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                                                                  Exhibit 10.8

                  RDO EQUIPMENT CO. 1996 STOCK INCENTIVE PLAN
                        AND FORMS OF OPTION AGREEMENTS


1.  PURPOSE OF PLAN.

      The purpose of the RDO Equipment Co. 1996 Stock Incentive Plan (the 
"Plan") is to advance the interests of RDO Equipment Co. (the "Company") and 
its stockholders by enabling the Company and its Subsidiaries to attract and 
retain persons of ability to perform services for the Company and its 
Subsidiaries by providing an incentive to such individuals through equity 
participation in the Company and by rewarding such individuals who contribute 
to the achievement by the Company of its economic objectives.

2.  DEFINITIONS.

       The following terms will have the meanings set forth below, unless the 
context clearly otherwise requires:

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

       2.2     "BROKER EXERCISE NOTICE" means a written notice pursuant to 
which a Participant, upon exercise of an Option, irrevocably instructs a 
broker or dealer to sell a sufficient number of shares or loan a sufficient 
amount of money to pay all or a portion of the exercise price of the Option 
and/or any related withholding tax obligations and remit such sums to the 
Company and directs the Company to deliver stock certificates to be issued 
upon such exercise directly to such broker or dealer.

       2.3     "CHANGE IN CONTROL" means an event described in Section 13.1 
of the Plan.

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

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

       2.6     "COMMON STOCK" means the Class A Common Stock of the Company, 
par value $.01 per share, or the number and kind of shares of stock or other 
securities into which such Common Stock may be changed in accordance with 
Section 4.3 of the Plan.

       2.7     "DISABILITY" means the disability of the Participant such as 
would entitle the Participant to receive disability income benefits pursuant 
to the long-term disability plan of the Company or Subsidiary then covering 
the Participant or, if no such plan exists or is applicable to the 
Participant, the permanent and total disability of the Participant within the 
meaning of Section 22(e)(3) of the Code.

       2.8     "ELIGIBLE RECIPIENTS" means all employees of the Company or 
any Subsidiary and any non-employee directors, consultants and independent 
contractors of the Company or any Subsidiary.

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

       2.10     "FAIR MARKET VALUE" means, with respect to the Common Stock, 
as of any date (or, if no shares were traded or quoted on such date, as of 
the next preceding date on which there was such a trade or quote) (a) the 
mean between the reported high and low sale prices of the Common Stock if the 

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Common Stock is listed, admitted to unlisted trading privileges or reported 
on any national securities exchange or on the Nasdaq National Market; (b) if 
the Common Stock is not so listed, admitted to unlisted trading privileges or 
reported on any national securities exchange or on the Nasdaq National 
Market, 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.  If determined by the Committee, such determination will be 
final, conclusive and binding for all purposes and on all persons, including, 
without limitation, the Company, the stockholders of the Company, the 
Participants and their respective successors-in-interest.  No member of the 
Committee will be liable for any determination regarding the fair market 
value of the Common Stock that is made in good faith.

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

       2.12     "INCENTIVE STOCK OPTION" means a right to purchase Common 
Stock granted to an Eligible Recipient pursuant to Section 6 of the Plan that 
qualifies as an "incentive stock option" within the meaning of Section 422 of 
the Code.

       2.13     "NON-STATUTORY STOCK OPTION" means a right to purchase Common 
Stock granted to an Eligible Recipient pursuant to Section 6 of the Plan that 
does not qualify as an Incentive Stock Option.

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

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

       2.16     "PERFORMANCE UNIT" means a right granted to an Eligible 
Recipient pursuant to Section 9 of the Plan to receive a payment from the 
Company, in the form of stock, cash or a combination of both, upon the 
achievement of established employment, service, performance or other goals.

       2.17     "PREVIOUSLY ACQUIRED SHARES" means shares of Common Stock 
that are already owned by the Participant or, with respect to any Incentive 
Award, that are to be issued upon the grant, exercise or vesting of such 
Incentive Award.

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

       2.19     "RETIREMENT" means termination of employment or service 
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 Subsidiary then covering the Participant, provided that if the 
Participant is not covered by any such plan or practice, the Participant will 
be deemed to be covered by the Company's plan or practice for purposes of 
this determination.

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

       2.21     "STOCK APPRECIATION RIGHT" means a right granted to an 
Eligible Recipient pursuant to Section 7 of the Plan to receive a payment 
from the Company, in the form of stock, cash or a 

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combination of both, equal to the difference between the Fair Market Value of 
one or more shares of Common Stock and the exercise price of such shares 
under the terms of such Stock Appreciation Right.

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

       2.23     "SUBSIDIARY" means any entity that is directly or indirectly 
controlled by the Company or any entity in which the Company has a 
significant equity interest, as determined by the Committee.

       2.24     "TAX DATE" means the date any withholding tax obligation 
arises under the Code for a Participant with respect to an Incentive Award.

