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                                   EXHIBIT 4.1

                             IN FOCUS SYSTEMS, INC.
                            1998 STOCK INCENTIVE PLAN

        1. STATEMENT OF PURPOSE.

        The principal purposes of this Stock Incentive Plan ("Plan") are to
secure to In Focus Systems, Inc. (the "Company") the advantages of the incentive
inherent in stock ownership on the part of employees, officers, directors, and
consultants responsible for the continued success of the Company and to create
in such individuals a proprietary interest in, and a greater concern for, the
welfare of the Company through the grant of options to acquire shares of the
common stock of the Company ("Common Stock") and through the award of restricted
Common Stock. Such grants or awards of options and of stock pursuant to this
Plan shall be referred to as "Awards." Each incentive stock option ("ISO")
granted hereunder is intended to constitute an "incentive stock option," as such
term is defined in Section 422 of the Internal Revenue Code of 1986, as the same
may be amended from time to time (the "Code"), and this Plan and each such ISO
is intended to comply with all of the requirements of said Section 422 and of
all other provisions of the Code applicable to incentive stock options and to
plans issuing the same. Each nonstatutory stock option ("Non-ISO") granted
hereunder is intended to constitute a nonstatutory stock option that does not
comply with the requirements of Section 422 of the Code. ISO's and Non-ISO's
shall sometimes hereinafter be referred to collectively as "Options". This Plan
is expected to benefit shareholders by enabling the Company to attract and
retain personnel of the highest caliber by offering to them an opportunity to
share in any increase in the value of the Common Stock to which such personnel
have contributed.

        2. ADMINISTRATION.

           2.1 The Plan shall be administered by the Board of Directors of the
Company ("Board") or a committee or committees (which term includes
subcommittees) appointed by, and consisting of two or more members of, the Board
(hereinafter, "Plan Administrator"). If and so long as the Common Stock is
registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934,
as amended ("Exchange Act"), the Board shall consider in selecting the Plan
Administrator and the membership of any committee acting as Plan Administrator
of the Plan with respect to any persons subject or likely to become subject to
Section 16 under the Exchange Act the provisions regarding (a) "outside
directors," as contemplated by Section 162(m) of the Code, and (b) "nonemployee
directors," as contemplated by Rule 16b-3 under the Exchange Act. The Board may
delegate the responsibility for administering the Plan with respect to
designated classes of eligible persons to different committees, subject to such
limitations as the Board deems appropriate. Committee members shall serve for
such term as the Board may determine, subject to removal by the Board at any
time.

           2.2 Except for the terms and conditions explicitly set forth in the
Plan, the Plan Administrator shall have exclusive authority, in its discretion,
to determine all matters relating to awards under the Plan, including the
selection of individuals to be granted Awards, the type of Awards, the number of
shares of Common Stock subject to an Award, all terms, conditions, restrictions
and limitations, if any, of an Award, and the terms of any instrument that
evidences the Award. The Plan Administrator shall also have exclusive authority
to interpret the Plan and may from time to time adopt, and change, rules and
regulations of general application for the Plan's administration. The Plan
Administrator's interpretation of the Plan and its rules and regulations, and
all actions taken and determinations made by the Plan Administrator pursuant to
the Plan, shall be conclusive and binding on all parties involved or affected.
The Plan Administrator may delegate administrative duties to such of the
Company's officers as it so determines.

        3. ELIGIBILITY.

           3.1 ISO's may be granted to any employee of the Company or of an
Affiliate of the Company, as defined in Section 3.2 below. Non-ISO's may be
granted to any employee, officer or director (whether or not also an employee),
or consultant of the Company or of an Affiliate of the Company. Each employee,
officer, director, or consultant selected by the Plan Administrator to receive
an Option shall sometimes hereinafter be referred to as an "Optionee".



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           3.2 As used in this Plan, an "Affiliate" of a corporation shall refer
to a "parent corporation" of such corporation as described in Section 424(e) of
the Code or a "subsidiary corporation" of such corporation as described in
Section 424(f) of the Code.

