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                               TRICORD SYSTEMS, INC.
                                          
                       1998 NON-EMPLOYEE DIRECTOR STOCK PLAN
                                          
                      (AS AMENDED EFFECTIVE JANUARY 30, 1999)


     1.     PURPOSE.  The purpose of the 1998 Non-Employee Director Stock 
Plan (the "Plan"), is to advance the interests of Tricord Systems, Inc. (the 
"Company") and its stockholders by enabling the Company to attract and retain 
the services of experienced and knowledgeable non-employee directors and to 
increase the proprietary interests of such directors in the Company's 
long-term success and progress and their identification with the interests of 
the Company's stockholders.

     2.     ADMINISTRATION.  The Plan will be administered by the Board or by 
a committee of the Board.  So long as the Company has a class of its equity 
securities registered under section 12 of the Exchange act, any committee 
administering the Plan will consist solely of two or more members of the 
Board who are "non-employee directors" within the meaning of Rule 16b-3 under 
the Exchange Act.  Such a committee, if established, will act by majority 
approval of the members, and a majority of the members of such a committee 
will constitute a quorum.  As used in the Plan, "Committee" will refer to the 
Board or to such a committee, if established.  All questions of 
interpretation of the Plan or of any stock options and stock awards under the 
Plan (collectively, "Awards") shall be determined by the Committee and such 
determination shall be final and binding upon all persons having an interest 
in the Plan.

     3.     PARTICIPATION IN THE PLAN.  Directors of the Company who are not 
employees of the Company or any subsidiary of the Company shall be eligible 
to participate in the Plan ("Eligible Directors").

     4.     STOCK SUBJECT TO THE PLAN.

            (a)    NUMBER OF SHARES.  The maximum number of shares of Common 
     Stock that shall be reserved for issuance under the Plan shall be five 
     hundred fifty thousand (550,000) shares of the Company's common stock, 
     $.01 par value (the "Common Stock"), subject to adjustment upon changes 
     in capitalization of the Company as provided in subparagraph (b) below.  
     The maximum number of shares authorized may be increased from time to 
     time by approval of the Board of Directors and the stockholders of the 
     Company.  Shares of Common Stock that are issued as stock awards or that 
     may be issued upon exercise of stock options granted under the Plan 
     shall be applied to reduce the maximum number of shares of Common Stock 
     remaining available for use under the Plan.  The shares to be issued 
     pursuant to the Plan may be, at the election of the Company, either 
     treasury shares or shares authorized but unissued.  Any shares of Common 
     Stock that are subject to a stock option granted under the Plan (or any 
     portion thereof) that lapses, expires or for any reason is terminated 
     unexercised shall automatically again become available for use under the 
     Plan.

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            (b)    CHANGES IN STOCK.  In the event of any reorganization, 
     merger, consolidation, recapitalization, liquidation, reclassification, 
     stock dividend, stock split, combination of shares, rights offering, or 
     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 entity in any such 
     transaction, the board of directors of the surviving corporation) shall 
     make adjustments, determined by the Committee in its discretion to be 
     appropriate, as to the number and kind of securities subject to and 
     reserved under the Plan and, in order to prevent dilution or enlargement 
     of rights of Eligible Directors, the number, kind and, where applicable, 
     the exercise price of outstanding Awards granted under the Plan.

     5.     GRANT OF OPTIONS.

            (a)    NON-STATUTORY STOCK OPTIONS.  All stock options granted 
     under the Plan (the "Options") shall be non-statutory stock options not 
     entitled to special tax treatment under Section 422 of the Internal 
     Revenue Code of 1986, as amended to date and as may be amended from time 
     to time (the "Code").

            (b)    TERMS, CONDITIONS AND FORM OF OPTIONS.  Each Option 
     granted under the Plan shall be evidenced by a written agreement in such 
     form as the Committee shall from time to time approve, which agreements 
     shall comply with and be subject to the following terms and conditions:

                  (i)    GRANT OF OPTIONS.  At such time as additional Eligible
           Directors are first elected or appointed to the Board of Directors to
           fill new directorships or to fill vacancies, such Eligible Directors
           will be granted automatically, on a one-time basis on the date of
           their election or appointment, an Option to purchase 25,000 shares of
           Common Stock.  In addition to the one-time grant of an Option to
           purchase 25,000 shares as described above (the "One-Time Option"), an
           Option to purchase 10,000 shares of Common Stock (the "Annual 
           Option") shall be granted on January 5, 1998 and on each succeeding
           January 5 thereafter to each Eligible Director as of such dates.

