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                                                                     EXHIBIT 4.3

                               HMN Financial, Inc.
                             2001 Omnibus Stock Plan


         1.       PURPOSE. The purpose of the HMN Financial, Inc. 2001 Omnibus
Stock Plan (the "Plan") is to promote the interests of the Company and its
stockholders by providing key personnel of the Company and its Affiliates with
an opportunity to acquire a proprietary interest in the Company and reward
them for achieving a high level of performance and thereby develop a stronger
incentive to put forth maximum effort for the continued success and growth of
the Company and its Affiliates. In addition, the opportunity to acquire a
proprietary interest in the Company will aid in attracting and retaining key
personnel of outstanding ability. Additionally, the Plan is intended to
provide Outside Directors with an opportunity to acquire a proprietary
interest in the Company, to compensate Outside Directors for their
contribution to the Company and to aid in attracting and retaining Outside
Directors.

         2.       DEFINITIONS.

                  2.1      The capitalized terms used elsewhere in the Plan
         have the meanings set forth below.

                           (a)      "Affiliate" means any corporation that is a
                  "parent corporation" or "subsidiary corporation" of the
                  Company, as those terms are defined in Code Sections 424(e)
                  and (f), or any successor provisions.

                           (b)      "Agreement" means a written contract (i)
                  consistent with the terms of the Plan entered into between the
                  Company or an Affiliate and a Participant and (ii) containing
                  the terms and conditions of an Award in such form and not
                  inconsistent with the Plan as the Committee shall approve from
                  time to time, together with all amendments thereto, which
                  amendments may be unilaterally made by the Company (with the
                  approval of the Committee) unless such amendments are deemed
                  by the Committee to be materially adverse to the Participant
                  and not required as a matter of law.

                           (c)      "Award" or "Awards" means a grant made under
                  the Plan in the form of Restricted Stock, Options, Stock
                  Appreciation Rights, Stock or any other stock-based award.

                           (d)      "Board" means the Board of Directors of the
                  Company.

                           (e)      "Code" means the Internal Revenue Code of
                  1986, as amended and in effect from time to time or any
                  successor statute.

                           (f)      "Committee" means two or more Non-Employee
                  Directors designated by the Board to administer the Plan under
                  Section 3.1 of the Plan and constituted so as to permit grants
                  thereby to comply with Exchange Act Rule 16b-3 and Code
                  Section 162(m).

                           (g)      "Company" means HMN Financial, Inc., a
                  Delaware corporation, or any successor to all or substantially
                  all of its businesses by merger, consolidation, purchase of
                  assets or otherwise.

                           (h)      "Effective Date" means the date specified in
                  Section 11.1 of the Plan.

                           (i)      "Employee" means an employee (including an
                  officer or director who is also an employee) of the Company or
                  an Affiliate.

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                           (j)      "Exchange Act" means the Securities Exchange
                  Act of 1934, as amended and in effect from time to time or any
                  successor statute.

                           (k)      "Exchange Act Rule 16b-3" means Rule 16b-3
                  promulgated by the Securities and Exchange Commission under
                  the Exchange Act, as now in force and in effect from time to
                  time or any successor regulation.

                           (l)      "Fair Market Value" as of any date means,
                  unless otherwise expressly provided in the Plan:

                                    (i)      the average of the high and low
                           sale prices of a Share on the date of grant, or, if
                           no sale of Shares shall have occurred on that date,
                           on the next preceding day on which a sale of Shares
                           occurred

                                             (A)      on the composite tape for
                                    New York Stock Exchange listed shares, or

                                             (B)      if the Shares are not
                                    quoted on the composite tape for New York
                                    Stock Exchange listed shares, on the
                                    principal United States Securities Exchange
                                    registered under the Exchange Act on which
                                    the Shares are listed, or

                                             (C)      if the Shares are not
                                    listed on any such exchange, on the National
                                    Association of Securities Dealers, Inc.
                                    Automated Quotations National Market System
                                    or any system then in use, or

                                    (ii)     if clause (i) is inapplicable, the
                           mean between the closing "bid" and the closing
                           "asked" quotation of a Share on the date immediately
                           preceding that date, or, if no closing bid or asked
                           quotation is made on that date, on the next preceding
                           day on which a closing bid and asked quotation is
                           made, on the National Association of Securities
                           Dealers, Inc. Automated Quotations System or any
                           system then in use, or

                                    (iii)    if clauses (i) and (ii) are
                           inapplicable, what the Committee determines in good
                           faith to be 100% of the fair market value of a Share
                           on that date, using such criteria as it shall
                           determine, in its sole discretion, to be appropriate
                           for valuation.

                           However, if the applicable securities exchange or
                  system has closed for the day at the time the event occurs
                  that triggers a determination of Fair Market Value, whether
                  the grant of an Award, the exercise of an Option or Stock
                  Appreciation Right or otherwise, all references in this
                  paragraph to the "date immediately preceding that date" shall
                  be deemed to be references to "that date." In the case of an
                  Incentive Stock Option, if this determination of Fair Market
                  Value is not consistent with the then current regulations of
                  the Secretary of the Treasury, Fair Market Value shall be
                  determined in accordance with those regulations. The
                  determination of Fair Market Value shall be subject to
                  adjustment as provided in Section 15 of the Plan.