           3.3 An Optionee who is not an employee of the Company or of an
Affiliate of the Company shall not be eligible to receive an ISO hereunder and
no ISO's shall be granted to any such non-employee Optionee.

           3.4 No Option shall be granted hereunder to any Optionee unless the
Plan Administrator shall have determined, based on the advice of counsel, that
the grant of such option (and the exercise thereof by the Optionee) will not
violate the securities law of the state where the Optionee resides.

        4. SHARES SUBJECT TO THE PLAN.

           4.1 Subject to adjustment from time to time as provided in Section
10, a maximum of one million five hundred thousand (1,500,000) shares of Common
Stock shall be available for issuance under the Plan; in addition, if subsequent
to the 1998 Annual Meeting of the Company's shareholders the Company repurchases
any shares of Common Stock (whether on the open market, pursuant to option
exercises or otherwise), then additional shares of Common Stock may be issued
pursuant to the Plan, provided that the number of such additional shares shall
not exceed the lesser of (i) the number of shares so repurchased, or (ii) one
million five hundred thousand (1,500,000) shares. Shares issued under the Plan
shall be drawn from authorized and unissued shares.

           4.2 Upon exercise of an Option, the number of shares of Common Stock
thereafter available hereunder and under the Option shall decrease by the number
of shares of Common Stock as to which such Option was exercised; provided that
if such shares are pledged to secure a promissory note given in payment of the
Option Price for such shares and, as a result of a default on such note, the
pledged shares are returned to the Company, then such shares shall again be
available for the purposes of this Plan.

           4.3 Any shares of Common Stock made subject to an Award granted
hereunder that cease to be subject to the Award (other than by reason of
exercise or payment of the Award to the extent it is exercised for or settled in
shares) shall again be available for issuance in connection with future Awards
under this Plan.

           4.4 The Company shall at all times during the term of this Plan
reserve and keep available such number of shares as shall be sufficient to
satisfy the requirements of the Plan.

           4.5 Subject to any adjustment as provided in Section 10, if and so
long as the Common Stock is registered under Section 12 of the Exchange Act, not
more than four hundred thousand (400,000) shares of Common Stock may be made
subject to Awards under the Plan to any one individual in the aggregate in any
one fiscal year of the Company, except the Company may make additional one-time
grants of up to one million (1,000,000) shares to a newly hired individual, such
limitation to be applied in a manner consistent with the requirements of, and
only to the extent required for compliance with, the exclusion from the
limitation on deductibility of compensation under Section 162(m) of the Code.

        5. OPTION TERMS.

           5.1 The Plan Administrator shall specify the following terms to be
contained in each Option granted to an Optionee hereunder, which Option shall be
executed by the Company and such Optionee:

               5.1.1 Whether such Option is an ISO or a Non-ISO;

               5.1.2 The number of shares of Common Stock subject to purchase
pursuant to such Option;

               5.1.3 The date on which the grant of such Option shall be
effective (the "Date of Grant");



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               5.1.4 The period of time during which such Option shall be
exercisable, which shall in no event be more than ten (10) years following its
Date of Grant for ISO's; provided, however, that if an ISO is granted to an
Optionee who on the Date of Grant owns, either directly or indirectly within the
meaning of Section 424(d) of the Code, more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or an Affiliate of
the Company, the period of time during which such Option shall be exercisable
shall in no event be more than five (5) years following its Date of Grant;

               5.1.5 The price at which such Option shall be exercisable by the
Optionee (the "Option Price"); provided, however, that the Option Price for all
Options shall be not less than the fair market value, as defined in Section 5.2
below, on the Date of Grant of the shares of Common Stock subject thereto; and
provided further that, if such Option is granted to an Optionee who on the Date
of Grant owns, either directly or indirectly within the meaning of Section
424(d) of the Code, more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or an Affiliate of the Company,
then the Option Price specified in such Option shall be at least one hundred ten
percent (110%) of the fair market value, on the Date of Grant, of the Common
Stock subject thereto;


