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                                                                  EXHIBIT 4.1(b)

                              WEBTRENDS CORPORATION

                    AMENDED AND RESTATED 1998 STOCK INCENTIVE
                                COMPENSATION PLAN

                               SECTION 1. PURPOSE

        The purpose of the WebTrends Corporation 1998 Stock Incentive
Compensation Plan (the "Plan") is to enhance the long-term shareholder value of
WebTrends Corporation, an Oregon corporation (the "Company"), by offering
opportunities to selected persons to participate in the Company's growth and
success, and to encourage them to remain in the service of the Company and its
Related Corporations (as defined in Section 2) and to acquire and maintain stock
ownership in the Company.

                             SECTION 2. DEFINITIONS

        For purposes of the Plan, the following terms shall be defined as set
forth below:

        "AWARD" means an award or grant made pursuant to the Plan, including,
without limitation, awards or grants of Options and Stock Awards, or any
combination of the foregoing.

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

        "CAUSE" means dishonesty, fraud, misconduct, unauthorized use or
disclosure of confidential information or trade secrets, or conviction or
confession of a crime punishable by law (except minor violations), in each case
as determined by the Plan Administrator, and its determination shall be
conclusive and binding.

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

        "COMMON STOCK" means the common stock, without par value, of the
Company.

        "CORPORATE TRANSACTION" means any of the following events:

                (a) Consummation of any merger or consolidation of the Company
        with or into another corporation; or

                (b) Consummation of any sale, lease, exchange or other transfer
        in one transaction or a series of related transactions of all or
        substantially all of the Company's assets other than a transfer of the
        Company's assets to a majority-owned subsidiary corporation (as defined
        in Section 8.3) of the Company.

        "DISABILITY," unless otherwise defined by the Plan Administrator, means
a mental or physical impairment of the Participant that is expected to result in
death or that has lasted or is expected to last for a continuous period of 12
months or more and that causes the Participant to be unable, in the opinion of
the Company, to perform his or her duties for the Company and to be engaged in
any substantial gainful activity.

        "EFFECTIVE DATE" means the date on which the Plan is adopted by the
Board, so long as it is approved by the Company's shareholders at any time
within 12 months of such adoption.

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

        "FAIR MARKET VALUE" shall be as established in good faith by the Plan
Administrator or (a) if the Common Stock is listed on the Nasdaq National
Market, the average of the high and low per share sales prices for the Common
Stock as reported by the Nasdaq National Market for a single trading day or (b)
if the Common Stock is



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listed on the New York Stock Exchange or the American Stock Exchange, the
average of the high and low per share sales prices for the Common Stock as such
price is officially quoted in the composite tape of transactions on such
exchange for a single trading day. If there is no such reported price for the
Common Stock for the date in question, then such price on the last preceding
date for which such price exists shall be determinative of Fair Market Value.

        "GRANT DATE" means the date on which the Plan Administrator completes
the corporate action relating to the grant of an Award and all conditions
precedent to the grant have been satisfied, provided that conditions to the
exercisability or vesting of Awards shall not defer the Grant Date.

        "INCENTIVE STOCK OPTION" means an Option to purchase Common Stock
granted under Section 7 with the intention that it qualify as an "incentive
stock option" as that term is defined in Section 422 of the Code.

        "NONQUALIFIED STOCK OPTION" means an Option to purchase Common Stock
granted under Section 7 other than an Incentive Stock Option.

        "OPTION" means the right to purchase Common Stock granted under Section
7.

        "PARENT" means, except as otherwise defined in Section 8.3 in connection
with Incentive Stock Options, any entity, whether now or hereafter existing,
that directly or indirectly controls the Company.

        "PARTICIPANT" means: (a) the person to whom an Award is granted; (b) for
a Participant who has died, the personal representative of the Participant's
estate, the person(s) to whom the Participant's rights under the Award have
passed by will or by the applicable laws of descent and distribution, or the
beneficiary designated in accordance with Section 11; or (c) the person(s) to
whom an Award has been transferred in accordance with Section 11.

        "PLAN ADMINISTRATOR" means the Board or any committee or committees of
the Board to administer the Plan under Section 3.1.

        "RELATED CORPORATION" means any Parent or Subsidiary of the Company.

        "RETIREMENT" means retirement as of the individual's normal retirement
date under the Company's 401(k) Plan or other similar successor plan applicable
to salaried employees, unless otherwise defined by the Plan Administrator from
time to time for purposes of the Plan.

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

        "STOCK AWARD" means shares of Common Stock or units denominated in
Common Stock granted under Section 9, the rights of ownership of which may be
subject to restrictions prescribed by the Plan Administrator.

        "SUBSIDIARY," except as provided in Section 8.3 in connection with
Incentive Stock Options, means any entity that is directly or indirectly
controlled by the Company.

        "SUCCESSOR CORPORATION" has the meaning set forth in Section 12.3.

