or Medical Products Stock
or are measured by or in relation to shares of Agritope Stock or Medical
Products Stock. The Award Plan thus provides needed flexibility to design future
types of stock-based or stock-related Awards to attract and retain employees,
Advisors, and directors in a competitive environment.

FEDERAL INCOME TAX CONSEQUENCES

The following discussion summarizes the principal anticipated federal
income tax consequences of Awards granted under the Award Plan to participants
and to Epitope.

INCENTIVE STOCK OPTIONS. An optionee does not realize taxable income
upon the grant or exercise of an incentive stock option ("ISO") under the Award
Plan.

If no disposition of shares issued to an optionee pursuant to the
exercise of an ISO is made by the optionee within two years from the date of
grant or within one year from the date of exercise, then (a) upon the sale of
the shares, any amount realized in excess of the option price (the amount paid
for the shares) is taxed to the optionee as long-term capital gain and any loss
sustained will be a long-term capital loss, and (b) no deduction is allowed to
Epitope for federal income tax purposes. The exercise of ISOs gives rise to an
adjustment in computing alternative minimum taxable income that may result in
alternative minimum tax liability for the optionee.

If shares of common stock acquired upon the exercise of an ISO are
disposed of prior to the expiration of the two-year and one-year holding periods
described above (a "disqualifying disposition"), then (a) the optionee realizes
ordinary income in the year of disposition in an amount equal to the excess (if
any) of the fair market value of the shares at exercise (or, if less, the amount
realized on a sale of the shares) over the option price thereof and (b) Epitope
is entitled to deduct such amount. Any further gain realized is taxed as a
short-term or long-term capital gain, as applicable, and does not result in any
deduction to Epitope. A disqualifying disposition in the year of exercise will
generally avoid the alternative minimum tax consequences of the exercise of an
ISO.

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<PAGE>

NONQUALIFIED OPTIONS. No income is realized by the optionee at the time
a nonqualified option is granted. Upon exercise, (a) ordinary income is realized
by the optionee in an amount equal to the difference between the option price
and the fair market value of the shares on the date of exercise and (b) Epitope
receives a tax deduction for the same amount. Upon disposition of the shares,
appreciation or depreciation after the date of exercise is treated as a
short-term or long-term capital gain or loss, as applicable, and will not result
in any deduction to Epitope.

PAYMENT OF EXERCISE PRICE IN SHARES. The Committee may permit
participants to pay all or a portion of the exercise price using previously
acquired shares of the applicable class of common stock. If an option is
exercised and payment is made in previously held shares, there is no taxable
gain or loss to the participant other than any gain recognized as a result of
exercise of the option, as described above.

STOCK APPRECIATION RIGHTS. The grant of a SAR to a participant will not
cause the recognition of income by the participant. Upon exercise of a SAR, the
participant will realize ordinary income equal to the amount of cash payable to
the participant plus the fair market value of any shares of common stock or
other property delivered to the participant. Epitope will be entitled to a
deduction equal to the amount of ordinary income realized by the participant in
connection with the exercise of a SAR.

RESTRICTED AWARDS AND PERFORMANCE AWARDS. Generally, a participant will
not recognize any income upon issuance of a restricted Award or performance
Award that is subject to forfeiture during a Restriction Period or performance
cycle. Dividends paid with respect to Awards during a Restriction Period or
performance cycle prior to the vesting of the Awards will be taxable as ordinary
income to the participant. Generally, a participant will recognize ordinary
income upon the vesting of restricted Awards or performance Awards in an amount
equal to the amount of cash payable to the participant plus the fair market
value of shares of common stock or other property delivered to the participant.
However, a participant may elect to recognize compensation income upon the grant
of restricted shares, based on the fair market value of the shares of common
stock subject to the Award at the date of grant. If a participant makes such an
election, dividends paid with respect to the restricted shares will not be
treated as ordinary income, but rather as dividend income, and the participant
will not recognize additional income when the restricted shares vest. Epitope
will be entitled to a deduction equal to the amount of ordinary income
recognized by the participant. If a participant who receives an Award of
restricted shares makes the special election described above, Epitope will not
be entitled to deduct dividends paid with respect to the restricted shares.

LIMITATION ON DEDUCTIBILITY OF CERTAIN COMPENSATION. Section 162(m) of
the Code generally makes nondeductible to Epitope taxable compensation paid to a
single individual in excess of $1 million in any calendar year if the individual
is the Chief Executive Officer or one of the next four highest-paid executive
officers unless the excess compensation is considered to be "performance based."
Among other requirements contained in Section 162(m), the material terms of a
compensation plan must be approved by shareholders. Although Awards previously
granted under the Award Plan would not qualify for deductibility under Section
162(m) to the extent that the $1 million threshold were to be exceeded, the
Company may in the future consider structuring Awards to attempt to meet the
requirements of Section 162(m) if it determines the action to be advisable.

PROPOSAL 3: BOARD RECOMMENDATION AND VOTE REQUIRED

The Board recommends a vote FOR amendment of the Award Plan as
described above to provide for the issuance of up to 1,000,000 shares of
Agritope Stock, plus a total of approximately 1,616,615 shares of Agritope Stock
to be issued as Adjustment Options with respect to options outstanding under the
Award Plan, the ISOP and the 1992 Plan, together with an additional 1,000,000
shares of Epitope Common Stock (Medical Products Stock if the Agritope Stock
Proposal is approved) under the Award Plan. If a quorum is present at the Annual
Meeting, Proposal 3 will be adopted if the votes cast in favor of the proposal
at the Annual Meeting exceed the votes cast opposing the action.

If Proposal 2, the Agritope Stock Proposal, or this Proposal 3 is not
approved by the shareholders, the Award Plan will remain in effect but Agritope
Stock will not be issued under the plan and the options reflected in the table
under the heading "New Plan Benefits" will not be granted. If this Proposal 3 is
approved by the

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<PAGE>

shareholders, the increase in the number of shares of Epitope Common Stock
issuable under the Award Plan will take effect even if the Agritope Stock
Proposal is not approved.

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<PAGE>

PROPOSAL 4: AMENDMENT OF 1993 EMPLOYEE STOCK PURCHASE PLAN

The Purchase Plan was approved by the shareholders at the 1993 annual
meeting. In late 1996, the Board adopted, subject to shareholder approval,
amendments to the Purchase Plan (the "Purchase Plan Amendments") to permit the
issuance under the plan of up to an additional 500,000 shares of common stock
consisting of up to 250,000 shares of Agritope Stock, available only if the
Agritope Stock Proposal is approved, and up to 250,000 shares of Epitope Common
Stock (Medical Products Stock if the Agritope Stock Proposal is approved), in
each case subject to adjustment for changes in capitalization. In addition, if
the Agritope Stock Proposal is approved, "Adjustment Subscriptions" (as defined
below) for a total of approximately 21,410 shares of Agritope Stock will be
issued to participants in the Purchase Plan. A summary description of certain
terms and provisions of the Purchase Plan reflecting the effect of the Purchase
Plan Amendments follows.

The purpose of the Purchase Plan is to give employees of the Company
the opportunity to subscribe for shares of Agritope Stock, Medical Products
Stock or both on an installment basis through payroll deductions.

The Purchase Plan provides for offering and purchase periods to be set
by the Board, but no more than three regular offering periods may be set during
each fiscal year of the Company. The number of offering periods, the number of
shares offered, and the length of each period will be set by the Board. The
Purchase Plan also provides for special offerings as described below. Shares not
subscribed for in any offering period and shares subscribed for that cease to be
subject to a subscription agreement will be available for subscription in
connection with a later offering period established by the Board.

The subscription price per share for each purchase period will be the
lesser of (i) 85 percent of the mean between the reported high and low sales
prices of shares of Medical Products Stock or Agritope Stock, as applicable, on
the stock exchange or automated securities interdealer quotation system on which
the stock was traded on the day before the offering period commenced (the
"initial subscription price") and (ii) the mean between the reported high and
low sales prices for the shares on the date the purchase period ends, or on any
earlier date of purchase provided for in the Purchase Plan.

The total value of shares that may be subscribed for in one or more
regular offering periods within any calendar year is limited to $21,250. Subject
to this limitation, the Board may set a minimum, a maximum, or both a minimum
and a maximum number of shares that may be subscribed for during any offering
period.

The Purchase Plan also provides for monthly special offering dates
pursuant to which any employee of the Company may receive a one-year
subscription for a number of shares of either or both Agritope Stock and Medical
Products Stock in such proportions as the Company may determine equal in the
aggregate to the amount by which the employee's annual compensation would
otherwise be increased during the one-year period following the employee's
annual compensation review divided by the initial subscription price for the
special offering date that occurs on or immediately following the effective date
of the increase in compensation. The subscription may be provided to the
employee at the Company's discretion or pursuant to the employee's irrevocable
election in lieu of any increase in cash compensation for the ensuing year.

An employee may terminate his or her subscription at any time before
the full purchase price for the subscribed shares has been paid and be refunded
the full amount withheld, plus interest at the rate of 6 percent per year. An
employee may also reduce the number of subscribed shares and (i) receive a
refund of the amount withheld that is in excess of the amount that would have
been withheld if his subscription had been for the reduced number of shares,
plus interest on the refund at the rate of 6 percent per year, or (ii) have the
excess applied to reduce the amount of future installments of the purchase
price.

An employee whose employment is terminated for any reason other than
retirement, disability, or death (or the personal representative of an employee
who dies after such termination) may, at his or her election, (i) be refunded
the full amount withheld, plus interest at the rate of 6 percent per year or
(ii) receive the whole number of shares that could be purchased at the purchase
price with that amount together with a cash refund of any balance. An employee
who retires or is permanently disabled (or the personal representative of an
employee who dies while

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<PAGE>

employed, retired, or disabled) at any time before the full purchase price of
the subscribed shares has been paid has the rights described above and in
addition may prepay the entire unpaid balance for the subscribed shares in a
lump sum of cash and receive the shares. Any such election must be made within
three months following any termination of employment and prior to the end of the
respective purchase period.

At September 30, 1996, approximately 148 employees were eligible to
participate in the Purchase Plan, 42,820 shares were subject to outstanding
subscriptions under the plan, and 24,053 had been purchased pursuant to the
plan. If the Agritope Stock Proposal and the Purchase Plan Amendments are
approved, each outstanding subscription under the Purchase Plan will be amended
to include the right to purchase one-half share of Agritope Stock for each share
of Epitope Common Stock covered by the subscription as of the Effective Date and
the respective purchase prices of the shares will be determined in the same
manner as for outstanding stock options under the Award Plan. Such rights to
purchase Agritope Stock are herein called "Adjustment Subscriptions." See
"Proposal 3: Amendment of 1991 Stock Award Plan." As of September 30, 1996,
executive officers and employees of the Company held outstanding subscriptions
under the Purchase Plan as follows: Dr. Ferro, 500 shares; Mr. Miller, 776
shares; all executive officers as a group, 7,100 shares; and all employees other
than executive officers as a group, 35,720 shares. Numbers of shares that may be
subject to future individual subscriptions under the Purchase Plan are not now
determinable.

In addition to the Purchase Plan Amendments, which are subject to
shareholder approval at the Annual Meeting, the Board also approved amendments
to the Purchase Plan to (i) reflect the recent approval of the Epitope Common
Stock on the Nasdaq National Market and (ii) authorize the Board to amend or
terminate the Purchase Plan without shareholder approval other than amendments
that materially increase the number of shares that may be issued under the plan
or decrease the purchase price of shares under the plan.

The foregoing is a summary description of certain terms and provisions
of the Purchase Plan and is subject to the detailed terms and provisions
thereof. A copy of the Purchase Plan, as proposed to be amended, is set forth as
Annex V.

FEDERAL INCOME TAX CONSEQUENCES RELATING TO PURCHASE PLAN

The Purchase Plan is intended to qualify as an "employee stock purchase
plan" under Section 423 of the Code. Participants do not realize taxable income
at the commencement of an offering or at the time shares are purchased under the
Purchase Plan.

If no disposition of shares purchased under the Purchase Plan is made
by the participant within two years from the offering commencement date or
within one year from the purchase date, then (a) upon sale of the shares, 15
percent of the fair market value of the stock at the commencement of the
offering period (or, if less, the amount realized on sale of the shares in
excess of the purchase price) is taxed to the participant as ordinary income
with any additional gain taxed as a long-term capital gain and any loss
sustained treated as a long-term capital loss, and (b) no deduction is allowed
to Epitope for federal income tax purposes.

If shares purchased under the Purchase Plan are disposed of prior to
the expiration of the two-year and one-year holding periods described above,
then (a) the participant realizes ordinary income in the year of disposition in
an amount equal to the excess (if any) of the fair market value of the shares on
the date of purchase (or, if less, the amount realized on sale of the shares)
over the purchase price thereof, and (b) Epitope is entitled to deduct that
amount. Any further gain realized is taxed as a short-term or long-term capital
gain and will not result in any deduction to Epitope.

PROPOSAL 4: BOARD RECOMMENDATION AND VOTE REQUIRED

The Board recommends a vote FOR amendment of the Purchase Plan as
described above to provide for the purchase of Agritope Stock under the plan. If
a quorum is present at the Annual Meeting, Proposal 4 will be adopted if the
votes cast in favor of the proposal at the Annual Meeting exceed the votes cast
opposing the action.

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If Proposal 2, the Agritope Stock Proposal, or this Proposal 4 is not
approved by the shareholders, the Purchase Plan will remain in effect but
Agritope Stock will not be issued under the plan. If this Proposal 4 is approved
by the shareholders, the increase in the number of shares of Epitope Common
Stock issuable under the Purchase Plan will take effect even if the Agritope
Stock Proposal is not approved.

EXECUTIVE OFFICERS

The following table presents the names, ages and positions of the
Company's executive officers at January , 1997.

<TABLE>
<CAPTION>
NAME OF
EXECUTIVE OFFICER AGE POSITION
<S> <C> <C>

Adolph J. Ferro, Ph.D. 54 President, Chief Executive
Officer and Director

Gilbert N. Miller 55 Executive Vice President,
Chief Financial Officer and
Treasurer

John H. Fitchen, M.D. 51 Senior Vice President and
Chief Operating Officer--
Epitope Medical Products

Andrew S. Goldstein 48 Senior Vice President of
Advanced Technology
Development--Epitope Medical
Products, Secretary and
Director

Richard K. Bestwick, Ph.D. 42 Senior Vice President and Chief
Operating Officer--
Agritope

Joseph A. Bouckaert 56 President and Chief Executive
Officer--Vinifera, Inc.

Byron A. Allen, Jr. 64 Vice President of Corporate
Communications

Fred L. Williamson 56 President and Chief Executive
Officer--Andrew and
Williamson Sales, Co.
</TABLE>

Officers of the Company hold office at the discretion of the Board.

For biographical summaries of Dr. Ferro and Mr. Goldstein, see "Proposal 1:
Election of Class I Directors."

Gilbert N. Miller joined the Company in June 1989 as Executive Vice
President and Chief Financial Officer and has served as the Company's Treasurer
since March 1991. He has also been a Senior Vice President of Agritope, Inc.
since September 1992 and its Chief Financial Officer since December 1991. From
1987 to 1989, he was Executive Vice President, Finance and Administration, of
Northwest Marine Iron Works, a privately held ship repair contractor located in
Portland, Oregon. From 1986 to 1987, he was Vice President/Controller of the
Manufacturing Group of Morgan Products, Ltd., a manufacturer and distributor of
specialty building products based in Oshkosh, Wisconsin. He also held the
position of Senior Vice President/Finance of Nicolai Company, a Portland

- 65 -

<PAGE>

wood door manufacturing concern which became a wholly owned subsidiary of Morgan
Products, Ltd., in 1986. Mr. Miller received a B.S. degree from Oregon State
University and a Master of Business Administration degree from University of
Oregon. He is a certified public accountant.

John H. Fitchen, M.D., joined the Company in July 1990 as Vice
President of Research and Clinical Activities, was appointed Senior Vice
President in September 1993, and assumed the additional position of Chief
Operating Officer-Epitope Medical Products in November 1994. Prior to joining
the Company, Dr. Fitchen was Associate Chief of Staff for Research at the
Portland Veterans Administration Medical Center in Portland, Oregon, and
Professor of Medicine at OHSU. Dr. Fitchen received his M.D. degree from the
University of Rochester School of Medicine and a B.A. degree from Amherst
College. He completed his clinical training in Internal Medicine at OHSU in 1976
and in Hematology/Oncology at the University of California, Los Angeles, in
1978.

Richard K. Bestwick, Ph.D., joined Epitope in August 1987 and was
appointed Senior Vice President of Agritope, Inc. in September 1992. He was
appointed to the additional position of Chief Operating Officer of Agritope,
Inc. in October 1996. Prior to joining Epitope, he was a Research Assistant
Professor in the Department of Biochemistry at the Oregon Health Sciences
University, where he also completed his postdoctoral training. Dr. Bestwick
received a Ph.D. in Biochemistry and Biophysics from Oregon State University and
a B.S. degree from Evergreen State College.

Joseph A. Bouckaert joined Vinifera, Inc. as its President and Chief
Executive Officer at the inception of the Company in March 1993. From 1988 to
1991 he was Vice Chairman of DNA Plant Technology Corporation, a publicly held
agricultural biotechnology company with offices in Cinnaminson, New Jersey, and
Oakland, California. He also was a co-founder and member of the board of
directors of Florigene, B.V., an agricultural biotechnology company focused on
the flower business and located in the Netherlands. From 1985 to 1988, he served
as President and Chief Executive Officer of Advanced Genetic Sciences Inc. a
publicly held biotechnology company located in Oakland, California. In 1982, Mr.
Bouckaert co-founded Plant Genetic Systems, N.V., a privately held agricultural
biotechnology company located in Brussels, Belgium, and served as its first
Managing Director from 1982 through 1986. Mr. Bouckaert received a Juris Doctor
degree from the University of Leuven in Belgium and postgraduate degrees in
Business Administration from the University of Ghent in Belgium, and the
University of Kentucky in Lexington, Kentucky.

Byron A. Allen, Jr., joined the Company in July 1995. Prior to joining
the Company, from 1993 to 1995, Mr. Allen was Senior Vice President, Equity
Portfolio Manager, for C.J. Lawrence/Deutsche Bank Securities Corporation, New
York. From 1978 to 1993, he was Director of Retail Brokerage Service, C.J.
Lawrence, Incorporated. Mr. Allen holds an A.B. degree from Dartmouth College
and a Master of Business Administration degree from the Amos Tuck School of
Business Administration.

Fred L. Williamson has been President of Andrew and Williamson Sales,
Co., which produces, markets, distributes and sells a wide variety of fresh
fruits and vegetables throughout North America, since 1987. A&W was acquired by
the Company in December, 1996. Mr. Williamson has been involved in the business
of marketing and shipping fresh produce since 1962.

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<PAGE>

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table summarizes the compensation for the last three
fiscal years of the Chief Executive Officer and the four other most highly
compensated executive officers of the Company (together, the "Named Executive
Officers") during the 1996 fiscal year.

<TABLE>
<CAPTION>
Long-Term
Compensation
Awards

Annual Compensation Securities All Other
Underlying Compen-
Name and Principal Position Year Salary Bonus Options (#)(1) sation(2)
<S> <C> <C> <C> <C> <C>

Adolph J. Ferro, Ph.D. 1996 $214,183 $ 50,000 - $ 4,237
President and Chief Executive 1995 200,769 113,245 74,000 5,390
Officer 1994 135,000 - - 3,375

Gilbert N. Miller 1996 128,510 33,075 - 3,206
Executive Vice President, 1995 130,962 - 34,000 5,021
Chief Financial Officer, 1994 120,000 - - 3,000
and Treasurer

John H. Fitchen, M.D. 1996 147,548 37,200 - 3,540
Senior Vice President and 1995 148,606 - 43,000 3,578
Chief Operating Officer-- 1994 131,250 - - 3,057
Epitope Medical Products

Andrew S. Goldstein 1996 128,510 30,000 - 3,206
Senior Vice President of 1995 126,923 - 34,000 3,182
Advanced Technology 1994 105,000 - - 2,625
Development--Epitope Medical
Products

Richard K. Bestwick, Ph.D.(3) 1996 91,385 20,160 - 2,280
Senior Vice President and
Chief Operating Officer--
Agritope
</TABLE>

(1) Represents the number of shares for which options were awarded. No SARs
have been granted to any named executive officer during the years
indicated.

(2) Represents amounts contributed to the Company's 401(k) Profit Sharing
Plan as employer matching contributions in the form of Epitope Common
Stock.

(3) Dr. Bestwick was not an executive officer of Epitope during fiscal 1995
or 1994.

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<PAGE>

<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES
IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES(1)

Number of Securities
Underlying Unexercised Value of Unexercised In-the-Money
Shares Options at Fiscal Year-End Options at Fiscal Year-End
Acquired On Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>

Adolph J. Ferro, Ph.D. 20,000 $173,722 496,061 60,143 $2,800,693 $69,583
Gilbert N. Miller 16,000 141,440 181,299 27,805 1,024,121 642
John H. Fitchen, M.D. - - 160,133 28,667 1,001,375 -
Andrew S. Goldstein 25,000 188,034 165,444 28,556 1,092,090 37,910
Richard K. Bestwick, Ph.D. 2,750 32,313 57,632 18,472 31,058 642

(1) The named executive officers did not hold any SARs at September 30,
1996.

(2) In-the-money stock options are options for which the exercise price is
less than the market value of the underlying stock on a particular
date. The values shown in the table are based on the difference between
$15.0625, which was the average of the high and low sales prices of the
Epitope Common Stock on the AMEX on September 30, 1996, and the
applicable exercise price.
</TABLE>

EMPLOYMENT AGREEMENTS

Pursuant to written employment agreements with the Company, the Named
Executive Officers each are entitled to receive one year of salary in the event
of termination without cause (two years in the case of Dr. Ferro) or two years
of salary if terminated without cause within 12 months following a change in
control (within the meaning of the Exchange Act) or sale of substantially all
the assets of the Company (three years in the case of Dr. Ferro). The agreements
in each case prohibit the officer from competing with the Company for one year
unless the officer elects to waive the right to amounts otherwise payable. The
agreements do not expire by their terms and are terminable by the Company on 90
days' notice with cause or, subject to payment of the salary amounts described
above, without cause.

COMPENSATION OF DIRECTORS

Under the terms of the Award Plan in effect during the 1996 fiscal
year, nonemployee directors of the Company were eligible to receive nonqualified
stock options granted on a nondiscretionary basis, as described below.

INITIAL OPTIONS. Upon becoming a nonemployee director, each such
director has been granted a stock option to purchase 50,000 shares of Epitope
Common Stock (an "Initial Option"). A newly-elected Chairman of the Board has
been entitled to receive an Initial Option to purchase an additional 25,000
shares (75,000 shares if not previously a nonemployee director). Until December
1994, Initial Options were granted at an exercise price equal to 75 percent of
the fair market value of a share of Epitope Common Stock on the date of grant;
beginning in December 1994, Initial Options have been granted at an exercise
price equal to the fair market value of a share on the date of grant minus the
lesser of (a) $2.00 or (b) 25 percent of the fair market value. Each Initial
Option becomes exercisable in annual installments based on continued service as
a director and expires at the end of five years following the director's
retirement or one year following the director's death, disability or cessation
of service as a director for any other reason. An Initial Option will generally
become fully exercisable by the date of the fourth annual meeting of
shareholders through which the director has served on the Board. Initial Options
become exercisable in full immediately upon the happening of a change in control
of the Company. A change in control of the Company would occur on the happening
of such events as the beneficial ownership by a person or group of 30 percent or
more of the outstanding common stock, certain changes in Board membership
affecting a majority of positions, certain mergers or consolidations, a sale or
other transfer of all or substantially all the Company's

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<PAGE>

assets, or approval by the shareholders of a plan of liquidation or dissolution
of the Company, as well as any change in control required to be reported by the
proxy disclosure rules of the Commission.

Payment of the exercise price may be made in cash or by delivery of
previously acquired shares of common stock having a fair market value equal to
the aggregate exercise price. To the extent that payment is made in previously
acquired shares, the director is automatically granted a replacement ("reload")
option for a number of shares equal to the number delivered upon exercise with
an exercise price equal to the fair market value of a share of common stock on
the date of exercise. Reload options become exercisable in full six months after
the grant date.

RENEWAL OPTIONS. Additional nonqualified stock options have also been
granted to each nonemployee director to purchase 15,000 shares of Epitope Common
Stock ("Renewal Options") as of the December 15 prior to the annual meeting of
shareholders at which the options most recently granted to the nonemployee
director fully vest. Renewal Options vest in three equal annual installments
beginning with the second annual meeting of shareholders following the date of
grant, subject to acceleration of vesting upon the occurrence of a change in
control of the Company. The other terms of Renewal Options are comparable to
those of Initial Options, except that Renewal Options do not provide for reload
options.

AGRITOPE OPTIONS. Mr. Paxton and Mr. Pringle, as nonemployee directors
of Agritope, were each awarded nonqualified options for 50,000 shares of
Agritope common stock under the 1992 Plan. The options have an exercise price of
$5.625 per share, which was equal to 75 percent of the fair market value of
Agritope, Inc. common stock on the date of grant, September 14, 1992, based on a
good faith determination of fair market value by Agritope, Inc. board of
directors. The options are fully vested. Until Agritope, Inc. ceases to be a
wholly owned subsidiary of the Company, shares of Agritope, Inc. common stock
received upon exercise of the foregoing options must be exchanged for shares of
Epitope Common Stock based on a ratio of 2.433 shares of Agritope, Inc. common
stock for each share of Epitope Common Stock. Accordingly, upon exercise of the
foregoing options in full, Messrs. Paxton and Pringle would each receive a total
of 20,552 shares of Epitope Common Stock, or a corresponding number of shares of
Medical Products Stock and Agritope Stock if the Agritope Stock Proposal is
approved.

See "Proposal 3: Amendment of 1991 Stock Award Plan" for an explanation
of the effect of the proposed Award Plan Amendments on Awards to nonemployee
directors.

REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE

The following report of the Executive Compensation Committee of the
Board shall not be deemed to be incorporated by reference into any previous
filing by the Company under either the Securities Act or the Exchange Act that
incorporates future Securities Act or Exchange Act filings in whole or in part
by reference.

GENERAL. The Executive Compensation Committee of the Board, which is
composed of three independent, nonemployee directors, is responsible for
establishing and administering the Company's policies that govern executive
compensation and benefit practices. The Committee evaluates the performance of
the executive officers and determines the salary of the Chief Executive Officer
and annual bonus and related benefits for all executive officers. Awards to
executive officers under the Award Plan are made solely by the Committee in
order to satisfy certain requirements under the Commission's rules regarding
stock transactions with the Company under Section 16 of the Exchange Act.

COMPENSATION PHILOSOPHY. The Company's executive compensation programs
are designed to (i) align the interests of executive management with the
long-term interests of the shareholders, (ii) motivate Company executives to
achieve the strategic business goals of the Company and recognize their
individual contributions, and (iii) provide compensation opportunities that are
competitive with those offered by other national medical and agricultural
biotechnology companies similar in size and performance to the Company. In
furtherance of these goals, the components of executive compensation include
base salary, merit cash bonuses, stock option grants and other benefits and are
linked to individual performance.

- 69 -

<PAGE>

BASE SALARY. At least annually, the Committee sets salaries for
executive officers. Salary levels for other officers are set by the Chief
Executive Officer subject to review and recommendations by the Committee. As
part of its review process, the Committee has considered compensation data
regarding other national biotechnology companies contained in a report by an
outside consultant retained by the Company in fiscal 1995 and in prior years.
The 1995 base salary amounts for executive officers were established at levels
that did not exceed the 50th percentile for comparable-sized biotechnology
companies as reported in the outside consultant's report. For fiscal 1996,
salaries for executive officers were reduced by 5 percent as a part of a
corporate restructuring program.

MERIT CASH BONUSES. Merit bonuses were granted to executive officers in
fiscal 1996 based on a determination that management had achieved performance
goals established at the beginning of the fiscal year.

STOCK OPTION GRANTS. As previously noted, an important goal of the
Company's compensation program is to align the interests of the executive
officers and other key employees with the long-term interests of the Company's
shareholders. In furtherance of this goal, the Board adopted the 1991 Award
Plan, pursuant to which the Company may grant stock-based awards to directors,
officers, and employees of, and consultants and Advisors to, the Company. The
size of individual option grants to executive officers during fiscal 1995 was
determined by the Committee based on the executive's duties and the levels of
option grants for executives with comparable positions at other biotechnology
companies, as summarized in the consultant's report described above. No grants
of stock-based awards were made to executive officers during fiscal 1996.

OTHER COMPENSATION VEHICLES. The Company also has a 401(k) Profit
Sharing Plan (the "401(k) Plan") which allows participants to defer compensation
pursuant to Section 401(k) of the Internal Revenue Code. All employees of the
Company, including executives, are eligible to participate in the 401(k) Plan if
certain qualifications are met. In addition to amounts that participants may
elect to contribute to the 401(k) Plan, the Company makes matching contributions
to the 401(k) Plan in Epitope Common Stock, which are allocated to all
participants. Payments of benefits accrued for 401(k) Plan participants will be
made upon retirement or upon termination of employment prior to retirement if
certain conditions have been met by the employee prior to termination.

EXECUTIVE COMPENSATION COMMITTEE:

W. Charles Armstrong, Chairman
R. Douglas Norby
G. Patrick Sheaffer

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<PAGE>

STOCK PRICE PERFORMANCE GRAPH

The following graph compares the cumulative total returns to investors
in Epitope Common Stock, the Standard & Poor's 500 Stock Index, and the Russell
2000 Index for the period from October 1, 1991, through September 30, 1996. The
graph assumes that $100 was invested on September 30, 1991, in Epitope Common
Stock and in each of the above-mentioned indices and that all dividends were
reinvested. The Russell 2000 Index is an index of companies with market
capitalizations similar to that of the Company. It has been selected because the
Company has been unable to identify a peer group of companies for comparison. No
single public or private company has a comparable mix of technologies under
development or products that serve the same markets as the Company. The
Company's management believes that an index of companies with similar market
capitalizations provides a reasonable basis for comparing total shareholder
returns. Shareholders are cautioned that the graph shows the returns to
investors only as of the dates noted and may not be representative of the
returns for any other past or future period.

<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG EPITOPE INC., THE S & P 500 INDEX AND THE RUSSELL 2000 INDEX

9/91 9/92 9/93 9/94 9/95 9/96
<S> <C> <C> <C> <C> <C> <C>
Epitope, Inc. $100 $ 87 $112 $104 $ 73 $ 73

S & P 500 $100 $111 $125 $130 $169 $203

Russell 2000 $100 $109 $145 $149 $184 $208
</TABLE>

- 71 -

<PAGE>

PRINCIPAL SHAREHOLDERS

The following table sets forth information as of September 30, 1996,
regarding the beneficial ownership of Epitope Common Stock by (a) each person
who is known to the Company to be the beneficial owner of more than 5 percent of
Epitope Common Stock outstanding, (b) each director and nominee for election as
director, (c) each of the Named Executive Officers, and (d) all directors and
executive officers of the Company as a group.

Amount and Nature Percent
5% Shareholders, Directors of Beneficial of
Officers Ownership(1)(2) Class

<S> <C> <C>
Groupe des Assurances Nationales 1,242,108 9.1
61 Rue Monceau
Paris 75008 France(3)

W. Charles Armstrong 59,540(4) *

Richard K. Bestwick, Ph.D. 67,382 *

Richard K. Donahue 57,000(4) *

Adolph J. Ferro, Ph.D. 496,901 3.7

John H. Fitchen, M.D. 164,461(4) 1.3

Andrew S. Goldstein 427,921(5) 3.3

Margaret H. Jordan 10,000 *

Gilbert N. Miller 182,961(5) 1.4

R. Douglas Norby 58,750 *

Michael J. Paxton 30,552 *

Roger L. Pringle 114,677 *

G. Patrick Sheaffer 80,000 *

All directors and executive
officers as a group
(15 persons) 1,794,545(4)(5) 12.5
</TABLE>

*Less than 1%

(1) Subject to community property laws where applicable, beneficial
ownership consists of sole voting and investment power except as
otherwise indicated.

(2) Includes shares subject to options and warrants exercisable within 60
days of September 30, 1996, by directors and executive officers as
follows: Mr. Armstrong, 55,000 shares; Dr. Bestwick, 67,382 shares
(including options for 9,750 shares held by his wife); Mr. Donahue,
50,000 shares; Dr. Ferro, 496,061 shares; Dr. Fitchen, 160,133 shares;
Dr. Goldstein, 165,444 shares; Ms. Jordan, 10,000 shares;

- 72 -

<PAGE>

Mr. Miller, 181,299 shares; Mr. Norby, 55,000 shares; Mr. Paxton,
30,552 shares; Mr. Pringle, 100,552 shares; Mr. Sheaffer, 67,500
shares; and all directors and executive officers as a group, 1,454,173
shares.

(3) Includes 595,000 shares subject to warrants exercisable within 60 days
of September 30, 1996 and 128,008 shares issuable upon conversion of
convertible notes.

(4) Includes shares as to which the individual has shared voting and
dispositive power as follows: Mr. Armstrong, 165 shares; Mr. Donahue,
1,000 shares; Dr. Fitchen, 100 shares; and all directors and executive
officers as a group, 2,265 shares.

(5) Does not include 17,035 shares of Epitope Common Stock held in the
401(k) Plan, as to which Messrs. Ferro, Goldstein and Miller share
voting power as trustees of the 401(k) Plan. Messrs. Ferro, Goldstein
and Miller disclaim any economic beneficial interest in such shares
other than the 798, 636, and 711 shares, respectively, allocated to
their individual accounts under the 401(k) Plan.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires the Company's officers and
directors and persons who own more than 10 percent of the Epitope Common Stock
(collectively, "Reporting Persons") to file reports of ownership and changes in
ownership with the Commission. Reporting persons are required by the
Commission's regulations to furnish the Company with copies of all Section 16(a)
forms they file.

Based solely on its review of the copies of such forms and written
representations regarding the absence of a filing requirement received from
Reporting Persons, the Company believes that with respect to the 1996 fiscal
year, all Reporting Persons complied with all applicable filing requirements,
except that T. J. Paulsen, the Company's principal accounting officer until
November 11, 1996, filed one report relating to one transaction after the filing
deadline; Richard K. Bestwick, Ph.D., Senior Vice President and Chief Operating
Officer--Agritope, and Joseph A. Bouckaert, President and Chief Executive
Officer--Vinifera, Inc., each filed his initial report of his stockholdings upon
becoming an executive officer of Epitope after the filing deadline; and Byron A.
Allen, Jr., Vice President of Corporate Communications of the Company, and
Richard K. Donahue, a director of the Company, each filed one report of an
option grant after the filing deadline.

CERTAIN TRANSACTIONS

In connection with the December 1987 merger of Agricultural Genetic
Systems, Inc. ("AGS"), with and into Agritope, Inc. Dr. Ferro, as an executive
officer and principal shareholder of AGS, was granted a royalty equal to 4
percent of net sales of products resulting from the technology transferred to
Agritope pursuant to the merger; royalties with respect to a particular product
were to be paid for a period equal to the life of the patent on the product or
an equivalent period if a patent is not issued. On November 11, 1996, Dr. Ferro
agreed to accept a one-time payment of $590,000 in lieu of the royalties that
would otherwise be due him.

In September 1996, the Company extended the expiration date of certain
warrants issued in private placement transactions in September 1991, December
1992, and July and August 1993, to purchase Epitope Common Stock at prices of
$16.00, $16.00, $20.00 and $18.50 per share, respectively. The warrants would
have otherwise expired in September 1996 and March 1997, if not exercised. The
Company extended the expiration date of the warrants to September 30, 1997. The
warrants were extended because they represent a significant potential source of
additional capital.

Holders of the warrants included Groupe des Assurances Nationales
("GAN"), which beneficially owns more than 5 percent of the Epitope Common Stock
outstanding. As of September 30, 1996, GAN held 1991 warrants to purchase 80,000
shares of Epitope Common Stock, 1992 warrants to purchase 270,000 shares of
Epitope Common Stock, July 1993 warrants to purchase 195,000 shares of Epitope
Common Stock, and August 1993 warrants to purchase 50,000 shares of Epitope
Common Stock.

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<PAGE>

On November 14, 1996, the Company agreed to exchange $3,380,000
principal amount of Agritope 4% Convertible Notes Due 1997 for 250,367 shares of
Epitope Common Stock at a reduced exchange price of $13.50 per share. The
original terms of the notes permitted the holders to exchange them for Epitope
Common Stock at an exchange price of $19.53 per share. Holders exchanging their
notes at the reduced exchange price included GAN, which exchanged $2,500,000
principal amount of notes for 185,185 shares of Epitope Common Stock.

In connection with the acquisition of A&W on December 12, 1996, the
Company renegotiated the terms of a line of credit extended to A&W by Wells
Fargo Bank, National Association. The line of credit had previously been
guaranteed by the four former shareholders of A&W, including Fred L. Williamson,
now an executive officer of the Company. Under the renegotiated terms of the
line of credit, Epitope, Inc. will guarantee A&W's obligations under the
line of credit and the guarantees of the former shareholders will be released.
See Note 13 to Historical Financial Statements included in Annex III.

LEGAL OPINIONS

The validity of Agritope Stock has been passed upon by Miller Nash,
Portland, Oregon.

EXPERTS

The financial statements of Epitope, Inc. as of September 30, 1996 and
1995 and for each of the three years in the period ended September 30, 1996
included in this Prospectus/Proxy Statement have been included in reliance on
the report of Price Waterhouse LLP, independent accountants, given upon the
authority of that firm as experts in auditing and accounting. In preparing the
report, Price Waterhouse LLP has relied as to amounts included for A&W on the
report of Boros and Farrington, APC, independent accountants, regarding the
financial statements of Andrew and Williamson Sales, Co., as of September 30,
1996 and 1995, and for each of the three years in the period ended September 30,
1996.

FINANCIAL ADVISOR

The Company has retained Vector Securities as the Company's exclusive
financial advisor for a period of one year commencing July 10, 1996. Pursuant to
this engagement, Vector Securities has provided advisory services to the Company
with respect to the Agritope Stock Proposal. Vector Securities may also assist
the Company in the solicitation of proxies in connection with the Annual
Meeting. Vector Securities also acted as financial advisor to the Company in
connection with the A&W merger. The Company has paid Vector Securities a
non-refundable retainer fee of $50,000, plus a transaction fee of $500,000 in
connection with the merger. The Company has also agreed to pay Vector Securities
a fee equal to ______________ upon approval of the Agritope Stock Proposal, a
fee equal to ______________ on December 15, 1997, and a fee equal to
______________ on June 30, 1998.

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP, independent public accountants, examined the
financial statements of the Company for fiscal 1996. No change in independent
public accountants is contemplated for fiscal 1997. The Company expects
representatives of Price Waterhouse LLP to be present at the Annual Meeting and
to be available to respond to appropriate questions from shareholders. The
accountants will have the opportunity to make a statement at the meeting if they
desire to do so.

ANNUAL REPORT

The Company's Annual Report to Shareholders for the fiscal year ended
September 30, 1996, accompanies this Prospectus/Proxy Statement.

- 74 -

<PAGE>

DEADLINE FOR SHAREHOLDER PROPOSALS

Shareholders of the Company may submit proposals for inclusion in the
proxy material for the Company's 1998 annual meeting of shareholders. Any such
proposals must meet the shareholder eligibility and other requirements imposed
by rules issued by the Commission and must be received by the Company at 8505
S.W. Creekside Place, Beaverton, Oregon 97008, Attention: Secretary, not later
than , 1997.

The Company's Bylaws provide that nominations for election to the Board
may be made by the Board or by any shareholder entitled to vote for the election
of directors. Notice of a shareholder's intent to make such a nomination must be
given in writing, by personal delivery or certified mail, postage prepaid, to
the Secretary of the Company and must include the name and address of the
shareholder and each proposed nominee, a representation that the shareholder is
a record holder of common stock and intends to appear in person or by proxy at
the meeting to nominate the person or persons specified in the notice, a
description of any arrangements or understandings pursuant to which the
nominations are to be made, the consent of each proposed nominee to serve as a
director if elected, and such other information regarding each nominee as would
be required to be included in the Company's proxy statement had the person been
nominated by the Board. The notice, with respect to an election to be held at an
annual meeting of shareholders, must be given at least 60 days in advance of the
anniversary of the date of the previous year's annual meeting of shareholders
or, with respect to an election to be held at a special shareholders meeting,
must be given no later than the close of business on the seventh day following
the date on which notice of the meeting was first given to shareholders.

EXPENSES OF SOLICITATION

Epitope will bear the cost of solicitation of proxies, including the
charges and expenses of brokerage firms and others of forwarding solicitation
material to beneficial owners of stock in connection with the Annual Meeting. In
addition to solicitations by mail, proxies may be solicited by officers and
employees of Epitope in person or by telephone or other means without additional
compensation. Epitope may retain a professional proxy solicitation firm to
assist in the solicitation of proxies at a cost that Epitope estimates will not
exceed $15,000.

OTHER MATTERS

The Board knows of no business to come before the Annual Meeting other
than the matters described in the accompanying Notice of Annual Meeting of
Shareholders. If other business is properly presented for consideration at the
Annual Meeting, the enclosed proxy authorizes the persons named therein to vote
the shares in their discretion.

BY ORDER OF THE BOARD OF DIRECTORS

Andrew S. Goldstein
Secretary
, 1997

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<PAGE>

ANNEX I

INDEX OF TERMS

1992 Plan.....................................................................14
401(k) Plan...................................................................70
A&W............................................................................5
Advisors......................................................................56
Affected Group................................................................46
Agritope.......................................................................2
Agritope Plan.................................................................57
Agritope Stock.................................................................1
Agritope Stock Proposal........................................................1
AGS...........................................................................73
AGTO..........................................................................11
Amendment......................................................................6
Annual Meeting.................................................................1
Articles.......................................................................1
Award Plan.....................................................................1
Award Plan Amendments.........................................................56
Awards........................................................................56
Board..........................................................................1
Broker nonvotes...............................................................29
Code..........................................................................51
COMMISSION.....................................................................2
Committee.....................................................................56
Company........................................................................1
Convertible Notes.............................................................51
Corporation Act................................................................8
Disposition...................................................................46
Disqualifying disposition.....................................................60
Distribution...................................................................1
DMR...........................................................................32
Effective Date.................................................................1
EPA...........................................................................24
Epitope........................................................................1
Epitope Common Stock...........................................................1
Epitope Medical Products.......................................................2
EPTO..........................................................................10
Exchange Act...................................................................4
Exchange Amount...............................................................41
Exchange Date.................................................................46
Fair Value....................................................................46
FDA...........................................................................24
GAN...........................................................................73
Incorporated Documents.........................................................4
Initial Option................................................................68
Initial subscription price....................................................63
Inter-Group Interest Fraction.............................................10, 48
Inter-Group Shares Issuable...............................................10, 48
IRS...........................................................................51
ISO...........................................................................60
ISOP..........................................................................14
Market Value..................................................................46

I - 1

<PAGE>

Medical Products Stock.........................................................1
Miller Nash...................................................................52
Named Executive Officers......................................................67
Nasdaq National Market........................................................10
Net Proceeds..................................................................46
New Options...................................................................57
OHSU..........................................................................32
OSU...........................................................................32
Outstanding Interest Fraction.........................................10, 46, 48
Prospectus/Proxy Statement.....................................................1
Proxies.......................................................................28
Purchase Plan..................................................................1
Purchase Plan Amendments......................................................63
Record Date....................................................................6
Registration Statement.........................................................4
Related Business Transactions.................................................46
Reload....................................................................59, 69
Renewal Options...............................................................69
Reporting Persons.............................................................73
Restriction Period............................................................60
SARs..........................................................................60
SB............................................................................26
Section 306 Stock.............................................................53
Securities Act.................................................................4
Stock Plans....................................................................1
Substantially all the properties and assets...................................46
TIN...........................................................................54
Trading Day...................................................................46
USDA..........................................................................24
Vector Securities..............................................................6
Vinifera.......................................................................5
Warrants......................................................................51

I - 2

<PAGE>

ANNEX II

PROPOSED
AMENDMENT
TO THE
RESTATED ARTICLES OF INCORPORATION
OF
EPITOPE, INC.

Article V of the Company's Restated Articles of Incorporation is proposed to be
amended and restated to read in its entirety as follows:

ARTICLE V

Description of Capital Stock

A. AUTHORIZED CAPITAL STOCK

The total number of shares of capital stock that the
Corporation shall be authorized to issue is 101,000,000 shares, divided into
classes as follows:

Title of Class No. of Shares

<S> <C>
Epitope Medical Products 60,000,000
Common Stock, no par value
("Medical Products Stock")

Agritope Common Stock, 40,000,000
no par value
("Agritope Stock")

Preferred Stock, no par value 1,000,000
("Preferred Stock")
</TABLE>

Upon the effectiveness of this Article V, as amended, and without any further
action on the part of the Corporation or its shareholders, each share of the
Corporation's Common Stock, no par value, then issued and outstanding shall be
redesignated as one fully paid and nonassessable share of Medical Products
Stock. The meanings of certain terms used in this Article V are given in Section
E. of this Article V.

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<PAGE>

B. DESCRIPTION OF PREFERRED STOCK

The preferences, limitations, and rights of the shares of
Preferred Stock shall be as follows:

1. DIVISION INTO SERIES. The Board of Directors shall have authority to
divide the Preferred Stock into as many series as the Board of Directors shall
from time to time determine, and to issue the Preferred Stock in such series.
The Board of Directors shall determine the number of shares comprising each
series, which number may, unless otherwise provided by the Board of Directors in
creating such series, be increased or decreased from time to time by action of
the Board of Directors. Each series shall be so designated as to distinguish the
shares thereof from the shares of all other series.

2. AUTHORITY OF BOARD OF DIRECTORS TO DETERMINE PREFERENCES,
LIMITATIONS, AND RELATIVE RIGHTS. The Board of Directors shall have authority to
determine, except as otherwise prescribed in this Article V or by law, the
preferences, limitations, and relative rights, including voting rights, of the
shares of Preferred Stock before the issuance of any shares of such class or the
preferences, limitations, and relative rights, including voting rights, of the
shares of any series of Preferred Stock before the issuance of any shares of
such series. All shares of any such series shall have preferences, limitations,
and relative rights, including voting rights, identical with those of other
shares of the same series and, except to the extent otherwise provided in the
description of such series, of those of other series of the Preferred Stock.

C. DESCRIPTION OF MEDICAL PRODUCTS STOCK AND AGRITOPE STOCK

The preferences, limitations, and relative rights of the
shares of Medical Products Stock and Agritope Stock shall be as follows:

1. DIVIDENDS AND DISTRIBUTIONS

Subject to the express terms of any outstanding series of
Preferred Stock, dividends may be declared and paid upon Medical Products Stock
or Agritope Stock upon the terms provided for below with respect to each such
class, in such amounts and at such times as the Board of Directors may
determine.

a. DIVIDENDS ON MEDICAL PRODUCTS STOCK. Dividends on Medical Products Stock
may be declared and paid only out of the lesser of (i) assets of the Corporation
legally available therefor and (ii) the Available Medical Products Dividend
Amount.

b. DIVIDENDS ON AGRITOPE STOCK. Dividends on Agritope Stock may be declared
and paid only out of the lesser of (i) assets of the Corporation legally
available therefor and (ii) the Available Agritope Dividend Amount.

c. DISCRETION AS TO DIVIDEND AMOUNTS. Subject to the provisions of
paragraphs V.C.1.a. and V.C.1.b., the Board of Directors shall have the
authority to declare and pay dividends on either class of common stock without
declaring or paying a dividend on the other class, or to declare and pay
dividends on both classes of common stock in equal or unequal amounts,
notwithstanding the amounts available for the payment of dividends on each class
of common stock, the respective voting and liquidation rights of each class of
common stock, the amounts of prior dividends declared on each class or any other
factor.

d. SHARE DIVIDENDS. Subject to paragraphs V.C.1.a or V.C.1.b, as the case
may be, and except as permitted by paragraphs V.C.2.a and V.C.2.b.(ii), the
Board of Directors may declare and pay dividends or distributions of shares of
common stock of a Group on shares of common stock or shares of Preferred Stock
only as follows:
(i) dividends or distributions of shares of Agritope
Stock (or Convertible Securities convertible into or exchangeable or
exercisable for shares of Agritope Stock) may be made on shares of
Agritope Stock;

II - 2

<PAGE>

(ii) dividends or distributions of shares of Medical
Products Stock (or Convertible Securities convertible into or
exchangeable or exercisable for shares of Medical Products Stock) may
be made on shares of Medical Products Stock;

(iii) dividends or distributions of shares of Medical
Products Stock may be made on shares of Agritope Stock, but only if the
number of shares of Medical Products Stock to be issued is less than or
equal to the number of Inter-Group Shares Issuable with respect to the
Inter-Group Interest in Epitope Medical Products; and

(iv) dividends or distributions of shares of Agritope
Stock may be made on shares of Medical Products Stock, but only if the
number of shares of Agritope Stock to be so issued is less than or
equal to the number of Inter-Group Shares Issuable with respect to the
Inter-Group Interest in Agritope.

2. EXCHANGE OF STOCK.

Shares of common stock of each Group are subject to exchange
on the terms and conditions set forth below:

a. OPTIONAL EXCHANGE. At any time after February 28, 1999, the
Board of Directors may determine to exchange each outstanding share of a Group's
stock for (i) a number of fully paid and nonassessable shares of the second
Group's stock equal to (x) 115 percent of the Average Market Value of one share
of the first Group's stock (the "Exchange Amount") divided by (y) the Average
Market Value of one share of the second Group's stock, or (ii) cash equal to the
Exchange Amount, or (iii) any combination of the Second Group's stock and cash,
as determined by the Board of Directors, equal to the Exchange Amount. In each
case, Average Market Value shall be calculated for the 20-Trading Day period
prior to the date of the first public announcement by the Corporation of the
exchange.

b. MANDATORY DIVIDEND, REDEMPTION OR EXCHANGE IN CASE OF
DISPOSITION OF ALL OR SUBSTANTIALLY ALL GROUP ASSETS. In the event of the
Disposition, in one transaction or a series of related transactions, by the
Corporation and/or its subsidiaries of all or substantially all the properties
and assets of either Group to one or more persons, entities or groups (other
than (v) in connection with the Disposition by the Corporation of its properties
and assets in one transaction or a series of related transactions in connection
with the dissolution, liquidation and winding up of the Corporation and the
distribution of assets to shareholders as referred to in Section V.C.5, (w) in
connection with the Disposition by the Corporation of all the Corporation's
properties and assets in one transaction or a series of related transactions,
(x) to any person, entity or group which the Corporation, directly or
indirectly, after giving effect to the Disposition, controls (as determined by
the Board of Directors), (y) in connection with a Related Business Transaction
or (z) in connection with the Disposition of the stock of a Group Subsidiary as
contemplated by paragraph V.C.2.c), the Corporation shall, on or prior to the
85th Trading Day after the date of consummation of such Disposition (the "Group
Disposition Date"), at the Corporation's election, either:

(i) providing that there are funds of the Corporation
legally available therefor:

(A) subject to paragraphs V.C.1.a. and V.C.1.b., declare and
pay a dividend in cash, securities (other than common stock of the Corporation)
and/or other property to the holders of the outstanding shares of the Affected
Group's stock, having a Fair Value as of the Group Disposition Date in the
aggregate amount equal to the product of the Outstanding Interest Fraction of
the Affected Group as of the record date for determining the holders entitled to
receive the dividend multiplied by the Fair Value of the Net Proceeds of the
Disposition; or

(B)(1) subject to the last sentence of this paragraph V.C.2.b,
if the Disposition involves all (not merely substantially all) the properties
and assets of the Affected Group, redeem as of the Redemption Date all
outstanding shares of the Affected Group's stock in exchange for cash,
securities (other than common stock

II - 3

<PAGE>

of the Corporation) and/or other property having a Fair Value as of the Group
Disposition Date in the aggregate equal to the product of the Outstanding
Interest Fraction of the Affected Group as of the Redemption Date and the Net
Proceeds of the Disposition; or

(B)(2) subject to the last sentence of this paragraph V.C.2.b,
if the Disposition involves substantially all (but not all) of the properties
and assets of the Affected Group, apply an aggregate amount of cash, securities
(other than common stock of the Corporation) and/or other property having a Fair
Value as of the Group Disposition Date in the aggregate equal to the product of
the Outstanding Interest Fraction of the Affected Group as of the date shares
are selected for redemption multiplied by the Fair Value of the Net Proceeds of
the Disposition as of the Group Disposition Date, to the redemption of
outstanding shares of the Affected Group's stock; the number of shares to be
redeemed to equal the lesser of (x) the whole number of shares nearest the
number determined by dividing the aggregate amount so applied to the redemption
of such stock by the Average Market Value of one share of the Affected Group's
stock during the 10-Trading Day period beginning on the 16th Trading Day
following the Group Disposition Date and (y) the number of shares of the
Affected Group's stock outstanding; or

(ii) exchange each outstanding share of the Affected Group's
stock for a number (or fraction) of fully paid and nonassessable shares of the
other Group's stock equal to 115 percent of the ratio, expressed as a decimal
fraction rounded to the nearest seven decimal places, of the Average Market
Value of one share of the Affected Group's stock to the Average Market Value of
one share of common stock of the other group, which Average Market Values shall
be determined for the 10-Trading Day period described in clause (B)(ii) of this
paragraph V.C.2.b.(i).

For purposes of this paragraph V.C.2.b.:

(x) "substantially all the properties and assets" of a Group
means a portion of the properties and assets attributed to the Group that
represents at least 80 percent of the Fair Value of the properties and assets
attributed to the Group as of the date of determination;

(y) in the case of a Disposition of properties and assets of a
Group in a series of related transactions, the Disposition shall not be deemed
to have been consummated until the consummation of the last of the transactions;
and

(z) the Corporation may pay the dividend or redemption price
referred to in paragraph V.C.2.b.(i). in cash, securities (other than common
stock of the Corporation) and/or other property, regardless of the form or
nature of the proceeds of the Disposition.