               5.1.6 Any vesting schedule upon which the exercise of an Option
is contingent; provided that the Plan Administrator shall have complete
discretion with respect to the terms of any vesting schedule upon which the
exercise of an Option is contingent, including, without limitation, discretion
(a) to allow full and immediate vesting upon grant of such Option, (b) to permit
partial vesting in stated percentage amounts based on the length of the holding
period of such Option, or (c) to permit full vesting after a stated holding
period has passed; and

               5.1.7 Such other terms and conditions as the Plan Administrator
deems advisable and as are consistent with the purpose of this Plan. 

           5.2 Fair market value shall be determined as follows:

               5.2.1 If the Company's Common Stock is publicly traded at the
time an Option is granted hereunder, fair market value shall be determined as of
the date of grant and shall mean:

                      (a) The average (on that date) of the high and low prices
               of the Common Stock on the principal national securities exchange
               on which the Common Stock is traded, if the Common Stock is then
               traded on a national securities exchange; or

                      (b) The last reported sale price (on that date) of the
               Common Stock on the NASDAQ National Market System, if the Common
               Stock is not then traded on a national securities exchange; or

                      (c) The closing bid price (or average of bid prices) last
               quoted on such date by an established quotation service for
               over-the-counter securities, if the Common Stock is not reported
               on the NASDAQ National Market System.

               5.2.2 If the Common Stock is not publicly traded at the time an
Option is granted hereunder, fair market value shall be deemed to be the fair
value of the Common Stock as determined by the Plan Administrator after taking
into consideration all factors that it deems appropriate, including, without
limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.

           5.3 No Option shall be granted hereunder during the suspension of
this Plan or after the termination of this Plan pursuant to Section 12.2. Except
as expressly provided herein, nothing contained in this Plan shall require that
the terms and conditions of Options granted hereunder be uniform.

           5.4 Notwithstanding anything in the Plan to the contrary, the Plan
Administrator may grant Options under the Plan in substitution for options
issued under other plans, or assume under the Plan awards issued under other
plans, if the other plans are or were plans of other acquired entities
("Acquired Entities") (or the parent of the Acquired Entity) and the new Option
is substituted, or the old option is assumed, by reason of a merger,
consolidation, acquisition of property or of stock, reorganization or
liquidation (the "Acquisition Transaction"). In the event that a written
agreement pursuant to which the Acquisition Transaction is completed is



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approved by the Board and said agreement sets forth the terms and conditions of
the substitution for or assumption of outstanding awards of the Acquired Entity,
said terms and conditions shall be deemed to be the action of the Plan
Administrator without any further action by the Plan Administrator, and the
persons holding such Options shall be deemed to be Optionees.

        6. LIMITATION ON GRANTS OF ISO'S.

In the event that the aggregate fair market value of Common Stock and other
stock with respect to which ISO's granted to an Optionee hereunder or incentive
stock options granted to such Optionee under any other plan of the Company or
any of its Affiliates are exercisable for the first time during any calendar
year, exceeds the maximum permitted under Section 422(d) of the Code, then to
the extent of such excess, such ISO's shall be treated as Non-ISO's.

        7. EXERCISE OF OPTION.

           7.1 Subject to any limitations or conditions imposed upon an Option
pursuant to Section 5 above, an Optionee may exercise an Option or any part
thereof (unless partial exercise is specifically prohibited by the terms of the
Option), by giving written notice thereof to the Company at its principal place
of business accompanied by payment as described in Section 7.2.