        SECTION 3. ADMINISTRATION

3.1     PLAN ADMINISTRATOR

        The Plan shall be administered by the Board and/or a committee or
committees (which term includes subcommittees) appointed by, and consisting of
two or more members of, the Board (a "Plan Administrator"). If and so long as
the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act,
the Board shall consider in selecting the members of any committee acting as
Plan Administrator, with respect to any persons subject or likely to become
subject to Section 16 of the Exchange Act, the provisions regarding (a) "outside

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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 consisting of two
or more members of the Board, 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.

3.2     ADMINISTRATION AND INTERPRETATION BY THE PLAN ADMINISTRATOR

        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.

                      SECTION 4. STOCK SUBJECT TO THE PLAN

4.1     AUTHORIZED NUMBER OF SHARES

        Subject to adjustment from time to time as provided in Section 12.1, the
number of shares of Common Stock that shall be available for issuance under the
Plan shall be:

        (a) 4,228,950 shares plus;

        (b) an annual increase to be added as of the first day of the Company's
fiscal year beginning in 2001 equal to the lesser of (i) 1,000,000 shares, (ii)
5% of the adjusted average common shares outstanding of the Company used to
calculate fully diluted earnings per share as reported in the Annual Report to
shareholders for the preceding year, and (iii) a lesser amount determined by the
Plan Administrator; provided, that any shares from any such increases in
previous years that are not actually issued, shall be added to the aggregate
number of shares for issuance under the Plan; plus

        (c) any shares subject to outstanding awards under the Company's 1997
Stock Incentive Compensation Plan (the "Prior Plan") on the Effective Date that
cease to be subject to such awards (other than by reason of exercise or payment
of the awards to the extent they are exercised for or settled in vested and
nonforfeitable shares), which shares shall no longer be available for grant and
issuance under the Prior Plan, but shall be available for issuance under this
Plan.

         Shares issued under the Plan shall be drawn from authorized and
unissued shares or shares now held or subsequently acquired by the Company.

4.2     LIMITATIONS

        (a) Subject to adjustment from time to time as provided in Section 12.1,
not more than an aggregate of 1,400,000 shares shall be available for issuance
pursuant to grants of Stock Awards under the Plan.

        (b) Subject to adjustment from time to time as provided in Section 12.1,
not more than 1,000,000 shares of Common Stock may be made subject to Awards
under the Plan to any individual in the aggregate in any one fiscal year of the
Company, except that the Company may make additional one-time grants of up to
2,000,000 shares to newly hired individuals, such limitation to be applied in a
manner consistent with the


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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.

4.3     REUSE OF SHARES

        Any shares of Common Stock that have been made subject to an Award 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 vested and
nonforfeitable shares) shall again be available for issuance in connection with
future grants of Awards under the Plan; provided, however, that for purposes of
Section 4.2, any such shares shall be counted in accordance with the
requirements of Section 162(m) of the Code.

                             SECTION 5. ELIGIBILITY

        Awards may be granted under the Plan to those officers, directors and
employees of the Company and its Related Corporations as the Plan Administrator
from time to time selects. Awards may also be made to consultants, agents,
advisors and independent contractors who provide services to the Company and its
Related Corporations; provided such Participants render bona fide services that
are not in connection with the offer and sale of the Company's securities in a
capital-raising transaction and do not directly or indirectly promote or
maintain a market for the Company's securities.

                                SECTION 6. AWARDS

6.1     FORM AND GRANT OF AWARDS

        The Plan Administrator shall have the authority, in its sole discretion,
to determine the type or types of Awards to be made under the Plan. Such Awards
may include, but are not limited to, Incentive Stock Options, Nonqualified Stock
Options and Stock Awards. Awards may be granted singly or in combination.

6.2     SETTLEMENT OF AWARDS

        The Company may settle Awards through the delivery of shares of Common
Stock, cash payments, the granting of replacement Awards, or any combination
thereof as the Plan Administrator shall determine. Any Award settlement,
including payment deferrals, may be subject to such conditions, restrictions and
contingencies as the Plan Administrator shall determine. The Plan Administrator
may permit or require the deferral of any Award payment, subject to such rules
and procedures as it may establish, which may include provisions for the payment
or crediting of interest, or dividend equivalents, including converting such
credits into deferred stock equivalents. The Plan Administrator may at any time
offer to buy out for a payment in cash or Common Stock, an Option previously
granted based on such terms and conditions as the Plan Administrator shall
establish and communicate to the Participant at the time such offer is made.

6.3     ACQUIRED COMPANY AWARDS

        Notwithstanding anything in the Plan to the contrary, the Plan
Administrator may grant Awards under the Plan in substitution for awards 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 Award is
substituted, or the old award 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 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, except as may be required for
compliance with Rule 16b-3 under the Exchange Act, and the persons holding such
Awards shall be deemed to be Participants.




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                          SECTION 7. AWARDS OF OPTIONS

7.1     GRANT OF OPTIONS

        The Plan Administrator is authorized under the Plan, in its sole
discretion, to issue Options as Incentive Stock Options or as Nonqualified Stock
Options, which shall be appropriately designated.

