Exhibit 10.3

Incentive Stock Option Agreement
under the WII Components, Inc.
2003 Stock Option and Grant Plan

Name of Optionee:

 

John Fitzpatrick (the “Optionee”)

No. of Option Shares:

 

80,000 Shares of Common Stock

Grant Date:

 

May 31, 2006 (the “Grant Date”)

Expiration Date:

 

May 31, 2016 (the “Expiration Date”)

Option Exercise Price/Share:

 

$5.54 (the “Option Exercise Price”)

 

Pursuant to the WII Components, Inc. 2003 Stock Option and Grant Plan (the
“Plan”), WII Components, Inc., a Delaware corporation (together with all
successors thereto, the “Company”), hereby grants to the Optionee, who is an
employee of the Company or any of its Subsidiaries, an option (the “Stock
Option”) to purchase on or prior to the Expiration Date, or such earlier date as
is specified herein, all or any part of the number of shares of Voting Common
Stock, par value $0.01 per share (“Common Stock”), of the Company indicated
above (the “Option Shares,” and such shares once issued shall be referred to as
the “Issued Shares”), at the Option Exercise Price per share, subject to the
terms and conditions set forth in this Incentive Stock Option Agreement (this
“Agreement”) and in the Plan.  This Stock Option is intended to qualify as an
“incentive stock option” as defined in Section 422(b) of the Internal Revenue
Code of 1986, as amended from time to time (the “Code”).  To the extent that any
portion of the Stock Option does not so qualify, it shall be deemed a
non-qualified stock option.

1.             DEFINITIONS.  FOR THE PURPOSES OF THIS AGREEMENT, THE FOLLOWING
TERMS SHALL HAVE THE FOLLOWING RESPECTIVE MEANINGS.  ALL CAPITALIZED TERMS USED
HEREIN AND NOT OTHERWISE DEFINED SHALL HAVE THE RESPECTIVE MEANINGS SET FORTH IN
THE PLAN.

An “Affiliate” of any Person means a Person that directly or indirectly, through
one or more intermediaries, controls, is controlled by or is under common
control with the first mentioned Person.  A Person shall be deemed to control
another Person if such first Person possesses directly or indirectly the power
to direct, or cause the direction of, the management and policies of the second
Person, whether through the ownership of voting securities, by contract or
otherwise.

“Bankruptcy” shall mean (i) the filing of a voluntary petition under any
bankruptcy or insolvency law, or a petition for the appointment of a receiver or
the making of an assignment for the benefit of creditors, with respect to the
Optionee or any Permitted Transferee, or (ii) the Optionee or any Permitted
Transferee being subjected involuntarily to such a petition or assignment or to
an attachment or other legal or equitable interest with respect to the
Optionee’s or such Permitted Transferee’s assets, which involuntary petition or
assignment or attachment is not discharged within 60 days after its date, and
(iii) the Optionee or any Permitted

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

Transferee being subject to a transfer of the Stock Option or the Issued Shares
by operation of law (including by divorce, even if not insolvent), except by
reason of death.

“Cause” shall mean a vote of the Board resolving that the Optionee should be
dismissed as a result of (i) the commission of any act by the Optionee
constituting financial dishonesty against the Company (which act would be
chargeable as a crime under applicable law); (ii) the Optionee’s engaging in any
other act of dishonesty, fraud, intentional misrepresentation, moral turpitude,
illegality or harassment which, as determined in good faith by the Board,
would:  (A) materially adversely affect the business or the reputation of the
Company with its current or prospective customers, suppliers, lenders and/or
other third parties with whom it does or might do business; or (B) expose the
Company to a risk of civil or criminal legal damages, liabilities or penalties;
(iii) the repeated failure by the Optionee to follow the directives of the
Company’s chief executive officer or Board or (iv) any material misconduct,
violation of the Company’s policies, or willful and deliberate non-performance
of duty by the Optionee in connection with the business affairs of the Company;
provided, however, the Company acknowledges and hereby agrees that, in the event
Optionee is appointed to the position of Chairman, Optionee’s responsibilities
and obligations will be reduced and that such reduction shall not in any way be
deemed to constitute “Cause” under this Agreement.

“Good Reason” shall mean the occurrence of any of the following events: (i) a
substantial adverse change in the nature or scope of the Optionee’s
responsibilities, authorities, powers, functions or duties; (ii) a reduction in
the Optionee’s annual base salary except for across-the-board salary reductions
similarly affecting all or substantially all management employees; or (iii) the
relocation of the offices at which the Optionee is principally employed to a
location more than 50 miles from such offices; provided, however, that the Board
may appoint Optionee to the position of Chairman without reduction in Optionee’s
annual cash compensation and such appointment shall not be deemed to constitute
Good Reason.

“Permitted Transferees” shall mean any of the following to whom the Optionee may
transfer Issued Shares hereunder (as set forth in Section 8):  the Optionee’s
spouse, children (natural or adopted), stepchildren or a trust for their sole
benefit of which the Optionee is the settlor; provided, however, that any such
trust does not require or permit distribution of any Issued Shares during the
term of this Agreement unless subject to its terms.  Upon the death of the
Optionee (or a Permitted Transferee to whom shares have been transferred
hereunder), the term Permitted Transferees shall also include such deceased
Optionee’s (or such deceased Permitted Transferee’s) estate, executions,
administrations, personal representations, heirs, legatees and distributees, as
the case may be.

“Person” shall mean any individual, corporation, partnership (limited or
general), limited liability company, limited liability partnership, association,
trust, joint venture, unincorporated organization or any similar entity.

“Sale Event” shall mean, regardless of form thereof, consummation of (i) the
dissolution or liquidation of the Company, (ii) the sale of all or substantially
all of the assets of the Company on a consolidated basis to an unrelated person
or entity, (iii) a merger, reorganization or consolidation in which the
outstanding shares of Stock are converted into or exchanged for securities of
the successor entity and the holders of the Company’s outstanding

2

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

voting power immediately prior to such transaction do not own a majority of the
outstanding voting power of the successor entity immediately upon completion of
such transaction, (iv) the sale of all or a majority of the outstanding capital
stock of the Company to an unrelated person or entity or (v) any other
transaction in which the owners of the Company’s outstanding voting power
immediately prior to such transaction do not own at least a majority of the
outstanding voting power of the successor entity immediately upon completion of
the transaction; provided, however, that no such event shall constitute a Sale
Event unless, if Optionee is requested by the Board, Optionee agrees in writing
to continue his Service Relationship, if any, with the Company or its successor
in substantially the same capacity as Optionee served immediately prior to the
Sale Event for a term of two (2) years.

“Service Relationship”  shall mean any relationship as an employee or part-time
employee with the Company or one of its Subsidiaries (or their successors) such
that, for example, a Service Relationship shall be deemed to continue without
interruption in the event that the Optionee’s status changes from employee to
part-time employee.

“Subsidiary” shall mean any corporation (other than the Company) in any unbroken
chain of corporations or other entities beginning with the Company if each of
the corporations (other than the last corporation in the unbroken chain) owns
stock or other interests possessing 50 percent or more of the total combined
voting power of all classes of stock or in one of the other corporations in the
chain.