Notwithstanding the provisions of this paragraph V.C.2.b., the Corporation shall
redeem stock of the Affected Group only if the amount to be paid in redemption
of such stock is less than or equal to the Available Agritope Dividend Amount
(with respect to Agritope Stock) or the Available Medical Products Dividend
Amount (with respect to Medical Products Stock).

c. EXCHANGE OF COMMON STOCK FOR SUBSIDIARY STOCK. At any time
at which all of the assets and liabilities attributed to a Group (and no other
assets or liabilities of the Corporation) are held by one or more wholly owned,
direct subsidiaries of the Corporation (each, a "Group Subsidiary") and one or
more wholly or partly owned subsidiaries of such Group Subsidiaries, the Board
of Directors may, provided that there are funds of the Corporation legally
available therefor, exchange each outstanding share of the Group's stock for a
number of fully paid and nonassessable shares of the common stock of each Group
Subsidiary equal to (x) the product of the Outstanding Interest Fraction of the
Affected Group multiplied by (y) the number of shares of common stock of the
Group Subsidiary to be outstanding immediately following such exchange of shares
(excluding shares owned before the exchange by Nonaffiliates), divided by (z)
the number of shares of the Affected Group's stock outstanding.

II - 4

<PAGE>

d. DISTRIBUTION OF INTER-GROUP SHARES ISSUABLE. In the case of
an exchange under paragraph V.C.2.a. or V.C.2.b.(ii) or a full redemption under
clause (B)(1) of paragraph V.C.2.b.(i), but not a dividend under clause (A) of
paragraph V.C.2.b.(i) or a partial redemption under clause (B)(2) of paragraph
V.C.2.b.(i), if the Affected Group holds an Inter-Group Interest in the other
Group on the date of the exchange or redemption, then in addition to the cash,
securities, and/or other property to be distributed to holders of the Affected
Group's stock, the Company shall issue as a dividend to such holders pro rata,
on a per share basis, that number of fully paid and nonassessable shares of the
other Group's stock as is equal to the product of the Outstanding Interest
Fraction of the Affected Group multiplied by the number of Inter-Group Shares
Issuable with respect to the Affected Group's Inter-Group Interest in the other
Group. The dividend shall be paid at or before the time of distribution of the
cash, other securities, and/or other property to be distributed in connection
with the exchange or redemption, to holders of record as of the Exchange Date or
Redemption Date.

e. NOTICES AND ANNOUNCEMENTS. (i) Not later than the tenth
Trading Day following the consummation of a Disposition referred to in paragraph
V.C.2.b., the Corporation shall announce publicly by press release (A) the Net
Proceeds of the Disposition, (B) the number of outstanding shares of the
Affected Group's stock, (C) the number of shares of the Affected Group's stock
into or for which Convertible Securities are then convertible, exercisable or
exchangeable and the conversion, exercise or exchange prices thereof; and (D)
the applicable Outstanding Interest Fraction of the Affected Group as of a
recent date preceding the date of such notice. Not earlier than the 26th Trading
Day and not later than the 30th Trading Day following the consummation of the
Disposition, the Company shall announce publicly by press release which of the
actions specified in paragraphs V.C.2.b.(i) or V.C.2.b.(ii), it has irrevocably
determined to take in respect of the Disposition.

(ii) If the Corporation determines to pay a dividend pursuant
to clause (A) of paragraph V.C.2.b.(i), the Corporation shall, not later than
the 30th Trading Day following the consummation of the Disposition, cause to be
given to each holder of record of outstanding shares of the Affected Group's
stock and to each holder of record of Convertible Securities convertible into or
exercisable or exchangeable for shares of the Affected Group's stock (unless
alternate provision for notice to the holders of the Convertible Securities is
made pursuant to the terms of the Convertible Securities), a notice setting
forth (A) the record date for determining holders entitled to receive the
dividend, which shall not be earlier than the 40th Trading Day and not later
than the 50th Trading Day following the consummation of the Disposition, (B) the
anticipated payment date of the dividend (which shall not be more than 85
Trading Days following the consummation of the Disposition), (C) whether cash,
securities and/or other property will be distributed in respect of shares of the
Affected Group's stock, (D) the Net Proceeds of the Disposition, (E) the
Outstanding Interest Fraction of the Affected Group as of a recent date
preceding the date of the notice, (F) the number of outstanding shares of the
Affected Group's stock and the number of shares of the Affected Group's stock
into or for which outstanding Convertible Securities are then convertible,
exercisable or exchangeable and the conversion, exercise or exchange prices
thereof and (G) in the case of a notice to holders of Convertible Securities, a
statement to the effect that a holder of such Convertible Securities will be
entitled to receive the dividend only if the holder properly converts, exercises
or exchanges such Convertible Securities on or prior to the record date referred
to in clause (A) of this sentence. Such notice shall be sent by first-class
mail, postage prepaid, to each such holder of record as of a date on or after
the Group Disposition Date at the holder's address appearing on the transfer
books of the Corporation.

(iii) If the Corporation determines to undertake a redemption
of shares of the Affected Group's stock following a Disposition of all (not
merely substantially all) of the properties and assets of the Affected Group
pursuant to clause (B)(1) of paragraph V.C.2.b.(i), the Corporation shall, not
earlier than the 45th Trading Day and not later than the 35th Trading Day prior
to the Redemption Date, cause to be given to each holder of record of
outstanding shares of the Affected Group's stock and to each holder of record of
Convertible Securities convertible into or exercisable or exchangeable for
shares of the Affected Group's stock (unless alternate provision for notice to
the holders of the Convertible Securities is made pursuant to the terms of the
Convertible Securities), a notice setting forth (A) a statement that all shares
of the Affected Group's stock outstanding on the Redemption Date will be
redeemed, (B) the Redemption Date (which shall not be more than 85 Trading Days
following the consummation of the Disposition), (C) whether cash, securities,
and/or other

II - 5

<PAGE>

property will be paid as the redemption price in respect of shares of the
Affected Group's stock outstanding on the Redemption Date, (D) the Net Proceeds
of the Disposition, (E) the Outstanding Interest Fraction of the Affected Group
as of a recent date preceding the date of the notice, (F) the place or places
where certificates for shares of the Affected Group's stock, properly endorsed
or assigned for transfer (unless the Corporation waives such requirement), are
to be surrendered, (G) the number of outstanding shares of the Affected Group's
stock and the number of shares of the Affected Group's stock into or for which
Convertible Securities are then convertible, exercisable or exchangeable and the
conversion, exercise or exchange prices thereof, (H) in the case of a notice to
holders of Convertible Securities, a statement to the effect that a holder of
the Convertible Securities will be entitled to participate in the redemption
only if the holder properly converts, exercises or exchanges the Convertible
Securities on or prior to the Redemption Date and a statement as to what, if
anything, the holder shall be entitled to receive if the holder converts,
exercises or exchanges the Convertible Securities after the Redemption Date, and
(I) a statement to the effect that, except as otherwise provided in this Article
V, dividends on such shares of such common stock shall cease to be paid as of
the Redemption Date. Such notice shall be sent by first class mail, postage
prepaid, to each holder of record as of a date on or after the Group Disposition
Date at such holder's address appearing on the transfer books of the
Corporation.

(iv) If the Corporation determines to undertake a redemption
of shares of the Affected Group's stock following a Disposition of substantially
all (but not all) of the properties and assets of a Group pursuant to clause
(B)(2) of paragraph V.C.2.b.(i), the Corporation shall, not later than the 30th
Trading Day following the consummation of the Disposition, cause to be given to
each holder of record of outstanding shares of the Affected Group's stock, and
to each holder of record of Convertible Securities convertible into or
exercisable or exchangeable for shares of the Affected Group's stock (unless
alternate provision for notice to the holders of the Convertible Securities is
made pursuant to the terms of the Convertible Securities), a notice setting
forth (A) a date, not earlier than the 40th Trading Day and not later than the
50th Trading Day following the consummation of the Disposition, on which shares
of the Affected Group's stock then outstanding shall be selected for redemption,
(B) the anticipated Redemption Date (which shall not be more than 85 Trading
Days following the consummation of the Disposition), (C) whether cash,
securities, and/or other property will be paid as the redemption price in
respect of shares of the Affected Group's stock selected for redemption, (D) the
Net Proceeds of the Disposition, (E) the Outstanding Interest Fraction of the
Affected Group as of a recent date preceding the date of the notice, (F) the
number of outstanding shares of the Affected Group's stock and the number of
shares of the Affected Group's stock into or for which outstanding Convertible
Securities are then convertible, exercisable or exchangeable and the conversion,
exchange, or exercise prices thereof, and (G) in the case of a notice to holders
of Convertible Securities, a statement to the effect that a holder of the
Convertible Securities will be entitled to participate in the selection for
redemption only if the holder properly converts, exercises or exchanges the
Convertible Securities on or prior to the date referred to in clause (A) of this
sentence and a statement as to what, if anything, the holder shall be entitled
to receive if the holder converts, exercises or exchanges the Convertible
Securities after that date. Such notice shall be sent by first-class mail,
postage prepaid, to each holder of record as of a date on or after the Group
Disposition Date at such holder's address appearing on the transfer books of the
Corporation. Promptly on or following the date referred to in clause (A) of the
preceding sentence, the Corporation shall cause to be given to each record
holder of shares of the Affected Group's stock to be so redeemed, a notice
setting forth (1) the number of shares of the Affected Group's stock held by the
holder to be redeemed, (2) a statement that such shares of the Affected Group's
stock will be redeemed, (3) the Redemption Date (which shall not be more than 85
Trading Days following the consummation of the Disposition), (4) the per share
amount of cash, securities, and/or other property to be received by the holder
with respect to each share of the Affected Group's stock to be redeemed,
including details as to the calculation thereof, (5) the place or places where
certificates for shares of the Affected Group's stock, properly endorsed or
assigned for transfer (unless the Corporation waives the requirement), are to be
surrendered, (6) if applicable, a statement to the effect that the shares being
redeemed may no longer be transferred on the transfer books of the Company after
the Redemption Date, and (7) a statement to the effect that, except as otherwise
provided in this Article V, dividends on such shares of the Affected Group's
stock will cease to be paid as of the Redemption Date. The notices referred to
in the preceding sentence shall be sent by first-class mail, postage prepaid, to
each such record holder at the holder's address appearing on the transfer books
of the Corporation. If less than all of the outstanding shares of the Affected
Group's stock are to be redeemed pursuant to clause (B)(2) of paragraph
V.C.2.b.(i), the shares shall

II - 6

<PAGE>

be redeemed by the Corporation pro rata among the holders of the Affected
Group's stock or by such other method as may be determined by the Board of
Directors to be equitable.

(v) In the event of any exchange pursuant to paragraph
V.C.2.a., paragraph V.C.2.b.(ii), or paragraph V.C.2.c., the Corporation shall,
not earlier than the 45th Trading Day and not later than the 35th Trading Day
prior to the Exchange Date, cause to be given to each holder of record of
outstanding shares of the Affected Group's stock and to each holder of record of
Convertible Securities convertible into or exercisable or exchangeable for
shares of the Affected Group's stock (unless alternate provision for notice to
the holders is made pursuant to the terms of the Convertible Securities), a
notice setting forth (A) a statement that all outstanding shares of the Affected
Group's stock will be exchanged, (B) the Exchange Date (which shall not be more
than 85 Trading Days following the consummation of the Disposition in the event
of an exchange pursuant to paragraph V.C.2.b.(ii), and which shall not be more
than 85 Trading Days after the date as of which Average Market Value is
determined in the event of an exchange pursuant to paragraph V.C.2.a), (C) the
per share number of shares of stock and, if applicable, the amount of cash to be
received with respect to each share of the Affected Group's stock, including
details as to the calculation thereof, (D) the place or places where
certificates for shares of the Affected Group's stock properly endorsed or
assigned for transfer (unless the Corporation waives the requirement) are to be
surrendered for delivery of certificates for shares of such common stock, (E)
the number of outstanding shares of the Affected Group's stock and the number of
shares of the Affected Group's stock into or for which outstanding Convertible
Securities are then convertible, exercisable or exchangeable and the conversion,
exercise or exchange prices thereof, (F) a statement to the effect that, except
as provided in this Article V, dividends on such shares of the Affected Group's
stock will cease to be paid as of the Exchange Date, and (G) in the case of a
notice to holders of Convertible Securities, a statement to the effect that a
holder of the Convertible Securities will be entitled to participate in the
exchange only if the holder properly converts, exercises or exchanges the
Convertible Securities on or prior to the Exchange Date and a statement as to
what, if anything, the holder shall be entitled to receive if the holder
converts, exercises or exchanges the Convertible Securities after the Exchange
Date. The notice shall be sent by first-class mail, postage prepaid, to each
holder of record as of a date on or after the Group Disposition Date or date as
of which Average Fair Market Value is determined, as applicable, at the holder's
address appearing on the transfer books of the Corporation.

(vi) Neither the failure to mail any notice required by this
paragraph V.C.2.e., to any particular holder of the Affected Group's stock or
Convertible Securities nor any defect therein shall affect the sufficiency
thereof with respect to any other holder or the validity of any exchange or
redemption.

f. GENERAL PROVISIONS REGARDING EXCHANGE OR REDEMPTION. (i)
The Corporation shall not be required to issue or deliver fractional shares of
any class of capital stock or any fractional securities to any holder of any
class of common stock upon any exchange, redemption, dividend or other
distribution pursuant to this Section V.C.2. In connection with the
determination of the number of shares of any class of capital stock that shall
be issuable or the amount of securities that shall be deliverable to any holder
of record upon any such exchange, redemption, dividend or other distribution
(including any fractions of shares or securities), the Corporation may aggregate
the number of shares of the Affected Group's stock held at the relevant time by
such holder of record. If the number of shares of any class of capital stock or
the amount of securities remaining to be issued or delivered to any record
holder of the Affected Group's stock is a fraction, the Corporation shall, if
the fraction is not issued or delivered to the holder, pay a cash adjustment in
respect of the fraction in an amount equal to the Fair Value of the fraction on
the fifth Trading Day prior to the date such payment is to be made (without
interest).

(ii) No adjustments in respect of dividends shall be made upon
the exchange or redemption of any shares of the Affected Group's stock;
provided, however, that if the Exchange Date or the Redemption Date, as the case
may be, with respect to the Affected Group's stock shall be subsequent to the
record date for the payment of a dividend or other distribution thereon or with
respect thereto, the holders of shares of the Affected Group's stock at the
close of business on such record date shall be entitled to receive the dividend
or other distribution payable on or with respect to such shares on the date set
for payment of such dividend or other

II - 7

<PAGE>

distribution, in each case without interest, notwithstanding the subsequent
exchange or redemption of such shares.

(iii) Before any holder of shares of the Affected Group's
stock shall be entitled to receive cash, securities, and/or other property with
respect to shares of the Affected Group's stock pursuant to this Section V.C.2.,
the holder shall surrender at such place as the Corporation shall specify
certificates for shares of the Affected Group's stock, properly endorsed or
assigned for transfer (unless the Corporation waives the requirement). The
Corporation shall as soon as practicable after the surrender of certificates
representing shares of the Affected Group's stock deliver to the person for
whose account shares of the Affected Group's stock were so surrendered, or to
the nominee or nominees of that person, the cash, securities, and/or other
property to which that person shall be entitled, together with any payment for
fractional securities contemplated by paragraph V.C.2.f.(i). If less than all of
the shares of the Affected Group's stock represented by any one certificate are
to be redeemed, the Corporation shall issue and deliver a new certificate for
the shares of the Affected Group's stock not redeemed. The Corporation shall not
be required to register a transfer of any shares of the Affected Group's stock
selected or called for redemption.

(iv) From and after any applicable Exchange Date or Redemption Date, as
the case may be, all rights of a holder of shares of the Affected Group's stock
that were exchanged or redeemed shall cease except for the right, upon surrender
of the certificates representing shares of the Affected Group's stock, to
receive the cash, securities, and/or other property for which such shares were
exchanged or redeemed, together with any payment for fractional securities and
rights to dividends as provided above, in each case without interest, and the
holder shall have no other or further rights in respect of the shares so
exchanged or redeemed, including, but not limited to, any rights with respect to
any cash, securities or other properties which are reserved or otherwise
designated by the Company as being held for the satisfaction of the Company's
obligations to pay or deliver any cash, securities or other property upon the
conversion, exercise or exchange of any Convertible Securities outstanding as of
the date of such conversion or redemption. No holder of a certificate that,
immediately prior to the applicable Exchange Date or Redemption Date for the
Affected Group's stock, represented shares of the Affected Group's stock shall
be entitled to receive any dividend or other distribution with respect to shares
of any kind of capital stock in exchange for which the Affected Group's stock
was exchanged or redeemed until surrender of the holder's certificate for a
certificate or certificates representing shares of that kind of capital stock.
Upon surrender, there shall be paid to the holder the amount of any dividends or
other distributions (without interest) which theretofore became payable with
respect to a record date on or after the Exchange Date or Redemption Date, as
the case may be, but that were not paid by reason of the foregoing, with respect
to the number of whole shares of the kind of capital stock represented by the
certificate or certificates issued upon such surrender. From and after an
Exchange Date or Redemption Date, as the case may be, for any shares of the
Affected Group's stock, the Corporation shall, however, be entitled to treat the
certificates for shares of the Affected Group's stock that have not yet been
surrendered for exchange or redemption as evidencing the ownership of the number
of whole shares of the kind or kinds of capital stock for which the shares of
the Affected Group's stock represented by the certificates shall have been
exchanged or redeemed, notwithstanding the failure to surrender the
certificates.

(v) The Corporation shall pay any and all documentary, stamp
or similar issue or transfer taxes that may be payable in respect of the issue
or delivery of any shares of capital stock and/or other securities on exchange
or redemption of shares of the Affected Group's stock. The Corporation shall
not, however, be required to pay any tax that may be payable in respect of any
transfer involved in the issue and delivery of any shares of capital stock
and/or other securities in a name other than that in which the shares of the
Affected Group's stock so exchanged or redeemed were registered and no such
issue or delivery shall be made unless and until the person requesting the issue
has paid to the Corporation the amount of any such tax, or has established to
the satisfaction of the Corporation that the tax has been paid.

(vi) The date by which any notice is required to be given or
any action taken by the Corporation under this Section V.C.2. may be extended by
any reasonable time determined by the Board of Directors as being necessary to
allow the Corporation to take action required to comply with securities or other
applicable law.

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(vii) The Board of Directors may establish such rules and
requirements to facilitate the effectuation of the transactions contemplated by
this Section V.C.2. as the Board of Directors shall determine to be appropriate.

g. EFFECT ON CONVERTIBLE SECURITIES. After any Exchange Date
or Redemption Date on which all outstanding shares of a Group's stock were
exchanged or redeemed, any share of the Affected Group's stock issued upon
conversion, exercise or exchange of any Convertible Security issued after the
Effective Date shall, immediately upon issuance pursuant to such conversion or
exercise and without any notice or any other action on the part of the
Corporation or its Board of Directors or the holder of such share of the
Affected Group's stock, be redeemed for $.01 per share. The foregoing provisions
shall not apply to the extent that equivalent or alternative adjustments are
otherwise made pursuant to provisions of such Convertible Security specifically
referring to an exchange or redemption under this Section V.C.2.

3. VOTING RIGHTS

a. MEDICAL PRODUCTS STOCK. The holders of Medical Products
Stock, voting together with the holders of Agritope Stock as a single voting
group, shall have the exclusive right to vote for the election of directors and
on all matters requiring action by the shareholders or submitted to the
shareholders for action, except as may be determined by the Board of Directors
in establishing any series of Preferred Stock or as may otherwise be required by
law or this Article V. Each share of Medical Products Stock shall entitle the
holder thereof to one vote.

b. AGRITOPE STOCK. The holders of Agritope Stock, voting
together with the holders of Medical Products Stock as a single voting group,
shall have the exclusive right to vote for the election of directors and on all
other matters requiring action by the shareholders or submitted to the
shareholders for action, except as may be determined by the Board of Directors
in establishing any series of Preferred Stock or as may otherwise be required by
law or this Article V. Each share of Agritope Stock shall entitle the holder
thereof to a variable number of votes (which may be more than, equal to or less
than one) equal to the ratio (expressed as a decimal and rounded to the nearest
seven decimal places) of the Average Market Value of one share of Agritope Stock
during the 20-Trading Day period immediately preceding the record date for the
matter to be acted on, to the Average Market Value of one share of Medical
Products Stock during that period. If no shares of Medical Products Stock are
outstanding on that record date, each share of Agritope Stock shall have one
vote.

c. SPECIAL VOTING RIGHTS. The Corporation shall not, without
approval by the holders of the affected class of common stock voting as a
separate voting group at a meeting at which a quorum is present and the votes
cast in favor of the proposal exceed those cast against:

(i) allow any proceeds from the Disposition of the properties
or assets allocated to any Group represented by such class of common stock to be
used in the business of the other Group without fair compensation being
allocated to the Group whose properties or assets are disposed of as determined
by the Board of Directors; or

(ii) issue, sell or otherwise distribute shares of either
class of common stock without allocating the proceeds or other benefits of such
issuance, sale or distribution to the Group represented by such class of common
stock unless such allocation is made in respect of the reduction of an
Inter-Group Interest.

4. APPLICATION OF THE PROVISIONS OF ARTICLE V

a. CERTAIN DETERMINATIONS BY THE BOARD OF DIRECTORS. The Board
of Directors shall make such determinations with respect to the assets and
liabilities to be attributed to the Groups, the items of income and expenses
attributed to the Groups for purposes of determining the Earnings (Loss)
Attributable to the Groups and the application of the provisions of this Section
V.C.4. to transactions to be engaged in by the

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<PAGE>

Corporation and the powers, preferences and relative, participating, optional
and other special rights of the holders of the classes of common stock of the
Groups, and the qualifications and restrictions thereon, provided by this
Article V as may be or become necessary or appropriate to the exercise of such
powers, preferences and relative, participating, optional and other special
rights, including, without limiting the foregoing, the determinations referred
to in the following paragraphs (i), (ii), (iii), and (iv) of this paragraph
V.C.4.a. A record of any such determination shall be filed with the records of
the actions of the Board of Directors.

(i) Upon any acquisition by the Corporation or its
subsidiaries of any assets or business, or any assumption of liabilities,
outside of the ordinary course of business of Agritope or Epitope Medical
Products, as the case may be, the Board of Directors shall determine whether
such assets, business and liabilities (or an interest therein) shall be for the
benefit of Epitope Medical Products or Agritope or whether an interest therein
shall be partly for the benefit of Epitope Medical Products and partly for the
benefit of Agritope and, accordingly, shall be attributed to Epitope Medical
Products or Agritope, or partly to each.

(ii) Upon any issuance of any shares of (x) Agritope Stock at
a time when the Inter-Group Shares Issuable with respect to the Inter-Group
Interest in Agritope is more than zero or (y) Medical Products Stock at a time
when the Inter-Group Shares Issuable with respect to the Inter-Group Interest in
Epitope Medical Products is more than zero, the Board of Directors shall
determine, based on the use of the proceeds of such issuance and any other
relevant factors, whether all or any part of the shares of Agritope Stock or
Medical Products Stock so issued should reduce the Inter-Group Shares Issuable
with respect to the applicable Inter-Group Interest, and the Inter-Group Shares
Issuable with respect to the applicable Inter-Group Interest shall be adjusted
accordingly.

(iii) Upon any issuance by the Corporation or any subsidiary
thereof of any Convertible Securities that are convertible into or exchangeable
or exercisable for shares of Agritope Stock or Medical Products Stock, if at the
time such Convertible Securities are issued the Inter-Group Shares Issuable with
respect to an Inter-Group Interest in Agritope or Epitope Medical Products,
respectively, is greater than zero, the Board of Directors shall determine
whether, upon conversion, exchange or exercise thereof, the issuance of shares
of Agritope Stock or Medical Products Stock, as the case may be, pursuant
thereto shall, in whole or in part, reduce the Inter-Group Shares Issuable with
respect to the applicable Inter-Group Interest, taking into consideration the
use of the proceeds of such issuance of Convertible Securities in the business
of Agritope or Epitope Medical Products and any other relevant factors. The
Board of Directors may subsequently change its determination if necessary on
account of reductions in Inter-Group Interests other than as a result of
issuance of shares upon conversion, exchange or exercise of the Convertible
Securities.

(iv) Upon any redemption or repurchase by the Corporation or
any subsidiary thereof of shares of any Preferred Stock of any class or series
or of other securities or debt obligations of the Corporation, if some of such
shares, other securities or debt obligations were attributed to Agritope and
some of such shares, other securities or debt obligations were attributed to
Epitope Medical Products, the Board of Directors shall determine which, if any,
of such shares, other securities or debt obligations redeemed or repurchased
shall be attributed to Agritope and which, if any, of such shares, other
securities or debt obligations shall be attributed to Epitope Medical Products
and, accordingly, how many of the shares of such series of Preferred Stock or of
such other securities, or how much of such debt obligations, that remain
outstanding, if any, continue to be attributed to Agritope or Epitope Medical
Products.

b. CERTAIN DETERMINATIONS NOT REQUIRED. Notwithstanding the
foregoing provisions of this Section V.C.4. or any other provision of this
Article V, at any time when there are not outstanding both (i) one or more
shares of Agritope Stock or Convertible Securities convertible into or
exchangeable or exercisable for Agritope Stock and (ii) one or more shares of
Medical Products Stock or Convertible Securities convertible into or
exchangeable or exercisable for Medical Products Stock, the Corporation (A) need
not attribute any of the assets or liabilities of the Corporation or any of its
subsidiaries to Epitope Medical Products or Agritope or any of the earnings (or
any loss) of the Corporation or any of its subsidiaries to Epitope Medical
Products or Agritope or (B) make any determination required in connection
therewith, nor shall the Board of Directors be required (C) to make any of the
determinations otherwise required by this Article V, and in such circumstances

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<PAGE>

the holders of the shares of Medical Products Stocks or Agritope Stock
outstanding, as the case may be, shall (unless otherwise specifically provided
by this Article V) be entitled to all the voting powers, preferences, optional
or other special rights of both classes of common stock without differentiation
between Medical Products Stock and Agritope Stock and any provision of this
Article V to the contrary shall no longer be in effect or operative.

c. EFFECT OF DETERMINATIONS BY THE BOARD OF DIRECTORS. Any
determinations with respect to any Group or the rights of holders of any series
of common stock made by the Board of Directors of the Corporation in good faith
pursuant to or in furtherance of any provision of this Article V shall be final
and binding on all shareholders of the Corporation.

5. LIQUIDATION, DISSOLUTION OR WINDING UP

Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the rights of the holders of Medical Products
Stock and Agritope Stock shall be as follows:

a. After the Corporation has satisfied or made provision for
its debts and obligations and for the payment to the holders of shares of any
class or series of capital stock having preferential rights to receive
distributions of the net assets of the Corporation (including any accumulated
and unpaid dividends), (i) the holders of Agritope Stock shall share equally, on
a share for share basis, in a percentage of the funds of the Corporation
remaining for distribution to its common shareholders equal to 100 percent
multiplied by the average daily ratio (expressed as a decimal fraction rounded
to the nearest seven decimal places) of X/Z for the 20-Trading Day period ending
on the Trading Day prior to the date of the public announcement of such
liquidation, dissolution or winding up, and (ii) the holders of the Medical
Products Stock shall share equally, on a share for share basis, in a percentage
of the funds of the Corporation remaining for distribution to its common
shareholders equal to 100 percent multiplied by the average daily ratio
(expressed as a decimal fraction rounded to the nearest seven decimal places) of
Y/Z for such 20-Trading Day period, where X is the aggregate Market
Capitalization of the Agritope Stock, Y is the aggregate Market Capitalization
of the Medical Products Stock, and Z is the aggregate Market Capitalization of
the Agritope Stock and the Medical Products Stock.

b. For the purposes of paragraph V.C.5.a., any merger or
business combination involving the Corporation or any sale of all or
substantially all the assets of the Corporation as a going concern shall not be
treated as a liquidation, dissolution or winding up.

6. RANK

Medical Products Stock and Agritope Stock shall rank junior
with respect to the payment of dividends and the distribution of assets to all
series of the Corporation's Preferred Stock that specifically provide that they
shall rank prior to Medical Products Stock and Agritope Stock. Nothing herein
shall preclude the Board from creating any series of Preferred Stock ranking on
a parity with or prior to Medical Products Stock and Agritope Stock as to the
payment of dividends or the distribution of assets.

D. NO PREEMPTIVE RIGHTS

No shareholder shall have any preemptive right to acquire
additional shares of the Corporation, whether shares originally authorized or
other shares which may subsequently be authorized.

E. DEFINITIONS

As used in this Article V, the following terms shall have the
following meanings (with terms defined in the singular having comparable meaning
when used in the plural and vice versa), unless another definition is provided
or the context otherwise requires:

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1. "AFFECTED GROUP" means the Group (a) the assets of which are the
subject of a Disposition, or (b) the common stock of which will cease to be
outstanding as a result of any exchange.

2. "AGRITOPE" means, at any time, the Group representing the
Corporation's interest in (a) the businesses, products, development programs or
research projects of Agritope, Inc., an Oregon corporation, Andrew and
Williamson Sales, Co., a California corporation, Vinifera, Inc., an Oregon
corporation, and any other agricultural production or agricultural biotechnology
business that may be conducted by the Corporation in the future; (b) all assets
and liabilities of the Corporation (other than capital stock of a subsidiary) on
such date attributed by the Board of Directors to Agritope or the businesses
thereof, whether or not such assets or liabilities are or were also assets and
liabilities of Agritope; (c) a proportionate undivided interest in each and
every business, asset and liability attributed to Epitope Medical Products equal
to the Inter-Group Interest Fraction in Epitope Medical Products as of such
date; (d) all properties and assets transferred to Agritope from Epitope Medical
Products (other than as described in clause (e) of this Section V.E.2) after the
Effective Date pursuant to transactions in the ordinary course of business of
both Agritope and Epitope Medical Products or otherwise as the Board of
Directors may have directed as permitted by this Article V; (e) all properties
and assets transferred to Agritope from Epitope Medical Products in connection
with a reduction of the Inter-Group Shares Issuable with respect to the
Inter-Group Interest in Epitope Medical Products; (f) the interest of the
Corporation or any of its subsidiaries in any business or asset acquired and any
liabilities assumed by the Corporation or any of its subsidiaries outside the
ordinary course of business and attributed to Agritope, as determined by the
Board of Directors; and (g) from and after the payment date of any dividend or
other distribution with respect to shares of Medical Products Stock (other than
a dividend or other distribution payable in shares of Medical Products Stock,
with respect to which adjustment shall be made as provided in clause a. of the
definition of "Inter-Group Shares Issuable," or payable in shares of Agritope
Stock), an amount of assets or properties previously attributed to Epitope
Medical Products of the same kind as were paid in such dividend or other
distribution with respect to shares of Medical Products Stock as have a Fair
Value on the record date for such dividend or distribution equal to the product
of (1) the Fair Value on such record date of the aggregate of such dividend or
distribution multiplied by (2) a fraction the numerator of which is equal to the
Inter-Group Interest Fraction in Epitope Medical Products in effect on the
record date for such dividend or distribution and the denominator of which is
equal to the Outstanding Interest Fraction in Epitope Medical Products in effect
on the record date for such dividend or distribution; provided that whenever
Epitope Medical Products receives or is deemed to include an interest in any
assets or properties of Agritope, Agritope shall no longer include that interest
in such assets or properties (except to the extent of any Inter-Group Interest
of Agritope in Epitope Medical Products).

3. "AVAILABLE AGRITOPE DIVIDEND AMOUNT," as of any date, means the
greater of:

a. the excess of

(i) the greater of (x) the product of the Outstanding
Interest Fraction in Agritope multiplied by the fair value on that date of the
net assets of Agritope and (y) the product of the Outstanding Interest Fraction
in Agritope multiplied by an amount equal to the shareholders' equity allocated
to Agritope as of September 30, 1996, increased or decreased, as appropriate, to
reflect, after September 30, 1996, (A) the Earnings (Loss) Attributable to
Agritope, (B) any dividends or other distributions (including by
reclassification or exchange) declared or paid with respect to Agritope, but
excluding dividends or other distributions paid in shares of Agritope Stock or
any other class of capital stock attributed to Agritope and (C) any other
adjustments to the shareholders' equity of Agritope made in accordance with
generally accepted accounting principles, over

(ii) the sum of the aggregate amount that would be
needed to satisfy any preferential rights to which holders of all outstanding
Preferred Stock not attributed to Epitope Medical Products are entitled upon
dissolution of the Corporation, plus any amount necessary to enable Agritope to
pay its debts as they become due, and

b. the amount legally available for the payment of dividends
determined in accordance with Oregon law applied as if Agritope were a separate
corporation.

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4. "AVAILABLE MEDICAL PRODUCTS DIVIDEND AMOUNT," as of any date, means
the greater of:

a. the excess of

(i) the greater of (x) the product of the Outstanding
Interest Fraction in Epitope Medical Products multiplied by the fair value on
that date of the net assets of Epitope Medical Products and (y) the product of
the Outstanding Interest Fraction in Epitope Medical Products multiplied by an
amount equal to the shareholders' equity allocated to Epitope Medical Products
as of September 30, 1996, increased or decreased, as appropriate, to reflect,
after September 30, 1996, (A) the Earnings (Loss) Attributable to Epitope
Medical Products, (B) any dividends or other distributions (including by
reclassification or exchange) declared or paid with respect to, or repurchases
or issuances of, any shares of Medical Products Stock or any other class of
capital stock attributed to Epitope Medical Products, but excluding dividends or
other distributions paid in shares of Medical Products Stock or in shares of any
other class of capital stock attributed to Epitope Medical Products and (C) any
other adjustments to the shareholders' equity of Epitope Medical Products made
in accordance with generally accepted accounting principles, over

(ii) the sum of the aggregate amount that would be
needed to satisfy any preferential rights to which holders of all outstanding
Preferred Stock not attributed to Agritope are entitled upon dissolution of the
Corporation, plus any amount necessary to enable Epitope Medical Products to pay
its debts as they become due, and

b. the amount legally available for the payment of dividends
determined in accordance with Oregon law applied as if Epitope Medical Products
were a separate corporation.

5. "AVERAGE MARKET VALUE" with respect to a specified period means the
average of the Market Values of the specified security on each Trading Day of
the period.

6. "CONVERTIBLE SECURITIES" means any securities (including warrants
and employee stock options) of the Corporation that are convertible into, that
are exchangeable for or that evidence the right to purchase any shares of any
class or series of common stock, whether upon conversion, exercise, or exchange,
pursuant to antidilution provisions of such securities or otherwise.

7. "DISPOSITION" means the sale, transfer, assignment or other
disposition (whether by merger, consolidation, sale or contribution of assets or
stock or otherwise) of any properties or assets, other than by pledge,
hypothecation or grant of any security interest in such properties or assets.

8. "DISTRIBUTION" means the initial distribution of Agritope Stock to
holders of record of Epitope Common Stock on the Effective Date.

9. "EARNINGS (LOSS) ATTRIBUTABLE" to a particular Group for any period,
means the net income or loss of such Group for such period (or for the fiscal
periods of the Corporation commencing prior to the Effective Date and after
September 30, 1996, pro forma net income or loss of such Group as if the
Effective Date were September 30, 1996) determined in accordance with generally
accepted accounting principles, with all income and expenses of the Corporation
being allocated between Groups in a reasonable and consistent manner in
accordance with policies adopted by the Board of Directors; provided, however,
that as of the end of any fiscal quarter of the Corporation, any projected tax
benefit attributable to a Group that cannot be utilized by such Group to offset
or reduce its allocated tax liability may be allocated to the other Group
without any compensating payment or allocation.

10. "EFFECTIVE DATE" means the date on which this Article V, as
amended, shall become effective.

11. "EPITOPE MEDICAL PRODUCTS" means, at any time, the Group
representing the Corporation's interest in (a) the businesses, products,
development programs or research projects relating to the development and
marketing of diagnostic tests and related products and services for the
detection of medical conditions and

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<PAGE>

analytes, the devices developed and marketed under the brand names OraSure and
EpiScreen, and any medical products business conducted by the Corporation in the
future; (b) all assets and liabilities of the Corporation (other than capital
stock of a subsidiary) on such date attributed by the Board of Directors to
Epitope Medical Products or the businesses thereof, whether or not such assets
or liabilities are or were also assets and liabilities of Epitope Medical
Products; (c) a proportionate undivided interest in each and every business
asset and liability attributed to Agritope equal to the Inter-Group Interest in
Agritope as of such date; (d) all properties and assets transferred to Epitope
Medical Products from Agritope (other than as described in clause (e) of this
Section V.E.11) after the Effective Date pursuant to transactions in the
ordinary course of business of both Epitope Medical Products and Agritope or
otherwise as the Board of Directors may have directed as permitted by this
Article V; (e) all properties and assets transferred to Epitope Medical Products
from Agritope in connection with a reduction of the Inter-Group Shares issuable
with respect to the Inter-Group Interest in Agritope; (f) the interest of the
Corporation or any of its subsidiaries in any business or asset acquired and any
liabilities assumed by the Corporation or any of its subsidiaries outside of the
ordinary course of business and attributed to Epitope Medical Products, as
determined by the Board of Directors; and (g) from and after the payment date of
any dividend or other distribution with respect to shares of Agritope Stock
(other than a dividend or other distribution payable in shares of Agritope
Stock, with respect to which adjustment shall be made as provided in clause a.
of the definition of "Inter-Group Shares Issuable," or payable in shares of
Medical Products Stock), an amount of assets or properties previously attributed
to Agritope of the same kind as were paid in such dividend or other distribution
with respect to shares of Agritope Stock as have a Fair Value on the record date
for such dividend or distribution equal to the product of (1) the Fair Value on
such record date of the aggregate of such dividend or distribution multiplied by
(2) a fraction the numerator of which is equal to the Inter-Group Interest
Fraction in Agritope in effect on the record date for such dividend or
distribution and the denominator of which is equal to the Outstanding Interest
Fraction in Agritope in effect on the record date for such dividend or
distribution; provided that whenever Agritope receives or is deemed to include
any interest in any assets or properties of Epitope Medical Products, Epitope
Medical Products shall no longer include that interest in such assets or
properties (except to the extent of any Inter-Group Interest of Epitope Medical
Products in Agritope).

12. "EXCHANGE AMOUNT" has the meaning given in paragraph V.C.2.a.

13. "EXCHANGE DATE" means the date, if any, fixed for the exchange of
shares of a class of capital stock as set forth in a notice to holders of such
capital stock in accordance with the provisions of this Article V.

14. "FAIR VALUE" means, in the case of equity securities or debt
securities of a class that has previously been Publicly Traded for a period of
at least 15 months, the Market Value thereof (if such value, as so defined, can
be determined) or, in the case of an equity security or debt security that has
not been Publicly Traded for at least such period, the fair value per share of
stock or per other unit of such other security, on a fully distributed basis, as
determined in the good faith judgment of the Board of Directors; and in the case
of property other than securities, the value determined in the good faith
judgment of the Board of Directors. Any such determination of Fair Value shall
be described in a statement filed with the records of the actions of the Board
of Directors.

15. "GROUP" means Epitope Medical Products or Agritope.

16. "GROUP'S STOCK" and words of similar import mean Agritope Stock
with respect to Agritope and Medical Products Stock with respect to Epitope
Medical Products.

17. "GROUP DISPOSITION DATE" has the meaning given in paragraph
V.C.2.b.

18. "GROUP SUBSIDIARY" has the meaning given in paragraph V.C.2.c.

19. "INTER-GROUP INTEREST" means the interest of one Group in the
equity value of the Company attributable to the other Group.

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20. "INTER-GROUP INTEREST FRACTION" as of any date means a fraction the
numerator of which is the number of Inter-Group Shares Issuable with respect to
the Inter-Group Interest in a Group as of such date and the denominator of which
is the sum of (a) such number plus (b) the aggregate number of outstanding
shares of such Group's stock as of such date.

21. "INTER-GROUP SHARES ISSUABLE" with respect to an Inter-Group
Interest shall as of the Effective Date be zero; provided, however, that such
number shall from time to time thereafter be:

a. adjusted, if before such adjustment greater than zero, as determined
by the Board of Directors to be appropriate, to reflect equitably any
subdivision (by stock split or otherwise) or combination (by reverse stock split
or otherwise) of Agritope Stock or Medical Products Stock, as the case may be,
or any dividend or other distribution of shares of Agritope Stock or Medical
Products Stock or any reclassification of Agritope Stock or Medical Products
Stock, as the case may be;

b. with respect to an Inter-Group Interest in Agritope, decreased (but
to not less than zero) by action of the Board of Directors by (i) the number of
shares of Agritope Stock issued or sold by the Corporation that the Board of
Directors has determined should reduce the Inter-Group Shares Issuable with
respect to the Inter-Group Interest in Agritope, (ii) the number of shares of
Agritope Stock issued by the Corporation as a dividend or other distribution
(including in connection with any reclassification or exchange of shares) to
holders of Medical Products Stock, (iii) the number of shares of Agritope Stock
issued upon the conversion, exchange or exercise of any Convertible Securities
issued by the Corporation as a dividend or other distribution (including in
connection with any reclassification or exchange of shares) to holders of
Medical Products Stock, or (iv) the number (rounded, if necessary, to the
nearest whole number) equal to the quotient of (A) the aggregate Fair Value, as
of the date of transfer, of properties or assets (including cash) transferred
from Agritope to Epitope Medical Products in consideration of a reduction in the
Inter-Group Shares Issuable with respect to the InterGroup Interest in Agritope,
divided by (B) the Average Market Value of one share of Agritope Stock
calculated during the 20-Trading Day period preceding the date of such transfer;

c. with respect to an Inter-Group Interest in Epitope Medical Products,
decreased (but to not less than zero) by action of the Board of Directors by (i)
the number of shares of Medical Products Stock issued or sold by the Corporation
that the Board of Directors has determined should reduce the Inter-Group Shares
Issuable with respect to the Inter-Group Interest in Epitope Medical Products,
(ii) the number of shares of Medical Products Stock issued by the Corporation as
a dividend or other distribution (including in connection with any
reclassification or exchange of shares) to holders of Agritope Stock, (iii) the
number of shares of Medical Products Stock issued upon the conversion, exchange
or exercise of any Convertible Securities issued by the Corporation as a
dividend or other distribution (including in connection with any
reclassification or exchange of shares) to holders of Agritope Stock, or (iv)
the number (rounded, if necessary, to the nearest whole number) equal to the
quotient of (A) the aggregate Fair Value, as of the date of transfer, of
properties or assets (including cash) transferred from Epitope Medical Products
to Agritope in consideration of a reduction in the Inter-Group Shares Issuable
with respect to the Inter-Group Interest in Epitope Medical Products, divided by
(B) the Average Market Value of one share of Medical Products Stock calculated
during the 20-Trading Day period preceding the date of such transfer;

d. with respect to an Inter-Group Interest in Agritope, increased by
(i) the number of outstanding shares of Agritope Stock repurchased by the
Corporation for consideration that is attributed to Epitope Medical Products
pursuant to this Article V and (ii) the number (rounded, if necessary, to the
nearest whole number) equal to the quotient of (A) the Fair Value of properties
or assets (including cash) transferred from Epitope Medical Products to Agritope
in consideration of an increase in the Inter-Group Shares Issuable with respect
to the Inter-Group Interest in Agritope, divided by (B) the Average Market Value
of one share of Agritope Stock calculated during the 20-Trading Day period
preceding the date of such transfer; and

e. with respect to an Inter-Group Interest in Epitope Medical Products,
increased by (i) the number of outstanding shares of Medical Products Stock
repurchased by the Corporation for consideration that is attributed to Agritope
pursuant to this Article V and (ii) the number (rounded, if necessary, to the
nearest

II - 15

<PAGE>

whole number) equal to the quotient of (A) the Fair Value of properties or
assets (including cash) transferred from Agritope to Epitope Medical Products in
consideration of an increase in the Inter-Group Shares Issuable with respect to
the Inter-Group Interest in Epitope Medical Products, divided by (B) the Average
Market Value of one share of Medical Products Stock calculated during the
20-Trading Day period preceding the date of such contribution.

22. "MARKET CAPITALIZATION" of any class or series of capital stock of
the Corporation on any day means the product of (a) the Market Value of one
share of such class or series on that day and (b) the number of shares of such
class or series outstanding on that day.

23. "MARKET VALUE" of any class of capital stock of the Corporation on
any day means the average of the high and low reported sales prices, regular
way, of a share of such class on such day (if such day is a Trading Day, and if
such day is not a Trading Day, on the Trading Day immediately preceding such
day) or, in case no such reported sale takes place on such Trading Day, the
average of the reported closing bid and asked prices, regular way, of a share of
such class on such Trading Day, in either case on the national market tier of
The Nasdaq Stock Market or, if not traded thereon, on the principal national
securities exchange on which shares of such class are traded (which shall be the
exchange on which the greater number of shares of such class are traded on such
day), or if the shares of such class are not quoted on the national market tier
of The Nasdaq Stock Market or any national securities exchange on such Trading
Day, the average of the closing bid and asked prices of a share of such class in
the over-the-counter market on such Trading Day as furnished by any New York
Stock Exchange member firm selected from time to time by the Corporation, or if
such closing bid and asked prices are not made available by any such New York
Stock Exchange member firm on such Trading Day, the market value of a share of
such class as determined by the Board of Directors; provided that for purposes
of determining the Market Value of a share of any class of capital stock for any
period (a) the "Market Value" of any share of any class on any day prior to the
"ex-dividend" date or any similar date for any dividend or distribution paid or
to be paid with respect to such class of capital stock shall be reduced by the
Fair Value of the per share amount of such dividend or distribution as
determined by the Board of Directors and (b) the "Market Value" of any share of
any class on any day prior to (i) the effective date of any subdivision (by
stock split or otherwise) or combination (by reverse stock split or otherwise)
of outstanding shares of such class of capital stock or (ii) any "ex-dividend"
date or any similar date for any dividend or distribution with respect to any
such class of capital stock shall be appropriately adjusted, as determined by
the Board of Directors, to reflect such subdivision, combination, dividend or
distribution.

24. "NET PROCEEDS" as of any date, with respect to any Disposition of
any of the properties and assets of a Group, means an amount, if any, equal to
the gross proceeds of such Disposition after any payment of, or reasonable
provision, as determined by the Board of Directors, for, (a) any taxes payable
by the Corporation in respect of such Disposition or in respect of any resulting
dividend or redemption pursuant to paragraph V.C.2.b.(i). (or which would have
been payable but for the utilization of tax benefits attributable to the other
Group), (b) any transaction costs, including, without limitation, any legal,
investment banking and accounting fees and expenses and (c) any liabilities and
other obligations (contingent or otherwise) of, or attributed to, the Group,
including, without limitation, any indemnity or guarantee obligations incurred
in connection with the Disposition or any liabilities for future purchase price
adjustments and any preferential amounts plus any accumulated and unpaid
dividends and other obligations in respect of Preferred Stock attributed to the
Group. For purposes of this definition, any properties and assets of the Group
remaining after such Disposition shall constitute "reasonable provision" for
such amount of taxes, costs and liabilities (contingent or otherwise) as the
Board of Directors determines can be expected to be supported by such properties
and assets.

25. "NONAFFILIATES" means individuals and entities that do not control,
that are not controlled by, and that are not under common control with, the
Corporation, as determined by the Board of Directors.

26. "OUTSTANDING INTEREST FRACTION" as of any date means a fraction the
numerator of which shall be the aggregate number of shares of a Group's stock
outstanding on such date and the denominator of which

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<PAGE>

shall be the sum of (a) such number plus (b) the number of Inter-Group Shares
Issuable with respect to an Inter-Group Interest in such Group as of such date.

27. "PUBLICLY TRADED" with respect to any security means (a) registered
under Section 12 of the Securities Exchange Act of 1934, as amended (or any
successor provision of law), and (b) listed on any national securities exchange
registered under Section 7 of the Securities Exchange Act of 1934, as amended
(or any successor provision of law), or quoted in The Nasdaq Stock Market (or
any successor system).

28. "REDEMPTION DATE" means the date fixed by the Board of Directors as
the effective date for a redemption of shares of any class of common stock as
set forth in a notice to holders thereof required pursuant to this Article V.

29. "RELATED BUSINESS TRANSACTION" means any Disposition of all or
substantially all of the properties and assets of a Group in a transaction or
series of related transactions in which the Corporation receives as proceeds of
such Disposition primarily equity securities (including, without limitation,
capital stock, convertible securities, partnership or limited partnership
interests and other types of equity securities, without regard to the voting
power or contractual or other management or governance rights related to such
equity securities) of the purchaser or acquiror of such assets and properties of
the Group, any entity which succeeds (by merger, formation of a joint venture
enterprise or otherwise) to such assets and properties of the Group or a third
party issuer, which purchaser, acquiror or other issuer is engaged or proposes
to engage primarily in one or more businesses similar or complementary to the
business conducted by the Group prior to such Disposition, as determined in good
faith by the Board of Directors.

30. "TRADING DAY" means each weekday other than any day on which any
relevant class of common stock is not traded on any national securities exchange
or The Nasdaq Stock Market or in the over-the-counter market.

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<PAGE>

Annex III
THE COMPANY

DESCRIPTION OF BUSINESS

Epitope, Inc. ("Epitope" or the "Company"), is an Oregon corporation
incorporated in 1981. Its Epitope Medical Products group ("Epitope Medical
Products") develops and markets oral specimen collection kits and related
diagnostic tests for the detection of the Human Immunodeficiency Virus ("HIV"),
the cause of Acquired Immune Deficiency Syndrome ("AIDS"), and for the detection
of other medical conditions and analytes. Epitope Medical Products' oral
specimen HIV testing system is marketed by the Company under the name
EpiScreen(TM) and by SmithKline Beecham plc ("SB") under the name OraSure(R).
The Company's Agritope group ("Agritope") historically has focused its efforts
on the development of novel agricultural products using plant genetic
engineering and other modern methods. Through its acquisition of Andrew and
Williamson Sales, Co. ("A&W") on December 12, 1996 and its majority ownership of
Vinifera, Inc. ("Vinifera"), Agritope now conducts operations in each step of
the production and distribution chain for a broad range of fruits, vegetables
and plants and has an established infrastructure that will facilitate
commercialization of the Company's genetically engineered agricultural products.

EPITOPE MEDICAL PRODUCTS

Epitope Medical Products' lead product, a patented collection device
used as part of an oral fluid diagnostic system ("EpiScreen/OraSure"), is
designed for use in the detection of HIV and other medical conditions and
analytes. The Company markets the device under the brand name EpiScreen in the
United States for use in screening life insurance applicants, and in certain
foreign countries for use in professional markets. In February 1995, the Company
entered into a Development, License and Supply Agreement with SB, under which SB
is marketing the device in the U.S. and certain foreign countries as part of an
integrated test system to physicians, hospitals and other healthcare
professionals under the brand name OraSure. Subject to obtaining required
regulatory approvals, the Company intends to market the system for
over-the-counter sale through SB in the United States and through SB or other
distributors in international markets.

The EpiScreen/OraSure device consists of a small, treated cotton-fiber
pad on a nylon handle that is placed in the patient's mouth for two minutes. The
device collects oral mucosal transudate ("OMT"), a serum-derived fluid that,
unlike saliva, contains high concentrations of HIV antibodies in people infected
with the virus. As a result, OMT testing is a highly accurate method for
detecting HIV infection. Because EpiScreen/OraSure uses a noninvasive,
needle-free collection method, the Company believes that oral fluid testing has
several significant advantages over blood-based testing systems for both
healthcare professionals and patients.

Epitope Medical Products also markets HIV-1 Western blot confirmatory
test kits used to confirm positive results of initial screening tests for HIV-1
infection. Its OraSure HIV-1 Western blot confirmatory test kit is used in
conjunction with oral-fluid based screening tests, while its EPIBlot(R) HIV-1
Western blot confirmatory test kit is used in conjunction with blood-based
screening tests. The kits are distributed worldwide under an exclusive agreement
with Organon Teknika Corporation ("Organon Teknika"), a member of the Akzo
Pharma group of Akzo Nobel, NV.

The EpiScreen/OraSure HIV-1 device and the OraSure HIV-1 Western blot
and EPIBlot confirmatory tests have all received clearance from the U.S. Food
and Drug Administration ("FDA") for sale to professional markets in the United
States.

BACKGROUND

Acquired Immune Deficiency Syndrome is caused by the Human
Immunodeficiency Virus. HIV attacks the immune system, slowly weakening the
body's ability to ward off infection and certain forms of cancer. When these
complications develop, the HIV infection has progressed to clinically diagnosed
AIDS. HIV is spread through sexual contact, blood transfusions, the sharing of
intravenous needles, accidental needle sticks, or contact between

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<PAGE>

a mother and her child during gestation, childbirth, or breast-feeding. There is
currently no known cure for HIV/AIDS. However, the recent introduction of a new
class of anti-HIV drugs called protease inhibitors, when used in combination
with nucleoside analogs (e.g., AZT), has shown promising results in slowing
progress of the disease. Clinical studies have demonstrated that the early
detection and treatment of HIV can help to curb the effects of the disease and
significantly prolong the life of the patient. Other studies have shown that
treatment with AZT of an HIV-infected pregnant woman may prevent the
transmission of HIV from the mother to her child.

According to the World Health Organization ("WHO"), an estimated 24
million adults and 1.5 million children have been infected with HIV worldwide,
and approximately 10,000 new infections occur each day. WHO also estimates that
over 6 million cases of AIDS have occurred worldwide to date. In North America,
an estimated 1.3 million people have been infected with HIV. AIDS is currently
the leading cause of death for Americans between the ages of 25 and 44. It is
estimated that approximately 800,000 people in the United States are living with
the HIV virus. According to the Centers for Disease Control and Prevention
("CDC"), total federal funding budgeted for HIV/AIDS in 1995 was over $2.7
billion.

