8-K

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 23, 2000

INFOCUS CORPORATION
(Exact name or registrant as specified in its charter)
Oregon	000-18908	93-0932102
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
27700B S.W. Parkway Avenue, Wilsonville, Oregon 97070
(Address of principal executive offices and Zip Code)
(503) 685-8888
Registrant's telephone number, including area code:
In Focus Systems, Inc.
(Former name or former address, if changed since last report)

INFOCUS CORPORATION
FORM 8-K

Item 1.  Not Applicable

Item 2.  Acquisition or Disposition of Assets.

    On June 23, 2000, InFocus Corporation ("InFocus"), formerly In Focus Systems, Inc., completed a share exchange with the holders of 95.79% of the issued and outstanding ordinary shares of Proxima ASA, a corporation organized under the laws of the Kingdom of Norway ("Proxima"). InFocus conducted and completed the share exchange pursuant to the terms and conditions of a Business Combination Agreement, dated as of March 5, 2000, between InFocus and Proxima (the "Combination Agreement"). The share exchange is being accounted for as a pooling of interests.

    As provided in the Combination Agreement, InFocus initiated the share exchange by making a public tender offer to all of Proxima's shareholders, offering to exchange 0.3615 shares of InFocus common stock for each issued and outstanding Proxima ordinary share. The holders of 40,259,121 Proxima ordinary shares, representing approximately 95.79% of Proxima's total issued and outstanding shares, accepted the tender offer. InFocus issued 14,554,846 shares of InFocus common stock in exchange for the tendered shares. InFocus has also assumed all of Proxima's outstanding stock options. If fully exercised, InFocus would issue an additional 536,674 shares of InFocus common stock. Based on the market price of InFocus common stock at the close of trading on June 23, 2000, the total value of the InFocus common stock issued in the share exchange is approximately $450,860,000.

    As required by Norwegian law, InFocus must initiate a "mandatory offer" to purchase, for cash, all of the 1,762,060 Proxima ordinary shares that were not tendered in response to the exchange offer. In accordance with Norwegian law, the per share offering price will be NOK102. InFocus expects to commence the mandatory offer on or about July 12, 2000, and must keep the offer open for at least four weeks, but no more than six weeks, after such date. If all remaining Proxima shareholders tender their shares in response to the mandatory cash offer, InFocus would pay an aggregate of NOK180,410,052 (approximately $20.8 million) for such shares.

    If any remaining Proxima shareholders fail to tender their shares in response to the mandatory offer, InFocus intends to initiate a "compulsory acquisition" under Section 4-25 of the Norwegian Public Limited Companies Act. The purpose and effect of a compulsory acquisition is to force the remaining Proxima shareholders to sell their Proxima ordinary shares to InFocus at a fair cash price, which may be determined by a Norwegian court.

    As permitted by Norwegian law, InFocus intends to include a compulsory acquisition offer in its mandatory offer materials. InFocus would then commence the compulsory acquisition process, if necessary, by publishing notice of the compulsory acquisition offer in the Norwegian Legal Gazette immediately upon expiration of the mandatory offer. At the same time, InFocus would deposit the aggregate offering price with a financial institution authorized to do business in Norway, whereupon InFocus would be deemed the holder of all outstanding Proxima ordinary shares. The remaining Proxima shareholders must raise any objections to the compulsory acquisition offer within two months after publication of the required notice. Any Proxima shareholders who do not meet this deadline will be deemed to have accepted the compulsory acquisition offer. InFocus will attempt to reach an agreement with any Proxima shareholders who raise timely objections. To the extent InFocus is unable to reach such an agreement, a Norwegian court will determine what constitutes fair compensation.

    InFocus intends to use all of Proxima's assets in the manner Proxima used such assets prior to completion of the share exchange. The funds necessary to purchase Proxima ordinary shares in connection with the mandatory offer and compulsory acquisition will be paid from InFocus's cash reserves.

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Item 3.  Not Applicable.

Item 4.  Not Applicable.

Item 5.  Other Events.

    Pursuant to the Combination Agreement, InFocus expanded its Board of Directors from four to seven members. Mr. Ole Fredriksen, Proxima's former Chief Executive Officer, and Messrs. Einar Greve and Svein Jacobsen, both of whom served on Proxima's Board of Directors, have been elected to fill the three new seats on InFocus's Board of Directors.

    InFocus also sought and received shareholder approval to amend its Articles of Incorporation to: (a) change its name from In Focus Systems, Inc., to InFocus Corporation; and (b) increase the number of authorized shares of common stock from 50,000,000 to 150,000,000. On June 2, 2000, InFocus filed an amendment to its Articles of Incorporation with the Oregon Secretary of State. A copy of the Certificate of Amendment is included as Exhibit 4 to this Form 8-K and is incorporated herein by this reference. In addition, InFocus also sought and obtained shareholder approval for an amendment to its 1998 Stock Incentive Plan, increasing the aggregate number of shares issuable thereunder from 1,500,000 to 4,500,000 shares of common stock.

Item 6.  Not Applicable.

Item 7.  Financial Statements and Exhibits.

(a)

Financial statements of business acquired.

    Incorporated by reference to Exhibit 20 are Proxima's audited balance sheets as of December 31, 1998 and 1999 and audited statements of operations, shareholders' equity and cash flows for each of the three years ended December 31, 1997, 1998 and 1999.

(b)

Pro forma financial information.

    Pursuant to Rule 11-02(c) of Regulation S-X, the filing of restated audited financial information as Exhibit 99 to this Form 8-K eliminates the requirement to include pro forma financial information herein.

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(c)

Exhibits. This list is intended to constitute the exhibit index.

Exhibit No.	Document Description
2	Business Combination Agreement, dated as of March 5, 2000, by and among In Focus Systems, Inc. and Proxima ASA.
3.1	1990 Restated Articles of Incorporation
3.2	Amendment to 1990 Restated Articles of Incorporation
3.3	Amendments to the 1990 Restated Articles of Incorporation
3.4	1997 Restated Bylaws
3.5	Amendment to 1997 Restated Bylaws
20	Audited balance sheets of Proxima ASA as of December 31, 1998 and 1999 and audited statements of operations, shareholders' equity and cash flows for the years ended December 31, 1997, 1998 and 1999.
23.1	Consent of Arthur Andersen LLP, dated July 5, 2000.
23.2	Consent of PricewaterhouseCoopers DA, dated July 5, 2000.
27	Financial Data Schedule
99.1	Audited (except as indicated) supplemental restated consolidated balance sheets of InFocus Corporation as of March 31, 2000 (unaudited) and December 31, 1999 and 1998, supplemental restated consolidated statements of operations for the three months ended March 31, 2000 (unaudited) and 1999 (unaudited) and the years ended December 31, 1999, 1998 and 1997, supplemental restated consolidated statements of shareholders' equity for the years ended December 31, 1999, 1998 and 1997 and supplemental restated supplemental statements of cash flows for the three months ended March 31, 2000 (unaudited) and 1999 (unaudited) and the years ended December 31, 1999, 1998 and 1997.
99.2	Restated Management's Discussion and Analysis of Financial Condition and Results of Operations for the Years Ended December 31, 1999, 1998 and 1997.

Signature

    Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		INFOCUS CORPORATION
July 5, 2000 (Date)	By:	/s/ E. Scott Hildebrandt E. Scott Hildebrandt, Vice President, Finance, Chief Financial Officer and Secretary

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EX-2

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EXHIBIT 2

BUSINESS COMBINATION AGREEMENT
by and among
IN FOCUS SYSTEMS, INC.
and
PROXIMA ASA
Dated as of March 5, 2000

BUSINESS COMBINATION AGREEMENT

    BUSINESS COMBINATION AGREEMENT, dated as of March 5, 2000 (the "Agreement"), by and between IN FOCUS SYSTEMS, INC., an Oregon corporation ("In Focus"), and PROXIMA ASA, a corporation organized under the laws of the country of Norway ("Proxima").

RECITALS

    A.  The Board of Directors of In Focus and the Board of Directors of Proxima have each determined that it is advisable, and in the best interest of their respective stockholders, to combine their respective businesses under the ownership of one company;

    B.  The Board of Directors of In Focus and the Board of Directors of Proxima have, in accordance with the laws of their respective jurisdictions of organization, approved the business combination transaction contemplated by this Agreement, whereby In Focus will make a public tender offer to acquire all of the outstanding ordinary shares of Proxima in exchange for shares of common stock of In Focus;

    C.  Concurrently with the execution and delivery of this Agreement and as a condition to In Focus's willingness to enter into this Agreement, certain shareholders of Proxima are entering into Irrevocable Commitments to Sell Shares, substantially in the form attached hereto as Exhibit A, pursuant to which each such shareholder has agreed to tender all ordinary shares of Proxima beneficially owned by such shareholder to In Focus pursuant to the Exchange Offer referred to herein;

    D.  The Board of Directors of Proxima has resolved and agreed to recommend that holders of all of the issued and outstanding ordinary shares of Proxima tender their shares to In Focus pursuant to the Exchange Offer referred to herein;

    E.  In Focus and Proxima desire to make certain representations, warranties and agreements in connection with the transactions contemplated by this Agreement, and to prescribe various conditions to the consummation of such transactions;

    F.  For financial reporting purposes the parties intend that the transactions contemplated by this Agreement will be accounted for as a "pooling-of-interests" transaction under United States generally accepted accounting principles ("US GAAP"); and

    G.  All capitalized terms used in this Agreement and not elsewhere defined shall have the respective meanings ascribed to them in Annex A hereto;

    NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE I
THE EXCHANGE OFFER

1.1  The Exchange Offer.

(a) As soon as reasonably practicable after the public announcement of the execution of this Agreement, In Focus shall commence, in compliance with Norwegian law, a public tender offer (the "Exchange Offer") to the holders of ordinary shares, par value NOK 2 per share, of Proxima (the "Proxima Ordinary Shares"), to exchange, subject to the Exchange Offer Conditions, .3615 share of common stock, no par value, of In Focus (the "In Focus Common Stock"), for each Proxima Ordinary Share held by such holder (such .3615-for-one exchange to be offered pursuant to this Section 1.1(a), with such adjustments as may be required pursuant to Section 1.6, being referred to herein as the "Exchange Offer Ratio"). The maximum number of shares of In Focus Common Stock to be issued in exchange for

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the acquisition by In Focus of all Proxima Ordinary Shares outstanding on a Fully Diluted Basis shall be 15,825,000, with such adjustments as may be required pursuant to Section 1.6.

(b) The obligation of In Focus to consummate the Exchange Offer and issue In Focus Common Stock in exchange for the Proxima Ordinary Shares tendered pursuant to the Exchange Offer, shall be subject only to satisfaction or waiver of (i) the condition that there shall have been validly tendered and available for purchase, in accordance with the terms of the Exchange Offer, prior to the Exchange Offer Expiration Date, a number of Proxima Ordinary Shares that represents more than 90% of the outstanding Proxima Ordinary Shares (the "Minimum Condition"), and (ii) the other conditions set forth in Article VII (together with the Minimum Condition, the "Exchange Offer Conditions").

(c) The expiration date of the Exchange Offer shall initially be the date which is 30 calendar days after commencement of the Exchange Offer or such other date mutually agreeable to In Focus and Proxima (such date, as it may be extended as provided herein, the "Exchange Offer Expiration Date"). In Focus shall have the right, in its sole discretion and without Proxima's consent, to extend the expiration date of the Exchange Offer, at any time and from time to time, but in no event shall the Exchange Offer Expiration Date be later than the Outside Termination Date. If at any scheduled Exchange Offer Expiration Date any of the Exchange Offer Conditions have not been satisfied or waived by In Focus, at Proxima's written request delivered to In Focus no later than such Exchange Offer Expiration Date, In Focus shall extend the Exchange Offer until a date not later than the Outside Termination Date.

(d) Subject to the satisfaction or waiver of the Exchange Offer Conditions, In Focus shall, at the earliest practicable time following the Exchange Offer Expiration Date and after it is permitted to do so under applicable law, accept for exchange, by written notice to the Exchange Agent, and shall exchange, all Proxima Ordinary Shares validly tendered (the "Share Exchange") and shall effect the Share Exchange in accordance with applicable law (the date In Focus gives such written notice to the Exchange Agent being referred to herein as the "Effective Time").

(e) No holder of Proxima Ordinary Shares will be entitled to receive fractional shares of In Focus Common Stock pursuant to the Exchange Offer. In lieu thereof, In Focus shall round to the next highest whole number the number of shares issuable to such holders otherwise entitled to a fractional share.

1.2  Norwegian Exchange Offer Documents.  As soon as reasonably practicable after the public announcement of this Agreement, In Focus shall prepare and file with the Oslo Stock Exchange ("OSE") a preliminary prospectus/offer document (together with all amendments and supplements thereto, the "Norwegian Prospectus/Offer Document") with respect to the Exchange Offer, and shall use its reasonable best efforts to have the Norwegian Prospectus/Offer Document cleared by the OSE as promptly as practicable after the filing. The Norwegian Prospectus/Offer Document shall contain an offer to exchange, listing particulars, a form of acceptance, and any other documents required to be filed pursuant to the Norwegian Securities Trading Act of 1997 (the "Securities Trading Act") and the Norwegian Stock Exchange Regulations No. 30 of January 17, 1994 (the Norwegian Prospectus/Offer Document and such other documents, together with all amendments and supplements thereto, are sometimes collectively referred to in this Agreement as the "Exchange Offer Documents"). The Norwegian Prospectus/Offer Document shall also contain the recommendation of the Board of Directors of Proxima that the holders of the Proxima Ordinary Shares accept the Exchange Offer and tender their Proxima Ordinary Shares to In Focus thereunder. Proxima agrees to provide to In Focus, as promptly as practicable, such information concerning its stockholders, business, financial statements and affairs as may be reasonably required or appropriate for inclusion in the Exchange Offer Documents and to cause its counsel and auditors to cooperate with In Focus's counsel and auditors in the preparation of the Exchange Offer Documents. In Focus shall use commercially reasonable efforts to cause the Exchange Offer Documents to be disseminated to the holders of Proxima Ordinary Shares, as and to the extent required by applicable Norwegian law, as promptly as practicable after (i) the Norwegian Prospectus/Offer Document has been cleared by the OSE, and (ii) the Norwegian Tax Approval has been obtained and is in full force and effect, provided

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Proxima may waive this condition or require the offer to proceed subject to this condition. Proxima and its counsel shall be given an opportunity to review and comment on the Exchange Offer Documents prior to their being filed with the OSE, and Proxima shall be promptly advised of and consulted with respect to any comments that In Focus receives from the OSE or its staff with respect to the Exchange Offer Documents promptly after receipt of any such comments.

1.3  Mandatory Offer; Compulsory Acquisition.  If In Focus acquires or holds, as a result of the Exchange Offer or otherwise, a number of Proxima Ordinary Shares representing more than 40% of the voting rights in Proxima, then In Focus will commence a mandatory offer (the "Mandatory Offer") pursuant to the Securities Trading Act. If In Focus acquires or holds more than 90% of the total issued shares and voting rights in Proxima then outstanding, after having made the Mandatory Offer, In Focus will, pursuant to Section 4-25 of the Norwegian Public Limited Companies Act (the "Companies Act"), commence a process leading to a compulsory acquisition for cash of all Proxima Ordinary Shares not theretofore acquired by In Focus at a price to be determined in accordance with the Companies Act.

1.4  Proxima Action.

(a) Proxima hereby approves and consents to the Exchange Offer and represents that the Board of Directors of Proxima, at a meeting duly called and held at which a quorum was present throughout, has unanimously (i) determined that this Agreement and the transactions contemplated hereby, including the Exchange Offer, are fair to and in the best interest of the holders of the Proxima Ordinary Shares, (ii) approved and adopted this Agreement and the transactions contemplated hereby, and (iii) recommended that the holders of the Proxima Ordinary Shares accept the Exchange Offer, and tender their Proxima Ordinary Shares thereunder to In Focus.

(b) Proxima shall promptly, at In Focus's request, cause its transfer agent to furnish In Focus with mailing labels containing the names and addresses of all record holders of Proxima Ordinary Shares and with security position listings of the Proxima Ordinary Shares held in stock depositories, each as of a recent date, together with all other available listings and computer files containing names, addresses, and security position listings of record holders and beneficial holders of the Proxima Ordinary Shares. Proxima shall furnish In Focus with such additional information, including, without limitation, updated listings and files of stockholders, mailing labels and security position listings and such other assistance as In Focus or its agents may reasonably request in communicating the Exchange Offer to record and beneficial holders of the Proxima Ordinary Shares.

1.5  Exchange Agent.  In Focus shall appoint a bank or trust company or other independent financial institution to act as exchange agent for the Exchange Offer (the "Exchange Agent").

1.6  Anti-Dilution Protection for Exchange Offer Ratio.  If, between the date of this Agreement and the Effective Time, the outstanding shares of In Focus Common Stock shall have been changed into a different number of shares or a different class by reason of any reclassification, recapitalization, stock split, combination or exchange of shares, or a stock dividend or dividend payable in any other securities shall be declared with a record date within such period, or any similar event shall have occurred, the Exchange Offer Ratio shall be appropriately adjusted to provide to the holders of the Proxima Ordinary Shares the same economic effect as contemplated by this Agreement prior to such event.

ARTICLE II
COMPOSITION OF IN FOCUS BOARD AFTER EFFECTIVE TIME

2.1  Composition of Board of Directors of In Focus.

(a) Without the intention to interfere with the rights and powers of the In Focus shareholders, In Focus and Proxima agree that after the Effective Time and until the first annual meeting of the In Focus

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shareholders following the Effective Time, the Board of Directors of In Focus shall be comprised of the following individuals:

Existing Directors	New Directors
John V. Harker	Ole J.Fredriksen
Peter D. Behrendt	Svein A. Jacobsen
Michael R. Hallman	Einar J.Greve
Nobuo Mii

(b) The current Board of Directors of In Focus shall, at or prior to the Effective Time, take all action necessary to increase the size of the Board of Directors from four members to seven members, and shall take all such other action as necessary to cause Ole Fredriksen, Svein Jacobsen and Einar Greve to be appointed, as of the Effective Time, to fill the three new seats on the Board of Directors.

2.2  Co-Chairmen of In Focus.  In Focus and Proxima agree that after the Effective Time and until the first annual meeting of the Board of Directors of In Focus following the Effective Time, John V. Harker shall serve as Co-Chairman, President and CEO of In Focus, and Ole Fredriksen shall serve as Co-Chairman of In Focus. The current Board of Directors of In Focus shall, at or prior to the Effective Time, take all necessary action to create Co-Chairmen positions, and shall take all such other action as necessary to cause John V. Harker and Ole Fredriksen to be appointed, effective upon consummation of the Share Exchange, to fill such Co-Chairmen positions.

ARTICLE III
REPRESENTATIONS AND WARRANTIES

    Except as set forth in the In Focus Disclosure Schedule or as otherwise contemplated by this Agreement, In Focus hereby represents and warrants to Proxima, and except as set forth in the Proxima Disclosure Schedule or as otherwise contemplated by this Agreement, Proxima hereby represents and warrants to In Focus, in each case as set forth in this Article III and as of the date of this Agreement, with the party making such representations and warranties being referred to as the "Representing Party." Notwithstanding the foregoing, any representation or warranty which expressly refers to In Focus or Proxima is being made solely by In Focus or Proxima, as the case may be.

3.1  Corporate Organization.  The Representing Party is a corporation duly incorporated, validly existing and in good standing (to the extent the concept of "good standing" exists) under the laws of the jurisdiction of its incorporation and has the corporate power and authority to own, operate and lease all of its properties and assets and to carry on its business as it is now being conducted, except where the failure to be in good standing would not reasonably be expected to have a Material Adverse Effect. The Representing Party is duly qualified to do business and is in good standing (to the extent the concepts of "qualification to do business" and "good standing" exist) in all jurisdictions where it is required to be so qualified, except in such jurisdictions, if any, where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Representing Party, its Subsidiaries and, to their knowledge, their respective employees hold all permits, licenses, variances, exemptions, orders, registrations and approvals of all Government Entities which are required for the operation of the businesses of the Representing Party and its Subsidiaries as currently conducted (the "Company Permits"), except where the failure to have any such Company Permits individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect. In Focus has made available to Proxima true and complete copies of its Articles of Incorporation and Bylaws and Proxima has made available to In Focus a true and complete copy of its Articles of Association and an English translation thereof.

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3.2  Subsidiaries.

(a) Each Subsidiary of the Representing Party is a corporation duly organized, validly existing and in good standing (to the extent the concept of "good standing" exists) under the laws of its jurisdiction of incorporation, has the corporate power and authority to own, operate or lease all of its properties and assets and to carry on its business as it is now being conducted and is duly qualified to do business and is in good standing (to the extent the concepts of "qualification to do business" and "good standing" exist) in each jurisdiction where it is required to be so qualified, except in such jurisdictions, if any, where the failure to be so organized, existing, in good standing or qualified would not reasonably be expected to have a Material Adverse Effect. Each Representing Party has made available to the other Representing Party a true and complete copy of the certificate of incorporation, bylaws, articles of association or other similar governing documents for each of its Subsidiaries.

(b) Each Representing Party is, directly or indirectly, the record and beneficial owner of that percentage of the outstanding shares of capital stock of each of its Subsidiaries which is set forth opposite the name of each such Subsidiary in Section 3.2(b) of the Representing Party's Disclosure Schedule. There are no outstanding (i) securities of the Representing Party or any of its Subsidiaries convertible into or exchangeable or exercisable for shares of capital stock or other voting securities or ownership interests in any of the Representing Party's Subsidiaries, (ii) warrants, calls, options or other rights to acquire from the Representing Party or any of its Subsidiaries, or any obligations of the Representing Party or any of its Subsidiaries to issue, any capital stock, voting securities or other ownership interests in, or any securities convertible into or exchangeable or exercisable for, any capital stock, voting securities or ownership interests in any of the Representing Party's Subsidiaries, or (iii) obligations of the Representing Party or any of its Subsidiaries to repurchase, redeem or otherwise acquire any outstanding securities of the Representing Party's Subsidiaries or to issue, deliver or sell, or cause to be issued, delivered or sold, any such securities. All of the outstanding shares of capital stock of each of the Representing Party's Subsidiaries have been validly issued and are fully paid, non-assessable and free of preemptive rights, and the shares owned, directly or indirectly, by such Representing Party are owned free and clear of all Encumbrances, other than restrictions on transfer arising under applicable securities laws.

3.3  Capital Stock.

(a) Section 3.3(a) of the Representing Party's Disclosure Schedule sets forth as of the date of this Agreement:

(i) the number of authorized shares of each class or series of capital stock of the Representing Party;

(ii) the number of shares of each class or series of capital stock of the Representing Party which are issued and outstanding;

(iii) the number of shares of each class or series of capital stock which are held in the treasury of such Representing Party;

(iv) the number of shares of each class or series of capital stock of the Representing Party which are reserved for issuance, indicating each particular reservation;

(v) the number of shares of each class or series of capital stock of such Representing Party which are subject to stock options or other rights to purchase or receive capital stock granted under such Representing Party's stock option or other stock based employee benefit plans, indicating the name of the plan, identifying the option or right holder by name, such person's jurisdiction of residence, the date of grant and the exercise price thereof; and

(vi) on Proxima's Disclosure Schedule, the identity of, and number of Proxima Ordinary Shares held by, each U.S. holder (as such term is defined in Rule 800(h) of the Securities Act) as registered in the Norwegian register of Proxima Ordinary Shares.

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(b) Except as disclosed in Section 3.3(a) of each Representing Party's Disclosure Schedule, there are no authorized, issued, reserved for issuance or outstanding (i) shares of capital stock or voting securities of the Representing Party, (ii) securities of the Representing Party convertible into or exchangeable for shares of capital stock or voting securities of the Representing Party, (iii) warrants, calls, options or other rights to acquire from the Representing Party or any of its Subsidiaries, or any obligation of the Representing Party or any of its Subsidiaries to issue, any shares of capital stock or voting securities or securities convertible into or exchangeable or exercisable for capital stock or voting securities of the Representing Party, and there are no outstanding obligations of the Representing Party to repurchase, redeem or otherwise acquire any such securities or to issue, deliver or sell, or cause to be issued, delivered or sold, any such securities.

3.4  Authority.  The Representing Party has the corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution, delivery and performance of this Agreement by In Focus and the consummation by In Focus of the transactions contemplated hereby have been duly authorized by the Board of Directors of In Focus, and, except for the In Focus Stockholders' Approval, no other corporate action on the part of In Focus is necessary to authorize this Agreement or the transactions contemplated hereby. The execution, delivery and performance of this Agreement by Proxima and the consummation by Proxima of the transactions contemplated hereby have been duly authorized by the Board of Directors of Proxima, and no other corporate action on the part of Proxima is necessary to authorize this Agreement or the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Representing Party and (assuming this Agreement constitutes a valid and binding obligation of the other Representing Party) is a valid and binding agreement of the Representing Party, enforceable against such Representing Party in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar Laws relating to the enforcement of creditors' rights generally and by general principles of equity.

3.5  Consents and Approvals; No Violation.

(a) Except as disclosed in Section 3.5 of each Representing Party's Disclosure Schedule, no filing with, and no permit, authorization, consent or approval of, any Governmental Entity or other public or private third party is necessary or required under the terms, conditions or provisions of any Law or Order of any Governmental Entity or any Contract to which the Representing Party or any of its Subsidiaries is a party or by which the Representing Party or any of its Subsidiaries or any of their respective assets or properties is bound for the execution, delivery and performance of this Agreement by the Representing Party and the consummation by such Representing Party of the transactions contemplated hereby, other than such consents, approvals, actions, filings and notices which the failure to make or obtain, as the case may be, individually or in the aggregate, could not be reasonably expected to have a Material Adverse Effect on the ability of the Representing Party to consummate the transactions contemplated by this Agreement.

(b) Neither the execution, delivery or performance of this Agreement by the Representing Party nor the consummation by such Representing Party of the transactions contemplated hereby, will (i) violate any provision of the Articles or Certificate of Incorporation, Bylaws, Articles of Association, or other similar governing documents of the Representing Party or any of its Subsidiaries, (ii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation, vesting, payment, exercise, acceleration, suspension or revocation) under any of the provisions of any note, bond, mortgage, deed of trust, security interest, indenture, license, sublicense, contract, agreement, plan or other instrument or obligation of any kind (collectively, "Contracts") to which the Representing Party or any of its Subsidiaries is a party or by which any of them or any of their respective properties or assets may be bound, (iii) violate any statute, law, rule, regulation or ordinance (collectively, "Laws"), or any judgment, decree, order, writ, injunction, permit or license (collectively, "Orders") of any Governmental Entity applicable to the Representing Party or its Subsidiaries or any of their respective properties or assets, (iv) result in the creation or imposition of any Encumbrance on any

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asset of the Representing Party or any of its Subsidiaries, or (v) cause the suspension or revocation of any permit, license, governmental authorization, consent or approval necessary for the Representing Party or any of its Subsidiaries to conduct its business as currently conducted, except in the case of clauses (ii), (iii), (iv) and (v) for violations, breaches, defaults, terminations, cancellations, accelerations, creations, impositions, suspensions or revocations which would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect or prevent the consummation of the transactions contemplated hereby.

3.6  SEC Filings; OSE Filings; Financial Statements.

(a) Proxima has received prior to the execution of this Agreement a true and complete copy of each form, report, schedule, registration statement, definitive proxy statement and other document (together with all amendments thereof and supplements thereto) filed by In Focus or any of its Subsidiaries with the U.S. Securities and Exchange Commission ("SEC") since January 1, 1997, which are all the documents (other than preliminary material) that In Focus and its Subsidiaries were required to file with the SEC since such date, and In Focus will promptly deliver to Proxima a true and complete copy of all additional filings made by In Focus with the SEC between the date hereof and the Effective Time, specifically including, without limitation, In Focus's annual report on Form 10-K for the fiscal year ended December 31, 1999 (collectively, as such documents have since the time of their filing been amended or supplemented, the "In Focus SEC Filings"). As of their respective dates, the In Focus SEC Filings (i) complied as to form in all material respects with the requirements of the Securities Act of 1933, as amended, and the rules and regulations thereunder (the "Securities Act"), or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the case may be, and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The audited consolidated financial statements and unaudited interim consolidated financial statements (including, in each case, the notes, if any, thereto) included in the In Focus SEC Filings (the "In Focus Financial Statements") complied as to form in all material respects with the published rules and regulations of the SEC as of the date thereof with respect thereto, were prepared in accordance with US GAAP applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto and except with respect to unaudited statements as permitted by Form 10-Q of the SEC) and fairly present (subject, in the case of the unaudited interim financial statements, to normal, recurring year-end audit adjustments which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect) the consolidated financial position of In Focus and its consolidated subsidiaries as at the respective dates thereof and the consolidated results of their operations and cash flows for the respective periods then ended. Each Subsidiary of In Focus is treated as a consolidated subsidiary of In Focus in the In Focus Financial Statements for all periods covered thereby.

