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                              MERRILL CORPORATION
                           1993 STOCK INCENTIVE PLAN
                    (AS AMENDED EFFECTIVE JANUARY 13, 1997)
 
1.  PURPOSE OF PLAN.
 
    The  purpose  of  the Merrill  Corporation  1993 Stock  Incentive  Plan (the
"Plan") is to advance the interests  of Merrill Corporation (the "Company")  and
its  shareholders by  enabling the Company  and its Subsidiaries  to attract and
retain  persons  of  ability  to  perform  services  for  the  Company  and  its
Subsidiaries  by  providing  an  incentive to  such  individuals  through equity
participation in the Company and by rewarding such individuals who contribute to
the achievement by the Company of its economic objectives.
 
2.  DEFINITIONS.
 
    The following  terms will  have the  meanings set  forth below,  unless  the
context clearly otherwise requires:
 
    2.1   "ADVERSE ACTIONS"  mean the actions  described in Section  12.5 of the
Plan.
 
    2.2  "BOARD" means the Board of Directors of the Company.
 
    2.3  "BROKER  EXERCISE NOTICE" means  a written notice  pursuant to which  a
Participant,  upon  exercise of  an Option,  irrevocably  instructs a  broker or
dealer to sell  a sufficient number  of shares  or loan a  sufficient amount  of
money  to pay all  or a portion of  the exercise price of  the Option and/or any
related withholding  tax obligations  and remit  such sums  to the  Company  and
directs  the  Company  to deliver  stock  certificates  to be  issued  upon such
exercise directly to such broker or dealer.
 
    2.4  "CHANGE IN  CONTROL" means an  event described in  Section 11.1 of  the
Plan.
 
    2.5  "CODE" means the Internal Revenue Code of 1986, as amended.
 
    2.6   "COMMITTEE" means the group  of individuals administering the Plan, as
provided in Section 3 of the Plan.
 
    2.7  "COMMON STOCK" means  the common stock of  the Company, par value  $.01
per  share, or the number  and kind of shares of  stock or other securities into
which such Common Stock  may be changed  in accordance with  Section 4.3 of  the
Plan.
 
    2.8   "DISABILITY"  means the  disability of  the Participant  such as would
entitle the Participant to  receive disability income  benefits pursuant to  the
long-term  disability  plan  of  the Company  or  Subsidiary  then  covering the
Participant or, if no such plan exists or is applicable to the Participant,  the
permanent  and total disability of the Participant within the meaning of Section
22(e)(3) of the Code.
 
    2.9    "ELIGIBLE  RECIPIENTS"   means  all  employees  (including,   without
limitation, officers and directors who are also employees) of the Company or any
Subsidiary  and any non-employee consultants  and independent contractors of the
Company or any Subsidiary.
 
    2.10  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
 
    2.11  "FAIR MARKET VALUE" means, with respect to the Common Stock, as of any
date (or, if  no shares  were traded  or quoted  on such  date, as  of the  next
preceding  date on which there was such a  trade or quote), the mean between the
reported high and low sale prices of the Common Stock as reported on the  NASDAQ
National Market System.
 
    2.12    "INCENTIVE  AWARD"  means  an  Option,  Restricted  Stock  Award  or
Performance Unit granted to an Eligible Recipient pursuant to the Plan.
 
    2.13   "INCENTIVE STOCK  OPTION"  means a  right  to purchase  Common  Stock
granted  to  an  Eligible Recipient  pursuant  to  Section 6  of  the  Plan that
qualifies as an "incentive  stock option" within the  meaning of Section 422  of
the Code.
 
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    2.14   "NON-STATUTORY STOCK  OPTION" means a right  to purchase Common Stock
granted to an Eligible Recipient pursuant to Section 6 of the Plan that does not
qualify as an Incentive Stock Option.
 
    2.15  "OPTION"  means an  Incentive Stock  Option or  a Non-Statutory  Stock
Option.
 
    2.16   "PARTICIPANT"  means an Eligible  Recipient who receives  one or more
Incentive Awards under the Plan.
 
    2.17  "PERFORMANCE  UNIT" means  a right  granted to  an Eligible  Recipient
pursuant  to Section 8 of the Plan to receive a payment from the Company, in the
form of  stock,  cash  or  a  combination  of  both,  upon  the  achievement  of
established performance goals.
 
    2.18   "PREVIOUSLY  ACQUIRED SHARES" means  shares of Common  Stock that are
already owned by the Participant or,  with respect to any Incentive Award,  that
are to be issued upon the grant, exercise or vesting of such Incentive Award.
 
