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                                                                    EXHIBIT 10.1

                               IKONICS CORPORATION

                            1995 STOCK INCENTIVE PLAN
                       (AS AMENDED THROUGH APRIL 29, 2004)

         1.       Purpose of Plan.

                  The purpose of the IKONICS Corporation 1995 Stock Incentive
Plan (the "Plan") is to advance the interests of the IKONICS Corporation (the
"Company") and its stockholders 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 meaning set forth below,
unless the context clearly otherwise requires:

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

                  2.2 "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 or deliver stock certificates to be issued upon
such exercise directly to such broker or dealer.

                  2.3      "Change in Control" means an event described in
Section 13.1 of the Plan.

                  2.4      "Code" means the Internal Revenue Code of 1986, as
amended.

                  2.5      "Committee" means the group of individuals
administering the Plan, as provided in Section 3 of the Plan.

                  2.6      "Common Stock" means the common stock of the
Company's $.10 par value, 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.

                  2.7      "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.

                  2.8      "Eligible Recipients" means all directors (including
non-employee directors), officers and employees of the Company or any
Subsidiary.

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

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                  2.10     "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):

                  a.       If the Common Stock is listed (or admitted to
         unlisted trading privileges) on an exchange or reported on the NASDAQ
         National Market System or bid and asked prices are reported on the
         NASDAQ system or a comparable reporting service, the closing sale price
         or the mean of the closing bid and asked prices, as the case may be.

                  b.       If the Common Stock is not so listed or reported,
         such price as the Committee determines in good faith in the exercise of
         its reasonable discretion.

                  2.11     "Incentive Award" means an Option, Stock Appreciation
Right, Restricted Stock Award, Performance Unit or Stock Bonus granted to an
Eligible Recipient pursuant to the Plan.

                  2.12     "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.

                  2.13     "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 a Incentive Stock Option.

                  2.14     "Option" means an Incentive Stock Option or a
Non-Statutory Stock Option.

                  2.15     "Participant" means an Eligible Recipient who
receives one or more Incentive Awards under the Plan.

                  2.16     "Performance Unit" means a right granted to an
Eligible Recipient pursuant to Section 9 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.

                  2.17     "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.

                  2.18     "Restricted Stock Award" means an award of Common
Stock granted to an Eligible Recipient pursuant to Section 8 of the Plan that is
subject to the restrictions on transferability and the risk of forfeiture
imposed by the provisions of such Section 8.

                  2.19     "Retirement" means normal or approved early
termination of employment or service pursuant to and in accordance with the
regular 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.

                  2.20     "Securities Act" means the Securities Act of 1933, as
amended.

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                  2.21     "Stock Appreciation Right" means a right granted to
an Eligible Recipient pursuant to Section 7 of the Plan to receive a payment
from the Company, in the form of stock, cash or a combination of both, equal to
the difference between the Fair Market Value of one or more shares of Common
Stock and the exercise price of such shares under the terms of such Stock
Appreciation Right.

                  2.22     "Stock Bonus" means an award of Common Stock granted
to an Eligible Recipient pursuant to Section 10 of the Plan.

                  2.23     "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.

                  2.24     "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. The Plan will be administered by the
Board or by a committee of the Board consisting of not less than two persons;
provided, however, that from and after the date on which the Company first
registers a class of its equity securities under Section 12 of the Exchange Act,
the Plan will be administered by the Board, all of whom will be "disinterested
persons" within the meaning of Rule 16b-3 under the Exchange Act, or by a
committee consisting solely of not fewer than two members of the Board who are
such "disinterested persons." As used in this Plan, the term "Committee" will
refer to the Board or to such a committee, if established. 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. The Committee may exercise its duties, power and authority under
the Plan in its sole and absolute discretion without the consent of any
Participant or other party, unless the Plan specifically provides otherwise.
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 with
         other Incentive Awards) and the form of written agreement, if any,
         evidencing such Incentive Award; (iii) the time or times when

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         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 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 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. 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 228,500 shares.
The shares available for issuance under the Plan may, at the election of the
Committee, be either treasury shares or shares authorized but unissued, and, if
treasury shares are used, all references in the Plan to the issuance of shares
will, for corporate law purposes, be deemed to mean the transfer of shares from
treasury.