7.2     OPTION EXERCISE PRICE

        The exercise price for shares purchased under an Option shall be as
determined by the Plan Administrator, but shall not be less than 100% of the
Fair Market Value of the Common Stock on the Grant Date with respect to
Incentive Stock Options and not less than 85% of the Fair Market Value of the
Common Stock on the Grant Date with respect to Nonqualified Stock Options. For
Incentive Stock Options granted to a more than 10% shareholder, the option
exercise price shall be as specified in Section 8.2.

7.3     TERM OF OPTIONS

        The term of each Option shall be as established by the Plan
Administrator or, if not so established, shall be 10 years from the Grant Date.
For Incentive Stock Options granted to a more than 10% shareholder, the maximum
Option term shall be as specified in Section 8.2.

7.4     EXERCISE OF OPTIONS

        The Plan Administrator shall establish and set forth in each instrument
that evidences an Option the time at which, or the installments in which, the
Option shall vest and become exercisable, which provisions may be waived or
modified by the Plan Administrator at any time. If not so established in the
instrument evidencing the Option, the Option shall vest and become exercisable
according to the following schedule, which may be waived or modified by the Plan
Administrator at any time:




PERIOD OF PARTICIPANT'S CONTINUOUS EMPLOYMENT
OR SERVICE WITH THE COMPANY OR ITS                  PERCENT OF TOTAL OPTION THAT
RELATED CORPORATIONS FROM THE OPTION GRANT DATE     IS VESTED AND EXERCISABLE
-----------------------------------------------     ----------------------------

After 1 year                                        25%

Each additional one-month period of continuous      An additional 1/48
service completed thereafter

After 4 years                                       100%


        To the extent that the right to purchase shares has accrued thereunder,
an Option may be exercised from time to time by delivery to the Company of a
written stock option exercise agreement or notice, in a form and in accordance
with procedures established by the Plan Administrator, setting forth the number
of shares with respect to which the Option is being exercised, the restrictions
imposed on the shares purchased under such exercise agreement, if any, and such
representations and agreements as may be required by the Company, accompanied by
payment in full as described in Section 7.5. An Option may not be exercised as
to less than a reasonable number of shares at any one time, as determined by the
Plan Administrator.

7.5     PAYMENT OF EXERCISE PRICE

        The exercise price for shares purchased under an Option shall be paid in
full to the Company by delivery of consideration equal to the product of the
Option exercise price and the number of shares purchased. Such consideration
must be paid in cash or by check or, unless the Plan Administrator in its sole
discretion determines otherwise, either at the time the Option is granted or at
any time before it is exercised, any combination of:


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        (a) cash or check; or

        (b) tendering (either actually or, if and so long as the Common Stock is
registered under Section 12(b) or 12(g) of the Exchange Act, by attestation)
shares of Common Stock already owned by the Participant for at least six months
(or any shorter period necessary to avoid a charge to the Company's earnings for
financial reporting purposes) having a Fair Market Value on the day prior to the
exercise date equal to the aggregate Option exercise price;

        (c) if and so long as the Common Stock is registered under Section 12(b)
or 12(g) of the Exchange Act, delivery of a properly executed exercise notice,
together with irrevocable instructions, to (i) a brokerage firm designated by
the Company to deliver promptly to the Company the aggregate amount of sale or
loan proceeds to pay the Option exercise price and any withholding tax
obligations that may arise in connection with the exercise and (ii) the Company
to deliver the certificates for such purchased shares directly to such brokerage
firm, all in accordance with the regulations of the Federal Reserve Board; or

        (d) such other consideration as the Plan Administrator may permit.

        In addition, to assist a Participant (including a Participant who is an
officer or a director of the Company) in acquiring shares of Common Stock
pursuant to an Award granted under the Plan, the Plan Administrator, in its sole
discretion, may authorize, either at the Grant Date or at any time before the
acquisition of Common Stock pursuant to the Award, (a) the payment by a
Participant of a full-recourse promissory note, (b) the payment by the
Participant of the purchase price, if any, of the Common Stock in installments,
or (c) the guarantee by the Company of a full-recourse loan obtained by the
Participant from a third party. Subject to the foregoing, the Plan Administrator
shall in its sole discretion specify the terms of any loans, installment
payments or loan guarantees, including the interest rate and terms of and
security for repayment.

7.6     POST-TERMINATION EXERCISES

        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 a Participant ceases to be
employed by, or to provide services to, the Company or its Related Corporations,
which provisions may be waived or modified by the Plan Administrator at any
time. If not so established in the instrument evidencing the Option, the Option
shall be exercisable according to the following terms and conditions, which may
be waived or modified by the Plan Administrator at any time:

        (a) Any portion of an Option that is not vested and exercisable on the
date of termination of the Participant's employment or service relationship (the
"Termination Date") shall expire on such date, unless the Plan Administrator
determines otherwise.

        (b) Any portion of an Option that is vested and exercisable on the
Termination Date shall expire upon the earliest to occur of:

                (i) the last day of the Option term;

                (ii) if the Participant's Termination Date occurs for reasons
other than Cause, death, Disability or Retirement, the three-month anniversary
of such Termination Date;

                (iii) if the Participant's Termination Date occurs by reason of
Retirement, the one-year anniversary of such Termination Date; or

                (iv) if the Participant's Termination Date occurs by reason of
Disability or death, the one-year anniversary of such Termination Date.