    2.19   "RESTRICTED STOCK AWARD" means an award of Common Stock granted to an
Eligible Recipient pursuant  to Section 7  of the  Plan that is  subject to  the
restrictions  on  transferability  and the  risk  of forfeiture  imposed  by the
provisions of such Section 7.
 
    2.20  "RETIREMENT" means  termination of employment  or service pursuant  to
and in accordance with the regular (or, if approved by the Board for purposes of
the  Plan,  early)  retirement/pension  plan  or  practice  of  the  Company  or
Subsidiary then covering the  Participant, provided that  if the Participant  is
not  covered by any such plan or practice,  the Participant will be deemed to be
covered by the Company's plan or practice for purposes of this determination.
 
    2.21  "SECURITIES ACT" means the Securities Act of 1933, as amended.
 
    2.22    "SUBSIDIARY"  means  any  entity  that  is  directly  or  indirectly
controlled  by the Company or any entity  in which the Company has a significant
equity interest, as determined by the Committee.
 
    2.23  "TAX DATE" means the date any withholding tax obligation arises  under
the Code for a Participant with respect to an Incentive Award.
 
3.  PLAN ADMINISTRATION.
 
    3.1    THE COMMITTEE.  So long  as the  Company  has a  class of  its equity
securities registered under  Section 12 of  the Exchange Act,  the Plan will  be
administered by a committee (the "Committee") consisting solely of not less than
two  members of the Board who are  "disinterested persons" within the meaning of
Rule 16b-3 under the Exchange Act. To the extent consistent with corporate  law,
the  Committee may delegate to any officers of the Company the duties, power and
authority of  the  Committee under  the  Plan  pursuant to  such  conditions  or
limitations  as the  Committee may establish;  provided, however,  that only the
Committee may exercise such duties, power and authority with respect to Eligible
Recipients  who  are  subject   to  Section  16  of   the  Exchange  Act.   Each
determination,  interpretation or  other action made  or taken  by the Committee
pursuant to the provisions of  the Plan will be  conclusive and binding for  all
purposes  and on all persons, and no member  of the Committee will be liable for
any action or determination made in good  faith with respect to the Plan or  any
Incentive Award granted under the Plan.
 
    3.2  AUTHORITY OF THE COMMITTEE.
 
        (a)  In accordance with and  subject to the provisions  of the Plan, the
    Committee will have the authority  to determine all provisions of  Incentive
    Awards  as the Committee  may deem necessary or  desirable and as consistent
    with the terms of  the Plan, including,  without limitation, the  following:
    (i)  the Eligible Recipients to be selected as Participants; (ii) the nature
    and extent of the Incentive Awards to be made to each Participant (including
    the number of shares of Common Stock to be subject to each Incentive  Award,
    any exercise price, the manner in which Incentive Awards will vest or become
    exercisable   and  whether  Incentive  Awards  will  be  granted  in  tandem
 
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    with other Incentive  Awards) and  the form  of written  agreement, if  any,
    evidencing  such Incentive  Award; (iii)  the time  or times  when Incentive
    Awards will be granted; (iv) the  duration of each Incentive Award; and  (v)
    the  restrictions and  other conditions to  which the payment  or vesting of
    Incentive Awards may be  subject. In addition, the  Committee will have  the
    authority under the Plan in its sole discretion to pay the economic value of
    any  Incentive Award in the form of cash, Common Stock or any combination of
    both.
 
        (b) The Committee  will have the  authority under the  Plan to amend  or
    modify  the  terms  of  any  outstanding  Incentive  Award  in  any  manner,
    including, without limitation, the authority to modify the number of  shares
    or  other terms and conditions of an  Incentive Award, extend the term of an
    Incentive Award,  accelerate  the  exercisability or  vesting  or  otherwise
    terminate  any  restrictions  relating  to an  Incentive  Award,  accept the
    surrender  of  any  outstanding  Incentive  Award  or,  to  the  extent  not
    previously  exercised or vested, authorize the grant of new Incentive Awards
    in substitution for surrendered Incentive Awards; provided, however that the
    amended or modified terms are  permitted by the Plan  as then in effect  and
    that  any Participant adversely  affected by such  amended or modified terms
    has  consented  to   such  amendment  or   modification.  No  amendment   or
    modification  to  an  Incentive  Award, however,  whether  pursuant  to this
    Section 3.2 or  any other provisions  of the Plan,  will be deemed  to be  a
    regrant of such Incentive Award for purposes of this Plan.
 