                           (m)      "Fundamental Change" means a dissolution or
                  liquidation of the Company, a sale of substantially all of the
                  assets of the Company, a merger or consolidation of the
                  Company with or into any other corporation, regardless of
                  whether the Company is the surviving corporation, or a
                  statutory share exchange involving capital stock of the
                  Company.

                           (n)      "Incentive Stock Option" means any Option
                  designated as such and granted in accordance with the
                  requirements of Code Section 422 or any successor provision.

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                           (o)      "Insider" as of a particular date means any
                  person who, as of that date is an officer of the Company as
                  defined under Exchange Act Rule 16a-1(f) or its successor
                  provision.

                           (p)      "Non-Employee Director" means a member of
                  the Board who is considered a non-employee director within the
                  meaning of Exchange Act Rule 16b-3(b)(3) or its successor
                  provision and an outside director for purposes of Code Section
                  162(m).

                           (q)      "Non-Statutory Stock Option" means an Option
                  other than an Incentive Stock Option.

                           (r)      "Option" means a right to purchase Stock,
                  including both Non-Statutory Stock Options and Incentive Stock
                  Options.

                           (s)      "Outside Director" means a director who is
                  not an Employee.

                           (t)      "Participant" means a person or entity to
                  whom an Award is or has been made in accordance with the Plan.

                           (u)      "Plan" means this HMN Financial, Inc. 2001
                  Omnibus Stock Plan, as may be amended and in effect from time
                  to time.

                           (v)      "Restricted Stock" means Stock granted under
                  Section 7 of the Plan so long as such Stock remains subject to
                  one or more restrictions.

                           (w)      "Section 16" or "Section 16(b)" means
                  Section 16 or Section 16(b), respectively, of the Exchange Act
                  or any successor statute and the rules and regulations
                  promulgated thereunder as in effect and as amended from time
                  to time.

                           (x)      "Share" means a share of Stock.

                           (y)      "Stock" means the common stock, par value
                  $.01 per share, of the Company.

                           (z)      "Stock Appreciation Right" means a right,
                  the value of which is determined in relation to the
                  appreciation in value of Shares pursuant to an Award granted
                  under Section 10 of the Plan.

                           (aa)     "Subsidiary" means a "subsidiary
                  corporation," as that term is defined in Code Section 424(f)
                  or any successor provision.

                           (bb)     "Successor" with respect to a Participant
                  means the legal representative of an incompetent
                  Participant, and if the Participant is deceased the estate
                  of the Participant or the person or persons who may, by
                  bequest or inheritance, or pursuant to the terms of an
                  Award, acquire the right to exercise an Option or Stock
                  Appreciation Right or to receive cash and/or Shares issuable
                  in satisfaction of an Award in the event of the
                  Participant's death.

                           (cc)     "Term" means the period during which an
                  Option or Stock Appreciation Right may be exercised or the
                  period during which the restrictions or terms and conditions
                  placed on Restricted Stock or any other Award are in effect.

                           (dd)     "Transferee" means any member of the
                  Participant's immediate family (I.E., his or her children,
                  step-children, grandchildren and spouse) or one or more trusts
                  for the benefit of such family members or partnerships in
                  which such family members are the only partners.

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                  2.2      GENDER AND NUMBER. Except when otherwise indicated by
         the context, reference to the masculine gender shall include, when
         used, the feminine gender and any term used in the singular shall also
         include the plural.

         3.       ADMINISTRATION AND INDEMNIFICATION.

                  3.1      ADMINISTRATION.

                           (a)      The Committee shall administer the Plan. The
                  Committee shall have exclusive power to (i) make Awards, (ii)
                  determine when and to whom Awards will be granted, the form of
                  each Award, the amount of each Award, and any other terms or
                  conditions of each Award consistent with the Plan, and (iii)
                  determine whether, to what extent and under what
                  circumstances, Awards may be settled, paid or exercised in
                  cash, Shares or other Awards, or other property or canceled,
                  forfeited or suspended. Each Award shall be subject to an
                  Agreement authorized by the Committee. A majority of the
                  members of the Committee shall constitute a quorum for any
                  meeting of the Committee, and acts of a majority of the
                  members present at any meeting at which a quorum is present or
                  the acts unanimously approved in writing by all members of the
                  Committee shall be the acts of the Committee. Notwithstanding
                  the foregoing, the Board shall have the sole and exclusive
                  power to administer the Plan with respect to Awards granted to
                  Outside Directors.

                           (b)      Solely for purposes of determining and
                  administering Awards to Participants who are not Insiders, the
                  Committee may delegate all or any portion of its authority
                  under the Plan to one or more persons who are not Non-Employee
                  Directors.

                           (c)      To the extent within its discretion and
                  subject to Sections 14 and 15 of the Plan, other than price,
                  the Committee may amend the terms and conditions of any
                  outstanding Award.