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        Notwithstanding the foregoing, if the Participant dies after the
Termination Date while the Option is otherwise exercisable, the portion of the
Option that is vested and exercisable on such Termination Date shall expire upon
the earlier to occur of (y) the last day of the Option term and (z) the first
anniversary of the date of death, unless the Plan Administrator determines
otherwise.

        Also notwithstanding the foregoing, in case of termination of the
Participant's employment or service relationship for Cause, the Option shall
automatically expire upon first notification to the Participant of such
termination, unless the Plan Administrator determines otherwise. If a
Participant's employment or service relationship with the Company is suspended
pending an investigation of whether the Participant shall be terminated for
Cause, all the Participant's rights under any Option likewise shall be suspended
during the period of investigation.

        A Participant's transfer of employment or service relationship between
or among the Company and its Related Corporations, or a change in status from or
to an employee to or from a consultant, shall not be considered a termination of
employment or service relationship for purposes of this Section 7. The effect of
a Company-approved leave of absence on the terms and conditions of an Option
shall be determined by the Plan Administrator, in its sole discretion.

                  SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS

        To the extent required by Section 422 of the Code, Incentive Stock
Options shall be subject to the following additional terms and conditions:

8.1     DOLLAR LIMITATION

        To the extent the aggregate Fair Market Value (determined as of the
Grant Date) of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time during any calendar year (under the Plan and all
other stock option plans of the Company) exceeds $100,000, such portion in
excess of $100,000 shall be treated as a Nonqualified Stock Option. In the event
the Participant holds two or more such Options that become exercisable for the
first time in the same calendar year, such limitation shall be applied on the
basis of the order in which such Options are granted.

8.2     10% SHAREHOLDERS

        If an individual owns more than 10% of the total voting power of all
classes of the Company's stock, then the exercise price per share of an
Incentive Stock Option shall not be less than 110% of the Fair Market Value of
the Common Stock on the Grant Date and the Option term shall not exceed five
years. The determination of 10% ownership shall be made in accordance with
Section 422 of the Code.

8.3     ELIGIBLE EMPLOYEES

        Individuals who are not employees of the Company or one of its parent
corporations or subsidiary corporations may not be granted Incentive Stock
Options. For purposes of this Section 8.3, "parent corporation" and "subsidiary
corporation" shall have the meanings attributed to those terms for purposes of
Section 422 of the Code.

8.4     TERM

        Subject to Section 8.2, the term of an Incentive Stock Option shall not
exceed 10 years.

8.5     EXERCISABILITY

An Option designated as an Incentive Stock Option shall cease to qualify for
favorable tax treatment as an Incentive Stock Option to the extent it is
exercised (if permitted by the terms of the Option) (a) more than three

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months after the Termination Date for reasons other than death or disability,
(b) more than one year after the Termination Date by reason of Disability or (c)
after the Participant has been on leave of absence for more than 90 days, unless
the Participant's reemployment rights are guaranteed by statute or contract.

        For purposes of this Section 8.5, Disability shall mean "permanent and
total disability" as that term is defined for purposes of Section 422 of the
Code.

8.6     TAXATION OF INCENTIVE STOCK OPTIONS

        In order to obtain certain tax benefits afforded to Incentive Stock
Options under Section 422 of the Code, the Participant must hold the shares
issued upon the exercise of an Incentive Stock Option for two years after the
Grant Date and one year from the date of exercise. A Participant may be subject
to the alternative minimum tax at the time of exercise of an Incentive Stock
Option. The Participant shall give the Company prompt notice of any disposition
of shares acquired by the exercise of an Incentive Stock Option prior to the
expiration of such holding periods.

8.7     PROMISSORY NOTES

        The amount of any promissory note delivered pursuant to Section 7.5 in
connection with an Incentive Stock 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 to the
imputed interest rules) for federal income tax purposes.

                             SECTION 9. STOCK AWARDS

9.1     GRANT OF STOCK AWARDS

        The Plan Administrator is authorized to make Awards of Common Stock or
Awards denominated in units 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 profits,
profit growth, profit-related return ratios, cash flow or total shareholder
return, 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. 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 the Stock Award shall occur by reason of termination of the
Participant's employment or service relationship.

9.2     ISSUANCE OF SHARES

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

9.3     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 Stock Award under such circumstances and
subject to such terms and conditions as the Plan Administrator shall deem
appropriate; provided, however, that the Plan Administrator may not adjust
performance goals for any Stock Award intended to be exempt under Section 162(m)
of the Code for the year in which the Stock Award is settled in such a manner as
would increase the amount of compensation otherwise payable to a Participant.

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                             SECTION 10. WITHHOLDING

        The Company may require the Participant to pay to the Company the amount
of any withholding taxes that the Company is required to withhold with respect
to the grant, vesting or exercise of any Award. Subject to the Plan and
applicable law, the Plan Administrator may, in its sole discretion, permit the
Participant to satisfy withholding obligations (up to the minimum required
federal tax withholding rate), 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. The Company shall have the right to withhold from
any Award or any shares of Common Stock issuable pursuant to an Award or from
any cash amounts otherwise due or to become due from the Company to the
Participant an amount equal to such taxes. The Company may also deduct from any
Award any other amounts due from the Participant to the Company or a Related
Corporation.

