Exhibit 10.1


Dakota Plains Holdings, Inc.


2011 EQUITY INCENTIVE PLAN




1.          Purpose. The purpose of the Dakota
Plains Holdings, Inc. 2011 Equity Incentive Plan (the “Plan”) is to help attract
and retain the best available people for positions of responsibility with the
Company, to provide additional incentives to them and align their interests
with those of the Company’s shareholders, and to thereby promote the Company’s
long-term business success.  


2.          Definitions. In this Plan, the
following definitions will apply.  


          (a)          “Affiliate”
means any corporation that is a Subsidiary or Parent of the Company.


          (b)          “Agreement”
means the written or electronic agreement containing the terms and conditions
applicable to an Award granted under the Plan. An Agreement is subject to the
terms and conditions of the Plan.


          (c)          “Award”
means the grant of a compensatory award under the Plan in the form of an
Option, Stock Appreciation Rights, Restricted Stock, Stock Units, an Other
Stock-Based Award or a Cash Incentive Award.


          (d)          “Board”
means the Board of Directors of the Company.


          (e)          “Cash
Incentive Award” means an Award described in Section 11 of the Plan.


          (f)          “Cause”
means what the term is expressly defined to mean in a then-effective written
agreement (including an Agreement) between a Participant and the Company or any
Affiliate or, in the absence of any such then-effective agreement or definition,
means a Participant’s (i) failure or refusal to perform satisfactorily the
duties reasonably required of the Participant by the Company (other than by
reason of Disability); (ii) material violation of any law, rule, regulation,
court order or regulatory directive (other than traffic violations,
misdemeanors or other minor offenses); (iii) material breach of any Company
code of conduct, of any agreement with the Company or any Affiliate or of any
nondisclosure, non-solicitation, non-competition or similar obligation owed to
the Company or any Affiliate; (iv) engaging in any act or practice that
involves personal dishonesty on the part of the Participant or demonstrates a
willful and continuing disregard for the best interests of the Company and its
Affiliates; or (v) engaging in conduct that would be reasonably expected to
harm or bring disrepute to the Company, any of its Affiliates, or any of their
customers, employees or vendors. 


          (g)          “Change in
Control” means one of the following:


                    (1)          An
Exchange Act Person becomes the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of securities of the Company representing more
than 50% of the combined voting power of the Company’s then outstanding Voting
Securities, except that the following will not constitute a Change in Control:


                                        (A)          any
acquisition of securities of the Company by an Exchange Act Person directly or
indirectly from the Company for the purpose of providing financing to the
Company;






                                        (B)          any
formation of a Group consisting solely of beneficial owners of the Company’s
Voting Securities as of the effective date of this Plan; or


                                        (C)          any
Exchange Act Person becomes the beneficial owner of more than 50% of the
combined voting power of the Company’s outstanding Voting Securities as the
result of any repurchase or other acquisition by the Company of its Voting
Securities;


If,
however, an Exchange Act Person or Group referenced in clause (A), (B) or (C)
above acquires beneficial ownership of additional Company Voting Securities
after initially becoming the beneficial owner of more than 50% of the combined
voting power of the Company’s outstanding Voting Securities by one of the means
described in those clauses, then a Change in Control shall be deemed to have
occurred.


                    (2)          Individuals
who are Continuing Directors cease for any reason to constitute a majority of
the members of the Board. 


                    (3)          The
consummation of a Corporate Transaction unless, immediately following such
Corporate Transaction, all or substantially all of the individuals and entities
who were the beneficial owners of the outstanding Company Voting Securities
immediately prior to such Corporate Transaction beneficially own, directly or
indirectly, more than 50% of the combined voting power of the then outstanding
Voting Securities of the of the surviving or acquiring entity (or its Parent)
resulting from such Corporate Transaction in substantially the same proportions
as their ownership, immediately before such Corporate Transaction, of the
outstanding Company Voting Securities.


Notwithstanding
the foregoing, to the extent that any Award constitutes a deferral of
compensation subject to Code Section 409A, and if that Award provides for a
change in the time or form of payment upon a Change in Control, then no Change
in Control shall be deemed to have occurred upon an event described in Section
2(g) unless the event would also constitute a change in ownership or effective
control of, or a change in the ownership of a substantial portion of the assets
of, the Company under Code Section 409A.


          (h)          “Code”
means the Internal Revenue Code of 1986, as amended and in effect from time to
time, and the regulations promulgated thereunder. 


          (i)          “Committee”
means two or more Non-Employee Directors designated by the Board to administer
the Plan under Section 3, each member of which shall (i) satisfy the
independence requirements for independent directors and members of compensation
committees as set forth from time to time in the Listing Rules of the NYSE Amex
Equities Market, (ii) be a non-employee director within the meaning of Exchange
Act Rule 16b-3, and (iii) be an outside director for purposes of Code Section
162(m).


          (j)          “Company”
means Dakota Plains Holdings, Inc., a  Nevada corporation, or any successor thereto.


          (k)          “Continuing
Director” means an individual (A) who is, as of the effective date
of the Plan, a director of the Company, or (B) who is elected as a director of
the Company subsequent to the effective date of the Plan and whose initial
election, or nomination for initial election by the Company’s shareholders, was
approved by at least a majority of the then Continuing Directors, but
excluding, for purposes of this clause (B), any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest.


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          (l)          “Corporate
Transaction” means a reorganization, merger or consolidation of the
Company, or a sale or other disposition (in one or a series of transactions) of
all or substantially all of the assets of the Company.


          (m)          “Disability”
means “total and permanent disability” within the meaning of Code Section
22(e)(3).


          (n)          “Employee”
means an employee of the Company or an Affiliate.


          (o)          “Exchange Act”
means the Securities Exchange Act of 1934, as amended and in effect from time
to time.


          (p)          “Exchange Act
Person” means any natural person, entity or Group other than (i) the
Company or any Subsidiary of the Company; (ii) any employee benefit plan (or
related trust) sponsored or maintained by the Company or any Affiliate; (iii)
an underwriter temporarily holding securities in connection with a registered
public offering of such securities; or (iv) an entity whose Voting Securities
are beneficially owned by the beneficial owners of the Company’s Voting
securities in substantially the same proportions as their beneficial ownership
of the Company’s Voting Securities.


          (q)          “Fair Market
Value” means the fair market value of a Share determined as follows:


                    (1)          If
the Shares are readily tradable on an established securities market (as
determined under Code Section 409A), then Fair Market Value will be the closing
sales price for a Share on the principal securities market on which it trades
on the date for which it is being determined, or if no sale of Shares occurred
on that date, on the next preceding date on which a sale of Shares occurred, as
reported in
The Wall Street Journal or such other source as the Committee deems
reliable; or


                    (2)          If
the Shares are not then readily tradable on an established securities market
(as determined under Code Section 409A), then Fair Market Value will be
determined by the Committee as the result of a reasonable application of a
reasonable valuation method that satisfies the requirements of Code Section
409A.