        (c)  In  the event  of  (i) any  reorganization,  merger, consolidation,
    recapitalization,  liquidation,  reclassification,  stock  dividend,   stock
    split,  combination of  shares, rights  offering, extraordinary  dividend or
    divestiture  (including  a  spin-off)  or  any  other  change  in  corporate
    structure  or shares, (ii) any purchase, acquisition, sale or disposition of
    a significant amount of assets or  a significant business, (iii) any  change
    in  accounting principles or practices, or (iv) any other similar change, in
    each case with respect to the Company or any other entity whose  performance
    is  relevant to the  grant or vesting  of an Incentive  Award, the Committee
    (or,  if  the  Company  is  not  the  surviving  corporation  in  any   such
    transaction,  the  board of  directors  of the  surviving  corporation) may,
    without the consent of any affected Participant, amend or modify the vesting
    criteria of any  outstanding Incentive Award  that is based  in whole or  in
    part  on  the financial  performance of  the Company  (or any  Subsidiary or
    division thereof)  or such  other entity  so as  equitably to  reflect  such
    event,  with  the  desired  result that  the  criteria  for  evaluating such
    financial  performance  of  the  Company  or  such  other  entity  will   be
    substantially the same (in the sole discretion of the Committee or the board
    of  directors of the surviving corporation) following such event as prior to
    such event;  provided,  however, that  the  amended or  modified  terms  are
    permitted by the Plan as then in effect.
 
4.  SHARES AVAILABLE FOR ISSUANCE.
 
    4.1   MAXIMUM NUMBER OF SHARES  AVAILABLE. Subject to adjustment as provided
in Section 4.3 of the  Plan, the maximum number of  shares of Common Stock  that
will  be  available  for  issuance  under the  Plan  will  be  1,500,000 shares.
Notwithstanding any other provisions of the Plan to the contrary, no Participant
in the Plan may  be granted any  Options, or any other  Incentive Awards with  a
value  based solely on  an increase in the  value of the  Common Stock after the
date of grant,  relating to  more than  100,000 shares  of Common  Stock in  the
aggregate  in any fiscal year of the  Company (subject to adjustment as provided
in Section 4.3 of the Plan); provided, however, that a Participant who is  first
appointed  or  elected as  an officer,  hired as  an employee  or retained  as a
consultant by  the  Company or  who  receives a  promotion  that results  in  an
increase in responsibilities or duties may be granted, during the fiscal year of
such  appointment,  election, hiring,  retention or  promotion, Options  or such
other Incentive Awards relating to up to 200,000 shares of Common Stock (subject
to adjustment as provided in Section 4.3 of the Plan).
 
    4.2  ACCOUNTING FOR INCENTIVE AWARDS. Shares of Common Stock that are issued
under the  Plan or  that are  subject to  outstanding Incentive  Awards will  be
applied  to  reduce  the maximum  number  of  shares of  Common  Stock remaining
available   for   issuance    under   the   Plan.    Any   shares   of    Common
 
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Stock  that are subject to an Incentive Award that lapses, expires, is forfeited
or for any reason is terminated unexercised or unvested and any shares of Common
Stock that are subject to an Incentive Award that is settled or paid in cash  or
any  form  other than  shares of  Common Stock  will automatically  again become
available for  issuance  under  the  Plan.  Any  shares  of  Common  Stock  that
constitute  the forfeited portion of a Restricted Stock Award, however, will not
become available for further issuance under the Plan.
 
    4.3   ADJUSTMENTS  TO SHARES  AND  INCENTIVE AWARDS.  In  the event  of  any
reorganization,    merger,    consolidation,    recapitalization,   liquidation,
reclassification, stock  dividend, stock  split, combination  of shares,  rights
offering,  divestiture or extraordinary  dividend (including a  spin-off) or any
other change in the corporate structure or shares of the Company, the  Committee
(or,  if the Company is  not the surviving corporation  in any such transaction,
the board  of directors  of  the surviving  corporation) will  make  appropriate
adjustment (which determination will be conclusive) as to the number and kind of
securities  available  for issuance  under  the Plan  and,  in order  to prevent
dilution or enlargement  of the rights  of Participants, the  number, kind  and,
where  applicable, exercise price of securities subject to outstanding Incentive
Awards.
 
5.  PARTICIPATION.
 
    Participants in  the Plan  will be  those Eligible  Recipients who,  in  the
judgment of the Committee, have contributed, are contributing or are expected to
contribute  to  the achievement  of economic  objectives of  the Company  or its
Subsidiaries. Eligible Recipients may be granted  from time to time one or  more
Incentive  Awards, singly  or in combination  or in tandem  with other Incentive
Awards, as may be determined by the Committee in its sole discretion.  Incentive
Awards  will be  deemed to  be granted  as of  the date  specified in  the grant
resolution of  the  Committee,  which date  will  be  the date  of  any  related
agreement with the Participant.
 