2.             VESTING, EXERCISABILITY AND TERMINATION.

(A)           NO PORTION OF THIS STOCK OPTION MAY BE EXERCISED UNTIL SUCH
PORTION SHALL HAVE VESTED.

(B)           THIS STOCK OPTION SHALL BE DEEMED VESTED AND EXERCISABLE IN FULL
UPON THE EARLIEST TO OCCUR OF THE FOLLOWING:

(I)            A SALE EVENT; OR

(II)           JUNE 30, 2009; PROVIDED, HOWEVER, IN THE EVENT THE OPTIONEE’S
SERVICE RELATIONSHIP TERMINATES PRIOR TO JUNE 30, 2009, AND SUCH TERMINATION IS
EITHER (A) BY THE COMPANY WITHOUT CAUSE, OR (B) BY THE OPTIONEE FOR GOOD REASON,
A PORTION OF THIS STOCK OPTION MAY VEST ACCORDING TO THE PROVISIONS SET FORTH IN
SECTION 2(C) OF THIS AGREEMENT.

NO PORTION OF THIS STOCK OPTION SHALL VEST OR BECOME EXERCISABLE UNLESS AND
UNTIL ANY OF THE EVENTS DESCRIBED IN SUBPARAGRAPHS (I) AND (II) ABOVE OCCUR.

(C)           TERMINATION.  EXCEPT AS MAY OTHERWISE BE PROVIDED BY THE
COMMITTEE, IF THE OPTIONEE’S SERVICE RELATIONSHIP IS TERMINATED, THE PERIOD
WITHIN WHICH TO EXERCISE THIS STOCK OPTION MAY BE SUBJECT TO EARLIER TERMINATION
AS SET FORTH BELOW:

(I)            TERMINATION BY COMPANY WITHOUT CAUSE.  IN THE EVENT OPTIONEE’S
SERVICE RELATIONSHIP IS TERMINATED BY THE COMPANY WITHOUT CAUSE, OR BY THE
OPTIONEE FOR

3

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

GOOD REASON PRIOR TO JUNE 30, 2009, AND A SALE EVENT OCCURS THEREAFTER, THIS
STOCK OPTION WILL VEST AS INDICATED BELOW:

Determination Date:

 

% of Option Vesting:

 

0-365 days after termination date

 

100

%

366-546 days after termination date

 

50

%

547-730 days after termination date

 

25

%

thereafter

 

0

%

 

The date that a letter of intent regarding a bona fide acquisition of the
Company (an “LOI”) has been approved by the Board and executed by the Company
and the relevant third party shall be the Determination Date used in the table
above.  By way of illustration only, if Optionee’s Service Relationship is
terminated by the Company without Cause on February 9, 2007 and the Company
executes an LOI on February 14, 2008, then, upon consummation of the Sale Event
described in the LOI, 50% of the Option shall vest and be exercisable.

(II)           TERMINATION BY OPTIONEE WITHOUT GOOD REASON OR FOR CAUSE.  IN THE
EVENT OPTIONEE TERMINATES THE SERVICE RELATIONSHIP WITHOUT GOOD REASON, OR THE
COMPANY TERMINATES OPTIONEE’S SERVICE RELATIONSHIP FOR CAUSE PRIOR TO JUNE 30,
2009, NO PORTION OF THIS STOCK OPTION SHALL VEST.

(III)          TERMINATION DUE TO DEATH OR DISABILITY.  IF THE OPTIONEE’S
SERVICE RELATIONSHIP TERMINATES BY REASON OF SUCH OPTIONEE’S DEATH OR DISABILITY
(AS DEFINED IN SECTION 422(C) OF THE CODE), THIS STOCK OPTION MAY BE EXERCISED,
TO THE EXTENT EXERCISABLE ON THE DATE OF SUCH TERMINATION, BY THE OPTIONEE, THE
OPTIONEE’S LEGAL REPRESENTATIVE OR LEGATEE FOR A PERIOD OF 12 MONTHS FROM THE
DATE OF DEATH OR DISABILITY OR UNTIL THE EXPIRATION DATE, IF EARLIER, SUBJECT IN
ANY EVENT TO SECTION 6.

(IV)          OTHER TERMINATION.  IF THE OPTIONEE’S SERVICE RELATIONSHIP
TERMINATES FOR ANY REASON OTHER THAN DEATH OR DISABILITY, AND UNLESS OTHERWISE
DETERMINED BY THE COMMITTEE, THIS STOCK OPTION MAY BE EXERCISED, TO THE EXTENT
EXERCISABLE ON THE DATE OF TERMINATION, FOR A PERIOD OF 90 DAYS FROM THE DATE OF
TERMINATION OR UNTIL THE EXPIRATION DATE, IF EARLIER; PROVIDED HOWEVER, IF THE
OPTIONEE’S SERVICE RELATIONSHIP IS TERMINATED FOR CAUSE, THIS STOCK OPTION SHALL
TERMINATE IMMEDIATELY UPON THE DATE OF SUCH TERMINATION.

For purposes hereof, the Committee’s determination of the reason for termination
of the Optionee’s Service Relationship shall be conclusive and binding on the
Optionee and his or her representatives or legatees or Permitted Transferees. 
Any portion of this Stock Option that is not

4

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

exercisable on the date of termination of the Service Relationship shall
terminate immediately and be null and void.

It is understood and intended that this Stock Option is intended to qualify as
an “incentive stock option” as defined in Section 422 of the Code to the extent
permitted under applicable law.  Accordingly, the Optionee understands that in
order to obtain the benefits of an incentive stock option under Section 422 of
the Code, no sale or other disposition may be made of Issued Shares for which
incentive stock option treatment is desired within the one-year period beginning
on the day after the day of the transfer of such Issued Shares to him or her,
nor within the two-year period beginning on the day after the grant of this
Stock Option and further that this Stock Option must be exercised within three
(3) months after termination of employment as an employee (or 12 months in the
case of death or disability) to qualify as an incentive stock option.  If the
Optionee disposes (whether by sale, gift, transfer or otherwise) of any such
Issued Shares within either of these periods, he or she will notify the Company
within 30 days after such disposition.  The Optionee also agrees to provide the
Company with any information concerning any such dispositions required by the
Company for tax purposes.  Further, to the extent Option Shares and any other
incentive stock options of the Optionee having an aggregate Fair Market Value in
excess of $100,000 (determined as of the Grant Date) vest in any year, such
options will not qualify as incentive stock options.