3.  PLAN ADMINISTRATION.

       3.1     THE COMMITTEE.  The Plan will be administered by the Board or 
by a committee of the Board.  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 and, if the Board so determines in its sole 
discretion, who are "outside directors" within the meaning of Section 162(m) 
of the Code.  Such a committee, if established, will act by majority approval 
of the members (but may also take action with the written consent of all 
members of such committee), 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.  To the extent consistent with 
corporate law, the Committee may delegate to any officers of the Company the 
duties, power and authority of the Committee under the Plan pursuant to such 
conditions or limitations as the Committee may establish; provided, however, 
that only the Committee may exercise such duties, power and authority with 
respect to Eligible Recipients who are subject to Section 16 of the Exchange 
Act.  The Committee may exercise its duties, power and authority under the 
Plan in its sole and absolute discretion without the consent of any 
Participant or other party, unless the Plan specifically provides otherwise.  
Each determination, interpretation or other action made or taken by the 
Committee pursuant to the provisions of the Plan will be conclusive and 
binding for all purposes and on all persons, and no member of the Committee 
will be liable for any action or determination made in good faith with 
respect to the Plan or any Incentive Award granted under the Plan.

     3.2     AUTHORITY OF THE COMMITTEE.

             (a)     In accordance with and subject to the provisions of the 
     Plan, the Committee will have the authority to determine all provisions of 
     Incentive Awards as the Committee may deem necessary or desirable and as 
     consistent with the terms of the Plan, including, without limitation, the 
     following: (i) the Eligible Recipients to be selected as Participants; 
     (ii) the nature and extent of the Incentive Awards to be made to each 
     Participant (including the number of shares of Common Stock to be subject 
     to each Incentive Award, any exercise price, the manner in which Incentive 
     Awards will vest or become exercisable and whether Incentive Awards will be
     granted in tandem with other Incentive Awards) and the form of written
     agreement, if any, evidencing such Incentive Award; (iii) the time or
     times when Incentive Awards will be granted; (iv) the duration of each
     Incentive Award; and (v) the restrictions and other conditions to which
     the payment or vesting of Incentive Awards may be subject.  In addition,
     the Committee will have the authority under the Plan in its sole
     discretion to pay the economic value of any Incentive Award in the form of
     cash, Common Stock or any combination of both.

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             (b)     The Committee will have the authority under the Plan to 
     amend or modify the terms of any outstanding Incentive Award in any manner,
     including, without limitation, the authority to modify the number of
     shares or other terms and conditions of an Incentive Award, extend the
     term of an Incentive Award, accelerate the exercisability or vesting or
     otherwise terminate any restrictions relating to an Incentive Award,
     accept the surrender of any outstanding Incentive Award or, to the extent
     not previously exercised or vested, authorize the grant of new Incentive
     Awards in substitution for surrendered Incentive Awards; provided, however
     that the amended or modified terms are permitted by the Plan as then in
     effect and that any Participant adversely affected by such amended or
     modified terms has consented to such amendment or modification.  No
     amendment or modification to an Incentive Award, however, whether pursuant
     to this Section 3.2 or any other provisions of the Plan, will be deemed to
     be a regrant of such Incentive Award for purposes of this Plan.

             (c)     In the event of (i) any reorganization, merger, 
     consolidation, recapitalization, liquidation, reclassification, stock 
     dividend, stock split, combination of shares, rights offering, 
     extraordinary dividend or divestiture (including a spin-off) or any other 
     change in corporate structure or shares, (ii) any purchase, acquisition, 
     sale or disposition of a significant amount of assets or a significant 
     business, (iii) any change in accounting principles or practices, or (iv) 
     any other similar change, in each case with respect to the Company or any 
     other entity whose performance is relevant to the grant or vesting of an 
     Incentive Award, the Committee (or, if the Company is not the surviving 
     corporation in any such transaction, the board of directors of the 
     surviving corporation) may, without the consent of any affected 
     Participant, amend or modify the vesting criteria of any outstanding 
     Incentive Award that is based in whole or in part on the financial 
     performance of the Company (or any Subsidiary or division thereof) or such 
     other entity so as equitably to reflect such event, with the desired result
     that the criteria for evaluating such financial performance of the Company 
     or such other entity will be substantially the same (in the sole discretion
     of the Committee or the board of directors of the surviving corporation) 
     following such event as prior to such event; provided, however, that the 
     amended or modified terms are permitted by the Plan as then in effect.