                  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 Stock that are subject to an Incentive Award that lapses, expires, is
forfeited or

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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 of 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. 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 agreements 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. 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, provided that (a) such price
will not be less than 100% of the Fair Market Value of one share of Common Stock
on the date of grant with respect to an Incentive Stock Option (110% of the Fair
Market Value if, at the time the Incentive Stock Option is granted, the
Participant owns, directly or indirectly, more than 10% of the total combined
voting power of all classes of stock of the Company or any parent or subsidiary
corporation of the Company), and (b) such price will not be less than 85% of the
Fair Market Value of one share of Common Stock on the date of grant with respect
to a Non-Statutory Stock Option.

                  6.3      Exercisability and Duration. An Option will become
exercisable at such times and in such installments as may be determined by the
Committee at the time of grant; provided, however, that no Incentive Stock
Option may be exercisable after 10 years from its date of grant (five years from
its date of grant if, at the time the Incentive Stock Option is granted, the
Participant owns, directly or indirectly, more than 10% of the total combined
voting power of all classes of stock of the Company or any parent or subsidiary
corporation of the Company).

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                  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 may allow such payments to be made, in whole or in part and upon
such terms and conditions as may be established by the Committee, by tender of a
Broker Exercise Notice, Previously Acquired Shares, a promissory note 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: Chief Financial Officer)
at its principal executive office in Duluth, 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.

                  6.6      Aggregate Limitation of Stock Subject to Incentive
Stock Options. To the extent that the aggregate Fair Market Value (determined as
of the date an Incentive Stock Option is granted) of the shares of Common Stock
with respect to which incentive stock options (within the meaning of Section 422
of the Code) are exercisable for the first time by a Participant during any
calendar year (under the Plan and any other incentive stock option plans of the
Company or any subsidiary or parent corporation of the Company (within the
meaning of the Code)) exceeds $100,000 (or such other amount as may be
prescribed by the Code from time to time), such excess Options will be treated
as Non-Statutory Stock Options. The determination will be made by taking
incentive stock options into account in the order in which they were granted. If
such excess only applies to a portion of an incentive stock option, the
Committee will designate which shares will be treated as shares to be acquired
upon exercise of an incentive stock option.

         7.       Stock Appreciation Rights.

                  7.1      Grant. An Eligible Recipient may be granted one or
more Stock Appreciation Rights under the Plan, and such Stock Appreciation
Rights shall be subject to such terms and conditions, consistent with the other
provisions of the Plan, as will be determined by the Committee.

                  7.2      Exercise Price. The exercise price of a Stock
Appreciation Right will be determined by the Committee at the date of grant but
will not be less than 85% of the Fair Market Value of one share of Common Stock
on the date of grant.

                  7.3      Exercisability and Duration. A Stock Appreciation
Right will become exercisable at such time and in such installments as may be
determined by the Committee at the time of grant; provided, however, that no
Stock Appreciation Right may be exercisable prior to six months or after 10
years from its date of grant. A Stock Appreciation Right will be exercised by
giving notice in the same manner as for Options, as set forth in Section 6.5 of
the Plan.

         8.       Restricted Stock Awards.

                  8.1      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. The Committee may
impose such restrictions or conditions, not inconsistent with the provisions of

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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.

                  8.2      Rights as a Stockholder; Transferability. Except as
provided in Sections 8.1, 8.3 and 14.3 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 8
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.

                  8.3      Dividends and Distributions. Unless the Committee
determines otherwise (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 whether any interest will be paid on such dividends or
distributions. In addition, the Committee 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.

                  8.4      Enforcement of Restrictions. To enforce the
restrictions referred to in this Section 8, 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.

