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                              NET RADIO CORPORATION
            AMENDED AND RESTATED 1998 STOCK OPTION AND INCENTIVE PLAN


                                    ARTICLE 1

                            ESTABLISHMENT AND PURPOSE

         Net Radio Corporation (the "Company") hereby establishes the Net Radio
Corporation 1998 Stock Option and Incentive Plan (the "Plan"). The purpose of
the Plan is to enable the Company and its Affiliates to retain and attract
employees, directors and consultants who contribute to the Company's success by
their ability, ingenuity and industry, and to enable such individuals to
participate in the long-term success and growth of the Company by giving them a
proprietary interest in the Company.

                                    ARTICLE 2

                                   DEFINITIONS

         For the purposes of the Plan, the following terms shall be defined as
set forth below:

         2.1      "Affiliate" means any Parent or Subsidiary.

         2.2      "Award" means an Option, Deferred Stock award, Restricted
Stock award, or Stock Appreciation Right granted pursuant to the terms of the
Plan.

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

         2.4      "Broker Exercise Notice" means the written notice described in
Section 6.6 of the Plan.

         2.5      "Cause" means a felony conviction of a Participant or the
failure of a Participant to contest prosecution for a felony, or a particular
Participant's willful misconduct or dishonesty, any of which is directly and
materially harmful to the business or reputation of the Company.

         2.6      "Change in Control" means an event described in Section 12.1
of the Plan.

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

         2.8      "Committee" means a committee of the Board as may be
designated by the Board, from time to time, for the purpose of administering
this Plan as contemplated by Section 3.1 hereof. If at any time no Committee
shall be in office, then the functions of the Committee specified in the Plan
shall be exercised by the Board.



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         2.9      "Common Stock" means the common stock of the Company, no 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.

         2.10     "Deferred Stock" means an award made pursuant to Article 9
below of the right to receive Stock at the end of a specified period.

         2.11     "Disability" means the disability of the Participant as
defined in the long-term disability plan of the Company then covering the
Participant or, if no such plan exists, the permanent and total disability of
the Participant within the meaning of Section 22(e)(3) of the Code.

         2.12     "Eligible Recipient" means all employees (including, without
limitation, officers and directors who are also employees), nonemployee
directors, consultants and independent contractors of the Company and any
Affiliate.

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

         2.14     "Fair Market Value" means, with respect to the Common Stock,
the following:

                  (a) If the Common Stock is traded publicly, the Fair Market
         Value of a share of Common Stock on any date shall be the average of
         the representative closing bid and asked prices, as quoted by the
         National Association of Securities Dealers, Inc. ("NASD") through
         Nasdaq (its automated system for reporting quotes), for the date in
         question or, if the Common Stock is quoted on The Nasdaq National
         Market or is listed on a national stock exchange, the officially quoted
         closing price on The Nasdaq National Market or such exchange, as the
         case may be, on the date in question.

                  (b) If the Common Stock is not traded publicly, the Fair
         Market Value of a share of Common Stock on any date shall be
         determined, in good faith, by the Board or the Committee after such
         consultation with outside legal, accounting and other experts as the
         Board or the Committee may deem advisable, and the Board or the
         Committee shall maintain a written record of its method of determining
         such value.

         2.15     "Incentive Stock Option" means a right to purchase Common
Stock granted to an Eligible Recipient pursuant to Article 6 of the Plan that is
intended to be, designated as, and qualifies as an "incentive stock option"
within the meaning of Section 422 of the Code.

         2.16     "Non-Employee Director" means a "Non-Employee Director" within
the meaning of Rule 16b-3(b)(3) under the Exchange Act or any successor rule.

         2.17     "Non-Qualified Stock Option" means a right to purchase Common
Stock granted to an Eligible Recipient pursuant to Article 6 of the Plan that
does not qualify as an Incentive Stock Option.




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         2.18     "Option" means an Incentive Stock Option or a Non-Qualified
Stock Option.

         2.19     "Outside Director" means a director who (a) is not a current
employee of the Company or any member of an affiliated group which includes the
Company; (b) is not a former employee of the Company who receives compensation
for prior service (other than benefits under a tax-qualified retirement plan)
during the taxable year; (c) has not been an officer of the Company; and (d)
does not receive remuneration from the Company, either directly or indirectly,
in any capacity other than as a director, except as otherwise permitted under
Code Section 162(m) and regulations thereunder. For this purpose, remuneration
includes any payment in exchange for goods or services. This definition shall be
further governed by the provisions of Code Section 162(m) and regulations
promulgated thereunder.

         2.20     "Parent" means any parent corporation of the Company within
the meaning of Section 424(e) of the Code.

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

         2.22     "Person" means any individual, corporation, partnership,
group, association or other "person" (as such term is used in Section 14(d) of
the Exchange Act), other than the Company, a wholly owned subsidiary of the
Company or any employee benefit plan sponsored by the Company or a wholly owned
subsidiary of the Company.

         2.23     "Previously Acquired Shares" means shares of Common Stock that
are already owned by the Participant and shares of Common Stock that are to be
acquired by the Participant pursuant to the exercise of an Option, the
termination of restrictions of a Restricted Stock Award, or the termination of a
period of deferral of a Deferred Stock award.

         2.24     "Restricted Stock" means an award of shares of Common Stock
that are subject to restrictions under Article 8 below.

         2.25     "Retirement" means the retirement of a Participant pursuant to
and in accordance with the regular or, if approved by the Board for purposes of
the Plan, early retirement/pension plan or practice of the Company or Affiliate
then covering the Participant.

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

         2.27     "Stock Appreciation Right" means the right pursuant to an
award granted under Article 7 below to surrender to the Company all or a portion
of an Option in exchange for an amount equal to the difference between (i) the
Fair Market Value, as of the date such Option or such portion thereof is
surrendered, of the shares of Common Stock covered by such Option or such
portion thereof, and (ii) the aggregate exercise price of such Option or such
portion thereof.

         2.28     "Subsidiary" means any subsidiary corporation of the Company
within the meaning of Section 424(f) of the Code.


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         2.29     "Tax Date" means the date any withholding tax obligation
arises under the Code for a Participant with respect to an Award.