4.  SHARES AVAILABLE FOR ISSUANCE.

       4.1     MAXIMUM NUMBER OF SHARES AVAILABLE.  Subject to adjustment as 
provided in Section 4.3 of the Plan, the initial maximum number of shares of 
Common Stock that will be available for issuance under the Plan will be 
1,250,000 shares of Common Stock; as of February 1 of each year the Plan is 
in effect, if the total number of shares of Class A and Class B Common Stock 
issued and outstanding, not including any shares of Common Stock issued under 
the Plan, exceeds the total number of shares of Class A and Class B Common 
Stock issued and outstanding as of February 1 of the preceding year, the 
number of shares available will be increased by an amount such that the total 
number of shares available for issuance under the Plan equals 10% of the 
total number of shares of Common Stock outstanding, not including any shares 
issued under the Plan. Lapsed, forfeited, or canceled awards will not count 
against these limits. Cash exercises of SARs and cash settlements of other 
awards will also not be counted against these limits but the total number of 
SARs and other awards settled in cash shall not exceed the total number of 
shares authorized for issuance under the Plan (without deduction for 
issuances).  Notwithstanding any other provisions of the Plan to the 
contrary, no Participant in the Plan may be granted any Options or Stock 
Appreciation Rights, or any other Incentive Awards with a value based solely 
on an increase in the value of the Common Stock after the date of grant, 
relating to more than 125,000 shares of Common Stock in the aggregate in any 
fiscal year of the Company (subject to adjustment as provided in Section 4.3 
of the Plan); provided, however, that a Participant who is first 

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appointed or elected as an officer, hired as an employee or retained as a 
consultant by the Company or who receives a promotion that results in an 
increase in responsibilities or duties may be granted, during the fiscal year 
of such appointment, election, hiring, retention or promotion, Options, Stock 
Appreciation Rights or such other Incentive Awards relating to up to 250,000 
shares of Common Stock (subject to adjustment as provided in Section 4.3 of 
the Plan).

       4.2     ACCOUNTING FOR INCENTIVE AWARDS.  Shares of Common Stock that 
are issued under the Plan or that are subject to outstanding Incentive Awards 
will be applied to reduce the maximum number of shares of Common Stock 
remaining available for issuance under the Plan.  Any shares of Common Stock 
that are subject to an Incentive Award that lapses, expires, is forfeited or 
for any reason is terminated unexercised or unvested and any shares of Common 
Stock that are subject to an Incentive Award that is settled or paid in cash 
or any form other than shares of Common Stock will automatically again become 
available for issuance under the Plan.  Any shares of Common Stock that 
constitute the forfeited portion of a Restricted Stock Award, however, will 
not become available for further issuance under the Plan.

       4.3     ADJUSTMENTS TO SHARES AND INCENTIVE AWARDS.  In the event of 
any reorganization, merger, consolidation, recapitalization, liquidation, 
reclassification, stock dividend, stock split, combination of shares, rights 
offering, divestiture or extraordinary dividend (including a spin-off) or any 
other change in the corporate structure or shares of the Company, the 
Committee (or, if the Company is not the surviving corporation in any such 
transaction, the board of directors of the surviving corporation) will make 
appropriate adjustment (which determination will be conclusive) as to the 
number and kind of securities or other property (including cash) available 
for issuance or payment under the Plan and, in order to prevent dilution or 
enlargement of the rights of Participants, (a) the number and kind of 
securities or other property (including cash) subject to outstanding Options, 
and (b) the exercise price of outstanding Options.

5.  PARTICIPATION.

       Participants in the Plan will be those Eligible Recipients who, in the 
judgment of the Committee, have contributed, are contributing or are expected 
to contribute to the achievement of economic objectives of the Company or its 
Subsidiaries.  Eligible Recipients may be granted from time to time one or 
more Incentive Awards, singly or in combination or in tandem with other 
Incentive Awards, as may be determined by the Committee in its sole 
discretion. Incentive Awards will be deemed to be granted as of the date 
specified in the grant resolution of the Committee, which date will be the 
date of any related agreement with the Participant.

6.  OPTIONS.

       6.1     GRANT.  An Eligible Recipient may be granted one or more 
Options under the Plan, and such Options will be subject to such terms and 
conditions, consistent with the other provisions of the Plan, as may be 
determined by the Committee in its sole discretion.  The Committee may 
designate whether an Option is to be considered an Incentive Stock Option or 
a Non-Statutory Stock Option.  To the extent that any Incentive Stock Option 
granted under the Plan ceases for any reason to qualify as an "incentive 
stock option" for purposes of Section 422 of the Code, such Incentive Stock 
Option will continue to be outstanding for purposes of the Plan but will 
thereafter be deemed to be a Non-Statutory Stock Option.

       6.2     EXERCISE PRICE.  The per share price to be paid by a 
Participant upon exercise of an Option will be determined by the Committee in 
its discretion at the time of the Option grant; provided, 

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

       6.3     EXERCISABILITY AND DURATION.  An Option will become 
exercisable at such times and in such installments as may be determined by 
the Committee in its sole discretion at the time of grant; provided, however, 
that (a) except for Options to new directors, no Option may be exercisable 
prior to six months from its date of grant (other than as provided in Section 
11 of the Plan), and (b) no Option may be exercisable after 10 years from its 
date of grant.

       6.4     PAYMENT OF EXERCISE PRICE.  The total purchase price of the 
shares to be purchased upon exercise of an Option will be paid entirely in 
cash (including check, bank draft or money order); provided, however, that 
the Committee, in its sole discretion and upon terms and conditions 
established by the Committee, may allow such payments to be made, in whole or 
in part, by tender of a Broker Exercise Notice, Previously Acquired Shares, a 
promissory note (on terms acceptable to the Committee in its sole discretion) 
or by a combination of such methods.