          (r)          “Full Value
Award” means an Award other than an Option Award, Stock Appreciation
Rights Award or Cash Incentive Award.


          (s)          “Good Reason”
means what the term is expressly defined to mean in a then-effective written
agreement (including an Agreement) between a Participant and the Company or any
Affiliate or, in the absence of any such then-effective agreement or definition
and subject to the last sentence of this definition, means with respect to any
Participant any of the following events that has not been consented to by the
Participant:


                    (1)          A
material reduction or diminution in the Participant’s job responsibilities,
authority or duties, or in the job responsibilities, authority or duties of the
supervisor to whom the Participant is required to report, but a mere change in
title alone or reassignment to a substantially similar position will not
constitute Good Reason;


                    (2)          A
material reduction in the Participant’s base compensation in the absence of a
similar general reduction of the base compensation of similarly situated
Service Providers; or


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                    (3)          The
relocation of the Participant’s primary work location, on a permanent basis, to
a location that is more than 50 miles from the Participant’s primary work
location immediately prior to such change.


The
foregoing events will only be considered “Good Reason” for a Participant to
voluntarily resign from his or her position as Service Provider if, following
the occurrence of one or more of the foregoing events, the Participant (i)
provides written notice to the Company or its applicable Affiliate of the
event(s) constituting Good Reason within 30 days after the first occurrence of
such event(s), (ii) the Company or its applicable Affiliate fails to reasonably
cure such event(s) within 30 days after receiving such notice, and (iii) the
Participant’s termination of his or her status as a Service Provider is
effective not later than 30 days after the end of the period in which the
event(s) may be cured. 


          (t)          “Grant Date”
means the date on which the Committee approves the grant of an Award under the
Plan, or such later date as may be specified by the Committee on the date the
Committee approves the Award.


          (u)          “Group”
means two or more persons acting as a partnership, limited partnership,
syndicate or other group for the purpose of acquiring, holding or disposing of
securities of an entity.


          (v)          “Non-Employee
Director” means a member of the Board who is not an Employee.


          (w)          “Option”
means a right granted under the Plan to purchase a specified number of Shares
at a specified price during a specified period of time. An “Incentive
Stock Option” or “ISO” means any Option designated as such
and granted in accordance with the requirements of Code Section 422. A “Non-Statutory
Stock Option” means an Option other than an Incentive Stock Option.


          (x)          “Other
Stock-Based Award” means an Award described in Section 11 of this
Plan.


          (y)          “Parent”
means a “parent corporation,” as defined in Code Section 424(e).


          (z)          “Participant”
means a person to whom an Award is or has been made in accordance with the
Plan.


          (aa)          “Performance-Based
Compensation” means an Award to a person who is, or is determined by
the Committee to likely become, a “covered employee” (as defined in Code
Section 162(m)(3)) and that is intended to constitute “performance-based
compensation” within the meaning of Code Section 162(m)(4)(C).


          (bb)          “Plan”
means this Dakota Plains Holdings, Inc. 2011 Equity Incentive Plan, as amended and in
effect from time to time.


          (cc)          “Restricted
Stock” means Shares issued to a Participant that are subject to such
restrictions on transfer, vesting conditions and other restrictions or
limitations as may be set forth in this Plan and the applicable Agreement.


          (dd)          “Retirement”
means any termination, other than for Cause or due to death or Disability, of a
Participant’s Service with the Company and all of its Affiliates at or after
age 65, or at or after age 60 with five or more years of continuous Service.


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          (ee)          “Service”
means the provision of services by a Participant to the Company or any Affiliate
in any Service Provider capacity. A Service Provider’s Service shall be deemed
to have terminated either upon an actual cessation of providing services or
upon the entity for which the Service Provider provides services ceasing to be
an Affiliate. Except as otherwise provided in this Plan or any Agreement,
Service shall not be deemed terminated in the case of (i) any approved leave of
absence; (ii) transfers among the Company and any Affiliates in any Service
Provider capacity; or (iii) any change in status so long as the individual
remains in the service of the Company or any Affiliate in any Service Provider
capacity.


          (ff)          “Service
Provider” means an Employee, a Non-Employee Director, or any
consultant or advisor who is a natural person and who provides services (other
than in connection with (i) a capital-raising transaction or (ii) promoting
or maintaining a market in Company securities) to the Company or any Affiliate.


          (gg)          “Share”
means a share of Stock.


          (hh)          “Stock”
means the common stock, par value $0.01 per share, of the Company.


          (ii)          “Stock
Appreciation
Right” or “SAR” means a right granted under the Plan
to receive, in cash and/or Shares as determined by the Committee, an amount
equal to the appreciation in value of a specified number of Shares between the
Grant Date of the SAR and its exercise date.


          (jj)          “Stock Unit”
means a right granted under the Plan to receive, in cash and/or Shares as
determined by the Committee, the Fair Market Value of a Share, subject to such
restrictions on transfer, vesting conditions and other restrictions or
limitations as may be set forth in this Plan and the applicable Agreement.


          (kk)          “Subsidiary”
means a “subsidiary corporation,” as defined in Code Section 424(f), of the
Company.


          (ll)          “Substitute
Award” means an Award granted upon the assumption of, or in
substitution or exchange for, outstanding awards granted by a company or other
entity acquired by the Company or any Affiliate or with which the Company or
any Affiliate combines.


          (mm)          “Voting
Securities” of an entity means the outstanding securities entitled
to vote generally in the election of directors (or comparable equity interests)
of such entity.


3.          Administration
of the Plan.


          (a)          Administration.
The authority to control and manage the operations and administration of the
Plan shall be vested in the Committee in accordance with this Section 3.


          (b)          Scope
of Authority. Subject to the terms of the Plan, the Committee shall have
the authority, in its discretion, to take such actions as it deems necessary or
advisable to administer the Plan, including:


                    (1)          determining
the Service Providers to whom Awards will be granted, the timing of each such
Award, the types of Awards and the number of Shares covered by each Award, the
terms, conditions, performance criteria, restrictions and other provisions of
Awards, and the manner in which Awards are paid or settled; 


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                    (2)          cancelling
or suspending an Award or the exercisability of an Award, accelerating the
vesting or extending the exercise period of an Award, or otherwise amending the
terms and conditions of any outstanding Award, subject to the requirements of
Sections 15(d) and 15(e);


                    (3)          establishing,
amending or rescinding rules to administer the Plan, interpreting the Plan and
any Award or Agreement made under the Plan, and making all other determinations
necessary or desirable for the administration of the Plan; and


                    (4)          taking
such actions as are described in Section 3(c) with respect to Awards to foreign
Service Providers.