(b) In Focus has received prior to the execution of this Agreement a true and complete copy of each form, report, schedule, registration statement, definitive proxy statement and other document (together with all amendments thereof and supplements thereto) filed by Proxima or any of its Subsidiaries with the OSE since January 1, 1997, which are all the documents (other than preliminary material) that Proxima and its Subsidiaries were required to file with the OSE since such date, and Proxima will promptly deliver to In Focus a true and complete copy of all additional filings made by Proxima with the OSE between the date hereof and the Effective Time, specifically including, without limitation, Proxima's annual report, including audited financial statements, for the fiscal year ended December 31, 1999 (collectively, as such documents have since the time of their filing been amended or supplemented, the "Proxima OSE Filings"). As of their respective dates, the Proxima OSE Filings (i) complied as to form in all material respects with the requirements of the OSE and the Securities Trading Act, and the rules and regulations thereunder, and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The audited consolidated financial statements and unaudited

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interim consolidated financial statements (including, in each case, the notes, if any, thereto) included in the Proxima OSE Filings (the "Proxima Financial Statements") complied as to form in all material respects with the published rules and regulations of the OSE as of the date thereof with respect thereto, were prepared in accordance with Norwegian generally accepted accounting principles applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly present (subject, in the case of the unaudited interim financial statements, to normal, recurring year-end audit adjustments which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect) the consolidated financial position of Proxima and its consolidated subsidiaries as at the respective dates thereof and the consolidated results of their operations as at the respective dates thereof and the consolidated results of their operations and cash flows for the respective periods then ended. Each Subsidiary of Proxima is treated as a consolidated subsidiary of Proxima in the Proxima Financial Statements for all periods covered thereby.

3.7  Absence of Changes.  The In Focus SEC Filings and the Proxima OSE Filings are referred to, as applicable, as the "Representing Party's Filings," and the In Focus Financial Statements and the Proxima Financial Statements are referred to, as applicable, as the "Representing Party's Financial Statements." Except as disclosed in the Representing Party's Filings and except as contemplated by this Agreement, since the date of the Representing Party's latest financial statements included in such Representing Party's Filings, the Representing Party and its Subsidiaries have conducted their respective businesses in the ordinary course consistent with past practice and there has not been:

(a) any Material Adverse Effect;

(b) any material change in the method of accounting or accounting practice of the Representing Party and its Subsidiaries, other than changes required by applicable generally accepted accounting principles;

(c) any direct or indirect redemption, purchase or other acquisition by the Representing Party or its Subsidiaries of any shares of capital stock of the Representing Party or any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) in respect of such capital stock;

(d) (i) any increase in the compensation payable or to become payable by the Representing Party or any of its Subsidiaries to any of their respective officers or employees, other than increases in the ordinary course of business and substantially consistent with past practice, increases required by union contracts and increases specifically approved in writing by the other Representing Party, or (ii) any increase or modification in any bonus, pension, insurance or other employee benefit, plan, payment or arrangement made to, for or with respect to employees not in the ordinary course of business and consistent with past practice, other than changes required by applicable law, or (iii) entry into or amendment of any employment agreement or other employment arrangement with any employee of the Representing Party or any of its Subsidiaries which employment agreement or amendment provides compensation and benefits in excess of $150,000 to any individual in any 12-month period; or

(e) any issuance of shares of capital stock other than pursuant to stock options or other similar stock based employee benefit awards outstanding as of the date of the most recent Representing Party's Filing.

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3.8  Absence of Undisclosed Liabilities.  There are no liabilities of the Representing Party or any of its Subsidiaries of any kind whatsoever, whether or not accrued and whether or not contingent or absolute, determined or determinable, that are material to such Representing Party and its Subsidiaries taken as a whole, other than (a) liabilities disclosed or provided for in such Representing Party's Financial Statements, (b) liabilities disclosed in the Representing Party's Filings or disclosed as liabilities on the Representing Party's Disclosure Schedule, (c) liabilities incurred on behalf of the Representing Party in connection with this Agreement and the transactions contemplated hereby, (d) liabilities not required to be disclosed on the face of such party's balance sheet under applicable generally accepted accounting principles, and (e) liabilities incurred in the ordinary course of business consistent with past practice since the date of the Representing Party's latest financial statements included in such Representing Party's Filings, none of which, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

3.9  Litigation.  Except as set forth in Section 3.9 of each Representing Party's Disclosure Schedule, there are no claims, actions, suits, proceedings or investigations pending or, to the knowledge of the Representing Party, threatened against such Representing Party or any of its Subsidiaries or any of their respective assets before any Governmental Entity. The claims, actions, suits, proceedings or investigations disclosed in the Representing Party's Disclosure Schedule, if adversely determined, would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. Neither the Representing Party nor any of its Subsidiaries is subject to any outstanding order, writ, injunction or decree which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

3.10  Taxes.  The Representing Party and each of its Subsidiaries have timely filed or caused to be filed (or there has been timely filed on their behalf) all income Tax Returns and all other material Tax Returns required by applicable law to be filed on or prior to the date hereof, or requests for extensions to file such Tax Returns have been filed, granted and have not expired, except to the extent that such failures to file or to have extensions granted that remain in effect, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. All such Tax Returns are complete and accurate in all material respects. The Representing Party and each of its Subsidiaries have paid (or there has been paid on their behalf) all Taxes shown as due on such Tax Returns, and the most recent Representing Party's Financial Statements contained in the Representing Party's Filings reflect an adequate liability in accordance with applicable generally accepted accounting principles consistently applied for all Taxes payable by the Representing Party and its Subsidiaries for all taxable periods and portions thereof accrued through the date of such financial statements. No deficiencies for any Tax have been proposed or asserted in writing or assessed, in each case by any taxing authority, against the Representing Party or any of its Subsidiaries for which there are not adequate liabilities accrued on the latest balance sheet included in the Representing Party's Financial Statements. The Representing Party nor any of its Subsidiaries are a party to any agreement, contract or arrangement that would result, separately or in the aggregate, in the payment of any "excess parachute payments" within the meaning of Code Section 280G. The Representing Party and all of its Subsidiaries have complied in all material respects with all transfer pricing Laws of the United States and all other jurisdictions in which the Representing Party or its Subsidiaries has conducted, or is presently conducting, business.

3.11  Employee Benefit Plans.

(a) Section 3.11 of each Representing Party's Disclosure Schedule sets forth a true and complete list of each material deferred compensation, incentive compensation, stock purchase, stock option and other equity compensation plan, program, agreement or arrangement; each material severance or termination pay, medical, surgical, hospitalization, life insurance and other "welfare" plan, fund or program (within the meaning of Section 3(1) of ERISA); each material profit-sharing, stock bonus or other "pension" plan, fund or program (within the meaning of Section 3(2) of ERISA); each material employment, termination or severance agreement; and each other material employee benefit plan, fund, program, agreement or arrangement, in each case that is sponsored, maintained or contributed to or required to be contributed to

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by the Representing Party or by any trade or business, whether or not incorporated (an "ERISA Affiliate"), that together with the Representing Party would be deemed a "single employer" within the meaning of Section 4001(b) of ERISA, or to which the Representing Party or an ERISA Affiliate is a party, whether written or oral, for the benefit of any employee or former employee of the Representing Party or any of the Representing Party's Subsidiaries and whether or not subject to ERISA (with respect to a Representing Party, the "Plans").

(b) Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect, each Plan has been administered and operated in compliance with its terms and applicable law in all respects, including, without limitation, in accordance with the Internal Revenue Code of 1986, as amended (the "Code"), and ERISA and the comparable provisions of any foreign law.

(c) There are no liabilities of the Representing Party or any ERISA Affiliate with respect to any Plan, other than (i) liabilities disclosed or provided for in such Representing Party's Financial Statements, (ii) liabilities incurred in the ordinary course of business since the date of the Representing Party's Financial Statements, which do not have, individually or in the aggregate, a Material Adverse Effect, and (iii) liabilities which, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

3.12  Labor and Employment Matters.

(a) Section 3.12 of each Representing Party's Disclosure Schedule sets forth a true and complete list of each employment agreement or any other arrangement or understanding (other than applicable law) with any employee that provides for the payment of any consideration (including severance pay) by such Representing Party or any of its Subsidiaries to such person as a result of the consummation of any of the transactions contemplated by this Agreement, either alone or in conjunction with the termination of such person's employment.

(b) (i) neither the Representing Party nor any of its Subsidiaries is a party to, or bound by, any material collective bargaining agreement or other material contract, agreement, arrangement or understanding with a labor union or labor organization; (ii) except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or as set forth in the Representing Party's Disclosure Schedule, there is no (1) unfair labor practice, labor dispute (other than routine individual grievances) or labor arbitration proceeding pending or, to the knowledge of the Representing Party, threatened against the Representing Party or its Subsidiaries; (2) activity or proceeding by a labor union or representative thereof to organize any employees of the Representing Party or any of its Subsidiaries; or (3) lockout, strike, slowdown, work stoppage or, to the knowledge of the Representing Party, threat thereof by or with respect to such employees; and (iii) there has not been any adoption or amendment in any material respect by the Representing Party or any of its Subsidiaries of any material collective bargaining agreement or other contract, agreement, arrangement or understanding with a labor union or labor organization. Each of the Representing Party and its Subsidiaries is in compliance with all laws regarding employment, employment practices, terms and conditions of employment and wages, except for such noncompliance that individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect.

3.13  Information Supplied.  None of the information provided or to be provided by the Representing Party specifically for inclusion or incorporation by reference in (a) the Proxy Statement will, at the date the Proxy Statement is first mailed to the In Focus's stockholders, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, (b) the Exchange Offer Documents will, at the time the Exchange Offer commences or at the Exchange Offer Expiration Date, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, or (c) any other filings submitted to the SEC or the OSE in

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connection with the transactions contemplated by this Agreement will, at the time such filing is made, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, no representation or warranty is made by a Representing Party with respect to any statements made in the documents specified in items (a) through (c) above based on information provided by or on behalf of the other Representing Party for inclusion or incorporation by reference in such documents or with respect to information incorporated by reference in such documents from any of the other Representing Party's Filings.

3.14  Ownership Of Capital Stock.  To the knowledge of the Representing Party, neither the Representing Party nor any of its affiliates beneficially owns, directly or indirectly, any capital stock of the other Representing Party or is a party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any capital stock of the other Representing Party.

3.15  Environmental Matters.  Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect, the Representing Party and its Subsidiaries are in compliance with all applicable Environmental Laws. Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect, the Representing Party and its Subsidiaries have obtained all permits, licenses and other authorizations from all Governmental Entities required under applicable Environmental Laws, and are in compliance with the terms and conditions thereof. Neither the Representing Party nor any of its Subsidiaries has received written notice of, or is the subject of, any action, cause of action, claim, investigation, demand or notice by any person or entity alleging liability under or noncompliance with any Environmental Law. Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect, there is no environmental condition which would constitute a violation of applicable Environmental Law and was caused by the Representing Party or its Subsidiaries on any of the properties currently or formerly owned or leased by the Representing Party or any of its Subsidiaries.

3.16  Intellectual Property Rights.  Except as set forth in Section 3.16 of each Representing Party's Disclosure Schedule, (i) the Representing Party or its Subsidiaries own the entire right, title and interest in and to, or is licensed or otherwise has the right to use, all Intellectual Property, including the right to sue and recover for damages and the other remedies with respect to any past infringement or other violations of the Intellectual Property, used in or necessary for the conduct of the business as currently conducted by the Representing Party and its Subsidiaries taken as a whole; (ii) there is no suit, claim, action, investigation or proceeding pending or, to the knowledge of the Representing Party, threatened that the Representing Party or any of its Subsidiaries is infringing, misappropriating or otherwise violating the rights of any person or entity with regard to any Intellectual Property owned by, licensed to and/or otherwise used by the Representing Party or any of its Subsidiaries; (iii) to the knowledge of the Representing Party no person is infringing on or otherwise violating any right of the Representing Party or any of its Subsidiaries with respect to any Intellectual Property owned by, licensed to and/or otherwise used by the Representing Party or any of its Subsidiaries; (iv) the Representing Party or its Subsidiaries will continue to own, be licensed or have rights to use the Intellectual Property owned, licensed or used as of the date of this Agreement after the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby; (v) the Representing Party and each of its Subsidiaries has taken reasonable steps to protect its Intellectual Property and its rights thereunder, and to the knowledge of the Representing Party, no such rights to Intellectual Property have been lost or are in jeopardy of being lost through failure to act by the Representing Party or any of its Subsidiaries; (vi) there are no restrictions on the direct or indirect transfer of any interest in the Intellectual Property, including any license agreement, held by the Representing Party or any of its Subsidiaries in respect of the Intellectual Property; and (vii) neither the Representing Party nor any of its Subsidiaries is, or has received notice that it is, in default (or with the giving of notice or lapse of time or both, would be in default) under any agreement to use the Intellectual Property.

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3.17  Accounting Matters.  To its knowledge neither the Representing Party nor any of its affiliates (as such term is used in Section 6.11) has taken or agreed to take any action that would prevent the transactions contemplated by this Agreement from being accounted for as a "pooling-of-interests" under Opinion No. 16 "Business Combinations" of the Accounting Principles Board of the American Institute of Certified Public Accountants ("APB No. 16") and the Representing Party has no reason to believe that such transactions will not qualify for "pooling-of-interests" accounting treatment under APB No. 16.

3.18  Compliance with Laws and Orders.  Except as disclosed in the Representing Party's Filings, the Representing Party and its Subsidiaries are not in violation of or default under any Law or Order of any Governmental Entity, except for violations which, individually or in the aggregate, would not be reasonably expected to have a Material Adverse Effect.

3.19  Title to Properties.  The Representing Party and its Subsidiaries have good and marketable title to, or have valid leasehold interests in or valid rights under contract to use, all real and tangible personal properties used in and, individually or in the aggregate, material to the conduct of the businesses of the Representing Party and its Subsidiaries taken as a whole (including all real and tangible personal properties reflected on the latest balance sheet included in the Representing Party's SEC Filings or OSE Filings, as applicable, or acquired since such date, other than properties or assets disposed of since such date or held subject to a lease or other contract permitted to expire in accordance with its terms since such date, in either case in the ordinary course of business), free and clear of all Encumbrances other than (i) any lien for taxes, assessments or other governmental charges not yet due and payable or the validity of which are being contested in good faith by appropriate proceedings; (ii) any statutory liens arising in the ordinary course of business by operation of Law with respect to a liability that is not yet due or delinquent, and (iii) any minor imperfection of title or similar Encumbrance which individually or in the aggregate with other such Encumbrances does not materially impair the value of the property or asset subject to such Encumbrance or the use of such property or asset in the conduct of the business of the Representing Party or any such Subsidiary.

3.20  Opinion of Financial Advisors.  In Focus represents and warrants to Proxima that In Focus has received the opinion of Salomon Smith Barney, Inc. ("SSB"), to the effect that, as of the date of this Agreement, the Exchange Offer Ratio is fair from a financial point of view to the holders of shares of In Focus Common Stock. Proxima represents and warrants to In Focus that Proxima has received the opinion of Duetche Banc Alex, Brown ("DBAB"), to the effect that, as of the date of this Agreement, the Exchange Offer Ratio is fair from a financial point of view to the holders of Proxima Ordinary Shares.

3.21  Finders and Advisors.  Except for SSB, whose fees shall be the sole responsibility of In Focus, and DBAB, whose fees shall be the sole responsibility of Proxima, no financial advisor, broker, agent or finder has been retained by either Representing Party in connection with this Agreement or any transaction contemplated hereby, and no such financial advisor, broker, agent or finder is entitled to any fee or other compensation on account of this Agreement or any transaction contemplated hereby.

3.22  Duly Authorized Shares.  In Focus represents and warrants that all shares of In Focus Common Stock to be issued in exchange for Proxima Ordinary Shares pursuant to the terms of this Agreement have been duly authorized and when issued pursuant to the terms of the Exchange Offer will be validly issued, fully paid and nonassessable. The shares of In Focus Common Stock issuable upon exercise of the assumed Proxima U.S. Options and issuable upon the exercise of the assumed Proxima Norwegian Options have been duly authorized and will be, prior to the Effective Time, reserved for issuance, and upon issuance pursuant to the terms of such options, such shares shall be validly issued, fully paid and nonassessable.

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ARTICLE IV COVENANTS OF PROXIMA AND IN FOCUS

4.1  Conduct of Proxima's Business.  At all times from and after the date hereof until the Effective Time, Proxima covenants and agrees as to itself and its Subsidiaries that (except as expressly contemplated or permitted by this Agreement, or to the extent that In Focus shall otherwise consent in writing):

(a) Ordinary Course.  Proxima and its Subsidiaries shall conduct their respective businesses only in, and Proxima and such Subsidiaries shall not take any action except in, the ordinary course in substantially the same manner as previously conducted and in substantial compliance with all applicable Laws. Without limiting the generality of the foregoing, (i) Proxima and its Subsidiaries shall use reasonable efforts to preserve intact their present business organizations and reputation, to keep available the services of their present officers and employees, to maintain their assets and properties in good working order and condition, ordinary wear and tear excepted, to maintain insurance on their tangible assets and businesses in such amounts and against such risks and losses as are currently in effect, to preserve their relationships with customers, suppliers, licensors, licensees, distributors and others having business relationships with them and to comply in all material respects with all Laws and Orders of all Governmental Entities applicable to them, and (ii) neither Proxima nor any of its Subsidiaries shall, except as expressly contemplated by this Agreement:

(1) Adopt or amend in any material respect any bonus, profit sharing, compensation, severance, termination, stock option, stock appreciation right, pension, retirement, employment or other employee benefit agreement, trust plan or other arrangement for the benefit or welfare of any director, officer or employee of Proxima or any of its Subsidiaries or increase in any manner the compensation or fringe benefits of any director, officer or employee of Proxima or any of its Subsidiaries or pay any benefit not required by any existing agreement or place any assets in any trust for the benefit of any director, officer or employee of Proxima or any of its Subsidiaries;

(2) Incur any indebtedness for borrowed money or guarantee any such indebtedness of another person (other than in the ordinary course of business consistent with past practice) or issue or sell any debt securities or warrants or other rights to acquire any debt securities of Proxima or any of its Subsidiaries, guarantee any debt securities of another person, enter into any "keep well" or other agreement to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing, or make any loans, advances or capital contributions to, or investments in, any other person;

(3) Expend funds for capital expenditures or research and development, other than in the ordinary course of business consistent with past practices;

(4) Sell, lease, license, mortgage or otherwise encumber or subject to any Encumbrance or otherwise dispose of any of its properties or assets except for disposition of inventory or immaterial assets or the imposition of purchase money security interests on inventory or equipment, in either case, in the ordinary course of business consistent with past practice;

(5) (x) Declare, set aside or pay any dividends on, or declare or make any other distribution in respect of, any of its capital stock (except for dividends paid by Subsidiaries to Proxima with respect to capital stock), (y) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or (z) purchase, redeem or otherwise acquire any shares of capital stock of Proxima or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities;

(6) Authorize for issuance, issue, deliver, sell or agree to commit to issue, sell or deliver (whether through the issuance or granting of options or otherwise), pledge or otherwise encumber any shares of its capital stock or the capital stock of any of its Subsidiaries, any other voting securities or any securities convertible into, or any options to acquire, any such shares, voting securities or

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convertible securities or any other securities or equity equivalents (including without limitation stock appreciation rights) (other than issuances upon exercise of Proxima U.S. Options and Proxima Norwegian Options outstanding on the date hereof);

(7) Amend its certificate of incorporation, bylaws, articles of association or equivalent organizational documents or alter through merger, liquidation, reorganization, restructuring or in any other fashion the corporate structure or ownership of any Subsidiary of Proxima;

(8) Acquire or agree to acquire, including, without limitation, by merging or consolidating with, or by purchasing a substantial equity interest in or substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof;

(9) Settle or compromise any stockholder derivative or other suits arising out of the transactions contemplated by this Agreement or any other litigation (whether or not commenced prior to the date of this Agreement) or settle, pay or compromise any claims not required to be paid, other than in consultation and cooperation with In Focus, and, with respect to any such settlement, without the prior written consent of In Focus, which consent shall not be unreasonably withheld or delayed;

(10) Make any material Tax election or settle or compromise any material Tax liability (whether with respect to amount or timing);

(11) Except in the ordinary course of business, materially modify, amend or terminate any material Contract or waive or release or assign any material rights or claims;

(12) (i) Fail to pay in the ordinary course of business consistent with past practice any amount ("Payable") due, owing or payable to any trade creditor or supplier (other than amounts being disputed in good faith) or (ii) other than in the ordinary course of business consistent with past practice, alter the terms or scheduled payment dates of any Payable; or

(13) Take or agree to take any action that would make any representation and warranty of Proxima contained in this Agreement inaccurate at, or as of any time prior to the Effective Date, or omit or agree to omit to take any action necessary and prudent to prevent any such representation or warranty from being inaccurate at any such time.

(b)Advice of Changes.  Proxima shall confer on a regular and frequent basis with In Focus with respect to its business and operations and other matters relevant to the Exchange Offer, and shall promptly advise In Focus, orally and in writing, of any change or event, including, without limitation, any complaint, investigation or hearing by any Governmental Entity (or communication indicating the same may be contemplated) or the institution or threat of litigation, having, or which, insofar as can be reasonably foreseen, would reasonably be expected to have, a Material Adverse Effect on Proxima and its Subsidiaries taken as a whole or on the ability of Proxima to consummate the transactions contemplated hereby.

4.2  Conduct of In Focus's Business.  At all times from and after the date hereof until the Effective Time, In Focus and its Subsidiaries shall use reasonable efforts to preserve intact their present business organizations and reputation, to keep available the services of their present officers and employees, to maintain their assets and properties in good working order and condition, ordinary wear and tear excepted, to maintain insurance on their tangible assets and businesses in such amounts and against such risks and losses as are currently in effect, to preserve their relationships with customers, suppliers, licensors, licensees, distributors and others having business relationships with them and to comply in all material respects with all Laws and Orders of all Governmental Entities applicable to them.

4.3  No Solicitations.

(a) From the date of this Agreement until the earlier of the termination of this Agreement or the Effective Time, neither In Focus, Proxima nor any of their Subsidiaries shall, nor shall they authorize or

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permit any officer, director, employee, investment banker, financial advisor, attorney, accountant or other advisor or representative retained by or acting for or on behalf of In Focus, Proxima or any of their Subsidiaries to, directly or indirectly, (i) take any action to knowingly solicit, initiate, continue, facilitate or encourage (including by way of furnishing or disclosing non-public information) any offer or proposal for a merger, consolidation or other business combination involving In Focus, Proxima or any of their Subsidiaries or any proposal or offer to acquire in any manner, directly or indirectly, shares of any class of voting securities of In Focus, Proxima or any of their Subsidiaries (excluding, in the case of In Focus, proposals for the acquisition of shares constituting less than 20% of In Focus's outstanding voting securities) or a substantial portion of the assets of In Focus, Proxima or any of their Subsidiaries, other than the transactions contemplated by this Agreement (any of the foregoing being referred to as an "Acquisition Proposal"), or (ii) engage in negotiations, discussions or communications regarding or disclose any information relating to In Focus, Proxima or any of their Subsidiaries or afford access to the properties, books or records of In Focus, Proxima or any of their Subsidiaries to any person, corporation, partnership or other entity or group (a "Potential Acquiror") that may be considering making, or has made, an Acquisition Proposal. The board of directors of Proxima (including any committee thereof) shall not withdraw or modify in a manner adverse to In Focus the approval and recommendation of the Exchange Offer or this Agreement. Neither the board of directors of In Focus or Proxima shall approve or recommend any Acquisition Proposal.

(b) Notwithstanding the foregoing provisions of Section 4.2(a):

(i) Proxima may participate in discussions or negotiations with or furnish information to any third party which makes a written Acquisition Proposal which either (x) is not subject to a financing contingency and involves the purchase for cash of 100% of the Proxima Ordinary Shares at a price per share, which Proxima's board of directors determines, based on the advice of its financial advisor, is financially superior to the Exchange Offer or (y) provides for the acquisition of 100% of the Proxima Ordinary Shares, for consideration, not consisting entirely of cash, which Proxima's board of directors determines, based on the advice of its financial advisor, is financially superior to the Exchange Offer (in the case of either (x) or (y), a "Superior Proposal"), and Proxima's board of directors, or any committee thereof may withdraw or modify in a manner adverse to In Focus, the approval or recommendation of the Exchange Offer, and may approve or recommend any such Superior Proposal, if, in the case of either (x) or (y), Proxima's board of directors determines (and is advised by its outside legal counsel) that the failure to take such action would reasonably be expected to constitute a breach of its fiduciary duties. Proxima shall (i) notify In Focus promptly (and in any event within one business day) after receipt of any Acquisition Proposal or any request for non-public information relating to Proxima or any of its Subsidiaries or for access to the properties, books or records of Proxima or any of its Subsidiaries by any person that is considering making, or has made, an Acquisition Proposal, (ii) notify Proxima promptly of any material change to any such Acquisition Proposal or request and (iii) upon reasonable request by In Focus, provide In Focus all material information about any such Acquisition Proposal, indication or request. Proxima will not, and will cause its affiliates not to, enter into an agreement with respect to a Superior Proposal unless In Focus has been advised in writing of the identity of the parties making the Superior Proposal and the material terms thereof at least two business days prior to the entering into of such agreement.

(ii) In Focus may participate in discussions or negotiations with or furnish information to any third party which makes a written Acquisition Proposal, and In Focus's board of directors, or any committee thereof may withdraw or modify in a manner adverse to Proxima, the approval or recommendation of the Exchange Offer, and may approve or recommend any such Acquisition Proposal, if In Focus's board of directors determines (and is advised by its outside legal counsel) that the failure to take such action would reasonably be expected to constitute a breach of its fiduciary duties. In Focus shall (i) notify Proxima promptly (and in any event within one business day) after receipt of any Acquisition Proposal or any request for non-public information relating to In Focus or any of its Subsidiaries or for access to the properties, books or records of In Focus or any of its Subsidiaries by any person that is considering making, or has made, an Acquisition Proposal, and (ii) notify In Focus promptly of any material change to any such Acquisition Proposal or request.

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ARTICLE V
TREATMENT OF PROXIMA STOCK OPTION PLANS

5.1  U.S. Stock Option Plan.  Upon consummation of the Share Exchange, each outstanding and unexercised option to purchase shares of Proxima Ordinary Shares (the "Proxima U.S. Options") under the Proxima Amended 1998 Stock Option Plan (the "Proxima U.S. Option Plan"), whether vested or unvested, shall be, in connection with the Share Exchange, assumed by In Focus. Each Proxima U.S. Option so assumed by In Focus under this Agreement shall continue to have, and be subject to, the same terms and conditions set forth in the Proxima U.S. Option Plan, and/or as provided in the respective option agreements governing such Proxima U.S. Option immediately prior to consummation of the Share Exchange, except that (A) such Proxima U.S. Option shall be exercisable for the number of whole shares of In Focus Common Stock equal to the product of the number of shares of Proxima Ordinary Shares that were issuable upon exercise of such Proxima U.S. Option immediately prior to consummation of the Share Exchange, multiplied by the Exchange Offer Ratio rounded up to the nearest whole number of shares of In Focus Common Stock, and (B) the per share exercise price for the In Focus Common Stock issuable upon exercise of such assumed Proxima U.S. Option shall be equal to the quotient determined by dividing the exercise price per share at which such Proxima U.S. Option was exercisable immediately prior to the consummation of the Share Exchange by the Exchange Offer Ratio, rounded up to the nearest whole cent. Promptly following the consummation of the Share Exchange, In Focus will issue to each holder of an outstanding Proxima U.S. Option a document evidencing the foregoing assumption of such Proxima U.S. Option by In Focus. To the extent that such Proxima U.S. Option was qualified under Section 422 of the Code, In Focus shall use commercially reasonable efforts to cause such option to continue to be so qualified.

5.2  Norwegian Stock Option Plans.

(a) Proxima shall use commercially reasonable efforts to cause each holder of an outstanding and unexercised option to purchase Proxima Ordinary Shares (individually, a "Proxima Norwegian Option" and collectively, the "Proxima Norwegian Options") under the stock option plans maintained by Proxima in Norway (collectively, the "Proxima Norwegian Option Plans") to agree in writing, prior to the Effective Time, to allow In Focus to assume his or her Proxima Norwegian Option, as of the Effective Time, pursuant to an Option Assumption Agreement on terms and conditions reasonably acceptable to In Focus (individually, an "Option Assumption Agreement" and collectively, the "Option Assumption Agreements"). Each Proxima Norwegian Option so assumed by In Focus under an Option Assumption Agreement shall continue to have, and be subject to, the same terms and conditions set forth in the Norwegian Option Plans, as applicable, and as provided in the respective individual option agreement governing such Proxima Norwegian Option immediately prior to the consummation of the Share Exchange, except that (i) such Proxima Norwegian Option shall be exercisable for the number of whole shares of In Focus Common Stock equal to the product of the number of shares of Proxima Ordinary Shares that were issuable upon exercise of such Proxima Norwegian Option immediately prior to consummation of the Share Exchange, multiplied by the Exchange Offer Ratio rounded up to the nearest whole number of shares of In Focus Common Stock, and (ii) the per share exercise price for the In Focus Common Stock issuable upon exercise of such assumed Proxima Norwegian Option shall be equal to the quotient determined by dividing the exercise price per share at which such Proxima Norwegian Option was exercisable immediately prior to the consummation of the Share Exchange by the Exchange Offer Ratio, rounded up to the nearest whole cent.

(b) If an insufficient number of holders of Proxima Norwegian Options enter into Option Assumption Agreements, such that the transactions contemplated by this Agreement would not, in the opinion of In Focus's independent accountants, qualify for accounting as a "pooling of interests" under APB No. 16 and applicable SEC rules and regulations, Proxima shall use commercially reasonable efforts to cause such option holders to take such other actions and enter into such other agreements as In Focus may reasonably request to cause the transactions contemplated by this Agreement to so qualify.