3.             EXERCISE OF STOCK OPTION.

(A)           THE OPTIONEE MAY EXERCISE THIS STOCK OPTION ONLY IN THE FOLLOWING
MANNER:  PRIOR TO THE EXPIRATION DATE (SUBJECT TO SECTION 6), THE OPTIONEE MAY
DELIVER A STOCK OPTION EXERCISE NOTICE (AN “EXERCISE NOTICE”) IN THE FORM OF
APPENDIX A HERETO INDICATING HIS OR HER ELECTION TO PURCHASE SOME OR ALL OF THE
OPTION SHARES WITH RESPECT TO WHICH THIS STOCK OPTION IS EXERCISABLE AT THE TIME
OF SUCH NOTICE.  SUCH NOTICE SHALL SPECIFY THE NUMBER OF OPTION SHARES TO BE
PURCHASED.  PAYMENT OF THE PURCHASE PRICE MAY BE MADE BY ONE OR MORE OF THE
METHODS DESCRIBED BELOW.  PAYMENT INSTRUMENTS WILL BE RECEIVED SUBJECT TO
COLLECTION.

(I)            IN CASH, BY CERTIFIED OR BANK CHECK, OR OTHER INSTRUMENT
ACCEPTABLE TO THE COMMITTEE IN U.S. FUNDS PAYABLE TO THE ORDER OF THE COMPANY IN
AN AMOUNT EQUAL TO THE PURCHASE PRICE OF SUCH OPTION SHARES; OR

(II)           IF THE COMPANY’S INITIAL PUBLIC OFFERING HAS OCCURRED, THEN (A)
THROUGH THE DELIVERY (OR ATTESTATION TO OWNERSHIP) OF SHARES OF COMMON STOCK
THAT HAVE BEEN PURCHASED BY THE OPTIONEE ON THE OPEN MARKET OR THAT HAVE BEEN
HELD BY THE OPTIONEE FOR AT LEAST SIX MONTHS AND ARE NOT SUBJECT TO RESTRICTIONS
UNDER ANY PLAN OF THE COMPANY AND IN ANY EVENT WITH AN AGGREGATE FAIR MARKET
VALUE (AS OF THE DATE OF SUCH EXERCISE) EQUAL TO THE OPTION PURCHASE PRICE, (B)
BY THE OPTIONEE DELIVERING TO THE COMPANY A PROPERLY EXECUTED EXERCISE NOTICE
TOGETHER WITH IRREVOCABLE INSTRUCTIONS TO A BROKER TO PROMPTLY DELIVER TO THE
COMPANY CASH OR A CHECK PAYABLE AND ACCEPTABLE TO THE COMPANY TO PAY THE OPTION
PURCHASE PRICE, PROVIDED THAT IN THE EVENT THE OPTIONEE CHOOSES TO PAY THE
OPTION PURCHASE PRICE AS SO PROVIDED, THE OPTIONEE AND THE BROKER SHALL COMPLY
WITH SUCH PROCEDURES AND ENTER INTO SUCH AGREEMENTS OF INDEMNITY AND OTHER
AGREEMENTS AS THE COMMITTEE SHALL PRESCRIBE AS A CONDITION OF SUCH PAYMENT
PROCEDURE, OR (C) A COMBINATION OF (I), (II)(A) AND (II)(B) ABOVE.

5

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

(B)           CERTIFICATES FOR THE OPTION SHARES SO PURCHASED WILL BE ISSUED AND
DELIVERED TO THE OPTIONEE UPON COMPLIANCE TO THE SATISFACTION OF THE COMMITTEE
WITH ALL REQUIREMENTS UNDER APPLICABLE LAWS OR REGULATIONS IN CONNECTION WITH
SUCH ISSUANCE.  UNTIL THE OPTIONEE SHALL HAVE COMPLIED WITH THE REQUIREMENTS
HEREOF AND OF THE PLAN, THE COMPANY SHALL BE UNDER NO OBLIGATION TO ISSUE THE
OPTION SHARES SUBJECT TO THIS STOCK OPTION, AND THE DETERMINATION OF THE
COMMITTEE AS TO SUCH COMPLIANCE SHALL BE FINAL AND BINDING ON THE OPTIONEE.  THE
OPTIONEE SHALL NOT BE DEEMED TO BE THE HOLDER OF, OR TO HAVE ANY OF THE RIGHTS
OF A HOLDER WITH RESPECT TO, ANY SHARES OF COMMON STOCK SUBJECT TO THIS STOCK
OPTION UNLESS AND UNTIL THIS STOCK OPTION SHALL HAVE BEEN EXERCISED PURSUANT TO
THE TERMS HEREOF, THE COMPANY SHALL HAVE ISSUED AND DELIVERED THE ISSUED SHARES
TO THE OPTIONEE, AND THE OPTIONEE’S NAME SHALL HAVE BEEN ENTERED AS A
STOCKHOLDER OF RECORD ON THE BOOKS OF THE COMPANY.  THEREUPON, THE OPTIONEE
SHALL HAVE FULL DIVIDEND AND OTHER OWNERSHIP RIGHTS WITH RESPECT TO SUCH ISSUED
SHARES, SUBJECT TO THE TERMS OF THIS AGREEMENT.

(C)           NOTWITHSTANDING ANY OTHER PROVISION HEREOF OR OF THE PLAN, NO
PORTION OF THIS STOCK OPTION SHALL BE EXERCISABLE AFTER THE EXPIRATION DATE.

4.             INCORPORATION OF PLAN.  NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, THIS STOCK OPTION SHALL BE SUBJECT TO AND GOVERNED BY ALL THE TERMS
AND CONDITIONS OF THE PLAN.

5.             TRANSFERABILITY OF STOCK OPTION.  THIS AGREEMENT IS PERSONAL TO
THE OPTIONEE AND IS NOT TRANSFERABLE BY THE OPTIONEE IN ANY MANNER OTHER THAN BY
WILL OR BY THE LAWS OF DESCENT AND DISTRIBUTION.  THE STOCK OPTION MAY BE
EXERCISED DURING THE OPTIONEE’S LIFETIME ONLY BY THE OPTIONEE (OR BY THE
OPTIONEE’S GUARDIAN OR PERSONAL REPRESENTATIVE IN THE EVENT OF THE OPTIONEE’S
INCAPACITY).  THE OPTIONEE MAY ELECT TO DESIGNATE A BENEFICIARY BY PROVIDING
WRITTEN NOTICE OF THE NAME OF SUCH BENEFICIARY TO THE COMPANY, AND MAY REVOKE OR
CHANGE SUCH DESIGNATION AT ANY TIME BY FILING WRITTEN NOTICE OF REVOCATION OR
CHANGE WITH THE COMPANY; SUCH BENEFICIARY MAY EXERCISE THE OPTIONEE’S STOCK
OPTION IN THE EVENT OF THE OPTIONEE’S DEATH TO THE EXTENT PROVIDED HEREIN.  IF
THE OPTIONEE DOES NOT DESIGNATE A BENEFICIARY, OR IF THE DESIGNATED BENEFICIARY
PREDECEASES THE OPTIONEE, THE LEGAL REPRESENTATIVE OF THE OPTIONEE MAY EXERCISE
THIS STOCK OPTION TO THE EXTENT PROVIDED HEREIN IN THE EVENT OF THE OPTIONEE’S
DEATH.