          (c)          Awards
to Foreign Service Providers. The Committee may grant Awards to Service
Providers who are foreign nationals, who are located outside of the United
States or who are not compensated from a payroll maintained in the United
States, or who are otherwise subject to (or could cause the Company to be
subject to) legal or regulatory requirements of countries outside of the United
States, on such terms and conditions different from those specified in the Plan
as may, in the judgment of the Committee, be necessary or desirable to comply
with applicable foreign laws and regulatory requirements and to promote
achievement of the purposes of the Plan. In connection therewith, the Committee
may establish such subplans and modify exercise procedures and other Plan rules
and procedures to the extent such actions are deemed necessary or desirable,
and may take any other action that it deems advisable to obtain local
regulatory approvals or to comply with any necessary local governmental
regulatory exemptions.


          (d)          Acts
of the Committee; Delegation. A majority of the members of the Committee
shall constitute a quorum for any meeting of the Committee, and any act of a
majority of the members present at any meeting at which a quorum is present or
any act unanimously approved in writing by all members of the Committee shall
be the act of the Committee. Any such action of the Committee shall be valid
and effective even if the members of the Committee at the time of such action
are later determined not to have satisfied all of the criteria for membership
in clauses (i), (ii) and (iii) of Section 2(i). To the extent not inconsistent
with applicable law or stock exchange rules, the Committee may delegate
all or any portion of its authority under the Plan to any one or more of its
members or, as to Awards to Participants who are not subject to Section 16 of
the Exchange Act, to one or more executive officers of the Company. The
Committee may also delegate non-discretionary administrative responsibilities
in connection with the Plan to such other persons as it deems advisable.


          (e)          Finality
of Decisions. 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. 


          (f)          Indemnification.
Each person who is or has 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 by the Company, to the maximum extent permitted by law,
against liabilities and expenses imposed upon or reasonably incurred by such
person in connection with or resulting from any claims against such person by
reason of the performance of the individual’s duties under the Plan. This right
to indemnification is conditioned upon such person providing the Company an
opportunity, at the Company’s expense, to handle and defend the claims before
such person undertakes to handle and defend them on such person’s own behalf.
The Company will not be required to indemnify any person for any amount paid in
settlement of a claim unless the Company has first consented in writing to the
settlement. The foregoing right of indemnification shall not be exclusive of
any other rights of indemnification to 


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which
such person or persons may be entitled under the Company’s Articles of
Incorporation or Bylaws, as a matter of law, or otherwise.


4.          Shares
Available Under the Plan.


          (a)          Maximum
Shares Available. Subject to Sections 4(b) and (c) and to adjustment as
provided in Section 12(a), the number of Shares that may be the subject of
Awards and issued under the Plan shall be 2,000,000. Shares to be issued under the Plan shall either be authorized and
unissued Shares or treasury Shares. In determining the number of Shares
to be counted against this share reserve in connection with any Award, the
following rules shall apply:


                    (1)          Where
the number of Shares subject to an Award is variable on the Grant Date, the
number of Shares to be counted against the share reserve prior to the
settlement of the Award shall be the maximum number of Shares that could be
received under that particular Award.


                    (2)          Where
two or more types of Awards 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, the number of
Shares to be counted against the share reserve shall be the largest number of
Shares that would be counted against the share reserve under either of the
Awards.


                    (3)          Substitute
Awards shall not be counted against the share reserve, nor shall they reduce
the Shares authorized for grant to a Participant in any calendar year.


          (b)          Effect
of Forfeitures and Other Actions. Any Shares subject to an Award that is
forfeited, expires, is settled for cash or otherwise does not result in the
issuance of all or a portion of the Shares subject to such Award shall, to the
extent of such forfeiture, expiration, cash settlement or non-issuance, again
become available for Awards under this Plan and correspondingly increase the
total number of Shares available for grant and issuance under Section 4(a). For
avoidance of doubt, if payment by the Company upon the exercise of a Stock
Appreciation Right is made in Shares, then the Plan’s share reserve shall be
increased in an amount equal to the difference between the number of Shares as
to which the Stock Appreciation Right was exercised and the number of Shares
actually delivered to the Participant. If (i) any Award is exercised through
the tendering of Shares (either actually or by attestation) or by the
withholding of Shares by the Company in payment of an applicable exercise
price, or (ii) any tax withholding obligations arising from such Award are
satisfied by the tendering of Shares (either actually or by attestation) or by
the withholding of Shares by the Company, then the Shares so tendered or
withheld shall again become available for Awards under this Plan and
correspondingly increase the total number of Shares available for grant and
issuance under Section 4(a).


          (c)          Effect
of Plans Operated by Acquired Companies. If a company acquired by the
Company or any Subsidiary or with which the Company or any Subsidiary combines
has shares available under a pre-existing plan approved by shareholders and not
adopted in contemplation of such acquisition or combination, the shares
available for grant pursuant to the terms of such pre-existing plan (as
adjusted, to the extent appropriate, using the exchange ratio or other
adjustment or valuation ratio or formula used in such acquisition or
combination to determine the consideration payable to the holders of common
stock of the entities party to such acquisition or combination) may be used for
Awards under the Plan and shall not reduce the Shares authorized for grant
under the Plan. Awards using such available shares shall not be made after the
date awards or grants could have been made under the terms of the pre-existing
plan, absent the acquisition or combination, and shall only be made to
individuals who were not Employees or Non-Employee Directors prior to such
acquisition or combination.


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          (d)          No
Fractional Shares. Unless otherwise determined by the Committee, the number
of Shares subject to an Award shall always be a whole number. No fractional
Shares may be issued under the Plan, and in connection with any calculation
under the Plan that would otherwise result in the issuance or withholding of a
fractional Share, the number of Shares shall be rounded down to the nearest
whole Share.


          (e)          Individual
Option and SAR Limit. The aggregate number of Shares subject to Options
and/or Stock Appreciation Rights granted during any calendar year to any one
Participant shall not exceed 1,000,000 Shares.


5.          Eligibility. Participation in the Plan is limited to
Service Providers. Incentive Stock Options may only be granted to Employees.


6.          General
Terms of Awards.


          (a)          Award
Agreement. Except for any Award that involves only the immediate issuance
of unrestricted Shares, each Award shall be evidenced by an Agreement setting
forth the number of Shares subject to the Award together with such other terms
and conditions applicable to the Award (and not inconsistent with the Plan) as
determined by the Committee. An Award will not become effective unless
acceptance of the Agreement in a manner permitted by the Committee is received
by the Company within 30 days of the date the Agreement is delivered to the
Participant. An Award to a Participant may be made singly or in combination
with any form of Award. Two types of Awards may be made in tandem with each
other such that the exercise of one type of Award with respect to a number of
Shares reduces the number of Shares subject to the related Award by at least an
equal amount.