                                    ARTICLE 3

                               PLAN ADMINISTRATION

         3.1      THE COMMITTEE. The Plan shall be administered by the Board or
a Committee of at least two directors, all of whom shall be Outside Directors
and Non-Employee Directors. The Committee may be a subcommittee of the
Compensation Committee of the Board. Members of such a Committee, if
established, shall be appointed from time to time by the Board, shall serve at
the pleasure of the Board and may resign at any time upon written notice to the
Board. A majority of the members of such a Committee shall constitute a quorum.
Such a Committee shall act by majority approval of the members, shall keep
minutes of its meetings and shall provide copies of such minutes to the Board.
Action of such a Committee may be taken without a meeting if unanimous written
consent is given. Copies of minutes of such a Committee's meetings and of its
actions by written consent shall be provided to the Board and kept with the
corporate records of the Company. As used in this Plan, the term "Committee"
will refer to the Board or to such a Committee, if established.

         3.2      AUTHORITY OF THE COMMITTEE.

                  (a) The Committee shall have the power and authority to grant
         to Eligible Recipients, pursuant to the terms of the Plan: (i) Options,
         (ii) Stock Appreciation Rights, (iii) Restricted Stock awards, or (iv)
         Deferred Stock awards. In particular, the Committee shall have the
         authority:

                           (i)   to select the Eligible Recipients to whom
                  Options, Stock Appreciation Rights, Restricted Stock awards
                  and/or Deferred Stock awards may from time to time be granted
                  hereunder;

                           (ii)  to determine whether and to what extent
                  Incentive Stock Options, Non-Qualified Stock Options, Stock
                  Appreciation Rights, Restricted Stock awards or Deferred Stock
                  awards, or a combination of the foregoing, are to be granted
                  hereunder;

                           (iii) to determine the number of shares to be covered
                  by each Award granted hereunder;

                           (iv)  to determine the terms and conditions, not
                  inconsistent with the terms of the Plan, of any Award
                  (including, but not limited to, any restriction on any Option
                  or other Award and/or the shares of Common Stock relating
                  thereto) and, with the consent of the Participant affected
                  thereby, to amend such terms and conditions (including, but
                  not limited to, any amendment which accelerates the vesting of
                  any award); and




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                           (v) to determine whether, to what extent and under
                  what circumstances Common Stock and other amounts payable with
                  respect to an Award shall be deferred either automatically or
                  at the election of the Participant.

                  (b) The Committee shall have the authority, subject to the
         provisions of the Plan, to establish, adopt and revise such rules and
         regulations relating to the Plan as it may deem necessary or advisable
         for the administration of the Plan. The Committee's decisions and
         determinations under the Plan need not be uniform and may be made
         selectively among Participants, whether or not such Participants are
         similarly situated. Each determination, interpretation or other action
         made or taken by the Committee pursuant to the provisions of the Plan
         shall be conclusive and binding for all purposes and on all persons,
         including, without limitation, the Company and its Affiliates, the
         shareholders of the Company, the Committee and each of its members, the
         directors, officers, employees of and consultants to the Company and
         its Affiliates, and the Participants and their respective successors in
         interest. No member of the Committee shall be liable for any action or
         determination made in good faith with respect to the Plan or any Award.

                                    ARTICLE 4

                            STOCK SUBJECT TO THE PLAN

         4.1      NUMBER OF SHARES. Subject to adjustment as provided in Section
4.3 below, the maximum number of shares of Common Stock that shall be authorized
and reserved for issuance under the Plan shall be 2,000,000 shares of Common
Stock. The maximum number of shares authorized may also be increased from time
to time by approval of the Board and, if required pursuant to Rule 16b-3 under
the Exchange Act, Section 422 of the Code, or the applicable rules of any
securities exchange or the NASD, the shareholders of the Company.

         4.2      SHARES AVAILABLE FOR USE. Shares of Common Stock that may be
issued upon exercise of Options, or as Deferred Stock awards or Restricted Stock
awards shall be applied to reduce the maximum number of shares of Common Stock
available for use under the Plan. Any shares of Common Stock that are subject to
an Option or a Deferred Stock award or Restricted Stock award (or any portion
thereof) that lapses, expires or for any reason is terminated unexercised shall
automatically again become available for use under the Plan.

         4.3      ADJUSTMENTS TO SHARES. In the event of 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 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) shall make appropriate adjustment (which
determination shall be conclusive) as to the number and kind of securities
subject to and reserved under the Plan and, in order to prevent dilution or
enlargement of the rights of Participants, the number, kind and



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exercise price of securities subject to outstanding Options, Deferred Stock
awards and Restricted Stock awards (subject to Section 8.3(e)). The adjusted
Option price shall also be used to determine the amount payable by the Company
upon the exercise of any Stock Appreciation Right associated with any Option,
without limiting the generality of the foregoing, in the event that any of such
transactions are effected in such a way that holders of Common Stock shall be
entitled to receive stock, securities or assets, including cash, with respect to
or in exchange for such Common Stock, all Participants holding outstanding
Options, Deferred Stock awards or Restricted Stock awards shall upon the
exercise of such Options, upon the termination of restrictions of such
Restricted Stock award, or upon the termination of the deferral period of such
Deferred Stock award shall receive, in lieu of any shares of Common Stock they
may be entitled to receive, such stock, securities or other assets, including
cash, as would have been issued to such Participants if their Options had been
exercised or the deferral period or restrictions of a Deferred Stock award or
Restricted Stock award had lapsed or terminated and such Participants had
received Common Stock prior to such transaction.

                                    ARTICLE 5

                                  PARTICIPATION

         5.1      PARTICIPANTS. Participants in the Plan shall be those Eligible
Participants who have performed, are performing, or will perform services in the
management, operation and development of the Company or any Affiliate, and
significantly contributed, are significantly contributing or are expected to
significantly contribute to the achievement of corporate objectives. Eligible
Recipients may be granted from time to time one or more Awards, as may be
determined by the Committee in its discretion. The number, type, terms and
conditions of Awards need not be uniform, consistent or in accordance with any
program, regardless of whether such Eligible Recipients are similarly situated.