6.             [RESERVED]

7.             WITHHOLDING TAXES.  THE OPTIONEE SHALL, NOT LATER THAN THE DATE
AS OF WHICH THE EXERCISE OF THIS STOCK OPTION BECOMES A TAXABLE EVENT FOR
FEDERAL INCOME TAX PURPOSES, PAY TO THE COMPANY OR MAKE ARRANGEMENTS
SATISFACTORY TO THE COMMITTEE FOR PAYMENT OF ANY FEDERAL, STATE AND LOCAL TAXES
REQUIRED BY LAW TO BE WITHHELD ON ACCOUNT OF SUCH TAXABLE EVENT.  SUBJECT TO
APPROVAL BY THE COMMITTEE, THE OPTIONEE MAY ELECT TO HAVE THE MINIMUM TAX
WITHHOLDING OBLIGATION SATISFIED, IN WHOLE OR IN PART, BY AUTHORIZING THE
COMPANY TO WITHHOLD FROM SHARES OF COMMON STOCK TO BE ISSUED OR TRANSFERRING TO
THE COMPANY, A NUMBER OF SHARES OF COMMON STOCK WITH AN AGGREGATE FAIR MARKET
VALUE THAT WOULD SATISFY THE MINIMUM WITHHOLDING AMOUNT DUE.  THE OPTIONEE
ACKNOWLEDGES AND AGREES THAT THE COMPANY OR ANY SUBSIDIARY OF THE COMPANY HAS
THE RIGHT TO DEDUCT FROM PAYMENTS OF ANY KIND OTHERWISE DUE TO THE OPTIONEE, OR
FROM THE OPTION SHARES TO BE ISSUED IN RESPECT OF AN EXERCISE OF THIS STOCK
OPTION, ANY FEDERAL, STATE OR LOCAL TAXES OF ANY KIND REQUIRED BY LAW TO BE
WITHHELD WITH RESPECT TO THE ISSUANCE OF OPTION SHARES TO THE OPTIONEE.

6

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

8.             RESTRICTIONS ON TRANSFER OF ISSUED SHARES.  NONE OF THE ISSUED
SHARES ACQUIRED UPON EXERCISE OF THE STOCK OPTION SHALL BE SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, HYPOTHECATED, GIVEN AWAY OR IN ANY OTHER MANNER DISPOSED
OF OR ENCUMBERED, WHETHER VOLUNTARILY OR BY OPERATION OF LAW, UNLESS SUCH
TRANSFER IS IN COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS (INCLUDING,
WITHOUT LIMITATION, THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND
REGULATIONS THEREUNDER (THE “ACT”)), AND SUCH DISPOSITION IS IN ACCORDANCE WITH
THE TERMS AND CONDITIONS OF SECTIONS 8 AND 9 AND SUCH DISPOSITION DOES NOT CAUSE
THE COMPANY TO BECOME SUBJECT TO THE REPORTING REQUIREMENTS OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.  IN CONNECTION WITH ANY TRANSFER OF ISSUED
SHARES, THE COMPANY MAY REQUIRE THE TRANSFEROR TO PROVIDE AT THE OPTIONEE’S OWN
EXPENSE AN OPINION OF COUNSEL TO THE TRANSFEROR, SATISFACTORY TO THE COMPANY,
THAT SUCH TRANSFER IS IN COMPLIANCE WITH ALL FOREIGN, FEDERAL AND STATE
SECURITIES LAWS (INCLUDING, WITHOUT LIMITATION, THE ACT).  ANY ATTEMPTED
DISPOSITION OF ISSUED SHARES NOT IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF
SECTIONS 8 AND 9 SHALL BE NULL AND VOID, AND THE COMPANY SHALL NOT REFLECT ON
ITS RECORDS ANY CHANGE IN RECORD OWNERSHIP OF ANY ISSUED SHARES AS A RESULT OF
ANY SUCH DISPOSITION, SHALL OTHERWISE REFUSE TO RECOGNIZE ANY SUCH DISPOSITION
AND SHALL NOT IN ANY WAY GIVE EFFECT TO ANY SUCH DISPOSITION OF ANY ISSUED
SHARES.  SUBJECT TO THE FOREGOING GENERAL PROVISIONS, ISSUED SHARES MAY BE
TRANSFERRED PURSUANT TO THE FOLLOWING SPECIFIC TERMS AND CONDITIONS:

(A)           TRANSFERS TO PERMITTED TRANSFEREES.  THE OPTIONEE MAY SELL,
ASSIGN, TRANSFER OR GIVE AWAY ANY OR ALL OF THE ISSUED SHARES TO PERMITTED
TRANSFEREES; PROVIDED, HOWEVER, THAT SUCH PERMITTED TRANSFEREE(S) SHALL, AS A
CONDITION TO ANY SUCH TRANSFER, AGREE TO BE SUBJECT TO THE PROVISIONS OF THIS
AGREEMENT TO THE SAME EXTENT AS THE OPTIONEE (INCLUDING, WITHOUT LIMITATION, THE
PROVISIONS OF SECTIONS 8, 9, 11 AND 12) AND SHALL HAVE DELIVERED A WRITTEN
ACKNOWLEDGMENT TO THAT EFFECT TO THE COMPANY.

(B)           TRANSFERS UPON DEATH.  UPON THE DEATH OF THE OPTIONEE, ANY ISSUED
SHARES THEN HELD BY THE OPTIONEE AT THE TIME OF SUCH DEATH AND ANY ISSUED SHARES
ACQUIRED THEREAFTER BY THE OPTIONEE’S LEGAL REPRESENTATIVE PURSUANT TO THIS
AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS OF SECTIONS 8, 9, 11 AND 12, IF
APPLICABLE, AND THE OPTIONEE’S ESTATE, EXECUTORS, ADMINISTRATORS, PERSONAL
REPRESENTATIVES, HEIRS, LEGATEES AND DISTRIBUTEES SHALL BE OBLIGATED TO CONVEY
SUCH ISSUED SHARES TO THE COMPANY OR ITS ASSIGNS UNDER THE TERMS CONTEMPLATED
HEREBY.

(C)           COMPANY’S RIGHT OF FIRST REFUSAL.  IN THE EVENT THAT THE OPTIONEE
(OR ANY PERMITTED TRANSFEREE HOLDING ISSUED SHARES SUBJECT TO THIS SECTION 8(C))
DESIRES TO SELL OR OTHERWISE TRANSFER ALL OR ANY PART OF THE ISSUED SHARES, THE
OPTIONEE (OR PERMITTED TRANSFEREE) FIRST SHALL GIVE WRITTEN NOTICE TO THE
COMPANY OF THE OPTIONEE’S (OR PERMITTED TRANSFEREE’S) INTENTION TO MAKE SUCH
TRANSFER.  SUCH NOTICE SHALL STATE THE NUMBER OF ISSUED SHARES WHICH THE
OPTIONEE (OR PERMITTED TRANSFEREE) PROPOSES TO SELL (THE “OFFERED SHARES”), THE
PRICE AND THE TERMS AT WHICH THE PROPOSED SALE IS TO BE MADE AND THE NAME AND
ADDRESS OF THE PROPOSED TRANSFEREE.  AT ANY TIME WITHIN 30 DAYS AFTER THE
RECEIPT OF SUCH NOTICE BY THE COMPANY, THE COMPANY OR ITS ASSIGNS MAY ELECT TO
PURCHASE ALL OR ANY PORTION OF THE OFFERED SHARES AT THE PRICE AND ON THE TERMS
OFFERED BY THE PROPOSED TRANSFEREE AND SPECIFIED IN THE NOTICE.  THE COMPANY OR
ITS ASSIGNS SHALL EXERCISE THIS RIGHT BY MAILING OR DELIVERING WRITTEN NOTICE TO
THE OPTIONEE (OR PERMITTED TRANSFEREE) WITHIN THE FOREGOING 30-DAY PERIOD.  IF
THE COMPANY OR ITS ASSIGNS ELECT TO EXERCISE ITS PURCHASE RIGHTS UNDER THIS
SECTION 8(C), THE CLOSING FOR SUCH PURCHASE SHALL, IN ANY EVENT, TAKE PLACE
WITHIN 45 DAYS AFTER THE RECEIPT BY THE COMPANY OF THE INITIAL NOTICE FROM THE