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ARTICLE VI
ADDITIONAL AGREEMENTS

6.1  Access to Information; Confidentiality.

(a) Each of In Focus and Proxima shall, and shall cause each of their respective Subsidiaries to, afford to the other party and to the officers, employees, accountants, counsel, financial advisors and other representatives of such other party, reasonable access during normal business hours during the period prior to the Effective Time to all their respective properties, books, contracts, commitments, personnel and records and, during such period, each of In Focus and Proxima shall, and shall cause each of its respective Subsidiaries to, furnish promptly to the other party (i) a copy of each report, schedule, registration statement and other document filed by it during such period pursuant to the requirements of U.S. federal or state securities laws or Norwegian securities laws and (ii) all other information concerning its business, properties and personnel as such other party may reasonably request. No review pursuant to this Section 6.1 shall affect any representation or warranty given by the other party hereto.

(b) Each of In Focus and Proxima will hold and will cause each of their respective officers, directors, employees, accountants, attorneys, investment bankers and other advisors ("Representatives") to hold in strict confidence (unless compelled to disclose by judicial or administrative process with respect to which the other party shall be given a reasonable opportunity to oppose) all non-public information obtained, whether prior to or after the date of this Agreement, from or provided on behalf of the other party, except to the extent that such information can be shown to have been (i) previously known or independently developed by the party receiving such information, (ii) in the public domain through no fault of the receiving party, or (iii) later lawfully acquired by the receiving party from other sources not known by the receiving party to be bound by confidentiality obligations (the "Confidential Information"). Each of In Focus and Proxima will, and will cause each of their respective Representatives to, use the Confidential Information received by it solely in connection with its evaluation of the transactions contemplated by this Agreement and in furtherance of the consummation of such transactions in accordance with the terms of this Agreement. In the event of the termination of this Agreement, each of In Focus and Proxima will, and will cause each of their respective Representatives to, (x) maintain the confidentiality of the Confidential Information, and (y) return all copies of written Confidential Information promptly upon the written request of the other party.

6.2  Approval of In Focus Stockholders; Preparation of Proxy Statement.

(a)  Approval of In Focus Stockholders.  As soon as reasonably practicable after the public announcement of this Agreement, In Focus shall, through its Board of Directors, duly call, give notice of, convene and hold a meeting of its stockholders (the "In Focus Stockholders Meeting") for the purpose of obtaining such approvals as are required by the applicable rules and regulations of the NASDAQ National Market System and, if applicable, Oregon law, to consummate the transactions contemplated by this Agreement (the "In Focus Stockholders' Approval"). Subject to its rights to terminate this Agreement pursuant to Section 8.1, In Focus shall, through its Board of Directors, include in the Proxy Statement the recommendation of the Board of Directors that the In Focus stockholders grant such approval, and shall use its reasonable best efforts to obtain such approval.

(b)  Preparation of Proxy Statement.  As soon as reasonably practicable after the public announcement of this Agreement, In Focus shall in consultation with Proxima prepare and file with the SEC a preliminary proxy statement (the "Proxy Statement"), and all other required materials, to be used in connection with the solicitation of proxies by In Focus for the In Focus Stockholders Meeting. In Focus shall use commercially reasonable efforts to respond to any SEC comments regarding its Proxy Statement and to have such comments cleared as promptly as practicable, and shall promptly mail the Proxy Statement in its definitive form to its shareholders after the Norwegian Prospectus/Offer Document has been mailed to the holders of the Proxima Ordinary Shares. Proxima agrees to provide as promptly as

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practicable to In Focus such information concerning its stockholders and its business and financial statements and affairs as may reasonably be required or appropriate for inclusion in the Proxy Statement or in any amendments or supplements thereto, and to cause its counsel and auditors to cooperate with In Focus's counsel and auditors in the preparation of the Proxy Statement.

6.3  Regulatory and Other Approvals.

(a) Subject to the terms and conditions of this Agreement and without limiting the provisions of Section 6.2, each of Proxima and In Focus will use commercially reasonable efforts to do, or cause to be done, all things necessary, proper or advisable to, as promptly as practicable, obtain all consents, approvals or actions of, make all filings with and give all notices to Governmental Entities or any other public or private third parties required of Proxima, In Focus or any of their Subsidiaries to consummate the Exchange Offer and provide such other information and communications to such Governmental Entities or other public or private third parties as the other party hereto or such Governmental Entities or other public or private third parties may reasonably request. In addition to and not in limitation of the foregoing, each of the parties will (x) take promptly all actions necessary to make the filings required of In Focus and Proxima or their affiliates under the HSR Act and under comparable merger notification or competition laws of non-U.S. jurisdictions, (y) comply at the earliest practicable date with any request for additional information received by such party or its affiliates from the Federal Trade Commission (the "FTC") or the Antitrust Division of the Department of Justice (the "Antitrust Division") pursuant to the HSR Act or the authorities of such other jurisdictions, and (z) cooperate with the other party in connection with such party's filings under the HSR Act and in connection with resolving any investigation or other inquiry concerning the Exchange Offer or the other matters contemplated by this Agreement commenced by the FTC, the Antitrust Division, state attorneys general or any other Governmental Entity.

(b) In furtherance and not in limitation of the covenants in Section 6.3(a), In Focus and Proxima shall each use all reasonable efforts to resolve such objections, if any, as may be asserted with respect to any transactions contemplated by this Agreement by any of the authorities identified in Section 6.3(a). If any administrative, judicial or legislative action or proceeding is threatened to be instituted by any such authority challenging any of the transactions contemplated by this Agreement, In Focus and Proxima will each cooperate to contest and resist the institution of any such action or proceeding.

6.4  Expenses.  Except as set forth in Section 8.2(b), whether or not the Exchange Offer is consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such cost or expense, except that expenses incurred in connection with printing and mailing the Norwegian Exchange Offer Documents, as well as any filing fees relating thereto, shall be shared equally by In Focus and Proxima.

6.5  OSE Listing.  As soon as practicable following the date of this Agreement and in any event prior to the Effective Time, In Focus shall prepare and file all documents with OSE and use its reasonable best efforts to cause the shares of In Focus Common Stock to be issued by In Focus in connection with the transactions contemplated by this Agreement to be approved for secondary listing on OSE, subject to official notice of issuance.

6.6  Form S-8.  In Focus shall file a registration statement on Form S-8 for the shares of In Focus Common Stock issuable with respect to the assumed Proxima U.S. Options no later than ten (10) days after the Effective Time, to the extent the shares of In Focus Common Stock issuable upon exercise of such options qualify for registration on Form S-8.

6.7  NNM Listing of Additional Shares Application.  In Focus shall use commercially reasonable efforts to cause to be authorized for listing on the Nasdaq National Market (i) the shares of In Focus Common Stock to be issued in exchange for Proxima Ordinary Shares pursuant to the Exchange Offer and (ii) the shares of In Focus Common Stock required to be reserved for issuance in connection with assumption of the Proxima U.S. Options and the Proxima Norwegian Options.

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6.8  Fulfillment of Conditions.  Subject to the terms and conditions of this Agreement, each of In Focus and Proxima will take or cause to be taken all steps reasonably necessary or desirable to satisfy each condition to the other's obligations contained in this Agreement and to consummate and make effective the transactions contemplated by this Agreement, and neither In Focus nor Proxima will, nor will it permit any of its Subsidiaries to, take or fail to take any action that could be reasonably expected to result in the nonfulfillment of any such condition.

6.9  Tax Treatment.  Proxima shall use its reasonable best efforts to secure an unconditional commitment from Norwegian tax authorities that the holders of Proxima Ordinary Shares, who are residents of Norway, will not be subject to tax in Norway (i) upon consummation of the Share Exchange and the exchange of their Proxima Ordinary Shares for In Focus Common Stock, or (ii) if In Focus assumes the Proxima Norwegian Options as contemplated by Section 5.2 (the "Norwegian Tax Approval").

6.10  Conveyance Taxes.  In Focus and Proxima shall cooperate in the preparation, execution and filing of all returns, questionnaires, applications, or other documents regarding any real property transfer or gains, sales, use, transfer, value added, stock transfer and stamp taxes, any transfer, recording, registration and other fees, and any similar taxes which become payable in connection with the transactions contemplated hereunder that are required or permitted to be filed on or before the Effective Time.

6.11  Affiliates.  As soon as practicable after the date hereof, Proxima shall deliver to In Focus a letter identifying all persons who are, at the time the Exchange Offer is submitted to the stockholders of Proxima, "affiliates" of Proxima for purposes of Rule 145 under the Securities Act or for purposes of qualifying the Share Exchange for "pooling-of-interests" accounting treatment under APB No. 16 and applicable SEC rules and regulations, and such list shall be updated as necessary to reflect changes from the date hereof. Proxima shall use reasonable best efforts to cause all persons who are "affiliates" of Proxima for purposes of qualifying the Share Exchange for "pooling-of-interests" accounting treatment under APB No. 16 and applicable SEC rules and regulations to deliver to In Focus not less than thirty (30) days prior to the Effective Time, a written agreement substantially in the form of Exhibit B.

ARTICLE VII
CONDITIONS TO EXCHANGE OFFER

7.1  Conditions to Exchange Offer and In Focus's Obligations.  Notwithstanding any other provisions of this Agreement or the Exchange Offer, In Focus shall not be required to accept for exchange, and may delay acceptance of, any tendered Proxima Ordinary Shares, and may terminate the Exchange Offer, if each of the following conditions are not fully satisfied or waived by In Focus on or prior to the Effective Time:

(a) The Minimum Condition, as defined in Section 1.1(b), shall have been satisfied;

(b) Holders of a sufficient number of the Proxima Norwegian Options, as necessary for the transactions contemplated by this Agreement to be accounted for as a "pooling of interests" under APB No. 16 and applicable SEC rules and regulations, shall have entered into Option Assumption Agreements;

(c) The In Focus Shareholders' Approval shall have been obtained;

(d) Any applicable waiting periods under the HSR Act, or under any applicable competition laws of any non-U.S. jurisdiction, relating to the transactions contemplated by this Agreement shall have expired or been terminated;

(e) No change shall have occurred since the date of this Agreement (and no condition, event or development shall have occurred, involving a prospective change) that would have a Material Adverse Effect on Proxima;

(f)  The representations and warranties of Proxima set forth in this Agreement shall be true and correct both when made and at and as of the Effective Time, as if made at and as of such time, except

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where the failure of such representations and warranties to be true and correct would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Proxima, and In Focus shall have received a Certificate of the Chief Executive Officer of Proxima as to the satisfaction of this condition;

(g) Proxima shall, in all material respects, have performed and complied with all obligations, covenants and agreements required to be performed or complied with by it under this Agreement at or prior to the Effective Time, and In Focus shall have received a Certificate of the Chief Executive Officer of Proxima as to the satisfaction of this condition;

(h) In Focus shall have received a letter from its independent accountants, dated as of the Effective Time, stating that accounting for the Share Exchange as a "pooling-of-interests" under APB No. 16 and applicable SEC rules and regulations is appropriate if the Share Exchange is consummated as contemplated by this Agreement;

(i)  All consents, approvals and actions of, filings with and notices to any Governmental Entity required of In Focus, Proxima, or any of their respective Subsidiaries to consummate the Share Exchange, shall have been obtained or made, all in form and substance reasonably satisfactory to In Focus, including without limitation approval by the Norwegian Ministry of Industry and Trade pursuant to the Norwegian Business Acquisition Act of 1994 No. 79 and any other approvals required under any other applicable competition laws of any non-U.S. jurisdiction; and

(j)  No judgment, order, decree, statute, law, ordinance, rule or regulation, entered, enacted, promulgated, enforced or issued by any Governmental Entity of competent jurisdiction or other legal restraint or prohibition (collectively, "Restraints") shall be in effect (i) preventing the consummation of the Exchange Offer, or (ii) which otherwise is reasonably likely to have a Material Adverse Effect on In Focus or Proxima.

    The foregoing conditions are for the sole benefit of In Focus and may be waived by In Focus in whole or in part at any time and from time to time in the sole discretion of In Focus. The failure by In Focus at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right; the waiver of any such right with respect to particular facts and other circumstances shall not be deemed a waiver with respect to any other facts and circumstances; and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time. Any determination by In Focus concerning the events described above will be final and binding on all parties.

ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER

8.1  Termination.  This Agreement may be terminated, and the transactions contemplated hereby may be abandoned, at any time prior to the Effective Time, whether prior to or after In Focus Stockholders' Approval:

(a) By mutual written consent of Proxima and In Focus;

(b) By either Proxima or In Focus:

(i)	If the Share Exchange shall not have been consummated by September 30, 2000 (the "Outside Termination Date"), provided that the right to terminate this Agreement pursuant to this Section 8.1(b)(i) shall not be available to any party whose failure to perform any of its obligations under this Agreement results in the failure of the Share Exchange to be consummated on or prior to such date;
(ii)	If the In Focus Stockholders' Approval shall not have been obtained at the In Focus Stockholders Meeting or at any adjournment or postponement thereof; or

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(iii) If any Restraint having either of the effects set forth in Section 7.1(j) shall be in effect and shall have become final and nonappealable, provided, that the party seeking to terminate this Agreement pursuant to this Section 8.1(b)(iii) shall have used reasonable best efforts to prevent the entry of and to remove such Restraint.

(c) By In Focus, (i) if any representation or warranty of Proxima contained in this Agreement shall not be true and correct in all material respects and the failure of such representation or warranty to be true and correct (1) has a Material Adverse Effect on Proxima, and (2) if capable of being made true and correct within 30 days following receipt by Proxima of notice of such representation or warranty not being true and correct is not in fact made true and correct within such 30-day period, or (ii) if there has been a material breach of any covenant or agreement on the part of Proxima set forth in this Agreement, which breach is incapable of being cured by Proxima or is not cured within 30 days following receipt by Proxima of notice of such breach;

(d) By Proxima, (i) if any representation or warranty of In Focus contained in this Agreement shall not be true and correct in all material respects and the failure of such representation or warranty to be true and correct (1) has a Material Adverse Effect on In Focus, and (2) if capable of being made true and correct within 30 days following receipt by In Focus of notice of such representation or warranty not being true and correct is not in fact made true and correct within such 30-day period, or (ii) if there has been a material breach of any covenant or agreement on the part of In Focus set forth in this Agreement, which breach is incapable of being cured by In Focus or is not cured within 30 days following receipt by In Focus of notice of such breach;

(e) By In Focus or Proxima, upon the occurrence of a Trigger Event with respect to the other party; and

(f)  By In Focus, if the Exchange Offer shall have expired or been terminated without any Proxima Ordinary Shares being purchased hereunder by In Focus as a result of the failure of any of the conditions set forth in Article VII hereof.

8.2  Effect of Termination.

(a) In the event of termination of this Agreement by either Proxima or In Focus as provided in Section 8.1, written notice thereof shall be given as promptly as possible to the other party hereto, and this Agreement shall forthwith become null and void and there shall be no liability or obligation on the part of either Proxima or In Focus (or any of their respective Representatives or affiliates), except (i) that the provisions of Sections 6.1(b) and 6.4, this Section 8.2 and Article IX will continue to apply following any such termination, (ii) that nothing contained herein shall relieve any party hereto from liability for breach of its representations, warranties, covenants or agreements contained in this Agreement, and (iii) as provided in Section 8.2(b) below.

(b) If either party terminates this Agreement pursuant to Section 8.1(e), the non-terminating party shall pay to the terminating party by wire transfer in immediately available funds to an account specified in writing by the terminating party immediately upon notice of such termination, a termination fee of Three Million Five Hundred Thousand and No/100 US Dollars (US$3,500,000.00)

(c) The parties acknowledge that the agreements in Section 8.2(b) are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, they each would not enter into this Agreement; accordingly, if either party fails to pay in a timely manner the amounts due pursuant to Section 8.2(b) and, in order to obtain such payment, the terminating party makes a claim that results in a judgment against the other party for the amounts set forth in Section 8.2(b), the non-terminating party shall pay to the terminating party its reasonable costs and expenses (including reasonable attorneys' fees and expenses) in connection with such suit, together with interest on the amounts set forth in Section 8.2(b) from the date of demand to the date of payment at the prime rate of The Chase Manhattan Bank in effect on the date such payment was required to be made.

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(d) If any provision of this Section 8.2 shall be void under applicable law, or if the performance by any party of its obligations hereunder is prohibited by applicable law, but such provision or action would be permissible if some part or all of Section 8.2 were deleted, then such modification as may be necessary to make such provision or action permissible shall be deemed to have taken place.

8.3  Amendment.  This Agreement may be amended, supplemented or modified by action taken by or on behalf of the respective Boards of Directors of the parties hereto at any time prior to the Effective Time, whether prior to or after In Focus's Stockholders' Approval but after such approval only to the extent permitted by applicable law. No such amendment, supplement or modification shall be effective unless set forth in a written instrument duly executed by or on behalf of each party hereto.

8.4  Waiver.  At any time prior to the Effective Time, any party hereto, by action taken by or on behalf of its Board of Directors, may to the extent permitted by applicable law (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties of the other parties hereto contained herein or in any document delivered pursuant hereto or (iii) waive compliance with any of the covenants, agreements or conditions of the other parties hereto contained herein. No such extension or waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the party extending the time of performance or waiving any such inaccuracy or non-compliance. No waiver by any party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion.

ARTICLE IX
GENERAL PROVISIONS

9.1  No Survival of Representations and Warranties.  None of the representations and warranties in this Agreement or in any instrument or document delivered pursuant to this Agreement shall survive the Effective Time. This Section 9.1 shall not limit any covenant or agreement of the parties which by its terms contemplates performance after the Effective Time.

9.2  Notices.  All notices, requests and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally or by facsimile transmission, or by an internationally recognized courier service such as Federal Express, to the parties at the following addresses or facsimile numbers:

    If to In Focus, to:

 
In Focus Systems, Inc.
27700B SW Parkway Avenue
Wilsonville, Oregon 97070
Facsimile No.: (503) 685-8838
Attn: Chief Executive Officer

    with copies (which shall not constitute notice) to:

 
Garvey, Schubert & Barer
121 S.W. Morrison, 11^th Floor
Portland, Oregon 97204
Facsimile No.: (503) 226-0259
Attn: Bruce A. Robertson and
    Stephen J. Connolly  
and  
Thommessen Krefting Greve Lund
Haakon VII's gate 10
Postboks 1484 Vika
N-0116 Oslo, Norway
Facsimile No.: 011-47 23-11-10-10
Attn: Olav Vikoren

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    If to Proxima, to:

Proxima ASA	and	Proxima Corporation
K.G. Medahlsvei 9		9440 Carroll Park Drive
Postboks 1403		San Diego, California 92121-2298
N-1602 Fredrikstad, Norway		Facsimile No.: (858) 638-2951
Facsimile No.: 011-47-69-34-06-32		Attn: Thomas D. Kampfer
Attn: Chief Executive Officer

    with copies (which shall not constitute notice) to:

Brobeck, Phleger & Harrison LLP	and	Wikborg, Rein & Co.
38 Technology Drive		P. O. Box 1153 Vika
Irvine, California 92618-5312		01170 Oslo, Norway
Facsimile No.: (949) 790-6301		Facsimile No.: 011-47-22-82-75-01
Attn: Patrick Arrington		Attn: Einar Greve

    All such notices, requests and other communications will (i) if delivered personally or by an internationally recognized courier service to the address as provided in this Section, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided in this Section, be deemed given upon receipt, and (iii) if delivered by mail in the manner described above to the address as provided in this Section, be deemed given upon receipt (in each case regardless of whether such notice, request or other communication is received by any other person to whom a copy of such notice is to be delivered pursuant to this Section). Any party from time to time may change its address, facsimile number or other information for the purpose of notices to that party by giving notice in writing specifying such change to the other parties hereto.

9.3  Entire Agreement.  This Agreement, including all Exhibits and Schedules referred to herein or delivered pursuant hereto, and the Nondisclosure Agreement between In Focus and Proxima, dated January 24, 2000, supersede all prior discussions and agreements among the parties hereto with respect to the subject matter hereof and thereof, and contain the sole and entire agreement among the parties hereto with respect to the subject matter hereof and thereof. No prior draft of this Agreement may be used in the construction or interpretation hereof.

9.4  Public Announcements.  Except as otherwise required by law or the rules of any applicable securities exchange or national market system, so long as this Agreement is in effect, In Focus and Proxima will not, and will not permit any of their respective Representatives to, issue or cause the publication of any press release or make any other public announcement with respect to the transactions contemplated by this Agreement without the consent of the other party, which consent shall not be unreasonably withheld or delayed. In Focus and Proxima will cooperate with each other in the development and distribution of all press releases and other public announcements with respect to this Agreement and the transactions contemplated hereby, and will furnish the other with drafts of any such releases and announcements as far in advance as practicable. The parties agree that the initial press release to be issued with respect to the transactions contemplated by this Agreement shall be in the form heretofore agreed to by the parties and signed on their behalf for identification.

9.5  No Third Party Beneficiary.  The terms and provisions of this Agreement are intended solely for the benefit of each party hereto and their respective successors or permitted assigns, and it is not the intention of the parties to confer third-party beneficiary rights upon any other person.

9.6  No Assignment; Binding Effect.  Neither this Agreement nor any right, interest or obligation hereunder may be assigned by any party hereto without the prior written consent of the other parties hereto and any attempt to do so will be void, except that In Focus may assign any or all of its rights, interests and obligations hereunder, including the right to consummate the Share Exchange and purchase

Page 23 - BUSINESS COMBINATION AGREEMENT

all or any portion of Proxima Ordinary Shares tendered pursuant to the Exchange Offer, to a direct or indirect wholly owned Subsidiary of In Focus, provided that any such assignment will not relieve In Focus of any liability hereunder and any such Subsidiary must agree in writing to be bound by all of the terms, conditions and provisions contained herein. Subject to the preceding sentence, this Agreement is binding upon, inures to the benefit of and is enforceable by the parties hereto and their respective successors and assigns.

9.7  Headings.  The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.

9.8  Invalid Provisions.  If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law, and if the rights or obligations of any party hereto under this Agreement will not be materially and adversely affected thereby, (i) such provision will be fully severable, (ii) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (iii) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the legal, invalid or unenforceable provision or by its severance herefrom and (iv) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible.

9.9  Governing Law.  The Exchange Offer and Share Exchange (to the extent they are conducted in Norway) shall be governed by and effected in accordance with Norwegian law. In all other respects, this Agreement shall be governed by and construed in accordance with the laws of the State of New York, including Sections 5-1401 to 5-1402 of the New York General Obligation Law and Section 327(b) of the New York Civil Practice Law and Rules.

9.10  Consent to Jurisdiction.  Each of the parties hereto (a) consents to submit itself to the personal jurisdiction of any federal court located in the Borough of Manhattan, The City of New York, State of New York or any New York state court sitting in the Borough of Manhattan, The City of New York in the event any dispute arises out of or relates to this Agreement or any of the transactions contemplated by this Agreement, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, including, without limitation, a motion to dismiss on the grounds of forum non conveniens, (c) agrees that it will not bring any action arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than a federal court sitting in the Borough of Manhattan, The City of New York, State of New York or a New York state court sitting in the Borough of Manhattan, The City of New York, and (d) waives any right to a trial by jury with respect to any claim, counterclaim or action arising out of or in connection with this Agreement or the transactions contemplated hereby.

9.11  Counterparts.  This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

Page 24 - BUSINESS COMBINATION AGREEMENT

    IN WITNESS WHEREOF, each party hereto has caused this Agreement to be signed by its officer thereunto duly authorized as of the date first above written.

IN FOCUS SYSTEMS, INC.
By:	/s/ John V. Harker
Name:	John V. Harker
Title:	Chairman, President and CEO
PROXIMA ASA
By:	/s/ Svein S. Jacobsen
Name:	Svein S. Jacobsen
Title:	Styreformann
By:	/s/ Ole J. Fredriksen
Name:	Ole J. Fredrisksen
Title:	Administrative Director

Page 25 - BUSINESS COMBINATION AGREEMENT

ANNEX OF DEFINED TERMS

1.1

"Acquisition Proposal" shall have the meaning set forth in Section 4.3(a).

1.2

"affiliate" of any person shall mean, as to any person, any other person which, directly or indirectly, controls, is controlled by, or is under common control with, such person, where "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise.

1.3	"Agreement" shall have the meaning set forth in the preamble.
1.4	"Antitrust Division" shall have the meaning set forth in Section 6.3(a).
1.5	"APB No. 16" shall have the meaning set forth in Section 3.17.
1.6	"Code" shall have the meaning set forth in Section 3.11(b).
1.7	"Companies Act" shall have the meaning set forth in Section 1.3.
1.8	"Company Permits" shall have the meaning set forth in Section 3.1.
1.9	"Confidential Information" shall have the meaning set forth in Section 6.1(b).
1.1	"Contracts" shall have the meaning set forth in Section 3.5(b).
1.1	"DBAB" shall have the meaning set forth in Section 3.20.
1.1	"Disclosure Schedule" shall mean the disclosure schedule delivered by each Representing Party to the other setting forth (organized by the number and letter of the corresponding section and paragraph in the Business Combination Agreement, provided, that matters disclosed in any section of the Disclosure Schedule shall be deemed to be disclosed for all purposes of such disclosure schedule) the Representing Party's exceptions to the representations and warranties of such Representing party contained in Article III, and provided further that inclusion of an item in a disclosure schedule shall not be construed to mean that the item is required to be disclosed or is material.
1.1	"Effective Time" shall have the meaning set forth in Section 1.1(d).
1.1	"Encumbrance" shall mean any mortgage, pledge, lien, charge, encumbrance, security interest, claim or option.
1.15	"Environmental Law" means any Law of any Governmental Entity relating to human health, safety or protection of the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants or Hazardous Materials in the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata), or otherwise relating to the treatment, storage, disposal, transport or handling of any Hazardous Material. "Hazardous Material" means (A) petroleum or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation and transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls (PCBs); (B) any chemicals, materials, substances or wastes which are now or hereafter become defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants" or words of similar import, under any Environmental Law; and (C) any other chemical, material, substance or waste, exposure to which is now prohibited, limited or regulated by any Governmental Entity.
1.16	"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended.

Page 1 - ANNEX OF DEFINED TERMS

1.17	"ERISA Affiliate" shall have the meaning set forth in Section 3.11(a).
1.18	"Exchange Act" shall have the meaning set forth in Section 3.6(a).
1.19	"Exchange Agent" shall have the meaning set forth in Section 1.5.
1.20	"Exchange Offer" shall have the meaning set forth in Section 1.1(a).
1.21	"Exchange Offer Conditions" shall have the meaning set forth in Section 1.1(b).
1.22	"Exchange Offer Documents" shall have the meaning set forth in Section 1.2.
1.23	"Exchange Offer Expiration Date" shall have the meaning set forth in Section 1.1(c).
1.24	"Exchange Offer Ratio" shall have the meaning set forth in Section 1.1(a).
1.25	"FTC" shall have the meaning set forth in Section 6.3(a).
1.26	"Fully Diluted Basis" shall mean a basis that takes into account all outstanding Proxima Ordinary Shares and the maximum aggregate number of Proxima Ordinary Shares that may be issued in respect of any warrants, options, convertible instruments or other rights pursuant to which the holder thereof may acquire Proxima Ordinary Shares, regardless of whether currently exercisable or convertible.
1.27	"Governmental Entity" shall mean any court, tribunal or administrative, governmental or regulatory body, agency, commission, division, department, public body or other authority, whether federal, state, local or foreign.
1.28	"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
1.29	"In Focus" shall mean the corporate party to the Agreement identified in the first paragraph.
1.30	"In Focus Common Stock" shall have the meaning set forth in Section 1.1(a).
1.31	"In Focus Financial Statements" shall have the meaning set forth in Section 3.6(a).
1.32	"In Focus SEC Filings" shall have the meaning set forth in Section 3.6(a).
1.33	"In Focus Stockholders' Approval" shall have the meaning set forth in Section 6.2(a).
1.34	"In Focus Stockholders Meeting" shall have the meaning set forth in Section 6.2(a).
1.35	"Intellectual Property" shall mean (i) any and all trademarks and trademark rights, trade names and trade name rights, service marks and service mark rights, trade dress, copyrights and copyright rights, patents and patent rights, mask works, trade secrets, know-how, proprietary information, processes, formulae, computer programs (including source code, object code and data), industrial models, designs, methodologies, business names, product names, brand names, logos and slogans; (ii)  any and all pending applications for trademarks, service marks, copyrights, patents and mask works and any and all other kinds of intellectual property; and (iii) all documentation related to such intellectual property, including, without limitation, technical specifications, manufacturing, engineering and technical drawings, and comprising physical documents and/or electronic files.
1.36	"Laws" shall have the meaning set forth in Section 3.5(b).
1.37	"Mandatory Offer" shall have the meaning set forth in Section 1.3.
1.38	"Material Adverse Effect" with respect to In Focus or Proxima shall mean any event or state of facts that is or would reasonably be expected to be materially adverse to the business, assets, results of operations or financial condition of such Party and its Subsidiaries, taken as a whole.
1.39	"Minimum Condition" shall have the meaning set forth in Section 1.1(b).