         9.       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. 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 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.

         10.      Stock Bonuses.

                  An Eligible Recipient may be granted one or more Stock Bonuses
under the Plan, and such Stock Bonuses will be subject to such terms and
conditions, consistent with the other provisions of the Plan, as may be
determined by the Committee. The Participant will have all voting, dividend,
liquidation and other rights with respect to the shares of Common Stock issued
to a Participant as a Stock Bonus under this Section 10 upon the Participant
becoming the holder of record of such shares;

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provided, however, that the Committee may impose such restrictions on the
assignment or transfer of a Stock Bonus as it deems appropriate.

         11.      Effect of Termination of Employment or Other Service.

                  11.1     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:

                  a.       All outstanding Options and Stock Appreciation Rights
         then held by the Participant will remain exercisable to the extent
         exercisable as of such termination for a period of 30 days after such
         termination (but in no event after the expiration date of any such
         Option or Stock Appreciation Right);

                  b.       All outstanding Restricted Stock Awards then held by
         the Participant that have not vested will be terminated and forfeited;
         and

                  c.       All outstanding Performance Units and Stock Bonuses
         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 or Stock Bonuses.

                  11.2     Termination for Reasons Other than Death, Disability
or Retirement.

                  a.       In the event a Participant's employment or other
         service is termination 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 or Stock Appreciation Rights 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 and Stock Bonuses 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 or Stock Bonuses; 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 and
         Stock Appreciation Rights then held by such Participant will remain
         exercisable to the extent exercisable as of such termination for a
         period of 30 days after such termination (but in no event after the
         expiration date of any such Option or Stock Appreciation Right).

                  b.       For purposes of this Section 11.2, "cause" (as
         determined by the Committee) will be a 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 non-compete agreement entered
         into with the Company or any subsidiary.

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                  11.3     Modification of Rights Upon Termination.
Notwithstanding the other provisions of this Section 11, upon a Participant's
termination of employment or other service with the Company and all
subsidiaries, the Committee may in its discretion (which may be exercised at any
time on or after the date of grant, including following such termination) cause
Options and Stock Appreciation Rights (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, Performance Units and Stock Bonuses 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 casein
the manner determined by the Committee; provided, however, that no Option or
Stock Appreciation Right may remain exercisable beyond its expiration date.

                  11.4     Breach of Confidentiality or Non-Compete Agreements.
Notwithstanding anything in this Plan to the contrary, in the event that a
Participant materially breaches the terms of any confidentiality or non-compete
agreement entered into with the Company or any subsidiary, whether such breach
occurs before or after termination of such Participant's employment or other
service with the Company or any subsidiary, the Committee may immediately
terminate all rights of the Participant under the Plan and any agreements
evidencing an Incentive Award then held by the Participant without notice of any
kind.

                  11.5     Date of Termination of Employment or Other Service.
Unless the Committee otherwise determines, 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 based upon such records.

         12.      Payment of Withholding Taxes.

                  12.1     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 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 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.

                  12.2     Special Rules. The Committee may, 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 12.1 of the Plan by electing to tender
Previously Acquired Shares, a Broker Exercise Notice or a promissory note (on
terms acceptable to the Committee in its sole discretion), or by a combination
of such methods.

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         13.      Change in Control.

                  13.1     Change in Control. For purposes of this Section 13.1,
a "Change in Control" of the Company will mean the following:

                  a.       the sale, lease, exchange or other transfer, directly
         or indirectly, of substantially all of the assets of the Company (in
         one transaction or in a series of related transactions) to a person or
         entity that is not controlled by the Company;

                  b.       the approval by the stockholders of the Company of
         any plan or proposal for the liquidation or dissolution of the Company;