         5.2      AGREEMENTS. Upon determination by the Committee that an
Incentive Stock Option is to be granted to an Eligible Recipient, written notice
shall be given to such person, specifying the terms, conditions, rights and
duties related thereto. Each Eligible Recipient to whom an Option, Deferred
Stock award, Restricted Stock award, or Stock Appreciation Right is to be
granted shall, if requested by the Committee, enter into an agreement with the
Company, in such form as the Committee shall determine and which is consistent
with the provisions of the Plan, specifying such terms, conditions, rights and
duties. Awards shall be deemed to be granted as of the date specified in the
grant resolution of the Committee, which date shall be the date of the related
agreement with the Participant.

                                    ARTICLE 6

                                  STOCK OPTIONS

         6.1      GRANT. An Eligible Recipient may be granted one or more
Options under the Plan, and such Options shall be subject to such terms and
conditions, consistent with the other provisions of the Plan, as shall be
determined by the Committee in its discretion. The Committee



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shall designate whether an Option is to be considered an Incentive Stock Option
or a Non-Qualified Stock Option; provided, however, that an Incentive Stock
Option shall be granted only to an Eligible Employee who is an employee of the
Company or an Affiliate. The terms of the agreement relating to a Qualified or
Non-Qualified Stock Option shall expressly provide that such Option shall be
treated as an Incentive Stock Option or Non-Qualified Stock Option, as the case
may be.

         6.2      EXERCISE. An Option shall become exercisable at such times and
in such installments (which may be cumulative) as shall be determined by the
Committee, in its discretion, at the time the Option is granted. Upon the
completion of its exercise period, an Option, to the extent not then exercised,
shall expire. Notwithstanding the foregoing and subject to the discretionary
acceleration rights of the Committee, an Option granted to a director, officer
or 10% shareholder of the Company shall not be exercisable for a period of six
(6) months unless the Option has been approved by the Board, the Committee or
the shareholders of the Company.

         6.3      EXERCISE PRICE.

                  (a) INCENTIVE STOCK OPTIONS. The per share price to be paid by
         the Participant at the time an Incentive Stock Option is exercised
         shall be determined by the Committee, in its discretion, at the time
         the Option is granted; provided, however, that such price shall not be
         less than (i) 100% of the Fair Market Value of one share of Common
         Stock on the date the Option is granted, or (ii) 110% of the Fair
         Market Value of one share of Common Stock on the date the Option is
         granted if, at the time the Option is granted, the Participant owns,
         directly or indirectly (as determined pursuant to Section 424(d) of the
         Code), more than 10% of the total combined voting power of all classes
         of stock of the Company or any Affiliate.

                  (b) NON-QUALIFIED STOCK OPTIONS. The per share price to be
         paid by the Participant at the time a Non-Qualified Stock Option is
         exercised shall be determined by the Committee, in its discretion, at
         the time the Option is granted.

         6.4      DURATION.

                  (a) INCENTIVE STOCK OPTIONS. The period during which an
         Incentive Stock Option may be exercised shall be fixed by the
         Committee, in its discretion, at the time the Option is granted;
         provided, however, that in no event shall such period exceed 10 years
         from its date of grant or, in the case of a Participant who owns,
         directly or indirectly, (as determined pursuant to Section 424(d) of
         the Code), more than 10% of the total combined voting power of all
         classes of stock of the Company or any Affiliate, five years from its
         date of grant.

                  (b) NON-QUALIFIED STOCK OPTIONS. The period during which a
         Non-Qualified Stock Option may be exercised shall be fixed by the
         Committee, in its discretion, at the time the Option is granted.











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                  (c) EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE.
         Notwithstanding this Section 6.4, except as provided in Articles 11 and
         12 of the Plan, all Options granted to a Participant shall terminate
         and may no longer be exercised if the Participant's employment or other
         service with the Company and all Affiliates ceases.

         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 therein and in the agreement evidencing such Option, by delivery, in
person or through certified or registered mail, of written notice of exercise to
the Company at its principal executive office in Minneapolis, Minnesota
(Attention: President), and by paying in full the total Option exercise price
for the shares of Common Stock purchased. Such notice shall be in a form
satisfactory to the Committee and shall specify the particular Option (or
portion thereof) that is being exercised and the number of shares with respect
to which the Option is being exercised. Subject to compliance with Section 15.1
of the Plan, the exercise of the Option shall be deemed effective upon receipt
of such notice and payment complying with the terms of the Plan and the
agreement evidencing such Option. As soon as practicable after the effective
exercise of the Option, the Participant shall be recorded on the stock transfer
books of the Company as the owner of the shares purchased, and the Company shall
deliver to the Participant one or more duly issued stock certificates evidencing
such ownership. If a Participant exercises any Option with respect to some, but
not all, of the shares of Common Stock subject to such Option, the right to
exercise such Option with respect to the remaining shares shall continue until
it expires or terminates in accordance with its terms. An Option shall only be
exercisable with respect to whole shares.






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         6.6      PAYMENT OF PURCHASE PRICE.

                  (a) The total purchase price of the shares to be purchased
         upon exercise of an Option shall be paid entirely either by certified
         check or bank check, or by any other form of legal consideration deemed
         sufficient by the Committee and consistent with the Plan's purpose and
         applicable law, including promissory notes, Previously Acquired Shares,
         or a Broker Exercise Notice, or any combination thereof. As determined
         by the Committee, in its sole discretion, in the case of a
         Non-Qualified Stock Option, payment in full or in part may also be made
         in the form of Restricted Stock or Deferred Stock subject to an award
         under the Plan (based in each case on the fair market value of the
         Common Stock on the date the Option is exercised, as determined by the
         Committee); provided that in the event payment is made in the form of
         shares of Restricted Stock or Deferred Stock, the Participant will
         receive a portion of the Option shares in the form of, and in an amount
         equal to, the Restricted Stock award or Deferred Stock award tendered
         as payment by the Participant. In the case of an Incentive Stock
         Option, the right to make a payment in the form of Previously Acquired
         Shares may be authorized only at the time the Option is granted. If the
         terms of an Option so permit, a Participant may elect to pay all or
         part of the option exercise price by having the Company withhold from
         the shares of Common Stock that would otherwise be issued upon exercise
         that number of shares of Common Stock having a Fair Market Value equal
         to the aggregate option exercise price for the shares with respect to
         which such election is made. In determining whether or upon what terms
         and conditions a Participant will be permitted to pay the purchase
         price of an Option in a form other than cash, the Company may consider
         all relevant facts and circumstances, including, without limitation,
         the tax and securities law consequences to the Participant and the
         Company and the financial accounting consequences to the Company. No
         shares of Common Stock shall be issued until full payment therefor has
         been made.