                  The written agreement evidencing each Option granted under the
           Plan shall be dated as of the applicable date of grant (the "Date of
           Grant").  An Eligible Director accepting such a grant of an Option 
           (an "Optionee") shall execute and return a copy of such option 
           agreement to the Committee.

                   (ii)   OPTION EXERCISE PRICE.  The per share price to be paid
           by the Optionee at the time an Option is exercised shall be 100% of
           the Fair Market Value of one share of Common Stock on the Date of
           Grant.  For purposes of the Plan, "Fair Market Value" shall mean, 
           with respect to the Common Stock, as of any date, (or, if no shares 
           were traded or quoted on such date, as of the next preceding day on
           which there was such a trade or quote) (A) the closing sale price of
           the Common Stock if the Common Stock is listed, admitted to unlisted
           trading

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           privileges or reported on any foreign or national securities
           exchange or on the Nasdaq National Market or an equivalent foreign
           market on which sale prices are reported; (B) if the Common Stock is
           not so listed, admitted to unlisted trading privileges or reported,
           the closing bid price as reported by the Nasdaq SmallCap Market, OTC
           Bulletin Board or the National Quotation Bureau, Inc. or other 
           comparable service; or (C) if the Common Stock is not so listed or
           reported, such price as the Committee determines in good faith in the
           exercise of its reasonable discretion.

                  (iii)  EXERCISABILITY AND DURATION OF OPTIONS.  Each One-Time
           Option shall become exercisable each month on a cumulative basis with
           respect to 2.78% of the total shares covered by the Option, 
           commencing one month after its Date of Grant and shall terminate
           five years after its Date of Grant.  Each Annual Option shall become
           exercisable in full six months after its Date of Grant and shall 
           terminate five years after its Date of Grant. 

                  (iv)   TERMINATION OF DIRECTORSHIP.  Each Option shall
           terminate and may no longer be exercised if and when the Optionee
           ceases to serve as a director of the Company, except (A) if the
           Optionee ceases to serve as a director of the Company by reason of
           death or the occurrence of an event which constitutes permanent and
           total disability (within the meaning of Section 22(e)(3) of the 
           Code), then the Option shall remain exercisable to the extent that 
           the Option was exercisable as of such termination until the earlier 
           of the expiration of one year after such termination or the 
           remaining term of the Option, (B) if the Optionee ceases to serve 
           as a director of the Company by reason of his or her retirement, 
           then the Option shall remain exercisable to the extent that the 
           Option was exercisable on the date of retirement until the earlier 
           of the expiration of three months after such retirement or the 
           remaining term of the Option, (C) if the Optionee ceases to serve 
           as a director of the Company for any other reason, other than 
           voluntary termination or termination for "cause," then the Option 
           shall remain exercisable to the extent that the Option was 
           exercisable on the date the Optionee ceased to serve as a director 
           of the Company until the earlier of the expiration of three months 
           after the date the Optionee ceased to serve as a director of the 
           Company or the remaining term of the Option, and (D) if the 
           Optionee ceases to serve as a director of the Company as a result 
           of voluntary termination by the Optionee or termination by the 
           Company for "cause," then all outstanding Options then held by such 
           Optionee shall immediately terminate without notice of any kind and 
           no Options then held by the Optionee shall thereafter be 
           exercisable.
     
                  (v)    MANNER OF OPTION EXERCISE.  An Option may be exercised
           by an Optionee in whole or in part from time to time, subject to the
           conditions contained in the Plan and in the agreement evidencing such
           Option, by giving written notice of exercise to the Company at its
           principal executive office (such notice to specify the particular
           Option that is being exercised and the number of shares with respect
           to which the Option is being exercised) accompanied by payment, in
           cash or

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           personal check payable to the Company, of the total purchase
           price of the shares to be purchased under the Option.  The Company
           shall not be required to sell or issue any shares under any
           outstanding Option if, in the sole opinion of the Committee, the
           issuance of such shares would constitute a violation by the Optionee
           or the Company of any applicable law or regulation of any 
           governmental authority, including without limitation federal and 
           state securities laws.