7

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

Optionee (or Permitted Transferee).  In the event that the Company or its
assigns do not elect to exercise such purchase right, or in the event that the
Company or its assigns do not pay the full purchase price within such 45-day
period, the Optionee (or Permitted Transferee) may, within 60 days thereafter,
sell the Offered Shares to the proposed transferee and at the same price and on
the same terms as specified in the Optionee’s (or Permitted Transferee’s)
notice.  Any Shares purchased by such proposed transferee shall no longer be
subject to the terms of this Agreement.  Any Shares not sold to the proposed
transferee shall remain subject to this Agreement.  Notwithstanding the
foregoing, the restrictions under this Section 8(c) shall terminate in
accordance with Section 13(a).

9.             COMPANY’S RIGHT OF REPURCHASE.

(A)           RIGHT OF REPURCHASE.  THE COMPANY SHALL HAVE THE RIGHT, BUT NOT
THE OBLIGATION (THE “REPURCHASE RIGHT”) UPON THE OCCURRENCE OF ANY OF THE EVENTS
SPECIFIED IN SECTION 9(B) BELOW (THE “REPURCHASE EVENT”) TO REPURCHASE FROM THE
OPTIONEE (OR ANY PERMITTED TRANSFEREE) SOME OR ALL (AS DETERMINED BY THE
COMPANY) OF THE ISSUED SHARES HELD OR SUBSEQUENTLY ACQUIRED UPON EXERCISE OF
THIS STOCK OPTION IN ACCORDANCE WITH THE TERMS HEREOF BY THE OPTIONEE (OR ANY
PERMITTED TRANSFEREE) AT THE PRICE SPECIFIED BELOW (THE “REPURCHASE PRICE”). 
THE REPURCHASE RIGHT MAY BE EXERCISED BY THE COMPANY WITHIN THE LATER OF (I) SIX
MONTHS FOLLOWING THE DATE OF SUCH EVENT OR (II) SEVEN MONTHS AFTER THE EXERCISE
OF THIS STOCK OPTION (THE “REPURCHASE PERIOD”).  THE REPURCHASE RIGHT SHALL BE
EXERCISED BY THE COMPANY BY GIVING THE HOLDER WRITTEN NOTICE ON OR BEFORE THE
LAST DAY OF THE REPURCHASE PERIOD OF ITS INTENTION TO EXERCISE THE REPURCHASE
RIGHT, AND, TOGETHER WITH SUCH NOTICE, TENDERING TO THE HOLDER AN AMOUNT EQUAL
TO THE REPURCHASE PRICE OF THE SHARES, DETERMINED AS PROVIDED IN SECTION 9(C). 
THE COMPANY MAY ASSIGN THE REPURCHASE RIGHT TO ONE OR MORE PERSONS.  UPON SUCH
NOTIFICATION, THE OPTIONEE AND ANY PERMITTED TRANSFEREES SHALL PROMPTLY
SURRENDER TO THE COMPANY ANY CERTIFICATES REPRESENTING THE ISSUED SHARES BEING
PURCHASED, TOGETHER WITH A DULY EXECUTED STOCK POWER FOR THE TRANSFER OF SUCH
ISSUED SHARES TO THE COMPANY OR THE COMPANY’S ASSIGNEE OR ASSIGNEES.  UPON THE
COMPANY’S OR ITS ASSIGNEE’S RECEIPT OF THE CERTIFICATES FROM THE OPTIONEE OR ANY
PERMITTED TRANSFEREES, THE COMPANY OR ITS ASSIGNEE OR ASSIGNEES SHALL DELIVER TO
HIM, HER OR THEM A CHECK FOR THE REPURCHASE PRICE OF THE ISSUED SHARES BEING
PURCHASED; PROVIDED, HOWEVER, THAT THE COMPANY MAY PAY THE REPURCHASE PRICE FOR
SUCH SHARES BY OFFSETTING AND CANCELING ANY INDEBTEDNESS THEN OWED BY THE
OPTIONEE TO THE COMPANY.  AT SUCH TIME, THE OPTIONEE AND/OR ANY HOLDER OF THE
ISSUED SHARES SHALL DELIVER TO THE COMPANY THE CERTIFICATE OR CERTIFICATES
REPRESENTING THE ISSUED SHARES SO REPURCHASED, DULY ENDORSED FOR TRANSFER, FREE
AND CLEAR OF ANY LIENS OR ENCUMBRANCES.  THE REPURCHASE RIGHT SHALL TERMINATE IN
ACCORDANCE WITH SECTION 13(A).

(B)           COMPANY’S RIGHT TO EXERCISE REPURCHASE RIGHT.  THE COMPANY SHALL
HAVE THE REPURCHASE RIGHT IN THE EVENT THAT ANY OF THE FOLLOWING EVENTS SHALL
OCCUR:

(I)            THE TERMINATION OF THE OPTIONEE’S SERVICE RELATIONSHIP WITH THE
COMPANY AND ITS SUBSIDIARIES FOR ANY REASON WHATSOEVER, REGARDLESS OF THE
CIRCUMSTANCES THEREOF, AND INCLUDING WITHOUT LIMITATION UPON DEATH, DISABILITY,
RETIREMENT, DISCHARGE OR RESIGNATION FOR ANY REASON, WHETHER VOLUNTARILY OR
INVOLUNTARILY; OR

(II)           THE OPTIONEE’S OR PERMITTED TRANSFEREE’S BANKRUPTCY.

8

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

(C)           DETERMINATION OF REPURCHASE PRICE.  THE REPURCHASE PRICE SHALL BE
THE FAIR MARKET VALUE OF THE ISSUED SHARES, PROVIDED THAT IF THE OPTIONEE’S
SERVICE RELATIONSHIP IS TERMINATED FOR CAUSE, THE REPURCHASE RIGHT SHALL BE THE
LESSER OF FAIR MARKET VALUE OR THE PURCHASE PRICE PAID BY OPTIONEE FOR THE
SHARES BEING REPURCHASED.  FOR PURPOSES OF THIS SECTION 9, THE FAIR MARKET VALUE
OF THE ISSUED SHARES SHALL BE DETERMINED BY THE BOARD AS OF THE DATE OF THE
TERMINATION EVENT OR BANKRUPTCY.