6.  OPTIONS.
 
    6.1   GRANT. An Eligible Recipient may  be granted one or more Options under
the Plan,  and  such Options  will  be subject  to  such terms  and  conditions,
consistent  with the other provisions  of the Plan, as  may be determined by the
Committee in its sole discretion. The Committee may designate whether an  Option
is to be considered an Incentive Stock Option or a Non-Statutory Stock Option.
 
    6.2   EXERCISE PRICE. The  per share price to be  paid by a Participant upon
exercise of an Option will be determined  by the Committee in its discretion  at
the  time of the Option grant but will not  be less than 100% of the Fair Market
Value of one share of Common Stock on the date of grant.
 
    6.3  EXERCISABILITY AND DURATION. An Option will become exercisable at  such
times and in such installments as may be determined by the Committee in its sole
discretion  at  the time  of grant;  provided,  however, that  no Option  may be
exercisable after 10 years from its date of grant.
 
    6.4  PAYMENT OF EXERCISE PRICE. The total purchase price of the shares to be
purchased upon exercise of  an Option will be  paid entirely in cash  (including
check, bank draft or money order); provided, however, that the Committee, in its
sole  discretion and upon terms and conditions established by the Committee, may
allow such payments  to be  made, in whole  or in  part, by tender  of a  Broker
Exercise Notice, Previously Acquired Shares or by a combination of such methods.
 
    6.5   MANNER  OF EXERCISE. An  Option may  be exercised by  a Participant in
whole or in part from time to  time, subject to the conditions contained in  the
Plan  and in  the agreement  evidencing such Option,  by delivery  in person, by
facsimile or electronic transmission  or through the mail  of written notice  of
exercise to the Company (Attention: Secretary) at its principal executive office
in  St. Paul, Minnesota and  by paying in full the  total exercise price for the
shares of Common Stock  to be purchased  in accordance with  Section 6.4 of  the
Plan.
 
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7.  RESTRICTED STOCK AWARDS.
 
    7.1   GRANT.  An Eligible  Recipient may be  granted one  or more Restricted
Stock Awards under the Plan, and such Restricted Stock Awards will be subject to
such terms and conditions, consistent with the other provisions of the Plan,  as
may  be determined by  the Committee in  its sole discretion.  The Committee may
impose such restrictions or conditions, not inconsistent with the provisions  of
the  Plan,  to  the  vesting  of  such  Restricted  Stock  Awards  as  it  deems
appropriate, including, without limitation, that  the Participant remain in  the
continuous employ or service of the Company or a Subsidiary for a certain period
or  that the Participant or the Company  (or any Subsidiary or division thereof)
satisfy certain performance goals or criteria.
 
    7.2   RIGHTS  AS  A  SHAREHOLDER; TRANSFERABILITY.  Except  as  provided  in
Sections  7.1, 7.3  and 12.3 of  the Plan,  a Participant will  have all voting,
dividend, liquidation and other  rights with respect to  shares of Common  Stock
issued  to the Participant as a Restricted Stock Award under this Section 7 upon
the Participant  becoming  the  holder of  record  of  such shares  as  if  such
Participant were a holder of record of shares of unrestricted Common Stock.
 
    7.3   DIVIDENDS AND DISTRIBUTIONS. Unless the Committee determines otherwise
in its sole discretion (either in the agreement evidencing the Restricted  Stock
Award  at the time  of grant or  at any time  after the grant  of the Restricted
Stock Award), any dividends or  distributions (including regular quarterly  cash
dividends)  paid with respect to shares of  Common Stock subject to the unvested
portion of a Restricted Stock Award will be subject to the same restrictions  as
the  shares to which  such dividends or  distributions relate. In  the event the
Committee determines not to pay  such dividends or distributions currently,  the
Committee  will determine  in its sole  discretion whether any  interest will be
paid on such dividends or distributions. In addition, the Committee in its  sole
discretion may require such dividends and distributions to be reinvested (and in
such  case the  Participants consent to  such reinvestment) in  shares of Common
Stock that will be subject to the same restrictions as the shares to which  such
dividends or distributions relate.
 
    7.4  ENFORCEMENT OF RESTRICTIONS. To enforce the restrictions referred to in
this  Section 7,  the Committee  may place  a legend  on the  stock certificates
referring to  such  restrictions and  may  require the  Participant,  until  the
restrictions  have lapsed,  to keep the  stock certificates,  together with duly
endorsed stock powers, in the custody of the Company or its transfer agent or to
maintain evidence of stock ownership, together with duly endorsed stock  powers,
in a certificateless book-entry stock account with the Company's transfer agent.
 