Based on industry estimates, the Company believes that approximately 60
million HIV tests were performed in the U.S. in 1995. Of these tests,
approximately 30 million were performed in connection with blood donor
screening, 20 million were performed in healthcare settings such as hospitals
and clinics, 5 million were performed in connection with life insurance
applications, and the balance were performed by public health departments and
the military. Currently, substantially all HIV tests are performed by testing a
patient's blood. There are a number of blood tests for HIV, the most common of
which is the enzyme-linked immunosorbent assay ("ELISA"). In order to reduce the
possibility that an individual without HIV will be diagnosed as having the virus
(a false positive), most countries require the retesting of the blood sample
using a second, more specific test to confirm an initial positive test result.
The most commonly used confirmatory test is the Western blot.

The Company believes that blood testing has a number of disadvantages
which increase healthcare costs and patient inconvenience, pose a risk of
infection to healthcare professionals and make testing uneconomic or unavailable
in certain applications or settings. The disadvantages of blood testing include:

RISK OF HIV INFECTION. Blood tests involve the use of needles or
lancets to obtain blood from the patient. Healthcare professionals collecting
blood risk contracting HIV if accidentally stuck by the needle or lancet used to
obtain blood from an infected patient.

LIMITED ACCESS. Because blood must be collected by trained
professionals, its collection is often difficult or prohibitively expensive in
certain settings. For example, community-based outreach programs, homeless
shelters, rural communities, and other remote settings often lack healthcare
professionals trained in blood collection.
As a result, blood testing may not be available in some of these settings.

HIGHER OVERALL COST. The cost of collecting a blood specimen represents
a significant component of the total cost of HIV testing. Furthermore, when a
healthcare professional must travel to the subject's office or home to collect a
blood sample, as is often the case with life insurance applicant testing, the
cost of collecting the blood specimen is substantially increased.

PATIENT DISCOMFORT. Blood tests require the use of needles or lancets
that are uncomfortable for patients. In addition, patients with small or damaged
veins, such as intravenous drug users, the elderly and young children, may
require multiple needle sticks in order to obtain an adequate blood sample.

EPITOPE ORAL SPECIMEN COLLECTION TECHNOLOGY

In order to address the significant drawbacks associated with
blood-based tests, Epitope developed and patented a device to collect oral fluid
instead of blood. The EpiScreen/OraSure device, shaped like a small toothbrush,
consists of a cotton-fiber pad treated with a proprietary salt solution. The
pad, which is mounted on a nylon handle, is placed in the patient's mouth
between the lower cheek and gum for two minutes. The pad collects oral mucosal
transudate, a serum-derived fluid that, unlike saliva, contains high
concentrations of antibodies.

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<PAGE>

OMT contains approximately four times the amount of antibodies found in ordinary
whole saliva. Following collection, the pad is sealed in a specimen vial
containing a proprietary preservative solution. The treated pad enhances the
collection, and the preservative solution enhances the stabilization, of
antibodies and other analytes originating from the oral mucosae. The specimen in
the vial is stable for three weeks at room temperature, although in most cases
laboratory testing takes place within one to three days. See "Epitope,
Inc.--Patents and Proprietary Information."

A schematic representation of the oral fluid collection procedure is
shown below.

[Graphic material demonstrating specimen collection procedure,
containing illustrations and the following captions:

Peel open package.
Place pad between lower cheek and gum. Rub back and forth
until moist. Keep the pad in place for 2 minutes (maximum 5
minutes) while timing.
Open vial in upright position.
Insert pad to bottom of vial.
Break the pad handle by snapping it against the side of the
vial.
Replace the cap with a snap.]

PRODUCTS

EPISCREEN/ORASURE. In December 1994, the Company received clearance from
the FDA to sell EpiScreen/OraSure to professional markets for the ELISA
screening of HIV-1 antibodies. The device is marketed directly by the Company
under the trade name EpiScreen for use by the U.S. life insurance industry and
in certain international markets, and is marketed by SB under the trade name
OraSure to healthcare professionals in the United States and a number of other
countries. See "Epitope Medical Products--Marketing."

The EpiScreen/OraSure oral specimen collection and HIV-1 testing system
is easily administered and involves three steps: (i) collection of an oral
specimen using the EpiScreen/OraSure collection device, (ii) ELISA screening of
the specimen for HIV antibodies at a laboratory, and (iii) laboratory
confirmation of positive screening test results with the FDA-cleared OraSure
Western blot kit. A trained healthcare professional then conveys test results
and provides appropriate counseling to the patient.

The EpiScreen/OraSure HIV-1 testing system represents a highly accurate
alternative to traditional blood tests. In clinical trials, EpiScreen/OraSure
provided the correct result or triggered appropriate follow-up testing in 3,569
out of 3,570 cases (99.97 percent). The Company believes EpiScreen/OraSure has
several advantages over blood tests, as outlined in the following table.

<TABLE>
<CAPTION>
<S> <C> <C>
Feature Blood Test EpiScreen/OraSure

Safety Poses risk of HIV Eliminates risk of
infection through needle-stick accidents
accidental needle sticks

Invasiveness Requires use of a Uses noninvasive
needle or lancet collection technique

Ease of use Requires blood Sample collection
collection by a requires minimal
trained healthcare training
professional

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<PAGE>

Portability Generally performed in Can be used rapidly and
a physician's office efficiently in almost
or other healthcare any setting
setting

Cost Requires a nurse or Eliminates the need for
other trained healthcare and costs associated
professional with a trained
healthcare professional
</TABLE>

Oral-based and Serum-based Western Blot Confirmatory Tests. Epitope
Medical Products has also developed, and in June 1996 received FDA clearance to
market, an oral-based HIV-1 Western blot confirmatory test. This test uses the
original oral specimen to confirm positive results of initial EpiScreen/OraSure
HIV-1 ELISA screening tests. Epitope Medical Products has also marketed EPIblot,
a serum-based Western blot HIV-1 confirmatory test kit since 1987. The kit is
used to confirm the positive results of initial blood-based screening tests for
HIV-1 infection.

MARKETS

INSURANCE INDUSTRY. Epitope Medical Products believes there is a
significant need in the life insurance industry for an easy-to-administer,
noninvasive and cost-effective HIV testing system such as EpiScreen. In the
United States, approximately 5 million HIV tests were administered in 1995 by
the life insurance industry in connection with the issuance of new policies. In
addition, data from the American Council of Life Insurance and the Health
Insurance Association of America indicate that over $1.5 billion in AIDS-related
death benefits were paid in 1994. The organizations also cautioned that, due to
difficulty in identifying all AIDS-related claims, the data may significantly
understate the financial impact of AIDS on the insurance industry.

Current HIV testing of life insurance applicants involves the use of a
paramedic or other trained healthcare professional to obtain a blood sample. The
cost to the insurance company for an HIV test includes the cost of the paramedic
as well as the cost of the collection kit and laboratory testing services. These
costs average approximately $55 to $70, of which $35 to $50 is the cost of the
paramedic. As a result, insurance companies have generally limited HIV testing
to policies with face amounts of $100,000 or more. Based on industry statistics,
Epitope Medical Products estimates that in 1994 over 9 million policies were
issued for face amounts of less than $100,000, representing 68 percent of all
policies issued. Epitope Medical Products believes that the use of EpiScreen can
significantly reduce the cost of HIV testing to the insurance industry because
collection of an oral fluid specimen can be performed by insurance agents or
other persons without professional medical training, eliminating the cost of the
paramedic and making testing at policy levels below $100,000 a cost-effective
practice. Moreover, the Company believes that insurance companies may adopt
EpiScreen for use in connection with applications for insurance policies with
face amounts at and above $100,000.

Epitope Medical Products also believes that the use of EpiScreen will
allow the insurance industry to address "anti-selection." Anti-selection occurs
when an individual who knows that he or she is infected with HIV intentionally
applies for one or more life insurance policies that do not entail HIV testing.
Epitope Medical Products believes that the availability of two recently approved
over-the-counter ("OTC") HIV blood tests may increase the incidence of
anti-selection. By allowing insurance companies to lower the policy level at
which HIV testing is cost-effective, the use of EpiScreen may allow insurance
companies to reduce their exposure to losses from anti-selection and thereby to
lower overall claims costs.

An additional advantage of the EpiScreen testing system is that the
oral specimen used for HIV testing can also be used to identify smokers and
users of cocaine. Cotinine, a metabolite of nicotine, can be detected using
OraSure/EpiScreen. The FDA has advised Epitope Medical Products that EpiScreen
may be used for cocaine testing for the purpose of life insurance risk
assessment while a 510(k) notice is undergoing final review, and may be used for
cotinine testing generally. In a presentation at the 105th annual meeting of The
American Academy of Insurance Medicine, a major life insurance company reported
results of the use of the EpiScreen testing system in Canada and

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<PAGE>

in the Bahamas from 1992 to 1995. The life insurance company reported that agent
collection reduced its testing costs by $65 per application. During the
four-year study period, the insurer found that it saved $1.7 million by using
EpiScreen for HIV and cocaine testing. In addition, the life insurance company
determined that it realized $1.6 million in increased premiums as a result of
identifying smokers who claimed on their applications that they were nonsmokers.

PHYSICIAN AND CLINICAL MARKET. Through SB, Epitope Medical Products is
marketing its oral HIV testing system to the physician, hospital and other
professional healthcare provider markets under the brand name OraSure. OraSure
is now offered to physicians and hospitals in the United States by over 3,300
sales representatives in the SB distribution network. In connection with the
introduction of OraSure to the physician community in August 1996, SB created
the OraSure Confidential Testing Network, a nationwide network for consumers to
identify doctors in their area who offer confidential HIV testing with OraSure.
The Network is accessible to consumers through a toll-free number
(1-800-OraSure) and on the Internet (www.OraSure.com). The SB product launch was
accompanied by an advertising campaign featuring two-page spreads in major
medical professional publications. The OraSure brand was also a major sponsor of
the 1996 AIDS Candlelight March in Washington, D.C., conducted in connection
with the display of the National AIDS Quilts.

OTC MARKET. A recent study published in the New England Journal of
Medicine reported that 44 percent of Americans age 18 to 24 and 33 percent of
Americans age 25 to 44 were "very or somewhat likely" to purchase
over-the-counter home-collection HIV tests. According to the United States
Census Bureau, as of July 1996 there were 24.7 million Americans in the 18 to 24
age group and 83.7 million in the 25 to 44 age group. Thus, based on the study,
the number of people "very or somewhat likely" to purchase OTC home-collection
HIV tests in the U.S. exceeds 35 million individuals.

Epitope Medical Products and SB are currently conducting clinical
trials to support an application for FDA clearance to market OraSure as a home
collection testing system. If FDA clearance is obtained, Epitope Medical
Products and SB plan to market the OraSure device for OTC sale as part of an
integrated system including laboratory testing and counseling. Epitope Medical
Products believes the noninvasiveness and ease of use of OraSure represent
significant benefits to the home user over traditional blood-based methods.
There can be no assurance that Epitope Medical Products will receive FDA
clearance to market OraSure to the OTC market on a timely basis, if at all. See
"Description of Business--Epitope Medical Products--Government Regulation."

If Epitope Medical Products receives FDA clearance of the OraSure home
collection system, a consumer could purchase OraSure at retail outlets such as
pharmacies, drug stores, and other commercial facilities or through a mail order
program. The consumer would collect the specimen and mail it in a postage
prepaid envelope to an SB laboratory for testing. The consumer would obtain his
or her test results and counseling by calling a toll-free number and providing a
confidential identification number included with the test. SB has established an
arrangement under which the American Social Health Association ("ASHA") would
provide test results and counseling to the caller. ASHA is the leading provider
of AIDS counseling services in the United States, handling over 4,000 calls per
day on the National AIDS Hotline.

INTERNATIONAL. In light of the worldwide scope of the HIV epidemic,
Epitope Medical Products believes there are significant opportunities for sale
of EpiScreen/OraSure in international markets. Epitope Medical Products believes
that the ease of use, portability, increased safety and lower cost of oral fluid
testing will provide significant advantages over blood tests in international
markets. Epitope Medical Products has initiated an international marketing
program that offers a complete EpiScreen testing system. The program features
direct assistance to distributors in establishing EpiScreen programs that
include laboratory services, cooperation from screening test manufacturers, and
provision of Western blot confirmatory kits in each country. Epitope is
currently marketing EpiScreen to distributors in Canada, Thailand, Argentina and
South Africa for use in professional markets. SB also markets OraSure to the
professional market in several Latin American and African countries and the
European Community through its network of distributors. See "Epitope Medical
Products--Marketing."

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<PAGE>

PRODUCTS UNDER DEVELOPMENT

EPISCREEN/ORASURE. Oral mucosal transudate contains many constituents
found in blood serum. Because of this feature, the Company believes
EpiScreen/OraSure is a platform technology with a wide variety of potential
applications beyond HIV testing. For example, the EpiScreen/OraSure device may
be useful for the diagnosis of a variety of infectious diseases in addition to
HIV, such as viral hepatitis and a number of childhood diseases. The Company
recently applied for regulatory clearance in Canada to market EpiScreen for the
detection of measles, mumps and rubella. In addition, the Company believes that
the use of oral specimens may allow physicians to diagnose diseases more readily
in children without subjecting them to the discomfort of drawing a blood sample,
thereby increasing the frequency of testing for diseases.

The Company believes the EpiScreen/OraSure device also has potential
application in the detection of drugs of abuse, such as cocaine. A 510(k)
notification for this use is currently undergoing FDA review and, if approved,
will allow Epitope Medical Products to market EpiScreen/OraSure to professional
markets in addition to the life insurance industry. Under an agreement with STC
Technologies, Inc., Epitope Medical Products is conducting U.S. clinical trials
for other drugs of abuse. Physicians may also find the device useful for
monitoring levels and adjusting dosages of therapeutic drugs, such as those that
are toxic at levels only slightly above the level at which they are effective.
Monitoring of these drugs currently requires frequent blood tests to determine
drug concentration. The Company believes oral fluid testing would eliminate the
discomfort and inconvenience associated with this frequent blood testing.

ORAQUICK. Epitope Medical Products is currently developing OraQuick(R)
HIV, a one-step, rapid-format oral fluid testing system designed to provide test
results within ten minutes. Epitope Medical Products believes that OraQuick has
significant potential as a rapid laboratory-based HIV test and as an OTC
home-based HIV test. Epitope Medical Products has substantially completed a
prototype of OraQuick HIV. Like EpiScreen/OraSure, OraQuick is a platform
technology with a variety of potential applications in addition to HIV testing.
Modifications of the basic OraQuick technology may allow use of this approach
for detection of antibodies against the ulcer-causing bacterium Helicobacter
pylori, as well as for a variety of infectious diseases such as syphilis, viral
hepatitis, and childhood infections. There can be no assurance that Epitope
Medical Products will complete development of any of these products or, in the
event of successful development, will receive applicable regulatory clearances
or will profitably market the products.

MARKETING

LIFE INSURANCE INDUSTRY. Epitope Medical Products currently markets its
EpiScreen device for use in screening life insurance applicants for HIV,
cocaine, and nicotine. The Company maintains a six-member direct sales force
that markets and sells EpiScreen to the main insurance testing laboratories in
the United States and Canada. The major laboratories currently using the
EpiScreen device include LabOne, Inc., Osborn Laboratories, Clinical Reference
Laboratory, Inc. and GIB Laboratories. Epitope Medical Products also markets the
use of EpiScreen directly to life insurance companies.

U.S. PROFESSIONAL AND OTC. In February 1995, Epitope Medical Products
entered into a Development, License and Supply Agreement with SB (the
"Agreement") for the OraSure HIV-1 oral specimen collection device and certain
future diagnostic products. Under the Agreement, SB will sell the OraSure device
to the professional markets in the United States. In addition, if and when
regulatory clearance is received, SB will market the OraSure device to the U.S.
OTC market. SB paid Epitope Medical Products a one-time license fee of $5
million for the rights granted under the Agreement.

The Agreement provides that SB generally has responsibility for
advertising, promotion, distribution, and regulatory approval expenses in its
markets. Epitope Medical Products will manufacture the OraSure devices for sale
to SB at predetermined transfer prices and will receive certain royalties on SB
product sales. A portion of SB's costs in obtaining and maintaining regulatory
approvals will be credited against royalties payable to Epitope Medical
Products.

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<PAGE>

The Agreement permits SB to fund Epitope Medical Products' ongoing
development of diagnostic products and technology for its term, which lasts for
a minimum of 15 years, subject to earlier termination on 60 days' notice if SB
elects to stop marketing the products in all markets. SB has the option to
market those products developed with SB funding, which Epitope will initially
manufacture for agreed-upon prices and royalties.

INTERNATIONAL. Epitope Medical Products also employs a direct sales
force for the marketing and sale of EpiScreen in certain international markets.
The Company complements its direct sales efforts through the use of selected
international distributors who have the expertise and capabilities appropriate
for marketing EpiScreen. In addition, under the terms of the SB Agreement, SB
will act as exclusive director of the OraSure HIV-1 oral specimen collection
device in the professional markets in certain African countries. Epitope Medical
Products has retained all rights to distribute products in markets other than
those reserved to SB.

WESTERN BLOT DISTRIBUTION. Epitope Medical Products has entered into
supply and distribution agreements with Organon Teknika Corporation, a member of
the Pharma Division of Akzo Nobel, NV, an international chemical and
pharmaceutical manufacturer based in Arnhem, The Netherlands. The supply
agreement provides that Organon Teknika will supply the HIV-1 antigen used to
manufacture Western blot confirmatory test kits. The distribution agreement
grants Organon Teknika the exclusive right to purchase Western blot confirmatory
test kits from Epitope Medical Products and to market them worldwide. Epitope
Medical Products and Organon Teknika are negotiating terms for continuing the
supply and distribution arrangement after the existing agreements expire on
March 31, 1997.

MANUFACTURING

Epitope Medical Products manufactures Western blot confirmatory tests
at the Company's Beaverton, Oregon, facility. The Western blot operation is
presently producing current requirements with a one shift operating schedule. If
additional Western blot production is required, the Company can expand operating
hours or add an additional shift. The EpiScreen/OraSure device is manufactured
by a contract manufacturer which also manufacturers medical devices for other
firms. Recent increases in demand for the EpiScreen/OraSure device have been met
by increasing the frequency of production cycles and number of production shifts
while continuing to use the equipment purchased by the Company for use in the
manufacturing process. The Company believes that it will reach full capacity for
its present equipment configuration during 1997. Additional equipment has been
acquired and will be placed into service as required to meet increased demand.
See Risk Factors--Risk Factors Primarily to Epitope Medical Products--Dependence
on Contract Manufacturer.

Company quality control personnel inspect products and maintain
documentation for compliance with the FDA's current Good Manufacturing
Practices ("GMP") and other government manufacturing regulations. Epitope's
manufacturing facilities are subject to periodic inspection by regulatory
authorities. See "Government Regulation." Contract manufacturing is overseen by
an on-site employee of the Company who is responsible for monitoring compliance
with Company standard operating procedures, reviewing the manufacturing process
and assuring that the manufacture of Company product is in compliance with GMP.
The Company conducts further quality control tests in its Beaverton, Oregon,
facility.

COMPETITION

Competition in the emerging market for HIV testing is intense and is
expected to increase. The Company believes that the principal competition will
come from existing blood-based HIV assays and from urine-based testing assays.
Epitope Medical Products' competitors include specialized biotechnology firms as
well as pharmaceutical companies with biotechnology divisions and medical
diagnostic companies, many of which have considerably greater financial,
technical, and marketing resources than Epitope Medical Products. Competition
may intensify as technological advances are made and become more widely known
and as products reach the market in greater numbers. Furthermore, new testing
methodologies could be developed in the future that render Epitope Medical
Products' oral-based HIV test impractical, uneconomical or obsolete. There can
be no assurance that Epitope Medical Products' competitors will not succeed in
developing or marketing technologies and products that are more effective than
those developed by Epitope Medical Products or that would render its
technologies or products

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obsolete or otherwise commercially unattractive. In addition, there can be no
assurance that competitors will not succeed in obtaining regulatory approval for
these products, or in introducing or commercializing them before Epitope Medical
Products. Such developments could have a material adverse effect on the
Company's and Epitope Medical Products' business, financial condition and
results of operations.

Three companies have submitted applications to the FDA for OTC HIV
blood testing: Direct Access Diagnostics, Home Access Health Corp., and ChemTrak
Incorporated. The FDA has approved a home collection kit for HIV blood testing
developed by Direct Access Diagnostics and another home collection kit for HIV
blood testing developed by Home Access Health Corp.

Cambridge Biotech Corporation and BioRad Laboratories, Inc. manufacture
HIV Western blot confirmatory tests, and Waldheim Pharmazeutika manufactures
immunofluorescent HIV confirmatory tests, which compete with Epitope Medical
Products' EPIblot HIV-1 Western blot serum-based confirmatory test kits. In
addition, Abbott Laboratories provides in-house testing services for customers
of its HIV screening products.

Several other companies market or have announced plans to market oral
specimen collection devices and tests outside the United States and have
announced plans to seek FDA approval of such tests in the United States. Epitope
Medical Products expects the number of devices competing with its
EpiScreen/OraSure device to increase as the benefits of oral specimen-based
testing become more widely accepted. Epitope Medical Products expects that FDA
approval of the EpiScreen device will also encourage potential competitors to
develop oral diagnostic products. No such devices have yet been approved by the
FDA for HIV testing. See "Epitope Medical Products--Government Regulation."

The FDA recently approved an HIV ELISA screening test for use with
urine. However, no Western blot or other confirmatory test using urine has been
approved by the FDA to date. The Company believes that absence of an
FDA-approved confirmatory test for urine poses a significant disadvantage to
urine testing because a patient who receives an initial positive screening
result must return to give a second, blood-based sample for confirmatory
testing. The Company also believes that urine collection can be difficult,
inconvenient and potentially embarrassing for the patient, and that privacy and
chain-of-custody issues are further impediments to routine use of urine-based
HIV tests.

GOVERNMENT REGULATION

GENERAL. Many of Epitope Medical Products' proposed and existing
diagnostic products are subject to regulation by the FDA, other federal, state,
and local agencies, and comparable bodies in foreign countries. Such regulation
governs almost all aspects of development and marketing, including the
introduction, advertising, promotion, manufacturing practices, labeling,
distribution, and record keeping for the products. In the United States,
different types of diagnostic products are regulated differently by the FDA, as
discussed below. As part of the FDA clearance process, Epitope Medical Products
often must demonstrate that its products are both safe and effective for a
particular indication or application.

DRUGS AND BIOLOGICAL PRODUCTS. Generally, drugs and biological products
require FDA approval before marketing. The steps required before a drug or
biological product may be marketed in the United States include: (1) preclinical
laboratory and animal tests; (2) submission of an application for an
investigational new drug or biological product, which must become effective
before human clinical trials may commence; (3) human clinical trials; (4)
submission of a Product License Application ("PLA") for the biological product
or a New Drug Application ("NDA") for most other new drug products; and (5)
approval of the PLA or NDA.

Preclinical safety and initial efficacy testing is usually undertaken
in animals. Results of such preclinical and other laboratory tests are submitted
to the FDA before human clinical trials can begin. Clinical trials are typically
conducted in three phases. Phase I uses human subjects to determine safety and
tolerance. Phase II uses a limited patient population to determine effectiveness
and dosage and to identify side effects. Compounds found effective and safe in
Phase II are further tested in Phase III with an expanded patient population at
geographically dispersed clinical study sites. Each phase may last from one to
two years or more.

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Most products are not approved because of the failure to demonstrate
safety, effectiveness, or both. The FDA may suspend clinical trials at any time
if it is felt that subjects or patients are being exposed to an unacceptable
health risk. Obtaining FDA approval requires substantial time and effort. There
can be no assurance that any approval will be granted to Epitope Medical
Products on a timely basis, if at all. As part of the approval process, the FDA
may require Epitope Medical Products to initiate post-approval marketing
studies.

MEDICAL DEVICES. Medical devices are classified either in Class I,
Class II, or Class III. Class I devices are subject only to general control
provisions of the Federal Food, Drug, and Cosmetic Act, as amended (the "FDC
Act"). These provisions include requirements that a device not be adulterated or
misbranded. Class II devices are those for which general controls are
insufficient to provide a reasonable assurance of safety and efficacy and for
which a "generic" performance standard or other special controls are
appropriate. Devices that do not meet the criteria for Class I or II are placed
in Class III. Class I and II devices, those Class III devices initially marketed
prior to passage of the Medical Device Amendments of 1976 ("MDA") for which
premarket approval applications ("PMAs") are not yet required, and devices
substantially equivalent to such devices, may be marketed upon FDA clearance of
a section 510(k) notification (a "510(k) Notice"). Other Class III devices may
be commercially marketed only after FDA approval of a PMA. Generally, the
process of obtaining FDA approval of a PMA is similar to that for obtaining
approval of a biological or other drug product.

Based upon the information provided in a 510(k) Notice regarding the
device's intended use and technological features, the FDA will determine whether
the device is "substantially equivalent" to a predicate device, i.e., a device
legally marketed which did not require a PMA. If a device is found to be
substantially equivalent to a predicate device, it may be freely marketed in the
United States so long as the device is otherwise in compliance with the FDC Act.
If it is not so found, it will be considered a Class III device requiring a PMA.
Substantial equivalence means that the FDA has found that the device has the
same intended use as the predicate device, and either has the same technological
characteristics or has different characteristics, but there is information in
the 510(k) Notice that shows the device is as safe and effective as the
predicate and does not present different questions of safety and effectiveness.

EPISCREEN/ORASURE COLLECTION DEVICE. Use of the EpiScreen/OraSure
collection device for applications involving the detection of antibodies to HIV
is regulated by the FDA as use of a Class III medical device requiring a PMA. In
December 1994, the FDA approved Epitope Medical Products' PMA for use of the
Episcreen/Orasure device in HIV screening. Post-approval marketing studies are
under way as required as part of the FDA's approval of the EpiScreen/OraSure
device. In June 1996, the FDA approved the PMA for use of the OraSure oral
specimen-based Western blot confirmatory test kit for HIV-1 diagnosis.

In February 1995, Epitope Medical Products submitted a 510(k) Notice
for use of EpiScreen for cocaine testing. The submission is currently undergoing
FDA review. See "Business--Epitope Medical Products--Products Under
Development--EpiScreen." In the meantime, the FDA has advised Epitope Medical
Products that EpiScreen may be used for cocaine testing for the purposes of life
insurance risk assessment.

WESTERN BLOT TEST KITS. Epitope Medical Products' HIV-1 Western blot
serum-based confirmatory test kits are used to confirm whether individuals are
infected with HIV-1. They are regulated by the FDA as biological products,
unlike most other diagnostic tests which are regulated as medical devices. In
March 1991, the FDA cleared the EPIblot HIV-1 serum-based confirmatory test kit
for commercial distribution. As noted above, a PMA seeking permission to market
the OraSure oral specimen-based Western blot confirmatory test kit for HIV-1
diagnosis was approved by the FDA in June 1996.

MANUFACTURING REGULATIONS. Every company that manufactures drugs,
biological products, or medical devices distributed in the United States is
subject to inspections by the FDA and must comply with the FDA's Current Good
Manufacturing Practices regulations. These regulations govern, among other
matters, manufacture, testing, release, packaging, distribution, and
documentation.

OTHER. Epitope Medical Products is also subject to regulation by the
Occupational Safety and Health Administration and may be subject to regulation
by the U.S. Environmental Protection Agency ("EPA") under the

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Toxic Substances Control Act ("TSCA"), the Resource Conservation and Recovery
Act, and other legislation. Epitope Medical Products is also subject to foreign
regulations governing, for example, human clinical trials and marketing with
respect to products distributed outside the United States. Approval processes
vary from country to country, and the length of time required for approval or to
obtain other clearances may in some cases be longer than that required for U.S.
governmental approvals. The extent of potentially adverse governmental
regulation affecting Epitope Medical Products that might arise from future
legislative or administrative action cannot be predicted.

AGRITOPE

Historically, Agritope has focused on the development and
commercialization of novel agricultural products using plant genetic engineering
and other modern methods. Through its acquisition of A&W and its majority
ownership of Vinifera, Agritope positioned itself as a vertically integrated
agribusiness with the production, distribution and marketing infrastructure
necessary to realize better the value of its proprietary technology. Agritope's
products now include a broad range of fruits, vegetables and plants produced
using technologically advanced farming and plant propagation techniques designed
to incorporate advances in biotechnology, plant breeding, and crop production.

AGRITOPE RESEARCH AND DEVELOPMENT

Agritope's biotechnology research and development program is focused on
using the tools and techniques of plant genetic engineering to regulate the
synthesis of ethylene in ripening fruits and vegetables. Ethylene gas is a plant
hormone which in higher plant species is responsible for fruit ripening and
vegetable senescence as well as numerous other physiological effects. Agritope
has identified and patented a single gene that can be inserted into plants and
expressed to regulate the plant's ability to produce ethylene. In addition,
Agritope is conducting research in the area of disease control, including
screening plants for the presence of disease and creating genetically engineered
plants with resistance to pathogens.

RIPENING CONTROL. The fresh produce industry is based largely upon
rapid harvesting, processing and distribution of fruits and vegetables in order
to prevent spoilage and ensure the arrival of product at retail outlets in
acceptable condition for consumer purchase and use. The postharvest period for
most fruits and vegetables is one of continuous ripening and senescence, as
evidenced by rapid changes in color, texture, flavor, nutrient content, and
other quality attributes. Product losses due to perishability during harvesting,
processing, packing, shipping and distribution can reach substantial portions of
overall crop yield. Growers frequently incur losses resulting from the
abandonment of crops in the field or having shipments refused by receivers
because the produce is overripe. In addition, wholesalers and retailers may be
forced either to discard or sell overripe produce at reduced prices and
consumers often must use produce shortly after purchase to avoid spoilage.
Studies published in the United States Department of Agriculture ("USDA")
Marketing Research Report have estimated postharvest losses of 30 percent and 40
percent for strawberries shipped from Florida to the Chicago and New York
markets. In the U.S. fruit and vegetable markets, postharvest losses are
estimated to amount to several billion dollars annually.

Postharvest losses are largely attributable to the effects of ethylene.
Because ethylene is a gas, it not only affects the plant producing it, but also
surrounding plants as well. The physiological effects of ethylene include
initiation and enhancement of ripening, senescence, leaf abscission and
drooping, and flower fading and wilting. Common examples include the ripening
and subsequent rotting of tomatoes and apples, discoloration in lettuce and
broccoli, and the short bloom life of cut flowers.

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The importance of controlling ethylene production in plants has been
recognized for decades, and has been addressed primarily through the use of
controlled atmosphere storage, chemical treatment, and special packaging.
Conventional techniques for controlling ethylene production have serious
disadvantages that include high cost, time-critical handling requirements and
lack of consistent ripening. For example, the majority of product sold in the
fresh tomato market today is composed of "gas-green" tomatoes. These tomatoes
are picked and packed while still green and firm. Prior to shipping to wholesale
customers, green tomatoes are exposed to ethylene gas in order to initiate
ripening of the product. In general, gas-green tomatoes are perceived by
consumers to have less desirable taste and texture than vine ripened tomatoes.

Agritope believes the ability to regulate ethylene and control ripening
through genetic engineering represents an opportunity to provide a superior
product to consumers while also improving profitability for growers and
distributors. Growers may achieve higher marketable yields due to fewer losses
to overripe product in the field and may lower labor costs by decreasing
frequency of harvest. For packers/shippers, better control of product
perishability may result in improved inventory flexibility and control, and more
uniform product quality.

AGRITOPE TECHNOLOGY. Agritope's ethylene control technology is focused
on the use of a patented gene known as SAMase. The expression of SAMase in
plants produces an enzyme that acts to degrade one of the important precursor
compounds (S-adenosylmethionine or "SAM") necessary for the production of
ethylene. Agritope has genetically engineered plants to express the SAMase gene
only when certain levels of rising ethylene concentrations are reached in the
tissues of the fruit or plant. This feature causes the production of greater
levels of the enzyme that degrades SAM in response to a correspondingly higher
level of ethylene. Agritope believes that this technology thus offers a major
advantage over other approaches to ripening control in that the production of
ethylene may be specifically reduced to levels that allow for the initiation of
ripening but delay the spoiling effects of excess ethylene. Therefore, the fruit
can be maintained at an optimal level of ripeness for an extended period of
time. An additional benefit of Agritope's technology is that the enzyme produced
by the SAMase gene degrades SAM into compounds normally found in plants.
Agritope believes its SAMase technology can be utilized for the control of
ethylene in any plant species where ethylene affects ripening or senescence.

Agritope's ripening control technology is protected by a U.S. patent
covering the use of any gene that encodes S-adenosylmethionine hydrolase (the
enzyme expressed by the SAMase gene) in any plant species. In addition to the
patent on the SAMase gene, utility claims have been allowed on the promoter/gene
combination used by Agritope in applications currently under development as well
as potential applications in all other fruit-bearing plants. In the area of
regulated ripening control, Agritope has four additional U.S. and foreign
patents pending. In addition, Agritope has three U.S. and foreign patent
applications pending in related areas. See "Description of Business--Epitope,
Inc.--Patents and Proprietary Information."

DEVELOPMENT PROGRAMS. Agritope's research and development programs are
directed toward several highly perishable fruit and vegetable crops described
below. The development program comprises five stages, including gene isolation,
transformation, product evaluation, seed/plant production and commercialization.

The following chart shows the approximate progress Agritope has made to
date with various crops, which are described in more detail below.

[Chart titled "Agritope Product Development Program" listing the stages
of development (gene isolation, transformation, product evaluation,
seed/plant production, and product launch). The chart shows that the
following products are in the stages indicated:

Tomato Product Evaluation
Raspberry Product Evaluation
Melon Transformation
Brassica Transformation
Additional Crops Gene Isolation]

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GENE ISOLATION: The initial stage of genetic engineering. Gene
isolation involves the identification and characterization of genes and
gene promoters for use in Agritope's development programs. These
genetic elements are then combined for use in genetically engineered
plants.

TRANSFORMATION: The stage at which the new genetic material
is introduced into the plant. The transgenic plants which result are
then available for product evaluation.

PRODUCT EVALUATION: The analysis of transgenic plants in both
laboratory and field settings to determine commercial utility. This
stage also involves the plant breeding and selection process to develop
commercially competitive new varieties that incorporate the Agritope
technology.
Regulatory data are also collected and submitted at this stage.

SEED/PLANT PRODUCTION: Propagation of selected plant material
(either seed or plants) in quantities needed for commercial production.

PRODUCT LAUNCH: Commercial production and sale, following
regulatory clearance.

TOMATO. The annual U.S. wholesale fresh market tomato business is
estimated at $1.7 billion. In order to facilitate the commercialization of its
ethylene control technology into this market, Agritope and A&W formed Superior
Tomato Associates, L.L.C. ("STA"), a joint venture with Sunseeds Company, the
developer and producer of several leading fresh market tomato varieties.

Agritope provides genetic engineering technology and regulatory
expertise, has responsibility for managing the joint venture, and owns a
two-third equity ownership interest in STA. Sunseeds provides elite tomato
germplasm and breeding expertise in the development of transgenic varieties. A&W
contributes testing and production acreage and will oversee the production and
wholesale distribution of fresh tomatoes to the fresh produce industry.

STA is currently in the process of developing and testing transgenic
cherry, roma, and large fruited vine ripe tomato varieties. Agritope has
developed lines of elite tomato germplasm provided by Sunseeds. Recent field
trials have successfully demonstrated the transfer of Agritope's SAMase ripening
control technology to a number of Sunseeds' elite breeding lines. Sunseeds is
conducting further breeding and field trials of these transgenic lines. These
trials will be followed by production scale trials to be conducted by A&W that,
if successful, will lead to regulatory submissions and, if regulatory clearances
are received, commercial-scale seed production. Subsequently, A&W would commence
commercial tomato production and sales to the industry.

Prior to the formation of STA, Agritope submitted safety, nutritional,
and environmental information on a prototype transgenic tomato line to both the
USDA and the FDA. In March 1996, the USDA issued its finding that this line has
no significant environmental impact and would no longer be considered a
regulated article. During the same month the FDA determined that the variety did
not raise issues that would require pre-market review or approval by that
agency. In addition to receiving these U.S. regulatory clearances, Agritope is
also conducting field evaluations of SAMase tomato lines in Mexico under permits
granted by the Mexican Ministry of Agriculture. In order to commence sale of
selected varieties, Agritope will be required to make supplemental submissions
to the USDA and FDA that establish that such varieties are comparable to the
previously cleared lines.

RASPBERRY. The wholesale raspberry market, estimated at $48 million
annually in the United States, has experienced limited growth because of the
extreme perishability of the fruit. Agritope believes that the successful
development of raspberries containing its ethylene control technology could
permit a significant expansion of the fresh raspberry market.

In a collaboration with Sweetbriar Development, Inc. ("Sweetbriar"),
the largest fresh raspberry producer in the U.S., Agritope has engineered
several of Sweetbriar's proprietary commercial raspberry varieties to contain
the SAMase gene. Initial field trials of transgenic raspberries are currently
underway at Sweetbriar facilities in California and Agritope facilities in
Woodburn, Oregon. Agritope has already demonstrated the ability to reduce

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ethylene synthesis in the fruit. Successful development of a commercial
transgenic raspberry will require further demonstration of improved shelf life
as well as additional field trials to obtain the appropriate regulatory
clearances. If these conditions are met, Sweetbriar would produce the new
raspberries for distribution and marketing by Driscoll Strawberry Associates
("Driscoll"), the largest distributor of fresh raspberries and strawberries in
the U.S. Agritope would receive royalties on wholesale product sales.

Separately, Agritope has integrated its ripening control technology
into commercially successful public domain varieties. A&W would undertake
commercial production and distribution of any improved raspberry products
resulting from this program.

MELON. The U.S. wholesale fresh melon market is estimated at $282
million annually. As with tomatoes, perishability results in substantial product
losses during the processes of production, harvesting, and distribution.
Agritope believes that melons represent a substantial market opportunity for
implementation of its ripening control technology. Recent scientific reports
have demonstrated a dramatic increase in shelf life for specialty type melons in
which the ability to produce ethylene has been impaired. Using proprietary seed
varieties supplied by two units of the French seed company Limagrain, Clause
Semences, and its U.S. affiliate Harris Moran Seed Company ("Harris Moran"),
Agritope is developing commercial melon varieties with controlled ripening and
increased postharvest product life. Transgenic melons containing Agritope's
ethylene control gene are currently being evaluated jointly by Harris Moran and
Agritope technicians. If successfully developed, the melons will be distributed
by A&W and third party distributors.

BRASSICA. Agritope has an agreement with Sakata Seed America ("Sakata")
to develop new varieties of certain Brassica species (broccoli and cauliflower).
Sakata is the leading hybrid broccoli and cauliflower seed supplier in the U.S.
Sakata provided Agritope with germplasm from selected breeding lines and funds
to develop broccoli and cauliflower plants integrating Agritope ripening control
technology. Agritope received payment from Sakata upon the transfer of
genetically engineered plants to be used for the production of hybrid seeds. If
the seeds are commercialized, Agritope will receive a royalty on sales made by
Sakata.

ADDITIONAL CROPS. Agritope is also pursuing research and development
programs to incorporate its SAMase technology into other crops where
perishability causes significant losses in the production and distribution
process. These include strawberries, lettuce, bananas, peaches, pears, and
apples. The estimated U.S. wholesale markets for these crops range from $325
million for pears to $2.4 billion for bananas.

ANDREW AND WILLIAMSON SALES, CO.

As part of its vertical integration strategy, Agritope acquired A&W on
December 12, 1996. A&W is a wholly owned operating subsidiary based in San
Diego, California with sales offices in San Diego and Bakersfield, California
and Nogales, Arizona. A&W, founded in 1986, produces fruits and vegetables and
provides sales and distribution services for growers from both mainland and
Baja, Mexico and the San Joaquin Valley in California. A&W produces and
distributes a diversified mix of fresh fruits and vegetables including vine ripe
cherry, roma and fresh market tomatoes, strawberries, raspberries, melons, tree
fruits, table grapes, cucumbers, squash, green, red and yellow peppers, Brussels
sprouts and asparagus. In addition to fresh strawberries, A&W processes and
sells frozen strawberry products. A&W ships fresh produce every day of the year
from its facilities in San Diego and ships seasonally from its other sites. A&W
is one of the United States' largest distributors of vine ripe cherry and fresh
market tomatoes. It is also a major shipper of fresh strawberries, melons and
cucumbers throughout North America. In connection with its distribution
operations, A&W also provides technical support and short-term loans to certain
growers. See Note 13 to Financial Statements included herein.

The Company acquired A&W pursuant to an Acquisition and Merger
Agreement with A&W and its shareholders, under which a subsidiary of the Company
was merged into A&W. The Company issued 520,000 shares of common stock of
Epitope, Inc., in exchange for all the outstanding common stock of A&W. A&W also
repaid certain loans due to its shareholders. The acquisition was accounted for
as a pooling of interest and qualifies as a tax-free reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.

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The Company has agreed to register for resale the shares issued to the
shareholders of A&W, who have represented that they have no present intention to
sell the shares. Fifteen percent of the shares will bear a legend prohibiting
sale without the Company's consent. The shareholders have agreed that these
shares will be returned to the Company to satisfy claims for breach of
representations and/or warranties arising within approximately one year after
closing.

The four principals of A&W have entered into three-year employment and
five-year noncompetition agreements with the Company. Fred L. Williamson,
president of A&W, is an executive officer of the Company.

VINIFERA, INC.

Vinifera, Inc. was incorporated in 1993 to participate in the grapevine
nursery business. Through proprietary processes, Vinifera propagates and grafts
grape plants for sale to vineyards and to growers of table grapes. Industry
sources have estimated that 44 million grafted wine grape plants were produced
in California in 1996. This number is expected to increase to between 70 and 90
million by the year 2000.

Traditionally, grapevine plants for sale to vineyards are produced
seasonally using field grown, dormant cuttings that are grafted. In contrast,
Vinifera uses year-round greenhouse propagation and a herbaceous grafting method
that employs very young, actively growing cuttings. As a result of greenhouse
propagation, Vinifera is able to develop in two years a quantity of new plants
that is approximately ten times larger than can be produced with traditional
techniques. In addition, herbaceous grafting with green cuttings could allow a
vineyard to begin commercial production of grapes from a newly planted vineyard
a year sooner than would otherwise be possible. This grafting process also
produces sturdier unions than dormant grafting, resulting in significantly
higher yields of successful grafts, both at the propagation stage and in the
survival of actual plantings in the field. Agritope Research and Development
provides disease testing services for Vinifera.

Vinifera is headquartered in Napa, California, with facilities in
Woodburn, Oregon, and Petaluma, California. Its library of grape plants includes
32 different phylloxera-resistant types of rootstock, 88 different wine varietal
clones, and ten different table grape varietal clones. In addition, several
French and Italian varietals are currently passing through quarantine and, when
released, will be available to the U.S. market exclusively through Vinifera.
Vinifera believes that this collection of different grapevine clones is one of
the largest in the world. Vinifera's U.S. customer base consists of over 80
vineyards in California, Washington and Oregon. In 1995, Vinifera established a
joint venture in Argentina (Vinifera Sudamericana S.A.) to begin the propagation
of plant material in that country. The first vines produced are expected to be
sold in 1997. Vinifera is currently in the process of establishing similar
ventures in other countries with large grape and wine production industries.

Vinifera was formed in 1993 as a wholly owned subsidiary of Agritope,
Inc. In June 1995, Agritope, Inc. agreed to sell its equity interest in Vinifera
to VF Holdings, Inc., an affiliate of a Swiss investment group. The purchaser
subsequently failed to make scheduled payments of the purchase price. As part of
a settlement of claims based on the purchaser's default, the purchaser retained
a four percent minority interest in Vinifera and relinquished the majority
interest to Agritope, Inc. in August 1996.

COMPETITION

The agribusiness and plant biotechnology industry is highly
competitive. Competitors include independent companies that specialize in
agribusiness or biotechnology; chemical, pharmaceutical and food companies that
have biotechnology laboratories; universities; and public and private research
organizations. Agritope believes that many companies including companies with
significantly greater financial resources, such as Monsanto Company, Calgene
Inc., DNAP Holding and Zeneca Seeds are engaged in the development of mechanisms
to control the ripening and senescence of fruit and vegetable products.
Technological advances by others could render Agritope's products less
competitive. The Company believes that, despite barriers to new competitors such
as patent positions and substantial research and development lead time,
competition will intensify, particularly from agricultural biotechnology firms
and major agrichemical, seed and food companies with biotechnology laboratories.
Agritope believes that it can compete successfully with companies in these
markets by developing products that offer unique and desirable attributes with
superior quality.

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The produce markets in which Agritope sells its products are highly
competitive. For example, competition in the fresh tomato market is expected to
intensify as other companies introduce tomatoes developed through biotechnology
and as existing "gas green" tomato producers react to competitive pressures by
growing and marketing traditionally developed vine ripe tomatoes.

In other crops, competition may intensify as technological developments
occur within the agricultural biotechnology industry. In competing with such
companies, Agritope relies primarily on the experience of its production, sales
and marketing staff at A&W, the qualifications of its scientific staff, and its
technological capabilities.

GOVERNMENT REGULATION

Regulation by federal, state and local government authorities in the
U.S. and by foreign governmental authorities will be a significant factor in the
future production and marketing of Agritope's genetically engineered fruit and
vegetable products.

The federal government has implemented a coordinated policy for the
regulation of biotechnology research and products. The USDA has primary federal
authority for the regulation of specific research, product development and
commercial applications of certain genetically engineered plants and plant
products. The FDA has principal jurisdiction over plant products that are used
for human or animal food. The EPA has jurisdiction over the field testing and
commercial application of plants genetically engineered to contain pesticides.
Other federal agencies have jurisdiction over certain other classes of products
or laboratory research.

The USDA regulates the growing and transportation of most genetically
engineered plants and plant products. In March 1996 following a request from
Agritope, the USDA issued a determination that allows the growing and shipping
of its prototype variety of ripening controlled cherry tomato anywhere in the
U.S. in the same manner as conventionally developed tomatoes.

In May 1992, the FDA announced its policy on foods developed through
genetic engineering (the "FDA Policy"). The FDA Policy provides that the FDA
will apply the same regulatory standards to foods developed through genetic
engineering as applied to foods developed through traditional plant breeding.
Under the FDA Policy, the FDA will not ordinarily require premarket review of
genetically engineered plant varieties of traditional foods unless their
characteristics raise significant safety questions, such as elevated levels of
toxicants, the presence of allergens, or they are deemed to contain a food
additive.

In March 1996, the FDA announced its determination, based on its review
of food safety data submitted by Agritope, that its prototype variety of
ripening controlled cherry tomato expressing the SAMase gene has not been
significantly altered with respect to food safety or nutritive value when
compared to conventional tomatoes.

The FDA has also issued a food additive regulation permitting the use
of the kanr selectable marker gene, which encodes for the enzyme APH(3')II in
genetically engineering tomatoes, cotton and canola. Agritope tomato products
will fall under this regulation. It is uncertain whether additional food
additive regulations will need to be issued to cover additional fruit and
vegetable products which use the kanr selectable marker gene.

Currently, the FDA Policy does not require that genetically engineered
products be labeled as such, provided that such products are as safe and have
the same nutritional characteristics as conventionally developed products.
However, there can be no assurance that the FDA will not reconsider its
position, or that local, state or international authorities will not enact
labeling requirements, any of which could have a material adverse effect on
marketing of products derived using the tools and techniques of genetic
engineering.

The FDA is currently considering modifying its policy on foods
developed through genetic engineering to include a Premarket Notification
("PMN") procedure. This policy modification could require companies that develop
genetically engineered foods to inform the FDA that its safety evaluation is
complete and that the company intends to commercialize the product. The
objective of the PMN is to make the FDA and the public aware of all new

III - 15

<PAGE>

genetically engineered food products entering the market. Agritope believes that
any future requirement for a PMN should not delay plans to commercialize its
genetically engineered fruit and vegetable products.

Agritope's complete range of agribusiness and plant biotechnology
activities are subject to general FDA food regulations and are, or may be,
subject to regulation under various other laws and regulations. These include
but are not limited to the Occupational Safety and Health Act, the Toxic
Substances Control Act, the National Environmental Policy Act, other Federal
water, air and environmental quality statutes, import/export control
legislation, and other laws. At the present time most states are generally
deferring to federal agencies (USDA or EPA) for the approval of genetically
engineered plant field trials, although states are provided a review period
prior to the issuance of a field trial permit. Failure to comply with applicable
regulatory requirements could result in enforcement action, including withdrawal
of marketing approval, seizure or recall of products, injunction or criminal
prosecution.

The federal regulatory agencies most involved in the business of A&W,
the production and marketing of fresh fruit and vegetables, are the USDA and the
FDA. The USDA sets standards for raw produce and governs its inspection and
certification. Under the Perishable Agricultural and Commodities Act ("PACA"),
the USDA exercises broad control over the marketing of produce in domestic and
foreign commerce, sets standards of fair conduct as to representations, sales,
delivery, shipment and payment for goods and regulates the licensing of produce
merchants and brokers.

Almost every aspect of federal regulation is accompanied by regulation
on the state level. In addition, in its Mexican operations, A&W must comply with
the requirements of Mexican law, most importantly Mexico's environmental
protection law.

International regulatory policies for genetically engineered plants and
plant products are not complete. Consequently, it is possible that additional
data, labeling or other requirements will be required in countries where
Agritope intends to grow and/or commercialize its genetically engineered
products. Foreign regulatory agencies could require Agritope to conduct further
safety assessments and potentially delay product development programs or
commercialization of resulting products.

To date, Agritope to the best of its knowledge has successfully
functioned within the scope of applicable laws and regulations, including rules
administered by the USDA, the FDA and the Mexican Ministry of Agriculture.
Agritope believes it is in compliance with all applicable laws and regulations
pertaining to the development and commercialization of its products.

EPITOPE, INC.
SUPPLIES

The HIV-1 antigen needed to manufacture Epitope Medical Products'
Western blot HIV confirmatory test kits is available from only a limited number
of sources. Organon Teknika, the exclusive distributor of the test kits, is
required to supply Epitope Medical Products' requirements for antigen for the
term of its distribution agreement with Epitope Medical Products, which ends in
March 1997. The parties are negotiating terms for continuing the supply
arrangement. If for any reason Organon Teknika should no longer be able to
supply Epitope Medical Products' antigen needs, management believes Epitope
Medical Products would be able to obtain or produce its own supply of antigen at
a competitive cost. Epitope Medical Products has obtained a license from the
National Technical Information Service which is required for the production of
the HIV-1 antigen currently used in Epitope Medical Products' Western blot test
kits.

Other materials used by Agritope and Epitope Medical Products in
manufacturing, production, and research and development operations are widely
available from a variety of sources.

III - 16

<PAGE>

GRANTS AND CONTRACTS

The Company participates in United States Small Business Innovation
Research ("SBIR") programs sponsored by either the Department of Health and
Human Services or the Department of Agriculture. The SBIR programs have two
phases. Phase I covers a six-month project period and a total award not to
exceed $100,000. Phase II covers a two-year project period and a total award not
to exceed $750,000. Epitope Medical Products has received funds in the past from
the National Institute of Allergy and Infectious Diseases ("NIAID") for work in
developing a rapid test to detect HIV antibodies in oral fluid specimens and
from the National Cancer Institute ("NCI") to fund research for the treatment of
cancer by exploiting a deficiency of certain compounds in cancer cells.

Agritope was awarded from the USDA a Phase I grant of $50,000 in 1994
and a Phase II grant of $200,000 in 1995 for development of diagnostic tests for
the detection of grapevine leafroll virus. Agritope has been awarded grant
support in the past from the Oregon Strawberry Commission and Oregon Raspberry
and Blackberry Commission for antifungal biocontrol research. The Company also
receives funds for research and development programs from its strategic
partners.

The Company intends to continue to participate in the SBIR programs,
similar grant programs and projects with strategic partners, as it deems
appropriate. The Company regularly makes applications for new grants, but there
is no assurance that grant support will be continued.

PATENTS AND PROPRIETARY INFORMATION

Epitope Medical Products has obtained patents in the United States and
certain foreign countries for the EpiScreen/OraSure and OraQuick devices and
certain related technology. Epitope Medical Products has applied for additional
patents, both in the United States and in certain foreign countries, on the
EpiScreen/OraSure collection device and a number of other technologies and
products. In 1995, Agritope received a U.S. patent relating to its ethylene
control gene. Agritope has also applied for additional U.S. and foreign patent
protection for its ethylene control technology. Agritope's ability to
commercialize products depends in part on the ownership or right to use relevant
enabling technology as well as the ownership or right to use genes of interest.
The Company anticipates filing patent applications for protection on future
products and technology. United States patents generally have a maximum term of
20 years from the date an application is filed or 17 years from issuance,
whichever is longer.

Much of the technology developed by the Company, including its
proprietary preservative solution, is subject to trade secret protection. To
reduce the risk of loss of trade secret protection through disclosure, the
Company requires its employees and consultants to enter into confidentiality
agreements. The Company believes that patent and trade secret protection is
important to its business. However, the issuance of a patent or existence of
trade secret protection does not in itself ensure the Company's success.
Competitors may be able to produce products competing with a patented Company
product without infringing on the Company's patent rights. Issuance of a patent
in one country generally does not prevent manufacture or sale of the patented
product in other countries. The issuance of a patent to the Company or to a
licensor is not conclusive as to validity or as to the enforceable scope of the
patent. The validity or enforceability of a patent can be challenged by
litigation after its issuance, and, if the outcome of such litigation is adverse
to the owner of the patent, the owner's rights could be diminished or withdrawn.
Trade secret protection does not prevent independent discovery and exploitation
of the secret product or technique.