10.          ESCROW ARRANGEMENT.

(A)           ESCROW.  IN ORDER TO CARRY OUT THE PROVISIONS OF SECTIONS 8, 9 AND
11 OF THIS AGREEMENT MORE EFFECTIVELY, THE COMPANY SHALL HOLD ANY ISSUED SHARES
IN ESCROW TOGETHER WITH SEPARATE STOCK POWERS EXECUTED BY THE OPTIONEE IN BLANK
FOR TRANSFER, AND ANY PERMITTED TRANSFEREE SHALL, AS AN ADDITIONAL CONDITION TO
ANY TRANSFER OF ISSUED SHARES, EXECUTE A LIKE STOCK POWER AS TO SUCH ISSUED
SHARES.  THE COMPANY SHALL NOT DISPOSE OF THE ISSUED SHARES EXCEPT AS OTHERWISE
PROVIDED IN THIS AGREEMENT.  IN THE EVENT OF ANY REPURCHASE BY THE COMPANY (OR
ANY OF ITS ASSIGNS), THE COMPANY IS HEREBY AUTHORIZED BY THE OPTIONEE AND ANY
PERMITTED TRANSFEREE, AS THE OPTIONEE’S AND EACH SUCH PERMITTED TRANSFEREE’S
ATTORNEY-IN-FACT, TO DATE AND COMPLETE THE STOCK POWERS NECESSARY FOR THE
TRANSFER OF THE ISSUED SHARES BEING PURCHASED AND TO TRANSFER SUCH ISSUED SHARES
IN ACCORDANCE WITH THE TERMS HEREOF.  AT SUCH TIME AS ANY ISSUED SHARES ARE NO
LONGER SUBJECT TO THE COMPANY’S REPURCHASE, FIRST REFUSAL AND DRAG ALONG RIGHTS,
THE COMPANY SHALL, AT THE WRITTEN REQUEST OF THE OPTIONEE, DELIVER TO THE
OPTIONEE (OR THE RELEVANT PERMITTED TRANSFEREE) A CERTIFICATE REPRESENTING SUCH
ISSUED SHARES WITH THE BALANCE OF THE ISSUED SHARES TO BE HELD IN ESCROW
PURSUANT TO THIS SECTION 10.

(B)           REMEDY.  WITHOUT LIMITATION OF ANY OTHER PROVISION OF THIS
AGREEMENT OR OTHER RIGHTS, IN THE EVENT THAT THE OPTIONEE, ANY PERMITTED
TRANSFEREES OR ANY OTHER PERSON OR ENTITY IS REQUIRED TO SELL THE OPTIONEE’S
ISSUED SHARES PURSUANT TO THE PROVISIONS OF SECTION 8, 9 AND 11 OF THIS
AGREEMENT AND IN THE FURTHER EVENT THAT HE OR SHE REFUSES OR FOR ANY REASON
FAILS TO DELIVER TO THE COMPANY OR ITS DESIGNATED PURCHASER OF SUCH ISSUED
SHARES THE CERTIFICATE OR CERTIFICATES EVIDENCING SUCH ISSUED SHARES TOGETHER
WITH A RELATED STOCK POWER, THE COMPANY OR SUCH DESIGNATED PURCHASER MAY DEPOSIT
THE APPLICABLE PURCHASE PRICE FOR SUCH ISSUED SHARES WITH A BANK DESIGNATED BY
THE COMPANY, OR WITH THE COMPANY’S INDEPENDENT PUBLIC ACCOUNTING FIRM, AS AGENT
OR TRUSTEE, OR IN ESCROW, FOR THE OPTIONEE, ANY PERMITTED TRANSFEREES OR OTHER
PERSON OR ENTITY, TO BE HELD BY SUCH BANK OR ACCOUNTING FIRM FOR THE BENEFIT OF
AND FOR DELIVERY TO HIM, HER, THEM OR IT, AND/OR, IN ITS DISCRETION, PAY SUCH
PURCHASE PRICE BY OFFSETTING ANY INDEBTEDNESS THEN OWED BY THE OPTIONEE AS
PROVIDED ABOVE.  UPON ANY SUCH DEPOSIT AND/OR OFFSET BY THE COMPANY OR ITS
DESIGNATED PURCHASER OF SUCH AMOUNT AND UPON NOTICE TO THE PERSON OR ENTITY WHO
WAS REQUIRED TO SELL THE ISSUED SHARES TO BE SOLD PURSUANT TO THE PROVISIONS OF
SECTIONS 8, 9 AND 11, SUCH ISSUED SHARES SHALL AT SUCH TIME BE DEEMED TO HAVE
BEEN SOLD, ASSIGNED, TRANSFERRED AND CONVEYED TO SUCH PURCHASER, THE HOLDER
THEREOF SHALL HAVE NO FURTHER RIGHTS THERETO (OTHER THAN THE RIGHT TO WITHDRAW
THE PAYMENT THEREOF HELD IN ESCROW, IF APPLICABLE), AND THE COMPANY SHALL RECORD
SUCH TRANSFER IN ITS STOCK TRANSFER BOOK OR IN ANY APPROPRIATE MANNER.

11.          DRAG ALONG RIGHT.  IN THE EVENT THE HOLDERS OF A MAJORITY OF THE
COMPANY’S EQUITY SECURITIES THEN OUTSTANDING (THE “MAJORITY SHAREHOLDERS”)
DETERMINE TO SELL OR OTHERWISE DISPOSE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS
OF THE COMPANY OR ALL OR FIFTY PERCENT (50%) OR MORE OF THE CAPITAL STOCK OF THE
COMPANY IN EACH CASE IN A TRANSACTION CONSTITUTING A CHANGE IN

9

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

control of the Company, to any non-Affiliate(s) of the Company or any of the
Majority Shareholders, or to cause the Company to merge with or into or
consolidate with any non-Affiliate(s) of the Company or any of the Majority
Shareholders (in each case, the “Buyer”) in a bona fide negotiated transaction
(a “Sale”), the Optionee, including any Permitted Transferees, shall be
obligated to and shall upon the written request of a Majority Shareholders
(subject to Section 6):  (a) sell, transfer and deliver, or cause to be sold,
transferred and delivered, to the Buyer, his or her Issued Shares (including for
this purpose all of such Optionee’s or his or her Permitted Transferee’s Issued
Shares that presently or as a result of any such transaction may be acquired
upon the exercise of options (following the payment of the exercise price
therefor)) on substantially the same terms applicable to the Majority
Shareholders (with appropriate adjustments to reflect the conversion of
convertible securities, the redemption of redeemable securities and the exercise
of exercisable securities as well as the relative preferences and priorities of
preferred stock); and (b) execute and deliver such instruments of conveyance and
transfer and take such other action, including voting such Issued Shares in
favor of any Sale proposed by the Majority Shareholders and executing any
purchase agreements, merger agreements, indemnity agreements, escrow agreements
or related documents, as the Majority Shareholders or the Buyer may reasonably
require in order to carry out the terms and provisions of this Section 11.  The
obligations under this Section 11 shall terminate in accordance with 
Section 13(a).