                            SECTION 11. ASSIGNABILITY

        Awards granted under this Plan and any interest therein may not be
assigned, pledged or transferred by the Participant and may not be made subject
to attachment or similar proceedings otherwise than by will or by the applicable
laws of descent and distribution, and, during the Participant's lifetime, such
Awards may be exercised only by the Participant. Notwithstanding the foregoing,
and to the extent permitted by Section 422 of the Code, the Plan Administrator,
in its sole discretion, may permit such assignment, transfer and exercisability
and may permit a Participant to designate a beneficiary who may exercise the
Award or receive compensation under the Award after the Participant's death;
provided, however, that any Award so assigned or transferred shall be subject to
all the same terms and conditions contained in the instrument evidencing the
Award.

                             SECTION 12. ADJUSTMENTS

12.1    ADJUSTMENT OF SHARES

        In the event that, at any time or from time to time, a stock dividend,
stock split, spin-off, combination or exchange of shares, recapitalization,
merger, consolidation, distribution to shareholders other than a normal cash
dividend, or other change in the Company's corporate or capital structure
results in (a) the outstanding shares, or any securities exchanged therefor or
received in their place, being exchanged for a different number or class of
securities of the Company or of any other corporation or (b) new, different or
additional securities of the Company being received by the holders of shares of
Common Stock of the Company, then the Plan Administrator shall make proportional
adjustments in (i) the maximum number and kind of securities subject to the Plan
as set forth in Section 4.1 and the maximum number and kind of securities that
may be made subject to Stock Awards and to Awards to any individual as set forth
in Section 4.2, and (ii) the number and kind of securities that are subject to
any outstanding Award and the per share price of such securities, without any
change in the aggregate price to be paid therefor. The determination by the Plan
Administrator as to the terms of any of the foregoing adjustments shall be
conclusive and binding. Notwithstanding the foregoing, a dissolution or
liquidation of the Company or a Corporate Transaction shall not be governed by
this Section 12.1 but shall be governed by Sections 12.2 and 12.3, respectively.

12.2    DISSOLUTION OR LIQUIDATION

        In the event of the proposed dissolution or liquidation of the Company,
the Plan Administrator shall notify each Participant as soon as practicable
prior to the effective date of such proposed transaction. The Plan Administrator
in its discretion may permit a Participant to exercise an Option until ten days
prior to such transaction with respect to all vested and exercisable shares of
Common Stock covered thereby and with respect to such number of unvested shares
as the Plan Administrator shall determine. In addition, the Plan Administrator
may provide that any forfeiture provision or Company repurchase option
applicable to any Award shall lapse as to such number of shares as the Plan
Administrator shall determine, contingent upon the occurrence of the proposed
dissolution or liquidation at the time and in the manner contemplated. To the
extent an Option has not been previously exercised, the Option shall terminate
automatically immediately prior to the consummation of the proposed action. To
the

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extent a forfeiture provision applicable to a Stock Award has not been waived by
the Plan Administrator, the Stock Award shall be forfeited automatically
immediately prior to the consummation of the proposed action.

12.3    CORPORATE TRANSACTION

        In the event of a Corporate Transaction, except as otherwise provided in
the instrument evidencing the Award, each outstanding Option shall be assumed or
an equivalent option or right substituted by the successor corporation or its
parent corporation (the "Successor Corporation"). In the event that the
Successor Corporation refuses to assume or substitute for the Option, the Option
shall terminate, but the Participant shall have the right immediately prior to
the Corporate Transaction to exercise the Participant's Option to the extent the
vesting requirements applicable to the Option have been satisfied.

12.4    FURTHER ADJUSTMENT OF AWARDS

        Subject to Sections 12.2 and 12.3, the Plan Administrator shall have the
discretion, exercisable at any time before a sale, merger, consolidation,
reorganization, liquidation or change in control of the Company, as defined by
the Plan Administrator, to take such further action as it determines to be
necessary or advisable, and fair and equitable to Participants, with respect to
Awards. Such authorized action may include (but shall not be limited to)
establishing, amending or waiving the type, terms, conditions or duration of, or
restrictions on, Awards so as to provide for earlier, later, extended or
additional time for exercise, lifting restrictions and other modifications, and
the Plan Administrator may take such actions with respect to all Participants,
to certain categories of Participants or only to individual Participants. The
Plan Administrator may take such action before or after granting Awards to which
the action relates and before or after any public announcement with respect to
such sale, merger, consolidation, reorganization, liquidation or change in
control that is the reason for such action.

12.5    LIMITATIONS

        The grant of Awards shall in no way affect the Company's right to
adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.

12.6    FRACTIONAL SHARES

        In the event of any adjustment in the number of shares covered by any
Award, each such Award shall cover only the number of full shares resulting from
such adjustment.