          (b)          Vesting
and Term. Each Agreement shall set forth the period until the applicable
Award is scheduled to expire (which shall not be more than ten years from the
Grant Date), and any applicable performance period.


          (c)          Transferability.
Except as provided in this Section 6(c), (i) during the lifetime of a
Participant, only the Participant or the Participant’s guardian or legal
representative may exercise an Option or SAR, or receive payment with respect
to any other Award; and (ii) no Award may be sold, assigned, transferred,
exchanged or encumbered other than by will or the laws of descent and
distribution. Any attempted transfer in violation of this Section 6(c) shall be
of no effect. The Committee may, however, provide in an Agreement or otherwise
that an Award (other than an Incentive Stock Option) may be transferred
pursuant to a qualified domestic relations order or may be transferable by gift
to any “family member” (as defined in
General Instruction A(5) to Form S-8 under the Securities Act of 1933)
of the Participant. 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. 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 or termination of employment of a Participant, the references to “Participant”
shall mean the original grantee of an Award and not any transferee. 


          (d)          Designation
of Beneficiary. Each Participant may designate a beneficiary or
beneficiaries to exercise any Award or receive a payment under any Award
payable on or after the Participant’s death. Any such designation shall be on a
written or electronic form approved by the Committee and shall be effective
upon its receipt by the Company or an agent selected by the Company. 


          (e)          Termination
of Service. Unless otherwise provided
in an Agreement, and subject to Section 12 of this Plan, if a Participant’s
Service with the Company and all of its Affiliates terminates, the 


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following provisions shall apply (in all cases subject
to the originally scheduled expiration of an Option or Stock Appreciation
Right, as applicable):


                    (1)          Upon termination of Service for Cause, all
unexercised Options and SARs and all unvested portions of any other
outstanding Awards shall be immediately forfeited without consideration.


                    (2)          Upon
an involuntary termination of Service by the Company or any Affiliate without
Cause that does not constitute a Retirement, any portion of an Award scheduled
to vest within six months after the date of termination shall immediately
become vested (and exercisable, if applicable), and the vested and exercisable
portions of Options or SARs may be exercised for a period of six months after
the date of such termination and shall terminate upon the expiration of such
period.


                    (3)          Upon
a voluntary termination of Service by the Participant that does not constitute
Retirement, the currently vested and exercisable portions of Options and SARs
may be exercised for a period of three months after the date of such
termination and shall terminate upon the expiration of such period.


                    (4)          Upon
termination of Service due to death or Disability, any portion of an Award
scheduled to vest within twelve months after the date of termination shall
immediately become vested (and exercisable, if applicable), and the vested and
exercisable portions of Options or SARs may be exercised for a period of twelve
months after the date of such termination and shall terminate upon the expiration
of such period.


                    (5)          Upon
a termination of Service that constitutes a Retirement, an Award will continue
to vest for a period of twelve months after the date of termination and any
portion of the Award scheduled to vest during that twelve month period shall
vest (and become exercisable, if applicable) at its scheduled time, and the
vested and exercisable portions of Options or SARs may be exercised during a
period of fifteen months after the date of such termination and shall terminate
upon the expiration of such period.


                    (6)          Upon
a termination of Service for any reason, all unvested and unexercisable
portions of any outstanding Awards (after giving effect to any accelerated
vesting specified under Subsections (2) and (4) of this Section 6(e)) shall be
immediately forfeited without consideration, except to the extent provided in
Subsection (5) of the Section 6(e).


                    (7)          If
a Participant dies during the six-month post-termination exercise period
specified in Subsection (2) or (3) of this Section 6(e), then the applicable
post-termination exercise period shall be extended to twelve months after the
date of such termination. 


          (f)          Rights
as Shareholder. No Participant shall have any rights as a shareholder with
respect to any securities covered by an Award unless and until the date the
Participant becomes the holder of record of the Shares, if any, to which the
Award relates.


          (g)          Performance-Based
Awards. Any Award may be granted as a performance-based Award if the
Committee establishes one or more measures of corporate, Subsidiary, business
unit or individual performance which must be attained, and the performance
period over which the specified performance is to be attained, as a condition
to the vesting, exercisability, lapse of restrictions and/or settlement in cash
or Shares of such Award. In connection with any such Award, the Committee shall
determine the extent to which performance measures have been attained and other
applicable terms and conditions have been satisfied, and the degree to which
vesting, exercisability, lapse of restrictions and/or settlement in 


9






cash
or Shares of such Award has been earned. Any performance-based Award that is
intended by the Committee to qualify as Performance-Based Compensation shall
additionally be subject to the requirements of Section 17 of this Plan. Except
as provided in Section 17 with respect to Performance-Based Compensation, the
Committee shall also have the authority to provide, in an Agreement or
otherwise, for the modification of a performance period and/or an adjustment or
waiver of the achievement of performance goals upon the occurrence of certain
events, which may include a Change of Control, a Corporate Transaction, a
recapitalization, a change in the accounting practices of the Company, or the
Participant’s death or Disability. 


          (h)          Dividends
and Dividend Equivalents. Any dividends or distributions paid with respect
to Shares that are subject to the unvested portion of a Restricted Stock Award
will be subject to the same restrictions as the Shares to which such dividends
or distributions relate, except for regular cash dividends on Shares subject to
the unvested portion of a Restricted Stock Award that is subject only to
service-based vesting conditions. In its discretion, the Committee may provide
in an Award Agreement for a Stock Unit Award or an Other Stock-Based Award that
the Participant will be entitled to receive dividend equivalents on the units
or other Share equivalents subject to the Award based on dividends actually
declared on outstanding Shares. The terms of any dividend equivalents will be
as set forth in the applicable Award Agreement, including the time and form of
payment and whether such dividend equivalents will be credited with interest or
deemed to be reinvested in additional units or Share equivalents. Dividend
equivalents paid with respect to units or Share equivalents that are subject to
the unvested portion of a Stock Unit Award or an Other Stock-Based Award whose
vesting is subject to the satisfaction of specified performance objectives will
be subject to the same restrictions as the units or Share equivalents to which
such dividend equivalents relate. The Committee may, in its discretion, provide
in Award Agreements for restrictions on dividends and dividend equivalents in
addition to those specified in this Section 6(h). 


7.          Stock
Option Awards.


          (a)          Type
and Exercise Price. The Agreement pursuant to which an Option is granted
shall specify whether the Option is an Incentive Stock Option or a
Non-Statutory Stock Option. The exercise price at which each Share subject to
an Option may be purchased shall be determined by the Committee and set forth
in the Agreement, and shall not be less than the Fair Market Value of a Share
on the Grant Date, except in the case of Substitute Awards (to the extent
consistent with Code Section 409A). 