                           (d)      It is the intent that the Plan and all
                  Awards granted pursuant to it shall be administered by the
                  Committee so as to permit the Plan and Awards to comply with
                  Exchange Act Rule 16b-3, except in such instances as the
                  Committee, in its discretion, may so provide. If any
                  provision of the Plan or of any Award would otherwise
                  frustrate or conflict with the intent expressed in this
                  Section 3.1(d), that provision to the extent possible shall
                  be interpreted and deemed amended in the manner determined
                  by the Committee so as to avoid the conflict. To the extent
                  of any remaining irreconcilable conflict with this intent,
                  the provision shall be deemed void as applicable to Insiders
                  to the extent permitted by law and in the manner deemed
                  advisable by the Committee.

                           (e)      The Committee's interpretation of the Plan
                  and of any Award or Agreement made under the Plan and all
                  related decisions or resolutions of the Board or Committee
                  shall be final and binding on all parties with an interest
                  therein. Consistent with its terms, the Committee shall have
                  the power to establish, amend or waive regulations to
                  administer the Plan. In carrying out any of its
                  responsibilities, the Committee shall have discretionary
                  authority to construe the terms of the Plan and any Award or
                  Agreement made under the Plan.

                  3.2      INDEMNIFICATION. Each person who is or shall have
         been a member of the Committee, or of the Board, and any other person
         to whom the Committee delegates authority under the Plan, shall be
         indemnified and held harmless by the Company, to the extent permitted
         by law, against and from any loss, cost, liability or expense that
         may be imposed upon or reasonably incurred by such person in
         connection with or resulting from any claim, action, suit or
         proceeding to which such person may be a party or in which such
         person may be involved by reason of any action taken or failure to
         act, made in good faith, under the Plan and against and from any and
         all amounts paid by such person in settlement thereof, with

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         the Company's approval, or paid by such person in satisfaction of any
         judgment in any such action, suit or proceeding against such person,
         provided such person shall give the Company an opportunity, at the
         Company's expense, to handle and defend the same before such person
         undertakes to handle and defend it on such person's own behalf. The
         foregoing right of indemnification shall not be exclusive of any
         other rights of indemnification to which such person or persons may
         be entitled under the Company's Certificate of Incorporation or
         Bylaws, as a matter of law, or otherwise, or any power that the
         Company may have to indemnify them or hold them harmless.

         4.       SHARES AVAILABLE UNDER THE PLAN.

                           (a)     The number of Shares available for
                  distribution under the Plan shall not exceed 400,000 (subject
                  to adjustment pursuant to Section 15 of the Plan).

                           (b)     Any Shares subject to the terms and
                  conditions of an Award under the Plan that are not used
                  because the terms and conditions of the Award are not met
                  may again be used for an Award under the Plan; provided
                  however, that Shares with respect to which a Stock
                  Appreciation Right has been exercised whether paid in cash
                  and/or in Shares may not again be awarded under the Plan.

                           (c)     Any unexercised or undistributed portion of
                  any terminated, expired, exchanged, or forfeited Award, or any
                  Award settled in cash in lieu of Shares (except as provided in
                  Section 4(b)) below shall be available for further Awards.

                           (d)     For the purposes of computing the total
                  number of Shares granted under the Plan, the following rules
                  shall apply to Awards payable in Shares where appropriate:

                                    (i)      each Option shall be deemed to be
                           the equivalent of the maximum number of Shares that
                           may be issued upon exercise of the particular Option;

                                    (ii)     an Award (other than an Option)
                           payable in some other security shall be deemed to be
                           equal to the number of Shares to which it relates;

                                    (iii)    where the number of Shares
                           available under the Award is variable on the date it
                           is granted, the number of Shares shall be deemed to
                           be the maximum number of Shares that could be
                           received under that particular Award; and

                                    (iv)     where two or more types of Awards
                           (all of which are payable in Shares) are granted to a
                           Participant in tandem with each other, such that the
                           exercise of one type of Award with respect to a
                           number of Shares cancels at least an equal number of
                           Shares of the other, each such joint Award shall be
                           deemed to be the equivalent of the maximum number of
                           Shares available under the largest single Award.

                           Additional rules for determining the number of Shares
                  granted under the Plan may be made by the Committee as it
                  deems necessary or desirable.

                           (e)      No fractional Shares may be issued under the
                  Plan; however, cash shall be paid in lieu of any fractional
                  Share in settlement of an Award.

                           (f)      The maximum number of Shares that may be
                  awarded to a Participant in any calendar year in the form of
                  Options is 50,000 and the maximum number of Shares that may be
                  awarded to a Participant in any calendar year in the form of
                  Stock Appreciation Rights is 50,000.


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         5.       ELIGIBILITY. Participation in the Plan shall be limited to
Employees and to individuals or entities who are not Employees but who provide
services to the Company or an Affiliate, including services provided in the
capacity of a consultant, advisor or director. The granting of Awards is solely
at the discretion of the Committee, except that Incentive Stock Options may
only be granted to Employees. References herein to "employed," "employment" or
similar terms (except "Employee") shall include the providing of services in
any capacity or as a director or director emeritus. Neither the transfer of
employment of a Participant between any of the Company or its Affiliates, nor a
leave of absence granted to such Participant and approved by the Committee,
shall be deemed a termination of employment for purposes of the Plan.