                           SECTION 13. MARKET STANDOFF

        In connection with any underwritten public offering by the Company of
its equity securities pursuant to an effective registration statement filed
under the Securities Act, including the Company's initial public offering, a
person shall not sell, make any short sale of, loan, hypothecate, pledge, grant
any option for the purchase of, or otherwise dispose or transfer for value or
otherwise agree to engage in any of the foregoing transactions with respect to
any shares issued pursuant to an Award granted under the Plan without the prior
written consent of the Company or its underwriters. Such limitations shall be in
effect for such period of time as may be requested by the Company or such
underwriters and agreed to by the Company's officers and directors with respect
to their shares; provided, however, that in no event shall such period exceed
180 days. The limitations of this paragraph shall in all events terminate two
years after the effective date of the Company's initial public offering. Holders
of shares issued pursuant to an Award granted under the Plan shall be subject to
the market standoff provisions of this paragraph only if the officers and
directors of the Company are also subject to similar arrangements.

        In the event of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
Company's outstanding Common Stock effected as a class without the Company's
receipt of consideration, then any new, substituted or additional securities
distributed with respect to the purchased

                                      -10-


<PAGE>


   11

shares shall be immediately subject to the provisions of this Section 13, to the
same extent the purchased shares are at such time covered by such provisions.

        In order to enforce the limitations of this Section 13, the Company may
impose stop-transfer instructions with respect to the purchased shares until the
end of the applicable standoff period.

                  SECTION 14. AMENDMENT AND TERMINATION OF PLAN

14.1    AMENDMENT OF PLAN

        The Plan may be amended only by the Board in such respects as it shall
deem advisable; provided, however, to the extent required for compliance with
Section 422 of the Code or any applicable law or regulation, shareholder
approval shall be required for any amendment that would (a) increase the total
number of shares available for issuance under the Plan, (b) modify the class of
persons eligible to receive Options or (c) otherwise require shareholder
approval under any applicable law or regulation. Any amendment made to this Plan
that would constitute a "modification" to Incentive Stock Options outstanding on
the date of such amendment shall not, without the consent of the Participant, be
applicable to such outstanding Incentive Stock Options but shall have
prospective effect only.

14.2    TERMINATION OF PLAN

        The Board may suspend or terminate the Plan at any time. Unless sooner
terminated as provided herein, the Plan shall terminate ten years after the
earlier of the Plan's adoption by the Board and approval by the shareholders.

14.3    CONSENT OF PARTICIPANT

        The amendment or termination of the Plan or the amendment of an
outstanding Award shall not, without the Participant's consent, impair or
diminish any rights or obligations under any Award theretofore granted to the
Participant under the Plan; provided, however, that adjustments made pursuant to
Section 12 shall not be subject to these restrictions. Any change or adjustment
to an outstanding Incentive Stock Option shall not, without the consent of the
Participant, be made in a manner so as to constitute a "modification" that would
cause such Incentive Stock Option to fail to continue to qualify as an Incentive
Stock Option.

                               SECTION 15. GENERAL

15.1    EVIDENCE OF AWARDS

        Awards granted under the Plan shall be evidenced by a written instrument
that shall contain such terms, conditions, limitations and restrictions as the
Plan Administrator shall deem advisable and that are not inconsistent with the
Plan.

15.2    NO INDIVIDUAL RIGHTS

        Nothing in the Plan or any Award granted under the Plan shall be deemed
to constitute an employment contract or confer or be deemed to confer on any
Participant any right to continue in the employ of, or to continue any other
relationship with, the Company or any Related Corporation or limit in any way
the right of the Company or any Related Corporation of the Company to terminate
a Participant's employment or other relationship at any time, with or without
Cause.

15.3    REGISTRATION

Notwithstanding any other provision of the Plan, the Company shall have no
obligation to issue or deliver any shares of Common Stock under the Plan or make
any other distribution of benefits under the Plan unless such

                                      -11-


<PAGE>


   12

issuance, delivery or distribution would comply with all applicable laws
(including, without limitation, the requirements of the Securities Act), and the
applicable requirements of any securities exchange or similar entity.

        The Company shall be under no obligation to any Participant to register
for offering or resale or to qualify for exemption under the Securities Act, or
to register or qualify under state securities laws, any shares of Common Stock,
security or interest in a security paid or issued under, or created by, the
Plan, or to continue in effect any such registrations or qualifications if made.
The Company may issue certificates for shares with such legends and subject to
such restrictions on transfer and stop-transfer instructions as counsel for the
Company deems necessary or desirable for compliance by the Company with federal
and state securities laws.

        To the extent that the Plan or any instrument evidencing an Award
provides for issuance of stock certificates to reflect the issuance of shares of
Common Stock, the issuance may be effected on a non-certificated basis, to the
extent not prohibited by applicable law or the applicable rules of any stock
exchange.

15.4    NO RIGHTS AS A SHAREHOLDER

        No Option or Stock Award denominated in units shall entitle the
Participant to any cash dividend, voting or other right of a shareholder unless
and until the date of issuance under the Plan of the shares that are the subject
of such Award.