12.          LOCKUP PROVISION.  THE OPTIONEE AGREES, IF REQUESTED BY THE COMPANY
AND ANY UNDERWRITER ENGAGED BY THE COMPANY, NOT TO SELL OR OTHERWISE TRANSFER OR
DISPOSE OF ANY ISSUED SHARES (INCLUDING, WITHOUT LIMITATION PURSUANT TO RULE 144
UNDER THE ACT) HELD BY HIM OR HER FOR SUCH PERIOD FOLLOWING THE EFFECTIVE DATE
OF ANY REGISTRATION STATEMENT OF THE COMPANY FILED UNDER THE ACT AS THE COMPANY
OR SUCH UNDERWRITER SHALL SPECIFY REASONABLY AND IN GOOD FAITH, NOT TO EXCEED
180 DAYS.

13.          MISCELLANEOUS PROVISIONS.

(A)           TERMINATION.  THE COMPANY’S REPURCHASE RIGHTS UNDER SECTION 9, THE
RESTRICTIONS ON TRANSFER OF ISSUED SHARES UNDER SECTION 8(C) AND THE DRAG ALONG
OBLIGATIONS UNDER SECTION 11 SHALL TERMINATE UPON THE CLOSING OF THE COMPANY’S
INITIAL PUBLIC OFFERING OR UPON CONSUMMATION OF ANY SALE EVENT, IN EITHER CASE
AS A RESULT OF WHICH SHARES OF THE COMPANY (OR SUCCESSOR ENTITY) OF THE SAME
CLASS AS THE ISSUED SHARES ARE REGISTERED UNDER SECTION 12 OF THE EXCHANGE ACT
AND PUBLICLY TRADED ON NASDAQ/NMS OR ANY NATIONAL SECURITIES EXCHANGE.

(B)           EQUITABLE RELIEF.  THE PARTIES HERETO AGREE AND DECLARE THAT LEGAL
REMEDIES MAY BE INADEQUATE TO ENFORCE THE PROVISIONS OF THIS AGREEMENT AND THAT
EQUITABLE RELIEF, INCLUDING SPECIFIC PERFORMANCE AND INJUNCTIVE RELIEF, MAY BE
USED TO ENFORCE THE PROVISIONS OF THIS AGREEMENT.

(C)           ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE.  IF, AS A RESULT OF
ANY REORGANIZATION, RECAPITALIZATION, RECLASSIFICATION, STOCK DIVIDEND, STOCK
SPLIT, REVERSE STOCK SPLIT OR OTHER SIMILAR CHANGE IN THE COMMON STOCK, THE
OUTSTANDING SHARES OF COMMON STOCK ARE INCREASED OR DECREASED OR ARE EXCHANGED
FOR A DIFFERENT NUMBER OR KIND OF SHARES OF THE COMPANY’S STOCK, THE
RESTRICTIONS CONTAINED IN THIS AGREEMENT SHALL APPLY WITH EQUAL FORCE TO

10

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

additional and/or substitute securities, if any, received by the Optionee in
exchange for, or by virtue of his or her ownership of, Issued Shares.

(D)           CHANGE AND MODIFICATIONS.  THIS AGREEMENT MAY NOT BE ORALLY
CHANGED, MODIFIED OR TERMINATED, NOR SHALL ANY ORAL WAIVER OF ANY OF ITS TERMS
BE EFFECTIVE.  THIS AGREEMENT MAY BE CHANGED, MODIFIED OR TERMINATED ONLY BY AN
AGREEMENT IN WRITING SIGNED BY THE COMPANY AND THE OPTIONEE.

(E)           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO CONFLICT
OF LAW PRINCIPLES.

(F)            HEADINGS.  THE HEADINGS ARE INTENDED ONLY FOR CONVENIENCE IN
FINDING THE SUBJECT MATTER AND DO NOT CONSTITUTE PART OF THE TEXT OF THIS
AGREEMENT AND SHALL NOT BE CONSIDERED IN THE INTERPRETATION OF THIS AGREEMENT.

(G)           SAVING CLAUSE.  IF ANY PROVISION(S) OF THIS AGREEMENT SHALL BE
DETERMINED TO BE ILLEGAL OR UNENFORCEABLE, SUCH DETERMINATION SHALL IN NO MANNER
AFFECT THE LEGALITY OR ENFORCEABILITY OF ANY OTHER PROVISION HEREOF.

(H)           NOTICES.  ALL NOTICES, REQUESTS, CONSENTS AND OTHER COMMUNICATIONS
SHALL BE IN WRITING AND BE DEEMED GIVEN WHEN DELIVERED PERSONALLY, BY TELEX OR
FACSIMILE TRANSMISSION OR WHEN RECEIVED IF MAILED BY FIRST CLASS REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID.  NOTICES TO THE COMPANY OR THE OPTIONEE SHALL
BE ADDRESSED AS SET FORTH UNDERNEATH THEIR SIGNATURES BELOW, OR TO SUCH OTHER
ADDRESS OR ADDRESSES AS MAY HAVE BEEN FURNISHED BY SUCH PARTY IN WRITING TO THE
OTHER.

(I)            BENEFIT AND BINDING EFFECT.  THIS AGREEMENT SHALL BE BINDING UPON
AND SHALL INURE TO THE BENEFIT OF THE PARTIES HERETO, THEIR RESPECTIVE
SUCCESSORS, PERMITTED ASSIGNS, AND LEGAL REPRESENTATIVES.  THE COMPANY HAS THE
RIGHT TO ASSIGN THIS AGREEMENT, AND SUCH ASSIGNEE SHALL BECOME ENTITLED TO ALL
THE RIGHTS OF THE COMPANY HEREUNDER TO THE EXTENT OF SUCH ASSIGNMENT.

(J)            DISPUTE RESOLUTION.  EXCEPT AS PROVIDED BELOW, ANY DISPUTE
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE BREACH, TERMINATION OR
VALIDITY HEREOF SHALL BE FINALLY SETTLED BY BINDING ARBITRATION CONDUCTED
EXPEDITIOUSLY IN ACCORDANCE WITH THE J.A.M.S./ENDISPUTE COMPREHENSIVE
ARBITRATION RULES AND PROCEDURES (THE “J.A.M.S. RULES”).  THE ARBITRATION SHALL
BE GOVERNED BY THE UNITED STATES ARBITRATION ACT, 9 U.S.C. §§1-16, AND JUDGMENT
UPON THE AWARD RENDERED BY THE ARBITRATORS MAY BE ENTERED BY ANY COURT HAVING
JURISDICTION THEREOF.  THE PLACE OF ARBITRATION SHALL BE MINNEAPOLIS, MN.