         6.       GENERAL TERMS OF AWARDS.

                  6.1      AMOUNT OF AWARD. Each Agreement shall set forth the
         number of Shares of Restricted Stock, Stock subject to the Agreement,
         or the number of Shares to which the Option subject to the Agreement
         applies or with respect to which payment upon the exercise of the
         Stock Appreciation Right subject to the Agreement is to be determined,
         as the case may be, together with such other terms and conditions
         applicable to the Award as determined by the Committee acting in its
         sole discretion.

                  6.2      TERM. Each Agreement, other than those relating
         solely to Awards of Shares without restrictions, shall set forth the
         Term of the Option, Stock Appreciation Right, Restricted Stock or
         other Award. Acceleration of the expiration of the applicable Term is
         permitted, upon such terms and conditions as shall be set forth in the
         Agreement, which may, but need not, include, without limitation,
         acceleration in the event of the Participant's death or retirement.

                  6.3      TRANSFERABILITY. Except as provided in this Section,
         during the lifetime of a Participant to whom an Award is granted, only
         that Participant (or that Participant's legal representative) may
         exercise an Option or Stock Appreciation Right, or receive payment with
         respect to any other Award. No Award of Restricted Stock (before the
         expiration of the restrictions), Options, Stock Appreciation Rights or
         other Award may be sold, assigned, transferred, exchanged or otherwise
         encumbered other than to a Successor in the event of a Participant's
         death or pursuant to a qualified domestic relations order as defined in
         the Code or Title 1 of the Employee Retirement Income Security Act of
         1974, as amended ("ERISA"), or the rules thereunder; any attempted
         transfer in violation of this Section 6.3 shall be of no effect.
         Notwithstanding the immediately preceding sentence, the Committee, in
         an Agreement or otherwise at its discretion, may provide that the Award
         (other than Incentive Stock Options) may be transferable to a
         Transferee if the Participant does not receive any consideration for
         the transfer. Any Award held by a Transferee shall continue to be
         subject to the same terms and conditions that were applicable to that
         Award immediately before the transfer thereof to the Transferee. For
         purposes of any provision of the Plan relating to notice to a
         Participant or to acceleration or termination of an Award upon the
         death, disability or termination of employment of a Participant, the
         references to "Participant" shall mean the original grantee of an Award
         and not any Transferee.


                  6.4      TERMINATION OF EMPLOYMENT. Except as otherwise
         determined by the Committee or provided by the Committee in an
         Agreement, in case of a Participant's termination of employment, the
         following provisions shall apply:

                           (a)      OPTIONS AND STOCK APPRECIATION RIGHTS.


                           (i)      If a Participant's employment or other
                                    relationship with the Company and its
                                    Affiliates terminates because of the
                                    Participant's death, then any Option or
                                    Stock Appreciation Right that has not
                                    expired or been terminated shall become
                                    exercisable in full if the Participant's
                                    employment or other relationship with the
                                    Company and its Affiliates has been
                                    continuous between the date the Option or
                                    Stock Appreciation Right was granted and a
                                    date not more than three months prior


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<PAGE>


                                    to such death, and may be exercised by the
                                    Participant's Successor at any time, or from
                                    time to time, within one year after the date
                                    of the Participant's death.

                           (ii)     If a Participant's employment or other
                                    relationship with the Company and its
                                    Affiliates terminates because the
                                    Participant is disabled (within the meaning
                                    of Section 22(e)(3) of the Code), then any
                                    Option or Stock Appreciation Right that has
                                    not expired or been terminated shall become
                                    exercisable in full if the Participant's
                                    employment or other relationship with the
                                    Company and its Affiliates has been
                                    continuous between the date the Option or
                                    Stock Appreciation Right was granted and the
                                    date of such disability, and the Participant
                                    or the Participant's Successor may exercise
                                    such Option or Stock Appreciation Right at
                                    any time, or from time to time, within one
                                    year after the date of the Participant's
                                    disability.

                           (iii)    If a Participant's employment terminates for
                                    any reason other than death or disability,
                                    then any Option or Stock Appreciation Right
                                    that has not expired or been terminated
                                    shall remain exercisable for three months
                                    after termination of the Participant's
                                    employment or Participant's cessation of
                                    service as an Outside Director or director
                                    emeritus, whichever occurs later, but,
                                    unless otherwise provided in the Agreement,
                                    only to the extent that such Option or Stock
                                    Appreciation Right was exercisable
                                    immediately prior to such Participant's
                                    termination of employment or ceasing to be
                                    an Outside Director or director emeritus

                           (iv)     Notwithstanding Sections 6.4(a)(i), (ii) and
                                    (iii), in no event shall an Option or a
                                    Stock Appreciation Right be exercisable
                                    after the expiration of the Term of such
                                    Award. Any Option or Stock Appreciation
                                    Right that is not exercised within the
                                    periods set forth in Sections 6.4(i), (ii)
                                    and (iii), except as otherwise provided by
                                    the Committee in the Agreement, shall
                                    terminate as of the end of the periods
                                    described in such Sections.