                  c.       a merger or consolidation to which the Company is a
         party if the stockholders of the Company immediately prior to the
         effective date of such merger or consolidation have "beneficial
         ownership" (as defined in Rule 13d-3 under the Exchange Act),
         immediately following the effective date of such merger or
         consolidation, of securities of the surviving corporation representing
         (i) more than 50%, but not more than 80% of the combined voting power
         of the surviving corporation's then outstanding securities ordinarily
         having the right to vote at elections of directors, unless such merger
         or consolidation has been approved in advance by the Incumbent
         Directors (as defined in Section 13.2 below), or (ii) 50% or less of
         the combined voting power of the surviving corporation's then
         outstanding securities ordinarily having the right to vote at elections
         of directors (regardless of any approval by the Incumbent Directors);

                  d.       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 (i) 20% or more, but not 50%
         or more, of the combined voting power of the Company's outstanding
         securities ordinarily having the right to vote at elections of
         directors, unless the transaction resulting in such ownership has been
         approved in advance by the Incumbent Directors, or (ii) 50% or more of
         the combined voting power of the Company's outstanding securities
         ordinarily having the right to vote at elections of directors
         (regardless of any approval by the Incumbent Directors);

                  e.       the Incumbent Directors cease for any reason to
         constitute at least a majority of the Board; or

                  f.       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.

                  13.2     Incumbent Directors. For purposes of this Section 13,
"Incumbent Directors" of the Company means any individuals who are members of
the Board on the effective date of the Plan and any individual who subsequently
becomes a member of the Board whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a majority of the
Incumbent Directors (either by specific vote or by approval of the Company's
proxy statement in which such individual is named as a nominee for director
without objection to such nomination).

                  13.3.    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 unless the

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Committee otherwise determines and sets forth in the agreement evidencing an
Incentive Award at the time of grant of such Incentive Award, (a) all
outstanding Options and Stock Appreciation Rights will become immediately
exercisable in full and will remain exercisable for the remainder of their
terms, regardless of whether the Participant to whom such Options or Stock
Appreciation Rights have been granted remains in the employ or service of the
Company or any Subsidiary; (b) all outstanding Restricted Stock Awards will
become immediately fully vested and non-forfeitable; and (c) all outstanding
Performance Units and Stock Bonuses 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 Unites or Stock Bonuses.

                  13.4     Cash Payment for Options. If a Change of Control of
the Company occurs, then the Committee, if approved by the Committee either in
an agreement evidencing an Incentive Award at the time of grant or at any time
after the grant of an Incentive Award, 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.

                  13.5     Limitation on Change in Control Payments.
Notwithstanding anything in Section 13.3 or 13.4 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 13.3 or the payment of cash in exchange
for all or part of an Incentive Award as provided in Section 13.4 (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 "affiliate group" (as defined in Section 1504(a) of the Code
without regarding 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 13.3 or
13.4 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 that specifically provides that payments
attributable to one or more forms to employee stock incentives or to payments
made in lieu of employee stock incentives will not reduce any other payments
under such agreement, event if it would constitute an excess parachute payment,
or provides that the Participant will have the discretion to determine which
payment will be reduced in order to avoid an excess parachute payment, then the
limitations of this Section 13.5 will, to that extent, not apply.

         14.      Rights of Eligible Recipients and Participants;
Transferability.

                  14.1     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.

                  14.2     Rights as a Stockholder. As a holder of Incentive
Awards (other than Restricted Stock Awards and Stock Bonuses), a Participant
will have no rights as a stockholder 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

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<PAGE>

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.

                  14.3     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 11 of the Plan) may be made by, the Participant's
legal representatives, heirs and legatees.

                  14.4     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.

         15.      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 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.

         16.      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 NASD or any stock exchange. 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 is
deems appropriate under Sections 3.2(c), 4.3 and 13 of the Plan.

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         17.      Effective Date and Duration of the Plan

                  The Plan is effective as of February 23, 2004, the date it was
adopted by the Board in its current form. The Plan will terminate at midnight on
February 22, 2014, and may be terminated prior to such time by Board 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.

         18.      Miscellaneous

                  18.1     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, notwithstanding the
conflicts of laws principles of any jurisdictions.

                  18.2     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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