8.  PERFORMANCE UNITS.
 
    An Eligible Recipient may be granted one or more Performance Units under the
Plan,  and such Performance Units will be  subject to such terms and conditions,
consistent with the other provisions  of the Plan, as  may be determined by  the
Committee  in its sole discretion. The Committee may impose such restrictions or
conditions, not inconsistent with the provisions of the Plan, to the vesting  of
such  Performance Units as it  deems appropriate, including, without limitation,
that the Participant remain in the  continuous employ or service of the  Company
or  any Subsidiary for a  certain period or that  the Participant or the Company
(or any Subsidiary  or division  thereof) satisfy certain  performance goals  or
criteria.  The Committee will  have the sole discretion  either to determine the
form in which payment of the economic value of vested Performance Units will  be
made to the Participant (i.e., cash, Common Stock or any combination thereof) or
to  consent to or disapprove the election by the Participant of the form of such
payment.
 
9.  EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE.
 
    9.1  TERMINATION  DUE TO  DEATH, DISABILITY OR  RETIREMENT. In  the event  a
Participant's  employment or other service with the Company and all Subsidiaries
is terminated by reason of death, Disability or Retirement:
 
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        (a) All outstanding  Options then  held by the  Participant will  become
    immediately  exercisable in full and will remain exercisable for a period of
    one year (three  months in the  case of Retirement)  after such  termination
    (but in no event after the expiration date of any such Option);
 
        (b) All Restricted Stock Awards then held by the Participant will become
    fully vested; and
 
        (c)  All Performance Units then held by the Participant will vest and/or
    continue to vest in the manner determined by the Committee and set forth  in
    the agreement evidencing such Performance Units.
 
    9.2  TERMINATION FOR REASONS OTHER THAN DEATH, DISABILITY OR RETIREMENT.
 
        (a)  In  the  event  a  Participant's  employment  or  other  service is
    terminated with the Company and all  Subsidiaries for any reason other  than
    death,  Disability  or Retirement,  or  a Participant  is  in the  employ or
    service of a Subsidiary and the Subsidiary ceases to be a Subsidiary of  the
    Company  (unless the Participant  continues in the employ  or service of the
    Company or another Subsidiary), all rights of the Participant under the Plan
    and any agreements evidencing an Incentive Award will immediately  terminate
    without notice of any kind, and no Options then held by the Participant will
    thereafter  be exercisable,  all Restricted  Stock Awards  then held  by the
    Participant that have not vested will  be terminated and forfeited, and  all
    Performance  Units then held by the Participant will vest and/or continue to
    vest in  the  manner  determined by  the  Committee  and set  forth  in  the
    agreement evidencing such Performance Units; provided, however, that if such
    termination  is due to any  reason other than termination  by the Company or
    any Subsidiary  for  "cause," all  outstanding  Options then  held  by  such
    Participant  will remain  exercisable to the  extent exercisable  as of such
    termination for a period of three  months after such termination (but in  no
    event after the expiration date of any such Option).
 
        (b)  For purposes  of this  Section 9.2,  "cause" (as  determined by the
    Committee) will be as defined in any employment or other agreement or policy
    applicable to the  Participant or, if  no such agreement  or policy  exists,
    will   mean  (i)  dishonesty,   fraud,  misrepresentation,  embezzlement  or
    deliberate injury or attempted injury, in  each case related to the  Company
    or  any  Subsidiary, (ii)  any unlawful  or criminal  activity of  a serious
    nature, (iii) any  intentional and  deliberate breach  of a  duty or  duties
    that,  individually or  in the  aggregate, are  material in  relation to the
    Participant's overall duties, or (iv) any material breach of any employment,
    service, confidentiality  or  noncompete  agreement entered  into  with  the
    Company or any Subsidiary.
 
    9.3    MODIFICATION OF  RIGHTS UPON  TERMINATION. Notwithstanding  the other
provisions of this Section 9, upon a Participant's termination of employment  or
other  service with the Company and all  Subsidiaries, the Committee may, in its
sole discretion (which  may be exercised  at any time  on or after  the date  of
grant,  including  following  such  termination),  cause  Options  (or  any part
thereof) then  held  by  such  Participant  to  become  or  continue  to  become
exercisable  and/or remain exercisable following  such termination of employment
or service and Restricted Stock Awards  and Performance Units then held by  such
Participant  to  vest  and/or  continue  to  vest  or  become  free  of transfer
restrictions, as the case  may be, following such  termination of employment  or
service,  in  each case  in the  manner determined  by the  Committee; provided,
however, that no Option may remain exercisable beyond its expiration date.
 