           7.2 The exercise price for shares purchased under an Option shall be
paid in full to the Company by delivery of consideration equal to the Option
Price for the whole number of shares as to which it is exercised. Such
consideration must be paid in cash or by check, or, in the Plan Administrator's
discretion, a combination of cash and/or check and/or one or both of the
following alternative forms: (a) tendering (either actually or, if and so long
as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange
Act, by attestation) Common Stock already owned by the Optionee for at least six
(6) months (or any shorter period necessary to avoid a charge to the Company's
earnings for financial reporting purposes) having a fair market value on the day
prior to the exercise date equal to the aggregate Option Price or (b) if and so
long as the Common Stock is registered under Section 12(b) or 12(g) of the
Exchange Act, delivery of a properly executed exercise notice, together with
irrevocable instructions, to (i) a brokerage firm, that may from time to time be
designated by the Company in its discretion, to deliver to the Company the
aggregate amount of sale or loan proceeds to pay the Option Price and any
withholding tax obligations that may arise in connection with the exercise and
(ii) the Company, to deliver the certificates for such purchased shares directly
to such brokerage firm, all in accordance with the regulations of the Federal
Reserve Board. In addition, the exercise price for shares purchased under an
Option may be paid, either singly or in combination with one or more of the
alternative forms of payment authorized by this Section 7.2, by (y) a promissory
note; or (z) such other consideration as the Plan Administrator may permit. Any
promissory note delivered in connection with exercise of an Option shall bear
interest at a rate specified by the Plan Administrator but in no case less than
the rate required to avoid imputation of interest (taking into account any
exceptions) for federal income tax purposes.

           7.3 As soon as practicable after exercise of an option in accordance
with Sections 7.1 and 7.2 above, the Company shall issue a stock certificate
evidencing the Common Stock with respect to which the Option has been exercised.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of such stock
certificate, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to such Common Stock, notwithstanding the
exercise of the Option. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 10 below.

           7.4 The amount to be paid by the Optionee upon exercise shall be the
full Option Price together with the amount of any taxes required to be withheld
with respect to the grant or exercise of the Option. Subject to the Plan and to
applicable law, the Plan Administrator, in its sole discretion, may permit such
withholding obligations to be paid, in whole or in part, by electing to have the
Company withhold shares of Common Stock or by transferring shares of Common
Stock to the Company, in such amounts as are equivalent to the fair market value
of the withholding obligation.



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        8. TRANSFERABILITY AND POST-TERMINATION EXERCISES.

           8.1 Except as provided otherwise in this Section 8, no Option shall
be transferable or exercisable by any person other than the Optionee to whom
such Option was originally granted.

           8.2 The Plan Administrator shall establish and set forth in each
instrument that evidences an Option whether the Option will continue to be
exercisable and the terms and conditions of such exercise, if the Optionee
ceases to be employed by or provide services to the Company or its Affiliates,
which may be waived or modified by the Plan Administrator. If not so established
and subject to Section 8.3, the Option will be exercisable in accordance with
the following terms, which may be waived or modified by the Plan Administrator:

               8.2.1 In case of termination of Optionee's employment or services
other than by reason of death, the Option shall be exercisable, to the extent of
the number of shares purchasable at the date of termination, only within three
months after the date the Optionee ceases to be an employee or consultant of the
Company or Affiliate, but no later than the remaining term of the Option.

               8.2.2 Any Option exercisable at the time of the Optionee's death
may be exercised to the extent of the number of shares purchasable at the date
of death, by the personal representative of the Optionee's estate or the
person(s) to whom the Optionee's rights under the Option have passed by will or
applicable laws of descent and distribution at any time or from time to time
within one year after the date of death, but in no event later than the
remaining term of the Option.

               8.2.3 Any portion of an Option not exercisable on the date of
termination of the Optionee's employment or services shall terminate on such
date, unless the Plan Administrator determines otherwise.

               8.2.4 Subject to Section 8.3, the effect of a Company-approved
leave of absence on terms and conditions of an Option shall be determined by the
Plan Administrator in its sole discretion. A transfer of services or employment
between or among the Company and subsidiaries shall not be considered a
termination of employment or services.

               8.2.5 To the extent exercisable, a Non-ISO may be exercised
during the Optionee's lifetime by the Optionee's guardian or legal
representative.