                  (b) For purposes of this Section 6.6, a "Broker Exercise
         Notice" shall mean a written notice from a Participant to the Company
         at its principal executive office in Minneapolis, Minnesota (Attention:
         President), made on a form and in such manner as the Committee may from
         time to time determine, pursuant to which the Participant irrevocably
         elects to exercise all or any portion of an Option and irrevocably
         directs the Company to deliver the stock certificates to be issued to
         such Participant under such Option exercise directly to a broker or
         dealer. A Broker Exercise Notice must be accompanied by or contain
         irrevocable instructions to the broker or dealer (i) to promptly sell a
         sufficient number of shares of such Common Stock or to loan the
         Participant a sufficient amount of money to pay the exercise price for
         the Options and, if not otherwise satisfied by the Participant, to fund
         any related employment and withholding tax obligations due upon such
         exercise, and (ii) to promptly remit such to the Company upon the
         broker's or dealer's receipt of the stock certificates.

         6.7      RIGHTS AS A SHAREHOLDER. The Participant shall have no rights
as a shareholder with respect to any shares of Common Stock covered by an Option
until the Participant shall have become the holder of record of such shares, and
no adjustments shall be

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made for dividends or other distributions or other rights 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 determined pursuant to Section 4.3 of
the Plan.

         6.8      DISPOSITION OF COMMON STOCK ACQUIRED PURSUANT TO THE EXERCISE
OF INCENTIVE STOCK OPTIONS. Prior to making a disposition (as defined in Section
424(c) of the Code) of any shares of Common Stock acquired pursuant to the
exercise of an Incentive Stock Option granted under the Plan before the
expiration of two years after its date of grant or before the expiration of one
year after its date of exercise and the date on which such shares of Common
Stock were transferred to the Participant pursuant to the exercise of the
Option, the Participant shall send written notice to the Company of the proposed
date of such disposition, the number of shares to be disposed of, the amount of
the proceeds to be received from such disposition and any other information
relating to such disposition that the Company may reasonably request. The right
of a Participant to make any such disposition shall be conditioned on the
receipt by the Company of all amounts necessary to satisfy any federal, state or
local withholding and employment-related tax requirements attributable to such
disposition. The Committee shall have the right, in its discretion, to endorse
the certificates representing such shares with a legend restricting transfer and
to cause a stop transfer order to be entered with the Company's transfer agent
until such time as the Company receives the amounts necessary to satisfy such
withholding and employment-related tax requirements or until the later of the
expiration of two years from its date of grant or one year from its date of
exercise and the date on which such shares were transferred to the Participant
pursuant to the exercise of the Option.

         6.9      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 Affiliate) exceeds $100,000 (or such other amounts as may be
prescribed by the Code from time to time), such excess Options shall be treated
as Non-Qualified Options. The determination shall 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, in
its discretion, shall designate which shares shall be treated as shares to be
acquired upon exercise of an Incentive Stock Option.




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                                    ARTICLE 7

                            STOCK APPRECIATION RIGHTS

         7.1      GRANT. Stock Appreciation Rights may be granted in conjunction
with all or part of any Option granted under the Plan. In the case of a
Non-Qualified Stock Option, such rights may be granted either at or after the
time of the grant of such Option. In the case of an Incentive Stock Option, such
rights may be granted only at the time of the grant of the Option. A Stock
Appreciation Right or applicable portion thereof granted with respect to a given
Option shall terminate and no longer be exercisable upon the termination or
exercise of the related Option, except that a Stock Appreciation Right granted
with respect to less than the full number of shares covered by a related Option
shall not be reduced until the exercise or termination of the related Option
exceeds the number of shares not covered by the Stock Appreciation Right.

         7.2      EXERCISE. A Stock Appreciation Right may be exercised by a
Participant, in accordance with Section 7.3 below by surrendering the applicable
portion of the related Option. Upon such exercise and surrender, the Participant
shall be entitled to receive an amount determined in the manner prescribed in
Section 7.3. Options which have been so surrendered, in whole or in part, shall
no longer be exercisable to the extent the related Stock Appreciation Rights
have been exercised.

         7.3      TERMS AND CONDITIONS. Stock Appreciation Rights shall be
subject to applicable regulations relating to the exercise of Stock Appreciation
Rights by Participants subject to reporting responsibilities under Section 16 of
the Exchange Act, and to such terms and conditions, not inconsistent with the
provisions of the Plan, as shall be determined from time to time by the
Committee, including the following:

                  (a) Stock Appreciation Rights shall be exercisable only at
         such time or times and to the extent that the Options to which they
         relate shall be exercisable in accordance with the provisions of
         Article 6 and this Article 7 of the Plan.

                  (b) Upon the exercise of a Stock Appreciation Right, a
         Participant shall be entitled to receive up to, but not more than, an
         amount in cash or shares of Common Stock equal in value to the excess
         of the Fair Market Value of one share of Common Stock over the option
         exercise price per share specified in the related Option multiplied by
         the number of shares in respect of which the Stock Appreciation Right
         shall have been exercised, with the Committee having the right to
         determine the form of payment.

                  (c) Stock Appreciation Rights shall be transferable only when
         and to the extent that the underlying Option would be transferable
         under Section 14.2 of the Plan.

                  (d) Upon the exercise of a Stock Appreciation Right, the
         Option or part thereof to which such Stock Appreciation Right is
         related shall be deemed to have been exercised for the purpose of the
         limitation set forth in Section 4.1 of the Plan on the number of shares
         of Common Stock to be issued under the Plan, but only to the extent of



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         the number of shares issued or issuable under the Option at the time of
         exercise based on the value of the Stock Appreciation Right at such
         time.

                  (e) A Stock Appreciation Right granted in connection with an
         Incentive Stock Option may be exercised only if and when the market
         price of the Common Stock subject to the Incentive Stock Option exceeds
         the exercise price of such Option.