          (b)          Payment
of Exercise Price. The purchase price of the Shares with respect to which
an Option is exercised shall be payable in full at the time of exercise. The purchase price may be paid in cash or in such
other manner as the Committee may permit, including payment under a
broker-assisted sale and remittance program acceptable to the Committee or by withholding Shares otherwise issuable to
the Participant upon exercise of the Option or by delivery to the Company of
Shares (by actual delivery or attestation) already owned by the Participant (in
each case, such Shares having a Fair Market Value as of the date the Option is
exercised equal to the purchase price of the Shares being purchased). 


          (c)          Exercisability
and Expiration. Each Option shall be exercisable in whole or in part on the
terms provided in the Agreement. No Option shall be exercisable at any time
after its scheduled expiration. When an Option is no longer exercisable, it
shall be deemed to have terminated.


          (d)          Incentive
Stock Options. 


                    (1)          An
Option will constitute an Incentive Stock Option only if the Participant
receiving the Option is an Employee, and only to the extent that (i) it is so
designated in the applicable 


10






Agreement
and (ii) the aggregate Fair Market Value (determined as of the Option’s Grant
Date) of the Shares with respect to which Incentive Stock Options held by the
Participant first become exercisable in any calendar year (under the Plan and
all other plans of the Company and its Affiliates) does not exceed $100,000. To
the extent an Option granted to a Participant exceeds this limit, the Option
shall be treated as a Non-Statutory Stock Option. The maximum number of Shares
that may be issued upon the exercise of Incentive Stock Options shall equal the
maximum number of Shares that may be the subject of Awards and issued under the
Plan as provided in the first sentence of Section 4(a).


                    (2)          No
Participant may receive an Incentive Stock Option under the Plan if,
immediately after the grant of such Award, the Participant would own (after
application of the rules contained in Code Section 424(d)) Shares possessing
more than 10% of the total combined voting power of all classes of stock of the
Company or an Affiliate, 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 Grant Date and (ii) that Option will expire no
later than five years after its Grant Date.


                    (3)          For
purposes of continued Service by a Participant who has been granted an
Incentive Stock Option, no approved leave of absence may exceed three months
unless reemployment upon expiration of such leave is provided by statute or
contract. If reemployment is not so provided, then on the date six months
following the first day of such leave, any Incentive Stock Option held by the
Participant shall cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Non-Statutory Stock Option.


                    (4)          If
an Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Code Section 422, such Option shall
thereafter be treated as a Non-Statutory Stock Option.


                    (5)          The
Agreement covering an Incentive Stock Option shall contain such other terms and
provisions that the Committee determines necessary to qualify the Option as an
Incentive Stock Option.


8.          Stock
Appreciation Rights.


          (a)          Nature
of Award. An Award of Stock Appreciation Rights shall be subject to such
terms and conditions as are determined by the Committee, and shall provide a
Participant the right to receive upon exercise of the SAR all or a portion of
the excess of (i) the Fair Market Value as of the date of exercise of the SAR
of the number of Shares as to which the SAR is being exercised, over (ii) the
aggregate exercise price for such number of Shares. The per Share exercise
price for any SAR Award shall be determined by the Committee and set forth in
the applicable Agreement, and shall not be less than the Fair Market Value of a
Share on the Grant Date, except in the case of Substitute Awards (to the extent
consistent with Code Section 409A). 


          (b)          Exercise
of SAR. Each SAR may be exercisable in whole or in part at the times, on
the terms and in the manner provided in the Agreement. No SAR shall be
exercisable at any time after its scheduled expiration. When a SAR is no longer
exercisable, it shall be deemed to have terminated. Upon exercise of a SAR,
payment to the Participant 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 SAR. 


11






9.          Restricted
Stock Awards.


          (a)          Vesting
and Consideration. Shares subject to a Restricted Stock Award shall be
subject to vesting conditions, and the corresponding lapse of forfeiture
conditions and other restrictions, based on such factors and occurring over
such period of time as the Committee may determine in its discretion. The
Committee may provide whether any consideration other than Services must be
received by the Company or any Affiliate as a condition precedent to the grant
of a Restricted Stock Award, and may correspondingly provide for Company
reacquisition or repurchase rights if such additional consideration has been
required and some or all of a Restricted Stock Award does not vest.


          (b)          Shares
Subject to Restricted Stock Awards. Unvested Shares subject to a Restricted
Stock Award shall be evidenced by a book-entry in the name of the Participant
with the Company’s transfer agent or by one or more Stock certificates issued
in the name of the Participant. Any such Stock certificate shall be deposited
with the Company or its designee, together with an assignment separate from the
certificate, in blank, signed by the Participant, and bear an appropriate
legend referring to the restricted nature of the Restricted Stock evidenced
thereby. Any book-entry shall be subject to transfer restrictions and
accompanied by a similar legend. Upon the vesting of Shares of Restricted Stock
and the corresponding lapse of the restrictions and forfeiture conditions, the
corresponding transfer restrictions and restrictive legend will be removed from
the book-entry evidencing such Shares or the certificate evidencing such
Shares, and any such certificate shall be delivered to the Participant. Such
vested Shares may, however, remain subject to additional restrictions as
provided in Section 18(c). Except as otherwise provided in the Plan or an
applicable Agreement, a Participant with a Restricted Stock Award shall have
all the rights of a shareholder, including the right to vote the Shares of
Restricted Stock. 


10.          Stock
Unit Awards.


          (a)          Vesting
and Consideration. A Stock Unit Award shall be subject to vesting
conditions, and the corresponding lapse of forfeiture conditions and other
restrictions, based on such factors and occurring over such period of time as
the Committee may determine in its discretion. The Committee may provide
whether any consideration other than Services must be received by the Company
or any Affiliate as a condition precedent to the settlement of a Stock Unit
Award. 


          (b)          Payment
of Award. Following the vesting of a Stock Unit Award, settlement of the
Award and payment to the Participant shall be made at such time or times in the
form of cash, Shares (which may themselves be considered Restricted Stock under
the Plan subject to restrictions on transfer and forfeiture conditions) or a
combination of cash and Shares as determined by the Committee. If the Stock
Unit Award is not by its terms exempt from the requirements of Code Section
409A, then the applicable Agreement shall contain terms and conditions intended
to avoid adverse tax consequences specified in Code Section 409A. 


11.          Cash-Based
and Other Stock-Based Awards.


          (a)          Cash
Incentive Awards. A Cash Incentive Award shall be considered a
performance-based Award for purposes of, and subject to, Section 6(g), the
payment of which shall be contingent upon the degree to which one or more
specified performance goals have been achieved over the specified performance
period. Cash Incentive Awards may be granted to any Participant in such amounts
and upon such terms and at such times as shall be determined by the Committee,
and may be denominated in units that have a dollar value established by the
Committee as of the Grant Date. Following the completion of the applicable
performance period and the vesting of a Cash Incentive Award, payment of the
settlement amount of the Award to the Participant shall be made at such time or
times in the form of cash, Shares or 


12






other
forms of Awards under the Plan (valued for these purposes at their grant date
fair value) or a combination of cash, Shares and other forms of Awards as
determined by the Committee and specified in the applicable Agreement. If a Cash
Incentive Award is not by its terms exempt from the requirements of Code
Section 409A, then the applicable Agreement shall contain terms and conditions
intended to avoid adverse tax consequences specified in Code Section 409A. 