           8.3 To the extent required by Section 422 of the Code, ISO's shall be
subject to the following additional terms and conditions: To qualify for ISO tax
treatment, an Option designated as an ISO must be exercised within three months
after termination of employment for reasons other than death, except that in the
case of termination of employment due to total disability, such Option must be
exercised within one year after such termination. Employment shall not be deemed
to continue beyond the first 90 days of a leave of absence unless the Optionee's
reemployment rights are guaranteed by statute or contract. For purposes of this
Section 8.3, "total disability" shall have the meaning given to such term in the
Company's long-term disability plan, as such plan is in effect on the date of
determination.

           8.4 In the event that a qualified domestic relations order, as
defined by Section 414(p) of the Code or Title I of the Employee Retirement
Income Security Act or the rules thereunder, mandates the transfer of any Option
that could have been exercised immediately prior to the issuance of such order,
such Option shall pass to the person or persons entitled thereto pursuant to the
order and shall be exercisable by such person or persons in accordance with the
terms thereof.

           8.5 The Plan Administrator may, in its discretion, authorize all or a
portion of the Non-ISO's granted to an Optionee to be on terms which permit
transfer by such Optionee to (i) the spouse, children or grandchildren of the
Optionee ("Immediate Family Members"), (ii) a trust or trusts for the exclusive
benefit of such Immediate Family Members, or (iii) a partnership in which such
Immediate Family Members are the only partners, provided that (x) there may be
no consideration for any such transfer, (y) the stock option agreement pursuant
to which such Options are granted must be approved by the Plan Administrator and
must expressly provide for transferability in a manner consistent with this
Section, and (z) subsequent transfers of transferred Options are prohibited
except those in accordance with Section 8 of the Plan. The Plan Administrator
may, in its discretion, in permitting transferability, impose additional
conditions in the Option Agreement consistent with this 



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section, including without limitation imposition of a post-exercise holding
period on transferees. Following transfer, any such Options shall continue to be
subject to the same terms and conditions as were applicable immediately prior to
transfer; provided, the events of termination of employment of Sections 8 and 9
hereof shall continue to be applied with respect to the original Optionee,
following which the Options shall be exercisable by the transferee only to the
extent and for the periods specified. The Company disclaims any obligation to
provide notice to a transferee of early termination of the Option due to
termination of employment or otherwise. Notwithstanding a transfer pursuant to
the foregoing, the original Optionee will remain subject to applicable
withholding taxes upon exercise. No transfer will be effective until written
notice of transfer is delivered to the Company. The Company reserves the right
to approve transfers hereunder.

           8.6 In order to obtain certain tax benefits afforded to ISO's under
Section 422 of the Code, the Optionee must hold the shares issued upon exercise
of an ISO for two years after the grant date of the ISO and one year from the
date of exercise. An Optionee may be subject to the alternative minimum tax at
the time of exercise of an ISO. The Plan Administrator may require an Optionee
to give the Company prompt notice of any disposition of shares acquired by the
exercise of an ISO prior to expiration of such holding periods.

        9. TERMINATION OF OPTIONS.

        To the extent not earlier exercised, an Option shall terminate at the
earliest of the following dates:

           9.1 The termination date specified for such Option in the respective
Option Agreement;

           9.2 As specified in Section 8 above:

           9.3 The date of any sale, transfer, or hypothecation, or any
attempted sale, transfer or hypothecation, of such Option in violation of
Section 8 above;

           9.4 The date specified in Section 10.2 below for such termination in
the event of a Terminating Event; or

           9.5 At the discretion of the Plan Administrator, immediately upon
determination by the Plan Administrator that the Optionee has (i) made
unauthorized disclosure of confidential information relating to the Company,
(ii) failed to assign to the Company any invention which the Optionee is
obligated to assign to the Company pursuant to written agreement or otherwise,
or (iii) breached the terms of any written agreement in effect between the
Company and the Optionee relating to confidentiality, nondisclosure or ownership
of inventions.