       6.5     MANNER OF EXERCISE.  An Option may be exercised by a 
Participant in whole or in part from time to time, subject to the conditions 
contained in the Plan and in the agreement evidencing such Option, by 
delivery in person, by facsimile or electronic transmission or through the 
mail of written notice of exercise to the Company (Attention: Chief Financial 
Officer) at its principal executive office in Fargo, North Dakota and by 
paying in full the total exercise price for the shares of Common Stock to be 
purchased in accordance with Section 6.4 of the Plan.

7.  STOCK APPRECIATION RIGHTS.

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

       7.2     EXERCISE PRICE.  The exercise price of a Stock Appreciation 
Right will be determined by the Committee, in its discretion, at the date of 
grant but may not be less than 100% of the Fair Market Value of one share of 
Common Stock on the date of grant.

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

8.  RESTRICTED STOCK AWARDS.

       8.1     GRANT.  An Eligible Recipient may be granted one or more 
Restricted Stock Awards under the Plan, and such Restricted Stock Awards will 
be subject to such terms and conditions, consistent with the other provisions 
of the Plan, as may be determined by the Committee in its sole 

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discretion.  The Committee may impose such restrictions or conditions, not 
inconsistent with the provisions of the Plan, to the vesting of such 
Restricted Stock Awards as it deems appropriate, including, without 
limitation, that the Participant remain in the continuous employ or service 
of the Company or a Subsidiary for a certain period or that the Participant 
or the Company (or any Subsidiary or division thereof) satisfy certain 
performance goals or criteria.

       8.2     RIGHTS AS A STOCKHOLDER; TRANSFERABILITY.  Except as provided 
in Sections 8.1, 8.3 and 14.3 of the Plan, a Participant will have all 
voting, dividend, liquidation and other rights with respect to shares of 
Common Stock issued to the Participant as a Restricted Stock Award under this 
Section 8 upon the Participant becoming the holder of record of such shares 
as if such Participant were a holder of record of shares of unrestricted 
Common Stock.

       8.3     DIVIDENDS AND DISTRIBUTIONS.  Unless the Committee determines 
otherwise in its sole discretion (either in the agreement evidencing the 
Restricted Stock Award at the time of grant or at any time after the grant of 
the Restricted Stock Award), any dividends or distributions (including 
regular quarterly cash dividends) paid with respect to shares of Common Stock 
subject to the unvested portion of a Restricted Stock Award will be subject 
to the same restrictions as the shares to which such dividends or 
distributions relate.  In the event the Committee determines not to pay such 
dividends or distributions currently, the Committee will determine in its 
sole discretion whether any interest will be paid on such dividends or 
distributions.  In addition, the Committee in its sole discretion may require 
such dividends and distributions to be reinvested (and in such case the 
Participants consent to such reinvestment) in shares of Common Stock that 
will be subject to the same restrictions as the shares to which such 
dividends or distributions relate.

       8.4     ENFORCEMENT OF RESTRICTIONS.  To enforce the restrictions 
referred to in this Section 8, the Committee may place a legend on the stock 
certificates referring to such restrictions and may require the Participant, 
until the restrictions have lapsed, to keep the stock certificates, together 
with duly endorsed stock powers, in the custody of the Company or its 
transfer agent or to maintain evidence of stock ownership, together with duly 
endorsed stock powers, in a certificateless book-entry stock account with the 
Company's transfer agent.

9.  PERFORMANCE UNITS.

       An Eligible Recipient may be granted one or more Performance Units 
under the Plan, and such Performance Units will be subject to such terms and 
conditions, consistent with the other provisions of the Plan, as may be 
determined by the Committee in its sole discretion.  The Committee may impose 
such restrictions or conditions, not inconsistent with the provisions of the 
Plan, to the vesting of such Performance Units as it deems appropriate, 
including, without limitation, that the Participant remain in the continuous 
employ or service of the Company or any Subsidiary for a certain period or 
that the Participant or the Company (or any Subsidiary or division thereof) 
satisfy certain performance goals or criteria.  The Committee will have the 
sole discretion to determine the form in which payment of the economic value 
of vested Performance Units will be made to the Participant (i.e., cash, 
Common Stock or any combination thereof) or to consent to or disapprove the 
election by the Participant of the form of such payment.

10. STOCK BONUSES.

     An Eligible Recipient may be granted one or more Stock Bonuses under the 
Plan, and such Stock Bonuses will be subject to such terms and conditions, 
consistent with the other provisions of the Plan, as may be determined by the 
Committee.  The Participant will have all voting, dividend, liquidation and 

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other rights with respect to the shares of Common Stock issued to a 
Participant as a Stock Bonus under this Section 10 upon the Participant 
becoming the holder of record of such shares; provided, however, that the 
Committee may impose such restrictions on the assignment or transfer of a 
Stock Bonus as it deems appropriate.

11. EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE.

       11.1     TERMINATION DUE TO DEATH, DISABILITY OR RETIREMENT.  In the 
event a Participant's employment or other service with the Company and all 
Subsidiaries is terminated by reason of death, Disability or Retirement:

                (a)     All outstanding Options and Stock Appreciation Rights 
       then held by the Participant will become immediately exercisable in full 
       and will remain exercisable for a period of one year after such 
       termination (but in no event after the expiration date of any such Option
       or Stock Appreciation Right);

                (b)     All Restricted Stock Awards then held by the 
       Participant will become fully vested; and

                (c)     All Performance Units and Stock Bonuses then held by the
       Participant will vest and/or continue to vest in the manner determined by
       the Committee and set forth in the agreement evidencing such Performance 
       Units or Stock Bonuses.

       11.2     TERMINATION FOR REASONS OTHER THAN DEATH, DISABILITY OR 
RETIREMENT.

                (a)     In the event a Participant's employment or other service
       is terminated with the Company and all Subsidiaries for any reason other 
       than death, Disability or Retirement, or a Participant is in the employ 
       or service of a Subsidiary and the Subsidiary ceases to be a Subsidiary 
       of the Company (unless the Participant continues in the employ or service
       of the Company or another Subsidiary), all rights of the Participant 
       under the Plan and any agreements evidencing an Incentive Award will 
       immediately terminate without notice of any kind, and no Options or Stock
       Appreciation Rights then held by the Participant will thereafter be 
       exercisable, all Restricted Stock Awards then held by the Participant 
       that have not vested will be terminated and forfeited, and all 
       Performance Units and Stock Bonuses then held by the Participant will 
       vest and/or continue to vest in the manner determined by the Committee 
       and set forth in the agreement evidencing such Performance Units or Stock
       Bonuses; provided, however, that if such termination is due to any reason
       other than termination by the Company or any Subsidiary for "cause," all 
       outstanding Options or Stock Appreciation Rights then held by such 
       Participant will remain exercisable to the extent exercisable as of such 
       termination for a period of three months after such termination (but in 
       no event after the expiration date of any such Option or Stock 
       Appreciation Right).

                (b)     For purposes of this Section 11.2, "cause" (as 
       determined by the Committee) will be as defined in any employment or 
       other agreement or policy applicable to the Participant or, if no such 
       agreement or policy exists, will mean (i) dishonesty, fraud, 
       misrepresentation, embezzlement or deliberate injury or attempted injury,
       in each case related to the Company or any Subsidiary, (ii) any unlawful 
       or criminal activity of a serious nature, (iii) any intentional and 
       deliberate breach of a duty or duties that, individually or in the 
       aggregate, are material in relation to the Participant's overall duties, 
       or (iv) any material breach of any employment, service, confidentiality 
       or noncompete agreement entered into with the Company or any Subsidiary.

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       11.3     MODIFICATION OF RIGHTS UPON TERMINATION.  Notwithstanding the 
other provisions of this Section 11, upon a Participant's termination of 
employment or other service with the Company and all Subsidiaries, the 
Committee may, in its sole discretion (which may be exercised at any time on 
or after the date of grant, including following such termination), cause 
Options and Stock Appreciation Rights (or any part thereof) then held by such 
Participant to become or continue to become exercisable and/or remain 
exercisable following such termination of employment or service and 
Restricted Stock Awards, Performance Units and Stock Bonuses then held by 
such Participant to vest and/or continue to vest or become free of transfer 
restrictions, as the case may be, following such termination of employment or 
service, in each case in the manner determined by the Committee; provided, 
however, that no Option or Stock Appreciation Right may remain exercisable 
beyond its expiration date.

       11.4     BREACH OF CONFIDENTIALITY OR NONCOMPETE AGREEMENTS.  
Notwithstanding anything in the Plan to the contrary, in the event that a 
Participant materially breaches the terms of any confidentiality or 
noncompete agreement entered into with the Company or any Subsidiary, whether 
such breach occurs before or after termination of such Participant's 
employment or other service with the Company or any Subsidiary, the Committee 
in its sole discretion may immediately terminate all rights of the 
Participant under the Plan and any agreements evidencing an Incentive Award 
then held by the Participant without notice of any kind.

       11.5     DATE OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE.  Unless 
the Committee otherwise determines in its sole discretion, a Participant's 
employment or other service will, for purposes of the Plan, be deemed to have 
terminated on the date recorded on the personnel or other records of the 
Company or the Subsidiary for which the Participant provides employment or 
other service, as determined by the Committee in its sole discretion based 
upon such records.

12. PAYMENT OF WITHHOLDING TAXES.

       12.1     GENERAL RULES.  The Company is entitled to (a) withhold and 
deduct from future wages of the Participant (or from other amounts that may 
be due and owing to the Participant from the Company or a Subsidiary), or 
make other arrangements for the collection of, all legally required amounts 
necessary to satisfy any and all federal, state and local withholding and 
employment-related tax requirements attributable to an Incentive Award, 
including, without limitation, the grant, exercise or vesting of, or payment 
of dividends with respect to, an Incentive Award or a disqualifying 
disposition of stock received upon exercise of an Incentive Stock Option, or 
(b) require the Participant promptly to remit the amount of such withholding 
to the Company before taking any action, including issuing any shares of 
Common Stock, with respect to an Incentive Award.