          (b)          Other
Stock-Based Awards. The Committee may from time to time grant Stock and
other Awards that are valued by reference to and/or payable in whole or in part
in Shares under the Plan. The Committee, in its sole discretion, shall
determine the terms and conditions of such Awards, which shall be consistent
with the terms and purposes of the Plan. The Committee may, in 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. 


12.          Changes
in Capitalization, Corporate Transactions, Change in Control. 


          (a)          Adjustments
for Changes in Capitalization. In the event of any equity restructuring
(within the meaning of FASB ASC Topic 718 - Stock Compensation) that causes the per
share value of Shares to change, such as a stock dividend, stock split,
spinoff, rights offering or recapitalization through an extraordinary dividend,
the Committee shall make such adjustments as it deems equitable and appropriate
to (i) the aggregate number and kind of Shares or other securities issued or
reserved for issuance under the Plan, (ii) the number and kind of Shares or
other securities subject to outstanding Awards, (iii) the exercise price of
outstanding Options and SARs, and (iv) any maximum limitations prescribed by
the Plan with respect to certain types of Awards or the grants to individuals
of certain types of Awards. In the event of any other change in corporate
capitalization, including a merger, consolidation, reorganization, or partial
or complete liquidation of the Company, such equitable adjustments described in
the foregoing sentence may be made as determined to be appropriate and
equitable by the Committee to prevent dilution or enlargement of rights of
Participants. In either case, any such adjustment shall be conclusive and
binding for all purposes of the Plan. No adjustment shall be made pursuant to
this Section 12(a) in connection with the conversion of any convertible
securities of the Company, or in a manner that would cause Incentive Stock
Options to violate Section 422(b) of the Code or cause an Award to be
subject to adverse tax consequences under Section 409A of the Code. 


          (b)          Corporate
Transactions. Unless otherwise provided in an applicable Agreement, the
following provisions shall apply to outstanding Awards in the event of a Change
in Control that involves a Corporate Transaction.


                    (1)          Continuation,
Assumption or Replacement of Awards. In the event of a Corporate
Transaction, then the surviving or successor entity (or its Parent) may
continue, assume or replace Awards outstanding as of the date of the Corporate
Transaction (with such adjustments as may be required or permitted by Sections
12(a) and 6(g)), and such Awards or replacements therefor shall remain
outstanding and be governed by their respective terms, subject to Section
12(b)(4) below. A surviving or successor entity may elect to continue, assume
or replace only some Awards or portions of Awards. For purposes of this Section
12(b)(1), an Award shall be considered assumed or replaced if, in connection
with the Corporate Transaction and in a manner consistent with Code Sections
409A and 424, either (i) the contractual obligations represented by the Award
are expressly assumed by the surviving or successor entity (or its Parent) with
appropriate adjustments to the number and type of securities subject to the
Award and the exercise price thereof that preserves the intrinsic value of the
Award existing at the time of the Corporate Transaction, or (ii) the
Participant has received a comparable equity-based award that preserves the
intrinsic value of the Award existing at the time of the Corporate Transaction
and provides for a vesting or exercisability schedule that is the same as or
more favorable to the Participant. 


13






                    (2)          Acceleration.
If and to the extent that outstanding Awards under the Plan are not continued,
assumed or replaced in connection with a Corporate Transaction, then (i) all
outstanding Options and SARs shall become fully exercisable for such period of
time prior to the effective time of the Corporate Transaction as is deemed fair
and equitable by the Committee, and shall terminate at the effective time of
the Corporate Transaction, and (ii) all outstanding Full Value Awards shall
fully vest immediately prior to the effective time of the Corporate
Transaction. The Committee shall provide written notice of the period of
accelerated exercisability of Options and SARs to all affected Participants.
The accelerated exercisability of any Option or SAR pursuant to this Section
12(b)(2) and the exercise of any Option or SAR whose exercisability is so accelerated
shall be conditioned upon the consummation of the Corporate Transaction, and
any such exercise shall be effective only immediately before such consummation.


                    (3)          Payment
for Awards. If and to the extent that outstanding Awards under
the Plan are not continued, assumed or replaced in connection with a Corporate
Transaction, then the Committee may provide that some or all of such
outstanding Awards shall be canceled at or immediately prior to the effective
time of the Corporate Transaction in exchange for payments to the holders as
provided in this Section 12(b)(3). The Committee will not be required to treat
all Awards similarly for purposes of this Section 12(b)(3). The payment for any
Award canceled shall be in an amount equal to the difference, if any, between
(i) the fair market value (as determined in good faith by the Committee) of the
consideration that would otherwise be received in the Corporate Transaction for
the number of Shares subject to the Award, and (ii) the aggregate exercise
price (if any) for the Shares subject to such Award. If the amount determined
pursuant to clause (i) of the preceding sentence is less than or equal to the
amount determined pursuant to clause (ii) of the preceding sentence with respect
to any Award, such Award may be canceled pursuant to this Section 12(b)(3)
without payment of any kind to the affected Participant. Payment of any amount
under this Section 12(b)(3) shall be made in such form, on such terms and
subject to such conditions as the Committee determines in its discretion, which
may or may not be the same as the form, terms and conditions applicable to
payments to the Company’s shareholders in connection with the Corporate
Transaction, and may, in the Committee’s discretion, include subjecting such
payments to vesting conditions comparable to those of the Award surrendered,
subjecting such payments to escrow or holdback terms comparable to those
imposed upon the Company’s shareholders under the Corporate Transaction, or
calculating and paying the present value of payments that would otherwise be
subject to escrow or holdback terms. 


                    (4)          Termination
After a Corporate Transaction. If and to the extent that Awards
are continued, assumed or replaced under the circumstances described in Section
12(b)(1), and if within 18 months after the Corporate Transaction a Participant
experiences an involuntary termination of Service for reasons other than Cause,
or voluntarily terminates his or her Service for Good Reason, then (i)
outstanding Options and SARs issued to the Participant that are not yet fully
exercisable shall immediately become exercisable in full and shall remain
exercisable for one year following the Participant’s termination of Service,
and (ii) any Full Value Awards that are not yet fully vested shall immediately
vest in full.