                  (vi)   NONTRANSFERABILITY.  No Option granted under the Plan
           shall be assignable or transferable during the lifetime of the
           Optionee, either voluntarily or involuntarily, or subjected to any
           lien, directly or indirectly, by operation of law or otherwise,
           including execution, levy, garnishment, attachment, pledge or
           bankruptcy.  In the event of an Optionee's death, an Optionee's 
           rights and interest in any Option shall be transferable by 
           testamentary will or the laws of descent and distribution, and the 
           exercise of any Options (to the extent permitted pursuant to 
           paragraph 5(b)(iv)(A) above) may be made by the Participant's legal
           representatives, heirs or legatees.  An Option shall be exercisable
           during the Optionee's lifetime only by the Optionee.

                  (vii)  SUCCESSIVE OPTIONS.  Successive Options may be granted
           to the same Optionee, whether or not the Options previously granted 
           to such Optionee remain unexercised.  An Optionee may exercise an 
           Option if then exercisable, notwithstanding that Options previously 
           granted to such Optionee remain unexercised.

                  (viii) WITHHOLDING.  The Company may require an Optionee to
           promptly pay the Company the amount of any federal, state or local
           withholding tax attributable to the Optionee's exercise of an Option
           before acting on the Optionee's notice of exercise of the Option.

     6.     ANNUAL RETAINER PAYMENT.  Each Eligible Director shall receive an 
annual retainer payment of $10,000 in the discretion of the Board by action 
of a majority of the Board in cash or Common Stock, commencing on November 1, 
1997 and continuing on each succeeding November 1.  If payment is made in 
Common Stock, each Eligible Director shall receive such number of shares of 
Common Stock as equals $10,000 divided by the Fair Market Value of one share 
of Common Stock as of each immediately preceding October 31.

     7.     MEETING FEES.  Each Eligible Director shall receive meeting fees 
of $1,500 payable in the discretion of the Board by action of a majority of 
the Board in cash or Common Stock, for each Board meeting attended and for 
each Committee meeting attended if separate from each Board meeting.  If 
payment is made in Common Stock, each Eligible Director shall receive such 
number of shares of Common Stock as equals $1,500 divided by the Fair Market 
Value of one share of Common Stock as of each immediately preceding day prior 
to such meetings.  In addition, each Eligible Director shall receive such 
number of shares of Common Stock as equals

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any unpaid meeting payments due them through the February 20, 1998 Board 
meeting, divided by the Fair Market Value of one share of Common Stock on 
February 20, 1998. 
   

     8.     LIMITATION OF RIGHTS.

            (a)    NO RIGHT TO CONTINUE AS A DIRECTOR.  Neither the Plan, nor 
     the granting of an Award nor any other action taken pursuant to the 
     Plan, shall constitute or be evidence of any agreement or understanding, 
     express or implied, that the Company will retain a director for any 
     period of time, or at any particular rate of compensation.

            (b)    RIGHTS AS A STOCKHOLDER.  No Optionee shall have any 
     rights as a stockholder with respect to any shares of Common Stock 
     covered by an Option granted pursuant to the Plan until the Optionee 
     shall have become the holder of record of such shares, and no 
     adjustments shall be made for dividends or other distributions or other 
     rights as to which there is a record date preceding the date the 
     Optionee becomes the holder of record of such shares.

     9.     AMENDMENT OF THE PLAN.  The Board may amend the Plan from time to 
time in such respects as the Board may deem advisable in order that Awards 
under the Plan will conform to any change in applicable laws or regulations 
or in any other respect the Board may deem to be in the best interests of the 
Company; provided, however, that no amendments to the Plan will be effective 
without approval of the stockholders of the Company if stockholder approval 
of the amendment is then required pursuant to section 422 of the Code or the 
rules of Nasdaq or any stock exchange.  The Board may suspend or terminate 
the Plan or any portion thereof at any time.  No termination, suspension or 
amendment of the Plan shall alter any outstanding Option without the consent 
of the Optionee affected thereby; provided, however, that this sentence shall 
not impair the right of the Committee to take whatever action it deems 
appropriate under paragraph 4(b) above.

     10.    EFFECTIVE DATE AND DURATION OF THE PLAN.  The Plan shall be 
effective as of February 20, 1998, on the date of adoption by the Board.  The 
Plan shall terminate at midnight on February 20, 2003 and may be terminated 
prior thereto by action of the Board, 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.

     11.    GOVERNING LAWS.  The Plan and all rights and obligations under 
the Plan shall be construed in accordance with and governed by the laws of 
the State of Minnesota, notwithstanding any conflicts of law principles.

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