Page 2 - ANNEX OF DEFINED TERMS

1.40	"Norwegian Prospectus/Offer Document" shall have the meaning set forth in Section 1.2.
1.41	"Norwegian Tax Approval" shall have the meaning set forth in Section 6.9.
1.42	"Option Assumption Agreements" shall have the meaning set forth in Section 5.2(a).
1.43	"OSE" shall have the meaning set forth in Section 1.2.
1.44	"Orders" shall have the meaning set forth in Section 3.5(b).
1.45	"Outside Termination Date" shall have the meaning set forth in Section 8.1(b)(i).
1.46	"Payable" shall have the meaning set forth in Section 4.1(a)(12).
1.47	"person" shall mean an individual, corporation, partnership, association, trust, or any other entity or organization, including, without limitation, a Governmental Entity.
1.48	"Plans" shall have the meaning set forth in Section 3.11(a).
1.49	"Potential Acquiror" shall have the meaning set forth in Section 4.3(a).
1.50	"Proxima" shall mean the corporate party to the Agreement identified in the first paragraph.
1.51	"Proxima Financial Statements" shall have the meaning set forth in Section 3.6(b).
1.52	"Proxima Norwegian Option Plans" shall have the meaning set forth in Section 5.2(a).
1.53	"Proxima Norwegian Options" shall have the meaning set forth in Section 5.2(a).
1.54	"Proxima Ordinary Shares" shall have the meaning set forth in Section 1.1(a).
1.55	"Proxima OSE Filings" shall have the meaning set forth in Section 3.6(b).
1.56	"Proxima U.S. Options" shall have the meaning set forth in Section 5.1.
1.57	"Proxima U.S. Option Plan" shall have the meaning set forth in Section 5.1.
1.58	"Proxy Statement" shall have the meaning set forth in Section 6.2(b).
1.59	"Representatives" shall have the meaning set forth in Section 6.1(b).
1.60	"Representing Party" shall have the meaning set forth in Article III.
1.61	"Representing Party's Filings" shall have the meaning set forth in Section 3.7.
1.62	"Representing Party's Financial Statements" shall have the meaning set forth in Section 3.7.
1.63	"Restraints" shall have the meaning set forth in Section 7.1(j).
1.64	"SEC" shall have the meaning set forth in Section 3.6(a).
1.65	"Securities Act" shall have the meaning set forth in Section 3.6(a).
1.66	"Securities Trading Act" shall have the meaning set forth in Section 1.2.
1.67	"Share Exchange" shall have the meaning set forth in Section 1.1(d).
1.68	"SSB" shall have the meaning set forth in Section 3.20.
1.69	"Subsidiary" shall mean with respect to In Focus or Proxima, as the case may be, any person (i) of which fifty percent or more of either the equity interests in, or the voting control of, such person is directly or indirectly beneficially owned by In Focus or Proxima, or (ii) In Focus or Proxima has the ability to elect fifty percent or more of the directors or members of the governing board of such person, and in either such case, such person is a consolidated entity in the consolidated financial statements of In Focus or Proxima, as the case may be.

Page 3 - ANNEX OF DEFINED TERMS

1.70	"Superior Proposal" shall have the meaning set forth in Section 4.3(b)(i).
1.71	"Taxes" shall mean any and all taxes, duties, levies, imposts or other governmental charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any taxing authority, including without limitation, taxes or other charges on or with respect to income, net assets, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers' compensation, unemployment compensation, or net worth, and taxes or other charges in the nature of excise, withholding, ad valorem or value added.
1.72	"Tax Returns" shall mean any return, report or similar statement required to be filed with respect to any Taxes, including, without limitation, any information return, claim for refund, amended return or declaration of estimated Taxes.
1.73	"Trigger Event" shall mean any of the following events:
	(a)  A party enters into, or publicly announces its intention to enter into, an agreement or agreement in principle with respect to any Acquisition Proposal or similar business combination or transaction other than the transactions contemplated by this Agreement;
	(b)  A party's Board of Directors or any committee thereof shall have withdrawn its approval or recommendation of the Exchange Offer, or this Agreement, or modified its approval or recommendation in a manner adverse to the other party; or
	(c)  A party's Board of Directors or any committee thereof shall have made any recommendation with respect to an Acquisition Proposal by any person (other than In Focus) other than a recommendation rejecting or against such Acquisition Proposal.
1.74	"US GAAP" shall have the meaning set forth in Recital F.

Page 4 - ANNEX OF DEFINED TERMS

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BUSINESS COMBINATION AGREEMENT by and among IN FOCUS SYSTEMS, INC. and PROXIMA ASA Dated as of March 5, 2000
BUSINESS COMBINATION AGREEMENT
RECITALS
ARTICLE I THE EXCHANGE OFFER
ARTICLE II COMPOSITION OF IN FOCUS BOARD AFTER EFFECTIVE TIME
ARTICLE III REPRESENTATIONS AND WARRANTIES
ARTICLE IV COVENANTS OF PROXIMA AND IN FOCUS
ARTICLE V TREATMENT OF PROXIMA STOCK OPTION PLANS
ARTICLE VI ADDITIONAL AGREEMENTS
ARTICLE VII CONDITIONS TO EXCHANGE OFFER
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER
ARTICLE IX GENERAL PROVISIONS
ANNEX OF DEFINED TERMS

EX-3.1

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EXHIBIT 3.1

1990 RESTATED
ARTICLES OF INCORPORATION
OF
IN FOCUS SYSTEMS, INC.

    Pursuant to the Oregon Business Corporation Act, the undersigned corporation adopts the following 1990 Restated Articles of Incorporation, EFFECTIVE DECEMBER 29, 1990 AT 12:01 A.M., which shall supersede the original Articles of Incorporation and all prior amendments and restatements thereto.

ARTICLE I

    The name of this Corporation is IN FOCUS SYSTEMS, INC. and its duration shall be perpetual.

ARTICLE II

    Corporation is organized for purposes of:

    (1) Developing, manufacturing, and marketing visual display and presentation products utilizing state-of-the-art liquid crystal display technology; and

    (2) Engaging in any other lawful activity for which corporations may be organized under the Oregon Business Corporation Act.

ARTICLE III

    The aggregate number of shares which the Corporation shall have authority to issue is 30,000,000 shares of Common Stock.

ARTICLE IV

    The address of the registered office of the Corporation is:

121 S.W. Morrison
Eleventh Floor
Portland, Oregon 97204

and the name of its registered agent at such address is Stephen J. Connolly.

ARTICLE V

    The address where the Division may mail notices:

Stephen J. Connolly, Esq.
121 S.W. Morrison
Eleventh Floor
Portland, Oregon 97204

ARTICLE VI

    To the fullest extent permitted by the Oregon Business Corporation Act, as it exists on the date hereof or may hereafter be amended or be restricted by other applicable law then in effect, this Corporation shall indemnify any person who has been made, or is threatened to be made, a party to an action, suit, or proceeding, whether civil, criminal, administrative, investigative, or otherwise (including an action, suit, or

Page 1 -1990 RESTATED ARTICLES OF INCORPORATION

proceeding by or in the right of the Corporation) by reason of the fact that the person is or was a director or officer of the Corporation, or a fiduciary within the meaning of the Employee Retirement Income Security Act of 1974 with respect to any employee benefit plan of the Corporation, or serves or served at the request of the Corporation as a director or officer, or as a fiduciary of an employee benefit plan, of another corporation, partnership, joint venture, trust, or other enterprise. This Article VI shall not be deemed exclusive of any other provisions for indemnification of directors, officers and fiduciaries that may be included in any statute, bylaw, agreement, resolution of shareholders or directors or otherwise, both as to action in any official capacity and action in another capacity while holding office.

ARTICLE VII

    The Corporation elects to waive preemptive rights and no shareholder shall have any preemptive or preferential right to subscribe to or otherwise acquire any shares of stock of the Corporation, or any obligations or securities convertible into or carrying options or warrants to purchase shares of stock of the Corporation, whether now or hereafter authorized and whether or not the issuance or sale of any such shares, obligations, or securities would adversely affect such shareholder's proportionate voting power, other than such rights, if any, as the Board of Directors in its discretion from time to time may grant, and at such price as the Board of Directors may fix.

ARTICLE VIII

    No director of the Corporation shall be personally liable to the Corporation or its shareholders for monetary damages for conduct as a director, provided that this Article VIII shall not eliminate the liability of a director for any act or omission for which such elimination of liability is not permitted under the Oregon Business Corporation Act. No amendment to the Oregon Business Corporation Act that further limits the acts or omissions for which elimination of liability is permitted shall affect the liability of a director for any act or omission which occurs prior to the effective date of such amendment.

    The undersigned officer declares under penalty of perjury that he has examined the foregoing and, to the best of his knowledge and belief, it is true, correct and complete.

    DATED this 28th day of December, 1990, effective December 29, 1990 at 12:01 a.m.

IN FOCUS SYSTEMS, INC.
By:	/s/               Joseph I. Martin, Secretary

    Person to contact about this filing:

Stephen J. Connolly, Esq.
GARVEY, SCHUBERT & BARER
121 S.W. Morrison
Eleventh Floor
Portland, Oregon 97204
Telephone: (503) 228-3939

 
30318.00100/204307.1

Page 2 -1990 RESTATED ARTICLES OF INCORPORATION

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1990 RESTATED ARTICLES OF INCORPORATION OF IN FOCUS SYSTEMS, INC.

EX-3.2

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EXHIBIT 3.2

Amendment to 1990 Articles of Incorporation

Article III is amended as follows:

    The aggregate number of shares which the Corporation shall have the authority to issue is 50,000,000.

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Amendment to 1990 Articles of Incorporation

EX-3.3

EXHIBIT 3.3

     Amendments to the 1990 Articles of Incorporation of In Focus Systems, Inc.

Article I is amended as follows:

    The name of this Corporation is InFocus Corporation and its duration shall be perpetual.

Article III is amended as follows:

    The aggregate number of shares which the Corporation shall have the authority to issue is 150,000,000.

EX-3.4

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EXHIBIT 3.4

1997 RESTATED BYLAWS
OF
IN FOCUS SYSTEMS, INC.

CONTENTS

SECTION 1.	OFFICES		1
SECTION 2.	SHAREHOLDERS		1
2.1	Annual Meeting		1
2.2	Special Meetings		1
2.3	Place of Meeting		1
2.4	Notice of Meeting		1
2.5	Waiver of Notice		2
2.6	Fixing of Record Date for Determining Shareholders		2
2.7	Shareholders' List		3
2.8	Quorum		3
2.9	Manner of Acting		3
2.10	Proxies		4
2.11	Voting of Shares		4
2.12	Voting for Directors		4
2.13	Action by Shareholders Without a Meeting		4
2.14	Voting of Shares by Corporation		4
	2.14.1	Shares Held by Another Corporation	4
	2.14.2	Shares Held by the Corporation	4
2.15	Acceptance or Rejection of Shareholder Votes, Consents, Waivers and Proxy Appointments		5
	2.15.1	Documents Bearing Name of Shareholders	5
	2.15.2	Documents Bearing Name of Third Parties	5
	2.15.3	Rejection of Documents	5
2.16	Subject of Meetings		5
SECTION 3.	BOARD OF DIRECTORS		6
3.1	General Powers		6
3.2	Number, Tenure and Qualifications		7
3.3	Nominations of Directors		7
3.4	Annual and Regular Meetings		8
3.5	Special Meetings		8
3.6	Meetings by Telecommunications		8
3.7	Notice of Special Meetings		8
	3.7.1	Personal Delivery	9
	3.7.2	Delivery by Mail	9
	3.7.3	Delivery by Telegraph	9
	3.7.4	Oral Notice	9
	3.7.5	Notice by Facsimile Transmission	9
	3.7.6	Notice by Private Courier	9
3.8	Waiver of Notice		9
	3.8.1	Written Waiver	9
	3.8.2	Waiver by Attendance	10
3.9	Quorum		10
3.10	Manner of Acting		10
3.11	Presumption of Assent		10
3.12	Action by Board or Committees Without a Meeting		10
3.13	Resignation		10

- i -

3.14	Removal		10
3.15	Vacancies		11
3.16	Minutes		11
3.17	Executive and Other Committees		11
	3.17.1	Creation of Committees	11
	3.17.2	Authority of Committees	11
	3.17.3	Quorum and Manner of Acting	12
	3.17.4	Minutes of Meetings	12
	3.17.5	Resignation	12
	3.17.6	Removal	12
3.18	Compensation		12
SECTION 4.	OFFICERS		12
4.1	Number		12
4.2	Appointment and Term of Office		13
4.3	Resignation		13
4.4	Removal		13
4.5	Vacancies		13
4.6	Chair of the Board		13
4.7	Chief Executive Officer		13
4.8	President		14
4.9	Vice President		14
4.10	Secretary		14
4.11	Treasurer		14
4.12	Salaries		15
SECTION 5.	CONTRACTS, LOANS, CHECKS AND DEPOSITS		15
5.1	Contracts		15
5.2	Loans to the Corporation		15
5.3	Loans to Directors		15
5.4	Checks, Drafts, Etc.		15
5.5	Deposits		15
SECTION 6.	CERTIFICATES FOR SHARES AND THEIR TRANSFER		15
6.1	Issuance of Shares		15
6.2	Escrow for Shares		16
6.3	Certificates for Shares		16
6.4	Stock Records		16
6.5	Restriction on Transfer		16
	6.5.1	Securities Laws	16
	6.5.2	Other Restrictions	16
6.6	Transfer of Shares		16
6.7	Lost or Destroyed Certificates		17
6.8	Transfer Agent and Registrar		17
6.9	Officer Ceasing to Act		17
6.10	Fractional Shares		17
SECTION 7.	BOOKS AND RECORDS		17
SECTION 8.	FISCAL YEAR		17
SECTION 9.	SEAL		17

- ii -

SECTION 10.	INDEMNIFICATION	18
10.1	Directors and Officers	18
10.2	Employees and Other Agents	18
10.3	No Presumption of Bad Faith	18
10.4	Advances of Expenses	18
10.5	Enforcement	18
10.6	Nonexclusivity of Rights	19
10.7	Survival of Rights	19
10.8	Insurance	19
10.9	Amendments to Law	19
10.10	Savings Clause	19
10.11	Certain Definitions	19
SECTION 11.	AMENDMENTS	20

- iii -

1997 RESTATED BYLAWS
OF
IN FOCUS SYSTEMS, INC.

SECTION 1
Offices

    The principal office of the Corporation shall be located at the principal place of business or such other place as the Board of Directors (the "Board") may designate. The Corporation may have such other offices, either within or without the State of Oregon, as the Board may designate or as the business of the Corporation may require from time to time.

SECTION 2
Shareholders

    2.1  Annual Meeting.  The annual meeting of the shareholders shall be held in the month of April each year, or in such other month as fixed by the Board, on such date and at such time as fixed by the Board, at the principal office of the Corporation or at such other place as fixed by the Board, for the purpose of electing Directors and transacting such other business as may properly come before the meeting.

    2.2  Special Meetings.  The Board or the Chair of the Board may call special meetings of the shareholders for any purpose. The holders of not less than one-tenth of all the outstanding shares of the Corporation entitled to vote on any issue proposed to be considered at the proposed special meeting, if they date, sign and deliver to the Corporation's Secretary a written demand for a special meeting describing the purpose(s) for which it is to be held, may call a special meeting of the shareholders for such stated purpose(s).

    2.3  Place of Meeting.  All meetings shall be held at the principal office of the Corporation or at such other place as designated by the Board, by any persons entitled to call a meeting hereunder, or in a waiver of notice signed by all of the shareholders entitled to vote at the meeting.

    2.4  Notice of Meeting.

    2.4.1 The Corporation shall cause to be delivered to each shareholder entitled to notice of or to vote at an annual or special meeting of shareholders, either personally or by mail, not less than ten (10) nor more than sixty (60) days before the meeting, written notice stating the date, time and place of the meeting and, in the case of a special meeting, the purpose(s) for which the meeting is called.

    2.4.2 Notice to a shareholder of an annual or special shareholder meeting shall be in writing. Such notice, if in comprehensible form, is effective (a) when mailed, if it is mailed postpaid and is correctly addressed to the shareholder's address shown in the Corporation's then current record of shareholders; or (b) when received by the shareholder, if it is delivered by telegraph, facsimile transmission or private courier.

    2.4.3 If an annual or special shareholders' meeting is adjourned to a different date, time, or place, notice need not be given of the new date, time, or place if the new date, time, or place is announced at the meeting before adjournment, unless a new record date for the adjourned meeting is or must be fixed under Section 2.6.1 of these Bylaws or the Oregon Business Corporation Act.

    2.5  Waiver of Notice.

    2.5.1 Whenever any notice is required to be given to any shareholder under the provisions of these Bylaws, the Articles of Incorporation or the Oregon Business Corporation Act, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time

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stated therein, and delivered to the Corporation for inclusion in the minutes for filing with the corporate records, shall be deemed equivalent to the giving of such notice.

    2.5.2 The attendance of a shareholder at a meeting waives objection to lack of, or defect in, notice of such meeting or of consideration of a particular matter at the meeting, unless the shareholder, at the beginning of the meeting or prior to consideration of such matter, objects to holding the meeting, transacting business at the meeting, or considering the matter when presented at the meeting.

    2.6  Fixing of Record Date for Determining Shareholders.

    2.6.1 For the purpose of determining shareholders entitled to notice of, or to vote at, any meeting of shareholders or any adjournment thereof, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other purpose, the Board may fix in advance a date as the record date for any such determination. Such record date shall be not more than seventy (70) days, and in case of a meeting of shareholders, not less than ten (10) days, prior to the date on which the particular action requiring such determination is to be taken. If no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting, or to receive payment of a dividend, the date on which the notice of meeting is mailed or on which the resolution of the Board declaring such dividend is adopted, as the case may be, shall be the record date for such determination. Such determination shall apply to any adjournment of the meeting, provided such adjournment is not set for a date more than 120 days after the date fixed for the original meeting.

    2.6.2 The record date for the determination of shareholders entitled to demand a special shareholder meeting shall be the date the first shareholder signs the demand.

    2.7  Shareholders' List.

    2.7.1 Beginning two (2) business days after notice of a meeting of shareholders is given, a complete alphabetical list of the shareholders entitled to notice of such meeting shall be made, arranged by voting group, and within each voting group by class or series, with the address of and number of shares held by each shareholder. This record shall be kept on file at the Corporation's principal office or at a place identified in the meeting notice in the city where the meeting will be held. On written demand, this record shall be subject to inspection by any shareholder at any time during normal business hours. Such record shall also be kept open at such meeting for inspection by any shareholder.

    2.7.2 A shareholder may, on written demand, copy the shareholders' list at such shareholder's expense during regular business hours, provided that:

    (a) Such shareholder's demand is made in good faith and for a proper purpose;

    (b) Such shareholder has described with reasonable particularity such shareholder's purpose in the written demand; and

    (c) The shareholders' list is directly connected with such shareholder's purpose.

    2.8  Quorum.  A majority of the votes entitled to be cast on a matter at a meeting by a voting group, represented in person or by proxy, shall constitute a quorum of that voting group for action on that matter at a meeting of the shareholders. If a quorum is not present for a matter to be acted upon, a majority of the shares represented at the meeting may adjourn the meeting from time to time without further notice. If the necessary quorum is present or represented at a reconvened meeting following such an adjournment, any business may be transacted that might have been transacted at the meeting as originally called. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum.

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    2.9  Manner of Acting.

    2.9.1 If a quorum exists, action on a matter (other than the election of Directors) by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the affirmative vote of a greater number is required by these Bylaws, the Articles of Incorporation or the Oregon Business Corporation Act.

    2.9.2 If a matter is to be voted on by a single group, action on that matter is taken when voted upon by that voting group. If a matter is to be voted on by two or more voting groups, action on that matter is taken only when voted upon by each of those voting groups counted separately. Action may be taken by one voting group on a matter even though no action is taken by another voting group entitled to vote on such matter.

    2.10  Proxies.  A shareholder may vote by proxy executed in writing by the shareholder or by his or her attorney-in-fact. Such proxy shall be effective when received by the Secretary or other officer or agent authorized to tabulate votes at the meeting. A proxy shall become invalid eleven (11) months after the date of its execution, unless otherwise expressly provided in the proxy. A proxy for a specified meeting shall entitle the holder thereof to vote at any adjournment of such meeting but shall not be valid after the final adjournment thereof.

    2.11  Voting of Shares.  Each outstanding share entitled to vote shall be entitled to one vote upon each matter submitted to a vote at a meeting of shareholders.

    2.12  Voting for Directors.  Each shareholder may vote, in person or by proxy, the number of shares owned by such shareholder that are entitled to vote at an election of Directors, for as many persons as there are Directors to be elected and for whose election such shares have a right to vote. Unless otherwise provided in the Articles of Incorporation, Directors are elected by a plurality of the votes cast by shares entitled to vote in the election at a meeting at which a quorum is present.

    2.13  Action by Shareholders Without a Meeting.  Any action which could be taken at a meeting of the shareholders may be taken without a meeting if a written consent setting forth the action so taken is signed by all shareholders entitled to vote with respect to the subject matter thereof. The action shall be effective on the date on which the last signature is placed on the consent, or at such earlier or later time as is set forth therein. Such written consent, which shall have the same force and effect as a unanimous vote of the shareholders, shall be inserted in the minute book as if it were the minutes of a meeting of the shareholders.

    2.14  Voting of Shares by Corporation.

    2.14.1  Shares Held by Another Corporation.  Shares standing in the name of another corporation may be voted by such officer, agent or proxy as the bylaws of such other corporation may prescribe, or, in the absence of such provision, as the board of directors of such corporation may determine; provided, however, such shares are not entitled to vote if the Corporation owns, directly or indirectly, a majority of the shares entitled to vote for directors of such other corporation.

    2.14.2  Shares Held by the Corporation.  Authorized but unissued shares shall not be voted or counted for determining whether a quorum exists at any meeting or counted in determining the total number of outstanding shares at any given time. Notwithstanding the foregoing, shares of its own stock held by the Corporation in a fiduciary capacity may be counted for purposes of determining whether a quorum exists, and may be voted by the Corporation.

    2.15  Acceptance or Rejection of Shareholder Votes, Consents, Waivers and Proxy Appointments.

    2.15.1  Documents Bearing Name of Shareholders.  If the name signed on a vote, consent, waiver or proxy appointment corresponds to the name of a shareholder, the Secretary or other agent authorized to tabulate votes at the meeting may, if acting in good faith, accept such vote, consent, waiver or proxy appointment and give it effect as the act of the shareholder.

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    2.15.2  Documents Bearing Name of Third Parties.  If the name signed on a vote, consent, waiver or proxy appointment does not correspond to the name of its shareholder, the Secretary or other agent authorized to tabulate votes at the meeting may nevertheless, if acting in good faith, accept such vote, consent, waiver or proxy appointment and give it effect as the act of the shareholder if:

    (a) The shareholder is an entity and the name signed purports to be that of an officer or an agent of the entity;

    (b) The name signed purports to be that of an administrator, executor, guardian or conservator representing the shareholder and, if the Secretary or other agent requests, acceptable evidence of fiduciary status has been presented;

    (c) The name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder, and, if the Secretary or other agent requests, acceptable evidence of this status has been presented;

    (d) The name signed purports to be that of a pledgee, beneficial owner or attorney-in-fact of the shareholder and, if the Secretary or other agent requests, acceptable evidence of the signatory's authority to sign has been presented; or

    (e) Two or more persons are the shareholder as co-tenants or fiduciaries and the name signed purports to be the name of at least one of the co-owners and the person signing appears to be acting on behalf of all co-owners.

    2.15.3  Rejection of Documents.  The Secretary or other agent authorized to tabulate votes at the meeting is entitled to reject a vote, consent, waiver or proxy appointment if such agent, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the shareholder.

    2.16  Subject of Meetings.  To be properly brought before an annual meeting of shareholders, business must be either (i) specified in the notice of the meeting (or any supplement or amendment thereto) given by or at the direction of the Board, (ii) otherwise brought before the meeting by or at the direction of the Board, or (iii) otherwise brought before the meeting by a shareholder who is a shareholder of record at the time of giving of the notice provided for in this Section 2.16, who shall be entitled to vote at such meeting and who complies fully with all of the notice procedures and other requirements set forth in this Section 2.16. In addition to any other applicable requirements, for business to be properly brought before an annual meeting of shareholders by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a shareholder's notice shall be delivered to or mailed and received at the principal executive offices of the Corporation not less than sixty (60) calendar days nor more than ninety (90) calendar days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is changed by more than thirty (30) calendar days from such anniversary date, notice by the shareholder to be timely must be so received not later than the close of business on the tenth (10th) calendar day following the earlier of the day on which notice of the date of the meeting was mailed or public disclosure was made. A shareholder's notice to the Corporation's Secretary of business proposed to be conducted at any annual or special meeting of shareholders shall set forth as to each matter the shareholder proposes to bring before such meeting (i) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (ii) the name and record address of the shareholder proposing such business and the name and address of the beneficial owner, if any, on whose behalf the proposal is made, (iii) the class, series and number of shares of the capital stock of the Corporation which are owned beneficially and of record by such shareholder and by the beneficial owner, if any, on whose behalf the proposal is made, and (iv) any material interest of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made in such business. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at a meeting of shareholders except in accordance with the

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procedures set forth in this Section 2.16. The officer of the Corporation presiding at a meeting of shareholders (the "Presiding Officer") shall determine whether the proposed business is properly brought before the meeting in accordance with the provisions of this Section 2.16. If the Presiding Officer should determine that the proposed business is not properly brought before the meeting, the Presiding Officer shall state such determination to the meeting, whereupon any such business not properly brought before the meeting shall not be transacted or otherwise brought before the meeting. Notwithstanding the foregoing provisions of this Section 2.16, a shareholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the matters set forth herein.

SECTION 3
Board of Directors

    3.1  General Powers.  The business and affairs of the Corporation shall be managed by the Board, except as may be otherwise provided in these Bylaws, the Articles of Incorporation or the Oregon Business Corporation Act.

    3.2  Number, Tenure and Qualifications.  The authorized number of Directors of the Corporation shall be no less than three and no more than seven. The current number of Directors shall be within such maximum and minimum limits as determined, or as amended from time to time, by resolution adopted by the Board. The maximum or minimum number of Directors may be changed from time to time by amendment to these Bylaws, but no decrease in the number of Directors shall shorten the term of any incumbent Director. Each Director shall hold office until the next annual meeting of shareholders or until removed. If a Director's term expires, however, the Director shall continue to serve until the Director's successor shall have been elected and qualified, or until there is a decrease in the number of Directors. Directors need not be shareholders of the Corporation or residents of the State of Oregon.

    3.3  Nominations of Directors.  Only persons who are nominated in accordance with the following procedures shall be eligible for election as Directors. Nominations of persons for election to the Board of the Corporation at any meeting of shareholders may be made by or at the direction of the Board, by any committee of persons appointed by the Board or at the meeting by any shareholder of the Corporation who is a shareholder of record at the time of giving notice provided for in this Section 3.3, who shall be entitled to vote for the election of directors at the meeting and who complies fully with all of the notice procedures and other requirements set forth in this Section 3.3 and the procedures and requirements set forth in the Oregon Business Corporation Act. Nominations by any shareholder shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a shareholder's notice shall be delivered to or mailed and received at the principal executive offices of the Corporation (a) in the case of an annual meeting, not less than sixty (60) calendar days nor more than ninety (90) calendar days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is changed by more than thirty (30) calendar days from such anniversary date, notice by the shareholder to be timely must be so received not later than the close of business on the tenth (10th) calendar day following the earlier of the day on which notice of the date of the meeting was mailed or public disclosure was made, and (b) in the case of a special meeting at which Directors are to be elected, not later than the earlier of (i) the close of business on the tenth (10th) calendar day following the earlier of the day on which notice of the date of the meeting was mailed or public disclosure was made or (ii) the close of business on the fifth (5th) calendar day before the date of the meeting. Such shareholder's notice to the Secretary or a written demand from shareholders pursuant to Section 60.204 of the Oregon Revised Statutes shall set forth (i) as to each person whom such shareholders propose to nominate for election or reelection as a Director, (a) the name, age, business address and residence address of the person, (b) the principal occupation or employment of the person, (c) the class and number of shares of capital stock of the Corporation which are beneficially owned by the person, and (d) all other information relating to the person that is or would be required to be disclosed in a solicitation for proxies for election of Directors

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pursuant to the Rules and Regulations of the Securities and Exchange Commission under Section 14 of the Securities Exchange Act of 1934, as amended (including such person's written consent to being named in the proxy statement as a nominee and to serving as a Director if elected); (ii) as to the shareholders giving such notice or demand (a) the name and record address of the shareholders, (b) the class and number of shares of capital stock of the Corporation which are beneficially owned by each such shareholder and also which are owned of record by each such shareholder and (c) any material interest or relationship each such shareholder has in or with the proposed nominee; and (iii) as to each beneficial owner, if any, on whose behalf the nomination is made, (a) the name and address of such person, (b) the class and number of shares of capital stock of the Corporation which are beneficially owned by such person and (c) any material interest or relationship such person has in or with the proposed nominee. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a Director of the Corporation. No person shall be eligible for election as a Director of the Corporation unless nominated in accordance with the procedures set forth herein. The Presiding Officer shall determine whether the nomination is made in accordance with the foregoing procedures. If the Presiding Officer should determine that the nomination was not made in accordance with the foregoing procedures, the Presiding Officer shall state such determination to the meeting, whereupon any such defective nomination shall be disregarded and not otherwise brought before the meeting. Notwithstanding the foregoing provisions of this Section 3.3, a shareholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the matters set forth herein.

    3.4  Annual and Regular Meetings.  An annual Board meeting shall be held without further notice at the principal office of the Corporation on the day immediately following the annual meeting of shareholders, or at such other date, time and place as fixed by the Board. By resolution, the Board, or any committee thereof, may specify the time and place for holding regular meetings thereof without other notice than such resolution.