                                    ARTICLE 8

                             RESTRICTED STOCK AWARDS

         8.1      ADMINISTRATION. Shares of Restricted Stock may be issued
either alone or in addition to other Awards. The Committee shall determine the
Eligible Participants to whom, and the time or times at which, grants of
Restricted Stock will be made, the number of shares to be awarded, the time or
times within which such awards may be subject to forfeiture, and all other
conditions of the awards. The Committee may also condition the grant of
Restricted Stock upon the attainment of specified performance goals. The
provisions of Restricted Stock Awards need not be the same with respect to each
recipient.

          8.2     AWARDS AND CERTIFICATES. The prospective recipient of an award
of shares of Restricted Stock shall not have any rights with respect to such
award, unless and until such recipient has executed an agreement evidencing the
award and has delivered a fully executed copy thereof to the Company, and has
otherwise complied with the then applicable terms and conditions.

                  (a) Each Participant who has received a Restricted Stock Award
         shall be issued a stock certificate in respect of shares of Restricted
         Stock awarded under the Plan. Such certificate shall be registered in
         the name of the Participant, and shall bear an appropriate legend
         referring to the terms, conditions, and restrictions applicable to such
         award, substantially in the following form:

                  "The transferability of this certificate and the shares of
                  stock represented hereby are subject to the terms and
                  conditions (including forfeiture) of the Net Radio Corporation
                  1998 Stock Option and Incentive Plan and an agreement entered
                  into between the registered owner and Net Radio Corporation.
                  Copies of such Plan and Agreement are on file in the offices
                  of Net Radio Corporation, Riverplace - Exposition Hall, 43
                  Main Street SE; Suite 149, Minneapolis, Minnesota 55414."

                  (b) The Committee shall require that the stock certificates
         evidencing such shares be held in custody by the Company until the
         restrictions thereon shall have lapsed, and that, as a condition of any
         Restricted Stock award, the Participant shall have delivered a stock
         power, endorsed in blank, relating to the Common Stock covered by such
         award.





                                      -12-

<PAGE>   13

         8.3      RESTRICTIONS AND CONDITIONS. The shares of Restricted Stock
awarded pursuant to the Plan shall be subject to the following restrictions and
conditions:

                  (a) Subject to the provisions of this Plan and the award
         agreement, during a period set by the Committee commencing with the
         date of such award (the "Restriction Period"), the Participant shall
         not be permitted to sell, transfer, pledge or assign shares of
         Restricted Stock awarded under the Plan. Within these limits, the
         Committee may provide for the lapse of such restrictions in
         installments where deemed appropriate.

                  (b) Except as provided in Section 8.3(a), the Participant
         shall have, with respect to the shares of Restricted Stock, all of the
         rights of a shareholder of the Company, including the right to vote the
         shares and the right to receive any cash dividends. The Committee, in
         its sole discretion, may permit or require the payment of cash
         dividends to be deferred and, if the Committee so determines,
         reinvested in additional shares of Restricted Stock (but only to the
         extent shares are available under Article 4). Certificates for shares
         of unrestricted Common Stock shall be delivered to the Participant
         promptly after, and only after, the period of forfeiture shall have
         expired without forfeiture of such shares of Restricted Stock.

                  (c) Subject to the provisions of the award agreement and of
         Section 8.3(d) below, upon termination of employment for any reason
         during the Restriction Period, all shares still subject to restriction
         shall be forfeited by the Participant.

                  (d) In the event of special hardship circumstances of a
         Participant whose employment is terminated (other than for Cause),
         including death, Disability or Retirement, or in the event of an
         unforeseeable emergency of a Participant still in service, the
         Committee may, in its sole discretion, when it finds that a waiver
         would be in the best interest of the Company, waive in whole or in part
         any or all of the remaining restrictions with respect to such
         Participant's shares of Restricted Stock.

                  (e) Notwithstanding the foregoing, in the event of the sale by
         the Company of substantially all of its assets and the consequent
         discontinuance of its business, or in the event of a merger, exchange,
         consolidation or liquidation of the Company, the Board shall, in its
         sole discretion, in connection with the Board'sadoption of the plan for
         sale, merger, exchange, consolidation or liquidation, provide for one
         or more of the following with respect to Restricted Stock awards that
         are, on such date, still subject to a Restriction Period: (i) the
         removal of the restrictions on any or all outstanding Restricted Stock
         awards; (ii) the complete termination of this Plan and forfeiture of
         outstanding Restricted Stock awards prior to a date specified by the
         Board; and (iii) the continuance of the Plan with respect to the
         Restricted Stock awards which were outstanding as of the date of
         adoption by the Board of such plan for sale, merger, exchange,
         consolidation or liquidation and provide to Participants holding
         Restricted Stock awards the right to an equivalent number of restricted
         shares of stock of the corporation succeeding the Company by reason of
         such sale, merger, exchange, consolidation or liquidation. The grant of
         a Restricted Stock award pursuant to the Plan shall not limit in any
         way the right


                                      -13-

<PAGE>   14



         or power of the Company to make adjustments, reclassifications,
         reorganizations or changes to its capital or business structure or to
         merge, exchange or consolidate or to dissolve, liquidate, sell or
         transfer all or any part of its business or assets.

                  (f) Subject to Article 13 below, recipients of Restricted
         Stock awards under the Plan are not required to make any payment or
         provide consideration other than the rendering of services.

                                    ARTICLE 9

                              DEFERRED STOCK AWARDS

         9.1      ADMINISTRATION. Deferred Stock may be awarded either alone or
in addition to other awards granted under the Plan. The Committee shall
determine the Eligible Recipients to whom and the time or times at which
Deferred Stock shall be awarded, the number of shares of Deferred Stock to be
awarded to any Participant or group of Participants, the duration of the period
(the "Deferral Period") during which, and the conditions under which, receipt of
the Common Stock will be deferred, and the terms and conditions of the award in
addition to those contained in Section 9.2. The Committee may also condition the
grant of Deferred Stock upon the attainment of specified performance goals. The
provisions of Deferred Stock awards need not be the same with respect to each
recipient.

         9.2      TERMS AND CONDITIONS.

                  (a) Subject to the provisions of this Plan and the award
         agreement, Deferred Stock awards may not be sold, assigned,
         transferred, pledged or otherwise encumbered during the Deferral
         Period. At the expiration of the Deferral Period (or Elective Deferral
         Period, where applicable), share certificates shall be delivered to the
         Participant, or his legal representative, in a number equal to the
         shares covered by the Deferred Stock award.

                  (b) Amounts equal to any dividends declared during the
         Deferral Period with respect to the number of shares covered by a
         Deferred Stock award will be paid to the Participant currently or
         deferred and deemed to be reinvested in additional Deferred Stock or
         otherwise reinvested, all as determined at the time of the award by the
         Committee, in its sole discretion.

                  (c) Subject to the provisions of the award agreement and
         Section 9.2(d) below, upon termination of employment for any reason
         during the Deferral Period for a given award, the Deferred Stock in
         question shall be forfeited by the Participant.

                  (d) In the event of special hardship circumstances of a
         Participant whose employment is terminated (other than for Cause)
         including death, Disability or Retirement, or in the event of an
         unforeseeable emergency of a Participant still in service, the
         Committee may, in its sole discretion, when it finds that waiver would
         be in the best



                                      -14-


<PAGE>   15



         interest of the Company, waive in whole or in part any or all of the
         remaining deferral limitations imposed hereunder with respect to any or
         all of the Participant's Deferred Stock.

                  (e) A Participant may elect to further defer receipt of the
         award for a specified period or until a specified event (the "Elective
         Deferral Period"), subject in each case to the Committee's approval and
         to such terms as are determined by the Committee, all in its sole
         discretion. Subject to any exceptions adopted by the Committee, such
         election must generally be made prior to completion of one half of the
         Deferral Period for a Deferred Stock award (or for an installment of
         such an award).

                  (f) Each award shall be confirmed by, and subject to the terms
         of, a Deferred Stock agreement executed by the Company and the
         Participant.

                                   ARTICLE 10

                                  CASH BONUSES

         In connection with any grant of Options, Restricted Stock awards or
Deferred Stock Awards, or at any time thereafter, the Committee may, in its
discretion, grant a cash bonus to a Participant in connection with the grant or
vesting or exercise of an Award. The determination of whether to grant such a
cash bonus, the nature and amount of any such cash bonus and the terms and
conditions of such cash bonus shall be within the discretion of the Committee.

                                   ARTICLE 11

                      TERMINATION OF EMPLOYMENT OR SERVICE

         11.1     TERMINATION OF EMPLOYMENT OR OTHER SERVICE DUE TO DEATH,
DISABILITY OR RETIREMENT. Except as otherwise provided in Article 12 of the
Plan, in the event a Participant's employment or other service with the Company
and all Affiliates is terminated by reason of such Participant's death,
Disability or Retirement, all outstanding Options then held by the Participant
shall remain exercisable to the extent exercisable as of such termination for a
period of three months after such termination in the event of the Participant's
death or Retirement, or for a period of one year after such termination in the
event of the Participant's Disability (but in no event after the expiration date
of any such Option).

         11.2     TERMINATION OF EMPLOYMENT OR OTHER SERVICE FOR REASONS OTHER
THAN DEATH, DISABILITY OR RETIREMENT. Except as otherwise provided in Article 12
of the Plan, in the event a Participant's employment or other service with the
Company and all Affiliates is terminated for any reason other than death,
Disability or Retirement, all rights of the Participant under the Plan shall
immediately terminate within notice of any kind, and no Options then held by the
Participant shall thereafter be exercisable.





                                      -15-

<PAGE>   16

         11.3     MODIFICATION OF EFFECT OF TERMINATION. Notwithstanding the
provisions of this Article 11, upon a Participant's termination of employment or
other service with the Company and all Affiliates, other than for Cause, the
Committee may, in its discretion (which may be exercised before or following
such termination), cause Options, or any portions thereof, then held by such
Participant to become exercisable and remain exercisable following such
termination in the manner determined by the Committee; provided, however, that
no Option shall be exercisable after the expiration date thereof and any
Incentive Stock Option that remains unexercised more than three months following
employment termination by reason of Retirement or more than one year following
employment termination by reason of Disability shall thereafter be deemed to be
a Non-Qualified Stock Option.

         11.4     DATE OF TERMINATION. Unless the Committee shall otherwise
determine in its discretion, a Participant's employment or other service shall,
for purposes of the Plan, be deemed to have terminated on the date such
Participant ceases to perform services for the Company and all Affiliates, as
determined in good faith by the Committee.

         11.5     TRANSFER, LEAVE OF ABSENCE, ETC. For purposes of the Plan, the
following events shall not be deemed a termination of employment:

                  (a) a transfer of an employee from the Company to an
         Affiliate, from an Affiliate to the Company, or from one Affiliate to
         another;

                  (b) a leave of absence, approved in writing by the Committee,
         for military service or sickness, or for any other purpose approved by
         the Company if the period of such leave does not exceed ninety (90)
         days (or such longer period as the Committee may approve, in its sole
         discretion); and

                  (c) a leave of absence in excess of ninety (90) days, approved
         in writing by the Committee, but only if the employee's right to
         reemployment is guaranteed either by a statute or by contract, and
         provided that, in the case of any leave of absence, the employee
         returns to work within 30 days after the end of such leave.




                                      -16-

<PAGE>   17


                                   ARTICLE 12

                                CHANGE OF CONTROL

         12.1     CHANGE IN CONTROL. For purposes of this Article 12, a "Change
in Control" of the Company shall mean (a) the sale, lease, exchange or other
transfer of all or substantially all of the assets of the Company (in one
transaction or in a series of related transactions) to a corporation that is not
controlled by the Company, (b) the approval by the shareholders of the Company
of any plan or proposal for the liquidation or dissolution of the Company, or
(c) a change in control of the Company of a nature that would be required to be
reported (assuming such event has not been "previously reported") in response to
Item 1(a) of the Current Report on Form 8-K, as in effect on the effective date
of the Plan, pursuant to Section 13 or 15(d) of the Exchange Act, whether or not
the Company is then subject to such reporting requirement; provided, however,
that, without limitation, such a Change in Control shall be deemed to have
occurred at such time as (x) 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 50% or more of the combined voting power of the
Company's outstanding securities ordinarily having the right to vote at election
of directors or (y) individuals who constitute the board of directors of the
Company on the effective date of the Plan cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the effective date of the Plan whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the directors comprising the board of directors of the Company on
the effective date of the Plan (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a nominee for
director, without objection to such nomination) shall be, for the purposes of
this clause (y), considered as though such person were a member of the board of
directors of the Company on the effective date of this Plan.

         12.2     ACCELERATION OF VESTING. If a Change in Control of the Company
shall occur, then, without any action by the Committee or the Board, all
outstanding Options shall become immediately exercisable in full and shall
remain exercisable during the remaining term thereof, regardless of whether the
Participants to whom such Options have been granted remain in the employ or
service of the Company or any Affiliate.

         12.3     CASH PAYMENT. If a Change in Control of the Company shall
occur, then the Committee, in its discretion, and without the consent of any
Participant affected thereby, may determine that some or all Participants
holding outstanding Options shall 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.

         12.4     LIMITATION ON CHANGE IN CONTROL PAYMENTS. Notwithstanding
anything in Section 12.2 or 12.3 above to the contrary, if, with respect to a
Participant, the acceleration of the exercisability of an Option as provided in
Section 12.2 or the payment of cash



                                      -17-
<PAGE>   18



in exchange for all or part of an Option as provided in Section 12.3 above
(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 which
as member of an "affiliated group" (as defined in Section 1504(a) of the Code
without regard to Section 1504(b) of the Code) of which the Company is a member,
would constitute a "parachute payment" (as defined in Section 280G(b)(2) of the
Code), then the payments to such Participant pursuant to Section 12.2 or 12.3
above shall 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.

                                   ARTICLE 13

                 RIGHT TO WITHHOLD: PAYMENT OF WITHHOLDING TAXES

         13.1     GENERAL RULES. The Company is entitled to (a) withhold and
deduct from future wages of the Participant (or from other amounts which may be
due and owing to the Participant from the Company), 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: (i) attributable to the grant or exercise of an Option, a
Restricted Stock award, a Deferred Stock Award or a Stock Appreciation Right or
to a disqualifying disposition of stock received upon exercise of an Incentive
Stock Option, or (ii) otherwise incurred with respect to an Award or (b) require
the Participant promptly to remit the amount of such withholding to the Company
before taking any action with respect to an Award.

         13.2     SPECIAL RULES.

                  (a) Without limiting the generality of Section 13.1 above, the
         Committee may, in its discretion and subject to such rules as the
         Committee may adopt, permit a Participant to satisfy, in whole or in
         part, any withholding or employment-related tax obligations described
         in Section 13.1 above by electing to use Previously Acquired Shares or
         by electing to have the Company accept a Broker Exercise Notice with
         respect to that number of shares, in any such case, having a Fair
         Market Value, on the Tax Date, equal to the amount necessary to satisfy
         the withholding or employment-related taxes due, or by agreeing to
         deliver to the Company a promissory note in payment for some or all of
         the necessary amounts (containing such terms and conditions as the
         Committee in its discretion may determine).

                  (b) A Participant's election to use Previously Acquired
         Shares, a Broker Exercise Notice or a promissory note must be made on
         or prior to the Tax Date, is irrevocable and is subject to the consent
         or disapproval of the Committee. If the Participant is an officer,
         director or beneficial owner of more than 10% of the outstanding Common
         Stock and the Company has a class of equity securities registered under
         Section 12 of the Exchange Act, an election to use Previously Acquired
         Shares may not be made within six months of the date the Option is
         granted (unless the death or



                                     -18-


<PAGE>   19



         Disability of the Participant occurs prior to the expiration of such
         six-month period), and (unless otherwise permitted by the Committee in
         its discretion) must be made either six months prior to the Tax Date or
         at any time prior to the Tax Date between the third and twelfth
         business days following public release of any of the Company's
         quarterly or annual summary earnings statements. When shares of Common
         Stock are issued prior to the Tax Date to a Participant making an
         election to use Previously Acquired Shares, the Participant shall agree
         in writing to surrender that number of shares on the Tax Date having an
         aggregate Fair Market Value equal to the tax due.

                                   ARTICLE 14

                 RIGHTS OF ELIGIBLE RECIPIENTS AND PARTICIPANTS:
                                 TRANSFERABILITY

         14.1     EMPLOYMENT OR SERVICE. Nothing in the Plan shall interfere
with or limit in any way the right of the Company or any Affiliate with respect
to 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 Affiliate.

         14.2     RESTRICTIONS ON TRANSFER. Other than pursuant to a qualified
domestic relations order (as defined by the Code), no right or interest of any
Participant in an Option prior to the exercise of such Options shall 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, including execution, levy, garnishment,
attachment, pledge, divorce or bankruptcy. A Participant shall, however, be
entitled to designate a beneficiary to receive an Option upon such Participant's
death. In the event of a Participant's death, such Participant's rights and
interest in Options shall be transferable by testamentary will or the laws of
descent and distribution, and payment of any amounts due under the Plan shall be
made to, and exercise of any Options (to the extent permitted pursuant to
Article 11 of the Plan) may be made by, the Participant's legal representatives,
heirs or legatees. If in the opinion of the Committee a Participant holding an
Option is disabled from caring for his or her affairs because of mental
condition, physical condition or age, any payments due the Participant may be
made to, and any rights of the Participant under the Plan shall be exercised by,
such Participant's guardian, conservator or other legal personal representative
upon furnishing the Committee with evidence satisfactory to the Committee of
such status. Notwithstanding the foregoing, the Board or the Committee may, in
its discretion, determine that an Option may be exercised by someone other than
the optionee and that the Option may be transferable based on the tax and
federal securities laws then in effect for such Options.

         14.3     NON-EXCLUSIVITY OF THE PLAN. Nothing contained in the Plan is
intended to amend, modify or rescind any previously approved compensation plans
or programs entered into by the Company. The Plan will be construed to be in
addition to any and all such other plans or programs. Neither the adoption of
the Plan nor the submission of the Plan to the shareholders of the Company for
approval will be construed as creating any limitations on the


                                      -19-
<PAGE>   20




power or authority of the Board to adopt such additional or other compensation
arrangements as the Board may deem necessary or desirable.

                                   ARTICLE 15

                           SECURITIES LAW RESTRICTIONS

         15.1     SHARE ISSUANCES. Notwithstanding any other provision of the
Plan or any agreement entered into pursuant hereto, the Company shall not be
required to issue or deliver any certificate for shares of Common Stock under
this Plan, and an Option shall not be considered to be exercised notwithstanding
the tender by the Participant of any consideration therefor, unless and until
each of the following conditions has been fulfilled:

                  (a) (i) there shall be in effect with respect to such shares a
         registration statement under the Securities Act and any applicable
         state securities laws if the Committee, in its discretion, shall have
         determined to file, cause to become effective and maintain the
         effectiveness of such registration statement; or (ii) if the Committee
         has determined not to so register the shares of Common Stock to be
         issued under the Plan, (A) exemptions from registration under the
         Securities Act and applicable state securities laws shall be available
         for such issuance (as determined by counsel to the Company) and (B)
         there shall have been received from the Participant (or, in the event
         of death or disability, the Participant's heir(s) or legal
         representative(s)) any representations or agreements requested by the
         Company in order to permit such issuance to be made pursuant to such
         exemptions; and

                  (b) there shall have been obtained any other consent, approval
         or permit from any state or federal governmental agency which the
         Committee shall, in its discretion upon the advice of counsel, deem
         necessary or advisable.

         15.2     SHARE TRANSFERS. Shares of Common Stock issued pursuant to
Options, Restricted Stock awards or Deferred Stock Awards granted under the Plan
may not be sold, assigned, transferred, pledged, encumbered or otherwise
disposed of, whether voluntarily or involuntarily, directly or indirectly, by
operation of law or otherwise, except pursuant to registration under the
Securities Act and applicable state securities laws or pursuant to exemptions
from such registrations. The Company may condition the sale, assignment,
transfer, pledge, encumbrance or other disposition of such shares not issued
pursuant to an effective and current registration statement under the Securities
Act and all applicable state securities laws on the receipt from the party to
whom the shares of Common Stock are to be so transferred of any representations
or agreements requested by the Company in order to permit such transfer to be
made pursuant to exemptions from registration under the Securities Act and
applicable state securities laws.

         15.3     LEGENDS.




                                      -20-

<PAGE>   21


                  (a) Unless a registration statement under the Securities Act
         is in effect with respect to the issuance or transfer of shares of
         Common Stock under the Plan, each certificate representing any such
         shares shall be endorsed with a legend in substantially the following
         form, unless counsel for the Company is of the opinion as to any such
         certificate that such legend is unnecessary:

                  THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
                  THE SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"), OR UNDER
                  APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN
                  ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
                  ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
                  DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
                  STATEMENT UNDER THE ACT AND SUCH STATE LAWS OR PURSUANT TO AN
                  EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE LAWS,
                  THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE
                  SATISFACTION OF THE COMPANY.

                  (b) The Committee, in its discretion, may endorse certificates
         representing shares issued pursuant to the exercise of Incentive Stock
         Options with a legend in substantially the following form:

                  THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
                  TRANSFERRED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF
                  ON OR BEFORE [THE LATER OF THE ONE-YEAR OR TWO-YEAR INCENTIVE
                  STOCK OPTION HOLDING PERIODS], WITHOUT THE PRIOR WRITTEN
                  CONSENT OF THE COMPANY.

                                   ARTICLE 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 Awards under the Plan shall 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 such
amendment shall be effective, without approval of the shareholders of the
Company, if shareholder approval of the amendment is then required pursuant to
Rule 16b-3 under the Exchange Act or any successor rule or Section 422 of the
Code or under the applicable rules or regulations of any securities exchange or
the NASD. No termination, suspension or amendment of the Plan shall alter or
impair any outstanding Award without the consent of the Participant affected
thereby; provided, however, that this sentence shall not impair the right of the








                                      -21-

<PAGE>   22

Committee to take whatever action it deems appropriate under Section 4.3 or
Article 12 of the Plan.

                                   ARTICLE 17

                           EFFECTIVE DATE OF THE PLAN

         17.1     EFFECTIVE DATE. The Plan is effective as of June 1, 1998, the
date it was adopted by the Board, subject to approval within 12 months of such
adoption by a vote of the holders of a majority of the voting stock of the
Company represented in person or by proxy at a duly held shareholders' meeting,
or by written consent of all shareholders.

         17.2     DURATION OF THE PLAN. The Plan shall terminate at midnight on
ten years from effective date and may be terminated prior thereto by Board
action, and no Award shall be granted after such termination. Options
outstanding upon termination of the Plan may continue to be exercised in
accordance with their terms.

                                   ARTICLE 18

                                  MISCELLANEOUS

         18.1     CONSTRUCTION AND HEADINGS. The use of the masculine gender
shall also include within its meaning the feminine, and the singular may include
the plural and may include the singular, unless the context clearly indicates to
the contrary. The headings of the Articles, Sections and subparts of the Plan
are for convenience of reading only and are not meant to be of substantive
significance and shall not add or detract from the meaning of such Article,
Section or subpart.

         18.2     PUBLIC POLICY. No person shall have any claim or right to
receipt of an Award if, in the opinion of counsel to the Company, such receipt
conflicts with law or is opposed to governmental or public policy.

         18.3     GOVERNING LAW. The place of administration of the Plan shall
be conclusively deemed to be within the State of Minnesota, and the rights and
obligations of any and all persons having or claiming to have had an interest
under the Plan or under any agreements evidencing Awards shall be governed by
and construed exclusively and solely in accordance with the laws of the State of
Minnesota without regard to the conflict of laws provisions of any
jurisdictions. All parties agree to submit to the jurisdiction of the state and
federal courts of Minnesota with respect to matters relating to the Plan and
agree not to raise or assert the defense that such forum is not convenient for
such party.

         18.4     SUCCESSORS AND ASSIGNS. This Plan shall be binding upon and
inure to the benefit of the successors and permitted assigns of the Company,
including, without limitation, whether by way of merger, consolidation,
operation of law, assignment, purchase or other acquisition of substantially all
of the assets or business of the Company and any and all


                                      -22-
<PAGE>   23



such successors and assigns shall absolutely and unconditionally assume all of
the Company's obligations under the Plan.

          18.5    SURVIVAL OF PROVISIONS. The rights, remedies, agreements,
obligations and covenants contained in or made pursuant to the Plan, any
agreement evidencing an Award and any other notices or agreements in connection
therewith, including, without limitation, any notice of exercise of any Option,
shall survive the execution and delivery of such notices and agreements and the
delivery and receipt of shares of Common Stock and shall remain in full force
and effect.






                                      -23-