       12.2     SPECIAL RULES.  The Committee may, in its sole discretion and 
upon terms and conditions established by the Committee, permit or require a 
Participant to satisfy, in whole or in part, any withholding or 
employment-related tax obligation described in Section 12.1 of the Plan by 
electing to tender Previously Acquired Shares, a Broker Exercise Notice or a 
promissory note (on terms acceptable to the Committee in its sole 
discretion), or by a combination of such methods.

                               9

<PAGE>

13. CHANGE IN CONTROL.

       13.1     CHANGE IN CONTROL.  For purposes of this Section 13, a 
"Change in Control" of the Company will mean the following:

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

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

                (c)     a merger or consolidation to which the Company is a 
       party if the stockholders of the Company immediately prior to effective 
       date of such merger or consolidation have "beneficial ownership" (as 
       defined in Rule 13d-3 under the Exchange Act), immediately following the 
       effective date of such merger or consolidation, of securities of the 
       surviving corporation representing (i) more than 50%, but less than 80%, 
       of the combined voting power of the surviving corporation's then 
       outstanding securities ordinarily having the right to vote at elections 
       of directors, unless such merger or consolidation has been approved in 
       advance by the Continuity Directors (as defined in Section 13.2 below), 
       or (ii) 50% or less of the combined voting power of the surviving 
       corporation's then outstanding securities ordinarily having the right to 
       vote at elections of directors (regardless of any approval by the 
       Continuity Directors);

                (d)     any person becomes after the effective date of the Plan 
       the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
       directly or indirectly, of (i) 20% or more, but not 50% or more, of the
       combined voting power of the Company's outstanding securities ordinarily
       having the right to vote at elections of directors, unless the 
       transaction resulting in such ownership has been approved in advance by 
       the Continuity Directors, or (ii) 50% or more of the combined voting 
       power of the Company's outstanding securities ordinarily having the 
       right to vote at elections of directors (regardless of any approval by 
       the Continuity Directors); or

                (e)     the Continuity Directors cease for any reason to 
       constitute at least a majority of the Board.

Notwithstanding anything in this Section 13.1 to the contrary, none of the 
following events, in and of itself, will be deemed to constitute a Change in 
Control for purposes of this Section 13:  (i) the transfer by Ronald D. 
Offutt ("Offutt") of shares of Common Stock or shares of Class B Common Stock 
of the Company to a trust, provided that, Offutt retains voting control with 
respect to such shares; (ii) the distribution to his heirs or beneficiaries 
upon Offutt's death, or (iii) the conversion of shares of Class B Common 
Stock into shares of Common Stock, provided that this exception from the 
definition of Change in Control for conversions relates only to the 
conversion itself and not to any transfers that may occur in conjunction with 
such conversions.

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

                                10

<PAGE>

       13.3     ACCELERATION OF VESTING.  Without limiting the authority of 
the Committee under Sections 3.2 and 4.3 of the Plan, if a Change in Control 
of the Company occurs, then, unless otherwise provided by the Committee in 
its sole discretion either in the agreement evidencing an Incentive Award at 
the time of grant or at any time after the grant of an Incentive Award, (a) 
all outstanding Options and Stock Appreciation Rights that have been held at 
least six months will become immediately exercisable in full and will remain 
exercisable for the remainder of their terms, regardless of whether the 
Participant to whom such Options or Stock Appreciation Rights have been 
granted remains in the employ or service of the Company or any Subsidiary; 
(b) all outstanding Restricted Stock Awards will become immediately fully 
vested and non-forfeitable; and (c) all outstanding Performance Units and 
Stock Bonuses then held by the Participant will vest and/or continue to vest 
in the manner determined by the Committee and set forth in the agreement 
evidencing such Performance Units or Stock Bonuses.

       13.4     CASH PAYMENT FOR OPTIONS.  If a Change in Control of the 
Company occurs, then the Committee, if approved by the Committee in its sole 
discretion either in an agreement evidencing an Incentive Award at the time 
of grant or at any time after the grant of an Incentive Award, and without 
the consent of any Participant effected thereby, may determine that some or 
all Participants holding outstanding Options will receive, with respect to 
some or all of the shares of Common Stock subject to such Options, as of the 
effective date of any such Change in Control of the Company, cash in an 
amount equal to the excess of the Fair Market Value of such shares 
immediately prior to the effective date of such Change in Control of the 
Company over the exercise price per share of such Options.