    3.5  Special Meetings.  Special meetings of the Board or any committee designated by the Board may be called by or at the request of the Chair of the Board, the Chief Executive Officer, the President, or any two Directors, and, in the case of any special meeting of any committee designated by the Board, by the Chair thereof. The person or persons authorized to call special meetings may fix any place either within or without the State of Oregon as the place for holding any special Board or committee meeting called by them.

    3.6  Meetings by Telecommunications.  Members of the Board or any committee designated by the Board may participate in a meeting of such Board or committee by use of any means of communication by which all persons participating may simultaneously hear each other during the meeting. Participation by such means shall be deemed presence in person at the meeting.

    3.7  Notice of Special Meeting.  Notice of a special Board or committee meeting stating the date, time and place of the meeting shall be given to a Director in writing or orally by telephone or in person as set forth below. Neither the business to be transacted at, nor the purpose of, any special meeting need be specified in the notice of such meeting.

    3.7.1  Personal Delivery.  If delivery is by personal service, the notice shall be effective if delivered at such address at least one day before the meeting.

    3.7.2  Delivery by Mail.  If notice is delivered by mail, the notice shall be deemed effective if deposited in the official government mail at least five days before the meeting properly addressed to a Director at his or her address shown on the records of the Corporation with postage prepaid.

    3.7.3  Delivery by Telegraph.  If notice is delivered by telegraph, the notice shall be deemed effective if the content thereof is delivered to the telegraph company by such time that telegraph company guarantees delivery at least one day before the meeting.

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    3.7.4  Oral Notice.  If notice is delivered orally, by telephone or in person, the notice shall be effective if personally given to a Director at least one day before the meeting.

    3.7.5  Notice by Facsimile Transmission.  If notice is delivered by facsimile transmission, the notice shall be deemed effective if the content thereof is transmitted to the office of a Director, at the facsimile number shown on the records of the Corporation, at least one day before the meeting, and receipt is either confirmed by confirming transmission equipment or acknowledged by the receiving office.

    3.7.6  Notice by Private Courier.  If notice is delivered by private courier, the notice shall be deemed effective if delivered to the courier, properly addressed and prepaid, by such time that the courier guarantees delivery at least one day before the meeting.

    3.8  Waiver of Notice.

    3.8.1  Written Waiver.  Whenever any notice is required to be given to any Director under the provisions of these Bylaws, the Articles of Incorporation or the Oregon Business Corporation Act, a waiver thereof in writing, executed at any time, specifying the meeting for which notice is waived, signed by the person or persons entitled to such notice, and filed with the minutes or corporate records, shall be deemed equivalent to the giving of such notice.

    3.8.2  Waiver by Attendance.  The attendance of a Director at a Board or committee meeting shall constitute a waiver of notice of such meeting, unless the Director, at the beginning of the meeting, or promptly upon such Director's arrival, objects to holding the meeting or transacting any business at the meeting and does not thereafter vote for or assent to action taken at the meeting.

    3.9  Quorum.  A majority of the number of Directors fixed by or in the manner provided by these Bylaws shall constitute a quorum for the transaction of business at any Board meeting.

    3.10  Manner of Acting.  The act of the majority of the Directors present at a Board or committee meeting at which there is a quorum shall be the act of the Board or committee, unless the vote of a greater number is required by these Bylaws, the Articles of Incorporation or the Oregon Business Corporation Act.

    3.11  Presumption of Assent.  A Director of the Corporation present at a Board or committee meeting at which action on any corporate matter is taken shall be deemed to have assented to the action taken unless such Director objects at the beginning of the meeting, or promptly upon such Director's arrival, to holding the meeting or transacting business at the meeting; or such Director's dissent is entered in the minutes of the meeting; or such Director delivers a written notice of dissent or abstention to such action with the presiding officer of the meeting before the adjournment thereof; or such Director forwards such notice by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. A Director who voted in favor of such action may not thereafter dissent or abstain.

    3.12  Action by Board or Committees Without a Meeting.  Any action which could be taken at a meeting of the Board or of any committee appointed by the Board may be taken without a meeting if a written consent setting forth the action so taken is signed by each Director or by each committee member. The action shall be effective when the last signature is placed on the consent, unless the consent specifies an earlier or later date. Such written consent, which shall have the same effect as a unanimous vote of the Directors or such committee, shall be inserted in the minute book as if it were the minutes of a Board or committee meeting.

    3.13  Resignation.  Any Director may resign at any time by delivering written notice to the Chair of the Board, the Board, or to the registered office of the Corporation. Such resignation shall take effect at the time specified in the notice, or if no time is specified, upon delivery. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Once delivered, a notice of resignation is irrevocable unless revocation is permitted by the Board.

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    3.14  Removal.  One or more members of the Board (including the entire Board) may be removed at a meeting of shareholders called expressly for that purpose, provided that the notice of such meeting states that the purpose, or one of the purposes, of the meeting is such removal. A member of the Board may be removed with or without cause, unless the Articles of Incorporation permit removal for cause only, by a vote of the holders of a majority of the shares then entitled to vote on the election of the Director(s). A Director may be removed only if the number of votes cast to remove the Director exceeds the number of votes cast to not remove the Director. If a Director is elected by a voting group of shareholders, only the shareholders of that voting group may participate in the vote to remove such Director.

    3.15  Vacancies.  Any vacancy occurring on the Board, including a vacancy resulting from an increase in the number of Directors, may be filled by the shareholders, by the Board, by the affirmative vote of a majority of the remaining Directors though less than a quorum of the Board, or by a sole remaining Director. A Director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office; except that the term of a Director elected by the Board to fill a vacancy expires at the next shareholders' meeting at which Directors are elected. Any Directorship to be filled by reason of an increase in the number of Directors may be filled by the affirmative vote of a majority of the number of Directors fixed by the Bylaws prior to such increase for a term of office continuing only until the next election of Directors by the shareholders. Any Directorship not so filled by the Directors shall be filled by election at the next annual meeting of shareholders or at a special meeting of shareholders called for that purpose. If the vacant Directorship is filled by the shareholders and was held by a Director elected by a voting group of shareholders, then only the holders of shares of that voting group are entitled to vote to fill such vacancy. A vacancy that will occur at a specific later date by reason of a resignation effective at such later date or otherwise may be filled before the vacancy occurs, but the new Director may not take office until the vacancy occurs.

    3.16  Minutes.  The Board shall keep minutes of its meetings and shall cause them to be recorded in books kept for that purpose.

    3.17  Executive and Other Committees.

    3.17.1  Creation of Committees.  The Board, by resolution adopted by a majority of the number of Directors fixed in the manner provided by these Bylaws, may appoint standing or temporary committees, including an Executive Committee, from its own number and consisting of no less than two (2) Directors. The Board may invest such committee(s) with such powers as it may see fit, subject to such conditions as may be prescribed by the Board, these Bylaws, the Articles of Incorporation and the Oregon Business Corporation Act.

    3.17.2  Authority of Committees.  Each committee shall have and may exercise all of the authority of the Board to the extent provided in the resolution of the Board designating the committee and any subsequent resolutions pertaining thereto and adopted in like manner, except that no such committee shall have the authority to: (a) authorize distributions, except as may be permitted by Section 3.17.2(g) of these Bylaws; (b) approve or propose to shareholders actions required by the Oregon Business Corporation Act to be approved by shareholders; (c) fill vacancies on the Board or any committee thereof; (d) adopt, amend or repeal these Bylaws; (e) amend the Articles of Incorporation; (f) approve a plan of merger not requiring shareholder approval; or (g) authorize or approve reacquisition of shares, except within limits prescribed by the Board.

    3.17.3  Quorum and Manner of Acting.  A majority of the number of Directors composing any committee of the Board, as established and fixed by resolution of the Board, shall constitute a quorum for the transaction of business at any meeting of such committee.

    3.17.4  Minutes of Meetings.  All committees so appointed shall keep regular minutes of their meetings and shall cause them to be recorded in books kept for that purpose.

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    3.17.5  Resignation.  Any member of any committee may resign at any time by delivering written notice thereof to the Board, the Chair of the Board or the Corporation. Any such resignation shall take effect at the time specified in the notice, or if no time is specified, upon delivery. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Once delivered, a notice of resignation is irrevocable unless revocation is permitted by the Board.

    3.17.6  Removal.  The Board may remove from office any member of any committee elected or appointed by it, but only by the affirmative vote of not less than a majority of the number of Directors fixed by or in the manner provided by these Bylaws.

    3.18  Compensation.  By Board resolution, Directors and committee members may be paid their expenses, if any, of attendance at each Board or committee meeting, or a fixed sum for attendance at each Board or committee meeting, or a stated salary as Director or a committee member, or a combination of the foregoing. No such payment shall preclude any Director or committee member from serving the Corporation in any other capacity and receiving compensation therefor.

SECTION 4
Officers

    4.1  Number.  The Officers of the Corporation shall be a President and a Secretary, each of whom shall be appointed by the Board. One or more Vice Presidents, a Treasurer and such other Officers and assistant Officers, including a Chair of the Board and/or a Chief Executive Officer, may be appointed by the Board; such Officers and assistant Officers to hold office for such period, have such authority and perform such duties as are provided in these Bylaws or as may be provided by resolution of the Board. Any Officer may be assigned by the Board any additional title that the Board deems appropriate. The Board may delegate to any Officer or agent the power to appoint any such subordinate Officers or agents and to prescribe their respective terms of office, authority and duties. Any two or more offices may be held by the same person.

    4.2  Appointment and Term of Office.  The Officers of the Corporation shall be appointed annually by the Board at the Board meeting held after the annual meeting of the shareholders. If the appointment of Officers is not made at such meeting, such appointment shall be made as soon thereafter as a Board meeting conveniently may be held. Unless an Officer dies, resigns, or is removed from office, he or she shall hold office until the next annual meeting of the Board or until his or her successor is appointed.

    4.3  Resignation.  Any Officer may resign at any time by delivering written notice to the Corporation. Any such resignation shall take effect at the time specified in the notice, or if no time is specified, upon delivery. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Once delivered, a notice of resignation is irrevocable unless revocation is permitted by the Board.

    4.4  Removal.  Any Officer or agent appointed by the Board may be removed by the Board, with or without cause, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Appointment of an Officer or agent shall not of itself create contract rights.

    4.5  Vacancies.  A vacancy in any office because of death, resignation, removal, disqualification, creation of a new office or any other cause may be filled by the Board for the unexpired portion of the term, or for a new term established by the Board. If a resignation is made effective at a later date, and the Corporation accepts such future effective date, the Board may fill the pending vacancy before the effective date, if the Board provides that the successor does not take office until the effective date.

    4.6  Chair of the Board.  If appointed, the Chair of the Board shall perform such duties as shall be assigned to him or her by the Board from time to time and shall preside over meetings of the Board and shareholders unless another Officer is appointed or designated by the Board as Chair of such meeting.

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    4.7  Chief Executive Officer.  If appointed, the Chief Executive Officer shall be the chief executive Officer of the Corporation unless some other Officer is so designated by the Board, shall preside over meetings of the Board and shareholders in the absence of a Chair of the Board and, subject to the Board's control, shall supervise and control all of the assets, business and affairs of the Corporation. The Chief Executive Officer shall have authority to sign deeds, mortgages, bonds, contracts, or other instruments, except when the signing and execution thereof have been expressly delegated by the Board or by these Bylaws to some other Officer or agent of the Corporation, or are required by law to be otherwise signed or executed by some other Officer or in some other manner. In general, the Chief Executive Officer shall perform all duties incident to the office of Chief Executive Officer and such other duties as are prescribed by the Board from time to time.

    4.8  President.  In the absence of a Chief Executive Officer or in the event of the death of the Chief Executive Officer or his or her inability to act, the President shall perform the duties of the Chief Executive Officer, except as may be limited by resolution of the Board, with all the powers of and subject to all the restrictions upon the Chief Executive Officer. The President shall have, to the extent authorized by the Chief Executive Officer or the Board, the same powers as the Chief Executive Officer to sign deeds, mortgages, bonds, contracts or other instruments. The President shall perform such other duties as from time to time may be assigned to him or her by the Chief Executive Officer or the Board.

    4.9  Vice President.  In the event of the death of the President or his or her inability to act, the Vice President (or if there is more than one Vice President, the Vice President who was designated by the Board as the successor to the President, or if no Vice President is so designated, the Vice President first appointed to such office) shall perform the duties of the President, except as may be limited by resolution of the Board, with all the powers of and subject to all the restrictions upon the President. Vice Presidents shall have, to the extent authorized by the Chief Executive Officer, the President, or the Board, the same powers as the President to sign deeds, mortgages, bonds, contracts or other instruments. Vice Presidents shall perform such other duties as from time to time may be assigned to them by the Chief Executive Officer, the President, or the Board.

    4.10  Secretary.  The Secretary shall: (a) prepare and keep the minutes of meetings of the shareholders and the Board in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be responsible for custody of the corporate records and seal of the Corporation; (d) keep registers of the post office address of each shareholder and Director; (e) have general charge of the stock transfer books of the Corporation; and (f) in general perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her by the Chief Executive Officer, the President or by the Board. In the absence of the Secretary, an Assistant Secretary may perform the duties of the Secretary.

    4.11  Treasurer.  If required by the Board, the Treasurer shall give a bond for the faithful discharge of his or her duties in such amount and with such surety or sureties as the Board shall determine. The Treasurer shall have charge and custody of and be responsible for all funds and securities of the Corporation; receive and give receipts for moneys due and payable to the Corporation from any source whatsoever, and deposit all such moneys in the name of the Corporation in banks, trust companies or other depositories selected in accordance with the provisions of these Bylaws; and in general perform all of the duties incident to the office of the Treasurer and such other duties as from time to time may be assigned to him or her by the Chief Executive Officer, the President or by the Board. In the absence of the Treasurer, an Assistant Treasurer may perform the duties of the Treasurer.

    4.12  Salaries.  The salaries of the Officers shall be fixed from time to time by the Board or by any person or persons to whom the Board has delegated such authority. No Officer shall be prevented from receiving such salary by reason of the fact that he or she is also a Director of the Corporation.

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SECTION 5
Contracts, Loans, Checks and Deposits

    5.1  Contracts.  The Board may authorize any Officer or Officers, or agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation. Such authority may be general or confined to specific instances.

    5.2  Loans to the Corporation.  No loans shall be contracted on behalf of the Corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the Board. Such authority may be general or confined to specific instances.

    5.3  Loans to Directors.  The Corporation shall not lend money to or guarantee the obligation of a Director unless: (a) the particular loan or guarantee is approved by a majority of the votes represented by the outstanding voting shares of all classes, voting as a single voting group, excluding the votes of the shares owned by or voted under the control of the benefitted Director; or (b) the Board determines that the loan or guarantee benefits the Corporation and either approves the specific loan or guarantee or a general plan authorizing the loans and guarantees. The fact that a loan or guarantee is made in violation of this provision shall not affect the borrower's liability on the loan.

    5.4  Checks, Drafts, Etc.  All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such Officer or Officers, or agent or agents, of the Corporation and in such manner as is from time to time determined by resolution of the Board.

    5.5  Deposits.  All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board may select.

SECTION 6
Certificates for Shares and Their Transfer

    6.1  Issuance of Shares.  No shares of the Corporation shall be issued unless authorized by the Board, which authorization shall include the maximum number of shares to be issued and the consideration to be received for each share. Before the Corporation issues shares, the Board shall determine that the consideration received or to be received for such shares is adequate. Such determination by the Board shall be conclusive insofar as the adequacy of consideration for the issuance of shares relates to whether the shares are validly issued, fully paid and nonassessable.

    6.2  Escrow for Shares.  The Board may authorize the placement in escrow of shares issued for a contract for future services or benefits or a promissory note, or may authorize other arrangements to restrict the transfer of shares, and may authorize the crediting of distributions in respect of such shares against their purchase price, until the services are performed, the note is paid or the benefits received. If the services are not performed, the note is not paid, or the benefits are not received, the Board may cancel, in whole or in part, such shares placed in escrow or restricted and such distributions credited.

    6.3  Certificates for Shares.  Certificates representing shares of the Corporation shall be in such form as shall be determined by the Board. Such certificates shall be signed by any two of the following officers: the Chair of the Board, the President, any Vice President, the Treasurer, the Secretary or any Assistant Secretary. Any or all of the signatures on a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent or a registrar other than the Corporation itself or an employee of the Corporation. All certificates shall be consecutively numbered or otherwise identified.

    6.4  Stock Records.  The stock transfer books shall be kept at the registered office or principal place of business of the Corporation or at the office of the Corporation's transfer agent or registrar. The name and address of each person to whom certificates for shares are issued, together with the class and number

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of shares represented by each such certificate and the date of issue thereof, shall be entered on the stock transfer books of the Corporation. The person in whose name shares stand on the books of the Corporation shall be deemed by the Corporation to be the owner thereof for all purposes.

    6.5  Restriction on Transfer.

    6.5.1  Securities Laws.  Except to the extent that the Corporation has obtained an opinion of counsel acceptable to the Corporation that transfer restrictions are not required under applicable securities laws, or has otherwise satisfied itself that such transfer restrictions are not required, all certificates representing shares of the Corporation shall bear conspicuously on the front or back of the certificate a legend or legends describing the restriction or restrictions.

    6.5.2  Other Restrictions.  In addition, the front or back of all certificates shall include conspicuous written notice of any further restrictions which may be imposed on the transferability of such shares.

    6.6  Transfer of Shares.  Transfer of shares of the Corporation shall be made only on the stock transfer books of the Corporation pursuant to authorization or document of transfer made by the holder of record thereof or by his or her legal representative, who shall furnish proper evidence of authority to transfer, or by his or her attorney-in-fact authorized by power of attorney duly executed and filed with the Secretary of the Corporation. All certificates surrendered to the Corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificates for a like number of shares shall have been surrendered and cancelled.

    6.7  Lost or Destroyed Certificates.  In the case of a lost, destroyed or mutilated certificate, a new certificate may be issued therefor upon such terms and indemnity to the Corporation as the Board may prescribe.

    6.8  Transfer Agent and Registrar.  The Board may from time to time appoint one or more Transfer Agents and one or more Registrars for the shares of the Corporation, with such powers and duties as the Board shall determine by resolution.

    6.9  Officer Ceasing to Act.  In case any officer who has signed or whose facsimile signature has been placed upon a stock certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if the signer were such officer at the date of its issuance.

    6.10  Fractional Shares.  The Corporation shall not issue certificates for fractional shares.

SECTION 7
Books and Records

    The Corporation shall keep correct and complete books and records of account, stock transfer books, minutes of the proceedings of its shareholders and Board and such other records as may be necessary or advisable.

SECTION 8
Fiscal Year

    The fiscal year of the Corporation shall be the calendar year, provided that if a different fiscal year is at any time selected for purposes of federal income taxes, the fiscal year shall be the year so selected.

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SECTION 9
Seal

    The seal of the Corporation, if any, shall consist of the name of the Corporation and the state of its incorporation.

SECTION 10
Indemnification

    10.1  Directors and Officers.  The Corporation shall indemnify its directors and officers to the fullest extent not prohibited by law.

    10.2  Employees and Other Agents.  The Corporation shall have the power to indemnify its employees and other agents to the fullest extent not prohibited by law.

    10.3  No Presumption of Bad Faith.  The termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of this Corporation, or, with respect to any criminal proceeding, that the person had reasonable cause to believe that the conduct was unlawful.

    10.4  Advances of Expenses.  The expenses incurred by a director or officer in any proceeding shall be paid by the Corporation in advance at the written request of the director or officer, if the director or officer:

    10.4.1 Furnishes the Corporation a written affirmation of such person's good faith belief that such person is entitled to be indemnified by the Corporation; and

    10.4.2 Furnishes the Corporation a written undertaking to repay such advance to the extent that it is ultimately determined by a court that such person is not entitled to be indemnified by the Corporation. Such advances shall be made without regard to the person's ability to repay such expenses and without regard to the person's ultimate entitlement to indemnification under this Bylaw or otherwise.

    10.5  Enforcement.  Without the necessity of entering into an express contract, all rights to indemnification and advances under this Bylaw shall be deemed to be contractual rights and be effective to the same extent and as if provided for in a contract between the Corporation and the director or officer who serves in such capacity at any time while this Bylaw and any other applicable law, if any, are in effect. Any right to indemnification or advances granted by this Bylaw to a director or officer shall be enforceable by or on behalf of the person holding such right in any court of competent jurisdiction if (a) the claim for indemnification or advances is denied, in whole or in part, or (b) no disposition of such claim is made within ninety (90) days of request thereof. The claimant in such enforcement action, if successful in whole or in part, shall be entitled to be also paid the expense of prosecuting the claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in connection with any proceeding in advance of its final disposition when the required affirmation and undertaking have been tendered to the Corporation) that the claimant has not met the standards of conduct which makes it permissible under the law for the Corporation to indemnify the claimant, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel or its shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because the claimant has met the applicable standard of conduct, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel or its shareholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

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    10.6  Nonexclusivity of Rights.  The rights conferred on any person by this Bylaw shall not be exclusive of any other right which such person may have or hereafter acquire under any statute, provision of articles of incorporation, bylaws, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in the person's official capacity and as to action in another capacity while holding office. The Corporation is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification and advances to the fullest extent not prohibited by law.

    10.7  Survival of Rights.  The rights conferred on any person by this Bylaw shall continue as to a person who has ceased to be a director, officer, employee or other agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

    10.8  Insurance.  To the fullest extent not prohibited by law, the Corporation, upon approval by the Board of Directors, may purchase insurance on behalf of any person required or permitted to be indemnified pursuant to this Bylaw.

    10.9  Amendments to Law.  For purposes of this Bylaw, the meaning of "law" within the phrase "to the fullest extent not prohibited by law" shall include, but not be limited to, the Oregon Business Corporation Act, as the same exists on the date hereof or as it may be amended; provided, however, that in the case of any such amendment, such amendment shall apply only to the extent that it permits the Corporation to provide broader indemnification rights than the Act permitted the Corporation to provide prior to such amendment.

    10.10  Savings Clause.  If this Bylaw or any portion thereof shall be invalidated on any ground by any court of competent jurisdiction, the Corporation shall indemnify each director, officer or other agent to the fullest extent permitted by any applicable portion of this Bylaw that shall not have been invalidated, or by any other applicable law.

    10.11  Certain Definitions.  For purposes of this Section, the following definitions shall apply:

    10.11.1 The term "proceeding" shall be broadly construed and shall include, without limitation, the investigation, preparation, prosecution, defense, settlement and appeal of any threatened, pending or completed action, suit or proceeding, whether brought in the right of the Corporation or otherwise and whether civil, criminal, administrative or investigative, in which the director or officer may be or may have been involved as a party or otherwise by reason of the fact that the director or officer is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise.

    10.11.2 The term "expenses" shall be broadly construed and shall include, without limitation, all costs, charges and expenses (including fees and disbursements of attorneys, accountants and other experts) actually and reasonably incurred by a director or officer in connection with any proceeding, all expenses of investigations, judicial or administrative proceedings or appeals, and any expenses of establishing a right to indemnification under these Bylaws, but shall not include amounts paid in settlement, judgments or fines.

    10.11.3 "Corporation" shall mean In Focus Systems, Inc. and any successor corporation thereof.

    10.11.4 Reference to a "director," "officer," "employee" or "agent" of the Corporation shall include, without limitation, situations where such person is serving at the request of the Corporation as a director, officer, employee, trustee or agent of another corporation, partnership, joint venture, trust or other enterprise.

    10.11.5 References to "other enterprises" shall include employee benefit plans. References to "fines" shall include any excise taxes assessed on a person with respect to any employee benefit plan. References to "serving at the request of the Corporation" shall include any service as a director,

Page 14 - 1997 RESTATED BYLAWS

officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants, or beneficiaries. A person who acted in good faith and in a manner the person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Bylaw.

SECTION 11
Amendments

    These Bylaws may be altered, amended or repealed and new Bylaws may be adopted by the Board at any regular or special meeting of the Board; provided, however, that the shareholders, in amending or repealing a particular Bylaw, may provide expressly that the Board may not amend or repeal that Bylaw. The shareholders may also make, alter, amend and repeal the Bylaws of the Corporation at any annual meeting or at a special meeting called for that purpose. All Bylaws made by the Board may be amended, repealed, altered or modified by the shareholders at any regular or special meeting called for that purpose. The foregoing Bylaws were adopted by the Board of Directors of the Corporation on February 25, 1997 and the Secretary of the Corporation was empowered to authenticate such Bylaws by his signature below.

/s/ MICHAEL D. YONKER Michael D. Yonker, Secretary

Page 15 - 1997 RESTATED BYLAWS

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1997 RESTATED BYLAWS OF IN FOCUS SYSTEMS, INC.
CONTENTS
1997 RESTATED BYLAWS OF IN FOCUS SYSTEMS, INC.
SECTION 1 Offices
SECTION 2 Shareholders
SECTION 3 Board of Directors
SECTION 4 Officers
SECTION 5 Contracts, Loans, Checks and Deposits
SECTION 6 Certificates for Shares and Their Transfer
SECTION 7 Books and Records
SECTION 8 Fiscal Year
SECTION 9 Seal
SECTION 10 Indemnification
SECTION 11 Amendments

EX-3.5

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EXHIBIT 3.5

AMENDMENTS
TO
1997 RESTATED BYLAWS

Section	Effect of Amendment	Date of Amendment
Section 4.1	The words "including a Chair of the Board" within the second sentence of Section 4.1 shall be amended to read "including Co-Chairs of the Board."	June 23, 2000
Section 4.6	Section 4.6 is deleted in its entirety and replaced with the following: "4.6 The Co-Chairs of the Board shall each be a Director of the Corporation and shall perform such duties as may be assigned to them by the Board from time to time."	June 23, 2000
Sections 2.2, 3.5, 3.13, 3.17.5, 4.7, 6.3	All references to "Chair of the Board" throughout the 1997 Restated Bylaws are amended to "Co-Chairs of the Board."	June 23, 2000

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AMENDMENTS TO 1997 RESTATED BYLAWS

EX-20

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EXHIBIT 20

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Shareholders of Proxima ASA

    In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income and cash flows present fairly, in all material respects, the financial position of Proxima ASA and its subsidiaries at December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999 in conformity with generally accepted accounting principles in Norway. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards ("GAAS") in Norway, which are substantially the same as GAAS in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.

    Generally accepted accounting principles vary in certain significant respects from generally accepted accounting principles in the United States. Application of generally accepted accounting principles in the United States would have affected net income for each of the three years in the period ended December 31, 1999 and shareholders' equity as at December 31, 1999 and 1998 to the extent summarized in Note 17 to the consolidated financial statements

PricewaterhouseCoopers DA

Oslo, Norway
February 15, 2000, except for Note 17
and Note 18, which is as of April 5, 2000

1

PROXIMA GROUP

BALANCE SHEETS

December 31, 1999 and 1998

Figures in NOK 1,000				Note	1999	1998*
Assets
Fixed Assets:
	Intangible assets
		Deferred tax assets		6	88,733	15,189
		Goodwill		7	194,617	290,002
			Total intangible assets		283,350	305,191
	Tangible fixed assets:
		Property and equipment		8	34,006	17,484
			Total tangible fixed assets		34,006	17,484
	Long-term financial assets:
		Long-term receivables			493	222
		Investment in shares				9,718
			Total long-term financial assets		493	9,940
			Total Fixed Assets		317,849	332,615
Current Assets:
	Inventory			9	211,590	204,845
	Receivables
		Trade accounts receivable			505,537	382,294
		Other receivables			24,665	66,021
			Total receivables		530,202	448,315
	Cash and cash equivalents			10	330,090	321,638
			Total Current Assets		1,071,882	974,798
			Total Assets		1,389,731	1,307,413

*

The financial statements have been restated in accordance with the new Accounting Act of 1998.

The accompanying notes are an integral part of these consolidated financial statements.

2

PROXIMA GROUP

BALANCE SHEETS

December 31, 1999 and 1998

Figures in NOK 1,000				Note	1999	1998*
Equity and Liabilities
Shareholders' Equity:
	Paid-in capital
	Share capital				83,122	82,654
		Additional paid-in capital			35,064
			Total paid-in capital		118,186	82,654
Retained earnings:
	Other equity				783,745	647,308
		Total retained earnings			783,745	647,308
			Total Equity	11	901,931	729,962
Liabilities:
	Provision for commitments
	Pension liabilities			13	251	231
			Total provision for commitments		251	231
	Other long-term liabilities:
		Debts to financial institutions				5,327
			Total other long-term liabilities		0	5,327
	Short-term liabilities:
		Debts to financial institutions			5,635	171,225
		Accounts payable			310,174	263,846
		Taxes payable		6	46,149	40,143
		Employee taxes and social security costs			20,219	9,384
		Other short-term liabilities			105,372	87,295
			Total short-term liabilities		487,549	571,893
			Total Liabilities		487,800	577,451
			Total Equity and Liabilities		1,389,731	1,307,413

*

The financial statements have been restated in accordance with the new Accounting Act of 1998.

The accompanying notes are an integral part of these consolidated financial statements.

3

PROXIMA GROUP

INCOME STATEMENT

For the year ended December 31

Figures in NOK 1,000	Note	1999	1998*	1997*
Sales revenue	4	2,323,335	1,575,582	604,321
Cost of goods sold		1,613,547	1,077,890	348,357
Salaries	5	192,005	143,091	63,650
Amortization of goodwill	7	21,523	14,350	0
Depreciation	8	12,918	11,935	4,251
Other operating expense	16	289,521	175,977	61,054
Operating profit		193,821	152,339	127,009
Financial income	3	48,128	27,074	18,340
Financial expenses	3	29,461	24,254	9,888
Income before income taxes		212,488	155,159	135,461
Taxes	6	77,250	54,522	37,418
Net income for the year		135,238	100,637	98,043
Basic EPS (NOK)		3.27	2.48	2.69
Diluted EPS (NOK)		3.16	2.43	2.67

*

The financial statements have been restated in accordance with Norway's new Accounting Act of 1998.