                            (b)     RESTRICTED STOCK AWARDS. Unless otherwise
                  provided in the Agreement, in case of a Participant's death or
                  disability, the Participant shall be entitled to receive a
                  number of Shares of Restricted Stock under outstanding Awards
                  that has been prorated for the portion of the Term of the
                  Awards during which the Participant was employed by the
                  Company and its Affiliates, and, with respect to such Shares,
                  all restrictions shall lapse. Any Shares of Restricted Stock
                  as to which restrictions do not lapse under the preceding
                  sentence shall terminate at the date of the Participant's
                  termination of employment and such Shares of Restricted Stock
                  shall be forfeited to the Company.

                  6.5       RIGHTS AS STOCKHOLDER. Each Agreement shall provide
         that a Participant shall have no rights as a stockholder with respect
         to any securities covered by an Award unless and until the date the
         Participant becomes the holder of record of the Stock, if any, to
         which the Award relates.

         7. RESTRICTED STOCK AWARDS.

                           (a)      An Award of Restricted Stock under the Plan
                  shall consist of Shares subject to restrictions on transfer
                  and conditions of forfeiture, which restrictions and
                  conditions shall be included in the applicable Agreement. The
                  Committee may provide for the lapse or waiver of any such
                  restriction or condition based on such factors or criteria as
                  the Committee, in its sole discretion, may determine.

                           (b)      Except as otherwise provided in the
                  applicable Agreement, each Stock certificate issued with
                  respect to an Award of Restricted Stock shall either be
                  deposited with the Company or its designee, together with an
                  assignment separate from the certificate, in blank,


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<PAGE>


                  signed by the Participant, or bear such legends with respect
                  to the restricted nature of the Restricted Stock evidenced
                  thereby as shall be provided for in the applicable Agreement.

                           (c)      The Agreement shall describe the terms and
                  conditions by which the restrictions and conditions of
                  forfeiture upon awarded Restricted Stock shall lapse. Upon the
                  lapse of the restrictions and conditions, Shares free of
                  restrictive legends, if any, relating to such restrictions
                  shall be issued to the Participant or a Successor or
                  Transferee.

                           (d)      A Participant or a Transferee with a
                  Restricted Stock Award shall have all the other rights of a
                  stockholder including, but not limited to, the right to
                  receive dividends and the right to vote the Shares of
                  Restricted Stock.

                           (e)      No more than 100,000 of the total number of
                  Shares available for Awards under the Plan shall be issued
                  during the term of the Plan as Restricted Stock. This
                  limitation shall be calculated pursuant to the applicable
                  provisions of Sections 4 and 15 of the Plan.

         8.       OTHER AWARDS. The Committee may from time to time grant Stock
and other Awards under the Plan including, without limitation, those Awards
pursuant to which Shares are or may in the future be acquired, Awards
denominated in Stock units, securities convertible into Stock and phantom
securities. The Committee, in its sole discretion, shall determine the terms
and conditions of such Awards provided that such Awards shall not be
inconsistent with the terms and purposes of the Plan. The Committee may, at its
sole discretion, direct the Company to issue Shares subject to restrictive
legends and/or stop transfer instructions that are consistent with the terms
and conditions of the Award to which the Shares relate. No more than 50,000 of
the total number of Shares available for Awards under the Plan shall be issued
during the term of the Plan in the form of Stock without restrictions.

         9.       STOCK OPTIONS.

                  9.1      TERMS OF ALL OPTIONS.

                           (a)      An Option shall be granted pursuant to an
                  Agreement as either an Incentive Stock Option or a
                  Non-Statutory Stock Option. The purchase price of each Share
                  subject to an Option shall be determined by the Committee and
                  set forth in the Agreement, but shall not be less than 50% of
                  the Fair Market Value of a Share as of the date the Option is
                  granted (except as provided in Sections 9.2 and 18 of the
                  Plan).

                           (b)      The purchase price of the Shares with
                  respect to which an Option is exercised shall be payable in
                  full at the time of exercise, provided that to the extent
                  permitted by law, the Agreement may permit some or all
                  Participants to simultaneously exercise Options and sell the
                  Shares thereby acquired pursuant to a brokerage or similar
                  relationship and use the proceeds from the sale as payment of
                  the purchase price of the Shares. The purchase price may be
                  payable in cash, by delivery or tender of Shares having a
                  Fair Market Value as of the date the Option is exercised
                  equal to the purchase price of the Shares being purchased
                  pursuant to the Option, or a combination thereof, as
                  determined by the Committee, but no fractional Shares will be
                  issued or accepted. Provided, however, that a Participant
                  exercising a stock option shall not be permitted to pay any
                  portion of the purchase price with Shares if, in the opinion
                  of the Committee, payment in such manner could have adverse
                  financial accounting consequences for the Company.

                           (c)      The Committee may provide, in an Agreement
                  or otherwise, that a Participant who exercises an Option and
                  pays the Option price in whole or in part with Shares then
                  owned by the Participant will be entitled to receive another
                  Option covering the same number of shares tendered and with a
                  price of no less than Fair Market Value on the date of grant
                  of such additional Option ("Reload Option"). Unless otherwise
                  provided in the Agreement, a Participant, in order to


                                       8
<PAGE>


                  be entitled to a Reload Option, must pay with Shares that
                  have been owned by the Participant for at least the preceding
                  180 days.

                           (d)      Each Option shall be exercisable in whole or
                  in part on the terms provided in the Agreement. In no event
                  shall any Option be exercisable at any time after the
                  expiration of its Term. When an Option is no longer
                  exercisable, it shall be deemed to have lapsed or terminated.