    9.4   DATE  OF  TERMINATION  OF EMPLOYMENT  OR  OTHER  SERVICE.  Unless  the
Committee   otherwise  determines  in  its   sole  discretion,  a  Participant's
employment or other service will,  for purposes of the  Plan, be deemed to  have
terminated on the date recorded on the personnel or other records of the Company
or  the  Subsidiary  for  which the  Participant  provides  employment  or other
service, as determined by the Committee  in its sole discretion based upon  such
records.
 
10.  PAYMENT OF WITHHOLDING TAXES.
 
    10.1  GENERAL RULES. The Company is entitled to (a) withhold and deduct from
future wages of the Participant (or from other amounts that may be due and owing
to the Participant from the
 
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Company  or a Subsidiary), or make other arrangements for the collection of, all
legally required amounts  necessary to satisfy  any and all  federal, state  and
local  withholding and  employment-related tax  requirements attributable  to an
Incentive Award, including, without limitation,  the grant, exercise or  vesting
of,  or  payment  of  dividends  with  respect  to,  an  Incentive  Award  or  a
disqualifying disposition of stock received upon exercise of an Incentive  Stock
Option,  or (b)  require the  Participant promptly to  remit the  amount of such
withholding to  the Company  before  taking any  action, including  issuing  any
shares of Common Stock, with respect to an Incentive Award.
 
    10.2   SPECIAL  RULES. The  Committee may, in  its sole  discretion and upon
terms  and  conditions  established  by  the  Committee,  permit  or  require  a
Participant   to   satisfy,   in  whole   or   in  part,   any   withholding  or
employment-related tax  obligation described  in  Section 10.1  of the  Plan  by
electing to tender Previously Acquired Shares or a Broker Exercise Notice, or by
a combination of such methods.
 
11.  CHANGE IN CONTROL.
 
    11.1   CHANGE IN  CONTROL. For purposes  of this Section  11.1, a "Change in
Control" of  the  Company will  mean  (a) the  sale,  lease, exchange  or  other
transfer  of substantially all of the assets  of the Company (in one transaction
or in  a series  of related  transaction)  to a  person or  entity that  is  not
controlled by the Company, (b) a merger or consolidation to which the Company is
a  party if the shareholders of the  Company immediately prior to effective date
of such merger or consolidation do  not have "beneficial ownership" (as  defined
in  Rule 13d-3 under the Exchange  Act) immediately following the effective date
of such merger or consolidation of more than 80% of the combined voting power of
the surviving corporation's outstanding  securities ordinarily having the  right
to  vote at elections of directors, or (c) a change in control of the Company of
a nature that would be required to  be reported pursuant to Section 13 or  15(d)
of  the  Exchange  Act, whether  or  not the  Company  is then  subject  to such
reporting requirements,  including, without  limitation, such  time as  (i)  any
person  becomes after the effective date of  the Plan the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 20% or
more of  the  combined voting  power  of the  Company's  outstanding  securities
ordinarily  having  the  right  to  vote  at  elections  of  directors,  or (ii)
individuals who constitute the Board on the effective date of the Plan cease for
any reason to constitute  at least a  majority of the  Board, provided that  any
person  becoming a director subsequent  to the effective date  of the Plan whose
election, or nomination for election by the Company's shareholders, was approved
by a vote of at  least a majority of the  directors comprising the Board on  the
effective date of the Plan will, for purposes of this clause (ii), be considered
as  though such persons were a member of  the Board on the effective date of the
Plan.
 
    11.2   ACCELERATION  OF  VESTING.  Without limiting  the  authority  of  the
Committee  under Section 3.2 of the Plan, if  a Change in Control of the Company
occurs, then, if approved by the Committee  in its sole discretion either in  an
agreement  evidencing an  Incentive Award at  the time  of grant or  at any time
after the grant of an Incentive  Award, (a) all Options will become  immediately
exercisable  in  full and  will remain  exercisable for  the remainder  of their
terms, regardless of  whether the Participants  to whom such  Options have  been
granted  remain in the employ  or service of the  Company or any Subsidiary; (b)
all outstanding Restricted  Stock Awards will  become immediately fully  vested;
and  (c) all  Performance Units  then held by  the Participant  will vest and/or
continue to vest in the manner determined by the Committee and set forth in  the
agreement evidencing such Performance Units.
 
    11.3    CASH PAYMENT  FOR OPTIONS.  If a  Change in  Control of  the Company
occurs, then the Committee, if approved by the Committee in its sole  discretion
either  in an agreement evidencing an Incentive Award at the time of grant or at
any time after the grant of an  Incentive Award, and without the consent of  any
Participant  effected  thereby,  may  determine that  some  or  all Participants
holding outstanding Options  will receive, with  respect to some  or all of  the
shares  of Common Stock subject to such Options, as of the effective date of any
such Change in Control of the Company, cash in an amount equal to the excess  of
the  Fair Market Value of such shares immediately prior to the effective date of
such Change in Control of the Company over the exercise price per share of  such
Options.
 