The parties covenant and agree that the arbitration shall commence within 60
days of the date on which a written demand for arbitration is filed by any party
hereto.  In connection with the arbitration proceeding, the arbitrator shall
have the power to order the production of documents by each party and any
third-party witnesses.  In addition, each party may take up to three (3)
depositions as of right, and the arbitrator may in his or her discretion allow
additional depositions upon good cause shown by the moving party.  However, the
arbitrator shall not have the power to order the answering of interrogatories or
the response to requests for admission.  In connection with any arbitration,
each party shall provide to the other, no later than seven (7)

11

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

business days before the date of the arbitration, the identity of all persons
that may testify at the arbitration and a copy of all documents that may be
introduced at the arbitration or considered or used by a party’s witness or
expert.  The arbitrator’s decision and award shall be made and delivered within
six (6) months of the selection of the arbitrator.  The arbitrator’s decision
shall set forth a reasoned basis for any award of damages or finding of
liability.  The arbitrator shall not have power to award damages in excess of
actual compensatory damages and shall not multiply actual damages or award
punitive damages or any other damages that are specifically excluded under this
Agreement, and each party hereby irrevocably waives any claim to such damages.

The parties covenant and agree that they will participate in the arbitration in
good faith.  This Section 13(j) applies equally to requests for temporary,
preliminary or permanent injunctive relief, except that in the case of temporary
or preliminary injunctive relief any party may proceed in court without prior
arbitration for the limited purpose of avoiding immediate and irreparable harm.

Each of the parties hereto (i) hereby irrevocably submits to the jurisdiction of
any United States District Court of competent jurisdiction for the purpose of
enforcing the award or decision in any such proceeding, (ii) hereby waives, and
agrees not to assert, by way of motion, as a defense, or otherwise, in any such
suit, action or proceeding, any claim that it is not subject personally to the
jurisdiction of the above-named courts, that its property is exempt or immune
from attachment or execution (except as protected by applicable law), that the
suit, action or proceeding is brought in an inconvenient forum, that the venue
of the suit, action or proceeding is improper or that this Agreement or the
subject matter hereof may not be enforced in or by such court, and hereby waives
and agrees not to seek any review by any court of any other jurisdiction which
may be called upon to grant an enforcement of the judgment of any such court. 
Each of the parties hereto hereby consents to service of process by registered
mail at the address to which notices are to be given.  Each of the parties
hereto agrees that its, his or her submission to jurisdiction and its, his or
her consent to service of process by mail is made for the express benefit of the
other parties hereto.  Final judgment against any party hereto in any such
action, suit or proceeding may be enforced in other jurisdictions by suit,
action or proceeding on the judgment, or in any other manner provided by or
pursuant to the laws of such other jurisdiction.

(K)           COUNTERPARTS.  FOR THE CONVENIENCE OF THE PARTIES AND TO
FACILITATE EXECUTION, THIS AGREEMENT MAY BE EXECUTED IN TWO OR MORE
COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED AN ORIGINAL, BUT ALL OF WHICH SHALL
CONSTITUTE ONE AND THE SAME DOCUMENT.

[SIGNATURE PAGE FOLLOWS]

12

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

The foregoing Agreement is hereby accepted and the terms and conditions thereof
hereby agreed to by the undersigned as of the date first above written.

 

WII COMPONENTS, INC.

 

 

By:

/s/ Rodney Cohen

 

 

 

Name: Rodney Cohen

 

 

 

Title: President

 

The foregoing Agreement is hereby accepted and the terms and conditions thereof
hereby agreed to by the undersigned as of the date first above written.

 

OPTIONEE:

 

 

 

 

 

/s/ John Fitzpatrick

 

 

Name: John Fitzpatrick

 

 

 

 

 

Address:

 

 

 

 

 

1710 Shadywood Road

 

 

Wayzata, MN 55391

 

SPOUSE’S CONSENT

 

I acknowledge that I have read the

 

foregoing Incentive Stock Option Agreement

 

and understand the contents thereof.

 

 

 

 

 

 

 

13

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

 

 

DESIGNATED BENEFICIARY:

 

 

 

 

 

 

 

 

 

 

 

Beneficiary’s Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14

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

Appendix A

STOCK OPTION EXERCISE NOTICE

WII Components, Inc.

 

Attention: Chief Financial Officer

 

 

 

 

 

 

 

 

Pursuant to the terms of my stock option agreement dated                    (the
“Agreement”) under the WII Components, Inc. 2003 Stock Option and Grant Plan, I,
[Insert Name]                         , hereby [Circle One] partially/fully
exercise such option by including herein payment in the amount of $            
representing the purchase price for [Fill in number of Option Shares]
             option shares.  I have chosen the following form(s) of payment:

o            1.             Cash

o            2.             Certified or bank check payable to WII Components,
Inc.

o                                    3.             Other (as described in the
Agreement (please describe))
_____________________________________________________.

In connection with my exercise of the option as set forth above, I hereby
represent and warrant to WII Components, Inc. as follows:

(I)            I AM PURCHASING THE OPTION SHARES FOR MY OWN ACCOUNT FOR
INVESTMENT ONLY, AND NOT FOR RESALE OR WITH A VIEW TO THE DISTRIBUTION THEREOF.

(II)           I HAVE HAD SUCH AN OPPORTUNITY AS I HAVE DEEMED ADEQUATE TO
OBTAIN FROM WII COMPONENTS, INC. SUCH INFORMATION AS IS NECESSARY TO PERMIT ME
TO EVALUATE THE MERITS AND RISKS OF MY INVESTMENT IN WII COMPONENTS, INC. AND
HAVE CONSULTED WITH MY OWN ADVISERS WITH RESPECT TO MY INVESTMENT IN WII
COMPONENTS, INC.

(III)          I HAVE SUFFICIENT EXPERIENCE IN BUSINESS, FINANCIAL AND
INVESTMENT MATTERS TO BE ABLE TO EVALUATE THE RISKS INVOLVED IN THE PURCHASE OF
THE OPTION SHARES AND TO MAKE AN INFORMED INVESTMENT DECISION WITH RESPECT TO
SUCH PURCHASE.

(IV)          I CAN AFFORD A COMPLETE LOSS OF THE VALUE OF THE OPTION SHARES AND
AM ABLE TO BEAR THE ECONOMIC RISK OF HOLDING SUCH OPTION SHARES FOR AN
INDEFINITE PERIOD OF TIME.

(V)           I UNDERSTAND THAT THE OPTION SHARES MAY NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933 (IT BEING UNDERSTOOD THAT THE OPTION SHARES ARE BEING
ISSUED AND SOLD IN RELIANCE ON THE EXEMPTION PROVIDED IN RULE 701 THEREUNDER) OR
ANY APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED OR DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933 AND UNDER ANY APPLICABLE STATE
SECURITIES OR “BLUE SKY” LAWS (OR EXEMPTIONS FROM

15

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

the registration requirement thereof).  I further acknowledge that certificates
representing option shares will bear restrictive legends reflecting the
foregoing.

Sincerely yours,

 

 

 

 

 

Name:

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

16

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