                  9.2      INCENTIVE STOCK OPTIONS. In addition to the other
         terms and conditions applicable to all Options:

                           (i)      the purchase price of each Share subject to
                  an Incentive Stock Option shall not be less than 100% of the
                  Fair Market Value of a Share as of the date the Incentive
                  Stock Option is granted if this limitation is necessary to
                  qualify the Option as an Incentive Stock Option (except as
                  provided in Section 18 of the Plan);

                           (ii)     the aggregate Fair Market Value (determined
                  as of the date the Option is granted) of the Shares with
                  respect to which Incentive Stock Options held by an
                  individual first become exercisable in any calendar year
                  (under the Plan and all other incentive stock option plans of
                  the Company and its Affiliates) shall not exceed $100,000 (or
                  such other limit as may be required by the Code) if this
                  limitation is necessary to qualify the Option as an Incentive
                  Stock Option and to the extent any Option granted to a
                  Participant exceeds this limit the Option shall be treated as
                  a Non-Statutory Stock Option;

                           (iii)    an Incentive Stock Option shall not be
                  exercisable more than 10 years after the date of grant (or
                  such other limit as may be required by the Code) if this
                  limitation is necessary to qualify the Option as an Incentive
                  Stock Option;

                           (iv)     the Agreement covering an Incentive Stock
                  Option shall contain such other terms and provisions that the
                  Committee determines necessary to qualify this Option as an
                  Incentive Stock Option; and

                           (v)      notwithstanding any other provision of the
                  Plan to the contrary, no Participant may receive an Incentive
                  Stock Option under the Plan if, at the time the Award is
                  granted, the Participant owns (after application of the rules
                  contained in Code Section 424(d), or its successor
                  provision), Shares possessing more than 10% of the total
                  combined voting power of all classes of stock of the Company
                  or its Subsidiaries, unless (i) the option price for that
                  Incentive Stock Option is at least 110% of the Fair Market
                  Value of the Shares subject to that Incentive Stock Option on
                  the date of grant and (ii) that Option is not exercisable
                  after the date five years from the date that Incentive Stock
                  Option is granted.

         10.      STOCK APPRECIATION RIGHTS. An Award of a Stock Appreciation
Right shall entitle the Participant (or a Successor or Transferee), subject to
terms and conditions determined by the Committee, to receive upon exercise of
the Stock Appreciation Right all or a portion of the excess of (i) the Fair
Market Value of a specified number of Shares as of the date of exercise of the
Stock Appreciation Right over (ii) a specified price that shall not be less
than 100% of the Fair Market Value of such Shares as of the date of grant of
the Stock Appreciation Right. A Stock Appreciation Right may be granted in
connection with part or all of, in addition to, or completely independent of an
Option or any other Award under the Plan. If issued in connection with a
previously or contemporaneously granted Option, the Committee may impose a
condition that exercise of a Stock Appreciation Right cancels a pro rata
portion of the Option with which it is connected and vice versa. Each Stock
Appreciation Right may be exercisable in whole or in part on the terms provided
in the Agreement. No Stock Appreciation Right shall be exercisable at any time
after the expiration of its Term. When a Stock Appreciation Right is no longer
exercisable, it shall be deemed to have lapsed or terminated.


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<PAGE>


Upon exercise of a Stock Appreciation Right, payment to the Participant or a
Successor or Transferee shall be made at such time or times as shall be
provided in the Agreement in the form of cash, Shares or a combination of
cash and Shares as determined by the Committee. The Agreement may provide for
a limitation upon the amount or percentage of the total appreciation on which
payment (whether in cash and/or Shares) may be made in the event of the
exercise of a Stock Appreciation Right.

         11.      EFFECTIVE DATE AND DURATION OF THE PLAN.

                  11.1 EFFECTIVE DATE. The Plan shall become effective as of
         March 23, 2001, provided that the Plan is approved by the requisite
         vote of stockholders at the April 2001 Annual Meeting of Stockholders
         or any adjournment thereof.

                  11.2 DURATION OF THE PLAN. The Plan shall remain in effect
         until all Stock subject to it shall be distributed, all Awards have
         expired or lapsed, the Plan is terminated pursuant to Section 14 of the
         Plan, or March 23, 2011 (the "Termination Date"); provided, however,
         that Awards made before the Termination Date may be exercised, vested
         or otherwise effectuated beyond the Termination Date unless limited in
         the Agreement or otherwise. No Award of an Incentive Stock Option shall
         be made more than 10 years after the Effective Date (or such other
         limit as may be required by the Code) if this limitation is necessary
         to qualify the Option as an Incentive Stock Option. The date and time
         of approval by the Committee of the granting of an Award shall be
         considered the date and time at which the Award is made or granted.

         12.      PLAN DOES NOT AFFECT EMPLOYMENT STATUS.

                           (a) Status as an eligible Employee shall not be
                  construed as a commitment that any Award will be made under
                  the Plan to that eligible Employee or to eligible Employees
                  generally.