       13.5     LIMITATION ON CHANGE IN CONTROL PAYMENTS.  Notwithstanding 
anything in Section 13.3 or 13.4 of the Plan to the contrary, if, with 
respect to a Participant, the acceleration of the vesting of an Incentive 
Award as provided in Section 13.3 or the payment of cash in exchange for all 
or part of an Incentive Award as provided in Section 13.4 (which acceleration 
or payment could be deemed a "payment" within the meaning of Section 
280G(b)(2) of the Code), together with any other "payments" that such 
Participant has the right to receive from the Company or any corporation that 
is a 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), or would otherwise be subject to the excise tax 
imposed by Section 4999 of the Code, or any interest or penalties are 
incurred by the Participant with respect to such excise tax (such excise tax, 
together with any such interest and penalties, are hereinafter collectively 
referred to as the "Excise Tax"), then the Participant shall be entitled to 
receive an additional payment (a "Gross-Up Payment") in an amount such that 
after payment by the Participant of all taxes (including any interest or 
penalties imposed with respect to such taxes), including, without limitation, 
any income taxes (and any interest and penalties imposed with respect 
thereto) and Excise Tax, the Participant will be in the same after-tax 
position as if no Excise Tax had been imposed.  The Committee may, from time 
to time, adopt policies and procedures with respect to the calculation and 
payment of these amounts.

14. RIGHTS OF ELIGIBLE RECIPIENTS AND PARTICIPANTS; TRANSFERABILITY.

       14.1     EMPLOYMENT OR SERVICE.  Nothing in the Plan will interfere 
with or limit in any way the right of the Company or any Subsidiary to 
terminate the employment or service of any Eligible Recipient or Participant 
at any time, nor confer upon any Eligible Recipient or Participant any right 
to continue in the employ or service of the Company or any Subsidiary.

       14.2     RIGHTS AS A STOCKHOLDER.  As a holder of Incentive Awards 
(other than Restricted Stock Awards and Stock Bonuses), a Participant will 
have no rights as a stockholder unless and until such Incentive Awards are 
exercised for, or paid in the form of, shares of Common Stock and the 
Participant becomes the holder of record of such shares.  Except as otherwise 
provided in the Plan, no adjustment 

                                11

<PAGE>

will be made for dividends or distributions with respect to such Incentive 
Awards as to which there is a record date preceding the date the Participant 
becomes the holder of record of such shares, except as the Committee may 
determine in its discretion.

       14.3     RESTRICTIONS ON TRANSFER.  Except pursuant to testamentary 
will or the laws of descent and distribution or as otherwise expressly 
permitted by the Plan, unless approved by the Committee in its sole 
discretion, no right or interest of any Participant in an Incentive Award 
prior to the exercise or vesting of such Incentive Award will be assignable 
or transferable, or subjected to any lien, during the lifetime of the 
Participant, either voluntarily or involuntarily, directly or indirectly, by 
operation of law or otherwise.  A Participant will, however, be entitled to 
designate a beneficiary to receive an Incentive Award upon such Participant's 
death, and in the event of a Participant's death, payment of any amounts due 
under the Plan will be made to, and exercise of any Options (to the extent 
permitted pursuant to Section 11 of the Plan) may be made by, the 
Participant's legal representatives, heirs and legatees.

       14.4     NON-EXCLUSIVITY OF THE PLAN.  Nothing contained in the Plan 
is intended to modify or rescind any previously approved compensation plans 
or programs of the Company or create any limitations on the power or 
authority of the Board to adopt such additional or other compensation 
arrangements as the Board may deem necessary or desirable.

15. SECURITIES LAW AND OTHER RESTRICTIONS.

     Notwithstanding any other provision of the Plan or any agreements entered
into pursuant to the Plan, the Company will not be required to issue any shares
of Common Stock under this Plan, and a Participant may not sell, assign,
transfer or otherwise dispose of shares of Common Stock issued pursuant to
Incentive Awards granted under the Plan, unless (a) there is in effect with
respect to such shares a registration statement under the Securities Act and
any applicable state securities laws or an exemption from such registration
under the Securities Act and applicable state securities laws, and (b) there
has been obtained any other consent, approval or permit from any other
regulatory body which the Committee, in its sole discretion, deems necessary or
advisable.  The Company may condition such issuance, sale or transfer upon the
receipt of any representations or agreements from the parties involved, and the
placement of any legends on certificates representing shares of Common Stock,
as may be deemed necessary or advisable by the Company in order to comply with
such securities law or other restrictions.

16. PLAN AMENDMENT, MODIFICATION AND TERMINATION.

     The Board may suspend or terminate the Plan or any portion thereof at any
time, and may amend the Plan from time to time in such respects as the Board
may deem advisable in order that Incentive Awards under the Plan will conform
to any change in applicable laws or regulations or in any other respect the
Board may deem to be in the best interests of the Company; provided, however,
that no amendments to the Plan will be effective without approval of the
stockholders of the Company if stockholder approval of the amendment is then
required pursuant to Section 422 of the Code or the rules of any stock exchange
or Nasdaq.  No termination, suspension or amendment of the Plan may adversely
affect any outstanding Incentive Award without the consent of the affected
Participant; provided, however, that this sentence will not impair the right of
the Committee to take whatever action it deems appropriate under Sections 3.2,
4.3 and 13 of the Plan.

                            12

<PAGE>

17. EFFECTIVE DATE AND DURATION OF THE PLAN.

     The Plan is effective as of October 1, 1996.  The Plan will terminate at
midnight on September 31, 2006, and may be terminated prior to such time to by
Board action, and no Incentive Award will be granted after such termination.
Incentive Awards outstanding upon termination of the Plan may continue to be
exercised, or become free of restrictions, in accordance with their terms.