15.5    COMPLIANCE WITH LAWS AND REGULATIONS

        Notwithstanding anything in the Plan to the contrary, the Plan
Administrator, in its sole discretion, may bifurcate the Plan so as to restrict,
limit or condition the use of any provision of the Plan to Participants who are
officers or directors subject to Section 16 of the Exchange Act without so
restricting, limiting or conditioning the Plan with respect to other
Participants. Additionally, in interpreting and applying the provisions of the
Plan, any Option granted as an Incentive Stock Option pursuant to the Plan
shall, to the extent permitted by law, be construed as an "incentive stock
option" within the meaning of Section 422 of the Code.

15.6    PARTICIPANTS IN FOREIGN COUNTRIES

        The Plan Administrator shall have the authority to adopt such
modifications, procedures, and subplans as may be necessary or desirable to
comply with provisions of the laws of foreign countries in which the Company or
its Related Corporations may operate to assure the viability of the benefits
from Awards granted to Participants employed in such countries and to meet the
objectives of the Plan.

15.7    NO TRUST OR FUND

        The Plan is intended to constitute an "unfunded" plan. Nothing contained
herein shall require the Company to segregate any monies or other property, or
shares of Common Stock, or to create any trusts, or to make any special deposits
for any immediate or deferred amounts payable to any Participant, and no
Participant shall have any rights that are greater than those of a general
unsecured creditor of the Company.

15.8    SEVERABILITY

        If any provision of the Plan or any Award is determined to be invalid,
illegal or unenforceable in any jurisdiction, or as to any person, or would
disqualify the Plan or any Award under any law deemed applicable by the Plan
Administrator, such provision shall be construed or deemed amended to conform to
applicable laws, or, if it cannot be so construed or deemed amended without, in
the Plan Administrator's determination, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such jurisdiction,
person or Award, and the remainder of the Plan and any such Award shall remain
in full force and effect.

15.9    CHOICE OF LAW

                                      -12-


<PAGE>


   13


        The Plan and all determinations made and actions taken pursuant hereto,
to the extent not otherwise governed by the laws of the United States, shall be
governed by the laws of the State of Oregon without giving effect to principles
of conflicts of laws.

                           SECTION 16. EFFECTIVE DATE

        The Plan's Effective Date is the date on which it is adopted by the
Board, so long as it is approved by the Company's shareholders at any time
within 12 months of such adoption.


                                      -13-


<PAGE>


   14



                    PLAN ADOPTION AND AMENDMENTS/ADJUSTMENTS
                                  SUMMARY PAGE


<TABLE>

                                                  SECTION/EFFECT OF       DATE OF SHAREHOLDER
DATE OF BOARD ACTION           ACTION             AMENDMENT               APPROVAL
--------------------           ------             -----------------       -------------------
<S>                       <C>                     <C>                    <C>

December 16, 1998         Initial Plan Adoption                           December 16, 1998

February 25, 2000         Amendment and           All share numbers in
                          Restatement to (1)      plan reflect all
                          increase size of        stock splits
                          pool; (2) add           effective on or prior
                          Section 162(m)          to February 29, 2000
                          limitations;
                          (3) delete CA Appendix

</TABLE>

<PAGE>
                             WEBTRENDS CORPORATION

                     1998 STOCK INCENTIVE COMPENSATION PLAN

                    INCENTIVE STOCK OPTION LETTER AGREEMENT

TO:     [[First_Name]] [[Last_Name]]
We are pleased to inform you that you have been selected by the Company to
receive a stock option (the "Option") to purchase shares (the "Option Shares")
of the Company's Common Stock under the Company's 1998 Stock Incentive
Compensation Plan (the "Plan"). If you wish to accept the Option, you must sign
and date the "Acceptance and Acknowledgement" and return this agreement within
10 days. If you do not do so, the Option will lapse.

The terms of the Option are as set forth in this Agreement and in the Plan, a
copy of which is attached. The Plan is incorporated by reference into this
Agreement, which means that this Agreement is limited by and subject to the
express terms and provisions of the Plan. Capitalized terms that are not
defined in this Agreement have the meanings given to them in the Plan.

The most important terms of the Option are summarized as follows:

1.   Grant Date:
2.   Number of Shares:  [[shares]]
3.   Exercise Price:  $
4.   Expiration Date:
5.   Vesting Base Date: [[VestingBaseDate]]
6.   Type of Option:  Incentive stock option ("ISO")
7.   Vesting and Exercisability:  The Option will vest and become
     exercisable according to the following schedule:

     Date on and After Which Option Is          Portion of Total Option That Is
           Vested and Exercisable                     Vested and Exercisable
     ---------------------------------          -------------------------------

    [[FirstVest]]                                             25%

    Each additional one-month period of                An additional 1/48
    continuous service completed thereafter

   [[LastVest]]                                              100%

8.   Termination of Option: The unvested portion of the Option will terminate
automatically and without further notice immediately upon termination
(voluntary or involuntary) of your employment or service relationship with the
Company. The vested portion of the Option will terminate automatically and
without further notice on the earliest of the dates set forth below. It is your
responsibility to be aware of the date your Option terminates.