                           (b) Nothing in the Plan or in any Agreement or
                  related documents shall confer upon any Employee or
                  Participant any right to continue in the employment of the
                  Company or any Affiliate or constitute any contract of
                  employment or affect any right that the Company or any
                  Affiliate may have to change such person's compensation, other
                  benefits, job responsibilities, or title, or to terminate the
                  employment of such person with or without cause.

         13. TAX WITHHOLDING. The Company shall have the right to withhold from
any cash payment under the Plan to a Participant or other person (including a
Successor or a Transferee) an amount sufficient to cover any required
withholding taxes. The Company shall have the right to require a Participant or
other person receiving Shares under the Plan to pay the Company a cash amount
sufficient to cover any required withholding taxes before actual receipt of
those Shares. In lieu of all or any part of a cash payment from a person
receiving Shares under the Plan, the Committee may permit the individual to
cover all or any part of the required withholdings through a reduction of the
number of Shares delivered or delivery or tender return to the Company of Shares
held by the Participant or other person, in each case valued in the same manner
as used in computing the withholding taxes under the applicable laws.

         14. AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN.

                  (a) The Board may at any time and from time to time terminate,
         suspend or modify the Plan. Except as limited in (b) below, the
         Committee may at any time alter or amend any or all Agreements under
         the Plan to the extent permitted by law.

                  (b) No termination, suspension, or modification of the Plan
         will materially and adversely affect any right acquired by any
         Participant or Successor or Transferee under an Award granted before
         the date of termination, suspension, or modification, unless otherwise
         agreed to by the Participant in the Agreement or otherwise, or required
         as a matter of law; but it will be conclusively presumed that any

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         adjustment for changes in capitalization provided for in Section 15 of
         the Plan does not adversely affect these rights.

         15. ADJUSTMENT FOR CHANGES IN CAPITALIZATION. Subject to any required
action by the Company's stockholders, appropriate adjustments, so as to prevent
enlargement of rights or inappropriate dilution -- (i) in the aggregate number
and type of Shares available for Awards under the Plan, (ii) in the limitations
on the number of Shares that may be issued to an individual Participant as an
Option or a Stock Appreciation Right in any calendar year or that may be issued
in the form of Restricted Stock or Shares without restrictions, (iii) in the
number and type of Shares and amount of cash subject to Awards then outstanding,
and (iv) in the Option price as to any outstanding Options may be made by the
Committee in its sole discretion to give effect to adjustments made in the
number or type of Shares through a Fundamental Change (subject to Section 16 of
the Plan), recapitalization, reclassification, stock dividend, stock split,
stock combination or other relevant change, provided that fractional Shares
shall be rounded to the nearest whole Share.

         16. FUNDAMENTAL CHANGE. In the event of a proposed Fundamental Change,
the Committee may, but shall not be obligated to:

                  (a) if the Fundamental Change is a merger or consolidation or
         statutory share exchange, make appropriate provision for the protection
         of the outstanding Options and Stock Appreciation Rights by the
         substitution of options, stock appreciation rights and appropriate
         voting common stock of the corporation surviving any merger or
         consolidation or, if appropriate, the parent corporation of the Company
         or such surviving corporation; or

                  (b) at least ten days before the occurrence of the Fundamental
         Change, declare, and provide written notice to each holder of an Option
         or Stock Appreciation Right of the declaration, that each outstanding
         Option and Stock Appreciation Right, whether or not then exercisable,
         shall be canceled at the time of, or immediately before the occurrence
         of the Fundamental Change in exchange for payment to each holder of an
         Option or Stock Appreciation Right, within ten days after the
         Fundamental Change, of cash equal to (i) for each Share covered by the
         canceled Option, the amount, if any, by which the Fair Market Value (as
         defined in this Section) per Share exceeds the exercise price per Share
         covered by such Option or (ii) for each Stock Appreciation Right, the
         price determined pursuant to Section 10, except that Fair Market Value
         of the Shares as of the date of exercise of the Stock Appreciation
         Right, as used in clause (i) of Section 10 of the Plan, shall be deemed
         to mean Fair Market Value for each Share with respect to which the
         Stock Appreciation Right is calculated determined in the manner
         hereinafter referred to in this Section. At the time of the declaration
         provided for in the immediately preceding sentence, each Stock
         Appreciation Right and each Option shall immediately become exercisable
         in full and each person holding an Option or a Stock Appreciation Right
         shall have the right, during the period preceding the time of
         cancellation of the Option or Stock Appreciation Right, to exercise the
         Option as to all or any part of the Shares covered thereby or the Stock
         Appreciation Right in whole or in part, as the case may be. In the
         event of a declaration pursuant to this Section 16(b), each outstanding
         Option and Stock Appreciation Right granted pursuant to the Plan that
         shall not have been exercised before the Fundamental Change shall be
         canceled at the time of, or immediately before, the Fundamental Change,
         as provided in the declaration. Notwithstanding the foregoing, no
         person holding an Option or a Stock Appreciation Right shall be
         entitled to the payment provided for in this Section 16(b) if such
         Option or Stock Appreciation Right shall have terminated, expired or
         been cancelled. For purposes of this Section only, "Fair Market Value"
         per Share means the cash plus the fair market value, as determined in
         good faith by the Committee, of the non-cash consideration to be
         received per Share by the stockholders of the Company upon the
         occurrence of the Fundamental Change.