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    11.4   LIMITATION ON CHANGE IN CONTROL PAYMENTS. Notwithstanding anything in
Section 11.2  or 11.3  of  the Plan  to  the contrary,  if,  with respect  to  a
Participant,  the acceleration of the vesting  of an Incentive Award as provided
in Section  11.2 or  the payment  of cash  in exchange  for all  or part  of  an
Incentive Award as provided in Section 11.3 (which acceleration or payment could
be  deemed a "payment"  within the meaning  of Section 280G(b)(2)  of the Code),
together with any other payments which such Participant has the right to receive
from the Company or any  corporation that is a  member of an "affiliated  group"
(as  defined in Section 1504(a) of the Code without regard to Section 1504(b) of
the Code)  of which  the Company  is  a member,  would constitute  a  "parachute
payment"  (as defined in Section  280G(b)(2) of the Code),  then the payments to
such Participant pursuant to Section 11.2 or 11.3 will be reduced to the largest
amount as will result in no portion of such payments being subject to the excise
tax imposed  by  Section 4999  of  the Code;  provided,  however, that  if  such
Participant  is subject to a separate agreement with the Company or a Subsidiary
which specifically provides that payments attributable  to one or more forms  of
employee  stock  incentives  or  to  payments made  in  lieu  of  employee stock
incentives will not reduce any other  payments under such agreement, even if  it
would  constitute  an excess  parachute payment,  then  the limitations  of this
Section 11.4 will, to that extent, not apply.
 
12.  RIGHTS OF ELIGIBLE RECIPIENTS AND PARTICIPANTS; TRANSFERABILITY.
 
    12.1  EMPLOYMENT  OR SERVICE.  Nothing in the  Plan will  interfere with  or
limit  in any way  the right of the  Company or any  Subsidiary to terminate the
employment or service of any Eligible Recipient or Participant at any time,  nor
confer  upon any Eligible Recipient or Participant  any right to continue in the
employ or service of the Company or any Subsidiary.
 
    12.2  RIGHTS AS A SHAREHOLDER. As  a holder of Incentive Awards (other  than
Restricted  Stock Awards),  a Participant will  have no rights  as a shareholder
unless and until such Incentive  Awards are exercised for,  or paid in the  form
of,  shares of Common Stock and the  Participant becomes the holder of record of
such shares. Except  as otherwise provided  in the Plan,  no adjustment will  be
made  for dividends or distributions with respect to such Incentive Awards as to
which there is  a record  date preceding the  date the  Participant becomes  the
holder  of record of such  shares, except as the  Committee may determine in its
discretion.
 
    12.3  RESTRICTIONS ON TRANSFER. Except pursuant to testamentary will or  the
laws  of descent  and distribution  or as  otherwise expressly  permitted by the
Plan, no right or interest of any Participant in an Incentive Award prior to the
exercise or vesting of such Incentive Award will be assignable or  transferable,
or  subjected  to  any lien,  during  the  lifetime of  the  Participant, either
voluntarily or involuntarily,  directly or  indirectly, by operation  of law  or
otherwise.  A Participant will, however, be  entitled to designate a beneficiary
to receive an Incentive Award upon such Participant's death, and in the event of
a Participant's death, payment of  any amounts due under  the Plan will be  made
to,  and exercise of any Options (to  the extent permitted pursuant to Section 9
of the Plan) may be made by, the Participant's legal representatives, heirs  and
legatees.
 
    12.4  NON-EXCLUSIVITY OF THE PLAN. Nothing contained in the Plan is intended
to  modify or rescind any previously  approved compensation plans or programs of
the Company or create any limitations on the power or authority of the Board  to
adopt  such additional or other compensation  arrangements as the Board may deem
necessary or desirable.
 
    12.5  RESTRICTIONS REGARDING EMPLOYMENT OR SERVICE.
 
        (a) Notwithstanding anything in the Plan  to the contrary, in the  event
    that  a  Participant, prior  to  or following  such  Participant's voluntary
    termination  of  employment  or  other  service  with  the  Company  or  any
    Subsidiary,  takes  Adverse  Actions  with respect  to  the  Company  or any
    Subsidiary, the Committee in its sole discretion will have the authority (by
    so providing in the agreement evidencing the Incentive Award at the time  of
    grant) to terminate immediately all rights of the Participant under the Plan
    and  any agreement evidencing Incentive Awards  than held by the Participant
    without notice of any  kind. In addition, to  the extent that a  Participant
 