The accompanying notes are an integral part of these consolidated financial statements.

4

PROXIMA GROUP

STATEMENT OF CASH FLOWS

For the year ended December 31

Figures in NOK 1,000			1999		1998		1997
Cash flows from operating activities:
	Net income before taxes		212,488		155,159		135,461
	Tax paid in the period		(58,680	)	(42,423	)	(25,119	)
	Loss/profit on sale of fixed assets		(12,273	)
	Depreciation and amortization		34,441		26,285		4,251
	Write-down of fixed assets				1,294		0
	Change in inventory		1,210		9,327		(31,552	)
	Change in accounts receivable		(107,785	)	54,000		(98,789	)
	Change in accounts payable		35,600		(16,378	)	38,943
	Change in other assets and liabilities		67,836		(15,367	)	(4,360	)
	Changes in pension liabilities		20		128		405
		Net cash provided by operating activities	172,857		172,025		19,240
Cash flows from investing activities:
	Proceeds from sale of fixed assets		315
	Payments for purchase of property and equipment		(25,519	)	(19,001	)	(5,298	)
	Payments/proceeds on loan		(271	)	(180	)	126
	Proceeds from sale of shares		22,329
	Purchase of shares in subsidiary				(489,831	)
		Net cash used in investing activities	(3,146	)	(509,012	)	(5,172	)
Cash flows from financing activities:
	Proceeds from share issuances		10,668		325,217		83,822
	Payments received on long term liabilities				5,327
	Repayment of short term liabilities		(181,125	)
	Payments received on short-term liabilities				170,986
		Net cash provided by (used in) financing activities	(170,457	)	501,530		83,822
Net change in cash for the year			(746	)	164,543		97,890
Cash and cash equivalents at the beginning of the period			321,638		157,095		59,205
Effect of foreign exchange on cash and cash equivalents			9,198
Cash and cash equivalents at the end of the period			330,090		321,638		157,095

The accompanying notes are an integral part of these consolidated financial statements.

5

PROXIMA GROUP

NOTES TO FINANCIAL STATEMENTS

Three years ended December 31, 1999

Note 1—Accounting Principles and the Effect of Changes made to the Accounting Principles

    The annual accounts have been drawn up in accordance with the Accounting Act of 1998 and have been prepared according to Norwegian accounting standards. Several accounting principles have been changed in accordance with the Accounting Act. These changes are described below.

Basis of Consolidation

    The group accounts cover the parent company Proxima ASA and all companies in which it controls more than 50% of the voting rights, whether directly or indirectly. The group accounts show the overall financial performance and overall financial position when the parent company and the subsidiaries are presented as a financial entity. Therefore, shares in subsidiaries, internal claims and debts as well as intercompany transactions have been eliminated when preparing the group accounts. Unrealized gains in inventory that are derived from internal deliveries are eliminated in the group's inventory. The foreign subsidiary's balance sheet is translated at the exchange rates on the balance sheet date. The income statement has been translated at average rates for the year. All translation differences are included directly in equity.

    As of December 31, 1999, the group comprised the following companies:

Proxima ASA	Parent company
Proxima Corporation, USA	100%
ASK AS, Norway	100%

    In April 1998, Proxima ASA set up a subsidiary in the USA under the name BD Acquisition Corporation. The company purchased all the shares in Proxima Corporation, a distribution company with the bulk of its operations in the U.S. These companies merged immediately after the acquisition. The merged company acquired the name Proxima Corporation. The accounts for 1998 contain income and costs in Proxima Corporation from April 14, 1998. With effect from January 21, 1999, ASK LCD Inc., the wholly-owned subsidiary, was merged with Proxima Corporation.

    The accounts have been prepared using the purchase method for the acquired subsidiary. In conjunction with the acquisition, a detailed assessment of actual value of various asset and debt items was carried out. As a result of a planned coordination of the operations of Proxima Corporation and Proxima ASA, a provision for planned restructuring costs was also made. The cost price for shares that could not be allocated to specific asset or debt items has been classified as goodwill in the consolidated balance sheet. The goodwill amount is amortized on a straight-line basis over 15 years. Amortization over more than five years is justified by the fact that the company is a distribution company with a strong brand name.

    In connection with the finalization of the purchase price allocation, certain reclassifications to the balance sheet were recorded as of December 31, 1999.

    There is no activity in the Norwegian subsidiary ASK AS.

Classification

    Assets determined for permanent use and receivables that fall due later than one year after the financial year-end are classified as fixed assets. All other assets are classified as current assets. The same basis for classification has been used for liabilities.

6

Valuation Principles

Use of Estimates

    Preparation of the consolidated accounts in accordance with generally accepted accounting principles requires that the board and management of the company make estimates and establish conditions which have an influence on the value of assets and liabilities in the balance sheet and reported income and costs for the financial year. The final values realized may deviate from these estimates.

Recognition of Revenue

    All sales are taken to income on the delivery date. Sales are gross sales less commissions, discounts and any other price reductions.

Accounts Receivable

    Trade accounts receivable and other receivables are entered in the balance sheet at face value less a provision to cover bad debts. A provision for bad debts is made on the basis of an individual assessment of each claim.

Transactions and Reserves in Foreign Currencies

    Income statement items are entered in the individual accounts at the exchange rate on the transaction date. Current assets, accounts receivable and accounts payable in foreign currencies are translated at the exchange rates on the balance sheet date. Realized/unrealized currency gain and realized/unrealized currency loss are classified as financial items in the income statement.

Inventory

    Inventory is valued at the lower of cost and net realizable value on a first-in/first-out basis. For raw materials and work in progress net realizable value is calculated as the realizable value of finished goods less remaining manufacturing costs and sales costs. The cost price of manufactured goods comprises direct materials, direct wages and allocated indirect manufacturing costs.

Research and Development Costs

    Research and development costs are expensed as incurred.

Property and Equipment

    Tangible fixed assets are reported at historical cost less accumulated depreciation. Depreciation is charged on a straight-line basis over the estimated life of each asset. When fixed assets are sold or disposed of, gains/losses are included as operating income/cost.

7

Pension Costs

    The parent company provides its employees with a collective (secured) pension plan, which gives fixed future pension benefits based on the number of years of service and the expected salary upon retirement. The parent company also provides an unsecured pension plan for some of its employees. These pension commitments are paid using the company's own funds and the liabilities are subject to provisions. For secured pensions, overall liabilities are valued against overall pension funds in the pension plan. When valuing pension funds and pension commitments, the estimated value at year-end is used. In the balance sheet, secured and unsecured pension liabilities are shown combined under long-term liabilities. Pension costs are recorded in the accounts in accordance with the accounting standards governing pension costs. The main principle is that the pension liabilities are charged against income when they occur, i.e. as they are earned through employment. When calculating them, a straight-line earning profile is used, and the expected final salary is used as the earnings basis. Net pension costs are recorded in the income statement under "Salaries". Employers' contributions are accrued for unsecured pensions. For secured pensions, employers' contributions are charged against income based on pension premiums paid.

    Proxima Corporation provides a contributory pension plan. The premium for this is charged against income on an ongoing basis.

Stock-Based Compensation

    The group records its stock-based compensation plans in the accounts according to guidelines published by the Oslo Stock Exchange. Accompanying notes provide pro forma information of the effects these plans would have on net income and profit per share if they were recorded at actual value.

Earnings per Share

    Earnings per share are calculated on the basis of the time-weighted average of the number of outstanding shares in the company in the period. Diluted earnings per share are based on the time-weighted average of the number of outstanding shares in the company taking into consideration the diluting effect of potential shares in the company.

    The following table shows the basis for calculations of earnings per share and diluted earnings per share:

Figures in NOK 1,000	1999	1998	1997
Net income for the year	135,238	100,637	98,043
Average number of shares in the company	41,341,551	40,637,481	36,471,620
Average number of potential diluting shares:
Stock options	1,424,407	801,834	307,490
Average number of shares in the company taking into consideration the diluting effect of potential shares in the company	42,765,958	41,439,315	36,779,110

8

Taxes

    Taxes are expensed as incurred, i.e. the tax cost is linked to the income before taxes for accounting purposes. In principle, the tax cost consists of payable taxes and changes in deferred tax assets and liabilities. Deferred tax assets in the balance sheet are calculated on the basis of net temporary differences between accounting and tax values. In conjunction with the acquisition of Proxima Corporation, this company had substantial net tax-reducing temporary differences and losses to carry forward. The possible deferred tax assets linked to these temporary differences are included in goodwill in the acquisition balance sheet. The tax assets utilized in 1999 were reclassified from goodwill to deferred tax assets in the balance sheet.

Cash and Cash Equivalents

    Cash and cash equivalents consist of cash, cash equivalents and investments which fall due within three months of the time of making the investments.

Warranty Expenses

    Estimated future warranty obligations related to the group's products are provided by charges to operations in the period in which the related revenue is recognized.

Amendments to Accounting Principles

    Proxima ASA introduced new accounting principles in accordance with the Accounting Act of 1998 to take effect on December 31, 1996.

Deferred Tax Assets

    In accordance with previous acts, it was not permitted to enter net deferred tax assets in the balance sheet.

Long-Term Items in Foreign Currencies

    In accordance with previous acts, long-term items in foreign currencies were entered at the lowest/ highest value's principle, as the case might be, for assets and liabilities. According to the new Accounting Act, all items in foreign currencies are entered at the exchange rate on the balance sheet date.

    The amendments to the accounting principles were included in shareholders' equity in the accounts as of December 31, 1996. We refer to note 11 where the effect of shareholders' equity is given in detail.

Corresponding Figures

    The corresponding figures in the balance sheet and the income statement are restated according to principles in the new Accounting act.

9

Note 2—Financial Market Risk

    Financial instruments which are subject to credit and currency risk consist mainly of cash and cash equivalents and accounts receivable. Cash and cash equivalents are principally administered by two financial institutions. The main part of accounts receivable are not collateralized, but some are collateralized by use of Letter of Credit. The group assesses the creditworthiness of its customers on an ongoing basis and makes an accrual for possible bad debts. As at December 31,1999 and 1998, no customers accounted for more than 10% of total accounts receivable.

    The group is exposed to changes in exchange rates through large quantities of the materials used in production being bought from abroad, principally Asia. Similarly, a large percentage of the company's sales income is received in foreign currencies. Exposure to changes in foreign currency is to some extent covered by hedging with forward contracts. As at December 31, 1999, two transactions were in effect, totaling USD 4 million at an exchange rate of NOK 7.97, both falling due Q 1 2000. Unrealized profit/loss on forward contracts in foreign currencies were valued on the basis of the market exchange rate at the end of the year. The group has a foreign currency loan in USD which is being paid off on an ongoing basis via income in the same currency.

Note 3—Single Transactions and Merged Items

    In 1999, the group sold its shares in Laser Power Corporation. The sale made a gain of NOK 12.0 million which is recorded as income under financial income.

Figures in NOK 1,000	1999	1998	1997
Financial Income
Interest income	11,748	6,156	2,881
Currency gain	24,331	20,918	15,459
Gain from sales of shares	12,049	—	—
Total financial income	48,128	27,074	18,340
Financial Expenses
Currency loss	21,813	16,500	9,413
Other financial expenses	7,648	7,754	475
Total financial expenses	29,461	24,254	9,888

Note 4—Sales Revenue

    Based on guidelines issued by Norsk Regnskapsstiftelse (the Norwegian Institute of Accounting), the group has defined its activities as falling within one segment. Sales are geographically distributed as follows:

Sales Geographically Distributed	1999		1998		1997
America	63	%	55	%	16	%
Europe	28	%	38	%	69	%
Asia	9	%	7	%	15	%
Total	100	%	100	%	100	%

10

    No single customer accounted for more than 10% of turnover in the financial years ending in 1999, 1998 and 1997.

Note 5—Salaries

Figures in NOK 1,000	1999	1998	1997
Salaries	165,532	128,995	56,330
Social security costs	20,025	10,248	4,973
Pension costs	4,650	2,280	1,232
Other benefits	1,798	1,568	1,115
Total	192,005	143,091	63,650
Average number of employees	405	321	161

    Auditing fees for 1999 charged against income amounted to NOK 1,145,400. Additional fees for other services totaled NOK 923,650.

Note 6—Taxes

    Taxes for the group are distributed as follows:

Figures in NOK 1,000	1999	1998	1997
Norway	36,837	39,550	37,418
Other countries	40,413	14,972	—
Total	77,250	54,522	37,418

11

    The difference between the nominal tax rate in Norway and the group's effective tax rate is as follows:

Income before taxes	212,488		155,159		135,461
Nominal tax rate in Norway (28%)	59,497		43,445		37,929
Permanent differences	806		265		74
Higher tax rates abroad	10,921		5,186		—
Tax effect of non-deductible goodwill amortization	6,026		4,879		—
Other	—		747		(585	)
Effective taxes	77,250		54,522		37,418
Specification of Basis for Deferred Tax Assets:
Net Timing Differences
Fixed assets	2,494		9,835		(745	)
Current assets	198,181		195,444		32,048
Liabilities	13,061		10,232		8,846
Tax losses to be carried forward	65,076		83,800		—
Total	278,812		299,311		40,149
Deferred tax assets	101,553		111,887		11,242
Non-recognized deferred tax assets	(12,820	)	(96,698	)	—
Deferred tax assets recorded in the balance sheet	88,733		15,189		11,242

    Deferred tax assets are recorded in the balance sheet to the extent it is probable such assets are realizable in the future.

    In 1998 and 1997 respectively, NOK 11.5 million and NOK 2.6 million in tax assets were linked to tax-deductible share issue expenses included in shareholders' equity in Proxima ASA.

Note 7—Intangible Assets (Goodwill)

Figures in NOK 1,000	1999
Acquisition cost as of 01.01.99	304,453
Acquisitions for the year	0
Reclassification	(89,468	)
Currency translation difference	17,603
Acquisition cost as of 12.31.99	232,588
Amortization as of 12.31.99 incl. currency translation difference	37,971
Value recorded in the balance sheet as of 12.31.99	194,617
Amortization for the year	21,523

12

Goodwill

    Goodwill has increased following the acquisition of Proxima Corporation. The goodwill amount is amortized on a straight-line basis over the estimated life of 15 years. Goodwill resulting from the acquisition contains possible tax assets for tax-reducing temporary differences in conjunction with the acquisition. In 1999, NOK 89.5 million was reclassified from goodwill to deferred tax assets.

Product Research and Development

    During the fiscal year, the group completed the following research and development projects:

•

The COMPACT series projectors, consisting of C1, C2, C5 and C6.



•

The IMPRESSION series projectors were upgraded through launching A8+, A9+ and A10+.



•

The ASK M5 projector.

    A total of NOK 62.8 million in research and development costs were expensed in 1999.

Note 8—Property and Equipment

Figures in NOK 1,000
Acquisition costs as of 01.01.99	129,880
Acquisitions for the year	25,519
Sales for the year	(53,889	)
Currency translation difference	6,420
Value recorded in the balance sheet as of 12.31.99	107,930
Accumulated depreciation as of 12.31.99 incl. currency translation difference	73,924
Value recorded in the balance sheet as of 12.31.99	34,006
Depreciation for the year	12,918
Economic lifetime Depreciation plan	3-5 years

    Operating lease expense amounted to 5,942 in 1999 and 3,384 in 1998.

Note 9—Inventory

Figures in NOK 1,000	1999	1998
Raw materials	88,267	46,464
Work in progress	12,724	8,001
Finished goods	110,599	150,380
Total inventory	211,590	204,845

13

Note 10—Cash Equivalents, etc.

Figures in NOK 1,000	1999	1998
Restricted bank deposits	3,658	3,493

Note 11—Shareholders' Equity

Figures in NOK 1,000		Share capital	Additional paid-in apital		Other equity		Total Shareholders' equity
Shareholders' equity 12.31.96		11,925	41,163		60,102		113,190
Effect of new Accounting Act:
	Recording of deferred tax assets in the balance sheet	—	—		4,349		4,349
	Introduction of current market value for long-term receivables	—	—		180		180
Revised shareholders' equity 12.31.96		11,925	41,163		64,631		117,719
Shareholders' equity 12.31.97		75,254	8,470		217,657		301,381
Change in shareholders' equity for the year
	Issue of shares	7,400	24,662		304,638		336,700
	Share issue expenses, net after taxes	—	(8,268	)	—		(8,268	)
	Income for the year	—	—		100,637		100,637
	Currency translation differences	—	—		(488	)	(488	)
Shareholders' equity 12.31.98		82,654	24,864		622,444		729,962
Change in shareholders' equity for the year
	Issue of shares	468	10,200		—		10,668
	Income for the year	—	—		135,238		135,238
	Currency translation differences	—	—		26,063		26,063
Shareholders' equity 12.31.99		83,122	35,064		783,745		901,931

Note 12—Stock Option Plan

    The board has been granted authorization by a resolution of the general meeting to expand the share capital (with no pre-emption rights for shareholders) to employees, board members and advisors in the group via a stock option plan of in all 2,450,000 shares. 1,950,000 options apply for the period until ordinary general meeting in 2001 and 500,000 until November 2001.

    At present, the group has three stock option plans:

•

A two-year program in Proxima ASA where, as of December 31, 1999, a total of 575,000 stock options were distributed after adjustments for cancellations. 50% could be exercised after January 1, 1999 and the remaining 50% after January 1, 2000. The stock options will expire on March 10, 2000. As of December 31, 1999, 192,500 stock options had been exercised.

14

•

A three-year program in Proxima ASA where, as of December 31, 1999, a total of 486,000 stock options were distributed after adjustments for cancellations. The options vest ¹/3 per year and can be exercised for the first time 12 months after the allotment. Options not exercised can be accumulated until the end of the option plan period. As of December 31, 1999 40,000 options were exercised.



•

A five-year program for Proxima Corporation. Adjusted for cancellations 763,134 stock options were originally issued in 1998 and, as of December 31, 1999, 855,585 stock options had been issued adjusted for cancellations. The options vest ¹/3 per year over the first three years and can be exercised for the first time 12 months after the allotment. Options not exercised can be accumulated until the end of the option plan period. As of December 31, 1999, approximately 2,000 options had been exercised.

    The subscription price is the original market rate at the time of issue with an additional 1% increase per month (the addition does not apply to employees of Proxima Corporation). In November 1998, previously issued stock options were repriced. The original subscription price was NOK 41.67 per share for 700,000 shares and NOK 50.00 per share for 1,250,000 shares before the repricing at NOK 40.00 per share with an additional 1% increase per month which took place in November 1998 (the addition does not apply to employees of Proxima Corporation). The repricing was regarded as a one-time event and was undertaken because of the general fall in the stock market. As the repricing was in accordance with the current stock market price on that day, the repricing did not result in an expense for the company that had to be recorded in the accounts.

    The following table summarizes the stock option activity of the aforementioned plans:

	1999		1998		1997
Figures in NOK 1,000, except per share data	Number of Stock options	Weighted average exercise price (NOK/Sh.)	Number of stock options	Weighted average Exercise price (NOK/Sh.)	Number of stock options	Weighted average Exercise price (NOK/Sh.)
Number of shares as of 01.01	1,638,550	40.41	630,000	44.17	0	—
Issued	318,451	51.63	1,063,550	40.00	630,000	41.67
Exercised	234,149	45.56	0	—	0	—
Cancelled	40,416	40.00	55,000	46.67	0	—
Number of shares as of 12.31	1,682,436	44.44	1,638,550	40.41	630,000	44.17
Vested at the end of the year	416,896	42.47	0	—	0	—

    Weighted average remaining life of stock options in the company on December 31, 1999 is 2.48 years.

    The group has calculated pro forma information for income for the year as if the group had entered the stock-based compensation plans in the accounts at their actual value. In the following pro forma

15

statement, the actual value of the stock options has been calculated and charged over the period until the stock options can be exercised.

Figures in NOK 1,000, except per share data	1999		1998		1997
Reported income for the year	135,238		100,637		98,043
Earnings per share (NOK)	3.27		2.48		2.69
Pro forma income for the year	128,894		68,331		92,125
Pro forma earnings per share (NOK)	3.12		1.68		2.53
Weighted average actual value per stock option issued for the year (NOK)	19.92		19.72		9.39
Actual value of the stock options are calculated by use of the Black-Scholes model with the following assumptions:
Estimated yearly volatility as an average, when issued	45	%	80	%	42	%
Risk-free interest when issued	4.7 - 5.8	%	5.5 - 5.6	%	3.3	%
Estimated lifetime in years, provided further approval from the board	2.9 - 5.0 years		1.3 - 5.0 years		2.7 years
Estimated dividend	0	%	0	%	0	%

Note 13—Pension Plan

    Proxima ASA has a collective pension plan with an insurance company for its employees (secured scheme). The scheme is a defined benefit plan, i.e. the company bears the financial responsibility for ensuring that its employees receive the agreed benefits. The liability covers 135 employees, compared with 68 employees in 1998. The company also provides an unsecured pension plan for some of its employees. Proxima Corporation also provides a pension plan for its employees. This plan is a defined contribution plan. When the company has provided the contribution to the pension plan, it has no other obligations. The annual cost is thus equal to the contribution, and no entry is made in the balance sheet. Actuarial calculations for Proxima ASA are made each year on the basis of information from the company.

    The following conditions form the basis of calculations:

	1999		1998		1997
Discount rate	6.0	%	6.0	%	5.0	%
Estimated return pension funds	7.0	%	7.0	%	8.0	%
Estimated salary increase	3.5	%	3.5	%	3.5	%
Estimated increase of base amount	3.5	%	3.5	%	3.5	%
Pension adjustments	3.0	%	3.0	%	3.0	%
Average estimated voluntary retirement	2.5	%	2.5	%	2.5	%

16

    Based upon these assumptions the pension liabilities, pension funds and pension costs are calculated as follows:

Figures in NOK 1,000	1999		1998
Calculated pension liabilities	(7,990	)	(5,281	)
The market value of the pension funds	5,705		3,853
= Estimated Net pension liabilities	(2,285	)	(1,428	)
Non-realized changes of estimates	2,034		1,197
Net pension liabilities	(251	)	(231	)

Specification of pension costs:

Figures in NOK 1,000	1999		1998		1997
Pensions earned during the year	1,932		932		1,085
Interest cost from pension liabilities	338		243		178
Expected return on pension funds	(310	)	(216	)	(163	)
Realized deviations and changes of estimates	82		46		132
Pension cost	2,042		1,005		1,232
Contribution to pension plan in Proxima Corporation	2,608		1,275		0
Total pension costs in the group	4,650		2,280		1,232

    Estimate changes and deviations are amortized over the estimated remaining service period provided they exceed 10% of the largest of the pension liabilities and pension funds (corridor).

Note 14—Leasing Commitments

    The group is responsible for leasing buildings under leasing agreements that will expire on June 30, 2002, March 31, 2004 and April 30, 2009, respectively.

    As of December 31, 1999, future-leasing liabilities in accordance with agreements entered into will be as follows:

2000	NOK 10.9 million
2001	NOK 11.1 million
2002	NOK 10.9 million
2003	NOK 10.5 million
2004	NOK 5.4 million
Following years, total	NOK 16.0 million
Total lease commitments	NOK 64.8 million

17

Note 15—Legal Claims and Other Contingencies

    From time to time Proxima becomes involved in ordinary, routine or regulatory legal proceedings incidental to the business. The management's judgment is that these contingent liabilities do not have significant influence on the group's financial position, results or cash flow.

Note 16—Other Operating Expenses

Figures in NOK 1,000	1999	1998		1997
Marketing expenses	79,767	56,793		15,230
Rental	12,440	8,036		3,126
Loss on debtors	7,911	(4,370	)	3,332
Other operating expenses	189,403	115,518		39,366
Total other operating expenses	289,521	175,977		61,054

Note 17—United States Generally Accepted Accounting Principles

    The consolidated financial statements have been prepared under Norwegian generally accepted accounting (N GAAP), which differs in certain respects from United States generally accepted accounting principles (U.S. GAAP). The principal differences between the Group's accounting principles under N GAAP and U.S. GAAP are set out below:

Reconciliation of net income from N GAAP to U.S. GAAP

				Year end December 31,
Amounts in NOK 1000		Ref.		1999		1998		1997
Net income in accordance with N GAAP				135,238		100,637		98,043
Adjustments for U.S. GAAP:
Marketable securities		(a	)	(4,327	)	(25,949	)
Stock Compensation		(b	)	(6,815	)	314		(22,749	)
Business Combinations		(c	)	3,171		(20,544	)
Property and equipment		(d	)	2,307		786		593
Tax effect of U.S. GAAP adjustments		(e	)	57		(220	)	(166	)
Net income in accordance with U.S. GAAP				129,631		55,024		75,721
Approximate earnings (basic and dilutive) per share in accordance with U.S. GAAP
	Basic			3.13		1.36		2.08
	Dilutive (treasury stock method)			3.12		1.36		2.08
Shares used for Basic EPS				41,341,551		40,637,481		36,471,620
Shares used for Diluted EPS				41,611,110		40,701,911		36,482,661

18

Reconciliation of shareholders equity from N GAAP to U.S. GAAP

			Year end December 31
Amounts in NOK 1000	Ref.		1999		1998
Shareholders equity in accordance with N GAAP			901,931		729,962
Adjustments for U.S. GAAP:
Marketable Securities	(a	)			4,254
Stock Compensation	(b	)	(5,852	)	(2,404	)
Business Combinations	(c	)	(49,686	)	(50,880	)
Property and Equipment	(d	)	8,064		5,757
Tax effects of U.S. GAAP adjustments	(e	)	(2,258	)	(1,612	)
Shareholders' equity in accordance with U.S. GAAP			852,199		685,077

The following table reflects the components of comprehensive income under U.S. GAAP

Amounts in NOK 1000	1999	1998
Net income	129,631	55,024
Translation adjustments	17,849	(621	)
Comprehensive income	147,480	54,403

(a) Marketable Securities

    Under Norwegian GAAP, the Company's long-term investments in marketable securities are recorded at cost. The cost basis of the individual security shall be written down to fair value as a new cost basis and the amount of the writedown shall be included in earnings only if the decline in fair value of these securities is judged to be permanent

    Under U.S. GAAP, such securities that are available for sale are carried at fair value with unrealized gains or losses, net of tax, recorded as a separate component of shareholders' equity. If the decline in fair value of these securities is judged to be other than temporary, the cost basis of the individual security shall be written down to fair value as a new cost basis and the amount of the writedown shall be included in earnings.

(b) Stock Compensation

    In accordance with Norwegian GAAP, the Company did not recognize compensation expense for stock options granted to employees with no intrinsic value. On the grant date, it was agreed that the exercise price of the options would equal the quoted market price of the Company's stock and would increase by 1% per month until the date such options are exercised.

    In accordance with U.S. GAAP, the measurement date for determining compensation cost for stock options is the first date at which both the number of shares the employee is entitled to receive and the exercise price of the options are known. When the Company granted stock options, the number of shares

19

was known at the grant date, however, the exercise price to be paid was not because it was not known when the employee would exercise the options. Accordingly, variable grant accounting would apply under U.S. GAAP and the intrinsic value of the options at the end of each reporting period, based on a presumed exercise price and the quoted market price of the Company's stock, would be calculated and recorded as compensation expense over the vesting period.

    In accordance with Norwegian GAAP, the Company did not recognize compensation expense for shares issued to employees at a price below the quoted market price of the Company's stock.

    In accordance with U.S. GAAP, the intrinsic value of such shares would be calculated and recorded as compensation expense over the vesting period.

(c) Business Combinations

    In accordance with Norwegian GAAP, purchase price adjustments, which are broadly defined, and the related allocation to the fair value of the net assets acquired are recorded in connection with purchase business combinations.

    In accordance with U.S. GAAP, certain purchase price adjustments, such as provisions for restructuring, are narrowly defined and are not recorded unless specific criteria are met. The basis for goodwill and related amortization would be adjusted accordingly under U.S. GAAP.

    The following illustrates the net effect of the business combination differences on the financial statement line items:

	December 31,
	1999		1998
Shareholders equity
Deferred tax asset	(7078	)
Goodwill	(60,311	)	(69,209	)
Inventories	11,125		7,777
Accrued expenses	6,578		10,552
Effect on shareholders equity	(49,686	)	(50,880	)

	Year ended December 31,
	1999		1998
Cost of goods sold	2,929		(13,454	)
Personnel expenses	(929	)	(5,285	)
Goodwill amortization	4,967		3,405
Other operating expenses	(3,796	)	(5,210	)
Effect on net income	3,171		(20,544	)

20

(d) Property and Equipment

    In accordance with Norwegian GAAP, the Company records certain tangible fixed assets at historical cost less accumulated depreciation. Such assets have estimated useful lives between 3 and 5 years. Similar costs with estimated useful lives less than 3 years do not qualify as tangible fixed assets and are expensed as incurred.

    In accordance with U.S. GAAP, all tangible fixed assets are recorded at historical cost less accumulated depreciation.

(e) Tax effects of U.S. GAAP adjustments

    The tax adjustment includes the income tax effects of U.S. GAAP adjustments, where appropriate.