         17. FORFEITURES. An Agreement may provide that if a Participant has
received or been entitled to payment of cash, delivery of Shares, or a
combination thereof pursuant to an Award within six months before the
Participant's termination of employment with the Company and its Affiliates, the
Committee, in its sole discretion, may require the

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<PAGE>

Participant to return or forfeit the cash and/or Shares received with respect
to the Award (or its economic value as of (i) the date of the exercise of
Options or Stock Appreciation Rights or (ii) the date of, and immediately
following, the lapse of restrictions on Restricted Stock or the receipt of
Shares without restrictions, as the case may be) in the event of certain
occurrences specified in the Agreement. The Committee's right to require
forfeiture must be exercised within 90 days after discovery of such an
occurrence but in no event later than 15 months after the Participant's
termination of employment with the Company and its Affiliates. The
occurrences may, but need not, include competition with the Company or any
Affiliate, unauthorized disclosure of material proprietary information of the
Company or any Affiliate, a violation of applicable business ethics policies
of the Company or Affiliate or any other occurrence specified in the
Agreement within the period or periods of time specified in the Agreement.

         18. CORPORATE MERGERS, ACQUISITIONS, ETC. The Committee may also grant
Options, Stock Appreciation Rights, Restricted Stock or other Awards under the
Plan in substitution for, or in connection with the assumption of, existing
options, stock appreciation rights, restricted stock or other award granted,
awarded or issued by another corporation and assumed or otherwise agreed to be
provided for by the Company pursuant to or by reason of a transaction involving
a corporate merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation to which the Company or a Subsidiary is a party.
The terms and conditions of the substitute Awards may vary from the terms and
conditions set forth in the Plan to the extent as the Board at the time of the
grant may deem appropriate to conform, in whole or in part, to the provisions of
the awards in substitution for which they are granted.

         19. UNFUNDED PLAN. The Plan shall be unfunded and the Company shall not
be required to segregate any assets that may at any time be represented by
Awards under the Plan. Neither the Company, its Affiliates, the Committee, nor
the Board of Directors shall be deemed to be a trustee of any amounts to be paid
under the Plan nor shall anything contained in the Plan or any action taken
pursuant to its provisions create or be construed to create a fiduciary
relationship between the Company and/or its Affiliates, and a Participant or
Successor or Transferee. To the extent any person acquires a right to receive an
Award under the Plan, this right shall be no greater than the right of an
unsecured general creditor of the Company.

         20. LIMITS OF LIABILITY.

                  (a) Any liability of the Company to any Participant with
         respect to an Award shall be based solely upon contractual obligations
         created by the Plan and the Award Agreement.

                  (b) Except as may be required by law, neither the Company nor
         any member of the Board of Directors or of the Committee, nor any other
         person participating in any determination of any question under the
         Plan, or in the interpretation, administration or application of the
         Plan, shall have any liability to any party for any action taken, or
         not taken, in good faith under the Plan.

         21. COMPLIANCE WITH APPLICABLE LEGAL REQUIREMENTS. No certificate for
Shares distributable pursuant to the Plan shall be issued and delivered unless
the issuance of the certificate complies with all applicable legal requirements
including, without limitation, compliance with the provisions of applicable
state securities laws, the Securities Act of 1933, as amended and in effect from
time to time or any successor statute, the Exchange Act and the requirements of
the exchanges on which the Company's Shares may, at the time, be listed.

         22. DEFERRALS AND SETTLEMENTS. The Committee may require or permit
Participants to elect to defer the issuance of Shares or the settlement of
Awards in cash under such rules and procedures as it may establish under the
Plan. It may also provide that deferred settlements include the payment or
crediting of interest on the deferral amounts.

         23. OTHER BENEFIT AND COMPENSATION PROGRAMS. Payments and other
benefits received by a Participant under an Award made pursuant to the Plan
shall not be deemed a part of a Participant's regular, recurring compensation
for purposes of the termination, indemnity or severance pay laws of any country
and shall not be included in, nor have any effect on, the determination of
benefits under any other employee benefit plan, contract or similar arrangement
provided by the Company or an Affiliate unless expressly so provided by such
other plan, contract or arrangement, or

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<PAGE>

unless the Committee expressly determines that an Award or portion of an
Award should be included to accurately reflect competitive compensation
practices or to recognize that an Award has been made in lieu of a portion of
competitive cash compensation.

         24. BENEFICIARY UPON PARTICIPANT'S DEATH. To the extent that the
transfer of a Participant's Award at his or her death is permitted under an
Agreement, a Participant's Award shall be transferable at death to the estate or
to the person who acquires the right to succeed to the Award by bequest or
inheritance.

         25. REQUIREMENTS OF LAW.

                  (a) To the extent that federal laws do not otherwise control,
         the Plan and all determinations made and actions taken pursuant to the
         Plan shall be governed by the laws of the State of Minnesota without
         regard to its conflicts-of-law principles and shall be construed
         accordingly.

                  (b) If any provision of the Plan shall be held illegal or
         invalid for any reason, the illegality or invalidity shall not effect
         the remaining parts of the Plan, and the Plan shall be construed and
         enforced as if the illegal or invalid provision had not been included.
















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