     (a) three months after termination of your employment or service
relationship with the Company for any reason other than Cause, Retirement,
Disability or death;

     (b) one year after termination of your employment or service relationship
with the Company by reason of Retirement, Disability or death; or


<PAGE>

     (c) the Expiration Date;

except, that if the Company terminates your services for Cause you will forfeit
the unexercised portion of the Option, including vested and unvested shares, on
the date the Company notifies you of your termination, unless the Plan
Administrator determines otherwise. If you die while the Option is exercisable,
the Option may be exercised until one year after the date of death or the
Expiration Date, whichever is earlier. The Option must be exercised within
three months after termination of employment for reasons other than death or
Disability and one year after termination of employment due to Disability to
qualify for the beneficial tax treatment afforded ISOs.

9.  ISO Qualification: The Option is intended to qualify as an ISO under federal
income tax law, but the Company does not represent or guarantee that the Option
qualifies as such. If the aggregate Grant Date fair market value of the shares
with respect to which the Option first becomes exercisable during any calendar
year (under the Option and all other ISOs you hold) exceeds $100,000, the
excess portion will be treated as a nonqualified stock option, unless the
Internal Revenue Service changes the rules and regulations governing the
$100,000 limit for ISOs. A portion of the Option may be treated as a
nonqualified stock option if certain events cause exercisability of the Option
to accelerate.

10.  Method of Exercise: You may exercise the Option by giving written notice to
the Company, in form and substance satisfactory to the Company, which will
state the election to exercise the Option and the number of shares of Common
Stock for which you are exercising the Option. The written notice must be
accompanied by full payment of the exercise price for the number of shares of
Common Stock you are purchasing.

11.  Form of Payment: You may pay the Option exercise price, in whole or in
part, in cash, by check or, unless the Plan Administrator determines otherwise,
by (a) tendering (either actually or by attestation) shares of Common Stock
held by you for a period of at least six months having a fair market value on
the day prior to the date of exercise equal to the exercise price (you should
consult your tax advisor before exercising the Option with stock you received
upon the exercise of an ISO); (b) delivery of a properly executed exercise
notice together with irrevocable instructions to a broker to promptly deliver
to the Company the amount of sale or loan proceeds necessary to pay the
exercise price; or (c) such other consideration as the Plan Administrator may
permit.

12.  Withholding Taxes: As a condition to the exercise of any portion of the
Option that is treated as a nonqualified stock option, you must make such
arrangements as the Company may require for the satisfaction of any federal,
state or local withholding tax obligations that may arise in connection with
such exercise. The Company has the right to retain without notice sufficient
shares of stock to satisfy the withholding obligation. Unless the Plan
Administrator determines otherwise, you may satisfy the withholding obligation
by electing to have the Company withhold from the shares to be issued upon
exercise that number of shares having a fair market value equal to the amount
required to be withheld. The Company may also deduct from the shares to be
issued upon exercise of the Option any other amounts due from you to the
Company.

13.  Limited Transferability: During your lifetime only you can exercise the
Option. The Option is not transferable except by will or by the applicable
laws of descent and distribution. The Plan provides for exercise of the Option
by the personal representative of your estate or the beneficiary thereof
following your death.

14.  Notice of Disqualifying Disposition: To obtain certain tax benefits
afforded to ISOs you must hold the shares issued upon the exercise of the
Option for two years after the date of grant of the Option and one year from
the date of exercise. You may be subject to the alternative minimum tax at the
time of exercise. You should obtain tax advice when exercising the Option and
prior to the disposition of the Option Shares. By accepting the Option, you
agree to promptly notify the Company's Chief Financial Officer if you dispose
of any of the Option Shares within one year from the date you exercise all or
part of the Option or within two years of the Grant Date.

15.  Registration: At the present time, the Company intends to file and maintain
a registration statement with respect to the Option Shares. The Company intends
to maintain this registration but has no obligation to do so. In the event that
such registration is no longer effective, you will not be able to exercise the
Option unless exemptions from registration under federal and state securities
laws are available; such exemptions from

<PAGE>

registration are very limited and might be unavailable. By accepting the
Option, you hereby acknowledge that you have read and understand Section 15.3
of the Plan.

16.  Binding Effect:  This Agreement shall inure to the benefit of the
successors and assigns of the Company and be binding upon you and your heirs,
executors, administrators, successors and assigns.


<PAGE>


Please execute the following Acceptance and Acknowledgment and return it to the
undersigned.

                                        Very truly yours,

                                        WEBTRENDS CORPORATION



                                        By
                                           -------------------------------





<PAGE>



                         ACCEPTANCE AND ACKNOWLEDGMENT

I, a resident of the state of ---------------, accept the incentive stock option
described in this Agreement and in the Plan, and acknowledge receipt of a copy
of this Agreement and a copy of the Plan. I have read and understand the Plan.

Dated:
        --------------------------


---------------------------------      ---------------------------------
Taxpayer I.D. Number (S.S.#)             [[First_Name]] [[Last_Name]]

                                        Address
                                                ------------------------

                                       ---------------------------------

                                       ---------------------------------