Note 18—Subsequent Events

    Proxima ASA and In Focus Systems Inc. (In Focus) announced March 6, 2000 that they had entered into a definitive agreement to merge the activity of the two entities. Technically, In Focus will make a public exchange offer to all shareholders of Proxima. The combined company will be called "InFocus Corporation" and will continue to market multimedia solutions under all three of its popular brand names: In Focus, PROXIMA and ASK. The proposed transaction calls for Proxima shareholders to exchange each of their shares for 0.3615 shares of In Focus. Following the business combination, Proxima shareholders will comprise approximately 38% of the new company and In Focus shareholders approximately 62%.

    In Focus will apply for a secondary listing on the Oslo Stock Exchange. The Board of Directors of both In Focus and Proxima has unanimously approved the business combination. The transaction is expected to be consummated in the second quarter of 2000, subject to the holders of more than 90% of Proxima's outstanding shares accepting the offer; approval of In Focus shareholders; a number of regulatory approvals and other customary closing conditions.

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REPORT OF INDEPENDENT ACCOUNTANTS

EX-23.1

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EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

     As independent public accountants, we hereby consent to the incorporation of our report dated January 21, 2000, except for Note 12 as to which the date is June 23, 2000, included in this Form 8-K into the Company's previously filed Registration Statements Nos. 33-82522, 333-15235 and 333-53085 on Form S-8.

ARTHUR ANDERSEN LLP

Portland, Oregon,
July 5, 2000

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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

EX-23.2

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EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

     We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (Nos. 33-82522, 333-15235 and 333-53085) of InFocus Corporation and subsidiaries of our report dated February 15, 2000, except for Notes 17 and 18 as to which the date is April 5, 2000, relating to the consolidated financial statements of Proxima ASA, which appears in this Form 8-K.

PricewaterhouseCoopers DA
Oslo, Norway
July 5, 2000

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CONSENT OF INDEPENDENT ACCOUNTANTS

EX-27

 


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<CIK> 0000845434
<NAME> NONE
<MULTIPLIER> 1000

                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                             JAN-01-1999
<PERIOD-END>                               DEC-31-1999
<CASH>                                          91,827
<SECURITIES>                                    28,536
<RECEIVABLES>                                  162,665
<ALLOWANCES>                                    13,376
<INVENTORY>                                     66,696
<CURRENT-ASSETS>                               350,774
<PP&E>                                          56,187
<DEPRECIATION>                                  40,699
<TOTAL-ASSETS>                                 398,795
<CURRENT-LIABILITIES>                          121,019
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<COMMON>                                        71,367
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<TOTAL-LIABILITY-AND-EQUITY>                   398,796
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<TOTAL-REVENUES>                               688,519
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<OTHER-EXPENSES>                               127,374
<LOSS-PROVISION>                                 4,082
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<INCOME-PRETAX>                                 64,649
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<INCOME-CONTINUING>                             43,504
<DISCONTINUED>                                       0
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EX-99.1

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EXHIBIT 99.1

Report of Independent Public Accountants

To the Board of Directors and Shareholders of
  InFocus Corporation:

    We have audited the accompanying supplemental consolidated balance sheets of InFocus Corporation (formerly In Focus Systems, Inc.) (an Oregon corporation) and subsidiaries as of December 31, 1999 and 1998, and the related supplemental consolidated statements of operations, shareholders' equity and cash flows for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of Proxima ASA, a company acquired during 2000 in a transaction accounted for as a pooling of interests, as discussed in Note 12. Such statements are included in the consolidated financial statements of InFocus Corporation and reflect total assets of 41.8 percent and 49.0 percent as of December 31, 1999 and 1998, respectively, and total revenues of 43.3 percent, 40.5 percent and 21.3 percent for the years ended December 31, 1999, 1998 and 1997, respectively, of the related consolidated totals. These statements were audited by other auditors whose report has been furnished to us and our opinion, insofar as it relates to amounts included for Proxima ASA, is based solely upon the report of the other auditors.

    We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion.

    In our opinion, based on our audits and the report of the other auditors, the supplemental consolidated financial statements referred to above present fairly, in all material respects, the financial position of InFocus Corporation and subsidiaries as of December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Portland, Oregon,
January 21, 2000, except for Note 12
as to which the date is June 23, 2000

F-1

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Shareholders of Proxima ASA

    In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income and cash flows present fairly, in all material respects, the financial position of Proxima ASA and its subsidiaries at December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999 in conformity with generally accepted accounting principles in Norway. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards ("GAAS") in Norway, which are substantially the same as GAAS in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.

    Generally accepted accounting principles vary in certain significant respects from generally accepted accounting principles in the United States. Application of generally accepted accounting principles in the United States would have affected net income for each of the three years in the period ended December 31, 1999 and shareholders' equity as at December 31, 1999 and 1998 to the extent summarized in Note 17 to the consolidated financial statements

PricewaterhouseCoopers DA

Oslo, Norway
February 15, 2000, except for Note 17
and Note 18, which is as of April 5, 2000

F-2

InFocus Corporation

Supplemental Consolidated Balance Sheets

(In thousands, except share amounts)

						December 31,
			March 31, 2000
						1999			1998
			(Unaudited)
Assets
Current Assets:
	Cash and cash equivalents		$	96,382		$	91,827		$	68,985
	Marketable securities			16,609			21,746			11,805
	Accounts receivable, net of allowances of $14,580, $13,376 and $10,676			158,680			149,289			128,855
	Inventories, net			79,572			66,696			59,175
	Deferred income taxes			14,602			13,867			4,433
	Other current assets			14,041			7,349			12,255
		Total Current Assets		379,886			350,774			285,508
Marketable securities				4,709			6,790			1,833
Property and equipment, net of accumulated depreciation of $43,242, $40,699 and $45,851				21,585			15,488			16,105
Deferred income taxes				4,541			5,794			1,231
Goodwill, net of accumulated amortization of $3,936, $3,571 and $1,450				19,277			16,696			28,968
Other assets, net				4,771			3,253			1,735
		Total Assets	$	434,769		$	398,795		$	335,380
Liabilities and Shareholders' Equity
Current Liabilities:
	Notes payable		$	706		$	701		$	22,465
	Accounts payable			89,249			84,019			62,274
	Payroll and related benefits payable			7,603			8,683			3,410
	Income taxes payable			9,945			3,347			4,142
	Marketing incentives payable			12,234			11,867			6,198
	Accrued warranty			8,848			8,739			4,794
	Other current liabilities			5,480			3,662			5,570
		Total Current Liabilities		134,065			121,018			108,853
Other Long-Term Liabilities				2,029			1,284			729
Shareholders' Equity:
	Common stock, 50,000,000 shares authorized; shares issued and outstanding: 38,252,863 37,944,118 and 37,158,366			72,265			71,367			66,585
	Additional paid-in capital			81,449			74,535			69,421
	Other comprehensive loss			(10,304	)		(7,069	)		(4,364	)
	Retained earnings			155,265			137,660			94,156
		Total Shareholders' Equity		298,675			276,493			225,798
		Total Liabilities and Shareholders' Equity	$	434,769		$	398,795		$	335,380

The accompanying notes are an integral part of these supplemental consolidated balance sheets.

F-3

InFocus Corporation

Supplemental Consolidated Statements of Operations

(In thousands, except per share amounts)

		For the Three Months Ended March 31,						For the Year Ended December 31,
		2000			1999			1999			1998			1997
		(Unaudited)
Revenue		$	214,435		$	154,818		$	688,519		$	515,412		$	401,333
Cost of sales			149,030			118,924			500,669			401,090			286,500
Gross profit			65,405			35,894			187,850			114,322			114,833
Operating expenses:
	Marketing and sales		22,242			15,854			76,643			62,309			38,238
	Research and development		9,302			6,739			28,317			25,852			21,295
	General and administrative		7,957			3,897			20,293			10,504			13,995
	Goodwill amortization		365			505			2,121			1,450			—
			39,866			26,995			127,374			100,115			73,528
Income from operations			25,539			8,899			60,476			14,207			41,305
Other income (expense):
	Interest expense		(246	)		(284	)		(980	)		(1,109	)		(146	)
	Interest income		1,417			816			4,239			2,096			2,433
	Other, net		483			(732	)		914			(3,099	)		727
			1,654			(200	)		4,173			(2,112	)		3,014
Income before income taxes			27,193			8,699			64,649			12,095			44,319
Provision for income taxes			9,588			3,039			21,145			5,476			13,547
Net income		$	17,605		$	5,660		$	43,504		$	6,619		$	30,772
Basic net income per share		$	0.46		$	0.15		$	1.16		$	0.18		$	0.88
Diluted net income per share		$	0.44		$	0.15		$	1.12		$	0.18		$	0.87

The accompanying notes are an integral part of these supplemental consolidated statements.

F-4

InFocus Corporation

Supplemental Consolidated Statements of Shareholders' Equity
for The Years Ended December 31, 1999, 1998 and 1997

(In thousands, except share amounts)

		Common Stock
					Additional Paid-In Capital			Retained Earnings		Other Comprehensive Income (Loss)			Total Shareholders' Equity
		Shares	Amount
Balance at December 31, 1996		33,294,782	$	49,649	$	23,377		$	56,765	$	(45	)	$	129,746
Comprehensive income (loss):
	Net income	—		—		—			30,772		—			30,772
	Cumulative translation adjustment	—		—		—			—		(2,647	)		(2,647	)
														28,125
Shares issued in connection with Ask Norge merger		1,024,853		147		(147	)		—		—			—
Private placement, net of issuance costs		650,700		79		10,719			—		—			10,798
Proxima conversion from paid-in common capital		—		9,741		(9,741	)		—		—			—
Shares issued pursuant to stock plans		563,480		3,835		401			—		—			4,236
Compensation cost of stock options		—		—		476			—		—			476
Income tax benefit of non-qualified stock option exercises and disqualifying dispositions		—		—		1,198			—		—			1,198
Balance at December 31, 1997		35,533,815		63,451		26,283			87,537		(2,692	)		174,579
Comprehensive income (loss):
	Net income	—		—		—			6,619		—			6,619
	Cumulative translation adjustment	—		—		—			—		(1,672	)		(1,672	)
														4,947
Private placement, net of issuance costs		1,337,550		972		42,184			—		—			43,156
Shares issued pursuant to stock plans		287,001		2,162		—			—		—			2,162
Compensation cost of stock options		—		—		(127	)		—		—			(127	)
Income tax benefit of non-qualified stock option exercises and disqualifying dispositions		—		—		1,081			—		—			1,081
Balance at December 31, 1998		37,158,366		66,585		69,421			94,156		(4,364	)		225,798
Comprehensive income (loss):
	Net income	—		—		—			43,504		—			43,504
	Cumulative translation adjustment	—		—		—			—		(2,705	)		(2,705	)
														40,799
Compensation cost of stock options		—		—		874			—		—			874
Shares issued pursuant to stock plans		785,752		4,782		1,688			—		—			6,470
Income tax benefit of non-qualified stock option exercises and disqualifying dispositions		—		—		2,552			—		—			2,552
Balance at December 31, 1999		37,944,118	$	71,367	$	74,535		$	137,660	$	(7,069	)	$	276,493

The accompanying notes are an integral part of these supplemental consolidated statements.

F-5

InFocus Corporation

Supplemental Consolidated Statements of Cash Flows

(In thousands)

					Three Months Ended March 31,						Year Ended December 31,
					2000			1999			1999			1998			1997
					(Unaudited)
Cash flows from operating activities:
	Net income				$	17,605		$	5,660		$	43,504		$	6,619		$	30,772
	Adjustments to reconcile net income to net cash flows provided by (used in) operating activities:
		Depreciation and amortization				2,996			3,970			12,689			12,896			8,640
		Stock based compensation				1,929			(91	)		873			(127	)		476
		Deferred income taxes				234			312			(4,013	)		(2,595	)		(41	)
		(Gain) loss on sale of fixed assets				—			(8	)		—			171			—
		Other non-cash (income) expense				—			—			(975	)		3,437			—
		(Increase) decrease in:
			Accounts receivable, net			(10,150	)		(6,995	)		(22,028	)		20,949			(46,295	)
			Inventories, net			(13,657	)		(3,353	)		(8,223	)		4,896			(13,522	)
			Other current assets			(6,865	)		1,015			4,828			(7,516	)		(122	)
		Increase (decrease) in:
			Accounts payable			5,226			9,306			22,720			(18,263	)		31,130
			Payroll and related benefits payable			(986	)		1,932			5,337			(2,473	)		2,200
			Income taxes payable			6,476			2,108			(649	)		3,163			995
			Marketing incentives payable, accrued warranty and other current liabilities			2,153			722			8,021			(3,372	)		3,445
		Other long-term liabilities				(833	)		1			1,257			17			14
				Net cash provided by (used in) operating activities		4,128			14,579			63,341			17,802			17,692
Cash flows from investing activities:
	Purchase of marketable securities					(3,700	)		(2,491	)		(29,323	)		(12,141	)		(11,018	)
	Maturities of marketable securities					10,918			4,000			15,400			11,022			4,561
	Payments for purchase of property and equipment					(9,427	)		(2,592	)		(10,591	)		(9,200	)		(9,686	)
	Cash received from sale of Genigraphics					—			—			—			208			—
	Cash paid for Proxima Corporation, net of cash acquired					—			—			—			(66,588	)		—
	Cash paid for Mediavision, net of cash acquired					(924	)					—			—			—
	Other assets, net					(1,522	)		(1,890	)		(1,520	)		(627	)		502
				Net cash used in investing activities		(4,655	)		(2,973	)		(26,034	)		(77,326	)		(15,641	)
Cash flows from financing activities:
	Payments on notes payable					—			(7,421	)		(22,446	)		—			(738	)
	Borrowings on notes payable					25			—			—			23,593			—
	Proceeds from sale of common stock					4,933			52			6,470			45,318			15,034
	Income tax benefit of non-qualified stock option exercises and disqualifying dispositions					951			19			2,552			1,081			1,198
				Net cash provided by (used in) financing activities		5,909			(7,350	)		(13,424	)		69,992			15,494
Effect of exchange rate on cash						(827	)		(66	)		(1,041	)		(782	)		(1,376	)
Increase in cash and cash equivalents						4,555			4,190			22,842			9,686			16,169
Cash and cash equivalents:
	Beginning of period					91,827			68,985			68,985			59,299			43,130
	End of period				$	96,382		$	73,175		$	91,827		$	68,985		$	59,299

The accompanying notes are an integral part of these consolidated statements.

F-6

INFOCUS CORPORATION

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS

(Numbers in thousands, except per share amounts or as otherwise indicated)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

    The consolidated financial statements include the accounts of InFocus Corporation (formerly In Focus Systems, Inc.) (the "Company") and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

    As discussed in Note 12 ("Subsequent Events"), the Company consummated a merger with Proxima ASA, a Norwegian headquartered company, in June 2000. This merger has been accounted for as a pooling of interests and, accordingly, all prior period consolidated financial statements have been restated to include the combined results of operations, financial position and cash flows of Proxima ASA. Proxima ASA's wholly owned U.S. subsidiary, Proxima Corporation, was acquired by Proxima ASA pursuant to a purchase business combination in April 1998. See further details in Note 2. Proxima ASA's financial information is reflected in accordance with U.S. Generally Accepted Accounting Principles.

Nature of Operations

    The Company develops, manufactures and markets multimedia projection products and services to present video, audio, graphics and data from personal computers, workstations, VCRs and laser disc players. The Company's products are used in businesses, schools and government agencies for training sessions, meetings, sales presentations, technical seminars and other applications involving the sharing of computer-generated and/or video information with an audience. The Company's products are compatible with all major personal computers and most video sources used in business and education.

Estimates

    The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management believes that the estimates used are reasonable.

Cash Equivalents and Marketable Securities

    Cash equivalents consist of highly liquid investments with maturities at the date of purchase of 90 days or less; marketable securities consist primarily of government and corporate debt instruments. The Company's marketable securities are classified as "held to maturity" and "available for sale." See Note 3 below.

Foreign Currency Translation

    The assets and liabilities of the Company's foreign operations are generally translated into U.S. dollars at current exchange rates, and revenues and expenses are translated at average exchange rates for the year. Resulting translation adjustments are reflected as other comprehensive income or loss within shareholders' equity.

    Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency, except those transactions which operate as a hedge of an

F-7

identifiable foreign currency commitment or as a hedge of a foreign currency investment position, are included in the results of operations as incurred.

Market Risks

    In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded on the balance sheet as either an asset or liability measured at its fair value. SFAS 133 requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative's gains and losses to offset related results on the hedged item in the income statement, and requires that a company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting.

    In June 1999, the FASB issued Statement of Financial Accounting Standards No. 137 ("SFAS 137"), which deferred the effective date of SFAS 133 to fiscal years beginning after June 15, 2000. A company may implement SFAS 133 as of the beginning of any fiscal quarter after issuance; however, the statement cannot be applied retroactively. The Company does not believe that the statement will have a material impact on its accounting for price risk management activities.

    The Company is exposed to changes in exchange rates through the purchase of production materials and the sale of products denominated in foreign currencies. The Company limits its exposure by engaging in forward exchange contracts. At December 31, 1999, the Company had contracts totaling $4,000 at a rate of NOK 7.97, which became due during the first quarter of 2000. Unrealized profit/loss on forward contracts in foreign currencies were valued on the basis of the market exchange rate at the end of the year.

Revenue Recognition

    Revenue from the sale of products is recognized at time of shipment to the customer. The Company maintains a reserve for sales returns and price adjustments generally based on historical experience. The Company has incentive programs for dealers and distributors whereby rebates are offered based upon exceeding a percentage of quarterly and annual volume goals. Estimated sales returns, price adjustments and rebates are netted against revenue in the month in which revenue is recognized. These estimates have not differed materially from actual results.

Product Warranty

    Estimated warranty costs are provided at the time of sale of the warranted products.

Concentrations of Risk

    The Company generally attempts to procure components from multiple sources. Certain components, however, including LCDs, Digital Micromirror Devices™("DMDs") and plastic housing parts, are purchased from single or limited sources. The Company believes that it could obtain most LCDs manufactured to its specifications from other foreign sources within three-to-six months at a price that would not be materially higher than the price paid to existing suppliers. The Company does not have an alternate

F-8

source for the DMDs, which are currently used in a majority of the Company's products and have been supply constrained throughout 1999.

    The Company sells its products to a large number of customers worldwide. One customer accounted for 13.4 percent, 10.4 percent and 10.4 percent, respectively, of total revenues for the years ended December 31, 1999, 1998 and 1997.

    The Company invests its excess cash with high credit quality financial institutions, which bear minimal risk and, by policy, limits the amount of credit exposure to any one financial institution. The Company has not experienced any material losses on its investments.

Inventories

    Inventories are valued at the lower of cost, using average costs, which approximates the first-in, first-out (FIFO) method, or market, and include materials, labor and manufacturing overhead.

Property and Equipment

    Property and equipment are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets (approximately two to five years). Leasehold improvements are amortized over the lease term or the estimated useful life of the asset, whichever is shorter.

Patents and Trademarks

    Costs associated with obtaining patents and trademarks are capitalized in other assets and amortized over the estimated life of the associated patent or trademark.

Goodwill

    Goodwill, which represents the excess purchase price over fair value of net assets acquired, is amortized on the straight-line basis over the expected period to be benefited of 15 years. The Company assesses the recoverability of this intangible asset by determining whether the amortization of the goodwill balance over its remaining life can be recovered through undiscounted future operating cash flows of the acquired operation. The assessment of the recoverability of goodwill will be impacted if estimated future operating cash flows are not achieved. During 1999, $10,234 was reclassified from goodwill to deferred tax assets as a result of a change in judgment regarding the realizability of the deferred tax assets in future years.

Employee Benefit Plans

    The Company provides a defined benefit pension plan, a defined contribution pension plan and a 401(k) plan for certain employees. The net pension liability related to the defined benefit pension plan was $31 and $30 at December 31, 1999 and 1998, respectively. The total expense related to all of the plans was $1,403, $1,027 and $869, respectively, for the years ended December 31, 1999, 1998 and 1997. Detail information pursuant to Statement of Financial Accounting Standard No. 87 is not provided due to the immateriality of the defined benefit pension amounts.

F-9

Research and Development

    Amounts spent on research and development activities are expensed as incurred.

Advertising Costs

    Advertising costs, which are included in sales and marketing expenses, are expensed as incurred. Advertising expense was approximately $6,864, $6,969 and $5,846 in 1999, 1998 and 1997, respectively.

Stock-Based Compensation Plans

    The Company accounts for its stock-based compensation plans under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25). Effective January 1, 1996, the Company adopted the disclosure option of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123). SFAS 123 requires that companies which do not choose to account for stock-based compensation as prescribed by this Statement shall disclose the pro forma effects on earnings and earnings per share as if SFAS 123 had been adopted. Additionally, certain other disclosures are required with respect to stock compensation and the assumptions used to determine the pro forma effects of SFAS 123.

Net Income Per Share

    Basic earnings per share (EPS) and diluted EPS are computed using the methods prescribed by Statement of Financial Accounting Standard No. 128, Earnings per Share (SFAS 128). Following is a reconciliation of basic EPS and diluted EPS:

	Three Months Ended March 31,
	2000					1999
	Income		Shares	Per Share Amount		Income		Shares	Per Share Amount
	(Unaudited)
Basic EPS
Income available to Common Shareholders	$	17,605	38,021	$	0.46	$	5,660	37,120	$	0.15
Diluted EPS
Effect of dilutive stock options		—	2,437				—	760
Income available to Common Shareholders	$	17,605	40,458	$	0.44	$	5,660	37,880	$	0.15

F-10

    Potentially dilutive securities that are not included in the diluted EPS calculations because they would be antidilutive include 14 and 1,649 shares, respectively, issuable pursuant to stock options, for the three month periods ended March 31, 2000 and 1999, respectively.

	Year Ended December 31,
	1999					1998					1997
	Income		Shares	Per Share Amount		Income		Shares	Per Share Amount		Income		Shares	Per Share Amount
Basic EPS
Income available to Common Shareholders	$	43,504	37,390	$	1.16	$	6,619	36,860	$	0.18	$	30,772	34,837	$	0.88
Effect of Dilutive Securities:
Stock Options		—	1,454				—	367				—	696
Diluted EPS
Income available to Common Shareholders	$	43,504	38,844	$	1.12	$	6,619	37,227	$	0.18	$	30,772	35,533	$	0.87

    Shares issuable pursuant to stock options that have not been included in the above calculations totaled 1,446, 2,498 and 828 for 1999, 1998 and 1997, respectively, since they would have been antidilutive.

Segment Reporting

    The Company adopted Statement of Financial Accounting Standards No. 131 (SFAS 131), Disclosures about Segments of an Enterprise and Related Information for the year ended December 31, 1998. Based upon definitions contained within SFAS 131, the Company has determined that it operates in one segment.

Reclassifications

    Certain amounts in the prior year financial statements have been reclassified to conform to the current presentation.

2. PROXIMA CORPORATION ACQUISITION:

    In April 1998, Proxima ASA purchased all the shares of Proxima Corporation, a distribution company with the bulk of its operations in the U.S., for $84,100. The supplemental consolidated statements of operations include the results of Proxima Corporation from April 14, 1998. The transaction was accounted for as a purchase. In connection with the acquisition, a detailed assessment of actual value of assets and liabilities was performed. Acquisition costs that could not be allocated to specific assets or liabilities were classified as goodwill in the supplemental consolidated balance sheets. The goodwill is being amortized on a straight-line basis over 15 years based on the fact that Proxima Corporation is a distribution company with a strong brand name.

F-11

    Unaudited pro forma results of operations as if the acquisition had occurred at the beginning of the respective periods are as follows:

	Year Ended December 31,
	1998		1997
Revenue	$	554,784	$	534,669
Net income		1,132		19,143
Net income per share—basic		0.03		0.55
Net income per share—diluted		0.03		0.54

3. MARKETABLE SECURITIES:

    The Company accounts for its Marketable Securities in accordance with Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities (SFAS 115). Accordingly, the held to maturity securities are recorded at amortized cost and the available for sale securities are recorded at fair value with unrealized gains and losses reported in a separate component of shareholders' equity.

    Certain information regarding the Company's marketable securities is as follows:

			Held to Maturity
			December 31, 1999		December 31, 1998
Fair Market Value			$	28,473	$	11,885
Amortized Cost:
	State and Local Government		$	15,408	$	11,805
	Federal Government			2,066		—
	Corporate			11,062		—
		Total	$	28,536	$	11,805
Maturity Information:
	Less than one year		$	21,746	$	11,805
	One to five years			6,790		—
		Total	$	28,536	$	11,805

		Available for Sale
		December 31, 1999	December 31, 1998
Fair market value		—	$	1,833
Cost:
	Corporate	—	$	1,833

    Gains and losses on the sale of marketable securities are calculated using the specific identification method. In 1998, the Company recorded a permanent impairment of $3,437 to its investment in available

F-12

for sale securities because the decline in fair value was judged to be other than temporary. The write down is reflected in other expense for the year ended December 31, 1998.

4. INCOME TAXES:

    The Company accounts for income taxes in accordance with SFAS 109, Accounting for Income Taxes. The Company realizes tax benefits in the United States as a result of the exercise of nonqualified stock options and the exercise and subsequent sale of certain incentive stock options (disqualifying dispositions). For financial reporting purposes, any reduction in income tax obligations as a result of these tax benefits is credited to paid-in capital. Tax benefits of $2,552, $1,081 and $1,198 were credited to paid-in capital in 1999, 1998 and 1997, respectively.

    The provision for income taxes is as follows:

			December 31,
			1999			1998			1997
FEDERAL:
	Current		$	17,766		$	2,016		$	6,630
	Deferred			(3,804	)		(1,975	)		839
				13,962			41			7,469
STATE:
	Current			2,614			310			696
	Deferred			(191	)		(144	)		60
				2,423			166			756
FOREIGN:
	Current			4,973			5,763			6,275
	Deferred			(213	)		(494	)		(953	)
				4,760			5,269			5,322
		Total	$	21,145		$	5,476		$	13,547

    Total deferred income tax assets at December 31, 1999 and 1998 were $22,626 and $9,883, respectively. Total deferred income tax liabilities at December 31, 1999 and 1998 were $2,965 and $4,219, respectively.

F-13

    Individually significant temporary differences include the following:

	December 31,
	1999			1998
Accounts receivable reserves	$	3,248		$	1,760
Inventory reserves		3,663			3,265
Book/tax depreciation differences		2,288			1,879
Tax loss carryforwards		4,950			5,719
Accrued warranty		3,715			1,753
Accrued expenses		1,945			3,966
Other		1,758			669
Valuation allowance		(1,906	)		(13,347	)
	$	19,661		$	5,664

    The reconciliation between the effective tax rate and the statutory federal income tax rate is as follows:

	For the Year Ended December 31,
	1999		1998		1997
Statutory federal income tax rate	35.0	%	35.0	%	35.0	%
State taxes, net of federal income taxes	3.6		0.9		1.1
Effect of foreign taxes at lower rate than U.S.	(1.8	)	(8.9	)	(3.0	)
Research and development tax credit	(1.8	)	(5.3	)	(1.7	)
Foreign sales corporation tax benefit	(2.1	)	(2.0	)	(2.0	)
Non-deductible goodwill amortization	1.3		4.6		—
Tax exempt interest	(0.5	)	(2.7	)	(1.1	)
Meals and entertainment	0.2		0.9		0.2
Stock compensation	0.5		(0.1	)	2.5
Change in valuation allowance	(1.9	)	20.8		—
Other	0.2		2.1		(0.4	)
Effective tax rate	32.7	%	45.3	%	30.6	%

5. INVENTORIES:

			December 31,
	March 31, 2000
			1999		1998
	(Unaudited)
Raw materials and components	$	24,386	$	26,542	$	13,474
Work-in-process		6,185		2,691		2,699
Finished goods		49,001		37,463		43,002
	$	79,572	$	66,696	$	59,175

F-14

6.  PROPERTY AND EQUIPMENT:

	December 31,
	1999			1998
Furniture and fixtures	$	4,987		$	5,004
Manufacturing equipment		17,626			24,962
Engineering equipment		2,744			2,154
Computer equipment		26,477			26,914
Buildings, land and improvements		3,206			2,922
Construction in progress		1,147			—
		56,187			61,956
Less accumulated depreciation		(40,699	)		(45,851	)
	$	15,488		$	16,105

7.  LEASE OBLIGATIONS:

    The Company leases its Oregon facility and certain improvements under a non-cancelable operating lease, which expires in December 2003 as to approximately 150 square feet and December 2000 as to approximately 30 square feet. The lease has one, one-year renewal option in regard to the 30 square feet. The Company also leases space in Norway and California under leases expiring on June 30, 2002, March 31, 2004 and April 30, 2009.

    Future minimum lease payments under the non-cancelable operating leases as of December 31, 1999 are as follows (there were no capital leases at December 31, 1999):

Year ending December 31,
2000	$	3,974
2001		3,413
2002		3,518
2003		3,468
2004		864
Thereafter		2,710
Total minimum lease payments	$	17,947

    Rental expense for the years ended December 31, 1999, 1998 and 1997 was $4,399, $3,565 and $2,748, respectively.

8.  SHAREHOLDERS' EQUITY:

General

    In January 1998, the Company announced a 2 for 1 stock split of its Common Stock for holders of record of the Company's Common Stock on February 10, 1998. All share and per share amounts have been retroactively adjusted to reflect this stock split.