        10. ADJUSTMENTS.

           10.1 In the event of a material alteration in the capital structure
of the Company on account of a recapitalization, stock split, reverse stock
split, stock dividend, or otherwise, then the Plan Administrator shall make such
adjustments to this Plan and to the Awards then outstanding and thereafter
granted hereunder as the Plan Administrator determines to be appropriate and
equitable under the circumstances, so that the proportionate interest of each
holder shall, to the extent practicable, be maintained as before the occurrence
of such event. Such adjustments may include, without limitation (a) a change in
the number or kind of shares of stock of the Company covered by such Awards, and
(b) a change in the Option Price payable per share; provided, however, that the
aggregate Option Price applicable to the unexercised portion of existing Options
shall not be altered, it being intended that any adjustments made with respect
to such Options shall apply only to the price per share and the number of shares
subject thereto. For purposes of this Section 10.1, neither (i) the issuance of
additional shares of stock of the Company in exchange for adequate consideration
(including services), nor (ii) the conversion of outstanding preferred shares of
the Company into Common Stock shall be deemed material alterations of the
capital structure of the Company. In the event the Plan Administrator shall
determine that the nature of a material alteration in the capital structure of
the Company is such that it is not practical or feasible to make appropriate
adjustments to this Plan or to the Awards granted hereunder, such event shall be
deemed a Terminating Event as defined in Section 10.2 below.

           10.2 All Options granted hereunder shall terminate upon the
occurrence of any of the following events ("Terminating Events"): (a) the
dissolution or liquidation of the Company; or (b) a material 



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change in the capital structure of the Company that is subject to this Section
10.2 by virtue of the last sentence of Section 10.1 above.

           10.3 All Options granted hereunder shall become immediately
exercisable, without regard to any contingent vesting provision to which such
Options may have otherwise been subject, in the event of a reorganization (as
defined in Section 10.4), which results in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) less than a majority of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such reorganization.

           10.4 In the event of a reorganization as defined in this Section 10.4
in which the Company is not the surviving or acquiring company, or in which the
Company is or becomes a wholly-owned subsidiary of another company after the
effective date of the reorganization, then the plan or agreement respecting the
reorganization shall include appropriate terms providing for the assumption of
each Option granted hereunder, or the substitution of an option therefor, such
that no "modification" of any such Option occurs under Section 424 of the Code.
For purposes of Section 10.3 and this Section 10.4, reorganization shall mean
any statutory merger, statutory consolidation, sale of all or substantially all
of the assets of the Company, or sale, pursuant to an agreement with the
Company, of securities of the Company pursuant to which the Company is or
becomes a wholly-owned subsidiary of another corporation after the effective
date of the reorganization.

           10.5 The Plan Administrator shall have the right to accelerate the
date of exercise of any installment of any option; provided, however, that,
without the consent of the Optionee with respect to any Option, the Plan
Administrator shall not accelerate the date of any installment of any Option
granted to an employee as an ISO (and not previously converted into a Non-ISO
pursuant to Section 13 below) if such acceleration would violate the annual
vesting limitation contained in Section 422(d) of the Code, as described in
Section 6 above.

           10.6 Adjustments and determinations under this Section 10 shall be
made by the Plan Administrator (upon the advice of counsel), whose decisions as
to what adjustments or determination shall be made, and the extent thereof,
shall be final, binding, and conclusive.

        11. STOCK AWARDS.

           11.1 GRANT OF STOCK AWARDS. The Plan Administrator is authorized to
make awards of Common Stock on such terms and conditions and subject to such
restrictions, if any (which may be based on continuous service with the Company
or the achievement of performance goals related to operating profit as a
percentage of revenues, revenue and profit growth, profit-related return ratios,
such as return on equity, or cash flow, where such goals may be stated in
absolute terms or relative to comparison companies), as the Plan Administrator
shall determine, in its sole discretion, which terms, conditions and
restrictions shall be set forth in the instrument evidencing the award ("Stock
Award"). The terms, conditions and restrictions that the Plan Administrator
shall have the power to determine shall include, without limitation, the manner
in which shares subject to Stock Awards are held during the periods they are
subject to restrictions and the circumstances under which forfeiture of
restricted stock shall occur by reason of termination of the holder's services.