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    takes  such Adverse Actions during the  period beginning 12 months prior to,
    and ending 12  months following, the  date of such  voluntary employment  or
    service  termination, the  Committee in  its sole  discretion will  have the
    authority (by so providing in  the agreement evidencing the Incentive  Award
    at  the time of grant)  to rescind the exercise  or vesting of any Incentive
    Awards of the Participant that were  exercised or became vested during  such
    period  and to require the Participant to pay to the Company, within 10 days
    of receipt from the Company of notice of such rescission, the amount of  any
    gain  realized or payment received as a result of such rescinded exercise or
    vesting. Such payment will be made  in cash (including check, bank draft  or
    money order) or, with the Committee's consent, shares of Common Stock with a
    Fair  Market  Value on  the  date of  payment equal  to  the amount  of such
    payment. The Company  will be entitled  to withhold and  deduct from  future
    wages of the Participant (or from other amounts that may be due and owing to
    the Participant from the Company or a Subsidiary) or make other arrangements
    for  the  collection  of  all  amounts  necessary  to  satisfy  such payment
    obligation.
 
        (b) For purposes of this Section 12.5, an "Adverse Action" will mean any
    action by  a  Participant  that  the  Committee,  in  its  sole  discretion,
    determines  to be adverse to the interests of the Company or any Subsidiary,
    including, without limitation,  (i) disclosing  confidential information  of
    the Company or any Subsidiary to any person not authorized by the Company to
    receive  it,  (ii)  engaging,  directly  or  indirectly,  in  any commercial
    activity that in the judgment of the Committee competes with the business of
    the Company or any Subsidiary,  or (iii) interfering with the  relationships
    of  the  Company or  its Subsidiaries  with  their respective  employees and
    customers.
 
13.  SECURITIES LAW AND OTHER RESTRICTIONS.
 
    Notwithstanding any other provision  of the Plan  or any agreements  entered
into  pursuant to the Plan, the Company will not be required to issue any shares
of Common  Stock  under this  Plan,  and a  Participant  may not  sell,  assign,
transfer  or  otherwise dispose  of shares  of Common  Stock issued  pursuant to
Incentive Awards granted  under the  Plan, unless (a)  there is  in effect  with
respect to such shares a registration statement under the Securities Act and any
applicable  state securities laws  or an exemption  from such registration under
the Securities Act and applicable state securities laws, and (b) there has  been
obtained  any other consent,  approval or permit from  any other regulatory body
which the Committee, in its sole  discretion, deems necessary or advisable.  The
Company  may condition such issuance,  sale or transfer upon  the receipt of any
representations or agreements from  the parties involved,  and the placement  of
any  legends  on certificates  representing shares  of Common  Stock, as  may be
deemed necessary  or advisable  by the  Company  in order  to comply  with  such
securities law or other restrictions.
 
14.  PLAN AMENDMENT, MODIFICATION AND TERMINATION
 
    The  Board may suspend or  terminate the Plan or  any portion thereof at any
time, and may amend the Plan from time to time in such respects as the Board may
deem advisable in order that Incentive Awards under the Plan will conform to any
change in applicable laws or regulations or  in any other respect the Board  may
deem  to be  in the best  interests of  the Company; provided,  however, that no
amendments to the Plan will be effective without approval of the stockholders of
the Company if stockholder approval of  the amendment is then required  pursuant
to  Rule 16b-3 under the Exchange  Act, Section 422 of the  Code or the rules of
the National Association of Securities Dealers, Inc. No termination,  suspension
or  amendment of the  Plan may adversely affect  any outstanding Incentive Award
without the consent of  the affected Participant;  provided, however, that  this
sentence  will not impair the right of  the Committee to take whatever action it
deems appropriate under Sections 4.3 and 11 of the Plan.
 
15.  EFFECTIVE DATE AND DURATION OF THE PLAN
 
    The Plan is effective as of January 18, 1993, the date it was adopted by the
Board. The Plan  will terminate  at midnight  on January  18, 2003,  and may  be
terminated prior to such time to by Board
 
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action, and no Incentive Award will be granted after such termination. Incentive
Awards outstanding upon termination of the Plan may continue to be exercised, or
become free of restrictions, in accordance with their terms.
 
16.  MISCELLANEOUS
 
    16.1      GOVERNING   LAW.  The   validity,   construction,  interpretation,
administration and effect  of the Plan  and any rules,  regulations and  actions
relating to the Plan will be governed by and construed exclusively in accordance
with the laws of the State of Minnesota.
 
    16.2  SUCCESSORS AND ASSIGNS. The Plan will be binding upon and inure to the
benefit  of  the  successors  and  permitted  assigns  of  the  Company  and the
Participants.
 
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