F-15

Common Share Purchase Rights

    In July 1997, the Company declared a dividend distribution of one common share purchase right for each outstanding share of the Company's Common Stock (the "Rights"). If a person becomes an Acquiring Person, each Right will entitle its holder to purchase, at the Right's exercise price, a number of common shares of the Company having a market value at the time of twice the exercise price. The exercise price is $65. Rights held by the Acquiring Person become void and are not exercisable to purchase shares at the bargain purchase price. An Acquiring Person is defined as a person who acquires 20 percent or more of the outstanding common shares of the Company. In effect, this would enable a holder of Rights (other than an Acquiring Person) to purchase $130 worth of Common Stock at half price. The Company's Board of Directors is entitled to redeem the rights at $.01 per right at any time before a person has acquired 20 percent or more of the outstanding Common Stock.

Stock Option Plans

    The Company's 1988 Combination Stock Option Plan, as amended (the "1988 Plan") expired in December 1998. The Company's 1998 Stock Incentive Plan (the "1998 Plan", together with the 1988 Plan, the "Plans"), covering 1,500 shares of the Company's Common Stock, was approved by the Shareholders in April 1998. The 1998 Plan provides for the issuance of incentive stock options to employees of the Company and restricted stock and nonstatutory stock options to employees, officers, directors and consultants of the Company. At December 31, 1999, the Company had 3,972 shares of Common Stock reserved for issuance under the Plans. Under the Plans, the exercise price of all stock options cannot be less than the fair market value of the Company's Common Stock at the date of grant. Options granted generally vest over a four-year period and expire ten years from the date of grant. Options canceled under the 1988 Plan are not added back to the pool of shares available for grant.

    At December 31, 1999, the Company also had a total of 801 shares of its Common Stock authorized for issuance under stock option plans related to its merger with Proxima ASA. All options under these plans are granted at fair market value, vest over two to three year periods and expire two to five years from the date of grant. Pursuant to Norwegian tax requirements, the option price for options granted to employees located in Norway increases at a rate of 1% per month from the date of grant until the date of exercise. Included in the following are 166 options at December 31, 1999 subject to the 1% monthly increase. Such options are accounted for as variable awards under APB 25 and, accordingly, any compensation expense is recorded in the accompanying statements of operations with a corresponding increase to paid in capital. Pursuant to the agreement of merger with Proxima, all terms and conditions of the Proxima options remain unchanged with the exception of the adjustment of the exercise price and number of options to conform to the merger exchange ratio.

F-16

    Activity under all of the plans described above is summarized as follows:

	Shares Available for Grant		Shares Subject to Options		Weighted Average Exercise Price
Balances, December 31, 1996	2,057		2,981		$	9.14
Options granted	(1,441	)	1,441			13.02
Options canceled	555		(555	)		9.97
Options exercised	—		(504	)		7.05
Balances, December 31, 1997	1,171		3,363			10.97
Additional shares reserved	1,500		—			—
Restricted shares granted	(51	)	—			—
Restricted shares cancelled	6		—			—
Options granted	(2,750	)	2,750			8.51
Options canceled	1,772		(1,772	)		12.07
Options exercised	—		(275	)		7.61
Shares expired	(7	)	—			—
Balances, December 31, 1998	1,641		4,066			8.75
Restricted shares granted	(31	)	—			—
Options granted	(630	)	630			14.84
Options canceled	29		(247	)		6.99
Options exercised	—		(685	)		8.49
Balances, December 31, 1999	1,009		3,764		$	10.28

    The Company's Directors' Stock Option Plan, as amended (the "Directors' Plan") provides for the issuance of stock options covering a total of 400 shares of the Company's Common Stock to directors of the Company who have not, at any time during the year preceding the grant of a stock option under the Directors' Plan, been an employee of the Company or its subsidiaries ("Eligible Directors"). The Directors' Plan provides for the automatic grant of options to purchase 20 shares of the Company's Common Stock on the date the director becomes an Eligible Director and options to purchase 10 shares of the Company's Common Stock on the date that the Eligible Director is re-elected to the Board. All Eligible Director options vest six months after the date of grant.

F-17

    At December 31, 1999 the Company had reserved 322 shares of Common Stock for issuance under the Directors' Plan. Activity under the Directors' Plan is summarized as follows:

	Shares Available for Grant		Shares Subject to Options		Weighted Average Exercise Price
Balances, December 31, 1996	221		178		$	10.34
Options granted	(78	)	78			11.86
Options canceled	22		(22	)		11.01
Options exercised	—		(40	)		6.36
Balances, December 31, 1997	165		194			11.72
Options granted	(45	)	45			8.33
Options canceled	54		(54	)		13.62
Options exercised	—		(12	)		5.73
Balances, December 31, 1998	174		173			10.66
Options granted	(30	)	30			9.97
Options canceled	—		—			—
Options exercised	—		(25	)		7.35
Balances, December 31, 1999	144		178		$	11.03

Statement of Financial Accounting Standards No. 123

    The Company has elected to account for its stock-based compensation plans under APB 25; however, the Company has computed, for pro forma disclosure purposes, the value of all options granted during 1999, 1998 and 1997 using the Black-Scholes option pricing model as prescribed by SFAS 123 using the following weighted average assumptions:

	For the Year Ended December 31,
	1999		1998		1997
Risk-free interest rate	5.50	%	5.50	%	6.25	%
Expected dividend yield	0.00	%	0.00	%	0.00	%
Expected lives (years)	5		5		5
Expected volatility	74.5	%	75.0	%	73.1	%

    Using the Black-Scholes methodology, the total value of stock awards and options granted during 1999, 1998 and 1997 was $6,419, $16,341 and $11,610, respectively, which would be amortized on a pro forma basis over the vesting period of the options. The weighted average fair value of stock awards and options granted during 1999, 1998 and 1997 was $9.29 per share, $5.74 per share and $7.64 per share, respectively.

F-18

    If the Company had accounted for its stock-based compensation plans in accordance with SFAS 123, the Company's net income and net income per share would approximate the pro forma disclosures below:

	For the Year Ended December 31,
	1999				1998				1997
	As Reported		Pro Forma		As Reported		Pro Forma		As Reported		Pro Forma
Net income	$	43,504	$	36,911	$	6,619	$	125	$	30,772	$	25,999
Net income per share—basic	$	1.16	$	0.99	$	0.18	$	0.00	$	0.88	$	0.75
Net income per share—diluted	$	1.12	$	0.98	$	0.18	$	0.00	$	0.87	$	0.74

    The effects of applying SFAS 123 in this pro forma disclosure are not indicative of future amounts. SFAS 123 does not apply to awards prior to January 1, 1995, and additional awards are anticipated in future years.

    Information about stock options outstanding at December 31, 1999 is as follows:

Options Outstanding						Options Exercisable
Range of Exercise Prices		Number Outstanding at 12/31/99	Weighted Average Remaining Contractual Life (years)	Weighted Average Exercise Price		Number of Shares Exercisable at 12/31/99	Weighted Average Exercise Price
$	3.75-4.31	920	8.78	$	4.31	138	$	4.31
	4.50-7.81	572	8.20		6.53	143		6.55
	7.81-8.25	411	6.26		8.24	276		8.24
	8.31-16.50	1,777	5.85		13.84	714		13.41
	16.56-23.31	262	9.22		19.06	31		18.05
$	3.75-23.31	3,942	7.14	$	10.11	1,302	$	10.71

    At December 31, 1998 and 1997, 936 and 1,018 options, respectively, were exercisable at weighted average exercise prices of $10.50 per share and $9.69 per share, respectively.

9.  EXPORT SALES AND MAJOR CUSTOMERS:

    Geographic revenue information is as follows:

	For the Year Ended December 31,
	1999		1998		1997
United States	$	435,306	$	293,864	$	197,907
Europe		161,572		158,207		132,806
Asia Pacific		61,549		38,519		36,552
Other		30,092		24,822		34,068
	$	688,519	$	515,412	$	401,333

F-19

    Long-lived assets are as follows:

	December 31,
	1999		1998
United States	$	32,448	$	44,335
Norway		2,166		1,699
Other		823		774
	$	35,437	$	46,808

    One customer accounted for 13.4 percent, 10.4 percent and 10.4 percent, respectively, of total revenues for the years ended December 31, 1999, 1998 and 1997.

10.  LEGAL CLAIMS AND OTHER CONTINGENCIES:

    From time to time, the Company becomes involved in ordinary, routine or regulatory legal proceedings incidental to the business. Management's judgment is that these contingent liabilities do no have significant influence on the Company's financial position, results of operations or cash flows.

11.  SUPPLEMENTAL CASH FLOW INFORMATION:

    Supplemental disclosure of cash flow information is as follows:

	For the Year Ended December 31,
	1999		1998		1997
Cash paid during the period for interest	$	418	$	117	$	79
Cash paid during the period for income taxes		24,244		6,656		8,981
Note receivable in relation to sale of Genigraphics		—		630		—

12.  SUBSEQUENT EVENTS:

    In February 2000, the Company entered into a non-exclusive, perpetual license agreement with Pixelworks, Inc. which allows Pixelworks, Inc. to utilize certain of the Company's technology in exchange for $2,400 in cash and 157 shares of Pixelworks, Inc.'s Series D Preferred Stock with a value of $2,000 at the time of issuance to the Company. The $2,400 in cash will be received in four quarterly payments of $600 each beginning March 31, 2000. The Company will record revenue of $4,400 in the first quarter of 2000 related to this license agreement.

    Also in February 2000, the Company purchased 28.9 acres of land adjacent to its leased Wilsonville facility for $5.2 million in cash. The Company intends to enter into a sale- leaseback transaction for approximately one third of the property in the second quarter of 2000 and begin construction of a new facility. The remainder of the property will be held for development over the next three years.

    In March 2000, the Company announced a merger with Proxima ASA to exchange all shares of Proxima ASA Common Stock for shares of In Focus Common Stock at a ratio of 0.3615 shares of InFocus Common Stock for each share of Proxima ASA Common Stock. The merger was consummated on

F-20

June 23, 2000 pursuant to which InFocus issued approximately 14,555 shares of its Common Stock. The transaction has been accounted for as a pooling of interests and accordingly, all data included in the Supplemental Consolidated Financial Statements has been restated. The following is a reconciliation of certain restated amounts with amounts previously reported.

		For the Year Ended December 31,
		1999		1998			1997
Sales:
	InFocus	$	390,691	$	306,663		$	315,761
	Proxima		297,828		208,749			85,572
		$	688,519	$	515,412		$	401,333
Net income (loss):
	InFocus	$	26,887	$	(671	)	$	20,050
	Proxima		16,617		7,290			10,722
		$	43,504	$	6,619		$	30,772

F-21

Report of Independent Public Accountants
on Consolidated Financial Statement Schedule

To the Board of Directors and Shareholders of
InFocus Corporation:

    We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in InFocus Corporation's 1999 Annual Report on Form 10-K, and have issued our report thereon dated January 21, 2000. Our audits were made for the purpose of forming an opinion on those statements taken as a whole. We did not audit the financial statements of Proxima ASA, a company acquired during 2000 in a transaction accounted for as a pooling of interests, as discussed in Note 12 to the supplemental consolidated financial statements. Such statements are included in the consolidated financial statements of InFocus Corporation and reflect total allowances for accounts receivable of 28.8 percent, 33.6 percent and 18.3 percent for December 31, 1999, 1998 and 1997, respectively, of the related consolidated totals. These statements were audited by other auditors whose report has been furnished to us and our opinion, insofar as it relates to amounts included for Proxima ASA, is based solely upon the report of the other auditors. The Valuation and Qualifying Accounts schedule is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic consolidated financial statements. This schedule has been subjected to the auditing procedures applied in our audits, and the report of the other auditors, of the basic consolidated financial statements and, in our opinion, fairly states, in all material respects, the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole.

January 21, 2000                                                                                                                          ARTHUR ANDERSEN LLP

F-22

SCHEDULE II

InFocus Corporation
Valuation and Qualifying Accounts
Years Ended December 31, 1997, 1998 and 1999
(In thousands)

			Column C								Column E
Column A	Column B							Column D
					Charged to Other Accounts— Describe(b)
Description	Balance at Beginning of Period		Charged to Costs and Expenses					Deductions— Describe(a)			Balance at End of Period
Year Ended December 31, 1997:
Reserves deducted from asset accounts:
Allowance for uncollectible accounts	$	2,234	$	512	$	—		$	(443	)	$	2,303
Sales allowances	$	2,498	$	19,402	$	—		$	(18,284	)	$	3,616
Year Ended December 31, 1998:
Reserves deducted from asset accounts:
Allowance for uncollectible accounts	$	2,303	$	1,762	$	2,417	(b)	$	(1,228	)	$	5,254
Sales allowances	$	3,616	$	34,065	$	593	(b)	$	(32,852	)	$	5,422
Year Ended December 31, 1999:
Reserves deducted from asset accounts:
Allowance for uncollectible accounts	$	5,254	$	4,082	$	—		$	(3,063	)	$	6,273
Sales allowances	$	5,422	$	31,007	$	—		$	(29,326	)	$	7,103

(a)

Charges to the accounts included in this column are for the purposes for which the reserves were created.

(b)

Relates to the establishment of reserves related to the purchase of Proxima Corp. in 1998. The amount was offset against goodwill.

F-23

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REPORT OF INDEPENDENT ACCOUNTANTS
InFocus Corporation Valuation and Qualifying Accounts Years Ended December 31, 1997, 1998 and 1999 (In thousands)

EX-99.2

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EXHIBIT 99.2

Selected Financial Data

	1999		1998		1997		1996		1995
	In thousands (except per share amounts)
Statement of Operations Data
Revenue	$	688,519	$	515,412	$	401,333	$	308,763	$	237,419
Net income		43,504		6,619		30,772		19,525		26,336
Basic net income per share		1.16		0.18		0.88		0.56		0.78
Diluted net income per share		1.12		0.18		0.77		0.55		0.76
Balance Sheet Data
Total assets	$	398,795	$	335,380	$	247,735	$	168,402	$	142,194
Long-term debt, less current portion		31		729		14		738		23

Management's Discussion and Analysis of Financial Condition
and Results of Operations

Results of Operations

Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999

    Revenue increased to $214.4 million in the first quarter of 2000 compared to $154.8 million in the first quarter of 1999. The increase in revenue is primarily attributable to record unit sales. The microportable and ultraportable segment represented a majority of units sold in the first quarter of 2000.

    Also included in revenue in the first quarter of 2000 is $4.4 million related to a license agreement with Pixelworks, Inc. In February 2000, the Company entered into a non-exclusive, perpetual license agreement with Pixelworks, Inc. which allows Pixelworks, Inc. to utilize certain of the Company's technology in exchange for $2.4 million in cash and 156,863 shares of Pixelworks, Inc.'s Series D Preferred Stock with a value of $2.0 million at the time of issuance to the Company. The $2.4 million in cash will be received in four quarterly payments of $600,000 each, with the first one received March 31, 2000.

    During the first quarter of 2000, international sales represented approximately 38 percent of total revenue, compared to approximately 43 percent in the first quarter of 1999.

    As a result of strong demand for InFocus' XGA products, including the LP330, LP435Z and LP755, as well as others, at March 31, 2000, InFocus had backlog of approximately $42.6 million, compared to approximately $102.3 million at December 31, 1999 and $27.3 million at March 31, 1999. A portion of the decrease in backlog from December 31, 1999 resulted from order cancellations and product price reductions. Given current supply and demand estimates, it is anticipated that a majority of the current backlog will turn over by the end of the second quarter of 2000.* However, should InFocus not receive components as forecasted, some of the backlog orders at March 31, 2000 may be canceled and therefore not result in revenue for InFocus. There is minimal seasonal influence relating to InFocus' order backlog. The stated backlog is not necessarily indicative of sales for any future period nor is a backlog any assurance that InFocus will realize a profit from filling the orders.

    InFocus achieved gross margins of 30.5 percent in the first quarter of 2000 compared to 23.2 percent in the first quarter of 1999. Excluding license fees, gross margins were 29.0 percent in the first quarter of 2000. The increase in the gross margin percentage from the first quarter of 1999 was primarily a result of the volume shipment of microportable and ultraportable projectors. The gross margin percentage decreased from the fourth quarter of 1999, however, primarily as a result of more competitive pricing, especially on SVGA products, and an anticipated shift in mix to more OEM sales.

1

    Marketing and sales expense increased to $22.2 million (10.4 percent of revenue) in the first quarter of 2000 compared to $15.9 million (10.2 percent of revenue) in the first quarter of 1999. The increase in dollars spent is primarily a result of growth of the Company.

    Research and development expense increased to $9.3 million (4.3 percent of revenue) in the first quarter of 2000 from $6.7 million (4.4 percent of revenue) in the first quarter of 1999. The increase in dollars spent is primarily a result of growth of the Company. The Company introduced and began shipping two new small conference room projectors during the first quarter of 2000 and also introduced two new ultraportable projectors, which are expected to begin shipping in the second quarter of 2000*.

    General and administrative expense increased to $8.0 million (3.7 percent of revenue) in the first quarter of 2000 from $3.9 million (2.5 percent of revenue) in the first quarter of 1999. The increase is primarily a result of growth of the Company, the impact of accounting for variable stock options and increases in accounts receivable reserves.

    Income from operations increased to $25.5 million (11.9 percent of revenue) in the first quarter of 2000 compared to $8.9 million (5.7 percent of revenue) in the first quarter of 1999, as a result of increased revenues and gross margins, partially offset by increased operating expenses as a percent of revenue as indicated above.

    Income taxes are based on an estimated rate of 35.3 percent in the first quarter of 2000 compared to 34.9 percent in the first quarter of 1999 and 32.7 percent for the year ended December 31, 1999. The increase is primarily a result of an expected lower Foreign Sales Corporation ("FSC") benefit in 2000.

1999 Compared to 1998

    Total revenue increased to $688.5 million in 1999 from $515.4 million in 1998. The increase in total revenue is primarily attributable to record unit sales, with a 42 percent increase in units sold in 1999 compared to 1998. Demand was particularly strong for ultraportable personal projectors, the first of which was introduced by the Company during the first quarter of 1999. The ultraportable segment represented approximately 56 percent of units sold in 1999. Due to strong demand and a limited supply of Digital Micromirror Devices ("DMDs") (a component of Texas Instruments' Digital Light Processing™("DLP") technology, which is used in the ultraportable products), pricing on the ultraportable products remained relatively stable during 1999 while pricing on the conference room and fixed installation projectors experienced historical industry pricing declines of approximately 3 to 5 percent per quarter. Supply constraints of SVGA DMDs eased during the fourth quarter of 1999. International revenue, included in total revenue, increased to $253.2 million in 1999 (36.7 percent of total revenue) from $221.5 million in 1998 (43.0 percent of total revenue).

    During the third quarter of 1999, InFocus began shipping its latest XGA ultraportable projector, the LP330, which utilizes DLP technology, weighs 4.8 pounds and has 650 lumens. Market response to the product was favorable during the third and fourth quarters, especially as a companion product to laptop computers.

    As a result of strong demand for InFocus' LP400, LP330, LP425Z, LP435Z, LP755 and Proxima's UltraLight SVI/ASK C1 and UltraLight LX1/ASK C5 projectors and supply constraints for certain components, at December 31, 1999, the Company had backlog of approximately $102.3 million, compared to approximately $31.2 million at December 31, 1998 and $25.4 million at December 31, 1997. Given current supply and demand estimates, it is anticipated that a majority of the current backlog will turn over by the end of the first quarter of 2000.* However, should InFocus not receive components as forecasted, some of the backlog orders at December 31, 1999 may be canceled and therefore not result in revenue for InFocus. There is minimal seasonal influence relating to InFocus' order backlog. The stated backlog is not necessarily indicative of sales for any future period nor is a backlog any assurance that InFocus will realize a profit from filling the orders.

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    Gross profit, as a percentage of revenue, increased to 27.3 percent in 1999 from 22.2 percent in 1998. The increase in the gross margin percentage was primarily a result of the volume shipment of new ultraportable projectors that have higher gross margins than mature products, cost savings associated with the in-house manufacturing of the imaging engines for the ultraportable projectors and material cost reduction programs. In addition, prices for ultraportable products were relatively stable during 1999 due to strong demand and constrained supply for certain components.

    Marketing and sales expense increased to $76.6 million (11.1 percent of revenue) in 1999 from $62.3 million (12.1 percent of revenue) in 1998. The increase in dollars spent was primarily a result of increased spending to drive demand for new products, tradeshows and increased channel program expenses related to increased revenue.

    Research and development expense increased to $28.3 million (4.1 percent of revenue) in 1999 from $25.9 million (5.0 percent of revenue) in 1998. The increase in dollars spent was primarily a result of the level of new product introductions during 1999.

    General and administrative expense increased to $20.3 million (2.9 percent of revenue) in 1999 from $10.5 million (2.0 percent of revenue) in 1998. The increase was primarily a result of increased sales, headcount, bonus and profit sharing accruals, the impact of accounting for variable stock options and increases in accounts receivable reserves related to increased revenues. In addition, Proxima Corp. was included in the results for a full year in 1999 compared to approximately nine months in 1998.

    Goodwill amortization increased to $2.1 million (0.3 percent of revenue) in 1999 from $1.5 million (0.3 percent of revenue) in 1998 as a result of having a full year of amortization in 1999 and only approximately nine months in 1998.

    Income from operations was $60.5 million in 1999 compared to $14.2 million in 1998. The increase was primarily a result of increased sales, increased margins and lower operating expenses as a percentage of revenue, as discussed above.

    The Company's effective tax rate was approximately 32.7 percent in 1999, compared to approximately 45.3 percent in 1998. The decrease in the rate was primarily a result of a large increase in the Company's valuation allowance in 1998 principally caused by non-deductible capital losses on the Company's available for sale securities, offset in part by a larger portion of the income being derived from U.S. operations in 1999 and smaller research and development tax credit and tax exempt interest deductions compared to income during 1999.

    The Company believes that the impact of inflation was minimal in 1999 and 1998.

1998 Compared to 1997

    Revenue increased to $515.4 million in 1998 from $401.3 million in 1997. The Company's revenues, and financial performance, were adversely affected in 1998 by strong price competition that was fueled by a weakened yen to the dollar. Price decreases in the second half of 1998 returned to more historical levels of 5 to 10 percent rather than the accelerated rates experienced in the first half of 1998, due in part to a strengthening of the yen to the dollar in the second half of the year. SVGA products experienced greater pricing pressure than XGA products due to a slight shift in demand from SVGA to XGA and a constrained supply of XGA products. The Company's primary competitors are Asian companies. The decrease in average selling prices was partially offset by increases in units sold, with the number of units sold during 1998 increasing 30.2 percent over 1997.

    International revenue increased to $221.5 million in 1998 (43.0 percent of total revenue), including 7.5 percent from Asia Pacific countries, from $203.4 million in 1997 (50.7 percent of total revenue), including 9.1 percent from Asia Pacific countries.

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    Gross profit, as a percentage of revenue, decreased to 22.2 percent in 1998 from 28.6 percent in 1997. The decline in gross margins in 1998 compared to 1997 was primarily attributable to an aggressive competitive pricing environment and accelerated price reductions to end of life certain products, offset in part by a shift in mix in 1998 to higher margin products that incorporate engines designed and manufactured by the Company. Accordingly, the Company is continuing its ongoing efforts to reduce manufacturing costs by working closely with its suppliers to reduce direct material costs and designing products with extensible platforms that use new and lower cost technologies. In addition, the Company continues to focus on adding value to projectors that use its own engine designs in order to become less reliant on more expensive out-sourced engines.

    Marketing and sales expense increased to $62.3 million (12.1 percent of revenue) in 1998 from $38.2 million (9.5 percent of revenue) in 1997. The increase was primarily a result of expenditures in the first quarter of 1998 to build demand for the LP420 in two-tier wholesale distribution, work force reduction charges in the first half of 1998 and the addition of sales and service infrastructure around the world, particularly in Europe and Asia, partially offset by lower head count in the third and fourth quarters of 1998 as a result of the work force reduction and other efforts to bring spending in line with current revenue and margin levels.

    Research and development expense increased to $25.9 million (5.0 percent of revenue) in 1998 from $21.3 million (5.3 percent of revenue) in 1997. This increase was primarily a result of timing for new product releases under development as well as costs related to work force reduction in the first half of 1998 in order to create a more efficient organization, partially offset by lower head count in the third and fourth quarters of 1998 as a result of the work force reduction.

    General and administrative expense decreased to $10.5 million (2.0 percent of revenue) in 1998 from $14.0 million (3.4 percent of revenue) in 1997. The 1998 amount includes work force reduction charges taken during the first half of 1998. The third and fourth quarters of 1998 realized efficiencies with lower head count as a result of the work force reduction and other efforts to bring spending in line with current revenue and margin levels.

    Goodwill amortization increased to $1.5 million (0.3 percent of revenue) in 1998 from zero in 1997 due to the acquisition of Proxima Corp. in 1998.

    Income from operations was $14.2 million (2.8 percent of revenue) in 1998 compared to $41.3 million (10.3 percent of revenue) in 1997. The decrease was primarily a result of decreased margins and higher operating expenses as a percentage of revenue.

    The Company's effective tax rate was approximately 45.3 percent in 1998, compared to approximately 30.6 percent in 1997. The increase in the rate was primarily due to increases in the valuation allowance and non-deductible goodwill amortization in 1998, offset in part by a smaller portion of income being derived from U.S. operations during 1998 and larger research and development tax credits and tax exempt interest in relation to income in 1998.

    The Company believes that the impact of inflation was minimal in 1998 and 1997.

Liquidity and Capital Resources

    At March 31, 2000 and December 31, 1999, the Company had working capital of $245.8 million and $229.8 million, respectively, which included $96.4 million and $91.8 million, respectively, of cash and cash equivalents and $16.6 million and $21.7 million, respectively, of marketable securities, current.

    The $582,000 increase in the combined cash and marketable securities, current balance in the first quarter of 2000 was primarily due to a $2.1 million net decrease in long-term marketable securities, $4.9 million provided by the sale of common stock through the exercise of employee stock options and $1.0 million provided by the income tax benefit of nonqualified stock option exercises and disqualifying

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dispositions, offset in part by $1.9 million used in operations and $9.4 million used for purchases of property and equipment. The current ratio at March 31, 2000 and December 31, 1999 was 2.8:1 and 2.9:1, respectively.

    The $32.8 million increase in the combined cash and marketable securities, current balance in 1999 was primarily due to $64.7 million provided by operations, $6.5 million provided by the sale of common stock through the exercise of employee stock options and $2.6 million provided by the income tax benefit of nonqualified stock option exercises and disqualifying dispositions, offset in part by $10.6 million used for purchases of property and equipment, a $5.0 million net increase in long-term marketable securities and $26.0 million used for payments on note payable. The current ratio at December 31, 1999 and 1998 was 2.9:1 and 2.6:1, respectively.

    Accounts receivable increased $9.4 million to $158.7 million at March 31, 2000 compared to $149.3 million at December 31, 1999. Accounts receivable increased $20.4 million to $149.3 million at December 31, 1999 compared to $128.9 million at December 31, 1998. InFocus has increased collection efforts in an attempt to reduce accounts receivable balances relative to its sales levels. As a result, days sales outstanding decreased to 71 days at December 31, 1999 compared to 75 days at December 31, 1998. At December 31, 1999, 67 percent of InFocus' accounts receivable were current, 18 percent were 30 days or less past due and 15 percent were beyond 30 days past due.

    Inventories increased $12.9 million to $79.6 million at March 31, 2000 compared to $66.7 million at December 31, 1999. Inventories increased $7.5 million to $66.7 million at December 31, 1999 compared to $59.2 million at December 31, 1998. The increase in inventories at March 31, 2000 is primarily a result of increases in finished goods to help ensure adequate supply in the second quarter of 2000. The increase in inventories at December 31, 1999 was a result of the Company's contingency planning for year 2000 and in preparation for a manufacturing capacity expansion project. Annualized inventory turns were approximately 9.4 times for the quarter ended December 31, 1999.

    In February 2000, the Company purchased 28.9 acres of land adjacent to its leased Wilsonville facility for $5.2 million in cash. The Company intends to enter into a sale- leaseback transaction for approximately one third of the property in the second quarter of 2000 and begin construction of a new facility. The remainder of the property will be held for development over the next three years.

    The remaining $4.2 million of purchases of property, plant and equipment in the first quarter of 2000 were primarily for new product tooling, engineering design and test equipment and information systems infrastructure. Total expenditures for property and equipment, including the land purchase, are expected to total approximately $12.0 million in 2000, primarily for new product tooling, engineering equipment, information systems infrastructure and the land purchase mentioned above*.

    The $10.6 million of purchases of property, plant and equipment in 1999 were primarily for new product tooling, engineering design and test equipment and information systems infrastructure. The Company also began its capacity expansion project in the last quarter of 1999, which added space for an additional production line, increasing potential production capacity by 33 percent. The capacity expansion project also increased the efficiency of the warehouse space.

    Shareholders' equity increased $22.2 million and $51.0 million, respectively, primarily as a result of net income of $17.6 million and $43.5 million, respectively, and the issuance of common stock for $4.9 million and $6.5 million, respectively, for the three months ended March 31, 2000 and the year ended December 31, 1999, respectively.

    The Company's working capital requirements over the next year are expected to be met from existing cash and marketable securities balances and cash flow from operations*.

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New Accounting Pronouncement

    In June 1999, the FASB issued Statement of Financial Accounting Standards No. 137, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 137"). SFAS 137 is an amendment to Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities". SFAS 137 establishes accounting and reporting standards for all derivative instruments. SFAS 137 is effective for fiscal years beginning after June 15, 2000. InFocus does not expect the adoption of SFAS 137 to have a material impact on its financial position or results of operations.

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QuickLinks

Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations