
                                   EXHIBIT B

                        INCENTIVE STOCK OPTION AGREEMENT


     THIS  AGREEMENT is made as of the 5th day of February,  1995 by and between
Applied Laser Systems (the "Company"), and James Ewan ("Optionee").

                               W I T N E S S E T H

     WHEREAS,  pursuant to the Applied Laser Systems 1994 Stock Option Plan (the
"Stock  Option  Plan"),  the Plan  Committee  of the Board of  Directors  of the
Company (the "Plan  Committee")  has  authorized  the granting to Optionee of an
incentive  stock option to purchase the number of shares of Class A common stock
(the "Common  Stock") of the Company  specified  in  Paragraph 1 hereof,  at the
price specified  therein,  such option to be for the term and upon the terms and
conditions hereinafter stated;

     NOW, THEREFORE, in consideration of the promises and of the undertakings of
the parties hereto contained herein, it is hereby agreed:

     1.  Number of Shares;  Option  Price.  Pursuant  to said action of the Plan
Committee,  the Company  hereby  grants to  Optionee  the option  ("Option")  to
purchase,  upon and  subject to the terms and  conditions  of said Stock  Option
Plan,  all or any part of 150,000 shares of Common Stock of the Company for cash
at the price of $1.00 per share.

     2. Terms.  This Option shall expire on February 4, 2005, unless such Option
shall have been terminated  prior to that date in accordance with the provisions
of the Stock Option Plan or this Agreement (the  "Termination  Date).  The terms
"Parent"  and  "Subsidiary"  herein mean a parent  corporation  or a  subsidiary
corporation,  as such terms are defined in the Stock  Option  Plan.  If Optionee
owns more than 10% of the voting stock of the Company,  a Parent or a Subsidiary
on the date of this Agreement,  the Termination  Date shall be no later than the
day before the fifth anniversary of the date of this Agreement.

     3. Vesting.  This Option shall vest and be  exercisable  immediately  as to
50,000;  100,000 shares on and after February 5, 1996; and 150,000 shares on and
after February 5, 1997. The Option shall  thereafter  remain wholly  exercisable
for the term specified in Paragraph 2 hereof, provided that Optionee is then and
has  continuously  been in the employ of the Company,  a Parent or a Subsidiary;
subject, however, to the provisions of Paragraph 5 hereof.

     4. Exercise. The Option may be exercised by written notice delivered to the
Company  stating the number of shares with  respect to which the Option is being
exercised,  together  with a check made  payable to the Company in the amount of
the  purchase  price of such shares and the written  statement  provided  for in
Paragraph 9 hereof,  if required by said  Paragraph  9. Not less than 100 shares
may be purchased at any one time unless the number purchased is the total number
purchasable under such Option at the time. Only whole shares may be purchased.

     5.  Exercise  on  Termination  of  Employment.   In  the  event  Optionee's
employment is terminated Optionee's right to exercise his options, if any, shall
be governed by Section 7 of the Stock Option Plan.

     6.  Nontransferability.  This  Option may not be  assigned  or  transferred
except by will or by the laws of descent and distribution,  and may be exercised
only by Optionee during his lifetime and after his death, by his  representative
or by the  person  entitled  thereto  under  his will or the  laws of  intestate
succession.

     7.  Optionee  Not  a  Shareholder.  Optionee  shall  have  no  rights  as a
shareholder  with  respect to the  Common  Stock of the  Company  covered by the
Option until the date of issuance of a stock  certificate or stock  certificates
to him upon exercise of the Option.  No adjustment will be made for dividends or
other  rights  for  which  the  record  date is  prior to the  date  such  stock
certificate or certificates are issued,  except as provided in Section 10 of the
Stock Option Plan.

     8.  Modification  and  Termination.  The rights of Optionee  are subject to
modification  and termination in certain events as provided in Sections 7 and 10
of the Stock Option Plan.