PERSONNEL

At September 30, 1996, the Company and its subsidiaries had 113
full-time employees, including 66 persons in Epitope Medical Products, 29 in
Agritope, and 18 in corporate administration and support. Epitope Medical
Products employees included 18 persons in research and product development,
eight in administration and marketing, 29 in manufacturing and production, and
ten in regulatory affairs and quality assurance. Agritope employees included 19
in research and development and ten at the Vinifera grape plant nursery
operation which also employs seasonal part-time employees as needed. The Company
considers its relations with its employees to be excellent. None of its
employees are represented by labor unions.

III - 17

<PAGE>

The Company employs nine persons holding Ph.D. or M.D. degrees with
specialties in the following disciplines: analytical chemistry, bacteriology and
public health, biochemistry, biophysics, hematology and internal medicine,
immunology, molecular biology, organic chemistry, plant biology and plant
pathology. From time to time, the Company also engages the services of
scientists as consultants to augment the skills of its scientific staff.

SCIENTIFIC ADVISORY BOARD

The Company also utilizes the services of a Scientific Advisory Board.
The Scientific Advisory Board meets periodically to review the Company's
research and development efforts and to apprise the Company of scientific
developments pertinent to the Company's business. The Scientific Advisory Board
comprises chair Eugene W. Nester, Ph.D., Professor and Chair, Department of
Microbiology, University of Washington; Roger N. Beachy, Ph.D., Member, Scripps
Family Chair, and Head, Division of Plant Biology, The Scripps Research
Institute, and Co-Director of International Laboratory for Tropical Agricultural
Biotechnology; Peter R. Bristow, Ph.D., Associate Plant Pathologist, Washington
State University; J. Richard George, Ph.D., Vice President of Scientific Affairs
of Epitope Medical Products; Lesley M. Hallick, Ph.D., Vice President for
Academic Affairs, Oregon Health Sciences University; Daniel Malamud, Ph.D.,
Professor and Chair, Department of Biochemistry, University of Pennsylvania
School of Dental Medicine; and James I. Mullins, Ph.D., Professor of
Microbiology and Medicine, University of Washington.

PROPERTIES

The Company leases approximately 35,600 square feet of office,
manufacturing, and laboratory space in Beaverton, Oregon, under two leases that
terminate January 31, 2000. Each lease calls for fixed monthly payments over its
term. The Company also entered into a five-year lease, effective October 1,
1996, for 2,265 square feet of warehouse space used to store inventory and
equipment.

Agritope, Inc., owns a 15-acre farm which it leases to Vinifera, Inc.,
for use in connection with Vinifera, Inc.'s grapevine micropropagation
operations. Greenhouse capacity at the farm currently totals 60,000 square feet.
Agritope, Inc., also uses a portion of the Company's office space and research
and development facilities in Beaverton, Oregon.

In addition to leasing Agritope, Inc.'s Oregon farm and greenhouse,
Vinifera leases 250,000 square feet of greenhouse space in Petaluma, California
under a lease that expires January 31, 2001. The Vinifera California greenhouse
is currently in the final stages of being upgraded to provide the capacity
necessary to meet anticipated 1997 and 1998 production requirements.

A&W leases its main distribution facility in San Diego, California,
from Fred Andrew and Fred L. Williamson, under a lease agreement expiring August
31, 2001, with an option to extend the lease term for an additional five years.
A&W also leases a 1,000 square foot sales office in Bakersfield, California, on
a month-to-month basis. A&W utilizes 10,000 square feet of a cold storage
facility in San Diego, California, for its frozen strawberry operations. A&W has
the right to use the cold storage space through January 18, 1998.

The Company believes that its present facilities are adequate to meet
current requirements. See "Epitope Medical Products--Manufacturing."

LEGAL PROCEEDINGS

The Company is not a party to any pending material legal proceedings.

III - 18

<PAGE>

INDEX OF TERMS
IN DESCRIPTION OF BUSINESS

510(k) Notice..................................................................9
A&W ......................................................................1
Agreement......................................................................6
Agritope ......................................................................1
AIDS ......................................................................1
ASHA ......................................................................5
CDC ......................................................................2
Company ......................................................................1
Driscoll .....................................................................13
ELISA ......................................................................2
EPA ......................................................................9
EpiScreen/OraSure..............................................................1
Epitope ......................................................................1
Epitope Medical Products.......................................................1
FDA ......................................................................1
FDA Policy....................................................................15
FDC Act ......................................................................9
Harris Moran..................................................................13
HIV ......................................................................1
MDA ......................................................................9
NCI .....................................................................17
NDA ......................................................................8
NIAID .....................................................................17
OMT ......................................................................1
Organon Teknika................................................................1
OTC ......................................................................4
PACA .....................................................................16
PLA ......................................................................8
PMAs ......................................................................9
PMN .....................................................................15
Sakata .....................................................................13
SAM .....................................................................11
SB ......................................................................1
SBIR .....................................................................17
STA .....................................................................12
Sweetbriar....................................................................12
TSCA .....................................................................10
USDA .....................................................................10
Vinifera ......................................................................1
WHO ......................................................................2

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<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

THE FOLLOWING DISCUSSION OF OPERATIONS AND FINANCIAL CONDITION SHOULD BE READ IN
CONJUNCTION WITH THE FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE
IN THIS PROSPECTUS. SPECIAL NOTE: CERTAIN STATEMENTS SET FORTH BELOW CONSTITUTE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. SEE "NOTE REGARDING FORWARD-LOOKING STATEMENTS"
ON PAGE 28 FOR ADDITIONAL FACTORS RELATING TO SUCH STATEMENTS.

At the 1997 annual meeting, shareholders will vote on a proposal to create two
new classes of common stock, one that will track the performance of the
Company's agricultural operations and one that will track the performance of the
Company's medical products business. The accompanying consolidated financial
statements have been prepared to reflect the operating results and financial
condition of the Company and its subsidiaries. In addition, combined proforma
financial statements have been prepared to reflect, on a separate basis,
assuming shareholder approval of the proposal, the operating results and
financial condition of the two business groups.

Under the proposed plan, a new class of common stock called Agritope Common
Stock (Agritope Stock) will be distributed to Epitope shareholders in the ratio
of one-half share of Agritope Stock for each outstanding share of existing
common stock. In addition, Epitope shareholders will retain their existing
common stock which will be redesignated as Epitope Medical Products Common Stock
(Epitope Medical Products Stock) on a share-for-share basis. The approval of the
distribution will not result in any transfer of assets or liabilities of the
Company. The Company and its subsidiaries will continue to hold title to all its
assets and be responsible for all its liabilities. Holders of the Epitope
Medical Products and Agritope common stock will have no specific claim against
the assets attributed for financial statement presentation purposes to the group
whose performance is associated with the class of stock they hold. Liabilities
or contingencies of either group that affect the Company's resources or
financial condition could affect the financial condition or results of
operations of both groups.

The combined operating statements include the cost of certain corporate overhead
services which are provided on a centralized basis for the benefit of both
groups (Shared Services). Such expenses have been allocated to each group using
activity indicators which, in the opinion of management, represent a reasonable
measure of the respective group's utilization of or benefit from such Shared
Services. Interest earned on investments has been allocated to each group in
direct proportion to the allocation of Shared Services. See Note 2 to Historical
Financial Statements.

On December 12, 1996, the Company merged with Andrew and Williamson Sales, Co.
(A&W) in a transaction accounted for as a pooling of interests. Accordingly,
this Proxy/Prospectus includes both historical financial statements and
supplemental financial statements which are restated to include the financial
position and results of operations of A&W as if the merger had occurred on the
first day of the earliest period presented. See Note 13 to Supplemental
Financial Statements.

The following discussion is a summary of key factors management considers
necessary in reviewing the results of operations, liquidity and capital
resources of the Company and its Epitope Medical Products and Agritope groups.

III - 20

<PAGE>

HISTORICAL FINANCIAL STATEMENTS

EPITOPE MEDICAL PRODUCTS

RESULTS OF OPERATIONS

REVENUES. The table below shows the percentage of Epitope Medical Products'
total revenue contributed by each of its principal products and by grants and
contracts.

<S> <C> <C> <C>
FISCAL YEAR 1996 1995 1994
Percentage of Revenues from:
Oral Specimen Collection Devices. . . 59% 34% 34%
HIV Confirmatory Tests. . . . . . . . . 28% 64% 65%
Grants and Contracts. . . . . . . . . . . 13% 2% 1%
</TABLE>

Epitope Medical Products' product sales increased 73 percent in 1996, to $4.9
million, and 9 percent in 1995 as a result of expanded sales volume of its lead
product, the EpiScreen/OraSure oral specimen collection device. Approximately 39
percent of 1996 sales were attributable to shipments in the fourth quarter.
Grant and contract revenues amounted to $729,000 in 1996 due to funding of
research projects by the group's marketing partner, SmithKline Beecham plc (SB).

The oral specimen collection device, which is sold by the Company under the
trade name EpiScreen(TM) and by SB under the trade name OraSure(R), accounted
for revenues of $3.3 million in 1996, as compared to $981,000 in 1995, and
$833,000 in 1994. The significant increase in 1996 sales resulted from increased
sales volume following the June FDA clearance of the OraSure Western blot HIV
confirmatory test. For the quarter ended December 31, 1996, sales of
EpiScreen/OraSure amounted to $1.9 million, primarily due to increased sales
volumes to the insurance testing market. The Company believes that at least 12
U.S. insurance companies currently use EpiScreen for underwriting risk analyses,
including three firms in the top 20 life underwriters, and it believes that
additional companies plan to commence use of EpiScreen in fiscal 1997. The
Company believes that such adoptions of EpiScreen will result in increased
sales, but it does not know the magnitude of such increases.

Epitope Medical Products' Western blot HIV confirmatory test produced sales
revenues of $1.5 million for 1996, 15 percent below prior year levels. Reduced
sales to international markets accounted for the decline. In 1995, on the
strength of increased market share in the U.S., confirmatory tests produced
revenues of $1.8 million, representing a 7 percent increase over the prior
fiscal year.

As of September 30, 1996, Epitope Medical Products had firm orders totaling $1.8
million and $450,000, respectively, for delivery within 90 days of oral specimen
collection devices and HIV confirmatory tests, as compared to $488,000 and
$329,000, respectively, of firm orders for delivery within 90 days as of
September 30, 1995.

GROSS MARGINS. Gross margins on product sales improved to 44.9 percent of sales
in 1996 as a result of increased sales volume of EpiScreen/Orasure devices.
Margins on EpiScreen/OraSure sales were negative in 1995 and 1994. For the
fourth quarter of fiscal 1996, gross margins for product sales were 53 percent.
The Company expects gross margins to increase if EpiScreen/OraSure sales volumes
increase.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses declined 31
percent to $3.2 million in 1996 as a result of cost reductions associated with
the Company's September 1995 restructuring program as well as lower levels of
clinical trials activity. Research and development expenses increased from $3.7
million in 1994 to $4.6 million in 1995. The increase resulted primarily from
increased research projects and clinical trial activities.

III - 21

<PAGE>

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses declined 25 percent to $5.0 million in 1996 primarily
due to cost reductions implemented in the Company's restructuring program.
Selling, general and administrative expenses increased by $3.6 million to $6.7
million in 1995 as a result of increased sales and marketing expenses associated
with product launch following the December 1994 FDA approval of the
EpiScreen/OraSure device for use in HIV screening. Selling, general and
administrative expenses for 1995 included approximately $607,000 for severance
payments and other costs associated with implementing the restructuring program.
Selling, general and administrative expenses also included $3.0 million, $3.6
million and $1.9 million for the allocation of Shared Services in 1996, 1995 and
1994, respectively.

OTHER INCOME (EXPENSE), NET. Other income for 1996 included a $5.0 million
license fee and $200,000 interest income earned from SB as a result of FDA
approval of an extension of dating for the EpiScreen/OraSure device. Interest
income increased from $236,000 in 1994 to $756,000 in 1995 due to an increase in
funds available for investment.

LIQUIDITY AND CAPITAL RESOURCES

Cash, cash equivalents and marketable securities allocated to Epitope Medical
Products as of year-end totaled $19.6 million in 1996 and $17.1 million in 1995.
At September 30, 1996, Epitope Medical Products had working capital of $20.4
million, as compared to $15.4 million at September 30, 1995.

Cash flows from operating activities increased significantly in 1996 due to the
receipt of a non-recurring $5 million licensing fee from SB, as well as improved
operating results from product sales and research contracts. Fluctuations in
working capital components were primarily the result of timing differences. The
Company invests its excess cash in marketable securities, and liquidates these
securities as cash is needed. 1995 additions to property and equipment reflected
investments to expand manufacturing and administrative facilities.

Epitope Medical Products anticipates that it will continue to need funds to
support its operations and ongoing research and development projects as well as
to provide additional manufacturing capacity and related increases in working
capital. Epitope Medical Products intends to utilize cash reserves, cash
generated from sales of products and research funding from SB and other
strategic partners to provide the necessary funds. Epitope may also receive
additional funds from the sale of equity securities or from the exercise of
outstanding stock options and warrants.

Epitope Medical Products may also receive funds from or transfer funds to
Agritope. Such transfers will be either considered as borrowings or as an
increase or decrease in an Inter-Group Interest as determined by the Board of
Directors, who will also determine the amount of compensatory charges for such
transfers, if any. See "Risk Factors--Factors Related to Two Classes of Common
Stock--Transfer of Funds Between Groups; Equity Contributions Between Groups."

III - 22

<PAGE>

HISTORICAL FINANCIAL STATEMENTS

AGRITOPE RESULTS OF OPERATIONS

REVENUES. The table below shows the percentage of Agritope's total revenue
contributed by each of its principal products and by grants and contracts:

<TABLE>
<CAPTION>
FISCAL YEAR 1996 1995 1994
<S> <C> <C> <C>
Percentage of Revenues from:
Grape Plants. . . . . . . . . . . . . --% 4% 1%
Packaged Fresh Flowers. . . . . . --% 91% 97%
Grants and Contracts. . . . . . . . 100% 5% 2%
</TABLE>

Revenues declined from $2.1 million in 1995 to $585,000 in 1996. Revenues for
1994 were $2.2 million. Revenues in 1995 and 1994 included product sales of $2.0
and $2.2 million, respectively, from Agritope's unprofitable wholesale fresh
flower packaging and distribution operations (Agrimax) which were divested in
the third quarter of fiscal 1995. A grant from the U.S. Department of
Agriculture and grants from strategic partners accounted for the increase of
grant and contract revenues from $94,000 in 1995 to $585,000 in 1996.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses in 1996,
1995 and 1994 totaled $1.3 million, $2.2 million and $2.4 million, respectively.
The decrease from 1995 to 1996 resulted from the divestiture of two Agritope
business units. See Note 3 to Historical Financial Statements.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses in 1996, 1995, and 1994 were $1.5 million, $4.5 million
and $4.8 million, respectively. Costs in 1995 and 1994 included $2.8 million and
$4.1 million, respectively, of costs incurred in Agritope's Agrimax and Vinifera
business units, which were divested in 1995. Selling, general and administrative
expenses include $1.1 million, $1.9 million and $1.7 million for the allocation
of Shared Services in 1996, 1995 and 1994, respectively. The amount of allocated
Shared Services decreased in 1996 as a result of the disposition of Agrimax and
Vinifera. With the reacquisition of Vinifera in August 1996, the amount of
allocated Shared Services is expected to increase slightly in 1997 and
subsequent years.

OTHER INCOME (EXPENSE), NET. Interest income increased from $217,000 in 1994 to
$408,000 in 1995 due to an increase in funds available for investment.

LIQUIDITY AND CAPITAL RESOURCES

Cash allocated to Agritope totaled $4.9 million at September 30, 1996 and $4.2
million at September 30, 1995. At September 30, 1996, Agritope had working
capital of $1.3 million, as compared to $5.1 million at September 30, 1995. The
decrease in working capital was principally attributable to the reclassification
to current liabilities of $3.6 million of convertible notes which are due June
30, 1997. In November 1996, the Company accepted an offer from a representative
of the holders of $3.4 million principal amount of such notes to convert them
into 250,367 shares of common stock of the Company at a reduced conversion price
of $13.50 per share. Accordingly, the Company will recognize a charge of
approximately $1.2 million representing the conversion expense in the first
quarter of fiscal year 1997. See Note 13 to Historical Financial Statements.

Cash flows from operating activities improved significantly in 1996 largely due
to the divestiture of Agrimax and Vinifera. Fluctuations in working capital
components were primarily the result of timing differences. Additions to
property and equipment decreased in 1995 primarily due to the divestiture of
Agrimax and Vinifera and increased in 1996 as a result of expansion of
greenhouse capacity at Vinifera, which was reacquired in August 1996.
Expenditures for patents and proprietary technology increased in 1996 primarily
related to the Company's ethylene control technology.

III - 23

<PAGE>

Agritope expects to continue to require funds to support its operations and
research activities. Agritope intends to utilize cash reserves, cash generated
from sales of products and research funding from strategic partners and other
research grants to provide the necessary funds. Agritope may also receive
additional funds from the sale of equity securities or the exercise of
outstanding stock options and warrants.

Agritope may also receive funds from or transfer funds to Epitope Medical
Products. Such transfers will be either considered as borrowings or as an
increase or decrease in an Inter-Group Interest as determined by the Board of
Directors, who will also determine the amount of compensatory charges for such
transfers, if any. See "Risk Factors--Factors Related to Two Classes of Common
Stock--Transfer of Funds Between Groups; Equity Contributions Between Groups."

Agritope's investments include the book value of the investment in two
affiliates. Agritope holds an equity interest of approximately 9 percent in UAF,
Limited Partnership, a fresh flower distributor in Tampa, Florida and a 19.5
percent interest in Petals USA, Inc., which operates a similar business in St.
Paul, Minnesota. These equity interests were obtained in connection with the
divestiture of Agrimax. Recent events have caused the Company to determine that
the value of such investments has been permanently impaired. Accordingly, the
Company anticipates a non-cash charge to results of operations of approximately
$1.9 million in the first quarter of fiscal 1997. See Notes 3 and 13 to
Historical Financial Statements.

HISTORICAL FINANCIAL STATEMENTS

EPITOPE, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS

The Company reported revenues of $6.2 million, $5.0 million and $4.8 million,
respectively, for the years ended September 30, 1996, 1995 and 1994. Product
sales in 1996 increased due to higher sales volume for Epitope Medical Products,
which more than offset a $2.0 million reduction in product sales for Agritope.
Grant and contract revenues increased $681,000 for Epitope Medical Products due
to research funding received from SB and $491,000 for Agritope which was
attributable primarily to a Phase II SBIR grant.

Net losses for 1996, 1995 and 1994 amounted to $1.4 million, $18.5 million and
$15.6 million, respectively. The significant improvement in operating results in
1996 was due to (1) increased sales volumes and improved gross margins for
Epitope Medical Products' EpiScreen/OraSure oral specimen collection device, (2)
a $5.2 million fee and accrued interest from SB to Epitope Medical Products, (3)
cost reductions realized as a result of a September 1995 restructuring program,
and (4) reduced operating losses as a result of divestiture of Agrimax and
Vinifera.

The Company incurred expenses of $4.1 million, $5.5 million and $3.6 million in
1996, 1995 and 1994, respectively, to provide Shared Services to Epitope Medical
Products and Agritope. The decrease in such costs in 1996 represented cost
savings realized from the restructuring program implemented in September 1995.
Such costs increased in 1995 over 1994 levels as the Company increased its
infrastructure to respond to current growth and anticipated levels of activity
for both groups. See Note 2 to Historical Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

Cash, cash equivalents and marketable securities on hand as of September 30,
1996 and 1995 totaled $24.5 million and $21.3 million. At September 30, 1996,
the Company had working capital of $21.6 million, as compared to $20.5 million
at September 30, 1995.

In the financial statements, cash equal to 20 percent of the Company's cash,
cash equivalents and marketable securities has been allocated to Agritope.
Historically, cash was transferred to the Agritope operations in the form of
intercompany loans. For the purpose of preparing the separate statements of
Epitope Medical Products and Agritope, such transfers and intercompany balances
have been reflected as equity investments in Agritope. If the creation of a
second class of common stock is approved, the Company will allocate $______
million of total cash to Agritope as contributed capital.

III - 24

<PAGE>

Cash flows from operating activities improved significantly in 1996 due to the
receipt of a non-recurring $5 million licensing fee from SB, as well as improved
operating results from product sales and research contracts. Fluctuations in
working capital components were primarily the result of timing differences. The
Company invests its excess cash in marketable securities, and liquidates these
securities as cash is needed. Additions to property and equipment decreased in
1995 primarily due to the divestiture of two Agritope business units.
Expenditures for patents and proprietary technology increased in 1996 primarily
related to the Company's ethylene control technology.

Proceeds from the issuance of equity securities of the Company, augmented by
funding from strategic partners and other research grants, have represented the
primary sources of funds for meeting the Company's requirements for operations,
working capital and business expansion. During 1996, the Company received
proceeds of $5.9 million from the exercise of warrants and options to purchase
common stock, as compared to $21.1 million in 1995.

The Company anticipates that it will continue to need funds to support ongoing
research and development projects as well as to provide additional manufacturing
capacity and related increases in working capital. The Company intends to
utilize cash reserves, cash generated from sales of products and research
funding from SB and other strategic partners to provide the necessary funds. The
Company may also receive additional funds from the sale of equity securities or
the exercise of outstanding stock options and warrants. The Company believes
that it has sufficient capital resources to fund operations and capital
expenditures for at least the next two years based on currently expected future
cash requirements, although no assurance to that effect can be given. See "Risk
Factors--Risks Related to the Company--Need for Additional Funds, Dependence on
Commercial and Other Relationships."

III - 25

<PAGE>

SUPPLEMENTAL FINANCIAL STATEMENTS

EPITOPE MEDICAL PRODUCTS

The only modification to the Historical Financial Statements of Epitope Medical
Products appearing in the Supplemental Financial Statements are those required
to reflect the issuance of 520,000 shares of common stock of the Company in
connection with the merger with A&W. The Supplemental Financial Statements are
presented as if the shares were outstanding on the first day of the earliest
period presented. See "Historical Financial Statements--Epitope Medical
Products."

SUPPLEMENTAL FINANCIAL STATEMENTS

AGRITOPE
(MERGED WITH ANDREW AND WILLIAMSON SALES, CO. IN A POOLING OF INTERESTS)

RESULTS OF OPERATIONS

REVENUES. The table below shows the percentage of Agritope's total revenue
contributed by each of its principal products and by grants and contracts:

<TABLE>
<CAPTION>
FISCAL YEAR 1996 1995 1994
<S> <C> <C> <C>
Percentage of Revenues from:
Fresh or Frozen Produce . . . . 99% 96% 97%
Packaged Fresh Flowers. . . . . --% 4% 3%
Grants and Contracts . . . . . . 1% --% --%
</TABLE>

Revenues increased to $63.1 million in 1996 as compared to $54.3 million in 1995
and $62.9 in 1994, primarily attributable to produce sales of A&W. Produce sales
increased 20 percent in 1996 due to increased sales volume of vine ripe
tomatoes, peppers and strawberries. For 1995, produce sales declined as compared
to 1994 as a result of scaling back volume of vine ripe tomatoes, coupled with
the loss of one contract grower. Revenues in 1995 and 1994 also included
packaged fresh flower sales of $2.0 and $2.2 million, respectively, from
Agritope's unprofitable wholesale fresh flower packaging and distribution
operations (Agrimax) which were divested in the third quarter of fiscal 1995. A
grant from the U.S. Department of Agriculture and grants from strategic partners
accounted for the increase of grant and contract revenues from $94,000 in 1995
to $585,000 in 1996.

GROSS PROFITS. Gross profits in 1995 and 1994 were adversely affected by
negative margins of $1.2 million and $2.4 million, respectively, experienced by
Agritope's former fresh flower packaging operations. A&W realized gross profit
margins of 8 percent, 6 percent, and 8 percent in 1996, 1995, and 1994,
respectively. Gross profits for A&W in 1995 declined by $1.8 million, primarily
due to reduced sales volume as well as a tomato crop failure experienced by one
of A&W's contract growers. A&W gross profits were adversely affected by charges
for costs in excess of the estimated market value of growing crops of $1.8
million, $2.5 million and $2.1 million for 1996, 1995 and 1994, respectively,
representing 3 percent, 5 percent, and 3 percent of A&W sales, respectively.
Such losses arose primarily from crop failures due to disease or weather
conditions. A&W attempts to mitigate the risk of such losses by (1) using
contract growers who assume the primary risk of loss, (2) closely monitoring
crops in the field, (3) providing technical assistance to growers, (4) spreading
its risk over a variety of crops grown at various times throughout the year, (5)
establishing limitations on advances for growing crops to a given grower, based
on past performance and current financial condition, and (6) diversifying its
risk by using a number of different growers located in different geographical
locations. However, it is difficult to completely mitigate such risks and the
Company expects to incur such losses in the future. See "Risk Factors--Risks
Related Primarily to Agritope."

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses in 1996,
1995 and 1994 totaled $1.3 million, $2.2 million and $2.4 million, respectively.
The decrease from 1995 to 1996 resulted from the divestiture of the Agrimax and
Vinifera business units. See Note 3 to Supplemental Financial Statements.

III - 26

<PAGE>

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses in 1996, 1995 and 1994 were $4.8 million, $7.5 million
and $8.3 million, respectively. Costs in 1995 and 1994 included $2.8 million and
$4.1 million, respectively, of costs incurred at Agritope's Agrimax and Vinifera
business units, which were divested in 1995. Selling, general and administrative
expenses include $1.1 million, $1.9 million and $1.7 million for the allocation
of Shared Services in 1996, 1995 and 1994, respectively. The amount of allocated
Shared Services decreased in 1996 as a result of the disposition of Agrimax and
Vinifera. With the reacquisition of Vinifera in August 1996, the amount of
allocated Shared Services is expected to increase slightly in 1997 and
subsequent years. The Company does not expect to allocate significant Shared
Services costs to A&W in 1997 since A&W currently performs many of these
services on a stand alone basis.

OTHER INCOME (EXPENSE), NET. Interest income increased from $217,000 in 1994 to
$408,000 in 1995 due to an increase in funds available for investment. Interest
expense in 1996 increased primarily due to an increase in borrowings under the
A&W bank credit line.

LIQUIDITY AND CAPITAL RESOURCES

Cash allocated to Agritope totaled $4.9 million at September 30, 1996 and $4.2
million at September 30, 1995. At September 30, 1996, Agritope had working
capital of $0.8 million, as compared to $5.8 million at September 30, 1995. The
decrease in working capital was principally attributable to the
reclassifications to current liabilities of $3.6 million of convertible notes
which are due June 30, 1997, and $2.2 million of subordinated notes which A&W
repaid in fiscal 1997. In November 1996, the Company entered into an agreement
with holders of $3.4 million of convertible notes to convert them into 250,367
shares of common stock of the Company at a reduced conversion price of $13.50
per share. Accordingly, the Company will recognize a charge of approximately
$1.2 million representing the conversion expense in the first quarter of fiscal
1997. See Note 13 to Supplemental Financial Statements.

Cash flows from operating activities improved significantly in 1996 largely due
to the divestiture of Agrimax and Vinifera. Fluctuations in working capital
components were primarily the result of timing differences and, in 1995, lower
sales volume at A&W. Additions to property and equipment decreased in 1995
primarily due to the divestiture of Agrimax and Vinifera and increased in 1996
as a result of expansion of greenhouse capacity at Vinifera, which was
reacquired in August 1996. Expenditures for patents and proprietary technology
increased in 1996 primarily related to the Company's ethylene control
technology.

Agritope expects to continue to require funds to support its operations and
research activities. Agritope intends to utilize bank borrowings, cash reserves,
cash generated from sales of products and research funding from strategic
partners and other research grants to provide the necessary funds. Agritope may
also receive additional funds from the sale of equity securities or the exercise
of outstanding stock options and warrants.

Agritope may also receive funds from or transfer funds to Epitope Medical
Products. Such transfers will be either considered as borrowings or as an
increase or decrease in Inter-Group Interest as determined by the Board of
Directors who will also determine the amount of compensatory charges for such
transfers, if any. See "Risk Factors--Factors Related to Two Classes of Common
Stock--Transfer of Funds Between Groups; Equity Contributions Between Groups."

Agritope's investments include the book value of the investment in two
affiliates. Agritope holds an equity interest of approximately 9 percent in UAF,
Limited Partnership, a fresh flower distributor in Tampa, Florida and a 19.5
percent interest in Petals USA, Inc., which operates a similar business in St.
Paul, Minnesota. These equity interests were obtained in connection with
divestiture of Agrimax's fresh flower distribution business. Recent events have
caused the Company to determine that the value of such investments has been
permanently impaired. Accordingly, the Company anticipates a non-cash charge to
results of operations of approximately $1.9 million in the first quarter of
fiscal 1997. See Notes 3 and 13 to Supplemental Financial Statements.

III - 27

<PAGE>

SUPPLEMENTAL FINANCIAL STATEMENTS

EPITOPE, INC. AND SUBSIDIARIES
(MERGED WITH ANDREW AND WILLIAMSON SALES, CO. IN A POOLING OF INTERESTS)

RESULTS OF OPERATIONS

The Company reported revenues of $68.7 million, $57.1 million and $65.5 million,
respectively, for the years ended September 30, 1996, 1995 and 1994. A&W
recorded sales of $62.5 million, $52.2 million and $60.7 million, respectively
for such periods. Grant and contract revenues increased $681,000 for Epitope
Medical Products due to research funding received from SB and $491,000 for
Agritope which was attributable primarily to a Phase II SBIR grant.

Net losses for 1996, 1995 and 1994 amounted to $0.3 million, $18.9 million and
$14.6 million, respectively. The significant improvement in operating results in
1996 was due to (1) increased sales volumes and improved gross margins for
Epitope Medical Products' EpiScreen/OraSure oral specimen collection device, (2)
a $5.2 million fee and accrued interest from SB to Epitope Medical Products, (3)
cost reductions realized as a result of a September 1995 restructuring program,
(4) reduced operating losses as a result of divestiture of Agrimax and Vinifera
and (5) operating profits from A&W. The Company incurred expenses of $4.1
million, $5.5 million and $3.6 million in 1996, 1995 and 1994, respectively, to
provide Shared Services to Epitope Medical Products and Agritope. The decrease
in such costs in 1996 represented costs savings realized from the restructuring
program implemented in September 1995. Such costs increased in 1995 over 1994
levels as the Company increased its infrastructure to respond to current growth
and anticipated levels of activity for both groups. See Note 2 to Supplemental
Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

Cash, cash equivalents and marketable securities on hand as of September 30,
1996 and 1995 totaled $24.5 million and $21.3 million. At September 30, 1996,
the Company had working capital of $21.1 million, as compared to $21.2 million
at September 30, 1995.

In the financial statements, cash equal to 20 percent of the Company's cash,
cash equivalents and marketable securities has been allocated to Agritope.
Historically, cash was transferred to the Agritope operations in the form of
intercompany loans. For the purpose of preparing the separate statements of
Epitope Medical Products and Agritope, such transfers and intercompany balances
have been reflected as equity investments in Agritope. If the creation of a
second class of common stock is approved, the Company will allocate $_____
million of total cash to Agritope as additional contributed capital.

Cash flows from operating activities improved significantly in 1996 due to the
receipt of a non-recurring $5 million licensing fee from SB, as well as improved
operating results from product sales and research contracts. Fluctuations in
working capital components were primarily the result of timing differences and,
in 1995, lower sales volume at A&W. The company invests its excess cash in
marketable securities, and liquidates these securities as cash is needed.
Additions to property and equipment decreased in 1995 primarily due to the
divestiture of Agrimax and Vinifera. Expenditures for patents and proprietary
technology increased in 1996 primarily related to the Company's ethylene control
technology.

Proceeds from the issuance of equity securities of the Company and A&W bank
borrowings, augmented by funding from strategic partners and other research
grants, have represented the primary sources of funds for meeting the Company's
requirements for operations, working capital and business expansion. During
1996, the Company received proceeds of $5.9 million from the exercise of
warrants and options to purchase common stock, as compared to $21.1 million in
1995.

III - 28

<PAGE>

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

HISTORICAL QUARTERLY RESULTS OF OPERATIONS
(UNAUDITED) (In thousands, except net income
(loss) per share)

The following table presents summarized historical quarterly results of
operations for each of the fiscal quarters in the Company's fiscal years ended
September 30, 1996 and 1995. These quarterly results are unaudited, but, in the
opinion of management, have been prepared on the same basis as the Company's
audited financial information and include all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of the
information set forth therein. The summarized historical quarterly results of
operations have not been restated to give effect to the merger with Andrew &
Williamson Sales, Co. on December 12, 1996. The merger has been accounted for as
a pooling of interests. See Supplemental Quarterly Results of Operations below.
The data should be read in conjunction with the Financial Statements and related
notes included in this Prospectus/Proxy Statement.
<TABLE>
<CAPTION>

FIRST SECOND THIRD FOURTH
EPITOPE MEDICAL PRODUCTS QUARTER QUARTER QUARTER QUARTER TOTAL
<S> <C> <C> <C> <C> <C>
Year ended September 30, 1996
Revenues..................................... $ 1,225 $ 1,207 $ 1,107 $ 2,055 $ 5,594
Operating costs and expenses................. 2,510 2,819 2,507 3,045 10,881
Other income, net............................ 224 218 5,345 240 6,027
Net income (loss)............................ (1,061) (1,394) 3,945 (751) 739
Proforma net income (loss) per share......... (.08) (.11) .29 (.06) .06

Year ended September 30, 1995
Revenues..................................... $ 715 $ 722 $ 873 $ 546 $ 2,856
Operating costs and expenses................. 2,679 3,288 3,823 4,673 14,463
Other income, net............................ 101 149 277 229 756
Net loss..................................... (1,863) (2,417) (2,673) (3,898) (10,851)
Proforma net loss per share.................. (.17) (.21) (.22) (.31) (.91)

FIRST SECOND THIRD FOURTH
AGRITOPE QUARTER QUARTER QUARTER QUARTER TOTAL
Year ended September 30, 1996
Revenues..................................... $ 87 $ 263 $ 165 $ 70 $ 585
Operating costs and expenses................. 675 690 690 766 2,821
Other income (expense), net.................. (3) 5 79 16 97
Net loss..................................... (591) (423) (446) (679) (2,139)
Proforma net loss per share.................. (.09) (.07) (.06) (.11) (.34)

Year ended September 30, 1995
Revenues..................................... $ 419 $ 953 $ 695 $ 43 $ 2,110
Operating costs and expenses................. 2,891 3,433 2,201 1,395 9,920
Other income, net............................ 33 65 31 37 166
Net loss..................................... (2,439) (2,415) (1,475) (1,316) (7,645)
Proforma net loss per share.................. (.44) (.41) (.24) (.21) (1.29)

FIRST SECOND THIRD FOURTH
EPITOPE, INC. AND SUBSIDIARIES QUARTER QUARTER QUARTER QUARTER TOTAL
Year ended September 30, 1996
Revenues..................................... $ 1,311 $ 1,470 $ 1,272 $ 2,126 $ 6,179
Operating costs and expenses................. 3,185 3,510 3,197 3,810 13,702
Other income, net............................ 222 223 5,425 253 6,123
Net income (loss)............................ (1,652) (1,817) 3,500 (1,431) (1,400)
Net income (loss) per share.................. (.13) (.14) .25 (.11) (.11)

Year ended September 30, 1995
Revenues..................................... $ 1,135 $ 1,675 $ 1,569 $ 586 $ 4,965
Operating costs and expenses................. 5,571 6,721 6,025 6,066 24,383
Other income, net............................ 134 214 308 266 922
Net loss..................................... (4,302) (4,832) (4,148) (5,214) (18,496)
Net loss per share........................... (.39) (.41) (.34) (.42) (1.56)
</TABLE>

III - 29

<PAGE>

SUPPLEMENTAL QUARTERLY RESULTS OF OPERATIONS
(UNAUDITED) (In thousands, except net income
(loss) per share)

The following table presents summarized supplemental quarterly results of
operations for each of the fiscal quarters in the Company's fiscal years ended
September 30, 1996 and 1995. These quarterly results are unaudited, but, in the
opinion of management, have been prepared on the same basis as the Company's
audited financial information and include all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of the
information set forth therein. The summarized supplemental quarterly results of
operations have been restated to give effect to the merger with Andrew and
Williamson Sales, Co. on December 12, 1996. The merger has been accounted for as
a pooling of interests. The data should be read in conjunction with the
Financial Statements and related notes included in this Prospectus/Proxy
Statement.
<TABLE>
<CAPTION>

Year ended September 30, 1995
Revenues..................................... $ 715 $ 722 $ 873 $ 546 $ 2,856
Operating costs and expenses................. 2,679 3,288 3,823 4,673 14,463
Other income net............................. 101 149 277 229 756
Net loss..................................... (1,863) (2,417) (2,673) (3,898) (10,851)
Proforma net loss per share.................. (.16) (.20) (.21) (.30) (.87)

FIRST SECOND THIRD FOURTH
AGRITOPE QUARTER QUARTER QUARTER QUARTER TOTAL
Year ended September 30, 1996
Revenues..................................... $12,978 $10,291 $26,658 $13,130 $63,057
Operating costs and expenses................. 13,671 9,917 26,323 13,479 63,390
Other expense, net........................... (132) (189) (181) (169) (671)
Net income (loss)............................ (825) 184 154 (517) (1,004)
Proforma net income (loss) per share......... (.13) .03 .02 (.08) (.15)

Year ended September 30, 1995
Revenues..................................... $15,120 $ 9,682 $17,080 $12,407 $54,289
Operating costs and expenses................. 18,217 11,499 18,912 13,431 62,059
Other expense, net........................... (78) (19) (77) (78) (252)
Net loss..................................... (3,175) (1,836) (1,909) (1,102) (8,022)
Proforma net loss per share.................. (.55) (.30) (.30) (.17) (1.29)

FIRST SECOND THIRD FOURTH
EPITOPE, INC. AND SUBSIDIARIES QUARTER QUARTER QUARTER QUARTER TOTAL
Year ended September 30, 1996
Revenues..................................... $14,202 $11,498 $27,765 $15,185 $68,650
Operating costs and expenses................. 16,181 12,737 28,830 16,523 74,271
Other income, net............................ 93 29 5,165 69 5,356
Net income (loss)............................ (1,886) (1,210) 4,100 (1,269) (265)
Net income (loss) per share.................. (.14) (.09) .29 (.09) (.02)

Year ended September 30, 1995
Revenues..................................... $15,836 $10,404 $17,954 $12,950 $57,144
Operating costs and expenses................. 20,896 14,788 22,736 18,102 76,522
Other income, net............................ 22 130 200 152 504
Net loss..................................... (5,038) (4,253) (4,582) (5,001) (18,874)
Net loss per share........................... (.44) (.35) (.36) (.39) (1.52)
</TABLE>

III - 30

<PAGE>

INDEX TO FINANCIAL STATEMENTS
PAGE

HISTORICAL FINANCIAL STATEMENTS

Report of Independent Accountants..................................................................................III-32

Epitope Medical Products
Combined Balance Sheets at September 30, 1996 and 1995.............................................................III-33
Combined Statements of Operations for years ended September 30, 1996, 1995, and 1994...............................III-34
Combined Statements of Changes in Group Equity for years ended September 30, 1996, 1995, and 1994..................III-35
Combined Statements of Cash Flows for years ended September 30, 1996, 1995, and 1994...............................III-36

Agritope
Combined Balance Sheets at September 30, 1996 and 1995.............................................................III-37
Combined Statements of Operations for years ended September 30, 1996, 1995, and 1994...............................III-38
Combined Statements of Changes in Group Equity for years ended September 30, 1996, 1995, and 1994..................III-39
Combined Statements of Cash Flows for years ended September 30, 1996, 1995, and 1994...............................III-40

Epitope, Inc. and Subsidiaries
Consolidated Balance Sheets at September 30, 1996 and 1995.........................................................III-41
Consolidated Statements of Operations for years ended September 30, 1996, 1995, and 1994...........................III-42
Consolidated Statements of Changes in Shareholders' Equity for years ended September 30, 1996, 1995,
and 1994.........................................................................................................III-43
Consolidated Statements of Cash Flows for years ended September 30, 1996, 1995, and 1994...........................III-44

Notes to Historical Financial Statements...........................................................................III-45

SUPPLEMENTAL FINANCIAL STATEMENTS

Report of Independent Accountants..................................................................................III-60

Report of Independent Auditors.....................................................................................III-61

Epitope Medical Products
Combined Balance Sheets at September 30, 1996 and 1995.............................................................III-62
Combined Statements of Operations for years ended September 30, 1996, 1995, and 1994 ..............................III-63
Combined Statements of Changes in Group Equity for years ended September 30, 1996, 1995, and 1994..................III-64
Combined Statements of Cash Flows for years ended September 30, 1996, 1995, and 1994...............................III-65

Agritope (merged with Andrew and Williamson Sales, Co. in a pooling of interests)
Combined Balance Sheets at September 30, 1996 and 1995.............................................................III-66
Combined Statements of Operations for years ended September 30, 1996, 1995, and 1994 ..............................III-67
Combined Statements of Changes in Group Equity for years ended September 30, 1996, 1995, and 1994..................III-68
Combined Statements of Cash Flows for years ended September 30, 1996, 1995, and 1994...............................III-69

Epitope, Inc. and Subsidiaries (merged with Andrew and Williamson Sales, Co. in a pooling of interests)
Consolidated Balance Sheets at September 30, 1996 and 1995.........................................................III-70
Consolidated Statements of Operations for years ended September 30, 1996, 1995, and 1994 ..........................III-71
Consolidated Statements of Changes in Shareholders' Equity for years ended September 30, 1996, 1995,
and 1994.........................................................................................................III-72
Consolidated Statements of Cash Flows for years ended September 30, 1996, 1995, and 1994...........................III-73

Notes to Supplemental Financial Statements.........................................................................III-74
</TABLE>

III - 31

<PAGE>

HISTORICAL FINANCIAL STATEMENTS

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of Epitope, Inc.

In our opinion, the accompanying balance sheets and the related statements of
operations, of changes in shareholders'/group equity, and of cash flows present
fairly, in all material respects, the financial position of Epitope Medical
Products group and Agritope group (as described in Note 1 to these financial
statements) and Epitope, Inc. and its subsidiaries at September 30, 1996 and
1995, and the results of their operations and their cash flows for each of the
three years in the period ended September 30, 1996, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP

Portland, Oregon
October 28, 1996, except for Note 13 as to which the date is November 14, 1996,
November 25, 1996, December 12, 1996, and December 26, 1996.

III - 32

<PAGE>

HISTORICAL FINANCIAL STATEMENTS
EPITOPE MEDICAL PRODUCTS
COMBINED BALANCE SHEETS
SEPTEMBER 30 1996 1995
<S> <C> <C>

Assets
Current assets
Cash and cash equivalents (Note 2).................................... $ 795,787 $ 13,210
Marketable securities (Note 2)........................................ 18,818,120 17,080,246
Trade accounts receivable, net (Note 2)............................... 1,147,599 231,621
Other accounts receivable............................................. 174,083 382,753
Inventories (Note 2).................................................. 1,157,930 1,433,746
Prepaid expenses...................................................... 89,518 103,399
------------ -------------
Total current assets.................................................. 22,183,037 19,244,975

Property and equipment, net (Notes 2 and 4)........................... 1,542,757 1,989,769
Patents and proprietary technology, net (Note 2)...................... 601,234 415,010
Investments in affiliated companies................................... - 142,510
Other assets and deposits (Note 5).................................... 22,758 38,328
------------- -------------
$24,349,786 $21,830,592

Liabilities and Group Equity
Current liabilities
Accounts payable...................................................... $ 449,170 $ 819,424
Salaries, benefits and other accrued liabilities
(Notes 2 and 9)..................................................... 1,368,166 2,976,167
----------- -----------
Total current liabilities............................................. 1,817,336 3,795,591

Commitments and Contingencies (Notes 6,8,9,10 and 11)................. - -

Group equity (Note 6)
Contributed capital................................................... 64,237,350 60,479,315
Accumulated deficit................................................... (41,704,900) (42,444,314)
------------- -------------
22,532,450 18,035,001

$24,349,786 $21,830,592

The accompanying notes are an integral part of these statements.
</TABLE>

III - 33

<PAGE>

HISTORICAL FINANCIAL STATEMENTS
EPITOPE MEDICAL PRODUCTS
COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30 1996 1995 1994
<S> <C> <C> <C>

Revenues
Product sales........................................ $ 4,864,378 $ 2,806,850 $ 2,580,798
Grants and contracts ................................ 729,271 48,672 24,560
------------ ------------ -----------
5,593,649 2,855,522 2,605,358

Costs and expenses
Product costs........................................ 2,681,429 3,163,012 2,141,319
Research and development costs....................... 3,165,838 4,617,246 3,681,326
Selling, general and administrative expenses......... 5,033,491 6,682,860 3,066,896
------------ ------------- -------------
10,880,758 14,463,118 8,889,541

Loss from operations................................. (5,287,109) (11,607,596) (6,284,183)

Other income (expense), net
Interest income...................................... 1,025,030 756,743 237,467
License fee.......................................... 5,000,000 - -
Other, net .......................................... 1,493 (319) (1,541)
------------ -------------- --------------
6,026,523 756,424 235,926

Net income (loss).................................... $ 739,414 $(10,851,172) $(6,048,257)

Proforma net income (loss) per share................. $ .06 $ (.91) $ (.60)

Proforma weighted average number of shares
outstanding......................................... 13,440,396 11,886,234 10,050,129

The accompanying notes are an integral part of these statements.
</TABLE>

III - 34

<PAGE>

HISTORICAL FINANCIAL STATEMENTS
EPITOPE MEDICAL PRODUCTS
COMBINED STATEMENTS OF CHANGES IN GROUP EQUITY
CONTRIBUTED ACCUMULATED
CAPITAL DEFICIT TOTAL
<S> <C> <C> <C>
Balances at September 30, 1993..................... $34,167,582 $(25,544,885) $ 8,622,697
Common stock issued upon
exercise of options.............................. 636,293 - 636,293
Common stock issued as
compensation..................................... 318,386 - 318,386
Compensation expense for
stock option grants.............................. 823,350 - 823,350
Common stock issued upon
exercise of warrants............................. 9,718,259 - 9,718,259
Common stock issued in
private placement................................ 17,057,563 - 17,057,563
Equity issuance costs.............................. (3,335,261) - (3,335,261)
Net cash to Agritope............................... (12,132,173) (12,132,173)
Net loss for the year.............................. - (6,048,257) (6,048,257)
--------------- -------------- --------------
Balances at September 30, 1994..................... 47,253,999 (31,593,142) 15,660,857

Common stock issued upon
exercise of options.............................. 2,145,673 - 2,145,673
Common stock issued as
compensation..................................... 196,802 - 196,802
Compensation expense for
stock option grants.............................. 1,056,335 - 1,056,335
Common stock issued upon
exercise of warrants............................. 18,892,750 - 18,892,750
Equity issuance costs.............................. (735,390) - (735,390)
Net cash to Agritope............................... (8,330,854) (8,330,854)
Net loss for the year.............................. - (10,851,172) (10,851,172)
------------- --------------- --------------
Balances at September 30, 1995..................... 60,479,315 (42,444,314) 18,035,001

Common stock issued upon
exercise of options.............................. 4,886,118 - 4,886,118
Common stock issued as compensation................ 249,086 - 249,086
Compensation expense for stock
option grants.................................... 815,019 - 815,019
Common stock issued upon
exercise of warrants............................. 826,600 - 826,600
Equity issuance costs.............................. (152) - (152)
Net cash to Agritope............................... (3,018,636) - (3,018,636)
Net income for the year............................ - 739,414 739,414
-------------- --------------- ---------------
Balances at September 30, 1996..................... $64,237,350 $(41,704,900) $22,532,450

The accompanying notes are an integral part of these statements.
</TABLE>

III - 35

<PAGE>

HISTORICAL FINANCIAL STATEMENTS
EPITOPE MEDICAL PRODUCTS
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30 1996 1995 1994
<S> <C> <C> <C>

Cash flows from operating activities
Net income (loss) ........................................ $ 739,414 $(10,851,172) $ (6,048,257)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization ............................ 792,885 795,295 651,076
(Gain) loss on disposition of property ................... (1,098) 319 1,541
Increase in accounts receivable and
other receivables ...................................... (707,308) (76,549) (180,767)
Increase (decrease) in inventories ....................... 275,816 (375,640) (272,279)
Decrease in prepaid expenses ............................. 13,881 38,031 43,354
Decrease (increase) in other assets and deposits.......... 15,570 (42,658) (6,227)
Increase (decrease) in accounts payable and
accrued liabilities ..................................... (2,151,110) 2,273,364 329,875
Common stock issued as compensation for services.......... 249,086 196,802 318,386
Compensation expense for stock option grants and
deferred salary increases ............................... 815,019 1,056,335 915,351
---------- ------------ -----------
Net cash provided by (used in) operating activities ...... 42,155 (6,985,873) (4,247,947)

Cash flows from investing activities
Investment in marketable securities ...................... (47,608,270) (16,194,994) (5,603,414)
Proceeds from sale of marketable securities .............. 45,870,396 4,718,162 -
Additions to property and equipment ...................... (180,112) (1,112,292) (461,914)
Proceeds from sale of property ........................... 7,432 1,085 1,000
Expenditures for patents and proprietary
technology .............................................. (358,319) (126,927) (185,805)
Investment in affiliated companies ....................... 142,510 42,552 64,938
----------- ------------ -----------
Net cash used in investing activities .................... (2,126,363) (12,672,414) (6,185,195)

Cash flows from financing activities
Proceeds from issuance of common stock ................... 5,885,573 21,060,912 24,387,702
Cost of common stock issuance ............................ (152) (757,877) (310,849)
Cash to Agritope ......................................... (3,018,636) (8,330,854) (12,132,173)
------------ ------------- -------------
Net cash provided by financing activities ................ 2,866,785 11,972,181 11,944,680

Net increase (decrease) in cash and cash equivalents ..... 782,577 (7,686,106) 1,511,538
Cash and cash equivalents at beginning of year ........... 13,210 7,699,316 6,187,778
----------- ------------ ------------
Cash and cash equivalents at end of year ................. $ 795,787 $ 13,210 $ 7,699,316

The accompanying notes are an integral part of these statements.
</TABLE>

III - 36

<PAGE>

HISTORICAL FINANCIAL STATEMENTS
AGRITOPE
COMBINED BALANCE SHEETS
SEPTEMBER 30 1996 1995 1996
PROFORMA (1)
<S> <C> <C> <C>
Assets
Current assets
Cash and cash equivalents (Note 2) ......................... $ 4,903,476 $ 4,246,687 $ 4,903,476
Trade accounts receivable, net (Note 2) .................... 264,986 135,866 264,986
Other accounts receivable .................................. 32,337 993,790 32,337
Inventories (Note 2) ....................................... 509,745 - 509,745
Prepaid expenses ........................................... 812 56,064 812
------------- ------------- ------------
Total current assets ....................................... 5,711,356 5,432,407 5,711,356

Property and equipment, net (Notes 2 and 4) ................ 1,286,196 555,003 1,286,196
Patents and proprietary technology, net (Note 2) ........... 510,244 140,757 510,244
Investment in affiliated companies (Note 3) ................ 2,448,623 1,974,833 2,448,623
Other assets and deposits (Note 5) ......................... 140,513 200,430 54,379
------------- ------------- -------------
$ 10,096,932 $ 8,303,430 $ 10,010,798

Liabilities and Group Equity
Current liabilities
Current portion of installment notes payable ............... $ - $ 17,758 $ -
Convertible notes, due 1997 (Notes 5 and 13) ............... 3,620,003 - 240,003
Accounts payable ........................................... 91,474 125,971 91,474
Salaries, benefits and other accrued liabilities
(Notes 2 and 9) .......................................... 735,478 206,349 735,478
------------- ------------ ------------
Total current liabilities .................................. 4,446,955 350,078 1,066,955

Long-term portion of installment notes payable ............. - 21,749 -
Convertible notes, due 1997 (Notes 5 and 13) ............... - 3,620,003 -
Commitments and contingencies (Notes 6,8,9, and 10) ........ - - -
Minority interest .......................................... 215,407 - 215,407

Group equity (Note 6)
Contributed capital ........................................ 36,714,932 33,452,632 41,225,452
Accumulated deficit ........................................ (31,280,362) (29,141,032) (32,497,016)
------------- ------------- --------------
5,434,570 4,311,600 8,728,436

$ 10,096,932 $ 8,303,430 $ 10,010,798

(1) Reflects the proforma effect of conversion of $3,380,000 principal amount of
Agritope notes into 250,367 shares of common stock of Epitope at an exchange
price of $13.50 per share (see Note 13).

The accompanying notes are an integral part of these statements.
</TABLE>

III - 37

<PAGE>

HISTORICAL FINANCIAL STATEMENTS
AGRITOPE
COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30 1996 1995 1994
<S> <C> <C> <C>
Revenues
Product sales ............................................. $ - $ 2,015,318 $ 2,179,742
Grants and contracts ...................................... 585,485 94,370 33,642
------------ ------------ ------------
585,485 2,109,688 2,213,384

Costs and expenses
Product costs ............................................. - 3,235,675 4,575,149
Research and development costs ............................ 1,338,703 2,204,993 2,368,880
Selling, general and administrative expenses............... 1,482,694 4,479,498 4,759,219
------------ ----------- -----------
2,821,397 9,920,166 11,703,248

Loss from operations ...................................... (2,235,912) (7,810,478) (9,489,864)

Other income (expense), net
Interest income............................................ 361,938 408,097 216,934
Interest expense........................................... (265,356) (241,775) (236,121)
Other, net................................................. - (500) (75,280)
------------ ------------ -------------
96,582 165,822 (94,467)

Net loss ................................................. $ (2,139,330) $(7,644,656) $(9,584,331)

Proforma net loss per share .............................. $ (.34) $ (1.29) $ (1.91)

Proforma weighted average number of shares
outstanding ............................................ 6,330,710 5,943,117 5,025,064

The accompanying notes are an integral part of these statements.