          (c)          Change
in Control. In connection with a Change in Control that does not involve a
Corporate Transaction, the Committee may provide (in the applicable Agreement
or otherwise) for one or more of the following: (i) that any Award shall become
fully vested and exercisable upon the occurrence of the Change in Control or
upon the involuntary termination of the Participant without Cause or the
Participant’s voluntary termination for Good Reason within 18 months of the
Change in Control, (ii) that any Option or SAR shall remain exercisable during
all or some specified portion of its remaining term, or (iii) that Awards shall
be canceled in exchange for payments in a manner similar to that provided in
Section 12(b)(3). The Committee will not be required to treat all Awards
similarly in such circumstances. 


14






          (d)          Dissolution
or Liquidation. Unless otherwise provided in an applicable Agreement, in
the event the shareholders of the Company approve the complete dissolution or
liquidation of the Company, all outstanding Awards shall vest and become fully
exercisable, and will terminate immediately prior to the consummation of any
such proposed action. The Committee will notify each Participant as soon as
practicable of such accelerated vesting and exercisability and pending
termination. 


	
 

	
 


	
13.

	
Plan Participation and Service Provider Status. Status as a Service Provider shall not be
construed as a commitment that any Award will be made under the Plan to that
Service Provider or to eligible Service Providers generally. Nothing in the
Plan or in any Agreement or related documents shall confer upon any Service
Provider or Participant any right to continued Service with the Company or
any Affiliate, nor shall it interfere with or limit in any way any right of
the Company or any Affiliate to terminate the person’s Service at any time
with or without Cause or change such person’s compensation, other benefits, job
responsibilities or title.


	
 

	
 


	
14.

	
Tax Withholding. The Company or any Affiliate, as
applicable, shall have the right to (i) withhold from any cash payment under
the Plan or any other compensation owed to a Participant an amount sufficient
to cover any required withholding taxes related to the grant, vesting,
exercise or settlement of an Award, and (ii) require a Participant or other
person receiving Shares under the Plan to pay 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 (up to the Participant’s minimum required
tax withholding rate) through a reduction in the number of Shares delivered
or a delivery or tender 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 applicable laws.




15.          Effective
Date, Duration, Amendment and Termination of the Plan.


          (a)          Effective
Date. The Plan shall become effective on the date it is approved by the
Company’s shareholders, which shall be considered the date of its adoption for
purposes of Treasury Regulation §1.422-2(b)(2)(i). No Awards shall be made
under the Plan prior to its effective date. If the Company’s shareholders fail
to approve the Plan within 12 months of its approval by the Board, the Plan shall
be of no further force or effect. 


          (b)          Duration
of the Plan. The Plan shall remain in effect until all Shares subject to it
shall be distributed, the Plan is terminated pursuant to Section 15(c), or the
tenth anniversary of the effective date of the Plan, whichever occurs first
(the “Termination
Date”). Awards made before the Termination Date shall continue to be
outstanding in accordance with their terms unless limited in the applicable
Agreements.


          (c)          Amendment
and Termination of the Plan. The Board may at any time terminate, suspend
or amend the Plan. The Company shall submit any amendment of the Plan to its
shareholders for approval only to the extent required by applicable laws or
regulations or the rules of any securities exchange on which the Shares may
then be listed. No termination, suspension, or amendment of the Plan may
materially impair the rights of any Participant under a previously granted
Award without the Participant’s consent, unless such action is necessary to
comply with applicable law or stock exchange rules.


          (d)          Amendment
of Awards. Subject to Section 15(e), the Committee may unilaterally amend
the terms of any Agreement previously granted, except that no such amendment
may materially impair 


15






the
rights of any Participant under the applicable Award without the Participant’s
consent, unless such amendment is necessary to comply with applicable law or
stock exchange rules or any compensation recovery policy as provided in Section
18(i)(3).


          (e)          No
Option or SAR Repricing. Except as provided in Section 12(a), no Option or
Stock Appreciation Right granted under the Plan may be amended to decrease the
exercise price thereof, be cancelled in exchange for the grant of any new
Option or Stock Appreciation Right with a lower exercise price or any new Full
Value Award, be repurchased by the Company or any Affiliate, or otherwise be
subject to any action that would be treated under accounting rules or otherwise
as a “repricing” of such Option or Stock Appreciation Right, unless such action
is first approved by the Company’s shareholders. 


	
 

	
 


	
16.

	
Substitute Awards. The Committee may also grant Awards under
the Plan in substitution for, or in connection with the assumption of,
existing awards granted 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 merger, consolidation, acquisition of property
or stock, separation, reorganization or liquidation to which the Company or
an Affiliate 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
that the Committee 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. 




17.          Performance-Based
Compensation.


          (a)          Designation
of Awards. If the Committee determines at the time a Full Value Award or a
Cash Incentive Award is granted to a Participant that such Participant is, or
is likely to be, a “covered employee” for purposes of Code Section 162(m) as of
the end of the tax year in which the Company would ordinarily claim a tax deduction
in connection with such Award, then the Committee may provide that this Section
17 will be applicable to such Award, which shall be considered
Performance-Based Compensation.


          (b)          Compliance
with Code Section 162(m). If an Award is subject to this Section 17, then
the lapsing of restrictions thereon and the distribution of cash, Shares or
other property pursuant thereto, as applicable, shall be subject to the
achievement over the applicable performance period of one or more performance goals
based on one or more of the performance measures specified in Section 17(d).
The Committee will select the applicable performance measure(s) and specify the
performance goal(s) based on those performance measures for any performance
period, specify in terms of an objective formula or standard the method for
calculating the amount payable to a Participant if the performance goal(s) are
satisfied, and certify the degree to which applicable performance goals have
been satisfied and any amount payable in connection with an Award subject to
this Section 17, all within the time periods prescribed by and consistent with
the other requirements of Code Section 162(m). In specifying the performance
goals applicable to any performance period, the Committee may provide that one
or more objectively determinable adjustments shall be made to the performance
measures on which the performance goals are based, which may include
adjustments that would cause such measures to be considered “non-GAAP financial
measures” within the meaning of Rule 101 under Regulation G promulgated by the
Securities and Exchange Commission. The Committee may also adjust performance
measures for a performance period to the extent permitted by Code Section
162(m) in connection with an event described in Section 12(a) to prevent the
dilution or enlargement of a Participant’s rights with respect to
Performance-Based Compensation. The Committee may adjust downward, but not
upward, any amount determined to be otherwise payable in connection with such
an Award. The Committee may also provide, in an Agreement or otherwise, that
the achievement of specified performance goals in connection with an Award
subject to this Section 17 may be waived upon the death or Disability of the 


16






Participant
or under any other circumstance with respect to which the existence of such
possible waiver will not cause the Award to fail to qualify as
“performance-based compensation” under Code Section 162(m).