     9. Restrictions on Transfer of Shares.

     a. Securities Law Restrictions.  Optionee  represents and agrees that, upon
his  exercise  of the Option in whole or in part,  unless  there is in effect at
that time under the Securities Act of 1933 a registration  statement relating to
the shares  issued to him, he will acquire the shares  issuable upon exercise of
this Option for the purpose of investment and not with a view to their resale or
further distribution, and that upon each exercise thereof he will furnish to the
Company a written statement to such effect,  satisfactory to the Company in form
and substance.  Optionee  agrees that any  certificates  issued upon exercise of
this  Option  may  bear  a  legend  indicating  that  their  transferability  is
restricted in accordance  with applicable  state or federal  securities law. Any
person or persons  entitled to  exercise  this Option  under the  provisions  of
Paragraphs  5 and 6  hereof  shall,  upon  each  exercise  of the  Option  under
circumstances  in which  Optionee  would be required  to furnish  such a written
statement,  also furnish to the Company a written  statement to the same effect,
satisfactory to the Company in form and substance.

     10. Plan Governs.  This Agreement and the Option  evidenced hereby are made
and granted pursuant to the Stock Option Plan and are in all respects limited by
and  subject to the  express  terms and  provisions  of that Plan,  as it may be
amended from time to time and  construed  by the Plan  Committee of the Board of
Directors of the Company.  It is intended  that this Option shall  qualify as an
incentive stock option as defined by Section 422 of the Code, and this Agreement
shall be construed in a manner which will enable this Option to be so qualified.
Optionee hereby acknowledges receipt of a copy of the Stock Option Plan.

     11. Notices. All notices to the Company shall be addressed to the President
of the Company at the principal  office of the Company at 2067  Commerce  Drive,
Medford, OR 97504, and all notices to Optionee shall be addressed to Optionee at
the address of Optionee on file with the Company or its Subsidiaries, or to such
other address as either may designate to the other in writing. A notice shall be
deemed to be duly  given if and when  enclosed  in a properly  addressed  sealed
envelope deposited,  postage prepaid,  with the United States Postal Service. In
lieu of giving notice by mail as aforesaid, written notices under this Agreement
may be given by personal delivery to Optionee or to the President of the Company
(as the case may be).

     12. Sale or Other  Disposition.  Optionee  understands  that, under current
law, beneficial tax treatment resulting from the exercise of this Option will be
available  only if certain  requirements  of the Code are  satisfied,  including
without  limitation,  the  requirement  that no  disposition of shares of Common
Stock of the Company acquired pursuant to exercise of this Option be made within
two years  from the grant date or within  one year  after the  transfer  of such
shares to him or her.  If  Optionee  at any time  contemplates  the  disposition
(whether  by sale,  gift,  exchange,  or other form of  transfer)  of any shares
acquired by exercise of this Option,  he or she will first notify the Company in
writing of such proposed disposition and cooperate with the Company in complying
with all applicable  requirements of law, which, in the judgment of the Company,
must be  satisfied  prior to such  disposition.  In addition  to the  foregoing,
Optionee  hereby agrees that if Optionee  disposes  (whether by sale,  exchange,
gift,  or  otherwise)  of any of the shares  acquired by exercise of this Option
within two years of the grant date or within one year after the transfer of such
shares to Optionee upon exercise of this Option,  then Optionee shall notify the
Company  of such  disposition  in  writing  within 30 days from the date of such
disposition.  Said written notice shall state the date of such disposition,  and
the type and amount of the  consideration  received  for such share or shares by
Optionee in  connection  therewith.  In the event of any such  disposition,  the
Company shall have the right to require  Optionee to immediately pay the Company
the amount of taxes (if any) which the Company is  required  to  withhold  under
federal  and/or state law as a result of the granting or exercise of the subject
Option in the disposition of the subject shares.

     13.  180-Day  Holdback.  In accepting  the grant of this  Option,  Optionee
hereby  agrees  that,  in the event of an  underwritten  public  offering of the
Company's  securities  pursuant to which any of its  securities  are  registered
pursuant  to the  Securities  Act of 1933,  as  amended,  and to the  extent the
underwriter of such offering requests that the shareholders of the Company agree
to do so, the Optionee  will agree not to sell any of the Common Stock issued or
issuable  upon  exercise  of this Option for a period of at least 180 days after
the closing of such public offering,  and to sign a 180- day holdback  agreement
to that effect.

     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the date and year first above written.



                                                    APPLIED LASER SYSTEMS


                                                    By__________________________

                                                    Title:______________________


                                                    OPTIONEE:


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                                                             (Signature)


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                                                      (Typed or Printed Name)


                                                    Address:

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