</TABLE>

III - 38

<PAGE>

HISTORICAL FINANCIAL STATEMENTS
AGRITOPE
COMBINED STATEMENTS OF CHANGES IN GROUP EQUITY
CONTRIBUTED ACCUMULATED
CAPITAL DEFICIT TOTAL
<S> <C> <C> <C>
Balances at September 30, 1993 .............................. $11,259,717 $(11,912,045) $ (652,328)
Common stock issued as
compensation .............................................. 50,392 - 50,392
Compensation expense for
stock option grants ....................................... 343,922 - 343,922
Common stock issued upon
exchange of convertible notes ............................. 559,964 - 559,964
Equity issuance costs ....................................... (40,267) - (40,267)
Net cash from Epitope Medical Products ...................... 12,132,173 - 12,132,173
Net loss for the year ....................................... - (9,584,331) (9,584,331)
----------- ------------ -----------
Balances at September 30, 1994 .............................. 24,305,901 (21,496,376) 2,809,525

Common stock issued as compensation ......................... 69,998 - 69,998
Compensation expense for stock option grants ................ 318,375 - 318,375
Common stock issued upon exchange of convertible
notes ..................................................... 449,991 - 449,991
Equity issuance costs ....................................... (22,487) - (22,487)
Net cash from Epitope Medical Products ...................... 8,330,854 - 8,330,854
Net loss for the year ....................................... - (7,644,656) (7,644,656)
----------- ------------ -----------
Balances at September 30, 1995 .............................. 33,452,632 (29,141,032) 4,311,600

Common stock issued as compensation ......................... 14,500 - 14,500
Compensation expense for stock
option grants ............................................. 229,164 - 229,164
Net cash from Epitope Medical Products ...................... 3,018,636 - 3,018,636
Net loss for the year ....................................... - (2,139,330) (2,139,330)
----------- ------------ ------------
Balances at September 30, 1996 .............................. $36,714,932 $(31,280,362) $ 5,434,570

The accompanying notes are an integral part of these statements.
</TABLE>

III - 39

<PAGE>

HISTORICAL FINANCIAL STATEMENTS
AGRITOPE
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30 1996 1995 1994
<S> <C> <C> <C>
Cash flows from operating activities
Net loss .................................................. $(2,139,330) $(7,644,656) $(9,584,331)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization ............................. 294,045 663,380 505,135
Loss on disposition of property ........................... - 500 74,130
Decrease (increase) in accounts receivable and
other receivables ....................................... 832,333 (945,501) (140,268)
Decrease (increase) in inventories ........................ (509,745) 88,737 (385,928)
Decrease (increase) in prepaid expenses ................... 55,252 (55,639) 36,965
Decrease (increase) in other assets and deposits........... (36,219) 9,137 6,562
Increase (decrease) in accounts payable and
accrued liabilities ...................................... 494,632 (104,680) 67,457
Common stock issued as compensation for services........... 14,500 69,998 50,392
Compensation expense for stock option grants and
deferred salary increases ................................ 229,164 318,375 343,922
----------- ----------- -----------
Net cash used in operating activities ..................... (765,368) (7,600,349) (9,025,964)

Cash flows from investing activities
Additions to property and equipment ....................... (886,646) (238,558) (2,128,835)
Proceeds from sale of property ............................ 13,258
Expenditures for patents and proprietary
technology ............................................... (411,943) (178,208) 135
Investment in affiliated companies ........................ (473,790) 610,146
Minority Interest in affiliated companies ................. 215,407 - -
----------- ----------- -----------
Net cash (used in) provided by investing activities ....... (1,556,972) 206,638 (2,128,700)

Cash flows from financing activities
Principal payments under installment purchase
and capital lease obligations ............................ (39,507) (16,137) (20,726)
Cash from Epitope Medical Products ........................ 3,018,636 8,330,854 12,132,173
----------- ----------- -----------
Net cash provided by financing activities ................. 2,979,129 8,314,717 12,111,447

Net increase in cash and cash equivalents ................. 656,789 921,006 956,783
Cash and cash equivalents at beginning of year ............ 4,246,687 3,325,681 2,368,898
----------- ----------- -----------
Cash and cash equivalents at end of year .................. $ 4,903,476 $ 4,246,687 $ 3,325,681

The accompanying notes are an integral part of these statements.

</TABLE>

III - 40

<PAGE>

HISTORICAL FINANCIAL STATEMENTS
EPITOPE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30 1996 1995 1996
PROFORMA (1)
<S> <C> <C> <C>
Assets
Current assets
Cash and cash equivalents (Note 2) ........................ $ 5,699,263 $ 4,259,897 $ 5,699,263
Marketable securities (Note 2) ............................ 18,818,120 17,080,246 18,818,120
Trade accounts receivable, net (Note 2) ................... 1,412,585 367,487 1,412,585
Other accounts receivable ................................. 206,420 1,376,543 206,420
Inventories (Note 2) ...................................... 1,667,675 1,433,746 1,667,675
Prepaid expenses .......................................... 90,330 159,463 90,330
------------ ------------ ------------
Total current assets ...................................... 27,894,393 24,677,382 27,894,393

Property and equipment, net (Notes 2 and 4) ............... 2,828,953 2,544,772 2,828,953
Patents and proprietary technology, net (Note 2) .......... 1,111,478 555,767 1,111,478
Investment in affiliated companies (Note 3) ............... 2,448,623 2,117,343 2,448,623
Other assets and deposits (Note 5) ........................ 163,271 238,758 77,137
------------ ------------ -------------
$ 34,446,718 $ 30,134,022 $ 34,360,584

Liabilities and Shareholders' Equity
Current liabilities
Current portion of installment notes payable .............. $ - $ 17,758 $ -
Convertible notes, due 1997 (Notes 5 and 13) .............. 3,620,003 - 240,003
Accounts payable .......................................... 540,644 945,395 540,644
Salaries, benefits and other accrued liabilities
(Notes 2 and 9) ........................................... 2,103,644 3,182,516 2,103,644
----------- ------------ -----------
Total current liabilities ................................. 6,264,291 4,145,669 2,884,291

Long-term portion of installment notes payable ............ - 21,749 -
Convertible notes, due 1997 (Notes 5 and 13) .............. - 3,620,003 -
Commitments and contingencies (Notes 6, 8, 9, 10 and 11) - - -
Minority Interest ......................................... 215,407 - 215,407

Shareholders' equity (Note 6)
Preferred stock, no par value - 1,000,000 shares authorized;
no shares issued or outstanding ......................... - - -
Common stock, no par value - 30,000,000 shares
authorized; 12,937,383 and 12,485,130 shares issued and
outstanding, respectively ............................... 100,952,282 93,931,947 105,462,802
Accumulated deficit ....................................... (72,985,262) (71,585,346) (74,201,916)
------------- ------------- --------------
27,967,020 22,346,601 31,260,886

$ 34,446,718 $ 30,134,022 $ 34,360,584
</TABLE>

(1) Reflects the proforma effect of conversion of $3,380,000 principal amount of
Agritope notes into 250,367 shares of common stock of Epitope at an exchange
price of $13.50 per share (see Note 13).

The accompanying notes are an integral part of these statements.

III - 41

<PAGE>

HISTORICAL FINANCIAL STATEMENTS
EPITOPE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30 1996 1995 1994
<S> <C> <C> <C>
Revenues
Product sales ............................................... $ 4,864,378 $ 4,822,168 $ 4,760,540
Grants and contracts ........................................ 1,314,756 143,042 58,202
------------ ------------ ------------
6,179,134 4,965,210 4,818,742
Costs and expenses
Product costs .............................................. 2,681,429 6,398,687 6,716,468
Research and development costs ............................. 4,504,541 6,822,239 6,050,206
Selling, general and administrative expenses................ 6,516,185 11,162,358 7,826,115
----------- ----------- -----------
13,702,155 24,383,284 20,592,789

Loss from operations........................................ (7,523,021) (19,418,074) (15,774,047)

Other income (expense), net
Interest income ............................................ 1,386,968 1,164,840 454,401
Interest expense ........................................... (265,356) (241,775) (236,121)
License fee................................................. 5,000,000 - -
Other, net.................................................. 1,493 (819) (76,821)
------------ ------------ ------------
6,123,105 922,246 141,459

Net loss ................................................... $(1,399,916) $(18,495,828) $(15,632,588)

Net loss per share ......................................... $ (.11) $ (1.56) $ (1.56)

Weighted average number of shares
outstanding .............................................. 12,661,420 11,886,234 10,050,129

The accompanying notes are an integral part of these statements.
</TABLE>

III - 42

<PAGE>

HISTORICAL FINANCIAL STATEMENTS
EPITOPE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
COMMON STOCK ACCUMULATED
SHARES DOLLARS DEFICIT TOTAL
<S> <C> <C> <C> <C>

Balances at September 30, 1993 ......................... 9,091,922 $ 45,427,299 $(37,456,930) $ 7,970,369
Common stock issued upon
exercise of options .................................. 52,488 636,293 - 636,293
Common stock issued as
compensation ......................................... 19,678 368,778 - 368,778
Compensation expense for
stock option grants .................................. - 1,167,272 - 1,167,272
Common stock issued upon
exercise of warrants ................................. 618,291 9,718,259 - 9,718,259
Common stock issued upon
exchange of convertible notes ........................ 28,672 559,964 - 559,964
Common stock issued in
private placement .................................... 1,115,500 17,057,563 - 7,057,563
Equity issuance costs .................................. - (3,375,528) - (3,375,528)
Net loss for the year .................................. - - (15,632,588) (15,632,588)
----------- ----------- ------------- -------------
Balances at September 30, 1994 ......................... 10,926,551 71,559,900 (53,089,518) 18,470,382

Common stock issued upon
exercise of options .................................. 183,525 2,145,673 - 2,145,673
Common stock issued as
compensation ......................................... 16,013 266,800 - 266,800
Compensation expense for
stock option grants .................................. - 1,374,710 - 1,374,710
Common stock issued upon
exercise of warrants ................................. 1,336,000 18,892,750 - 18,892,750
Common stock issued upon
exchange of convertible notes ........................ 23,041 449,991 - 449,991
Equity issuance costs .................................. - (757,877) - (757,877)
Net loss for the year .................................. - - (18,495,828) (18,495,828)
----------- ----------- ------------- -------------
Balances at September 30, 1995 ......................... 12,485,130 93,931,947 (71,585,346) 22,346,601

Common stock issued upon
exercise of options .................................. 386,550 4,886,118 - 4,886,118
Common stock issued as compensation .................... 19,353 263,586 - 263,586
Compensation expense for stock
option grants ........................................ - 1,044,183 - 1,044,183
Common stock issued upon
exercise of warrants ................................. 46,350 826,600 - 826,600
Equity issuance costs .................................. - (152) - (152)
Net loss for the year .................................. - - (1,399,916) (1,399,916)
-------------------------------- -------------- -------------
Balances at September 30, 1996 ......................... 12,937,383 $100,952,282 $(72,985,262) $27,967,020
</TABLE>

The accompanying notes are an integral part of these statements.

III - 43

<PAGE>

HISTORICAL FINANCIAL STATEMENTS
EPITOPE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30 1996 1995 1994
<S> <C> <C> <C>
Cash flows from operating activities
Net loss ................................................... $ (1,399,916) $(18,495,828) $(15,632,588)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization .............................. 1,086,930 1,458,675 1,156,211
(Gain) loss on disposition of property ..................... (1,098) 819 75,671
Decrease (increase) in accounts receivable and
other receivables ........................................ 125,025 (1,022,050) (321,035)
Increase in inventories .................................... (233,929) (286,903) (658,207)
Decrease (increase) in prepaid expenses .................... 69,133 (17,608) 80,319
Decrease (increase) in other assets and deposits ........... 20,649 (33,521) 335
Increase in accounts payable and accrued
liabilities .............................................. (1,656,478) 2,168,684 397,332
Common stock issued as compensation for services............ 263,586 266,800 368,778
Compensation expense for stock option grants and
deferred salary increases ................................ 1,044,183 1,374,710 1,259,273
----------- ----------- -----------
Net cash used in operating activities ...................... (723,213) (14,586,222) (13,273,911)

Cash flows from investing activities
Investment in marketable securities ........................ (47,608,270) (16,194,994) (5,603,414)
Proceeds from sale of marketable securities ................ 45,870,396 4,718,162 -
Additions to property and equipment ........................ (1,066,758) (1,350,850) (2,590,751)
Proceeds from sale of property ............................. 7,432 14,343 1,000
Expenditures for patents and proprietary
technology ............................................... (770,262) (305,135) (185,670)
Investment in affiliated companies ......................... (331,280) 652,698 64,938
Minority interest in affiliated companies .................. 215,407 - -
---------- ----------- -----------
Net cash used in investing activities ...................... (3,683,335) (12,465,776) (8,313,897)

Cash flows from financing activities
Principal payments under installment purchase and
capital lease obligations ................................ (39,507) (16,137) (20,724)
Proceeds from issuance of common stock ..................... 5,885,573 21,060,912 24,387,702
Cost of common stock issuance .............................. (152) (757,877) (310,849)
----------- ------------- ------------
Net cash provided by financing activities .................. 5,845,914 20,286,898 24,056,129

Net increase (decrease) in cash and cash equivalents ....... 1,439,366 (6,765,100) 2,468,321
Cash and cash equivalents at beginning of year ............. 4,259,897 11,024,997 8,556,676
----------- ------------ -----------
Cash and cash equivalents at end of year ................... $ 5,699,263 $ 4,259,897 $ 11,024,997

The accompanying notes are an integral part of these statements.
</TABLE>

III - 44

<PAGE>

NOTES TO HISTORICAL FINANCIAL STATEMENTS

NOTE 1 THE COMPANY

Epitope, Inc. (the Company or Epitope) is an Oregon corporation utilizing
biotechnology to develop and market medical diagnostic products through its
Epitope Medical Products group (Epitope Medical Products) and superior new
plants and related products through its Agritope group (Agritope). Upon approval
of the proposal to create a new class of common stock (the Agritope Stock
Proposal), the capital structure of Epitope will be modified to include two
classes of common stock, Epitope Medical Products Common Stock and Agritope
Common Stock. The Epitope Medical Products group (Epitope Medical Products) will
include the medical products business conducted by the Company. The Agritope
group (Agritope) will include the agribusiness and agricultural biotechnology
operations of the Company.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION. The accompanying consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries. All
significant intercompany balances and transactions have been eliminated in
consolidation. Assets and liabilities of majority-owned subsidiaries are
included in these statements. Minority-owned investments and joint ventures are
accounted for using the equity method. Investments of less than 20 percent are
carried at cost.

The accompanying combined financial statements of the Epitope Medical Products
and Agritope groups have been prepared using the amounts included in the
consolidated financial statements of the Company. Assets, liabilities, revenues
and expenses of each group are included in the respective financial statements
of the applicable group. Cash, cash equivalents and marketable securities have
been allocated 80 percent to Epitope Medical Products and 20 percent to
Agritope. Cash advanced and allocated by the Company to business units of the
Agritope group has been reflected as contributed capital in the accompanying
combined financial statements.

Certain corporate overhead services such as accounting, finance, general
management, human resources, investor relations, information systems and payroll
are provided by the Company on a centralized basis for the benefit of both
groups (Shared Services). Such expenses have been allocated between Epitope
Medical Products and Agritope in the accompanying combined financial statements
using activity indicators which, in the opinion of management, represent a
reasonable measure of the respective group's utilization of such shared
services. These activity indicators, which will be reviewed periodically and
adjusted to reflect changes in utilization, include number of employees, number
of computers, and level of expenditures. The accompanying combined financial
statements also include an adjustment to allocate interest income in the same
proportion as the allocation of Shared Services between the two groups. Future
interest income will be based on amounts earned by each group. Shared Services
are included under the caption "Selling, general and administrative expenses" as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR ENDED SEPTEMBER 30 1996 1995 1994
Epitope Medical Products .......................... $3,028,181 $3,575,069 $1,899,969
Agritope .......................................... 1,069,249 1,892,370 1,735,688
------------ ------------ ------------
Consolidated ...................................... $4,097,430 $5,467,439 $3,635,657
</TABLE>

If the Agritope Stock Proposal is approved, the Company will provide holders of
Epitope Medical Products and Agritope common stock separate financial statements
prepared in accordance with generally accepted accounting principles,
management's discussion and analysis of financial condition and results of
operations, descriptions of businesses and other relevant information for each
group. Notwithstanding the attribution of assets and liabilities (including
contingent liabilities) to each group for the purposes of preparing their
respective historical and future financial statements, this attribution and the
change in capitalization contemplated in the Agritope Stock Proposal will not
affect legal title to such assets or responsibility for such liabilities of the
Company or any of its subsidiaries. Holders of each class of common stock will
be common shareholders of the Company and would be subject to risks associated
with an investment in the Company and all its businesses, assets, and
liabilities. Liabilities or contingencies of either group that affect the
Company's resources or financial condition could affect the financial condition
and results of operations of either group.

III - 45

<PAGE>

Notes to Historical Financial Statements, Continued

Under the Agritope Stock Proposal, dividends to be paid to the holders of either
class of common stock will be limited to the lesser of funds of the Company
legally available for the payment of dividends or the Available Medical Products
Dividend Amount or Available Agritope Dividend Amount as defined in the
Company's Articles of Incorporation. The Company has never paid any cash
dividends on shares of Epitope common stock. The Company currently intends to
retain any of its earnings to finance future growth and, therefore, does not
anticipate paying any cash dividends on either class of common stock in the
foreseeable future.

Except as stated in the amended Articles of Incorporation, the accounting
policies applicable to preparation of financial statements of either group may
be modified or rescinded at the sole discretion of the Board of Directors of the
Company without the approval of shareholders, although there is no intention to
do so. In addition, generally accepted accounting principles require that any
change in accounting policy be preferable (in accordance with such principles)
to the previous policy.

CASH AND CASH EQUIVALENTS; MARKETABLE SECURITIES. For purposes of the
consolidated balance sheets and statements of cash flows, the Company considers
all highly liquid investments with maturities at time of purchase of three
months or less to be cash equivalents. At September 30, 1996, marketable
securities consisted of commercial paper and U.S. Treasury securities with an
original maturity period greater than three months, but generally less than 12
months. The Company's policy is to invest its excess cash in securities that
maximize (a) safety of principal, (b) liquidity for operating needs, and (c)
after-tax yields.

Effective October 1, 1994, the Company adopted Financial Accounting Standards
Board Statement No. 115 (SFAS 115), Accounting for Certain Investments in Debt
and Equity Securities. Pursuant to SFAS 115, the Company has categorized all of
its investments as available-for-sale securities and, accordingly, unrealized
gains and losses on such investments, if material, will be carried as a separate
component of shareholders' equity. Such unrealized gains and losses were
immaterial as of September 30, 1996 and 1995.

INVENTORIES. Inventories are recorded at the lower of standard cost (which
approximates actual cost on a first-in, first-out basis) or market. Inventory
components are summarized as follows:

SEPTEMBER 30 1996 1995
EPITOPE MEDICAL PRODUCTS
Raw materials............................. $ 522,824 $ 657,568
Work-in-process........................... 389,642 379,470
Finished goods ........................... 192,882 295,032
Supplies ................................. 52,582 101,676
----------- -----------
$1,157,930 $1,433,746
AGRITOPE
Work-in-process .......................... $ 471,208 $ -
Finished goods ........................... 38,537 -
----------- ------------
$ 509,745 $ -
CONSOLIDATED
Raw materials ............................ $ 522,824 $ 657,568
Work-in-process .......................... 860,850 379,470
Finished goods ........................... 231,419 295,032
Supplies ................................. 52,582 101,676
----------- -----------
$1,667,675 $1,433,746

III - 46

<PAGE>

Notes to Historical Financial Statements, Continued

DEPRECIATION AND CAPITALIZATION POLICIES. Property and equipment are stated at
cost less accumulated depreciation. Expenditures for repairs and maintenance are
charged to operating expense as incurred. Expenditures for renewals and
betterments are capitalized. Depreciation and amortization of property and
equipment are calculated primarily under the straight-line method over the
estimated lives of the related assets (three to seven years). Leasehold
improvements are amortized over the shorter of estimated useful lives or the
terms of related leases. When assets are sold or otherwise disposed, cost and
related accumulated depreciation or amortization are removed from the accounts
and any resulting gain or loss is included in operations.

ACCOUNTING FOR LONG-LIVED ASSETS. The Company reviews its long-lived assets for
impairment periodically or as events or circumstances indicate that the carrying
amount of long-lived assets may not be recoverable. If the estimated net cash
flows are less than the carrying amount of the long-lived assets, the Company
recognizes an impairment loss in an amount necessary to write down long-lived
assets to fair value as determined from expected discounted future cash flows.
This accounting policy is consistent with Statement of Financial Accounting
Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of. There has been no significant impact to the
Company's financial position or results of operations as the carrying amount of
all long-lived assets is considered recoverable.

PATENTS AND PROPRIETARY TECHNOLOGY. Direct costs associated with patent
submissions and acquired technology are capitalized and amortized over their
minimum estimated economic useful lives, generally five years.

In August 1996, the Company amended an agreement pursuant to which it acquired
Agritope's patented ethylene control technology in 1987. A co-inventor of the
technology relinquished all rights to future compensation under the agreement in
exchange for a one-time cash payment, a research grant and a limited
non-exclusive license to use the technology for one crop. The total
consideration of $365,000 is included in Agritope's combined balance sheet under
the caption "Patents and Proprietary Technology" and is being amortized over 15
years, the remaining life of the related patent.

Amortization and accumulated amortization are summarized as follows:

1996 1995 1994
<S> <C> <C> <C>
Amortization for the year ended
September 30,
Epitope Medical Products ............................ $ 172,095 $ 130,313 $ 101,339
Agritope ............................................ 42,456 23,964 13,487
----------- ---------- ----------
Consolidated......................................... $ 214,551 $ 154,277 $ 114,826

Accumulated Amortization at
September 30,
Epitope Medical Products ............................ $ 621,110 $ 449,015 $ 318,702
Agritope ............................................ 79,907 37,451 13,487
---------- ---------- ----------
Consolidated......................................... $ 701,017 $ 486,466 $ 332,189
</TABLE>

FAIR VALUE OF FINANCIAL INSTRUMENTS. The carrying amount for cash equivalents,
marketable securities, accounts receivable, borrowings under bank line of
credit, subordinated notes, and accounts payable approximates fair value because
of the immediate or short-term maturity of these financial instruments. The
carrying amount for long-term debt and convertible notes approximates fair value
because the related interest rates are comparable to rates currently available
to the Company for debt with similar terms and maturities.

III - 47

<PAGE>

Notes to Historical Financial Statements, Continued

REVENUE RECOGNITION. Product revenues are recognized when the related products
are shipped. Grant and contract revenues include funds received under research
and development agreements with various entities. These grants and contracts
generally provide for progress payments as expenses are incurred and certain
research milestones are achieved. Revenue related to such grants and contracts
is recognized in accordance with contract terms as expenses are incurred and
progress milestones are achieved.

Accounts receivable are stated net of an allowance for doubtful accounts as
follows:

SEPTEMBER 30 1996 1995
Epitope Medical Products ................. $ 6,872 $ 6,872
Agritope ................................. 19,571 65,172
--------- ---------
Consolidated ............................. $ 26,443 $ 72,044

RESEARCH AND DEVELOPMENT. Research and development expenditures are comprised of
those costs associated with the Company's own ongoing research and development
activities including the costs to prepare for, obtain and compile clinical
studies and other information to support product license applications.
Expenditures for research and development also include costs incurred under
contracts to develop certain products, including those contracts resulting in
grant and contract revenues. All research and development costs are expensed as
incurred.

INCOME TAXES. The Company accounts for certain revenue and expense items
differently for income tax purposes than for financial reporting purposes. These
differences arise principally from methods used in accounting for stock options
and depreciation rates. Deferred tax assets and liabilities are recognized based
on temporary differences between the financial statement and the tax bases of
assets and liabilities using enacted tax rates in effect for the year in which
the temporary differences are expected to reverse.

To date, both Epitope Medical Products and Agritope have experienced operating
losses. Actual tax payment is a liability of Epitope as a whole. The Agritope
Stock Proposal provides that either group may be allocated the tax benefit of
such losses and future losses to reduce current or deferred tax expense and that
such losses will not be carried forward to reduce the losses of the group which
incurred such losses. Accordingly, either group may report lower earnings than
if such losses had been retained for the benefit of the group which incurred
such losses.

NET INCOME (LOSS) PER SHARE. Net income (loss) per share has been computed using
the weighted average number of shares of common stock and common stock
equivalents outstanding during the period. Common stock equivalents consist of
the number of shares issuable upon exercise of outstanding warrants, options and
convertible notes less the number of shares assumed to have been purchased for
the treasury with the proceeds from the exercise of such. Net income (loss) per
share for Epitope Medical Products and Agritope is presented on a proforma basis
assuming that the distribution of Agritope common stock and redesignation of
Epitope, Inc. common stock as Epitope Medical Products common stock pursuant to
the Agritope Stock Proposal had occurred on October 1, 1993.

Common stock equivalents are excluded from the computation if their effect is
anti-dilutive. Primary and fully diluted net income (loss) per share are the
same.

III - 48

<PAGE>

Notes to Historical Financial Statements, Continued

SUPPLEMENTAL CASH FLOW INFORMATION. Non-cash financing and investing activities
not included in the consolidated statements of cash flows are summarized as
follows:
<TABLE>
<CAPTION>

YEAR ENDED SEPTEMBER 30 1996 1995 1994
EPITOPE MEDICAL PRODUCTS
<S> <C> <C> <C>
Discount on private placement of common stock ............ $ - $ - $3,024,413

AGRITOPE
Conversion of notes to equity (Note 5) ................... $ - $ 427,496 $ 600,231
Investment in nonconsolidated subsidiary ................. - 2,584,979 -
</TABLE>

SUPPLEMENTAL PROFIT AND LOSS INFORMATION. In September 1995, management
announced a company-wide reduction in work force whereby 48 employees were
terminated. The Company charged $607,000 to results of operations for severance
payments and related expenses for this program. As of September 30, 1996 and
1995, $55,000 and $475,000, respectively, of these charges remain accrued and
are included in the accompanying balance sheets of the Company and Epitope
Medical Products under the caption "Salaries, benefits and other accrued
liabilities."

MANAGEMENT ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
relating to assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements as well as the reported amounts of revenues and
expenses during the reporting period. Actual results could vary from these
estimates.

NOTE 3 INVESTMENT IN AFFILIATED COMPANIES

In June 1995, Agritope agreed to sell its wholly owned grape plant propagation
subsidiary, Vinifera, Inc. to VF Holdings, Inc. ("VF"), an affiliate of a Swiss
investment group, pursuant to a stock purchase agreement. VF subsequently failed
to make all the payments required under the VF Agreement. As part of a
settlement of claims based on VF's default, VF retained a 4 percent minority
interest in Vinifera and relinquished the majority interest to Agritope in
August 1996.

The reacquisition of Vinifera in August 1996 has been accounted for under the
purchase method. The net purchase price of $916,000 has been allocated to
tangible net assets. Vinifera's results of operations are including in the
Agritope Combined Statements of Operations and in the Consolidated Statements of
Operations through May 1995, and for the month of September 1996. The following
summarized proforma results of operations are presented as if the reacquisition
had occurred on the first day of each period shown.

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30 1996 1995
Proforma Proforma
Historical Adjustments Proforma Historical Adjustments Proforma
<S> <C> <C> <C> <C> <C> <C>
Agritope
Revenues................. 585,485 833,949 1,419,434 2,109,688 276,588 2,386,276
Net loss.................(2,139,330) (1,464,002) (3,603,332) (7,644,656) (460,296) (8,104,952)
Proforma loss per share.. (0.34) (0.23) (0.57) (1.29) (0.08) (1.36)

Consolidated
Revenues................. 6,179,134 833,949 7,013,083 4,965,210 276,588 5,241,798
Net loss.................(1,399,916) (1,464,002) (2,863,918) (18,495,828) (460,296) (18,956,124)
Loss per share........... (0.11) (0.12) (0.23) (1.56) (0.04) (1.59)
</TABLE>

III - 49

<PAGE>

Notes to Historical Financial Statements, Continued

In May 1995, Agritope's wholly owned subsidiary, Agrimax Floral Products, Inc.
(Agrimax), ceased operations as an independent entity. UAF, Limited Partnership
(UAF), in which Agrimax obtained an 18 percent interest, was formed to combine
the Agrimax operations in Charlotte, North Carolina, with those of Universal
American Flowers, Inc. in Tampa, Florida and Hammond, Louisiana. In connection
with the UAF transaction, Agrimax contributed inventory, operating assets and
the right to use its proprietary floral preservative and certain trademarks. In
May 1966, the equity interest of Agrimax was reduced to 9 percent as the result
of a recapitalization of UAF.

The St. Paul, Minnesota, facility of Agrimax ceased operations in June 1995. In
June 1996, Agrimax contributed inventory and operating assets to Petals USA,
Inc. (Petals), a newly formed affiliate of a Canadian fresh flower wholesaler,
in return for a 19.5 percent equity interest in Petals.

The investments by Agrimax are included in the accompanying consolidated balance
sheets of the Company and combined balance sheets of Agritope under the caption
"Investment in affiliated companies." See Note 13.

For the years ended September 30, 1995, 1994 respectively, the accompanying
financial statements of the Company and Agritope include revenues of $2.0
million and $2.2 million, and operating losses of $3.8 million, and $6.4 million
attributable to the Agrimax and Vinifera business units. The accompanying
statements of operations of the Company and Agritope for the year ended
September 30, 1995, includes the results of operations of Agrimax and Vinifera
through May and also includes a charge of $500,000 primarily attributable to the
disposition of Agrimax.

III - 50

<PAGE>

Notes to Historical Financial Statements, Continued

NOTE 4 PROPERTY AND EQUIPMENT

Property and equipment are summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30 1996 1995
<S> <C> <C>
Epitope Medical Products
Research and development laboratory equipment ................ $ 1,056,883 $ 898,716
Manufacturing equipment ...................................... 1,291,546 1,296,416
Office furniture and equipment ............................... 1,899,948 2,041,897
Leasehold improvements ....................................... 1,084,660 1,084,660
Construction in progress ..................................... 134,557 70,961
----------- -----------
5,467,594 5,392,650
Less accumulated depreciation and amortization ............... (3,924,837) (3,402,881)
------------ ------------
$ 1,542,757 $ 1,989,769

Agritope
Land ......................................................... $ 30,020 $ 30,020
Buildings and improvements ................................... 717,508 717,508
Research and development laboratory equipment ................ 220,919 196,255
Manufacturing equipment ...................................... 351,538 -
Office furniture and equipment ............................... 140,452 95,338
Leasehold improvements........................................ 23,962 23,962
Construction in progress ..................................... 499,980 34,650
----------- -----------
1,984,379 1,097,733
Less accumulated depreciation and amortization ............... (698,183) (542,730)
------------ ------------
$ 1,286,196 $ 555,003
Consolidated
Land ......................................................... $ 30,020 $ 30,020
Buildings and improvements ................................... 717,508 717,508
Research and development laboratory equipment ................ 1,277,802 1,094,971
Manufacturing equipment ...................................... 1,643,084 1,296,416
Office furniture and equipment ............................... 2,040,400 2,137,235
Leasehold improvements ....................................... 1,108,622 1,108,622
Construction in progress ..................................... 634,537 105,611
----------- -----------
7,451,973 6,490,383
Less accumulated depreciation and amortization ............... (4,623,020) (3,945,611)
------------ ------------

$ 2,828,953 $ 2,544,772
</TABLE>

NOTE 5 LONG-TERM DEBT

On June 30, 1992, Agritope completed a private placement with several European
institutional investors pursuant to which $5,495,000 of convertible notes were
issued. The notes are unsecured, mature on June 30, 1997 and bear interest at
the rate of 4 percent per annum which is payable on each June 30 and December 31
until all outstanding principal and interest on the notes have been paid in
full. The notes are convertible into common stock of the Company at a conversion
price of $19.53 per share. In the event of an initial public offering of
Agritope common stock, the notes would be automatically converted to shares of
Agritope common stock at 90 percent of the public offering price.

III - 51

<PAGE>

Notes to Historical Financial Statements, Continued

During the years ended September 30, 1995 and 1994, respectively, investors
exchanged $449,991 and $559,964 principal amount of convertible notes for the
Company's common stock at a price of $19.53 per share. In conjunction with the
exchanges, unamortized debt issuance costs of $22,487 and $40,267 related to
such notes were recognized as equity issuance costs during 1995 and 1994,
respectively. Debt issuance costs are included in other assets and are being
amortized over the five-year life of the notes. Amortization expense of debt
issuance costs for the years ended September 30, 1996, 1995 and 1994,
respectively, totaled $108,257, $96,136 and $91,715, leaving an unamortized
balance of $88,821 and $197,077 at September 30, 1996 and 1995, respectively.
See Note 13.

NOTE 6 SHAREHOLDERS' EQUITY

AUTHORIZED CAPITAL STOCK. The Company's amended articles of incorporation
authorize 1,000,000 shares of preferred stock and 30,000,000 shares of common
stock. The Company's Board of Directors has authority to determine preferences,
limitations and relative rights of the preferred stock.

COMMON STOCK RESERVED FOR FUTURE ISSUANCE. As of September 30, 1996, the
following shares of the Company's common stock were reserved for future
issuance, as more fully described below:

PURPOSE SHARES
Outstanding warrants .............................. 2,000,640
Outstanding stock options ......................... 3,365,726
Employee Stock Purchase Plan subscriptions ........ 42,820
Conversion of notes (Note 5) ...................... 185,356
---------
5,594,542

If the Agritope Stock Proposal is approved, the Company will issue to the
holders of the above rights to purchase shares of Epitope common stock or to
convert notes into such shares, as applicable, the equivalent rights with
respect to Agritope common stock on the basis of one-half share of Agritope
common stock for each right to purchase one share of Epitope common stock.

COMMON STOCK WARRANTS. As of September 30, 1996, the following warrants to
purchase shares of common stock were outstanding:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Date of Issuance Shares Price Expiration Date
September 26, 1991 ....................... 159,150 $16.00 September 30, 1997
December 23, 1992 ........................ 988,390 18.50 September 30, 1997
July 20, 1993 ............................ 375,000 20.00 September 30, 1997
August 1, 1993 ........................... 200,000 18.50 September 30, 1997
October 17, 1994 ......................... 50,000 18.50 September 30, 1997
November 22, 1994 ........................ 228,100 18.50 September 30, 1997
----------
2,000,640
</TABLE>

STOCK AWARD PLANS. The Company's 1991 Stock Award Plan (the 1991 Plan) was
approved by the shareholders during 1991, replacing the Company's Incentive
Stock Option Plan (ISOP). The 1991 Plan provides for stock-based awards to
employees, outside directors and members of scientific advisory committees or
other consultants. Awards which may be granted under the 1991 Plan include
qualified incentive stock options, nonqualified stock options, stock
appreciation rights, restricted awards, performance awards and other stock-based
awards.

III - 52

<PAGE>

Notes to Historical Financial Statements, Continued

Under the terms of the 1991 Plan, qualified incentive stock options on shares of
common stock may be granted to eligible employees, including officers, of the
Company at an exercise price not less than the fair market value of the stock on
the date of grant. The maximum term during which any option may be exercised is
ten years from the date of grant. To date, options have been granted with
four-year vesting schedules.

Options issued to employees under the Incentive Stock Option Plan (ISOP) were
issued at prices not less than the fair market value of a share of common stock
on the date of grant. The options are exercisable after one year from the date
of grant at the rate of 25 percent per year cumulatively and expire ten years
from the date of grant.

The Agritope, Inc. 1992 Stock Award Plan (the 1992 Plan) was adopted by Agritope
and approved by the Company in 1992. The 1992 Plan, which has provisions similar
to those of the Company's 1991 Plan, authorizes issuance of 2,000,000 shares of
Agritope common stock. Until Agritope is no longer a wholly owned subsidiary of
the Company, shares issued pursuant to exercise of options under the 1992 Plan
will be converted into shares of the Company's common stock based on the ratio
of the fair market value of the Company's common stock to the fair market value
of Agritope common stock on the date of the grant.

The 1991 Plan and 1992 Plan also provide that nonqualified options may be
granted at a price not less than 75 percent of the fair market value of a share
of common stock on the date of grant. The option term and vesting schedule of
such awards may either be unlimited or have a specified period in which to vest
and be exercised. For the discounted nonqualified options issued, the Company
amortizes, on a straight-line basis over the vesting period of the options, the
difference between the exercise price and the fair market value of a share of
stock on the date of grant. As of September 30, 1996, 197,181 shares of Epitope
common stock remain available for grant under the Company's stock award plans.

In October 1995, the Financial Accounting Standards Board issued SFAS 123,
Accounting for Stock-Based Compensation. SFAS 123 allows companies which have
stock-based compensation arrangements with employees to adopt a fair-value basis
of accounting for stock options and other equity instruments or to continue to
apply the existing accounting rules under APB Opinion 25, Accounting for Stock
Issued to Employees, but with additional financial statement disclosure. The
Company plans to elect the disclosure-only alternative commencing in fiscal 1997
and therefore does not anticipate that SFAS 123 will have a material impact on
its financial position or results of operations.

Options granted and outstanding under the Company's stock option plans are
summarized as follows:
<TABLE>
<CAPTION>

1996 1995 1994
SHARES PRICE SHARES PRICE SHARES PRICE
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of period 3,636,103 $ 1.09-24.94 3,483,432 $ 1.09-24.94 3,052,653 $ 1.09-24.94
Granted . . . . . . . . . 901,379 9.81-18.13 802,050 14.94-18.88 589,850 14.38-22.94
Exercised. . . . . . . . (386,550) 1.09-17.13 (183,525) 1.84-22.50 (52,488) 12.43-22.50
Canceled . . . . . . . . (785,206) 14.38-24.00 (465,854) 7.38-22.94 (106,583) 8.50-22.94
------------ ------------ ------------
Outstanding at
end of period . . . . . 3,365,726 $ 3.50-24.94 3,636,103 $ 1.09-24.94 3,483,432 $ 1.09-24.94

Exercisable. . . . . . . 2,302,212 $ 3.50-24.94 2,002,925 $ 1.09-24.94 1,557,505 $ 1.09-24.94
</TABLE>

Pursuant to the 1991 Plan, 973, 3,680 and 11,741 shares of common stock were
also awarded to consultants and members of the Company's scientific advisory
committees during 1996, 1995, and 1994, respectively.

III - 53

<PAGE>

Notes to Historical Financial Statements, Continued

EMPLOYEE STOCK PURCHASE PLANS. In 1991, the shareholders approved the Company's
adoption of the 1991 Employee Stock Purchase Plan (1991 ESPP) covering a maximum
of 100,000 shares of common stock for subscription over two offering periods.
The purchase price for stock purchased under the 1991 ESPP for each of the two
24-month subscription periods was the lesser of 85 percent of the fair market
value of a share of common stock at the commencement of the subscription period
or the fair market value at the close of each subscription period. An employee
may also elect to withdraw at any time during the subscription period and
receive the amounts paid plus interest at the rate of 6 percent. During April
1994, 676 shares, at a purchase price of $14.00 per share, were issued to
employees for the second 1991 ESPP purchase period which closed March 31, 1994.

The 1993 Employee Stock Purchase Plan (1993 ESPP), as amended and restated
effective February 1, 1993, covers a maximum of 250,000 shares of common stock
for subscription over established offering periods. The Company's Board of
Directors was granted authority to determine the number of offering periods, the
number of shares offered, and the length of each period, provided that no more
than three offering periods (other than Special Offering Subscriptions as
described below) may be set during each fiscal year of the Company. Other
provisions of the 1993 ESPP are similar to the 1991 ESPP. During April, 1996,
10,106 shares were issued at a price of $11.90 per share. As of September 30,
1996, 42,820 shares of common stock were subscribed for during two offerings
under the 1993 ESPP. Shares subscribed for under these 1993 ESPP offerings may
be purchased over 24 months and have initial subscription prices of $12.33 and
$8.77 per share for the various offerings.

The 1993 ESPP was amended to allow the Company, at its discretion, to provide
Special Offering Subscriptions whereby an employee's annual increase in
compensation could be deferred for a one-year period. At the end of the one-year
period, the employee can elect to receive the deferred compensation amount in
the form of cash or shares of the Company's common stock. The purchase price for
stock issued under a Special Offering Subscription is the lesser of 85 percent
of the fair market value of a share of common stock on the first day of the
calendar month the employee's increase was effective or the fair market value at
the close of the one-year subscription period. During 1995 and 1994,
respectively, 5,569 and 2,314 Special Offering Subscription shares were issued
to employees at an average price of $15.26 and $15.24 per share.

NOTE 7 INCOME TAXES

As of September 30, 1996, the Company had net operating loss carryforwards of
approximately $66.7 million and $50.0 million, respectively, to offset federal
and state taxable income. These net operating loss carryforwards will generally
expire from 2001 through 2011 if not used by the Company. Approximately $6.9
million of the Company's net operating loss carryforwards were generated as a
result of deductions related to the exercise of stock options. When utilized,
such carryforwards, as tax effected, will be reflected in the Company's
financial statements as an increase in shareholders' equity rather than a
reduction of the provision for income taxes.

Significant components of the Company's deferred tax asset were as follows (in
thousands):
<TABLE>
<CAPTION>

SEPTEMBER 30 1996 1995
<S> <C> <C>
Net operating loss carryforwards.......................... $ 24,489 $ 26,110
Deferred compensation..................................... 1,997 1,665
Research & experimentation credit carryforwards .......... 1,151 1,151
Accrued expenses.......................................... 317 238
Other..................................................... 495 384
-------- ---------
Gross deferred tax assets................................. 28,449 29,548
Valuation allowance....................................... (28,449) (29,548)
--------- ----------
Net deferred tax asset.................................... - -
</TABLE>

III - 54

<PAGE>

Notes to Historical Financial Statements, Continued

No benefit for the Company's deferred tax assets has been recognized in the
accompanying financial statements as they do not satisfy the recognition
criteria set forth in SFAS 109. The valuation allowance decreased $1.1 million
in 1996, increased $7.5 million in 1995, and increased $6.2 million in 1994. The
research and development tax credit carryforwards will generally expire from
2001 through 2010 if not used by the Company.

The expected federal statutory tax benefit of approximately $476,000 for the
year ended September 30, 1996 is increased by approximately $61,000 for the
effect of state and local taxes (net of federal impact), $1.1 million for the
effect of the decrease in valuation allowance, and $840,000 for the effect of
stock option deductions included in the valuation allowance and is reduced by
approximately $2.5 million for the effect of Vinifera Inc.'s net operating loss
carryforwards and certain state net operating loss carryforwards being removed
from the consolidated tax group.

NOTE 8 RESEARCH AND DEVELOPMENT ARRANGEMENTS

In February 1995, the Company entered into a Development, License and Supply
Agreement with SmithKline Beecham, plc (SB) pursuant to which the Company will
conduct research and development projects funded by SB. Agritope also performed
research work in 1996 and 1995 with respect to raspberries which was partially
funded by Sweetbriar Development, Inc. under a License Agreement dated October
18, 1994 and with respect to grapevine disease diagnostics funded by a grant
from the U.S. Department of Agriculture under the Small Business Innovation
Research Program.

During 1994, the Company participated in a National Cancer Institute program
whereby the Company received funding for research toward the treatment of
cancer. Agritope has also received grant support from the U.S. Department of
Agriculture, Oregon Strawberry Commission, and Oregon Raspberry & Blackberry
Commission for antifungal biocontrol research and from several strategic
partners.

Revenues from research and development arrangements are included in the
accompanying consolidated statements of operations under the caption "Grants and
Contracts."

NOTE 9 DISTRIBUTION AND SUPPLY CONTRACTS

The Company has entered into several contractual arrangements, including those
discussed in the following paragraphs, for distribution of certain of its
products to customers.

The Company continues to maintain supply and distribution agreements with
Organon Teknika Corporation (Organon Teknika), whereby Organon Teknika supplies
the Company's antigen requirements and exclusively distributes the Company's
EPIblot HIV confirmatory tests (EPIblot) on a worldwide basis. As of April 1,
1994, the Company renewed the agreements which have an initial termination date
of March 31, 1997 (with successive one-year renewal periods thereafter) and
include pricing incentives based on volumes purchased by Organon Teknika and
penalties for failure to purchase specified minimum quarterly volumes. For the
years ended September 30, 1996, 1995 and 1994, respectively, revenues generated
from sales of EPIblot to Organon Teknika were $1,539,164, $1,808,431, and
$1,688,200, including export sales of $62,539, $72,369 and $320,700. The Company
has notified Organon Teknika that it intends to renew the agreements on mutually
acceptable, but revised, terms prior to the scheduled termination date.

LabOne, Inc. (previously Home Office Reference Laboratory, Inc.) purchases oral
specimen devices from the Company for use in insurance testing in return for
non-exclusive distribution rights in the United States and Canada under an
agreement which expires on March 13, 2000, with an automatic five-year renewal,
unless either party notifies the other of intent not to renew at least 180 days
prior to the initial expiration date. For the years ended September 30, 1996,
1995 and 1994, respectively, revenue generated from product sales to LabOne,
Inc. was $1,327,544, $525,628 and $477,186 including export sales of $394,747,
$58,500 and $110,933.

SB has an exclusive agreement to market the Company's oral specimen collection
device worldwide, except in several foreign countries and to the insurance
industry in the U.S., Canada and Japan.

III - 55

<PAGE>

Notes to Historical Financial Statements, Continued

In 1995, SB made an initial license fee payment of $1 million to the Company. SB
also placed $5 million in escrow for future payment to the Company, of which $1
million was designated for reimbursement of future research project work and $4
million was designated as an additional license fee to be paid upon FDA approval
of a pending request to amend the labeling of the Company's oral specimen
collection device to indicate a two-year shelf life. The initial $1 million
license fee was included as deferred revenue under the caption "Salaries,
benefits and other accrued liabilities" in the accompanying consolidated balance
sheets as of September 30, 1995. The escrowed funds are not reflected in the
Company's financial statements. When such funds are disbursed they will be
recognized as revenue in accordance with the Company's revenue recognition
policy. See Note 2.

In April 1996, the FDA granted the Company's request for extended dating and SB
disbursed $4 million plus interest from escrow. Accordingly the Company
recognized income of $5 million in 1996 operating results.

NOTE 10 COMMITMENTS

The Company leases office, manufacturing, warehouse and laboratory facilities
under operating lease agreements which require minimum annual payments as
follows:
<TABLE>
<CAPTION>
EPITOPE
MEDICAL
YEAR ENDING SEPTEMBER 30 PRODUCTS AGRITOPE CONSOLIDATED
<C> <C> <C> <C>
1997 .............................................. $ 345,577 $189,551 $ 535,128
1998 .............................................. 345,576 185,394 530,970
1999 .............................................. 346,356 150,000 496,356
2000 .............................................. 109,992 150,000 259,992
2001............................................... - 50,000 50,000
----------- ---------- ----------
$1,147,501 $724,945 $1,872,446
</TABLE>

The Company is also contingently liable for a lease of which has been assigned
to UAF and the lease of property which has been subleased to Petals in the
following amounts:
<TABLE>
<CAPTION>

YEAR ENDING SEPTEMBER 30
<C> <C>
1997............................................................................................. $ 328,953
1998............................................................................................. 341,304
1999............................................................................................. 347,184
----------
$1,017,441
</TABLE>

III - 56

<PAGE>

Notes to Historical Financial Statements, Continued

NOTE 11 PROFIT SHARING AND SAVINGS PLAN

The Company established a profit sharing and deferred salary savings plan in
1986 and restated the plan in 1991. All employees are eligible to participate in
the plan. In addition, the plan permits certain voluntary employee contributions
to be excluded from the employees' current taxable income under the provisions
of Internal Revenue Code Section 401(k) and the regulations thereunder.
Effective October 1, 1991, the Company replaced a discretionary profit sharing
provision with a matching contribution (either in cash, shares of Epitope common
stock, or partly in both forms) equal to 50 percent of an employee's basic
contribution, not to exceed 2.5 percent of an employee's compensation. The Board
of Directors has the authority to increase or decrease the 50 percent match at
any time. During 1996, 1995 and 1994, respectively, the Company contributed
$73,315 (4,653 shares totaling $73,279 and the remainder in cash), $97,631
(5,562 shares totaling $97,607 and the remainder in cash), and $79,981 (4,632
shares totaling $79,807 and the remainder in cash to the plan. As of September
30, 1996, 17,035 shares are held by the plan.

III - 57

<PAGE>

Notes to Historical Financial Statements, Continued

NOTE 12 GEOGRAPHIC AREA INFORMATION

The Company's products are included in the medical products and agricultural
products industry segments. (See Note 1 for a description of the Company's
business.) The Company's products are sold principally in the United States,
Canada and Europe. Operating loss represents revenues less operating expenses.
In computing operating loss, allocated corporate administration expenses have
been included; however, other income and expense items such as interest expense,
miscellaneous income, and other charges have not been added or deducted. Other
assets primarily represent cash and cash equivalents, marketable securities, and
prepaid insurance.
<TABLE>
<CAPTION>

EPITOPE MEDICAL PRODUCTS
IN THOUSANDS

GEOGRAPHIC
AREAS REVENUES OPERATING LOSS IDENTIFIABLE ASSETS
1996 1995 1994 1996 1995 1994 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United
States ......... $4,903 $2,630 $2,062 $(5,287) $(11,608) $(6,284) $4,604 $3,768 $3,464
Canada .......... 404 78 111 - - - - - -
Latin
America ........ 100 - - - - - - - -
Europe .......... 65 72 329 - - - - - -
Other ........... 122 76 103 - - - - - -
------- -------- ------- ---------- ---------- --------- ---------- --------- --------
$5,594 $2,856 $2,605 $(5,287) $(11,608) $(6,284) $4,604 $3,768 $3,464

AGRITOPE
IN THOUSANDS

GEOGRAPHIC
AREAS REVENUES OPERATING LOSS IDENTIFIABLE ASSETS
1996 1995 1994 1996 1995 1994 1996 1995 1994
United
States ..........$ 585 $2,110 $2,213 $(2,236) $(7,810) $(9,490) $5,351 $3,923 $4,050
----- ----- ----- ------- ------- ------- ----- ----- -----
$ 585 $2,110 $2,213 $(2,236) $(7,810) $(9,490) $5,351 $3,923 $4,050

CONSOLIDATED
IN THOUSANDS

GEOGRAPHIC
AREAS REVENUES OPERATING LOSS IDENTIFIABLE ASSETS
1996 1995 1994 1996 1995 1994 1996 1995 1994
United
States ..........$5,488 $4,739 $4,276 $(7,523) $(19,418) $(15,774) $9,955 $7,691 $7,514
Canada ........... 404 78 111 - - - - - -
Latin
America ......... 100 - - - - - - - -
Europe ........... 65 72 329 - - - - - -
Other ............ 122 76 103 - - - - - -
------- ------- ------- ---------- --------- ---------- ---------- --------- ---------
$6,179 $4,965 $4,819 $(7,523) $(19,418) $(15,774) $9,955 $7,691 $7,514
</TABLE>

III - 58

<PAGE>

Notes to Historical Financial Statements, Continued

NOTE 13 SUBSEQUENT EVENTS

On October 25, the Company received an offer from a representative of the
holders of the $3.6 million convertible notes due June 30, 1997, whereby the
holders proposed to convert such notes into common stock of the Company at a
reduced exchange price. On November 14, 1996, the Company agreed to exchange
$3,380,000 principal amount of Agritope notes for 250,367 shares of common stock
of the Company at an exchange price of $13.50 per share. Accordingly, the
Company will recognize a charge to income of approximately $1.2 million
representing the conversion expense in the first quarter of fiscal 1997.

On November 25, 1996, the Company negotiated an extension to the bank line of
credit previously maintained by Andrew and Williamson Sales, Co. (A&W). Under
terms of the commitment letter, the $6.5 million revolving credit line will be
extended until February 5, 1998, and will bear interest at prime or LIBOR plus
2.5 percent at the Company's option. The new line will be secured by A&W's
accounts receivable, inventory and equipment and will be guaranteed by Epitope,
Inc. The new line will also contain various financial covenants including
minimum working capital and tangible net worth levels and maximum debt to net
worth ratios.

On December 12, 1996, the Company merged with A&W. A&W is a producer and
wholesale distributor of fruits and vegetables based in San Diego, California.
Under the terms of the merger, the Company issued 520,000 shares of common stock
of Epitope, Inc. in exchange for all of the outstanding common stock of A&W. The
merger has been accounted for as a pooling of interests and will qualify as a
tax-free reorganization (see supplemental financial statements).

Based on information available on December 26, 1996, and due to continued
operating losses at UAF in the four months ended October 31, 1996, coupled with
a shortfall in sales and larger operating loss than expected at Petals in the
fourth quarter of calendar 1996, the Company believes that the value of its
investment in affiliated companies has more than temporarily declined as both
companies are now expected to show operating losses in fiscal 1997. Accordingly,
the Company anticipates a non-cash charge to results of operations of
approximately $1.9 million in the first quarter of fiscal 1997, reflecting the
permanent impairment in the value of its investment in affiliated companies.

III - 59

<PAGE>

SUPPLEMENTAL FINANCIAL STATEMENTS

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
Epitope, Inc.

As described in Note 13, on December 12, 1996, Epitope, Inc. merged with
Andrew and Williamson Sales, Co. in a transaction accounted for as a pooling of
interests. The accompanying supplemental financial statements give retroactive
effect to the merger.

In our opinion, based upon our audits and the report of other auditors, the
accompanying supplemental balance sheets and the related supplemental statements
of operations, of changes in shareholders'/group equity and of cash flows
present fairly, in all material respects, the financial position of Epitope
Medical Products group, Agritope group and Epitope, Inc. and its subsidiaries at
September 30, 1996 and 1995, and the results of their operations and their cash
flows for each of the three years in the period ended September 30, 1996, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of Andrew and Williamson
Sales, Co., which statements reflect total assets of $10,774,100 and $7,293,256
at September 30, 1996 and 1995, respectively, and total revenues of $62,471,119,
$52,178,973 and $62,704,601 for the years ended September 30, 1996, 1995 and
1994, respectively. Those statements were audited by other auditors whose report
thereon has been furnished to us, and our opinion expressed herein, insofar as
it related to the amounts included for Andrew and Williamson Sales, Co., is
based solely on the report of the other auditors. We conducted our audits of
these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits and the report of other auditors provide a reasonable basis for the
opinion expressed above.

PRICE WATERHOUSE LLP

Portland, Oregon
October 28, 1996, except for Note 13 as to which the date is November 14, 1996,
November 25, 1996, December 12, 1996, and December 26, 1996.

III - 60

<PAGE>

SUPPLEMENTAL FINANCIAL STATEMENTS

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors of
Andrew and Williamson Sales, Co.

We have audited the accompanying balance sheets of Andrew and Williamson Sales,
Co. as of September 30, 1996, and 1995, and the related statements of
operations, changes in shareholders' equity, and cash flows for the three years
in the period ended September 30, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above presently fairly, in
all material respects, the financial position of Andrew and Williamson Sales,
Co. at September 30, 1996, and 1995, and the results of its operations and its
cash flows for each of the three years in the period ended September 30, 1996,
in conformity with generally acceptable accounting principles.

BOROS & FARRINGTON, APC

San Diego, California
November 6, 1996

III - 61

<PAGE>

SUPPLEMENTAL FINANCIAL STATEMENTS
EPITOPE MEDICAL PRODUCTS
COMBINED BALANCE SHEETS
SEPTEMBER 30 1996 1995
<S> <C> <C>

Assets
Current assets
Cash and cash equivalents (Note 2) ....................... $ 795,787 $ 13,210
Marketable securities (Note 2) ........................... 18,818,120 17,080,246
Trade accounts receivable, net (Note 2) .................. 1,147,599 231,621
Other accounts receivable ................................ 174,083 382,753
Inventories (Note 2) ..................................... 1,157,930 1,433,746
Prepaid expenses ......................................... 89,518 103,399
------------ ------------
Total current assets ..................................... 22,183,037 19,244,975

Property and equipment, net (Notes 2 and 4) .............. 1,542,757 1,989,769
Patents and proprietary technology, net (Note 2) ......... 601,234 415,010
Investments in affiliated companies ...................... - 142,510
Other assets and deposits (Note 5) ....................... 22,758 38,328
----------- -----------
$24,349,786 $21,830,592

Liabilities and Group Equity
Current liabilities
Accounts payable .......................................... $ 449,170 $ 819,424
Salaries, benefits and other accrued liabilities
(Notes 2 and 9) ......................................... 1,368,166 2,976,167
----------- -----------
Total current liabilities ................................ 1,817,336 3,795,591

Commitments and contingencies (Notes 6, 8, 9,
10 and 11)............................................... - -

Group equity (Note 6)
Contributed capital ....................................... 64,237,350 60,479,315
Accumulated deficit ....................................... (41,704,900) (42,444,314)
------------- -------------
22,532,450 18,035,001

$24,349,786 $21,830,592

</TABLE>

The accompanying notes are an integral part of these statements.

III - 62

<PAGE>

SUPPLEMENTAL FINANCIAL STATEMENTS
EPITOPE MEDICAL PRODUCTS
COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30 1996 1995 1994
<S> <C> <C> <C>

Revenues
Product sales ....................................... $4,864,378 $ 2,806,850 $ 2,580,798
Grants and contracts ................................ 729,271 48,672 24,560
---------- ----------- -----------
5,593,649 2,855,522 2,605,358

Costs and expenses
Product costs ....................................... 2,681,429 3,163,012 2,141,319
Research and development costs ...................... 3,165,838 4,617,246 3,681,326
Selling, general and administrative expenses......... 5,033,491 6,682,860 3,066,896
---------- ----------- -----------
10,880,758 14,463,118 8,889,541

Loss from operations ................................ (5,287,109) (11,607,596) (6,284,183)

Other income (expense), net
Interest income...................................... 1,025,030 756,743 237,467
License fee.......................................... 5,000,000 - -
Other, net........................................... 1,493 (319) (1,541)
---------- ----------- ------------
6,026,523 756,424 235,926

Net income (loss) ................................... $ 739,414 $(10,851,172) $(6,048,257)

Proforma net income (loss) per share ................ $ .05 $ (.87) $ (.57)

Proforma weighted average number of shares
outstanding ....................................... 13,960,396 12,406,234 10,570,129

The accompanying notes are an integral part of these statements.

</TABLE>

III - 63

<PAGE>

SUPPLEMENTAL FINANCIAL STATEMENTS
EPITOPE MEDICAL PRODUCTS
COMBINED STATEMENTS OF CHANGES IN GROUP EQUITY
CONTRIBUTED ACCUMULATED
CAPITAL DEFICIT TOTAL
<S> <C> <C> <C>
Balances at September 30, 1993 ...................... $34,167,582 $(25,544,885) $ 8,622,697
Common stock issued upon
exercise of options ............................... 636,293 - 636,293
Common stock issued as
compensation ...................................... 318,386 - 318,386
Compensation expense for
stock option grants ............................... 823,350 - 823,350
Common stock issued upon
exercise of warrants .............................. 9,718,259 - 9,718,259
Common stock issued in
private placement ................................. 17,057,563 - 17,057,563
Equity issuance costs ............................... (3,335,261) - (3,335,261)
Net cash to Agritope ................................ (12,132,173) (12,132,173)
Net loss for the year ............................... - (6,048,257) (6,048,257)
-------------- ------------- -------------
Balances at September 30, 1994 ...................... 47,253,999 (31,593,142) 15,660,857

Common stock issued upon
exercise of options ............................... 2,145,673 - 2,145,673
Common stock issued as
compensation....................................... 196,802 - 196,802
Compensation expense for
stock option grants ............................... 1,056,335 - 1,056,335
Common stock issued upon
exercise of warrants............................... 18,892,750 - 18,892,750
Equity issuance costs ............................... (735,390) - (735,390)
Net cash to Agritope ................................ (8,330,854) (8,330,854)
Net loss for the year ............................... - (10,851,172) (10,851,172)
------------- ------------- -------------
Balances at September 30, 1995 ...................... 60,479,315 (42,444,314) 18,035,001

Common stock issued upon
exercise of options ............................... 4,886,118 - 4,886,118
Common stock issued as compensation ................. 249,086 - 249,086
Compensation expense for stock
option grants ..................................... 815,019 - 815,019
Common stock issued upon
exercise of warrants .............................. 826,600 - 826,600
Equity issuance costs ............................... (152) - (152)
Net cash to Agritope ................................ (3,018,636) - (3,018,636)
Net income for the year ............................. - 739,414 739,414
------------- ------------- ------------
Balances at September 30, 1996 ...................... $64,237,350 $(41,704,900) $22,532,450

The accompanying notes are an integral part of these statements.
</TABLE>

III - 64

<PAGE>

SUPPLEMENTAL FINANCIAL STATEMENTS
EPITOPE MEDICAL PRODUCTS
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30 1996 1995 1994

<S> <C> <C> <C>
Cash flows from operating activities
Net income (loss) ....................................... $ 739,414 $(10,851,172) $(6,048,257)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization ........................... 792,885 795,295 651,076
(Gain) loss on disposition of property .................. (1,098) 319 1,541
Increase in accounts receivable and
other receivables ..................................... (707,308) (76,549) (180,767)
Increase (decrease) in inventories ...................... 275,816 (375,640) (272,279)
Decrease in prepaid expenses ............................ 13,881 38,031 43,354
Decrease (increase) in other assets and deposits......... 15,570 (42,658) (6,227)
Increase (decrease) in accounts payable and
accrued liabilities .................................... (2,151,110) 2,273,364 329,875
Common stock issued as compensation for services......... 249,086 196,802 318,386
Compensation expense for stock option grants and
deferred salary increases .............................. 815,019 1,056,335 915,351
---------- ----------- ----------
Net cash provided by (used in) operating activities ..... 42,155 (6,985,873) (4,247,947)

Cash flows from investing activities
Investment in marketable securities ..................... (47,608,270) (16,194,994) (5,603,414)
Proceeds from sale of marketable securities ............. 45,870,396 4,718,162 -
Additions to property and equipment ..................... (180,112) (1,112,292) (461,914)
Proceeds from sale of property .......................... 7,432 1,085 1,000
Expenditures for patents and proprietary
technology ............................................ (358,319) (126,927) (185,805)
Investment in affiliated companies ...................... 142,510 42,552 64,938
---------- ----------- -----------
Net cash used in investing activities ................... (2,126,363) (12,672,414) (6,185,195)

Cash flows from financing activities
Proceeds from issuance of common stock .................. 5,885,573 21,060,912 24,387,702
Cost of common stock issuance ........................... (152) (757,877) (310,849)
Cash to Agritope ........................................ (3,018,636) (8,330,854) (12,132,173)
------------- ------------- -------------
Net cash provided by financing activities ............... 2,866,785 11,972,181 11,944,680

Net increase (decrease) in cash and cash equivalents .... 782,577 (7,686,106) 1,511,538
Cash and cash equivalents at beginning of year .......... 13,210 7,699,316 6,187,778
------------- ------------ ------------
Cash and cash equivalents at end of year ................ $ 795,787 $ 13,210 $ 7,699,316

The accompanying notes are an integral part of these statements.
</TABLE>

III - 65

<PAGE>

SUPPLEMENTAL FINANCIAL STATEMENTS
AGRITOPE
COMBINED BALANCE SHEETS
SEPTEMBER 30 1996 1995 1996
PROFORMA (1)
<S> <C> <C> <C>
Assets
Current assets
Cash and cash equivalents (Note 2) ................ $ 4,903,476 $ 4,246,687 $ 4,903,476
Trade accounts receivable, net (Note 2) ........... 3,123,172 1,995,244 3,123,172
Other accounts receivable ......................... 32,337 1,249,554 32,337
Inventories (Note 2) .............................. 6,570,187 3,239,441 6,570,187
Prepaid expenses .................................. 90,656 143,792 90,656
------------- ------------ ------------
Total current assets .............................. 14,719,828 10,874,718 14,719,828

Property and equipment, net (Notes 2 and 4) ....... 2,658,655 2,068,931 2,658,655
Patents and proprietary technology, net (Note 2) .. 510,244 140,757 510,244
Investment in affiliated companies (Note 3) ....... 2,651,294 2,185,630 2,651,294
Other assets and deposits (Note 5) ................ 321,011 326,650 234,877
------------- ------------- ------------
$20,861,032 $15,596,686 $20,774,898
Liabilities and Group Equity
Current liabilities
Borrowings under bank line of credit (Note 5) ..... $ 4,125,000 $ 3,150,000 $ 4,125,000
Subordinated notes (Note 5) ....................... 2,236,628 - 2,236,628
Current portion of long-term debt (Note 5) ........ 98,368 196,134 98,368
Convertible notes, due 1997 (Notes 5 and 13) ...... 3,620,003 - 240,003
Accounts payable .................................. 2,677,881 1,488,940 2,677,881
Salaries, benefits and other accrued liabilities
(Notes 2 and 9) ................................. 1,208,136 274,959 1,208,136
------------ ------------ ------------
Total current liabilities ......................... 13,966,016 5,110,033 10,586,016

Long-term debt, less current portion (Note 5) ..... 527,973 632,515 527,973
Convertible notes, due 1997 (Notes 5 and 13) ...... - 3,620,003 -
Subordinated notes (Note 5) ....................... - 1,015,461 -
Commitments and contingencies (Notes 6, 8, 9,
10 and 11)....................................... - - -
Minority interest ................................. 215,407 - 215,407

Group equity (Note 6)
Contributed capital ............................... 36,736,343 33,474,043 41,246,863
Accumulated deficit ............................... (30,584,707) (28,255,369) (31,801,361)
------------- ------------- -------------
6,151,636 5,218,674 9,445,502

$20,861,032 $15,596,686 $20,774,898
</TABLE>

(1) Reflects the proforma effect of conversion of $3,380,000 principal amount of
Agritope notes into 250,367 shares of common stock of Epitope at an exchange
price of $13.50 per share (see Note 13).

The accompanying notes are an integral part of these statements.

III - 66

<PAGE>

SUPPLEMENTAL FINANCIAL STATEMENTS
AGRITOPE
COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30 1996 1995 1994

<S> <C> <C> <C>
Revenues
Product sales ....................................... $62,471,119 $54,194,291 $62,884,343
Grants and contracts ................................ 585,485 94,370 33,642
------------- ------------- -----------
63,056,604 54,288,661 62,917,985

Costs and expenses
Product costs........................................ 57,262,340 52,337,266 60,374,171
Research and development costs ...................... 1,338,703 2,204,993 2,368,880
Selling, general and administrative expenses......... 4,789,096 7,516,458 8,280,756
------------ ------------ -----------
63,390,139 62,058,717 71,023,807

Loss from operations ................................ (333,535) (7,770,056) (8,105,822)

Other income (expense), net
Interest income...................................... 361,938 408,097 216,934
Interest expense..................................... (829,231) (681,859) (657,059)
Other, net .......................................... (203,510) 21,356 (3,837)
------------- ------------- -------------
(670,803) (252,406) (443,962)

Net loss ............................................ $(1,004,338) $(8,022,462) $(8,549,784)

Proforma net loss per share ......................... $ (.15) $ (1.29) $ (1.62)

Proforma weighted average number of shares
outstanding ........................................ 6,590,710 6,203,117 5,285,064

The accompanying notes are an integral part of these statements.
</TABLE>

III - 67

<PAGE>

SUPPLEMENTAL FINANCIAL STATEMENTS
AGRITOPE
COMBINED STATEMENTS OF CHANGES IN GROUP EQUITY
CONTRIBUTED ACCUMULATED
CAPITAL DEFICIT TOTAL
<S> <C> <C> <C>
Balances at September 30, 1993 ...................... $11,281,128 $(10,809,123) $ 472,005
Common stock issued as
compensation ...................................... 50,392 - 50,392
Compensation expense for
stock option grants .............................. 343,922 - 343,922
Common stock issued upon
exchange of convertible notes ..................... 559,964 - 559,964
Equity issuance costs ............................... (40,267) - (40,267)
Net cash from Epitope Medical Products............... 12,132,173 - 12,132,173
Distributions to S-corporation shareholders.......... - (540,000) (540,000)
Net loss for the year ............................... - (8,549,784) (8,549,784)
------------- ------------- -------------
Balances at September 30, 1994 ...................... 24,327,312 (19,898,907) 4,428,405

Common stock issued as
compensation ...................................... 69,998 - 69,998
Compensation expense for
stock option grants ............................... 318,375 - 318,375
Common stock issued upon
exchange of convertible notes ..................... 449,991 - 449,991
Equity issuance costs ............................... (22,487) - (22,487)
Net cash from Epitope Medical Products .............. 8,330,854 - 8,330,854
Distributions to S-corporation shareholders ......... - (334,000) (334,000)
Net loss for the year ............................... - (8,022,462) (8,022,462)
------------- ------------- -------------
Balances at September 30, 1995 ...................... 33,474,043 (28,255,369) 5,218,674

Common stock issued as compensation.................. 14,500 - 14,500
Compensation expense for stock
option grants ..................................... 229,164 - 229,164
Net cash from Epitope Medical Products .............. 3,018,636 - 3,018,636
Distributions to S-corporation shareholders ......... - (1,325,000) (1,325,000)
Net loss for the year ............................... - (1,004,338) (1,004,338)
------------- ------------- -------------
Balances at September 30, 1996 ...................... $36,736,343 $(30,584,707) $ 6,151,636

The accompanying notes are an integral part of these statements.

</TABLE>

III - 68

<PAGE>

SUPPLEMENTAL FINANCIAL STATEMENTS
AGRITOPE
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30 1996 1995 1994

<S> <C> <C> <C>
Cash flows from operating activities
Net loss ................................................ $(1,004,338) $(8,022,462) $(8,549,784)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization ........................... 474,256 859,641 714,420
Loss on disposition of property and investments ......... 64,126 29,560 74,130
Decrease (increase) in accounts receivable and
other receivables ..................................... (166,475) (630,054) 1,306,977
Decrease (increase) in inventories ...................... (3,330,746) 222,991 (5,260,547)
Decrease (increase) in prepaid expenses ................. 53,136 (100,940) 31,402
Decrease (increase) in other assets and deposits......... (36,219) 9,137 6,562
Increase (decrease) in accounts payable and
accrued liabilities ................................... 2,122,118 (12,991) 1,678,494
Common stock issued as compensation for services......... 14,500 69,998 50,392
Compensation expense for stock option grants and
deferred salary increases ............................. 229,164 318,375 343,922
----------- ----------- -----------
Net cash used in operating activities ................... (1,580,478) (7,256,745) (9,604,032)

Cash flows from investing activities
Additions to property and equipment ..................... (925,388) (308,136) (2,240,743)
Proceeds from sale of property .......................... - 13,258 -
Expenditures for patents and proprietary
technology ............................................ (411,943) (178,208) 135
Investment in affiliated companies ...................... (529,790) 548,876 (81,750)
Other investments ....................................... (54,278) 48,990 (99,122)
Minority Interest in affiliated companies ............... 215,407 - -
------------ ------------ ------------
Net cash (used in) provided by investing activities ..... (1,705,992) 124,780 (2,421,480)

Cash flows from financing activities
Net borrowings under bank line of credit ................ 975,000 500,000 1,075,000
Issuance of long-term debt .............................. 15,575 83,034 78,760
Principal payments on long-term debt .................... (217,883) (166,955) (116,020)
Borrowings from shareholders ............................ 255,764 8,365 410,741
Principal payments on borrowings from
shareholders........................................... (103,833) (368,327) (58,359)
Distributions to S-corporation shareholders.............. - (334,000) (540,000)
Cash from Epitope Medical Products ...................... 3,018,636 8,330,854 12,132,173
----------- ----------- -----------
Net cash provided by financing activities ............... 3,943,259 8,052,971 12,982,295

Net increase in cash and cash equivalents ............... 656,789 921,006 956,783
Cash and cash equivalents at beginning of year .......... 4,246,687 3,325,681 2,368,898
----------- ----------- -----------
Cash and cash equivalents at end of year ................ $4,903,476 $4,246,687 $3,325,681

The accompanying notes are an integral part of these statements.
</TABLE>

III - 69

<PAGE>

SUPPLEMENTAL FINANCIAL STATEMENTS
EPITOPE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30 1996 1995 1996
PROFORMA (1)
<S> <C> <C> <C>
Assets
Current assets
Cash and cash equivalents (Note 2) ............... $ 5,699,263 $ 4,259,897 $ 5,699,263
Marketable securities (Note 2) ................... 18,818,120 17,080,246 18,818,120
Trade accounts receivable, net (Note 2) .......... 4,270,771 2,226,865 4,270,771
Other accounts receivable ........................ 206,420 1,632,307 206,420
Inventories (Note 2) ............................. 7,728,117 4,673,187 7,728,117
Prepaid expenses ................................. 180,174 247,191 180,174
------------ ------------ ------------
Total current assets ............................. 36,902,865 30,119,693 36,902,865

Property and equipment, net (Notes 2 and 4) ...... 4,201,412 4,058,700 4,201,412
Patents and proprietary technology, net
(Note 2) ........................................ 1,111,478 555,767 1,111,478
Investment in affiliated companies (Note 3) ...... 2,651,294 2,328,140 2,651,294
Other assets and deposits (Note 5) ............... 343,769 364,978 257,635
----------- ----------- -----------
$45,210,818 $37,427,278 $45,124,684
Liabilities and Shareholders' Equity
Current liabilities
Borrowings under bank line of credit (Note 5) .... $ 4,125,000 $ 3,150,000 $ 4,125,000
Subordinated notes (Note 5) ...................... 2,236,628 - 2,236,628
Current portion of long-term debt ................ 98,368 196,134 98,368
Convertible notes, due 1997 (Notes 5 and 13) ..... 3,620,003 - 240,003
Accounts payable ................................. 3,127,051 2,308,364 3,127,051
Salaries, benefits and other accrued liabilities
(Notes 2 and 9) ................................ 2,576,302 3,251,126 2,576,302
----------- ------------ -----------
Total current liabilities ........................ 15,783,352 8,905,624 12,403,352

Long-term debt, less current portion (Note 5) .... 527,973 632,515 527,973
Convertible notes, due 1997 (Notes 5 and 13) ..... - 3,620,003 -
Subordinated notes (Note 5) ...................... - 1,015,461 -
Commitments and contingencies (Notes 6, 8, 9,
10 and 11)....................................... - - -
Minority Interest ................................ 215,407 - 215,407

Shareholders' equity (Note 6)
Preferred stock, no par value - 1,000,000 shares authorized;
no shares issued or outstanding ................. - - -

Common stock, no par value - 30,000,000 shares
authorized; 13,457,383 and 13,085,130 shares issued
and outstanding, respectively ................... 100,973,693 93,953,358 105,484,213
Accumulated deficit .............................. (72,289,607) (70,699,683) (73,506,261)
------------- ------------- -------------
28,684,086 23,253,675 31,977,952

$45,210,818 $37,427,278 $45,124,684
</TABLE>

(1) Reflects the proforma effect of conversion of $3,380,000 principal amount
of Agritope notes into 250,367 shares of common stock of Epitope at an exchange
price of $13.50 per share (see Note 13).

The accompanying notes are an integral part of these statements.

III - 70

<PAGE>

<TABLE>
<CAPTION>
SUPPLEMENTAL FINANCIAL STATEMENTS
EPITOPE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30 1996 1995 1994

<S> <C> <C> <C>
Revenues
Product sales .................................... $ 67,335,497 $ 57,001,141 $ 65,465,141
Grants and contracts ............................. 1,314,756 143,042 58,202
------------ ------------ ------------
68,650,253 57,144,183 65,523,343
Costs and expenses
Product costs .................................... 59,943,769 55,500,278 62,515,490
Research and development costs ................... 4,504,541 6,822,239 6,050,206
Selling, general and administrative expenses...... 9,822,587 14,199,318 11,347,652
------------ ------------ ------------
74,270,897 76,521,835 79,913,348

Loss from operations.............................. (5,620,644) (19,377,652) (14,390,005)

Other income (expense), net
Interest income................................... 1,386,968 1,164,840 454,401
Interest expense.................................. (829,231) (681,859) (657,059)
License fee....................................... 5,000,000 - -
Other, net........................................ (202,017) 21,037 (5,378)
------------ ----------- -----------
5,355,720 504,018 (208,036)

Net loss ......................................... $ (264,924) $(18,873,634) $(14,598,041)

Net loss per share ............................... $ (.02) $ (1.52) $ (1.38)

Weighted average number of shares
outstanding ..................................... 13,181,420 12,406,234 10,570,129

The accompanying notes are an integral part of these statements.
</TABLE>

III - 71

<PAGE>

SUPPLEMENTAL FINANCIAL STATEMENTS
EPITOPE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

COMMON STOCK ACCUMULATED
SHARES DOLLARS DEFICIT TOTAL
<S> <C> <C> <C> <C>
Balances at September 30, 1993.......................... 9,611,922 $ 45,448,710 $ (36,354,008) $9,094,702
Common stock issued upon exercise of options ........... 52,488 636,293 - 636,293
Common stock issued as
compensation .......................................... 19,678 368,778 - 368,778
Compensation expense for
stock option grants ................................... - 1,167,272 - 1,167,272
Common stock issued upon
exercise of warrants .................................. 618,291 9,718,259 - 9,718,259
Common stock issued upon
exchange of convertible notes ......................... 28,672 559,964 - 559,964
Common stock issued in
private placement ..................................... 1,115,500 17,057,563 - 17,057,563
Equity issuance costs .................................. - (3,375,528) - (3,375,528)
Distributions to S-corporation shareholders............. - - (540,000) (540,000)
Net loss for the year .................................. - - (14,598,041) (14,598,041)
----------- ------------- ------------- -------------
Balances at September 30, 1994 ......................... 11,446,551 71,581,311 (51,492,049) 20,089,262

Common stock issued upon
exercise of options ................................... 183,525 2,145,673 - 2,145,673
Common stock issued as
compensation .......................................... 16,013 266,800 - 266,800
Compensation expense for
stock option grants ................................... - 1,374,710 - 1,374,710
Common stock issued upon
exercise of warrants .................................. 1,336,000 18,892,750 - 18,892,750
Common stock issued upon
exchange of convertible notes ......................... 23,041 449,991 - 449,991
Equity issuance costs .................................. - (757,877) - (757,877)
Distributions to S-corporation shareholders............. - - (334,000) (334,000)
Net loss for the years ................................. - - (18,873,634) (18,873,634)
------------ ------------ ------------- -------------
Balances at September 30, 1995 ......................... 13,005,130 93,953,358 (70,699,683) 23,253,675

Common stock issued upon
exercise of options ................................... 386,550 4,886,118 - 4,886,118
Common stock issued as compensation..................... 19,353 263,586 - 263,586
Compensation expense for stock
option grants ......................................... - 1,044,183 - 1,044,183
Common stock issued upon
exercise of warrants .................................. 46,350 826,600 - 826,600
Equity issuance costs .................................. - (152) - (152)
Distributions to S-corporation shareholders............. - - (1,325,000) (1,325,000)
Net loss for the year .................................. - - (264,924) (264,924)
------------ ------------ ------------- -------------
Balances at September 30, 1996 ......................... 13,457,383 $ 100,973,693 $(72,289,607) $ 28,684,086

The accompanying notes are an integral part of these statements.
</TABLE>

III - 72

<PAGE>

<TABLE>
<CAPTION>
SUPPLEMENTAL FINANCIAL STATEMENTS
EPITOPE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30 1996 1995 1994

<S> <C> <C> <C>
Cash flows from operating activities
Net loss ............................................... $ (264,924) $(18,873,634) $(14,598,041)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization .......................... 1,267,141 1,654,936 1,365,496
Loss on disposition of property ........................ 63,028 29,879 75,671
Decrease (increase) in accounts receivable and
other receivables .................................... (873,783) (706,603) 1,126,210
Increase in inventories ................................ (3,054,930) (152,649) (5,532,826)
Decrease (increase) in prepaid expenses ................ 67,017 (62,909) 74,756
Decrease (increase) in other assets and deposits........ (20,649) (33,521) 335
Increase in accounts payable and accrued
liabilities .......................................... (28,992) 2,260,373 2,008,369
Common stock issued as compensation for
services.............................................. 263,586 266,800 368,778
Compensation expense for stock option grants and
deferred salary increases ............................ 1,044,183 1,374,710 1,259,273
----------- ----------- -----------
Net cash used in operating activities .................. (1,538,323) (14,242,618) (13,851,979)

Cash flows from investing activities
Investment in marketable securities .................... (47,608,270) (16,194,994) (5,603,414)
Proceeds from sale of marketable securities ............ 45,870,396 4,718,162 -
Additions to property and equipment .................... (1,105,500) (1,420,428) (2,702,657)
Proceeds from sale of property ......................... 7,432 14,343 1,000
Expenditures for patents and proprietary
technology ........................................... (770,262) (305,135) (185,670)
Investment in affiliated companies ..................... (387,280) 591,428 (16,812)
Other investments ...................................... (54,278) 48,990 (99,122)
Minority interest in affiliated companies .............. 215,407 - -
------------ ----------- -----------
Net cash used in investing activities .................. (3,832,355) (12,547,634) (8,606,675)

Cash flows from financing activities
Net borrowings under bank line of credit ............... 975,000 500,000 1,075,000
Issuance of long-term debt ............................. 15,575 83,034 78,760
Principal payments on long-term debt ................... (217,883) (166,955) (116,020)
Proceeds from issuance of common stock ................. 5,885,573 21,060,912 24,387,702
Cost of common stock issuance .......................... (152) (757,877) (310,849)
Borrowings from shareholders ........................... 255,764 8,365 410,741
Principal payments on borrowings from
shareholders ......................................... (103,833) (368,327) (58,359)
Distributions to S-corporation shareholders............. - (334,000) (540,000)
------------ ------------ ------------
Net cash provided by financing activities .............. 6,810,044 20,025,152 24,926,975

Net increase (decrease) in cash and cash equivalents ... 1,439,366 (6,765,100) 2,468,321
Cash and cash equivalents at beginning of year ......... 4,259,897 11,024,997 8,556,676
------------ ------------ ------------
Cash and cash equivalents at end of year ............... $ 5,699,263 $ 4,259,897 $ 11,024,997

The accompanying notes are an integral part of these statements.
</TABLE>

III - 73

<PAGE>

NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS

NOTE 1 THE COMPANY

Epitope, Inc. (the Company or Epitope) is an Oregon corporation utilizing
biotechnology to develop and market medical diagnostic products through its
Epitope Medical Products group (Epitope Medical Products) and superior new
plants and related products through its Agritope group (Agritope). Agritope is
also in the business of growing, marketing, selling, and distributing fresh and
frozen produce, primarily tomatoes and strawberries. Upon approval of the
proposal to create a new class of common stock (the Agritope Stock Proposal),
the capital structure of Epitope will be modified to include two classes of
common stock, Epitope Medical Products Common Stock and Agritope Common Stock.
The Epitope Medical Products group (Epitope Medical Products) will include the
medical products business conducted by the Company. The Agritope group
(Agritope) will include the agribusiness and agricultural biotechnology
operations of the Company.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

On November 6, 1996 the Company agreed to merge with Andrew and Williamson
Sales, Co. (A&W) in a transaction to be accounted for as a pooling of interests.
See Note 13. The accompanying consolidated financial statements and the combined
financial statements of the Agritope Group have been restated to reflect the
merger as if it had occurred at the beginning of the earliest period presented.

YEAR ENDED SEPTEMBER 30 1996 1995 1994
<S> <C> <C> <C>
Epitope Medical Products .......................... $3,028,181 $3,575,069 $1,899,969
Agritope .......................................... 1,069,249 1,892,370 1,735,688
----------- ---------- ----------
Consolidated ...................................... $4,097,430 $5,467,439 $3,635,657

</TABLE>

III - 74

<PAGE>

NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS, CONTINUED

INVENTORIES. Medical products inventories are recorded at the lower of standard
cost (which approximates actual cost on a first-in, first-out basis) or market.
Growing crops (included in work-in-process) are valued at the lower of cost
(representing direct and indirect production costs) or estimated market.
Harvested crops and frozen strawberry inventories (included in finished goods)
are valued at the lower of average cost or market. Inventory components are
summarized as follows:

III - 75

<PAGE>

NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS, CONTINUED

SEPTEMBER 30 1996 1995
EPITOPE MEDICAL PRODUCTS
<S> <C> <C>
Raw materials................................................. $ 522,824 $ 657,568
Work-in-process .............................................. 389,642 379,470
Finished goods ............................................... 192,882 295,032
Supplies ..................................................... 52,582 101,676
----------- -----------
$1,157,930 $1,433,746
AGRITOPE
Work-in-process............................................... $4,466,880 $2,201,073
Finished goods ............................................... 1,740,689 741,424
Supplies ..................................................... 362,618 296,944
----------- -----------
$6,570,187 $3,239,441
CONSOLIDATED
Raw materials ................................................ $ 522,824 $ 657,568
Work-in-process .............................................. 4,856,522 2,580,543
Finished goods ............................................... 1,933,571 1,036,456
Supplies ..................................................... 415,200 398,620
----------- -----------
$7,728,117 $4,673,187
</TABLE>

The Company grows crops primarily in Mexico in cooperation with various Mexican
farmers. Under the agreements, the Company generally shares in the costs of
growing, picking, packing, and distribution. The Company recovers its costs plus
a gross profit percentage of approximately ten percent from the sale of the
crops in the United States. Cost of sales is charged for costs in excess of
estimated market. During 1996, 1995, and 1994, the Company charged to cost of
sales growing costs in excess of estimated market of approximately $1,811,000,
$2,544,037, and $2,106,181, respectively.

DEPRECIATION AND CAPITALIZATION POLICIES. Land is stated at cost. Property and
equipment are stated at cost less accumulated depreciation. Expenditures for
repairs and maintenance are charged to operating expense as incurred.
Expenditures for renewals and betterments are capitalized.

Depreciation and amortization of property and equipment are calculated primarily
under the straight-line method over the estimated lives of the related assets
(three to seven years). Leasehold improvements are amortized over the shorter of
estimated useful lives or the terms of related leases. When assets are sold or
otherwise disposed, cost and related accumulated depreciation or amortization
are removed from the accounts and any resulting gain or loss is included in
operations.

III - 76

<PAGE>

NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS, CONTINUED

Amortization and accumulated amortization are summarized as follows:

<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Amortization for the year ended
September 30,
Epitope Medical Products ...................... $ 172,095 $ 130,313 $ 101,339
Agritope ...................................... 42,456 23,964 13,487
--------- --------- ---------
Consolidated .................................. $ 214,551 $ 154,277 $ 114,826

Accumulated Amortization at
September 30,
Epitope Medical Products ...................... $ 621,110 $ 449,015 $ 318,702
Agritope ...................................... 79,907 37,451 13,487
--------- ---------- ----------
Consolidated................................... $ 701,017 $ 486,466 $ 332,189
</TABLE>

Accounts receivable are stated net of an allowance for doubtful accounts as
follows:

<TABLE>
<CAPTION>
SEPTEMBER 30 1996 1995
<S> <C> <C>
Epitope Medical Products ........................ $ 6,872 $ 6,872
Agritope ........................................ 64,571 119,172
-------- ---------
Consolidated .................................... $ 71,443 $126,044
</TABLE>

III - 77

<PAGE>

NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS, CONTINUED

As a separate company, A&W had elected S-Corporation tax treatment. As an
S-Corporation, income or losses passed through to A&W's shareholders, and no
provision for federal income taxes was reflected in the financial statements.
State income taxes applicable to A&W were provided at a reduced rate under
S-Corporation status. Following the merger (see Note 13), A&W will be taxed as a
C-Corporation and will join with the Company in filing a consolidated federal
income tax return. The termination of the S-Corporation status is not expected
to have a material impact on future results of operations. As of September 30,
1996, the Company had net operating losses of approximately $66.7 million
available to offset future federal and state taxable income, including taxable
income of A&W. See Note 7.

NET INCOME (LOSS) PER SHARE. Net income (loss) per share has been computed using
the weighted average number of shares of common stock and common stock
equivalents outstanding during the period. Common stock equivalents consist of
the number of shares issuable upon exercise of outstanding warrants, options and
convertible notes less the number of shares assumed to have been purchased for
the treasury with the proceeds from the exercise of such. The weighted average
number of shares has been adjusted to reflect the issuance of 520,000 additional
shares issued in conjunction with the merger with A&W (see Note 13). Net income
(loss) per share for Epitope Medical Products and Agritope is presented on a
proforma basis assuming that the distribution of Agritope common stock and
redesignation of Epitope, Inc. common stock as Epitope Medical Products common
stock pursuant to the Agritope Stock Proposal had occurred on October 1, 1993.

Common stock equivalents are excluded from the computation if their effect is
anti-dilutive. Primary and fully diluted earnings per share are the same.

SUPPLEMENTAL CASH FLOW INFORMATION. Non-cash financing and investing activities
not included in the consolidated statements of cash flows are summarized as
follows:

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30 1996 1995 1994
EPITOPE MEDICAL PRODUCTS
<S> <C> <C> <C>
Discount on private placement of common stock...... $ - $ - $3,024,413

AGRITOPE
Conversion of notes to equity (Note 5)............. $ - $ 427,496 $ 600,231
Investment in nonconsolidated subsidiary........... - 2,584,979 -
Distributions to S-corporation shareholders
declared but not paid............................ 1,325,000 - -

In addition, Agritope paid $568,835; $455,783; and $407,929, for interest during
the years ended September 30 1996, 1995, and 1994, respectively.
</TABLE>

III - 78

<PAGE>

NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS, CONTINUED

NOTE 3 INVESTMENT IN AFFILIATED COMPANIES

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30 1996 1995
Proforma Proforma
Supplemental Adjustments Proforma Supplemental Adjustments Proforma
<S> <C> <C> <C> <C> <C> <C>
Agritope
Revenues 63,056,604 833,949 63,890,553 54,288,661 276,588 54,565,249
Net loss (1,004,338) (1,464,002) (2,468,340) (8,022,462) (460,296) (8,482,758)
Proforma loss per share (0.15) (0.22) (0.37) (1.29) (0.07) (1.37)

Consolidated
Revenues 68,650,253 833,949 69,484,202 57,144,183 276,588 57,420,771
Net loss (264,924) (1,464,002) (1,728,926) (18,873,634) (460,296)(19,333,930)
Loss per share (0.02) (0.11) (0.13) (1.52) (0.04) (1.56)
</TABLE>

The St. Paul, Minnesota, facility of Agrimax ceased operations in June 1995. In
June 1996, Agrimax contributed inventory and operating assets to Petals USA,
Inc. ("Petals"), a newly formed affiliate of a Canadian fresh flower wholesaler,
in return for a 19.5 percent equity interest in Petals.

III - 79

<PAGE>

NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS, CONTINUED

NOTE 4 PROPERTY AND EQUIPMENT

Property and equipment are summarized as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30 1996 1995
EPITOPE MEDICAL PRODUCTS
<S> <C> <C>
Research and development laboratory equipment............. $ 1,056,883 $ 898,716
Manufacturing equipment .................................. 1,291,546 1,296,416
Office furniture and equipment ........................... 1,899,948 2,041,897
Leasehold improvements ................................... 1,084,660 1,084,660
Construction in progress ................................. 134,557 70,961
----------- -----------
5,467,594 5,392,650
Less accumulated depreciation and amortization ........... (3,924,837) (3,402,881)
------------- -------------
$ 1,542,757 $ 1,989,769

AGRITOPE
Land ..................................................... $ 420,817 $ 420,817
Buildings and improvements ............................... 717,508 717,508
Research and development laboratory equipment ............ 220,919 196,255
Manufacturing and transportation equipment ............... 2,088,669 1,789,933
Office furniture and equipment ........................... 188,251 196,119
Leasehold improvements ................................... 166,398 173,262
Construction in progress ................................. 499,980 34,650
------------ -----------
4,302,542 3,528,544
Less accumulated depreciation and amortization............ (1,643,887) (1,459,613)
------------- -------------
$ 2,658,655 $ 2,068,931

CONSOLIDATED
Land ..................................................... $ 420,817 $ 420,817
Buildings and improvements ............................... 717,508 717,508
Research and development laboratory equipment ............ 1,277,802 1,094,971
Manufacturing and transportation equipment ............... 3,380,215 3,086,349
Office furniture and equipment ........................... 2,088,199 2,238,016
Leasehold improvements ................................... 1,251,058 1,257,922
Construction in progress ................................. 634,537 105,611
------------ -----------
9,770,136 8,921,194
Less accumulated depreciation and amortization............ (5,568,724) (4,862,494)
------------- -------------
$ 4,201,412 $ 4,058,700
</TABLE>

III - 80

<PAGE>

NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS, CONTINUED

NOTE 5 DEBT

BANK LINE OF CREDIT. At September 30, 1996, A&W had a bank line of credit which
provided for borrowings of up to $6,500,000 and was to expire in August 1997.
Borrowings under the line bore interest at the bank's prime interest rate plus
.5 percent; were collateralized by substantially all of the assets of A&W; and
were guaranteed by A&W's shareholders. The Company had the option to fix the
interest rate for a specified period of time at the LIBOR rate for such period.
See Note 13.

CONVERTIBLE NOTES. On June 30, 1992, Agritope completed a private placement with
several European institutional investors pursuant to which $5,495,000 of
convertible notes were issued. The notes are unsecured, mature on June 30, 1997
and bear interest at the rate of 4 percent per annum which is payable on each
June 30 and December 31 until all outstanding principal and interest on the
notes have been paid in full. The notes are convertible into common stock of the
Company at a conversion price of $19.53 per share. In the event of an initial
public offering of Agritope common stock, the notes would be automatically
converted to shares of Agritope common stock at 90 percent of the public
offering price.

During the years ended September 30, 1995 and 1994, respectively, investors
exchanged $449,991 and $559,964 principal amount of convertible notes for the
Company's common stock at a price of $19.53 per share. In conjunction with the
exchanges, unamortized debt issuance costs of $22,487 and $40,267 related to
such notes were recognized as equity issuance costs during 1996 and 1995,
respectively. Debt issuance costs are included in other assets and are being
amortized over the five-year life of the notes. Amortization expense of debt
issuance costs for the years ended September 30, 1996, 1995 and 1994,
respectively, totaled $108,257, $96,136 and $91,715, leaving an unamortized
balance of $88,821 and $197,077 at September 30, 1996 and 1995, respectively.
See Note 13.

LONG-TERM DEBT. Long-term debt is summarized as follows:
<TABLE>
<CAPTION>

SEPTEMBER 30 1996 1995
AGRITOPE
<S> <C> <C>
Note payable, interest at 7%,
due on demand, unsecured ......................................... $ - $ 50,000
Installment notes, interest at 5.9% to 12.75%
due various, secured by equipment ................................ 59,824 138,976
Installment note, interest at 9.25%,
due June 1997, secured by equipment .............................. 263,717 319,973
Note payable, interest at prime,
due October 1997, unsecured ...................................... 100,000 100,000
Bank installment note, interest at prime plus
1.25%, due March 1998, secured by property ....................... 202,800 219,700
---------- ----------
626,341 828,649
Less current portion .............................................. (98,368) (196,134)
----------- ------------
$ 527,973 $ 632,515
</TABLE>

The installment note payable of $263,717 at September 30, 1996 has a balloon
payment of $217,989 due in June 1997. The amount of the balloon payment has been
classified as long-term based on the Company's intent and ability to refinance
this borrowing on a long-term basis. Certain of the notes above have been
guaranteed by the shareholders of A&W. Certain of the note agreements provide
various financial and other covenants including minimum working capital and net
worth levels and restricted capital expenditures.

III - 81

<PAGE>

NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS, CONTINUED

As of September 30, 1996, maturities for long-term debt are as follows:

YEAR ENDING SEPTEMBER 30
1997........................................... $ 98,368
1998 .......................................... 525,532
1999 .......................................... 2,441
---------
$626,341

SUBORDINATED NOTES. The Company has notes payable to shareholders which are
subordinated to the claims of its bank. These notes are due on demand and bear
interest at 10 percent. The Company intends to pay these notes in full following
the effective date of the merger. See Note 13.

NOTE 6 SHAREHOLDERS' EQUITY

COMMON STOCK RESERVED FOR FUTURE ISSUANCE. As of September 30, 1996, the
following shares of the Company's common stock were reserved for future
issuance, as more fully described below:

PURPOSE SHARES
Outstanding warrants ................................... 2,000,640
Outstanding stock options .............................. 3,365,726
Employee Stock Purchase Plan subscriptions ............. 42,820
Conversion of notes (Notes 5 and 13) ................... 185,356
----------
5,594,542

COMMON STOCK WARRANTS. As of September 30, 1996, the following warrants to
purchase shares of common stock were outstanding:
<TABLE>
<CAPTION>
DATE OF ISSUANCE SHARES PRICE EXPIRATION DATE
<S> <C> <C> <C>
September 26, 1991 .................................. 159,150 $16.00 September 30, 1997
December 23, 1992 ................................... 988,390 18.50 September 30, 1997
July 20, 1993 ....................................... 375,000 20.00 September 30, 1997
August 1, 1993 ...................................... 200,000 18.50 September 30, 1997
October 17, 1994 .................................... 50,000 18.50 September 30, 1997
November 22, 1994 ................................... 228,100 18.50 September 30, 1997
----------
2,000,640
</TABLE>

III - 82

<PAGE>

NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS, CONTINUED

Options granted and outstanding under the Company's stock option plans are
summarized as follows:
<TABLE>
<CAPTION>

1996 1995 1994
SHARES PRICE SHARES PRICE SHARES PRICE
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of period .. 3,636,103 $ 1.09-24.94 3,483,432 $ 1.09-24.94 3,052,653 $ 1.09-24.94
Granted ............... 901,379 9.81-18.13 802,050 14.94-18.88 589,850 14.38-22.94
Exercised ............. (386,550) 1.09-17.13 (183,525) 1.84-22.50 (52,488) 12.43-22.50
Canceled .............. (785,206) 14.38-24.00 (465,854) 7.38-22.94 (106,583) 8.50-22.94
----------- ----------- -----------
Outstanding at
end of period ........ 3,365,726 $ 3.50-24.94 3,636,103 $ 1.09-24.94 3,483,432 $ 1.09-24.94

Exercisable ........... 2,302,212 $ 3.50-24.94 2,002,925 $ 1.09-24.94 1,557,505 $ 1.09-24.94
</TABLE>

III - 83

<PAGE>

NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS, CONTINUED

The 1993 ESPP was amended to allow the Company, at its discretion, to provide
Special Offering Subscriptions whereby an employee's annual increase in
compensation could be deferred for a one-year period. At the end of the one-
year period, the employee can elect to receive the deferred compensation amount
in the form of cash or shares of the Company's common stock. The purchase price
for stock issued under a Special Offering Subscription is the lesser of 85
percent of the fair market value of a share of common stock on the first day of
the calendar month the employee's increase was effective or the fair market
value at the close of the one-year subscription period. During 1995 and 1994,
respectively, 5,569 and 2,314 Special Offering Subscription shares were issued
to employees at an average price of $15.26 and $15.24 per share.

NOTE 7 INCOME TAXES

III - 84

<PAGE>

NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS, CONTINUED

Significant components of the Company's deferred tax asset were as follows (in
thousands):

<TABLE>
<CAPTION>
SEPTEMBER 30 1996 1995
<S> <C> <C>
Net operating loss carryforwards.............................. $ 24,489 $ 26,110
Deferred compensation......................................... 1,997 1,665
Research & experimentation credit carryforwards............... 1,151 1,151
Accrued expenses.............................................. 317 238
Other......................................................... 495 384
--------- --------
Gross deferred tax assets..................................... 28,449 29,548
Valuation allowance........................................... (28,449) (29,548)
--------- --------
Net deferred tax asset........................................ - -
</TABLE>

NOTE 8 RESEARCH AND DEVELOPMENT ARRANGEMENTS

Revenues from research and development arrangements are included in the
accompanying consolidated statements of operations under the caption "Grants and
Contracts."

NOTE 9 DISTRIBUTION AND SUPPLY CONTRACTS

The Company has entered into several contractual arrangements, including those
discussed in the following paragraphs, for distribution of certain of its
products to customers.

III - 85

<PAGE>

NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS, CONTINUED

SB has an exclusive agreement to market the Company's oral specimen collection
device worldwide, except in several foreign countries and to the insurance
industry in the U.S., Canada and Japan.

In 1995, SB made an initial license fee payment of $1 million to the Company. SB
also placed $5 million in escrow for future payment to the Company, of which $1
million was designated for reimbursement of future research project work and $4
million was designated as an additional license fee to be paid upon FDA approval
of a pending request to amend the labeling of the Company's oral specimen
collection device to indicate a two-year shelf life. The initial $1 million
license fee was included as deferred revenue under the caption "Salaries,
benefits and other accrued liabilities" in the accompanying consolidated balance
sheets as of September 30, 1995. The escrowed funds are not reflected in the
Company's financial statements. When such funds are disbursed, they will be
recognized as revenue in accordance with the Company's revenue recognition
policy. See Note 2.

NOTE 10 COMMITMENTS AND CONTINGENCIES

The Company leases office, manufacturing, warehouse and laboratory facilities,
and equipment under operating lease agreements which require minimum annual
payments as follows:

<TABLE>
<CAPTION>
EPITOPE
MEDICAL
YEAR ENDING SEPTEMBER 30 PRODUCTS AGRITOPE CONSOLIDATED
<C> <C> <C> <C>
1997 .............................................. $ 345,577 $ 399,731 $ 745,308
1998 .............................................. 345,576 317,394 662,970
1999 .............................................. 346,356 282,000 628,356
2000 .............................................. 109,992 282,000 391,992
2001 .............................................. - 182,000 182,000
------------ --------- ----------
$1,147,501 $1,463,125 $2,610,626
</TABLE>

III - 86

<PAGE>

NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS, CONTINUED

Under the agreements for the lease of its office and laboratory facilities, the
Company is obligated to the lessor for its share of certain expenses related to
the use, operation, maintenance and insurance of the property. These expenses,
payable monthly in addition to the base rent, are not included in the amounts
shown above. The Company also incurs rent expense for the short-term storage of
produce. Rent expense aggregated $1,466,368, $1,336,021 and $1,441,940 for the
years ended September 30, 1996, 1995 and 1994, respectively. Rent expense and
the future minimum lease commitments above include rent of $132,000 per year for
facilities leased from certain shareholders.

The Company is also contingently liable for a lease of which has been assigned
to UAF and the lease of property which has been subleased to Petals in the
following amounts:

YEAR ENDING SEPTEMBER 30
1997 ................................................. $ 328,953
1998 ................................................. 341,304
1999 ................................................. 347,184
---------
$1,017,441

Certain produce growers in the United States have alleged that Mexican growers
of tomatoes are illegally dumping their crops into United States markets. United
States regulatory authorities are investigating the allegations. Although it is
not possible to determine the final outcome of this matter, the Company believes
that its resolution will not have a material adverse effect on its operations or
financial position.

NOTE 11 PROFIT SHARING AND SAVINGS PLAN

III - 87

<PAGE>

NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS, CONTINUED

NOTE 12 GEOGRAPHIC AREA INFORMATION

EPITOPE MEDICAL PRODUCTS
IN THOUSANDS

GEOGRAPHIC
AREAS REVENUES OPERATING LOSS IDENTIFIABLE ASSETS
1996 1995 1994 1996 1995 1994 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United
States . . . . $4,903 $2,630 $2,062 $(5,287) $(11,608) $(6,284) $4,604 $3,768 $3,464
Canada . . . . 404 78 111 - - - - - -
Latin
America . . . 100 - - - - - - - -
Europe . . . . 65 72 329 - - - - - -
Other . . . . . 122 76 103 - - - - - -
-------- -------- -------- --------- --------- --------- -------- -------- --------
$5,594 $2,856 $2,605 $(5,287) $(11,608) $(6,284) $4,604 $3,768 $3,464

AGRITOPE
IN THOUSANDS
GEOGRAPHIC
AREAS REVENUES OPERATING LOSS IDENTIFIABLE ASSETS
1996 1995 1994 1996 1995 1994 1996 1995 1994
United
States . . . . $63,057 $54,289 $62,918 $ (333) $(7,770) $(8,106) $16,875 $13,396 $ 8,197
Latin
America . . . - - - - - - 3,996 2,201 3,303
-------------------- ---------- -------- -------- -------- -------- -------- --------
$63,057 $54,289 $62,918 $ (333) $(7,770) $(8,106) $20,871 $15,597 $11,500

EPITOPE, INC. CONSOLIDATED
IN THOUSANDS
GEOGRAPHIC
AREAS REVENUES OPERATING LOSS IDENTIFIABLE ASSETS
1996 1995 1994 1996 1995 1994 1996 1995 1994
United
States . . . . $67,959 $56,918 $64,981 $(5,621) $(19,377) $(14,390) $41,825 $35,226 $25,379
Canada . . . . 404 78 111 - - - - - -
Latin
America . . . 100 - - - - - 3,396 2,201 3,303
Europe . . . . 65 72 329 - - - - - -
Other . . . . . 122 76 103 - - - - - -
-------- --------- --------- ----------- --------------------- ---------- ---------- ----------
$68,650 $57,144 $65,523 $(5,621) $(19,377) $(14,390) $45,221 $37,427 $28,682
</TABLE>

III - 88

<PAGE>

NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS, CONTINUED

NOTE 13 SUBSEQUENT EVENTS

On November 25, 1996, the Company negotiated an extension to the bank line of
credit previously maintained by A&W. Under terms of the commitment letter, the
$6.5 million revolving credit line will be extended until February 5, 1998, and
will bear interest at prime or LIBOR plus 2.5 percent at the Company's option.
The new line will be secured by A&W's accounts receivable, inventory and
equipment and will be guaranteed by Epitope, Inc. The new line will also contain
various financial covenants including minimum working capital and tangible net
worth levels and maximum debt to net worth ratios.

On December 12, 1996, the Company merged with A&W, a producer and wholesale
distributor of fruits and vegetables based in San Diego, California. Under the
terms of the merger, the Company issued 520,000 shares of common stock of
Epitope, Inc. in exchange for all of the outstanding common stock of A&W. The
merger has been accounted for as a pooling of interests in the accompanying
financial statements which have been restated as if the merger occurred on the
first day of the earliest period presented. The merger will qualify as a
tax-free reorganization for income tax purposes.

III - 89

<PAGE>
Edgar note: For purposes of Edgar, { } indicates text that will be marked as new
and [ ] indicates text that will be marked as deleted.

Annex IV
Proposed Amendments to
1991 Stock Award Plan

EPITOPE, INC.

AMENDED AND RESTATED 1991 STOCK AWARD PLAN

ARTICLE 1
ESTABLISHMENT AND PURPOSE

1.1 Establishment; Amendment and Restatement. Epitope, Inc.
("Corporation"), hereby establishes the Epitope, Inc., 1991 Stock Award Plan
(the "Plan"), effective as of January 8, 1991, subject to shareholder approval
as provided in Article [18] {17}. The Plan was {previously} amended and restated
[as set forth herein] effective March 25, 1991 [and]{,} December 8, 1992,
December 14, 1993, and December 13, 1994{, and is further amended and restated
as set forth herein effective December 17, 1996}.

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, outside advisors, and directors of
Corporation and its subsidiaries. It is also intended to strengthen the
mutuality of interests between such employees, advisors, and directors and
Corporation's shareholders. The Plan is designed to meet this intent 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.

ARTICLE 2
DEFINITIONS

2.1 Defined Terms. For purposes of the Plan, the following terms
shall have the meanings set forth below:

"ADVISOR" means a member of an Advisory Committee of Corporation or a
Subsidiary, or any other consultant selected by the Committee, who is neither an
employee of Corporation or a Subsidiary nor a Non-Employee Director.

"ADVISORY COMMITTEE" means a scientific advisory committee to
Corporation or a Subsidiary.

{"AGRITOPE SHARE" means a share of Agritope Stock.

IV - 1

<PAGE>

"AGRITOPE STOCK PROPOSAL DATE" means the effective date of the
amendment of Corporation's Articles of Incorporation to create Agritope Stock
and to redesignate Corporation's previously existing common stock as Medical
Products Stock.}

{** 1} ["Common]{"AGRITOPE} STOCK" means the {Agritope} Common Stock,
no par value, of Corporation or any security of Corporation issued in
substitution, exchange, or {in} lieu [thereof] {of such stock}.

"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 shall be construed to refer
to the successor provision to such Code section.

"COMMITTEE" means the committee appointed by the Board to administer
the Plan as provided in Article 3 of the Plan.

[* 1 moved from here; text not shown]

{"COMMON STOCK" means the Common Stock, no par value, of Corporation
or any security of Corporation issued in substitution, exchange, or in lieu of
such stock. For all periods after the Agritope Stock Proposal Date, references
in this Plan to Common Stock include either Agritope Stock, Medical Products
Stock, or both, as the context may require.}

"CONTINUING RESTRICTION" means a Restriction contained in Sections
[6.5(g), 17.4, 17.5,] {6.5(h), 16.4, 16.5,} and [17.7] {16.7} of the Plan and
any other Restrictions expressly designated by the Committee in an Award
Agreement as a Continuing Restriction.

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

"DEFERRED COMPENSATION OPTION" means a Nonqualified Option granted
with an option price less than Fair Market Value on the date of grant pursuant
to Section 7.9 of the Plan.

IV - 2

<PAGE>

"DISABILITY" means the condition of being "disabled" within the
meaning of Section 422(c)(7) of the Code. 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, shall be construed to refer to
successor provisions to such section or rule.

"FAIR MARKET VALUE" means [on any given date] {with respect to either
Agritope Shares or Medical Products Shares, on a particular day, without regard
to any restrictions (other than a restriction which, by its terms, will never
lapse)}, the mean between the reported high and low sale prices [of Common
Stock, as reported for such date by the American Stock Exchange (or such other
exchange on which the Common Stock may be listed) or, if Common Stock was not
traded on such date, on the next preceding day on which Common Stock was]{, or,
if there is no sale on such day, the mean between the reported bid and asked
prices, for that day of Shares of the applicable class on the securities
exchange or automated securities interdealer quotation system on which such
Shares shall have been} traded.

"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.

{"MEDICAL PRODUCTS SHARE" means a share of Medical Products Stock.

"MEDICAL PRODUCTS STOCK" means the Epitope Medical Products Common
Stock, no par value, of Corporation or any security of Corporation issued in
substitution, exchange, or in lieu of such stock.}

"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, an NQO, or a Deferred Compensation Option.

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

"PARTICIPANT" means an employee of Corporation or a Subsidiary, an
Advisor, 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.

IV - 3

<PAGE>

"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 Epitope, Inc., 1991 Stock Award Plan, as {amended
and restated and} set forth herein and as it may be hereafter amended [and] 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.

"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] {at} 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,
termination of membership on the Board after attaining age 70, or such
earlier retirement date as approved by the Committee for purposes of
the Plan; and

(c) For Participants who are Advisors, termination of service
as an Advisor after attaining age 70, or such earlier retirement date
as approved by the Committee for purposes of the Plan.

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. {For all periods after the
Agritope Stock Proposal Date, references in this Plan to Shares include either
Agritope Shares, Medical Products Shares, or both, as the context may require.}

IV - 4

<PAGE>

"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);

(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 shall also
include the opposite gender; and the definition of any term in Section 2.1 in
the singular shall also include the plural, and vice versa.

ARTICLE 3
ADMINISTRATION

3.1 General. [The] {Except as provided in Section 3.7, the} Plan
shall be administered by a Committee composed as described in Section 3.2.

3.2 Composition of the Committee. The Committee shall be appointed by
the Board [and shall consist of not less than a sufficient number of
disinterested members of the Board so as to qualify the Committee to administer
the Plan as contemplated by] {from among its members in a number and with such
qualifications as will meet the requirements for approval by a committee
pursuant to }Rule 16b-3 under the Exchange Act. The Board may from time to time
remove members from, or add members to, the Committee. Vacancies on the
Committee, however caused, shall be filled by the Board. The initial members of
the Committee shall be the members of Corporation's existing Executive

IV - 5

<PAGE>

Compensation Committee. The Board may at any time replace the Executive
Compensation Committee with another Committee. In the event that the Executive
Compensation Committee shall cease to satisfy the requirements of Rule 16b-3,
the Board shall appoint another Committee satisfying such requirements.

3.3 Authority of the Committee. The Committee shall have 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;

(i) Select the employees and Advisors who shall be granted
Awards;

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

(iii) Determine the number of Shares, or Share equivalents, to
be subject to each Award {and whether the Shares subject to an Award
are to be Agritope Shares, Medical Products Shares, or a combination
of both};

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

[(iv)]{(v)} 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, shall be
final, conclusive, and binding on all Participants.

3.4 Action by the Committee. A majority of the members of the
Committee shall 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] {all} the members of the
Committee, shall be the valid acts of the Committee.

3.5 Delegation. Notwithstanding the foregoing, the Committee may
delegate to one or more officers of Corporation the authority to determine the
recipients, types, amounts, and terms of Awards granted to Participants who are
not Reporting Persons.

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<PAGE>

3.6 Liability of Committee Members. No member of the Committee shall
be liable for any action or determination made in good faith with respect to the
Plan, any Award, or any Participant.

3.7 Awards to Non-Employee Directors. The [Committee shall have no
discretion as to any aspects of Awards to Non-Employee Directors, which Awards]
{Board may grant Awards from time to time to Non-Employee Directors. Awards to
Non-Employee Directors }shall be governed by [Article 14.] {and shall be subject
to the terms and conditions set forth in an Award Agreement in a form approved
by the Board.}

3.8 Costs of Plan. The costs and expenses of administering the Plan
shall 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 January 8, 1991,
subject to approval by Corporation's shareholders as provided in Article [18]
{17}. The Plan shall 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 shall not affect outstanding Awards.

4.2 Shares Subject to the Plan.

{4.2.1 General.} The shares which may be made subject to Awards under
the Plan shall be Shares of Common Stock, which may be either authorized and
unissued Shares or reacquired Shares. No fractional Shares shall be issued under
the Plan. {If an Award under the 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 shall be made available for future Awards under the Plan.
Furthermore, any Shares used as full or partial payment to Corporation by a
Participant of the option, purchase, or other exercise price of an Award and any
Shares covered by a Stock Appreciation Right which are not issued upon exercise
shall become available for future Awards.

4.2.2 Medical Products Shares.} The maximum number of {Medical
Products} Shares for which Awards may be granted under the Plan shall be
[2,400,000] {3,400,000 Medical Products} Shares, plus [any] {the number of}
Shares {which were} available for grant under Corporation's [existing] Incentive
Stock Option Plan for Key Employees of Epitope, Inc. (the "ISOP"), {on January
8, 1991,} subject to adjustment pursuant to Article [15] {14.

4.2.3 Agritope Shares. The maximum number of Agritope Shares for
which Awards may be granted under the Plan shall be (i) 1,000,000 Agritope
Shares plus (ii) that

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number of Agritope Shares which is one-half of the number of shares of Epitope
Common Stock (rounded down to the nearest whole number) subject to outstanding
Options under the Plan on the Agritope Stock Proposal Date, in each case subject
to adjustment pursuant to Article 14.

4.2.4 Availability of Shares for Future Awards}. If an Award under
the Plan or under the ISOP 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 shall
be made available for future Awards under the Plan. Furthermore, any Shares used
as full or partial payment to Corporation by a Participant of the option,
purchase, or other exercise price of an Award and any Shares covered by a Stock
Appreciation Right which are not issued upon exercise shall become available for
future Awards.

ARTICLE 5
ELIGIBILITY

5.1 Employees and Advisors. Officers and other key employees of
Corporation and its Subsidiaries (who may also be directors of Corporation or a
Subsidiary) and Advisors who, in the Committee's judgment, are or will be
contributors to the long-term success of Corporation shall be eligible to
receive Awards under the Plan.

5.2 Non-Employee Directors. All Non-Employee Directors shall be
eligible to receive Awards [pursuant to Article 14] {as provided in Section 3.7}
of 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;

(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.

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<PAGE>

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, shall deem 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.

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 shall 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 shall be subject to
the following provisions:

{(a) Type of Shares. Each Award Agreement shall specify whether
the Award covers Agritope Shares, Medical Products Shares, or a
specified combination of both. }

[(a)]{(b)} 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 shall cause an immediate equal
(or pro rata) corresponding termination of the other alternative
Award or Awards.

[(b)]{(c)} Rights as Shareholders. No Participant shall 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)]{(d)} Employment Rights. Neither the adoption of the Plan
nor the granting of any Award shall 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 member of any Advisory
Committee, as the case may be, nor shall 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 an Advisor or as a director at
any time for any reason, with or without cause.

IV - 9

<PAGE>

[(d) Nontransferable. Each Award (other than Restricted Shares
after they Vest) shall not be transferable otherwise than by will or
the laws of descent and distribution and shall 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.]

(e) Termination Of Employment. The terms and conditions under
which an Award may be exercised, if at all, after a Participant's
termination of employment or service as an Advisor or as a
Non-Employee Director shall 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 the
Award Agreement), as of the date of such change in control:

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

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

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

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) Reporting Persons. With respect to all Awards granted to
Reporting Persons, the Award Agreement shall provide that:

(i) Awards requiring exercise shall 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(g) shall apply only if or to the
extent required by Rule 16b-3 under the Exchange Act {or any
applicable successor provision}. Award

IV - 10

<PAGE>

Agreements for Awards to Reporting Persons shall also comply with any
future restrictions imposed by such Rule 16b-3.

(h) 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.

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 shall 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 shall be subject to the terms and conditions set
forth in Article 6 and this Article 7 and shall contain such additional terms
and conditions, not inconsistent with the express provisions of the Plan, as the
Committee {(or the Board with respect to Awards to Non-Employee Directors)}
shall deem desirable.

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

(a) $1 per share 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

7.4 Option Term. The Award Agreement for each Option shall
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 shall
specify, as determined by the Committee:

(a) The time or times when the Option shall become exercisable
and whether the Option shall become exercisable in full or in
graduated amounts over a period specified in the Award Agreement;

IV - 11

<PAGE>

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

(c) The extent, if any, [that] {to which} the Option shall
remain exercisable after the Participant ceases to be an employee,
Advisor, 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 Option will become immediately and
fully exercisable (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.

7.6 Method of Exercise. The Award Agreement for each Option shall
specify the method or methods of payment acceptable upon exercise of an Option.
An Award Agreement may provide that the option price is payable in full in cash
or, at the discretion of the Committee:

(a) In installments on such terms and over such period as the
Committee shall determine;

(b) In previously acquired Shares (including Restricted Shares);

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

(i) 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 withholding taxes due; or

(ii) 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 withholding taxes due; or

(e) 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 an Option
price, a corresponding number of the Shares issued upon exercise of the Option
shall be Restricted Shares subject to the same Restrictions as the surrendered
Restricted Shares.

7.7 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

IV - 12

<PAGE>

shall be in conformance with the statutory and regulatory requirements specified
in 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 January 8, 2001, unless the ten-year limitation of
Section 422(b)(2) of the Code is removed or extended.

7.8 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.

7.9 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 of compensation to future
dates. The option price shall be determined by the Committee subject to Section
7.3(a) of the Plan. The number of Shares subject to a Deferred Compensation
Option shall 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 earned under Awards granted under the Plan or under
any other compensation program or arrangement of Corporation as permitted by the
Committee. The Committee shall 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.

7.10 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 shall automatically be granted 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 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 shall determine, including
without limitation, a condition that the Participant retain the Shares issued
upon exercise of the Option for a specified period of time.

{7.11 Limitation on Number of Shares Subject to Options. In no event
may options for more than 500,000 Shares be granted to any individual under the
Plan during any fiscal year period.}

ARTICLE 8 STOCK APPRECIATION RIGHTS

8.1 General. Stock Appreciation Rights shall be subject to the
terms and conditions set forth in Article 6 and this Article 8 and shall contain
such additional terms and conditions, not inconsistent with the express terms of
the Plan, as the Committee {(or the Board with respect to Awards to Non-Employee
Directors)} shall deem desirable.

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<PAGE>

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 shall determine at the time of grant, 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,
multiplied by the number of Shares with respect to which the SAR shall have been
exercised. The base price shall 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 shall
determine.

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 shall 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 shall 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 Form of Payment. Payment upon exercise of a Stock Appreciation
Right may be made in cash, in installments, in Shares, by issuance of a Deferred
Compensation Option, or in any combination of the foregoing, or in any other
form as the Committee shall determine.

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) 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 an Advisor)
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 a Restricted Share shall be issued
a stock certificate in respect of such Shares, registered in the name
of such Participant, and shall 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 shall be held
in custody by Corporation until the Restrictions thereon shall have
lapsed.

(b) 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

IV - 14

<PAGE>

that the Participant forfeit such Restricted Units upon termination of
Participant's employment (or service as an Advisor) 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 shall be subject to the terms and
conditions of Article 6 and this Article 9 and shall contain such additional
terms and conditions, not inconsistent with the express provisions of the Plan,
as the Committee {(or the Board with respect to Awards to Non-Employee
Directors)} shall deem desirable.

9.3 Restriction Period. Restricted Awards shall provide that such
Awards, and the Shares subject to such Awards, may not be transferred, and may
provide that, in order for a Participant to Vest in such Awards, the Participant
must remain in the employment (or remain as an Advisor) of Corporation or its
Subsidiaries, subject to relief for reasons specified in the Award Agreement,
for a period commencing on the date of the Award and ending on such later date
or dates as the Committee may designate at the time of the Award (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 shall be entitled to
settlement of the Restricted Award or portion thereof, as the case may be.
Although Restricted Awards shall usually Vest based on continued employment (or
service as an Advisor) and Performance Awards under Article 10 shall 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 an Advisor). In such case, the
Restriction Period for such a Restricted Award shall include the period prior to
satisfaction of the Performance Goals.

9.4 Forfeiture. If a Participant ceases to be an employee or Advisor
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
cash, installments, or by issuance of a Deferred Compensation Option equal to
the Fair Market Value of the Restricted Shares as of the date the Restrictions
lapse.

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<PAGE>

(b) Restricted Units. Upon Vesting of a Restricted Unit Award, a
Participant shall 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 shall be made as soon as practicable
following the conclusion of the applicable Restriction Period in cash, in
installments, in Shares equal to the number of Restricted Units, by issuance of
a Deferred Compensation Option, or in any other manner or combination of such
methods as the Committee, in its sole discretion, shall determine.

9.6 Rights as a Shareholder. A Participant shall 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 shall be treated as additional Shares covered by the grant
of Restricted Shares and shall be subject to the same Restrictions.

ARTICLE 10
PERFORMANCE AWARDS

10.1 General. Performance Awards shall be subject to the terms and
conditions set forth in Article 6 and this Article 10 and shall contain such
other terms and conditions not inconsistent with the express provisions of the
Plan, as the Committee {(or the Board with respect to Awards to Non-Employee
Directors)} shall deem 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 such Performance Award or a portion thereof 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
shall 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 shall 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 performance criteria for Corporation, a Subsidiary, or an
operating group, or based on a Participant's individual performance. 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

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<PAGE>

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 shall determine the extent to which
Performance Awards have been earned on the basis of performance in relation to
the established Performance Goals.

10.6 Timing and Form of Payment. Settlement of earned Performance
Awards shall be made to the Participant as soon as practicable after the
expiration of the Performance Cycle and the Committee's determination under
Section 10.5, in the form of cash, installments, Shares, Deferred Compensation
Options, or any combination of the foregoing or in any other form as the
Committee shall determine.

ARTICLE 11
OTHER STOCK{-}BASED AND COMBINATION AWARDS

11.1 Other Stock-Based Awards. The Committee {(or the Board with
respect to Awards to Non-Employee Directors)} 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. 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 shall 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 shall
establish rules and procedures for such payment deferrals, including, but not
limited to: (a) payment or crediting of reasonable interest on such deferred
amounts credited in cash, (b) the payment or crediting of dividend equivalents
in respect of deferrals credited in Share equivalent units, or (c) granting of
Deferred Compensation Options.

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<PAGE>

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 shall 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 are appropriate or necessary.

ARTICLE 14 [NON-EMPLOYEE DIRECTORS

14.1 GENERAL. AWARDS SHALL BE MADE TO NON-EMPLOYEE DIRECTORS ONLY
UNDER THIS ARTICLE 14. NO PERSON, INCLUDING THE MEMBERS OF THE BOARD OR THE
COMMITTEE, SHALL HAVE ANY DISCRETION AS TO THE SELECTION OF ELIGIBLE RECIPIENTS
OR THE DETERMINATION OF THE TYPE, AMOUNT, OR TERMS OF AWARDS PURSUANT TO THIS
ARTICLE 14.

14.2 ELIGIBILITY. THE PERSONS ELIGIBLE TO RECEIVE AWARDS PURSUANT TO
THIS ARTICLE 14 ARE ALL NON-EMPLOYEE DIRECTORS.

14.3 DIRECTOR OPTIONS.

(A) INITIAL DIRECTOR OPTIONS. UPON THE EFFECTIVE DATE OF THE PLAN
(THE "EFFECTIVE DATE"), THE CHAIRMAN OF THE BOARD OF DIRECTORS SHALL BE GRANTED
A NONQUALIFIED OPTION (A "DIRECTOR OPTION") TO PURCHASE 75,000 SHARES, AND EACH
OTHER PERSON WHO IS THEN A NON-EMPLOYEE DIRECTOR SHALL BE GRANTED A DIRECTOR
OPTION TO PURCHASE 50,000 SHARES, WITH AN OPTION PRICE EQUAL TO 75 PERCENT OF
THE FAIR MARKET VALUE OF A SHARE ON THE EFFECTIVE DATE. EACH PERSON WHO BECOMES
A NON-EMPLOYEE DIRECTOR AFTER THE EFFECTIVE DATE BUT PRIOR TO DECEMBER 15, 1994,
SHALL BE GRANTED AN INITIAL OPTION TO PURCHASE 50,000 SHARES, WITH AN OPTION
PRICE EQUAL TO 75 PERCENT OF THE FAIR MARKET VALUE OF A SHARE ON THE DATE OF
GRANT. EACH PERSON WHO BECOMES A NON-EMPLOYEE DIRECTOR ON OR AFTER DECEMBER 15,
1994, SHALL BE GRANTED, ON THE DATE SUCH PERSON BECOMES A NON-EMPLOYEE DIRECTOR,
AN INITIAL OPTION TO PURCHASE 50,000 SHARES WITH AN OPTION PRICE EQUAL TO THE
FAIR MARKET VALUE OF A SHARE ON SUCH DATE MINUS THE LESSER OF (A) $2.00 OR (B)
25 PERCENT OF THE FAIR MARKET VALUE OF A SHARE ON SUCH DATE. A NON-EMPLOYEE
DIRECTOR ELECTED AS CHAIRMAN OF THE BOARD OF DIRECTORS AFTER THE EFFECTIVE DATE
SHALL BE GRANTED, AS OF THE DATE OF SUCH ELECTION, AN INITIAL OPTION TO PURCHASE
75,000 SHARES (OR, IF SUCH PERSON HAS PREVIOUSLY RECEIVED AN INITIAL OPTION, AN
INITIAL OPTION TO PURCHASE AN ADDITIONAL 25,000 SHARES) WITH AN OPTION PRICE
EQUAL TO THE FAIR MARKET VALUE OF A SHARE ON SUCH DATE MINUS THE LESSER OF (A)
$2.00 OR (B) 25 PERCENT OF THE FAIR MARKET VALUE OF A SHARE ON SUCH DATE.

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<PAGE>

(B) RENEWAL DIRECTOR OPTIONS. EACH NON-EMPLOYEE DIRECTOR SHALL BE
GRANTED A NONQUALIFIED OPTION TO PURCHASE 15,000 SHARES ("RENEWAL OPTION") ON
THE DECEMBER 15 PRIOR TO THE ANNUAL MEETING OF SHAREHOLDERS AT WHICH THE MOST
RECENTLY GRANTED OF THE NON-EMPLOYEE DIRECTOR'S INITIAL OPTIONS OR RENEWAL
OPTIONS SHALL FULLY VEST, WITH AN OPTION PRICE EQUAL TO THE FAIR MARKET VALUE OF
A SHARE ON THE GRANT DATE MINUS THE LESSER OF (A) $2.00 OR (B) 25 PERCENT OF THE
FAIR MARKET VALUE OF A SHARE ON THE GRANT DATE.

14.4 AWARD AGREEMENTS. EACH AWARD OF INITIAL OPTIONS AND RENEWAL
OPTIONS MADE PURSUANT TO THIS ARTICLE 14 SHALL BE GOVERNED BY AND SHALL BE
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN AN AWARD AGREEMENT IN THE FORMS
ATTACHED TO THIS PLAN AS EXHIBIT A AND EXHIBIT B, RESPECTIVELY. EXCEPT TO THE
EXTENT OTHERWISE PROVIDED IN THIS ARTICLE 14 OR IN SUCH AWARD AGREEMENT, EACH
SUCH AWARD SHALL BE GOVERNED BY ARTICLE 7 OF THE PLAN. WITH RESPECT TO EACH
PERSON WHO BECOMES A NON-EMPLOYEE DIRECTOR AFTER THE EFFECTIVE DATE, THE AWARD
AGREEMENT FOR HIS OR HER INITIAL OPTION SHALL BE IN SUBSTANTIALLY THE SAME FORM
AS EXHIBIT A, BUT WITH THE DATES OF ANNUAL MEETINGS SPECIFIED IN SUCH AWARD
AGREEMENT ADJUSTED TO REFER TO DATES SUBSEQUENT TO SUCH PERSON BECOMING A
NON-EMPLOYEE DIRECTOR.

ARTICLE 15 ]ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC.

[15.1] {14.1} Plan Does Not Restrict Corporation. The existence of
the Plan and the Awards granted hereunder shall 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.

[15.2] {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, shall be made with respect to the aggregate number of Shares for which
Awards in respect thereof 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 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.

IV - 19

<PAGE>

ARTICLE [16] {15}
AMENDMENT AND TERMINATION

Without further approval of Corporation's shareholders, the Board may
at any time terminate the Plan, or may amend it from time to time in such
respects as the Board may deem advisable, except that the Board may not, without
approval of the shareholders, make any amendment [which would (i) materially
increase the benefits accruing to Participants under the Plan, (ii)] {that would
}materially increase the aggregate number of shares of Common Stock [which]
{that} may be issued under the Plan (except for adjustments pursuant to Article
[15 of the Plan), or (iii) materially modify the requirements as to eligibility
for participation in the Plan] {14 of the Plan)}. Without further shareholder
approval, the Board may amend the Plan to take into account changes in
applicable securities, federal income tax laws, and other applicable laws.
Further, should the provisions of Rule 16b-3, or any successor rule, under the
Exchange Act be amended, the Board, without further shareholder approval, may
amend the Plan as necessary to comply with any modifications to such rule.[ The
provisions of Article 14 of the Plan shall not be amended more than once every
six months, other than to comport with changes in the Code or in Rule 16b-3
under the Exchange Act.]

ARTICLE [17] {16}
MISCELLANEOUS

[17.1] {16.1} Tax Withholding.

[(a)] {16.1.1} General. Corporation shall have the right to deduct
from any settlement, including the delivery or vesting of Shares, made under the
Plan 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 shall make arrangements satisfactory to Corporation for the satisfaction of
any such withholding tax obligations. Corporation shall not be required to make
any such payment or distribution under the Plan until such obligations are
satisfied.

[(b)] {16.1.2} Stock Withholding. The Committee, in its sole
discretion, may permit a Participant to satisfy all or a part of the withholding
tax obligations incident to the settlement of an Award involving payment or
delivery of Shares to the Participant by having Corporation withhold a portion
of the Shares that would otherwise be issuable to the Participant. Such Shares
shall be valued based on their Fair Market Value on the date the tax withholding
is required to be made. Any stock withholding with respect to a Reporting Person
shall be subject to such limitations as the Committee may impose to comply with
the requirements of the Exchange Act.

[17.2] {16.2} Unfunded Plan. The Plan shall be unfunded and
Corporation shall 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

IV - 20

<PAGE>

the Plan shall be based solely upon any contractual obligations that may be
effected pursuant to the Plan. No such obligation of Corporation shall be deemed
to be secured by any pledge of, or other encumbrance on, any property of
Corporation.

[17.3] {16.3} Payments to Trust. The Committee is authorized to cause
to be established a trust agreement or several trust agreements whereunder the
Committee may make payments of amounts due or to become due to Participants in
the Plan.

[17.4] {16.4} Annulment of Awards. Any Award Agreement may provide
that the grant of an Award payable in cash is provisional until cash is paid in
settlement thereof or that grant of an Award payable in Shares is provisional
until the Participant becomes entitled to the certificate in settlement thereof.
In the event the employment (or service as an Advisor or membership on the
Board) of a Participant is terminated for cause (as defined below), any Award
which is provisional shall be annulled as of the date of such termination for
cause. For the purpose of this Section [17.4] {16.4}, the term "for cause" shall
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.

[17.5] {16.5} Engaging in Competition With [the] Corporation. Any
Award Agreement may provide that, if a Participant terminates employment with
Corporation or a Subsidiary for any reason whatsoever, and within 18 months
after the date thereof 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 is 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 with Corporation.

[17.6] {16.6} Other Corporation Benefit and Compensation Programs.
Payments and other benefits received by a Participant under an Award made
pursuant to the Plan shall 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 shall not be included in, [nor] {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.

IV - 21

<PAGE>

[17.7] {16.7} Securities Law Restrictions. No Shares shall be issued
under the Plan unless counsel for Corporation shall be 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 may deem 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.

[17.8] {16.8} Governing Law. Except with respect to references to the
Code or federal securities laws, the Plan and all actions taken thereunder shall
be governed by and construed in accordance with the laws of the state of Oregon.

ARTICLE [18] {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 the affirmative vote of the
holders of a majority of the shares present, or represented, and entitled to
vote thereon at the 1991 annual meeting of Corporation's shareholders.]
{amendment and restatement of the Plan is expressly subject to the approval of
the Plan by the shareholders at the 1997 annual meeting of Corporation's
shareholders.}

[Exhibits deleted.]

IV - 22

<PAGE>

Edgar note: For purposes of Edgar, { } indicates text that will be marked as new
and [ ] indicates text that will be marked as deleted.

ANNEX V
PROPOSED AMENDMENTS TO
1993 EMPLOYEE STOCK
PURCHASE PLAN

EPITOPE, INC.

1993 EMPLOYEE STOCK PURCHASE PLAN
[FIRST] {SECOND} AMENDMENT AND RESTATEMENT

1. PURPOSE OF THE PLAN. This plan, as amended and restated [by the
First] {effective December 17, 1996, by this Second} Amendment and Restatement
[effective May 1, 1993](the "Plan"), shall be known as the "Epitope, Inc., 1993
Employee Stock Purchase Plan." The purpose of the Plan is to permit employees of
Epitope, Inc. [(the "Company")]{("Corporation")}, and of its Subsidiaries (as
hereinafter defined) to obtain or increase a proprietary interest in [the
Company] {Corporation} by permitting them to make installment purchases of
shares of [the Company's] {Corporation's} Common Stock (as hereinafter defined)
through payroll deductions. The Plan is intended to qualify as an "employee
stock purchase plan" within the meaning of Section 423 of the Internal Revenue
Code of 1986 (the "Code").

2. DEFINITIONS.

{AGRITOPE STOCK. The Agritope Common Stock, no par value, of
Corporation or any security of Corporation issued in substitution,
exchange, or in lieu of such stock.

AGRITOPE STOCK PROPOSAL DATE. The effective date of the amendment of
Corporation's Articles of Incorporation to create the Agritope Stock and
to redesignate Corporation's previously existing common stock as Medical
Products Stock.}

BOARD OF DIRECTORS. The Board of Directors of [the Company]
{Corporation} or a committee thereof duly authorized for the purposes of
administering this Plan.

COMMON STOCK. [The Company's] {Corporation's} no par value common
stock [as presently constituted and shares of common stock which may be
issued by the Company in exchange for or reclassification thereof.] {and
any security of Corporation issued in substitution, exchange, or in lieu
of such stock. For all periods after the Agritope Stock Proposal Date,
references in this Plan to Common Stock include Agritope Stock or Medical
Products Stock, or both, as the context may require.}

ELIGIBLE EMPLOYEES. Those persons who on the applicable Offering Date
are employees of [the Company] {Corporation} or a Subsidiary except those
who, immediately prior to the applicable Offering Date, would be deemed
under Section 423(b)(3) of the Code to own stock possessing 5 percent or
more of the total

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combined voting power or value of all classes of stock of [the Company]
{Corporation} or any other corporation that constitutes a parent or
subsidiary corporation of [the Company] {Corporation} within the meaning of
that section.

MAXIMUM PURCHASE PRICE. 85 percent of the mean between the reported
high and low sale prices [of Common Stock on the American Stock
Exchange]{, or, if there is no sale on such day, the mean between the
reported bid and asked prices, of Common Stock (whether Agritope Stock or
Medical Products Stock) on the securities exchange or automated securities
interdealer quotation system on which Common Stock shall have been traded}
on the last day preceding the applicable Offering Date [on which such
Exchange shall have been open]{.

MEDICAL PRODUCTS STOCK. The Epitope Medical Products Common Stock, no
par value, of Corporation or any security of Corporation issued in
substitution, exchange, or in lieu of such stock}.

MONTHLY COMPENSATION. For an Eligible Employee on the payroll of [the
Company] {Corporation} or a Subsidiary for the entire calendar month
preceding the applicable Offering Date, the compensation paid or accrued
to such Eligible Employee for such month plus, in the case of such an
Eligible Employee whose compensation for such month was based wholly or
partly on a bonus, commission, profit sharing, or similar arrangement for
which no accrual was made for such month, an amount equal to the portion
attributable to one month of the amount accrued to such Eligible Employee
as of the day preceding the applicable Offering Date, on the books of [the
Company] {Corporation} or its Subsidiaries in accordance with such
arrangement. For all other Eligible Employees, Monthly Compensation shall
be the monthly rate of compensation in effect immediately prior to the
applicable Offering Date. For all purposes of the Plan, Monthly
Compensation shall include any amount which is contributed by [the
Company] {Corporation} or a Subsidiary pursuant to a salary reduction
agreement and which is not includable in the gross income of an Eligible
Employee under Code Sections 125 (relating to "cafeteria plans") or
402(a)(8) (relating to elective contributions under a "401(k)" plan).

OFFERING DATES. Such dates as may be set by the Board of Directors,
provided that no more than three Offering Dates (other than Special
Offering Dates for purposes of Special Offerings pursuant to Section 6 of
this Plan) may be set during each fiscal year. The first day of each
calendar month, commencing June 1, 1993, shall be a Special Offering Date.
Except as otherwise expressly provided in this Plan, all references to
Offering Dates shall include Special Offering Dates.

OFFERING PERIODS. Such periods as may be set by the Board of
Directors for the offering of Common Stock pursuant to this Plan.

PARTICIPANT. An Eligible Employee who subscribes for the purchase of
shares of Common Stock under the Plan in accordance with the Plan
(including an Eligible Employee who participates in a Special Offering
pursuant to Section 6 of this Plan.

PURCHASE DATES. Such dates as may be set by the Board of Directors
for the

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<PAGE>

purchase of Common Stock, provided that (i) Purchase Dates shall be
no less than six months and no more than 24 months after the termination
of the applicable Offering Period and (ii) Purchase Dates may be any
earlier date of purchase pursuant to the terms of this Plan, including
Sections 11 (termination of employment), 12 (retirement or disability),
and 13 (death).

PURCHASE PERIODS. The period beginning on the termination of an
Offering Period and ending on the applicable Purchase Date.

PURCHASE PRICE. The lesser of (i) the Maximum Purchase Price[,] or
(ii) the mean between the reported high and low sale prices{, or, if there
is no sale on such day, the mean between the reported bid and asked
prices,} of Common Stock on the [American Stock Exchange] {securities
exchange or automated securities interdealer quotation system on which
Common Stock shall have been traded} on the applicable Purchase Date or on
the last day preceding such date [on which such Exchange shall have been
open]. The Purchase Price per share shall be subject to adjustment in
accordance with the provisions of Section 17 of this Plan.

SPECIAL OFFERING. An offering pursuant to Section 6 of this Plan.

SUBSIDIARY. A domestic corporation of which, on the applicable
Offering Date, [the Company] {Corporation} or a Subsidiary of [the
Company] {Corporation} owns at least 51 percent of the total combined
voting power of all classes of stock and whose employees are authorized to
participate in the Plan by the Board of Directors of [the Company]
{Corporation}.

3. THE OFFERING. The number of shares of Common Stock subject to the
Plan shall be 250,000[,] {shares of Agritope Stock and 500,000 shares of Medical
Products Stock, plus that number of shares of Agritope Stock, which is one-half
of the number of shares of Common Stock (rounded down to the nearest whole
number) subject to outstanding subscriptions pursuant to the Plan immediately
prior to the Agritope Stock Proposal Date, in each case} subject to adjustment
as provided in Section 17 of this Plan. During each Offering Period, [the
Company] {Corporation} may offer, at the applicable Purchase Price, for
subscription by Eligible Employees in accordance with the terms of the Plan,
such number of authorized and unissued shares of its Common Stock subject to the
Plan as may be determined by the Board of Directors [of the Company].

4. SUBSCRIPTIONS.

a. SHARES SUBJECT TO SUBSCRIPTION. Except as provided in Section 6 of
this Plan with respect to Special Offerings, during each Offering Period, each
Eligible Employee shall be entitled to subscribe for the number of whole shares
of [Common] {Agritope Stock and Medical Products} Stock offered during such
Offering Period designated by him in accordance with the terms of the Plan;
provided, however, that for any Offering Period, the Board of Directors may set
a minimum, a maximum, or both a minimum and a maximum number of shares that may
be subscribed for during such Offering Period. In no event may any employee
subscribe for shares (under any one or more Offering Periods which have Offering
Dates within any calendar year) which would have a total value (computed as the
number of shares subscribed for during each such Offering Period multiplied by
the Maximum Purchase Price for each such Offering Period) in excess of $21,250.

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<PAGE>

b. FURTHER LIMITATION ON SUBSCRIPTIONS. Notwithstanding Section 4.a
of this Plan, the maximum number of shares that may be subscribed for by an
Eligible Employee shall be further limited and reduced to the extent that the
number of shares owned by such Eligible Employee immediately after any Offering
Date for purposes of Section 423(b)(3) of the Code plus the maximum number of
shares set forth in Section 4.a of this Plan would exceed 5 percent of the total
combined voting power or value of all classes of stock of [the Company]
{Corporation} or a parent or subsidiary corporation of [the Company]
{Corporation} within the meaning set forth in Section 423(b)(3) of the Code.

c. SUBSCRIPTION AGREEMENTS. Subscriptions pursuant to the Plan shall
be evidenced by the completion and execution of subscription agreements in the
form provided by [the Company] {Corporation} and delivery of such agreements to
[the Company] {Corporation}, at the place designated by [the Company]
{Corporation}, prior to the expiration of each Offering Period. No subscription
agreement shall be subject to termination or reduction during the Offering
Period to which it relates without written consent of [the Company]
{Corporation}.

d. OVER SUBSCRIPTION. In the event that the aggregate number of
shares {of Agritope Stock or Medical Products Stock} subscribed for pursuant to
the Plan as of any Purchase Date shall exceed the number of shares {of Agritope
Stock or Medical Products Stock} offered for sale during the Offering Period
related to such Purchase Date, then each subscription for such Offering Period
pursuant to which a purchase is effected shall be reduced to the number of
shares {of Agritope Stock and Medical Products Stock} that such subscription
would cover in the event of a proportionate reduction of all subscriptions for
such Offering Period outstanding on such Purchase Date so that the aggregate
number of shares subject to all such subscriptions would not exceed the number
of shares offered for sale during such Offering Period. In making such
reductions, fractions of shares shall be disregarded and each subscription shall
be for a whole number of shares.

5. PAYMENT OF PURCHASE PRICE. Except as otherwise specifically
provided in the Plan, the Purchase Price of all shares purchased hereunder shall
be paid in equal installments through payroll deduction from the Participant's
compensation during the applicable Purchase Period, without the right of
prepayment. The Maximum Purchase Price multiplied by the number of shares
subscribed for shall be withheld in substantially equal installments on each pay
period during the applicable Purchase Period.

6. SPECIAL OFFERS.

a. DEFINITIONS. For purposes of this Section 6, capitalized terms not
otherwise defined in Section 2 of this Plan shall have the following meanings:

ANNUAL INCREASE. The gross annual amount (before any applicable
withholding) by which an employee's compensation would otherwise be
increased during the one-year period following an Annual Review Date for
such employee had the employee not been subject to a Special Offering
Subscription pursuant to this Section 6.

ANNUAL REVIEW DATE. The effective date, which may be an employee's
anniversary date, of an increase in compensation on account of the
employee's annual compensation review by [the Company] {Corporation}.

SPECIAL OFFERING DATE. The first day of each calendar month
commencing June 1, 1993.

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<PAGE>

SPECIAL OFFERING SUBSCRIPTION. A subscription pursuant to this
Section 6 for the number of whole shares of [Common Stock ]{Agritope Stock
or Medical Products Stock (or a combination of both)} equal to an Eligible
Employee's Annual Increase as of an Annual Review Date divided by the
Maximum Purchase Price for the Special Offering Date which falls on or
immediately follows the Annual Review Date.

SPECIAL PURCHASE DATE. For each Participant with a Special Offering
Subscription, the one-year anniversary of the Annual Review Date
corresponding to the subscription.

SPECIAL PURCHASE PERIOD. The period from a Participant's Annual
Review date [preceeding] {preceding} a Special Offering Date through the
corresponding Special Purchase Date.

b. SUBSCRIPTION. As of each Annual Review Date for each Eligible
Employee:

i. [The Company] {Corporation} may, in its discretion, provide the
Eligible Employee a Special Offering Subscription in lieu of any increase
in cash compensation during the following year; or

ii. The Eligible Employee may make an irrevocable election to receive
a Special Offering Subscription in lieu of any increase in cash
compensation during the following year.

{In either case, the Special Offering Subscription shall be (at the discretion
of Corporation) for Agritope Stock, Medical Products Stock, or a combination of
both (specified by reference to relative percentages of the Annual Increase).
For example, Corporation could specify that an employee's Special Offering
Subscription for a $2,400 Annual Increase would be 75 percent (or $1,800) for
Agritope Stock and 25 percent (or $600) for Medical Products Stock.}

c. SUBSCRIPTION AGREEMENT. Each Special Offering Subscription shall
be evidenced by the completion of a Special Offering Subscription Agreement in
the form provided by [the Company] {Corporation}.

d. PAYMENT OF PURCHASE PRICE. For each Special Offering Subscription,
[the Company] {Corporation} shall credit to an account for the Participant an
amount equal to the Annual Increase in equal installments as of each payment
date for the Participant during the Special Purchase Period.

e. RIGHT TO TERMINATE ELECTION OR REDUCE NUMBER OF SHARES.
Notwithstanding Sections 9 and 10 of this Plan, a Participant subject to a
Special Offering Subscription may terminate the Special Offering Subscription or
reduce the number of shares covered by the Special Offering Subscription only as
of the Special Purchase Date (or an earlier Purchase Date upon the occurrence of
one or more of the events described in Sections 11, 12, or 13). Such a
termination or reduction must be made by written notice to [the Company]
{Corporation} and must be received by [the Company] {Corporation} no later than
the last business day before the Special Purchase Date (or such earlier Purchase
Date).

f. WITHHOLDING. Participants shall be subject to applicable state and
federal tax

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<PAGE>

withholding and employment taxes on the shares purchased pursuant to a Special
Offering Subscription or upon payment of the amounts credited to the
Participant's account. [The Company's] {Corporation's} obligation to
issue shares shall be conditioned on the payment by the Participant (or other
arrangement satisfactory to [the Company)] {Corporation)} of all applicable
withholding taxes.

7. APPLICATION OF FUNDS; PARTICIPANTS' ACCOUNTS. All amounts withheld
from and paid by Participants hereunder shall be deposited in [the Company's]
{Corporation's} general corporate account to be used for any corporate purposes;
provided, however, that [the Company] {Corporation} shall maintain a separate
bookkeeping account for each Participant hereunder reflecting all amounts
withheld from and paid by such Participant with respect to each Purchase Period
under the Plan. No interest shall be credited to such separate accounts.

8. ISSUANCE OF SHARES. Shares purchased under the Plan shall, for all
purposes, be considered to have been issued, sold, and purchased at the close of
business on the applicable Purchase Date. Prior to each applicable Purchase
Date, no Participant shall have any rights as a holder of any shares covered by
a subscription agreement. Promptly after each Purchase Date, [the Company]
{Corporation} shall issue and deliver to the Participant a stock certificate or
certificates representing the whole number of shares purchased by the
Participant during the Purchase Period ending with such Purchase Date and refund
to the Participant in cash any excess amount in his account relating to such
Purchase Period. No adjustment shall be made for dividends or for the other
rights for which the record date is prior to the applicable Purchase Date,
except as may otherwise be provided in Section 17.

9. RIGHT TO TERMINATE SUBSCRIPTION. Except as provided in Section 6
of this Plan, each Participant shall have the right, at any time after the
expiration of each Offering Period and prior to the applicable Purchase Date, to
terminate his subscription relating to such Offering Period by written notice to
[the Company] {Corporation} and receive a prompt refund in cash of the total
amount in his account with respect to the applicable Purchase Period.

10. RIGHT TO REDUCE NUMBER OF SHARES. Except as provided in Section 6
of this Plan, each Participant shall have the right, at any time after the
expiration of each Offering Period and prior to the applicable Purchase Date, to
make, by written notice to [the Company] {Corporation}, a one-time-only
reduction in the number of shares covered by his subscription agreement relating
to such Offering Period, provided that such right shall only apply to Purchase
Periods of 12 months or more. Upon such reduction of shares, an appropriate
reduction shall be made in the Participant's future payroll deductions during
the applicable Purchase Period and the excess amount in the Participant's
account with respect to such Purchase Period resulting from such reduction shall
be promptly refunded to the Participant in cash or, at the option of the
Participant, shall be applied in equal amounts against all future installment
payments of the Maximum Purchase Price of the reduced number of shares to be
purchased during the applicable Purchase Period.

11. TERMINATION OF EMPLOYMENT. Upon termination of employment of a
Participant for any reason other than retirement, disability or death, including
by reason of the sale of the Subsidiary by which the Participant is employed
such that [the Company] {Corporation} or a Subsidiary of [the Company]
{Corporation} no longer owns at least 51 percent of the total combined voting
power of all classes of stock of the Subsidiary, a Participant shall have,
during the period of three months following his termination date, but prior to
the applicable Purchase Date, the right with respect to each Purchase Period for
which he has an account under the Plan to elect to receive either a refund in
cash of the total amount of his account relating to such Purchase Period or the
whole number of shares that can be

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<PAGE>

purchased at the applicable Purchase Price with such amount together with any
remaining cash in his account relating to such Purchase Period. Each election
must be in writing and delivered to [the Company] {Corporation} within the
aforementioned period. If the Participant elects to receive shares, the Purchase
Date shall be the date the Participant's election is delivered to [the Company]
{Corporation}. In the event the Participant does not make a timely election with
respect to any Purchase Period for which he has an account under the Plan, he
shall be deemed to have elected to receive a cash refund of the amount of his
account relating to such Purchase Period.

12. RETIREMENT; DISABILITY. A participant who retires or whose
employment is terminated by reason of any injury or illness of such a serious
nature as to disable the Participant from resuming employment with [the Company]
{Corporation} shall have all of the rights described in Section 11 above and
shall have the additional right to elect, in the manner described in Section 11,
to prepay in cash in a lump sum the entire unpaid balance of the Purchase Price
of the shares covered by his subscription agreement relating to each Purchase
Period and to receive such shares. The Purchase Date for this purpose shall be
the date on which both the Participant's election and the lump-sum cash payment
shall have been delivered to [the Company] {Corporation}. For purposes of the
Plan, a termination of employment at or after age 60 for any reason shall be
considered retirement.

13. DEATH. In the event of the death of a Participant while in the
employ of [the Company] {Corporation} or a Subsidiary and prior to full payment
of the Maximum Purchase Price for the shares covered by his subscription with
respect to each Purchase Period, or the death of a retired or disabled
Participant prior to the exercise of his rights described in Section 12 above,
his personal representative shall have, during the period of three months
following the Participant's death, but prior to the applicable Purchase Date,
the rights described in Section 12. In the event of the death of a Participant
who previously terminated employment by reason other than retirement or
disability prior to full payment of the Maximum Purchase Price for the shares
covered by his subscription with respect to each Purchase Period and prior to
the exercise of his rights described in Section 11, his personal representative
shall have the rights described in Section 11.

14. TEMPORARY LAYOFF; LEAVES OF ABSENCE. A Participant's installment
payments with respect to each Purchase Period shall be suspended during any
period of absence from work due to temporary layoff or leave of absence without
pay. If such Participant returns to active employment within the applicable
Purchase Period, installment payments shall resume and, except as provided below
with respect to Special Offering Subscriptions, the Participant shall be
entitled to elect either to make up the deficiency in his account with respect
to such Purchase Period immediately with a lump-sum cash payment, or to have
future installments with respect to such Purchase Period uniformly increased to
make up the deficiency, or to have an appropriate reduction made in the number
of shares covered by his subscription agreement with respect to such Purchase
Period to eliminate the deficiency. The election (together with the lump-sum
cash payment, if applicable) must be delivered to [the Company] {Corporation}
within ten days of the Participant's return to active employment but prior to
the applicable Purchase Date. If the Participant fails to make a timely
election, the appropriate reduction of shares shall be made in accordance with
the above. If the Participant does not return to active employment within the
applicable Purchase Period, he shall have the right to elect to receive either a
refund in cash of the total amount of his account with respect to such Purchase
Period or the whole number of shares which can be purchased at the applicable
Purchase Price with such amount together with any remaining cash in his account
with respect to the Purchase Period. The election must be in writing and
delivered to [the Company] {Corporation} prior to, and shall be effective as of,
the applicable Purchase Date. In the event the Participant does not make a
timely election with respect to any Purchase Period, he shall be deemed

V - 7

<PAGE>

to have elected to receive the cash refund with respect to that Purchase Period.
For Special Offering Subscriptions under Section 6 of the Plan, no amounts with
respect to Annual Increase will be credited during a period of absence from work
due to temporary layoff or leave of absence without pay and such amounts will
not be made up after return to active employment.

15. INSUFFICIENCY OF COMPENSATION. In the event that for any payroll
period, for reasons other than termination of employment for any reason,
temporary layoff, or leave of absence without pay, a Participant's compensation
(after all other proper deductions from his compensation) becomes insufficient
to permit the full withholding of his installment payment, the Participant may
pay the deficiency in cash when it becomes due. In the event that, in a
subsequent payroll period, the Participant's compensation becomes sufficient to
make the full installment payment and there still remains a deficiency in his
account, the deficiency must then be eliminated through the election of one of
the alternatives described in Section 14. The Participant must deliver his
election to [the Company] {Corporation} within ten days of the end of such
subsequent payroll period but prior to the applicable Purchase Date. In the
event that on the applicable Purchase Date there remains a deficiency in such a
Participant's account or, in the event a Participant described above fails to
make a timely election, the appropriate reduction of shares shall be made in
accordance with Section 13.

16. INTEREST. Any person who becomes entitled to receive any amount
of cash refund from any account maintained for him pursuant to any provision of
the Plan shall be entitled to receive in cash, at the same time, simple interest
on the amount of such refund at the rate of 6 percent per annum. Any refund
shall be deemed to be made from the most recent payment or payments made by the
Participant pursuant to the Plan.

17. EFFECT OF CERTAIN STOCK TRANSACTIONS. If at any time after the
day preceding the Offering Date for each Purchase Period, and prior to the issue
and sale by [the Company] {Corporation} of all the shares of Common Stock
covered by Participants' subscription agreements with respect to each Purchase
Period for which the Offering Date has occurred, [the Company] {Corporation}
shall effect a subdivision of shares of Common Stock or other increase (by stock
dividend or otherwise) of the number of shares of Common Stock outstanding,
without the receipt of consideration by [the Company] {Corporation} or another
corporation in which it is financially interested and otherwise than in
discharge of [the Company's] {Corporation's} obligation to make further payment
for assets theretofore acquired by it or such other corporation or upon
conversion of stock or other securities issued for consideration, or shall
reduce the number of shares of Common Stock outstanding by a consolidation of
shares, then (a) in the event of such an increase in the number of such shares
outstanding, the number of shares of Common Stock then subject to Participants'
subscription agreements with respect to such Purchase Period shall be
proportionately increased and the Maximum Purchase Price and the Purchase Price
per share for such Purchase Period shall be proportionately reduced, and (b) in
the event of such a reduction in the number of such shares outstanding, the
number of shares of Common Stock then subject to subscription agreements with
respect to such Purchase Period shall be proportionately reduced and the Maximum
Purchase Price and the Purchase Price per share for such Purchase Period shall
be proportionately increased. Except as provided in this Section 17, no
adjustment shall be made under this Plan or any subscription agreement by reason
of any dividend or other distribution declared or paid by [the Company]
{Corporation}.

18. MERGER, CONSOLIDATION, LIQUIDATION OR DISSOLUTION. In the event
of any merger or consolidation of which [the Company] {Corporation} is not to be
the survivor (or in which [the Company] {Corporation} is the survivor, but
becomes a subsidiary of another corporation), or the

V - 8

<PAGE>

liquidation or dissolution of [the Company] {Corporation}, each Participant
shall have the right immediately prior to such event to elect to receive the
number of whole shares that can be purchased at the Purchase Price applicable to
each Purchase Period with respect to which such Participant has subscribed for
purchase of Common Stock with the full amount that has been withheld from and
paid by him pursuant to the subscription agreement relating to such Purchase
Period, together with any remaining excess cash in his account relating to such
Purchase Period. If such election is not made with respect to the amount in a
Participant's account for any Purchase Period, the Participant's subscription
agreement shall terminate and he shall receive a prompt refund in cash of the
total amount in such account.

19. LIMITATION ON RIGHT TO PURCHASE. Notwithstanding any provision of
the Plan to the contrary, if at any time a Participant is entitled to purchase
shares of Common Stock on a Purchase Date, taking into account such
Participant's rights, if any, to purchase Common Stock under the Plan and all
other stock purchase plans of [the Company] {Corporation} and of other
corporations that constitute parent or subsidiary corporations of [the Company]
{Corporation} within the meaning of Sections 425(e) and (f) of the Code, the
result would be that, during the then current calendar year, such Participant
would have first become entitled to purchase under the Plan and all such other
plans a number of shares of Common Stock of [the Company] {Corporation} that
would exceed the maximum number of shares permitted by the provisions of Section
423(b)(8) of the Code, then the number of shares that such Participant shall be
entitled to purchase pursuant to the Plan on such Purchase Date shall be reduced
by the number that is one more than the number of shares that represents the
excess, and any excess amount in his account resulting from such reduction shall
be promptly refunded to him in cash.

20. NON-ASSIGNABILITY. None of the rights of an Eligible Employee
under the Plan or any subscription agreement entered into pursuant hereto shall
be transferable by such Eligible Employee otherwise than by will or the laws of
descent and distribution, and during the lifetime of an Eligible Employee such
rights shall be exercisable only by him.

21. SHARES NOT PURCHASED. Shares of Common Stock subject to the Plan
that are not subscribed for during each successive Offering Period and shares
subscribed for pursuant to such Offering Period that thereafter cease to be
subject to any subscription agreement hereunder shall remain subject to and
reserved for use in connection with a later Offering Period established by the
Board of Directors.

22. CONSTRUCTION; ADMINISTRATION. All questions with respect to the
construction and application of the Plan and subscription agreements thereunder
and the administration of the Plan shall be settled by the determination of the
Board of Directors or of one or more other persons designated by it, which
determinations shall be final, binding and conclusive on [the Company]
{Corporation} and all employees and other persons. All Eligible Employees shall
have the same rights and privileges under the Plan.

23. TERMINATION OR AMENDMENT. [The Plan may be amended or terminated
by] {Without further approval of Corporation's shareholders,} the Board of
Directors[, provided that no such amendment or termination shall (a) adversely
affect the rights of employees under subscription agreements theretofore entered
into pursuant to the Plan, or (b) increase the maximum number of shares of
Common Stock offered] {may at any time terminate the Plan or may amend the Plan
from time to time in such respects as the Board of Directors may deem advisable,
except that the Board of Directors may not, without the approval of
Corporation's shareholders, make any amendment that would materially increase
the aggregate number of Shares that may be issued} under the Plan or decrease
the price per [share, except] {Share (except for adjustments} pursuant to
Section 17[.] {of the Plan.)}

V - 9

<PAGE>

ANNEX VI

ILLUSTRATIONS OF CERTAIN PROVISIONS OF
MEDICAL PRODUCTS STOCK AND AGRITOPE STOCK

The following illustrations demonstrate calculations relating to votes
per share, the creation of and changes in Inter-Group Interests, and certain
dividend, redemption and exchange provisions of the Agritope Stock Proposal.

The illustrations are based on the following assumptions, except as
otherwise indicated:

Shares of Medical Products Stock Authorized................... 60,000,000
Shares of Agritope Stock Authorized........................... 40,000,000
Shares of Medical Products Stock Outstanding.................. 15,000,000
Shares of Agritope Stock Outstanding.......................... 7,500,000
Inter-Group Interests......................................... None

The illustrations are not intended to be complete and are qualified in
their entirety by the more detailed information contained in this
Prospectus/Proxy Statement and the other Annexes. The assumptions on which the
illustrations are based (other than number of shares authorized) are purely
hypothetical and should not be interpreted as representing expectations of
management regarding events following the Distribution. Capitalized terms not
otherwise defined have the respective meanings given elsewhere in the
Prospectus/Proxy Statement. See Annex I, "Index of Terms."

Unless otherwise specified, each illustration should be read
independently as if none of the other transactions referred to had occurred.
Actual calculations may differ slightly due to rounding.

1. VOTING RIGHTS

This illustration demonstrates the calculation of voting rights to
which shares of Medical Products Stock and Agritope Stock would be entitled at a
meeting of shareholders. The illustration is based on the following additional
assumptions:

<TABLE>
<CAPTION>
<S> <C>
Record date for meeting......................................................................... December 15
Average Market Value of one share of Medical Products Stock
during the 20-Trading Day period immediately preceding December 15............................ $15.00
Average Market Value of one share of Agritope Stock during the
20-Trading Day period immediately preceding December 15....................................... $10.00

Each share would be entitled to the following number of votes:

Medical Products Stock.......................................................................... 1
Agritope Stock (Votes = $10.00/$15.00).......................................................... .6666667

The total voting power of each class of stock is proportional to the
market capitalization of that class, as follows:
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>

MEDICAL PRODUCTS STOCK AGRITOPE STOCK TOTAL
TOTAL VOTES................................... 15,000,000 5,000,000 20,000,000
PERCENT OF TOTAL VOTES....................... 75% 25% 100%
MARKET CAPITALIZATION......................... $225,000,000 $75,000,000 $300,000,000
PERCENT OF TOTAL CAPITALIZATION.............. 75% 25% 100%
</TABLE>

VI - 1

<PAGE>

2. INTER-GROUP INTERESTS

The illustrations below demonstrate the creation of and changes in
Inter-Group Interests. As described in the Prospectus/Proxy Statement, the
following terms have the following meanings: (i) the number of "Inter-Group
Shares Issuable" with respect to an Inter-Group Interest means the number of
shares of Agritope Stock or Medical Products Stock, as the case may be, that
could be issued or sold by the Company for the account of (A) Agritope with
respect to an Inter-Group Interest in Epitope Medical Products and (B) Epitope
Medical Products with respect to an Inter-Group Interest in Agritope; (ii) the
"Outstanding Interest Fraction" means the percentage interest in the equity
value of the Company attributable to a group that is represented at any time by
the outstanding shares of the class of stock for that group; and (iii) the
"Inter-Group Interest Fraction" means any remaining percentage interest in the
equity value of the Company attributable to the group that is represented by the
other group as a result of an Inter-Group Interest held by the other group.

The manner in which Inter-Group Interests are created and changed is
described in this Prospectus/Proxy Statement under "Proposal 2: The Agritope
Stock Proposal--Description of Medical Products Stock and Agritope
Stock--Inter-Group Interests."

When an Inter-Group Interest in a group is created or changed, the
Outstanding Interest Fraction and Inter-Group Interest Fraction in that group
are affected. The Outstanding Interest Fraction is determined by the following
formula:

Outstanding Shares of Group's Stock
Outstanding Shares of Group's Stock + Inter-Group Shares
Issuable with respect to the Inter-Group Interest

The Inter-Group Interest Fraction is determined by the following
formula:

Inter-Group Shares Issuable with respect to the Inter-Group Interest
Outstanding Shares of Group's Stock + Inter-Group Shares
Issuable with respect to the Inter-Group Interest

The sum of the Outstanding Interest Fraction and the Inter-Group
Interest Fraction will always equal 100 percent.

A. PUBLIC OFFERING OF AGRITOPE STOCK

This illustration reflects an assumed sale by the Company of 1.5
million shares of Agritope Stock in a public offering.

Assume all of the shares are identified as sold for the account of
Agritope, with the net proceeds reflected entirely in the financial statements
of Agritope.

No Inter-Group Interest would be created by the transaction. The
Inter-Group Shares Issuable would be zero. The Outstanding Interest Fraction in
both Epitope Medical Products and Agritope would remain at 100 percent, and the
Inter-Group Interest Fraction in both Epitope Medical Products and Agritope
would remain at 0 percent. The shares outstanding would increase to 9 million
shares and the authorized but unissued shares would be 31 million (40 million
minus 9 million issued and outstanding).

B. REPURCHASE OF AGRITOPE STOCK

This illustration demonstrates an assumed repurchase by the Company of
1 million shares of Agritope Stock with funds allocated to Epitope Medical
Products.

VI - 2

<PAGE>

Assume all the shares are identified as repurchased for the account of
Epitope Medical Products as a creation of an Inter-Group Interest in Agritope,
with the financial statements of Epitope Medical Products being charged entirely
with the consideration paid for the shares.

The repurchase will reduce the shares of Agritope Stock outstanding as
follows:

<TABLE>
<CAPTION>
<S> <C>
Agritope Stock previously issued and outstanding................................................ 7,500,000
Agritope Stock repurchased for the account of Epitope Medical Products.......................... (1,000,000)
---------
Agritope Stock issued and outstanding after repurchase.......................................... 6,500,000

The Inter-Group Shares Issuable with respect to Epitope Medical
Products' Inter-Group Interest in Agritope would be increased by the number of
shares of Agritope Stock repurchased for the account of Epitope Medical
Products, as follows:

Inter-Group Shares Issuable with respect to the Inter-Group
Interest prior to repurchase .................................................................. 0
Number of shares repurchased for the account of Epitope
Medical Products .............................................................................. 1,000,000
---------
Inter-Group Shares Issuable with respect to the Inter-Group
Interest after repurchase...................................................................... 1,000,000

As a result, the Outstanding Interest Fraction and Inter-Group Interest
Fraction in Agritope would be:

Outstanding Interest Fraction in Agritope
(6,500,000/(6,500,000 + 1,000,000))........................................................... 86.6666667%
Inter-Group Interest Fraction in Agritope
(1,000,000/(6,500,000 + 1,000,000))........................................................... 13.3333333%
</TABLE>

The Company would have 33.5 million authorized and unissued shares of
Agritope Stock (40 million minus 6.5 million issued and outstanding).

C. CASH DIVIDEND ON AGRITOPE STOCK

This illustration demonstrates the payment of a cash dividend on
Agritope Stock following the repurchase of shares described in Illustration 2.B.

Assume a dividend of $.10 per share of Agritope Stock outstanding is
declared. Also assume that the stock repurchase described in Illustration 2.B
has been completed prior to the record date for the dividend.

Because an Inter-Group Interest in Agritope exists, the financial
statements of Epitope Medical Products will be credited, and the financial
statements of Agritope will be charged, with an amount in addition to the
dividend paid to holders of Agritope Stock. This amount is equal to the number
of Inter-Group Shares Issuable with respect to the Inter-Group Interest in
Agritope, multiplied by $.10 per share.

Amounts to be paid, credited, and charged are as follows:

<TABLE>
<CAPTION>
<S> <C>
Dividend per share of Agritope Stock............................................................ $ 0.10
Shares of Agritope Stock outstanding............................................................ 6,500,000
Aggregate dividend paid to holders of Agritope Stock............................................ $ 650,000
Inter-Group Shares Issuable with respect to the
Inter-Group Interest in Agritope.............................................................. 1,000,000
Additional amount charged to Agritope and credited to Epitope Medical
Products on account of Inter-Group Interest (1,000,000 x $0.10)............................... $ 100,000
</TABLE>

VI - 3

<PAGE>

D. AGRITOPE STOCK DIVIDEND ON AGRITOPE STOCK

This illustration demonstrates a dividend of Agritope Stock on
outstanding shares of Agritope Stock after the assumed repurchase of 1 million
shares of Agritope Stock for the account of Epitope Medical Products described
in Illustration 2.B.

Assume the Company declares a dividend of 1/10 of a share of Agritope
Stock on each outstanding share of Agritope Stock.

<TABLE>
<CAPTION>
<S> <C>
Agritope Stock previously issued and outstanding................................................ 6,500,000
Newly issued shares to Agritope shareholders ................................................... 650,000
-----------
Total Agritope Stock issued and outstanding after dividend ..................................... 7,150,000
</TABLE>

The Inter-Group Shares Issuable with respect to Epitope Medical
Products' Inter-Group Interest in Agritope would be increased proportionately to
reflect the stock dividend. That is, the Inter-Group Shares Issuable would be
increased by 1/10, or 100,000.

<TABLE>
<CAPTION>
<S> <C>
Inter-Group Shares Issuable with respect to the Inter-Group Interest
in Agritope prior to dividend ................................................................ 1,000,000
Proportionate increase to reflect dividend of shares on outstanding
shares of Agritope Stock ..................................................................... 100,000
-----------
Inter-Group Shares Issuable with respect to the Inter-Group Interest
in Agritope after dividend ................................................................... 1,100,000
</TABLE>

As a result, the total issued and outstanding shares of Agritope Stock
(7,150,000) would in the aggregate continue to represent an Outstanding Interest
Fraction of 86.6666667 percent, calculated as follows:

7,150,000
7,150,000 + 1,100,000

The Inter-Group Interest Fraction in Agritope would accordingly
continue to be 13.3333333 percent.

The Company would have 32.85 million authorized and unissued shares of
Agritope Stock (40 million minus 7.15 million issued and outstanding).

E. AGRITOPE STOCK DIVIDEND ON MEDICAL PRODUCTS STOCK

This illustration reflects a dividend of Agritope Stock on outstanding
shares of Medical Products Stock, after the assumed repurchase of 1.0 million
shares of Agritope Stock for the account of Epitope Medical Products described
in Illustration 2.B. This illustration assumes that the stock dividend described
in Illustration 2.D has not occurred.

Assume the Company declares a dividend of 1/100 of a share of Agritope
Stock on each outstanding share of Medical Products Stock.

<TABLE>
<CAPTION>
<S> <C>
Agritope Stock outstanding prior to dividend ................................................... 6,500,000
Agritope Stock paid as a dividend for account of Epitope Medical Products ...................... 150,000
---------
Agritope Stock outstanding after dividend ...................................................... 6,650,000
</TABLE>

The dividend of shares of Agritope Stock to the holders of shares of
Medical Products Stock will decrease the Inter-Group Shares Issuable with
respect to Epitope Medical Products' Inter-Group Interest in Agritope, as
follows:

VI - 4

<PAGE>

<TABLE>
<CAPTION>
<S> <C>
Inter-Group Shares Issuable with respect to the Inter-Group
Interest in Agritope prior to dividend ........................................................ 1,000,000
Agritope Stock paid as a dividend on outstanding shares of
Medical Products Stock ........................................................................ ( 150,000)
---------
Inter-Group Shares Issuable with respect to the Inter-Group
Interest in Agritope after dividend ........................................................... 850,000

After the dividend, the Outstanding Interest Fraction and Inter-Group
Interest Fraction in Agritope would be:

Outstanding Interest Fraction in Agritope after dividend (6,650,000/(6,650,000 +
850,000))..................................................................................... 88.6666667%
Inter-Group Interest Fraction in Agritope after dividend (850,000/(6,650,000 +
850,000)) .................................................................................... 11.3333333%
</TABLE>

Accordingly, the Inter-Group Interest Fraction in Agritope has been
reduced from 13.3333333% to 11.3333333%. Note, however, that after the dividend,
the holders of Medical Products Stock would also hold 150,000 shares of Agritope
Stock, which would be intended to represent a 2 percent interest in the equity
value attributable to Agritope (taking into account the 850,000 Inter-Group
Shares Issuable with respect to Epitope Medical Products' Inter-Group Interest
in Agritope).

The Company would have 33.35 million authorized and unissued shares of
Agritope Stock (40 million minus 6.65 million issued and outstanding).

F. TRANSFER OF ASSETS FROM AGRITOPE TO EPITOPE MEDICAL PRODUCTS

The following illustration demonstrates the effect of a contribution by
Agritope to Epitope Medical Products of assets with a Fair Value of $8 million.
It also provides an example of the creation of an Inter-Group Interest of
Agritope in Epitope Medical Products. This illustration assumes that the
repurchase described in Illustration 2.B above has not occurred.

Assume that the Average Market Value of a share of Medical Products
Stock during the 20-Trading Day period preceding the date of the transfer is
$16. Also assume that the Board has designated the contribution as being in
consideration of an increase in Inter-Group Shares Issuable.

After the transfer, the number of shares of Medical Products Stock
outstanding would remain unchanged, as follows:

<TABLE>
<CAPTION>
<S> <C>
Medical Products Stock previously issued and outstanding ....................................... 15,000,000
Newly issued shares ............................................................................ 0
--------------
Medical Products Stock issued and outstanding after contribution ............................... 15,000,000

The Inter-Group Shares Issuable with respect to Agritope's Inter-Group
Interest in Epitope Medical Products would be increased by the number equal to
the Fair Value of the assets contributed ($8 million) divided by the Average
Market Value of a share of Medical Products Stock during the period cited above
($16), as follows:

Inter-Group Shares Issuable with respect to the Inter-Group
Interest in Epitope Medical Products prior to transfer......................................... 0
Increase in Inter-Group Shares Issuable to reflect transfer ($8,000,000/$16).................... 500,000
-------
Inter-Group Shares Issuable with respect to the Inter-Group
Interest in Epitope Medical Products after transfer ........................................... 500,000
</TABLE>

VI - 5

<PAGE>

As a result, the Outstanding Interest Fraction and Inter-Group Interest
Fractions in Epitope Medical Products would be:

<TABLE>
<CAPTION>
<S> <C>
Outstanding Interest Fraction in Epitope Medical Products
(15,000,000/(15,000,000 + 500,000))........................................................... 96.7741936%
Inter-Group Interest Fraction (500,000/(15,000,000 + 500,000)).................................. 3.2258065%
</TABLE>

The Company would have 45 million authorized and unissued shares of
Epitope Medical Products Stock (60 million minus 15 million issued and
outstanding).

G. TRANSFER OF ASSETS FROM AGRITOPE TO EPITOPE MEDICAL PRODUCTS - EXISTING
INTER-GROUP INTEREST

The following illustration reflects the assumed transfer by Agritope to
Epitope Medical Products of assets with a Fair Value of $8 million. Assume that
the transfer occurs after the assumed repurchase of 1 million shares of Agritope
Stock for the account of Epitope Medical Products, as described in Illustration
2.B.

Also assume that the Board had designated the transfer as being made in
consideration of a reduction in the Inter-Group Shares Issuable with respect to
the Inter-Group Interest in Agritope. Assume that the Average Market Value of a
share of Agritope Stock during the 20-Trading Day period preceding the date of
transfer is $10.

The number of outstanding shares of Agritope Stock would not be
affected:

<TABLE>
<CAPTION>
<S> <C>
Agritope Stock previously issued and outstanding ............................................... 6,500,000
Newly issued shares ............................................................................ 0
------------
Total Agritope Stock issued and outstanding after transfer ..................................... 6,500,000
</TABLE>

The Inter-Group Shares Issuable with respect to the Inter-Group
Interest in Agritope would be decreased as follows:

<TABLE>
<CAPTION>
<S> <C>
Inter-Group Shares Issuable with respect to the Inter-Group
Interest in Agritope prior to transfer ........................................................ 1,000,000
Decrease in Inter-Group Shares Issuable to reflect transfer ($8,000,000/$10) ................... ( 800,000)
-----------
Inter-Group Shares Issuable with respect to the Inter-Group
Interest in Agritope after transfer ........................................................... 200,000

The Outstanding Interest Fraction and Inter-Group Interest Fraction in
Agritope would be:

Outstanding Interest Fraction (6,500,000/(6,500,000 + 200,000))................................. 97.0149254%
Inter-Group Interest Fraction (200,000/(6,500,000 + 200,000))................................... 2.9850746%
</TABLE>

The Company would have 33.5 million authorized and unissued shares of
Agritope Stock (40 million minus 6.5 million issued and outstanding).

3. EXCHANGE AND REDEMPTION PROVISIONS

The following illustrations demonstrate (a) exchange of Agritope Stock
at the option of the Company and (b) mandatory redemption or exchange provisions
in connection with the Disposition of all of the properties and assets of
Agritope.

VI - 6

<PAGE>

These illustrations are based on the following common assumptions,
except as otherwise indicated:

<TABLE>
<CAPTION>
<S> <C>
Inter-Group Shares Issuable with respect to Epitope Medical Products'
Inter-Group Interest in Agritope.............................................................. 1,875,000
Outstanding Interest Fraction in Agritope
(7,500,000/(7,500,000 + 1,875,000))........................................................... 80%
Net Proceeds of Disposition..................................................................... $80,000,000

A. EXCHANGE OF AGRITOPE STOCK AT COMPANY'S OPTION

This illustration demonstrates an election by the Company to exchange
all outstanding shares of Agritope Stock for shares of Medical Products Stock,
and is based on the following additional assumptions:

Average Market Value of a share of Agritope Stock during the 20-Trading Day
period prior to the Company's first
public announcement of the exchange........................................................... $ 8.00
Average Market Value of a share of Medical Products Stock
during the 20-Trading Day period prior to the
Company's first public announcement of the exchange........................................... $12.00
Fair Value of Medical Products Stock on fifth Trading Day before payment
made for fractional shares ................................................................... $15.00

The table below shows the consideration that a record holder of 100
shares of Agritope Stock would receive in the exchange:

Shares of Medical Products Stock to be issued for each share of Agritope Stock
(115% x $8/$12)............................................................................... .7666667
Number of whole shares of Medical Products Stock issuable to a record holder
of 100 shares of Agritope Stock................................................................ 76
Payment for fractional share (.66667 x $15.00).................................................. $ 10.00
</TABLE>

The payment for a fractional share payable to a street name holder of
Agritope Stock would likely differ from the fractional share payment shown
above, depending on procedures used by the applicable record holder.

B. REDEMPTION FOLLOWING DISPOSITION.

1. This illustration demonstrates an election by the Company to redeem
for cash all outstanding shares of Agritope Stock following the Disposition of
all of Agritope's assets referred to above.

The cash payable to holders of Agritope Stock would be calculated by
multiplying the Net Proceeds of the Disposition by the Outstanding Interest
Fraction, as follows:

<TABLE>
<CAPTION>
<S> <C>
Total dividend payable to holders of Agritope Stock ($80,000,000 x 80%)......................... $64,000,000
Cash payable per share of Agritope Stock ($64,000,000/7,500,000)................................ $ 8.5333333
</TABLE>

In the event that the Company elected to pay a dividend instead of
redeeming outstanding shares, the amount of the dividend would be calculated in
the same manner, but shares of Agritope Stock would remain outstanding.

VI - 7

<PAGE>

2. This illustration assumes that the Company has elected to redeem the
Agritope Stock for cash following the Disposition of all of Agritope's assets
referred to above, and is based on the following additional assumptions:

<TABLE>
<CAPTION>
<S> <C>
Inter-Group Shares Issuable with respect to Agritope's Inter-Group Interest
in Epitope Medical Products.................................................................... 2,000,000
Inter-Group Shares Issuable with respect to Epitope Medical Products Inter-Group
Interest in Agritope........................................................................... 0

The cash payable to record holders of Agritope Stock would be
calculated as follows:

Outstanding Interest Fraction in Agritope....................................................... 100%
Total cash payable to holders of Agritope Stock................................................. $ 80,000,000
Cash payable per share of Agritope Stock ($80,000,000/7,500,000)................................ $ 10.6666667

In addition, the record holders of Agritope Stock would be entitled to
receive shares of Medical Products Stock corresponding to the Inter-Group Shares
Issuable with respect to Agritope's Inter-Group Interest in Epitope Medical
Products, as follows:

Inter-Group Shares Issuable with respect to Agritope's Inter-Group Interest in
Epitope Medical Products....................................................................... 2,000,000
Equivalent number of shares of Medical Products Stock to be issued in connection
with redemption................................................................................ 2,000,000
Outstanding Interest Fraction in Agritope......................................................... 100%
Shares of Medical Products Stock to be issued per share of Agritope Stock redeemed
(100% x 2,000,000/7,500,000).................................................................. .2666667

The table below shows the consideration that a record holder of 100
shares of Agritope Stock would receive in connection with the redemption:

Cash payable.................................................................................... $1,066.67
Whole shares of Medical Products Stock to be issued
to record holder .............................................................................. 26
Payment for fractional shares of Medical Products Stock (.66667 x $15).......................... $ 10.00
Total cash payable to holder.................................................................... $1,076.67

C. EXCHANGE FOLLOWING DISPOSITION

This illustration demonstrates the election by the Company to exchange
Agritope Stock for Medical Products Stock following the Disposition of all of
Agritope's assets referred to above.

This illustration is based on the following additional assumptions:

Average Market Value of a share of Agritope Stock during the ten-Trading Day period
beginning on the 16th Trading Day following the Disposition date.............................. $ 8.00
Average Market Value of a share of Medical Products Stock during the same period................ $12.00
Fair Value of Medical Products Stock on 5th Trading Day before payment made for
fractional shares............................................................................. $15.00
</TABLE>

VI - 8

<PAGE>

The table below shows the consideration that a record holder of 100
shares of Agritope Stock would receive in the exchange:

<TABLE>
<CAPTION>
<S> <C>
Shares of Medical Products Stock to be issued for each share of Agritope Stock
(115% x $8/$12)............................................................................... .7666667
Number of whole shares issuable to a record holder of 100 shares of Agritope Stock.............. 76
Payment for fractional share (.66667 x $15.00).................................................. $ 10.00
</TABLE>

In addition, if Agritope had an Inter-Group Interest in Medical Products prior
to the Disposition, each Agritope shareholder would also receive an additional
number of whole shares of Medical Products Stock equal to such shareholder's pro
rata portion of the Inter-Group Shares Issuable with respect to Medical Products
as calculated in Illustration 3.B.2 above. Each such shareholder would also
receive cash in lieu of fractional shares.

VI - 9

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS/PROXY STATEMENT

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Unless a corporation's articles of incorporation provide otherwise, the
Oregon Business Corporation Act (the "Oregon Act") requires the indemnification
of an individual made a party to a proceeding because the individual is or was a
director or officer of the corporation against reasonable expenses incurred in
connection with the proceeding if the individual is wholly successful on the
merits or otherwise. The Oregon Act permits the corporation to indemnify other
employees and agents to the same extent. In addition, the Oregon Act allows the
corporation to indemnify a director, officer, employee, or agent of the
corporation if:

(a) The conduct of the individual was in good faith;

(b) The individual reasonably believed that the individual's
conduct was in the best interests of the corporation, or at least not
opposed to its best interests;

(c) In the case of any criminal proceeding, the individual had
no reasonable cause to believe that the individual's conduct was
unlawful;

(d) In the case of any proceeding by or in the right of the
corporation, the individual was not adjudged liable to the corporation;
and

(e) In connection with any proceeding (other than a proceeding
by or in the right of the corporation) charging improper personal
benefit to the individual, the individual was not adjudged liable on
the basis that he or she improperly received personal benefit.

The Oregon Act also authorizes a court to order indemnification upon
application of the director or officer, whether or not the above standards of
conduct have been met, if the court determines that the officer or director is
fairly and reasonably entitled to indemnification in view of all the relevant
circumstances and the corporation's articles of incorporation do not prohibit
such resort to the court. In addition, the Oregon Act provides that the
indemnification described above is not exclusive of any other rights to which
officers or directors may be entitled under the corporation's articles of
incorporation or bylaws, or under any agreement, action of its board of
directors, vote of shareholders, or otherwise. The restated articles of
indemnification of the Registrant do not limit any rights of indemnification
otherwise available to the Registrant's directors and officers under the Oregon
Act.

Article III of the restated articles of incorporation of the Registrant
permits the Registrant to indemnify its directors, officers, employees, and
agents to the fullest extent permitted by law. Article V of the bylaws of the
Registrant requires such indemnification for directors or former directors, or
any individual who may have served at its request as a director of another
corporation in which it owns shares of capital stock or of which it is a
creditor, against expenses and liability, including attorney fees, actually and
necessarily incurred by such individual in connection with any threatened,
pending, or completed arbitration, mediation, action, suit, or proceeding to
which the individual is a party because of service to the Registrant. Article V
of the bylaws further provides that the foregoing right of indemnification shall
not be deemed exclusive of any other rights to which the individual may be
entitled under the restated articles of incorporation, bylaws, agreement, action
of the shareholders, or otherwise. The Registrant may, but is not required to,
offer the same rights of indemnification, on a case-by-case basis, to the
officers, employees, and agents of the Registrant.

Part II - 1

<PAGE>

In addition to the foregoing right of indemnity, the Registrant has
entered into indemnification agreements with all current officers and directors.
Each indemnification agreement makes provisions of the Oregon Act relating to
permissive indemnification mandatory and therefore restates the Registrant's
obligation as set forth in the bylaws, as discussed above. In addition, each
indemnification agreement sets forth the Registrant's obligation to indemnify
the party to the agreement in the event that the indemnitee is entitled to
indemnification of some but not all liability and expenses. Procedures are also
set forth in the indemnification agreements for the defense of claims by the
Registrant and in the event that there is a change or potential change in
control of the Registrant.

Section 60.367 of the Oregon Revised Statutes (a part of the Oregon
Act) provides in substance that any director held liable pursuant to that
section for the unlawful payment of a dividend or other distribution of assets
of a corporation shall be entitled to contribution from the shareholders who
accepted the dividend or distribution, knowing the same to have been made in
violation of the Oregon Act or the articles of incorporation. The section also
provides that any such director shall be entitled to contribution from the other
directors who voted for or assented to the dividend or distribution without
complying with the applicable standards of conduct prescribed by the Oregon Act.

The Registrant carries insurance protecting officers and directors
against certain liabilities that they may incur in their capacities as such.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) The exhibits to the Registration Statement required by Item 601 to
Regulation S-K are listed in the index to exhibits following the signature page
of this Registration Statement.

(b) All schedules are omitted because of the absence of the conditions
under which they are required or because the required information is included in
the financial statements or related notes.

ITEM 22. UNDERTAKINGS.

(a) The undersigned Registrant hereby undertakes that for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

(b) (1) The undersigned Registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this Registration Statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by other items of the applicable form.

(2) The Registrant undertakes that every prospectus: (i) that
is filed pursuant to paragraph (1) immediately preceding, or (ii) that purports
to meet the requirements of Section 10(a)(3) of the Securities Act and is used
in connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the Registration Statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

Part II - 2

<PAGE>

(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue. This undertaking shall not apply to claims
covered by insurance against liability arising under the Securities Act.

(d) The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the Prospectus/Proxy
Statement pursuant to Item 4, 10(b), 11, or 13 of this form, within one business
day of receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the Registration Statement
through the date of responding to the request.

(e) The undersigned Registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.

Part II - 3

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this amendment to this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Beaverton,
state of Oregon, on January 14, 1997.

EPITOPE, INC.

By /s/ GILBERT N. MILLER
Gilbert N. Miller,
Executive Vice President
and Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, this
amendment to this Registration Statement has been signed on January 14, 1997, by
the following persons in the capacities indicated.

Signature Title
- ----------- -------

*ADOLPH J. FERRO, PH.D. President, Chief Executive Officer
Adolph J. Ferro, Ph.D. and Director
(Principal Executive Officer)

/s/ GILBERT N. MILLER Executive Vice President,
Gilbert N. Miller Chief Financial Officer and
Treasurer
(Principal Financial Officer)

*MARK V. ALLRED Controller
Mark V. Allred (Principal Accounting Officer)

*W. CHARLES ARMSTRONG Director
W. Charles Armstrong

*RICHARD K. DONAHUE Director
Richard K. Donahue

*ANDREW S. GOLDSTEIN Director
Andrew S. Goldstein

*MARGARET H. JORDAN Director
Margaret H. Jordan

*R. DOUGLAS NORBY Director
R. Douglas Norby

*MICHAEL J. PAXTON Director
Michael J. Paxton

*ROGER L. PRINGLE Director
Roger L. Pringle

Part II - 4

<PAGE>

*G. PATRICK SHEAFFER Director
G. Patrick Sheaffer

*By /s/ GILBERT N. MILLER
Gilbert N. Miller
(Attorney-in-Fact)

Part II - 5

<PAGE>

INDEX TO EXHIBITS

Exhibit
Number Exhibit
- ------- -------

2 Acquisition and Merger Agreement among Epitope, Inc., Thamscoe,
Inc., Andrew and Williamson Sales, Co., and the shareholders of
Andrew and Williamson Sales, Co., dated as of November 6, 1996.
Incorporated by reference to Exhibit 2 to the Company's Current
Report on Form 8-K dated November 6, 1996.

3.1 Restated Articles of Incorporation, as amended, of the Registrant.
Incorporated by reference to Exhibit 3.1 to the Registrant's Current
Report on Form 8-K dated May 29, 1991.

3.2 Restated Bylaws of the Registrant. Incorporated by reference to
Exhibit 3.2 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended September 30, 1996 (the "1996 10-K").

4.1 Restated Articles of Incorporation, as amended, of the Registrant.
Incorporated by reference to Exhibit 3.1 to the Registrant's Current
Report on Form 8-K dated May 29, 1991.

4.2 Article V of Restated Articles of Incorporation as proposed to be
amended. Included in Part I as Annex II to the Prospectus/Proxy
Statement included in this Registration Statement.

4.3 Note Purchase Agreement dated June 10, 1992, among Agritope, Inc.,
the Registrant, and certain investors. Copies of the agreements with
individual investors shall be filed with the Commission upon request
pursuant to Item 601, Instruction 2. Incorporated by reference to
Exhibit 4.2 to the Registrant's Quarterly Report on Form 10-Q for
the fiscal quarterly period ended June 30, 1992.

5 Form of opinion of Miller, Nash, Wiener, Hager & Carlsen LLP
regarding legality of the Agritope Common Stock.

8 Form of opinion of Miller, Nash, Wiener, Hager & Carlsen LLP
regarding tax matters.

10.1 Incentive Stock Option Plan of Registrant, as amended. Incorporated
by reference to Exhibit 10.1 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended September 30, 1994 (the "1994
10-K").

10.2 Amended and Restated Epitope, Inc., 1991 Stock Award Plan ("1991
Plan"). Incorporated by reference to Exhibit 10.2 to the 1994 10-K.

10.3 Agritope, Inc., 1992 Stock Award Plan. Incorporated by reference to
Exhibit 10.3 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended September 30, 1992 (the "1992 10-K").

10.4 Form of Nonqualified Stock Option Agreement issued to certain
officers and directors of Registrant pursuant to Agritope, Inc.,
1992 Stock Award Plan. Incorporated by reference to Exhibit 10.4 to
the 1992 10-K.

10.5 Lease dated July 17, 1990, among Registrant, Koll Woodside
Associates, a California general partnership, and Petula Associates,
Ltd., an Iowa corporation. Incorporated by reference to Exhibit 10.5
to the 1994 10-K.

10.6 Fourth Amendment dated May 20, 1994, to Lease dated July 17, 1990,
among Registrant, Koll Woodside Associates, a California general
partnership, and Petula Associates, Ltd., an Iowa corporation.
Incorporated by reference to Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarterly period ended
June 30, 1994 ("June 1994 10-Q").

Index - 1

<PAGE>

10.7 Business Park Lease dated May 5, 1994, among Registrant, Koll
Woodside Associates, a California general partnership, and Petula
Associates, Ltd., an Iowa corporation. Incorporated by reference to
Exhibit 10.2 to the June 1994 10-Q.

10.8 Business Park Lease dated as of December 16, 1994, among Registrant,
Petula Associates, Ltd., an Iowa corporation, and Koll Portland
Associates, a California general partnership. Incorporated by
reference to Exhibit 10.1 to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarterly period ended December 31, 1994.

10.9 Lease Agreement dated as of October 15, 1993, between Kathryne L.
Brown and Agrimax Floral Products, Inc. Incorporated by reference to
Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for
the fiscal quarterly period ended December 31, 1993 ("December 1993
10-Q").

10.10 Office/Warehouse Lease dated as of August 25, 1994, between Tonka
Bay Associates as agent for M Corp. of Illinois and Agrimax Floral
Products, Inc. Incorporated by reference to Exhibit 10.10 to the
1994 10-K.

10.11 Lease dated as of December 12, 1996, between Williamson and Andrew
and Andrew and Williamson Sales, Co. Incorporated by reference to
Exhibit 10.12 to the 1996 10-K.

10.12 Agreement dated December 9, 1987, between Registrant and Adolph
Ferro, Ph.D. Incorporated by reference to Exhibit 4.3 to the
Registrant's Registration Statement on Form S-1 (No. 33-18722) (the
"1988 S-1").

10.13 Amendment to Agreement of December 9, 1987, between Registrant and
Adolph J. Ferro, Ph.D. Incorporated by reference to Exhibit 10.14 to
the 1996 10-K.

10.14 Distribution Agreement dated as of April 1, 1994, between Registrant
and Organon Teknika Corporation. Incorporated by reference to
Exhibit 10.3 to the June 1994 10-Q.

10.15 Supply Agreement dated as of April 1, 1994, between Registrant and
Organon Teknika Corporation. Incorporated by reference to Exhibit
10.4 to the June 1994 10-Q.

10.16 Superior Tomato Associates, L.L.C. Operating Agreement dated as of
February 19, 1996, among Sunseeds Company, Andrew and Williamson
Sales, Co., and Agritope, Inc. Incorporated by reference to Exhibit
10.18 to the 1996 10-K.

10.17 Development and Marketing Agreement dated as of February 19, 1996,
among Superior Tomato Associates, L.L.C., Agritope, Inc., Sunseeds
Company, and Andrew and Williamson Sales, Co. Incorporated by
reference to Exhibit 10.19 to the 1996 10-K.

10.18 Form of Indemnification Agreement for directors and officers.*

10.19 Amended and Restated Employment Agreement dated January 8, 1991,
between Andrew S. Goldstein and Registrant. Incorporated by
reference to Exhibit 10.28 to the Registrant's Annual Report on Form
10-K for the year ended September 30, 1991 (the "1991 10-K").

10.20 Amended and Restated Employment Agreement dated January 9, 1991,
between Adolph J. Ferro, Ph.D., and Registrant. Incorporated by
reference to Exhibit 10.29 to the 1991 10-K.

10.21 Employment Agreement dated January 28, 1990, between Gilbert N.
Miller and Registrant. Incorporated by reference to Exhibit 10.19 to
the 1994 10-K.

10.22 Employment Agreement dated July 1, 1990, between John H. Fitchen,
M.D. and Registrant. Incorporated by reference to Exhibit 10.20 to
the 1994 10-K.

Index - 2

<PAGE>

10.23 Employment Agreement dated July 15, 1995, between Byron A. Allen,
Jr., and Registrant. Incorporated by reference to Exhibit 10.23 to
the Registrant's Annual Report on Form 10-K for the fiscal year
ended September 30, 1995.

10.24 Employment Agreement dated May 31, 1995, between Joseph A. Bouckaert
and Vinifera, Inc.*

10.25 Employment Agreement dated August 17, 1992, between Richard K.
Bestwick, Ph.D., and Agritope, Inc.*

10.26 Employment Agreement dated December 12, 1996, between Fred L.
Williamson and Andrew and Williamson Sales, Co. Incorporated by
reference to Exhibit 10.28 to the 1996 10-K.

10.27 Credit Agreement dated August 5, 1996, between Wells Fargo Bank,
National Association and Andrew and Williamson Sales, Co.
Incorporated by reference to Exhibit 10.29 to the 1996 10-K.

10.28 Development, License and Supply Agreement between Registrant and
SmithKline Beecham plc dated February 24, 1995, as amended. Portions
of this agreement have been granted confidential treatment.
Incorporated by reference to Exhibit 10.1 to Amendment No. 2 to the
Registrant's Quarterly Report on Form 10-Q for the fiscal quarterly
period ended June 30, 1995.

21 The Registrant's subsidiaries are Agritope, Inc., an Oregon
corporation, Vinifera, Inc., an Oregon corporation, Andrew and
Williamson Sales, Co., a California corporation, and Agrimax Floral
Products, Inc., a Minnesota corporation. The Registrant also owns a
67 percent interest in Strategic Tomato Associates, L.L.C., a
Delaware limited liability company, and a 60 percent interest in
Epitope KK, a Japanese limited liability company.

23.1 Consent of Price Waterhouse LLP.

23.2 Consent of Boros and Farrington.

23.3 Consents of Miller, Nash, Wiener, Hager & Carlsen LLP. Included in
Exhibits 5 and 8.

24 Powers of Attorney.*

27 Financial Data Schedule.

99 Form of proxy.

Other exhibits listed in Item 601 of Regulation S-K are not applicable.

*Previously filed.

<PAGE>

EXHIBIT 5

January 14, 1997

Epitope, Inc.
8505 S.W. Creekside Drive
Beaverton, Oregon 97005

Subject: Epitope, Inc.
Registration Statement on Form S-4

Ladies and Gentlemen:

Reference is made to the Registration Statement on Form S-4
("Registration Statement") filed by Epitope, Inc., an Oregon corporation
("Epitope"), with the Securities and Exchange Commission for the purpose of
registering under the Securities Act of 1933, as amended, 10 million shares of
Agritope Common Stock, no par value ("Agritope Common Stock"), in connection
with a proposal (the "Agritope Stock Proposal") to be considered at Epitope's
1997 annual meeting of shareholders pursuant to which (i) subject to shareholder
approval, Epitope's Restated Articles of Incorporation would be amended to,
among other things, authorize the issuance of Agritope Common Stock and
redesignate Epitope's existing common stock, no par value ("Existing Common
Stock") as "Medical Products Stock," and (ii) Epitope will declare, subject to
shareholder approval, a distribution of one-half of one share of Agritope Common
Stock on each outstanding share of Existing Common Stock.

This opinion letter is governed by, shall be interpreted in
accordance with, and is subject to the qualifications described in the Legal
Opinion Accord (the "Accord") of the ABA Section of Business Law (1991).
Capitalized terms used in this Opinion Letter and not otherwise defined have the
meaning specified in the Accord.

Based on the foregoing, it is our opinion that the issuance of the
shares of Agritope Common Stock to be distributed upon the approval of the
Agritope Stock Proposal, as described in the Registration Statement, has been
authorized, and when (a) the Agritope Stock Proposal has been duly approved by
Epitope shareholders and (b) such shares have been delivered pursuant to the
terms of the Agritope Stock Proposal in compliance with state

<PAGE>

Epitope, Inc. - 2 - January 14, 1997

securities laws while the Registration Statement is effective, such shares will
be validly issued, fully paid, and nonassessable.

We hereby consent to the use of this opinion in the subject
Registration Statement and in any amendments thereto and to the use of our name
under the caption "Legal Matters" in the Registration Statement.

Very truly yours,

[DRAFT]

MILLER, NASH, WIENER, HAGER & CARLSEN LLP

<PAGE>

EXHIBIT 8

January 14, 1997

Board of Directors
Epitope, Inc.
8505 S.W. Creekside Place
Beaverton, Oregon 97008

Ladies and Gentlemen:

Reference is made to that Form S-4, Registration Statement under the
Securities Act of 1933 dated January 14, 1997, and filed with the Securities and
Exchange Commission by Epitope, Inc. (the "Registration Statement").

As tax counsel for Epitope, Inc., you have requested that we furnish
this opinion to you. Capitalized terms not otherwise defined herein have the
same meanings as in the Registration Statement.

In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the Registration
Statement. We have also examined such other documents as we have deemed
necessary or appropriate as a basis for the opinion set forth herein. This
opinion discusses the federal income tax consequences associated with the
adoption and implementation of the Agritope Stock Proposal and the Distribution.

This opinion is based on currently existing provisions of the Internal
Revenue Code of 1986, as amended to the date hereof (the "Code"), Treasury
Department regulations thereunder, published positions of the Internal Revenue
Service (the "IRS"), and court decisions. All the foregoing are subject to
change, and any such change could affect the continuing validity of this
opinion. In particular, Congress could enact legislation affecting the treatment
of stock with characteristics similar to Agritope Stock and Medical Products
Stock, or the Treasury Department could issue regulations that change the
current law, including regulations issued pursuant to its authority under
Section 337(d) of the Code. Any future legislation or regulations could be
enacted or promulgated so as to apply retroactively to the Agritope Stock
Proposal or the Distribution. In addition, this opinion is based on the
assumption that the Agritope Stock Proposal and the Distribution will be
implemented as described in the Registration Statement and that the existing
Epitope Common Stock (and the Medical Products Stock and Agritope Stock to be
received) is held as a capital asset.

The IRS announced in 1987 that it will not issue advance rulings on the
classification of stock with characteristics similar to Agritope Stock and

<PAGE>

Board of Directors - 2 - January 14, 1997

Medical Products Stock. Accordingly, no rulings have been or will be requested
from the IRS with respect to any of the matters discussed herein. The opinions
described below are not binding on the IRS.

Based on the foregoing and having regard for such legal considerations
as we have deemed relevant, it is our opinion that:

The Agritope Stock Proposal and the Distribution

The adoption and implementation of the Agritope Stock Proposal and the
Distribution of Agritope Stock will not result in taxable income to Agritope,
Inc. Epitope or its shareholders for federal income tax purposes, except as
stated below.

Tax Implications to Epitope Shareholders

IMPLEMENTATION OF THE AGRITOPE STOCK PROPOSAL AND THE DISTRIBUTION. In
our opinion, Agritope Stock and Medical Products Stock will be treated as common
stock of Epitope for federal income tax purposes, and Epitope shareholders will
not recognize income, gain or loss by reason of the implementation of the
Agritope Stock Proposal or the Distribution. The basis of the existing Epitope
Common Stock held by a shareholder immediately before the adoption and
implementation of the Agritope Stock Proposal will become the basis of Medical
Products Stock and Agritope Stock and will be allocated between Medical Products
Stock and Agritope Stock received in the Distribution in proportion to the
relative fair market values of Medical Products Stock and Agritope Stock on the
distribution date. The holding period of Agritope Stock and Medical Products
Stock will include the holding period of the existing Epitope Common Stock
immediately before the adoption and implementation of the Agritope Stock
Proposal and the Distribution.

Although it is our opinion that the implementation of the Agritope
Stock Proposal and the Distribution will not result in the recognition of
income, gain or loss or the receipt of a taxable dividend by Epitope
shareholders, there are no federal income tax regulations, court decisions, or
published IRS rulings bearing directly on the effect of the Distribution. It is
possible that the IRS may claim that Agritope Stock or Medical Products Stock
represents property other than stock of Epitope. If Agritope Stock or Medical
Products Stock were treated as property other than stock of Epitope, either the
redesignation of the Epitope Common Stock as Medical Products Stock or the
Distribution of Agritope Stock could be taxed as a dividend to Epitope
shareholders in an amount equal to the fair market value of the Medical Products
Stock or the Agritope Stock, as the case may be, to the extent of Epitope's
current and accumulated earnings and profits, and possibly as capital gain, to
the extent that the fair market value of the Medical Products Stock or the
Agritope Stock distributed to a shareholder exceeded both the holder's ratable
share of such earnings and profits and the holder's tax basis in Common Stock.

It is our opinion that shareholders of Epitope who receive cash in lieu
of a fractional share interest in Agritope Stock as part of the Distribution
will be treated as having received the cash in redemption of the fractional
share interest. If the cash payment exceeds the shareholder's basis in the
fractional share interest deemed surrendered therefor, the shareholder will
realize gain to the extent of the excess cash. If the cash payment is less than
the shareholder's basis in the fractional share interest exchanged, the
shareholder will realize a loss. The gain or loss will be a capital gain or
loss, and will be a long-term capital gain or loss if the tacked holding period
of the fractional share interest is greater than one year.

<PAGE>

Board of Directors - 3 - January 14, 1997

Agritope Stock or Medical Products Stock, as the case may be, that was sold.
Certain preferred stock which is distributed on a tax-free basis by a
corporation to its shareholders is treated as "Section 306 Stock." Generally,
part or all of the gain recognized when a shareholder sells or disposes of
Section 306 Stock must be treated as ordinary income rather than capital gain,
and shareholders are not permitted to recognize a loss on the sale or
disposition of Section 306 Stock. However, stock which is treated as common
stock for federal income tax purposes is not treated as Section 306 stock. As
noted above, it is our opinion that Agritope Stock and Medical Products Stock
will be treated as common stock of Epitope for federal income tax purposes.
Thus, in Miller Nash's opinion, Agritope Stock and Medical Products Stock
will not be treated as Section 306 Stock. Accordingly, any gain or loss on the
taxable sale of Agritope Stock or Medical Products Stock will be a capital gain
or loss.

EXCHANGE OF AGRITOPE STOCK OR MEDICAL PRODUCTS STOCK. It is our opinion
that any exchange of Agritope Stock solely for Medical Products Stock or of
Medical Products Stock solely for Agritope Stock, whether at the option of
Epitope or upon a mandatory exchange, will not result in the recognition of gain
or loss to the holders thereof, pursuant to Section 1036 and/or Sections
368(a)(1)(E) and 354 of the Code (except with respect to any cash received in
lieu of fractional share interests of Medical Products Stock or Agritope Stock,
as the case may be). Medical Products Stock or Agritope Stock received upon any
such exchange will have the same tax basis as the holder's basis for the
Agritope Stock or Medical Products Stock exchanged therefor, and the holder's
holding period for the Medical Products Stock or Agritope Stock received will
include the holding period of Agritope Stock or Medical Products Stock exchanged
therefor.

Any exchange of Agritope Stock solely for cash, whether at the option
of Epitope or upon a mandatory exchange, will be treated as a distribution in
redemption of Agritope Stock or Medical Products Stock and will be governed by
the rules under Section 302 of the Code, including the stock attribution rules
of Section 318. Depending on the shareholder's actual and constructive ownership
of Medical Products Stock and Agritope Stock at the time of the redemption, the
cash received may be treated as a dividend taxable as ordinary income to the
extent of the shareholder's ratable share of Epitope's earnings and profits.

<PAGE>

Board of Directors - 4 - January 14, 1997

shareholders' proportionate interest in the assets or earnings and profits of
the corporation. A distribution of stock, however, will not result in a taxable
stock dividend to the shareholders if the exchange price or exchange ratio of
the convertible securities is fully adjusted to compensate for the dilution
caused by the stock distribution.

Pursuant to action by the Board or the antidilution provisions of the
convertible securities of Epitope, the conversion price and conversion ratio of
the convertible securities will be fully adjusted to reflect the Distribution.
In our opinion, because of the adjustments, the Distribution will not result in
an increase in the shareholders' proportionate interest in the assets or
earnings and profits of Epitope and therefore the Distribution will not result
in a taxable stock distribution to shareholders.

UNITED STATES ALIEN HOLDERS. A United States Alien (as defined below)
will be subject to United States federal income or withholding tax on any gain
recognized on the taxable sale or exchange of, or dividend payments on, shares
of Agritope stock or Medical Products Stock in the same manner as the holder is
subject to United States federal income or withholding tax on gain recognized on
the taxable sale or exchange of, or dividend payments on, the existing shares of
Epitope Common Stock.

Tax Implications to Epitope

In our opinion, Agritope Stock and Medical Products Stock will be
common stock of Epitope and no gain or loss will be recognized by Epitope by
reason of the adoption or implementation of the Agritope Stock Proposal or the
Distribution. If, however, Agritope Stock or Medical Products Stock were treated
as property other than stock of Epitope, Epitope could recognize gain either on
the redesignation of the Epitope Common Stock as Medical Products Stock or on
the Distribution of Agritope Stock in an amount equal to the difference between
the fair market value of Agritope Stock or the Medical Products Stock, as the
case may be, and its basis in that stock.

This opinion is furnished to you solely for your benefit in
connection with the closing of the Distribution contemplated by the

<PAGE>

Board of Directors - 5 - January 14, 1997

Registration Statement and is not to be used, circulated, quoted, or otherwise
referred to for any purpose or relied upon by any other person without our
express written permission.

Very truly yours,

[DRAFT]

Miller, Nash, Wiener, Hager & Carlsen, LLP

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use of the Prospectus constituting part of this
Registration Statement on Form S-4 of Epitope, Inc. of our report dated October
28, 1996, except for Note 13 as to which the date is November 14, 1996, November
25, 1996, December 12, 1996, and December 26, 1996 relating to the financial
statements of Epitope Medical Products group, Agritope group and Epitope, Inc.,
which appears in such Prospectus. We also consent to the references to us under
the headings "Experts" and "Independent Accountants".

/s/ PRICE WATERHOUSE LLP

Portland, Oregon
January 13, 1997

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of amendment
No. 2 to the Registration Statement on Form S-4 of Epitope, Inc., to our report
dated November 6, 1996, relating to the financial statements of Andrew and
Williamson Sales, Co., which are referenced in such Form S-4 and to the
references to us under the headings "Experts" and "Independent Accountants."

We also consent to the incorporation by reference in the Prospectus constituting
part of the Registration Statements on Form S-3 (Numbers 33-68510, 33-67618,
33-57246, 33-52920, 33-42841, 33-39166, and 33-32673), Form S-8 (Numbers
33-63106, 33-63220, 33-63218, 33-41712, 33-13416, 33-21545, 33-82788, and
33-60789), and Form S-4 (Number 333-15705) of Epitope, Inc. of our report dated
November 6, 1996.

Boros & Farrington
January 14, 1997

<PAGE>

<ARTICLE> 5
<LEGEND> This schedule contains summary financial
information extracted from the condensed
consolidated financial statements
included herein and is qualified in its
entirety by reference to such financial
statements. and is qualified in its
entirety by reference to such financial
statements.
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<PERIOD-TYPE> 12-MOS
<CASH> 5,699,263
<SECURITIES> 18,818,120
<RECEIVABLES> 1,645,448
<ALLOWANCES> 26,443
<INVENTORY> 1,667,675
<CURRENT-ASSETS> 27,894,393
<PP&E> 7,451,973
<DEPRECIATION> 4,623,020
<TOTAL-ASSETS> 34,446,718
<CURRENT-LIABILITIES> 6,264,291
<BONDS> 0
0
0
<COMMON> 100,952,282
<OTHER-SE> (72,985,262)
<TOTAL-LIABILITY-AND-EQUITY> 34,446,718
<SALES> 4,864,378
<TOTAL-REVENUES> 6,179,134
<CGS> 2,681,429
<TOTAL-COSTS> 13,702,155
<OTHER-EXPENSES> (5,857,749)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 265,356
<INCOME-PRETAX> (1,399,916)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,399,916)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> 0

<PAGE>

</TABLE>

EXHIBIT 99

Form of Proxy

EPITOPE, INC.
ANNUAL MEETING, ____________________, 1997
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Adolph J. Ferro, Ph.D., and Gilbert N.
Miller, and each of them, proxies with full power of substitution, to vote all
of the shares which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of Epitope, Inc. (the "Company"), to be held , and at any
adjournment or adjournments thereof, with all the powers the undersigned would
possess if personally present, with respect to the matters listed on the reverse
side.

THE SHARES REPRESENTED BY THIS PROXY, IF PROPERLY EXECUTED, WILL BE
VOTED AS SPECIFIED ON THE REVERSE SIDE OR, IF NO SPECIFICATION IS MADE, WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE AS DIRECTORS
AND FOR ITEMS 2, 3, AND 4. IF ANY OTHER BUSINESS PROPERLY COMES BEFORE THE
MEETING, THE PROXIES NAMED ABOVE WILL HAVE DISCRETIONARY AUTHORITY TO VOTE
THEREON IN ACCORDANCE WITH THEIR BEST JUDGMENT.

PLEASE MARK, DATE, SIGN, AND RETURN THE PROXY CARD PROMPTLY.
(Continued and to be signed on reverse)

FOLD AND DETACH HERE

EPITOPE, INC.

ANNUAL MEETING OF SHAREHOLDERS

______________________, 1997

<PAGE>

Please mark your votes as indicated in this example [X]

<C> <C> <C>
1. Election of Class I Directors FOR WITHHOLD 2. Approval of the Agritope Stock 3. Approval of amendments
(Term Expiring 2000) [ ] [ ] Proposal which amends the Company's to the Company's 1991
W. Charles Armstrong Restated Articles of Incorporation. Stock Award Plan.
Adolph J. Ferro, Ph.D.
Roger L. Pringle FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
(Instruction: To withhold authority to [ ] [ ] [ ] [ ] [ ] [ ]
vote for any individual nominee, mark
FOR and strike a line through the 4. Approval of amendments to the 5. Transaction of such other business
nominee's name in the list above. To Company's 1993 Stock Purchase as may properly come before the
withhold authority to vote for all Plan. meeting or any adjournments thereof.
nominees, mark WITHHOLD.)
FOR AGAINST ABSTAIN
[ ] [ ] [ ]

</TABLE>
The undersigned hereby acknowledges receipt of the 1997 Notice of
Annual Meeting of Shareholders and the accompanying Proxy Statement furnished
with this Proxy.

Dated: , 1997

Signature of Shareholder

Signature of Shareholder Please date and sign exactly as your name
appears on this Proxy. If signing for estates, trusts, or corporations, title or
capacity should be stated. If shares are held jointly, each holder should sign.

FOLD AND DETACH HERE

EPITOPE, INC.

ANNUAL MEETING OF SHAREHOLDERS

____________________, 1997