          (c)          Limitations.
With respect to Awards of Performance-Based Compensation, the maximum number of
Shares that may be the subject of any Full Value Awards that are denominated in
Shares or Share equivalents and that are granted to any one Participant during
any calendar year shall not exceed 1,000,000 Shares (subject to adjustment as
provided in Section 12(a)). The maximum amount payable with respect to any Cash
Incentive Awards and Full Value Awards that are denominated other than in
Shares or Share equivalents and that are granted to any one Participant during
any calendar year shall not exceed $10,000,000 multiplied by the number of full
or partial years in the applicable performance period. 


          (d)          Performance
Measures. For purposes of any Full Value Award considered Performance-Based
Compensation subject to this Section 17, the performance measures to be
utilized shall be limited to one or a
combination of two or more of the following: revenue or net sales; gross
profit; operating profit; net income; earnings before income taxes; earnings
before one or more of interest, taxes, depreciation, amortization and other
adjustments; profitability as measured by return ratios (including, but not
limited to, return on assets, return on equity, return on investment and return
on revenues or gross profit) or by the degree to which any of the foregoing
earnings measures exceed a percentage of revenues or gross profit; cash flow;
market share; margins (including one or more of gross, operating and net
earnings margins); stock price; total stockholder return; asset quality;
non-performing assets; operating assets; operating expenses; balance of cash,
cash equivalents and marketable securities; improvement in or attainment of
expense levels or cost savings; inventory levels; inventory or operating
asset turnover; accounts receivable levels (including measured in terms of days
sales outstanding); economic value added;
improvement in or attainment of working capital levels; employee retention;
customer satisfaction; and implementation or completion of critical projects;
and growth in customer base. Any
performance goal based on one or more of the foregoing performance measures
may, in the Committee’s discretion, be expressed in absolute amounts, on a per
share basis (basic or diluted), relative to one or more other performance
measures, as a growth rate or change from preceding periods, or as a comparison
to the performance of specified companies or a published or special index
(including stock market indices) or other external measures, and may relate to
one or any combination of Company, Affiliate or business unit performance.


18.          Other
Provisions.


          (a)          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 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. To the extent any person has or
acquires a right to receive a payment in connection with an Award under the
Plan, this right shall be no greater than the right of an unsecured general
creditor of the Company.


          (b)          Limits
of Liability. Except as may be required by law, neither the Company nor any
member of the Board or of the Committee, nor any other person participating
(including participation pursuant to a delegation of authority under Section
3(c) of the Plan) 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.


17






          (c)          Compliance
with Applicable Legal Requirements. No Shares distributable pursuant to the
Plan shall be issued and delivered unless the issuance of the Shares complies
with all applicable legal requirements, including compliance with the
provisions of applicable state and federal securities laws, and the
requirements of any securities exchanges on which the Company’s Shares may, at
the time, be listed. During any period in which the offering and issuance of
Shares under the Plan are not registered under federal or state securities
laws, Participants shall acknowledge that they are acquiring Shares under the
Plan for investment purposes and not for resale, and that Shares may not be
transferred except pursuant to an effective registration statement under, or an
exemption from the registration requirements of, such securities laws. Any
book-entry or stock certificate evidencing Shares issued under the Plan that
are subject to such securities law restrictions shall be accompanied by or bear
an appropriate restrictive legend.


          (d)          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 or state 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 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.


          (e)          Governing
Law. 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.


          (f)          Severability.
If any provision of the Plan shall be held illegal or invalid for any reason,
the illegality or invalidity shall not affect 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.


          (g)          Code
Section 409A. It is intended that (i) all Awards of Options, SARs and
Restricted Stock under the Plan will not provide for the deferral of
compensation within the meaning of Code Section 409A and thereby be exempt from
Code Section 409A, and (ii) all other Awards under the Plan will either not
provide for the deferral of compensation within the meaning of Code Section
409A, or will comply with the requirements of Code Section 409A, and the Committee
shall endeavor to structure Awards and administer and interpret the Plan in
accordance with this intent. The Plan and any Agreement may be unilaterally
amended by the Company in any manner deemed necessary or advisable by the
Committee or Board in order to maintain such exemption from or compliance with
Code Section 409A, and any such amendment shall conclusively be presumed to be
necessary to comply with applicable law. Notwithstanding anything to the
contrary in the Plan or any Agreement, with respect to any Award that
constitutes a deferral of compensation subject to Code Section 409A:


                    (1)          If
any amount is payable under such Award upon a termination of Service, a
termination of Service will be deemed to have occurred only at such time as the
Participant has experienced a “separation from service” as such term is defined
for purposes of Code Section 409A; and


                    (2)          If
any amount shall be payable with respect to any such Award as a result of a
Participant’s “separation from service” at such time as the Participant is a
“specified employee” within the meaning of Code Section 409A, then no payment
shall be made, except as permitted under Code Section 409A, prior to the
first business day after the earlier of (i) the date that is six months after
the 


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Participant’s
separation from Service or (ii) the Participant’s death. Unless the Committee
has adopted a specified employee identification policy as contemplated by Code
Section 409A, specified employees will be identified in accordance with the
default provisions specified under Code Section 409A. 


Neither
the Company, the Committee nor any other person involved with the
administration of this Plan shall in any way be responsible for ensuring the
exemption of any Award from, or compliance by any Award with, the requirements
of Code Section 409A. By accepting an Award under this Plan, each Participant
acknowledges that the Company has no duty or obligation to design or administer
the Plan or Awards granted thereunder in a manner that minimizes a
Participant’s tax liabilities, including the avoidance of any additional tax
liabilities under Code Section 409A.


          (h)          Rule
16b-3. It is intended 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. If any provision of the Plan or of any
Award would otherwise frustrate or conflict with the intent expressed in this
Section 18(h), 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 applied to Participants subject
to Section 16 of the Exchange Act to the extent permitted by law and in the
manner deemed advisable by the Committee.


          (i)          Forfeiture
and Compensation Recovery.


                    (1)          The
Committee may specify in an Agreement that the Participant’s rights, payments,
and benefits with respect to an Award will be subject to reduction,
cancellation, forfeiture or recovery by the Company upon the occurrence of
certain specified events, in addition to any otherwise applicable vesting or
performance conditions of an Award. Such events may include termination of
Service for Cause, violation of any material Company or Affiliate policy,
breach of noncompetition, non-solicitation or confidentiality provisions that
apply to the Participant, a determination that the payment of the Award was
based on an incorrect determination that financial or other criteria were met
or other conduct by the Participant that is detrimental to the business or
reputation of the Company or its Affiliates.


                    (2)          Awards
and any compensation associated therewith may be made subject to forfeiture,
recovery by the Company or other action pursuant to any compensation recovery
policy adopted by the Board or the Committee at any time, including in response
to the requirements of Section 10D of the Exchange Act and any implementing
rules and regulations thereunder, or as otherwise required by law. Any
Agreement may be unilaterally amended by the Committee to comply with any such
compensation recovery policy. 


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