           11.2 ISSUANCE OF SHARES. Upon the satisfaction of any terms,
conditions and restrictions prescribed in respect to a Stock Award, or upon the
holder's release from any terms, conditions and restrictions of a Stock Award,
as determined by the Plan Administrator, the Company shall deliver, as soon as
practicable, to the holder or, in the case of the holder's death, to the
personal representative of the holder's estate or as the appropriate court
directs, a stock certificate for the appropriate number of shares of Common
Stock.

           11.3 WAIVER OF RESTRICTIONS. Notwithstanding any other provisions of
the Plan, the Plan Administrator may, in its sole discretion, waive the
forfeiture period and any other terms, conditions or restrictions on any
restricted stock under such circumstances and subject to such terms and
conditions as the Plan Administrator shall deem appropriate.

           11.4 PAYMENT. Stock Awards under the Plan may be settled through cash
payments, delivery of Common Stock or granting of awards or combinations thereof
as the Plan Administrator shall determine. Any award settlement, including
payment deferrals, may be subject to such conditions, restrictions 



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and contingencies as the Plan Administrator shall determine. The Plan
Administrator may permit or require deferral of any award payment, subject to
rules and procedures as it may establish, which may include provisions for
payment or crediting of interest, or dividend equivalents.

        12. TERMINATION AND AMENDMENT OF PLAN.

           12.1 The Plan may be amended only by the Board as it shall deem
advisable; however, to the extent required for compliance with Section 422 of
the Code or any applicable law or regulation, shareholder approval will be
required for any amendment that will (a) increase the total number of shares as
to which Awards may be granted under the Plan, (b) modify the class of persons
eligible to receive Awards, or (c) otherwise require shareholder approval under
any applicable law or regulation.

           12.2 The Company's shareholders or the Board may suspend or terminate
the Plan at any time. The Plan will have no fixed expiration date; provided,
however, that no ISO may be granted more than ten (10) years after the earlier
of the Plan's adoption by the Board and approval by the shareholders.

           12.3 The amendment or termination of the Plan shall not, without the
consent of the Optionee under the Plan, impair or diminish any rights or
obligations under any Option theretofore granted under the Plan. Any change or
adjustment to an outstanding ISO shall not, without the consent of the holder,
be made in a manner so as to constitute a "modification" that would cause such
ISO to fail to continue to qualify as an incentive stock option.

        13. CONVERSION OF ISO'S INTO NON-ISO'S.

At the written request of any ISO Optionee, the Plan Administrator may in its
discretion take such actions as may be necessary to convert such Optionee's
ISO's (or any installments or portions of installments thereof) that have not
been exercised on the date of conversion into Non-ISO's at any time prior to the
expiration of such ISO's, regardless of whether the Optionee is an employee of
the Company or of an Affiliate of the Company at the time of such conversion.
Such actions may include, but shall not be limited to, extending the exercise
period or reducing the exercise price of the appropriate installments of such
ISO's. At the time of such conversion, the Plan Administrator, with the consent
of the Optionee, may impose such conditions on the exercise of the resulting
Non-ISO's as the Plan Administrator in its discretion may determine, provided
that such conditions shall not be inconsistent with this Plan. Nothing in this
Plan shall be deemed to give any Optionee the right to have such Optionee's
ISO's converted into Non-ISO's, and no such conversion shall occur until and
unless the Plan Administrator takes appropriate action. The Plan Administrator,
with the consent of the Optionee, may also terminate any portion of any ISO that
has not been exercised at the time of such conversion.

        14. CONDITIONS UPON ISSUANCE OF SHARES.

           14.1 Shares shall not be issued pursuant to the exercise of any Award
unless the exercise of such Award and the issuance and delivery of such shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended ("Securities Act"),
the Exchange Act, any applicable state securities law, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the shares may then be listed or otherwise traded, and such compliance has been
confirmed by counsel for the Company. The Company shall be under no obligation
to any participants to register for offering or resale or to qualify for an
exemption under the Securities Act, or to register or qualify under state
securities laws, any shares of Company's stock issued under the Plan or to
continue in effect any registrations or qualifications if made. The Company may
issue certificates for shares with such legends and subject to such restrictions
on transfer as counsel for the Company deems necessary or desirable for
compliance with federal and state securities laws.

           14.2 As a condition to the exercise of any Option, the Company may
require the participant exercising such Option to represent and warrant at the
time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares
if, in the opinion of counsel for the Company, such representations and
warranties are required by any relevant provision of law.

           14.3 The Company's inability to obtain authority from any regulatory
body having jurisdiction, which authority the Company's counsel has determined
to be necessary to the lawful issuance and 



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<PAGE>   9

sale of any shares hereunder, shall relieve the Company of any liability with
respect to the failure to issue or sell such shares.

        15. USE OF PROCEEDS.

Proceeds from the sale of Common Stock pursuant to the exercise of Options
granted hereunder shall constitute general funds of the Company and shall be
used for general corporate purposes.

        16.    NOTICES.

All notices, requests, demands and other communications required or permitted to
be given under this Plan and the Awards granted hereunder shall be in writing
and shall be either served personally on the party to whom notice is to be given
(in which case notice shall be deemed to have been duly given on the date of
such service), or mailed to the party to whom notice is to be given, by first
class mail, registered or certified, return receipt requested, postage prepaid,
and addressed to the party at his or its most recent known address, in which
case such notice shall be deemed to have been duly given on the third (3rd)
postal delivery day following the date of such mailing.

        17. MISCELLANEOUS PROVISIONS.

           17.1 Optionees shall be under no obligation to exercise Options
granted hereunder.

           17.2 Nothing contained in this Plan shall obligate the Company to
retain an Optionee or holder of a Stock Award as an employee, officer, director,
or consultant for any period, nor shall this Plan interfere in any way with the
right of the Company to reduce such person's compensation.

           17.3 The provisions of this Plan and each Award hereunder shall be
binding upon such holder, the Qualified Successor or Guardian, and the heirs,
successors, and assigns.

           17.4 This Plan is intended to constitute an "unfunded" plan and
nothing herein shall require the Company to segregate any monies or other
property or shares of Common Stock or create any trusts or deposits, and no
Optionee or holder shall have rights greater than a general unsecured creditor
of the Company.

           17.5 It is the Company's intention that, if and so long as any of the
Company's equity securities are registered pursuant to Section 12(b) or 12(g) of
the Exchange Act, the Plan shall comply in all respects with Rule 16b-3 under
the Exchange Act and, if any Plan provision is later found not to be in
compliance with such Rule 16b-3, the provision shall be deemed null and void,
and in all events the Plan shall be construed in favor of its meeting the
requirements of Rule 16b-3. Notwithstanding anything in the Plan to the
contrary, the Board, in its sole discretion, may bifurcate the Plan so as to
restrict, limit or condition the use of any provision of the Plan to Optionees
who are officers or directors subject to Section 16 of the Exchange Act without
so restricting, limiting or conditioning the Plan with respect to other
Optionees. Additionally, in interpreting and applying the provisions of the
Plan, any Option granted as an ISO pursuant to the Plan shall, to be extent
permitted by law, be construed as an "incentive stock option" within the meaning
of Section 422 of the Code.

           17.6 Where the context so requires, references herein to the singular
shall include the plural, and vice versa, and references to a particular gender
shall include either or both genders.

           17.7 This Plan and any agreements hereunder shall be administered,
interpreted and enforced under the internal laws of the State of Oregon without
regard to conflicts of laws thereof.

        18. EFFECTIVE DATE OF PLAN AND AMENDMENTS.

This Plan was initially adopted by the Board of Directors on December 16, 1997
and approved by the shareholders on April 22, 1998.



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