18. MISCELLANEOUS.

       18.1     GOVERNING LAW.  The validity, construction, interpretation, 
administration and effect of the Plan and any rules, regulations and actions 
relating to the Plan will be governed by and construed exclusively in 
accordance with the laws of the State of Delaware, notwithstanding the 
conflicts of laws principles of any jurisdictions.

       18.2     SUCCESSORS AND ASSIGNS.  The Plan will be binding upon and 
inure to the benefit of the successors and permitted assigns of the Company 
and the Participants.

                                   13
<PAGE>


                           INCENTIVE STOCK OPTION AGREEMENT

    THIS AGREEMENT is entered into and effective as of this ____ day of
_______, ____ (the "Date of Grant"), by and between RDO Equipment Co. (the
"Company") and _______________ (the "Optionee").

    A.   The Company has adopted the RDO Equipment Co. 1996 Stock Incentive
Plan (the "Plan") authorizing the Board of Directors of the Company, or a
committee as provided for in the Plan (the Board or such a committee to be
referred to as the "Committee"), to grant incentive stock options to employees
of the Company and its Subsidiaries (as defined in the Plan).

    B.   The Company desires to give the Optionee an inducement to acquire a
proprietary interest in the Company and an added incentive to advance the
interests of the Company by granting to the Optionee an option to purchase
shares of Class A Common Stock of the Company pursuant to the Plan, subject to
the satisfaction of any conditions to such award as the Committee may have made
to the grant of such option.

    C.   The grant of this option is expressly conditioned upon the delivery by
Optionee to the Company of an assignment of invention, confidentiality and/or
non-compete agreement acceptable to the Company.

    Accordingly, the parties agree as follows:

1.  GRANT OF OPTION.

    The Company hereby grants to the Optionee the right, privilege, and option
(the "Option") to purchase ____________________ (_________) shares (the "Option
Shares") of the Company's Class A Common Stock, $0.01 par value (the "Class A
Common Stock"), according to the terms and subject to the conditions hereinafter
set forth and as set forth in the Plan.  The Option is intended to be an
"incentive stock option," as that term is used in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").

2.  OPTION EXERCISE PRICE.

    The per share price to be paid by Optionee in the event of an exercise of
the Option will be $_____.

3.  DURATION OF OPTION AND TIME OF EXERCISE.

    3.1  INITIAL PERIOD OF EXERCISABILITY.  The Option will become exercisable
with respect to the Option Shares in ____ (__) installments.  The following
table sets forth the initial dates of exercisability of

                                          23


<PAGE>

each installment and the number of Option Shares as to which this Option will
become exercisable on such dates:

                   Initial Date of                    Number of Option Shares
                   Exercisability                     Available for Exercise
                   ---------------                    -----------------------


                     -----------                            ---------
                     -----------                            ---------
                     -----------                            ---------
                     -----------                            ---------
                     -----------                            ---------

The foregoing rights to exercise this Option will be cumulative with respect to
the Option Shares becoming exercisable on each such date, but in no event will
this Option be exercisable after, and this Option will become void and expire as
to all unexercised Option Shares at, 5:00 p.m. (Fargo, North Dakota time) on
_______ __, ____ (the "Time of Termination").

    3.2  TERMINATION OF EMPLOYMENT.

         (a)  TERMINATION DUE TO DEATH OR DISABILITY.  In the event that the
    Optionee's employment with the Company and all Subsidiaries is terminated
    by reason of the Optionee's death or Disability (as defined in the Plan),
    this Option will become immediately exercisable in full and will remain
    exercisable for a period of one year after such termination (but in no
    event after the Time of Termination).

         (b)  TERMINATION DUE TO RETIREMENT.  In the event that the Optionee's
    employment with the Company and all Subsidiaries is terminated by reason of
    Retirement (as defined in the Plan), all outstanding Options then held by
    the Optionee will remain exercisable to the extent exercisable as of such
    termination for a period of 90 days after such termination (but in no event
    after the Time of Termination).

         (c)  TERMINATION FOR REASONS OTHER THAN DEATH, DISABILITY OR
    RETIREMENT.  In the event the Optionee's employment with the Company and
    all Subsidiaries is terminated for any reason other than death, Disability
    or Retirement, or the Optionee is in the employ of a Subsidiary and the
    Subsidiary ceases to be a Subsidiary of the Company (unless the Optionee
    continues in the employ of the Company or another Subsidiary), all
    outstanding Options then held by the Optionee will remain exercisable to
    the extent exercisable as of such termination for a period of 90 days after
    such termination (but in no event after the Time of Termination); provided
    however, that if the Optionee materially breaches the terms of any
    confidentiality or noncompete agreement entered into with the Company or
    any Subsidiary, whether such breach occurs before or after termination of
    the Optionee's employment with the Company or any Subsidiary, the
    Committee, in its sole discretion and without the consent of the Optionee,
    may immediately terminate all rights of the Optionee under the Plan and
    this Agreement.

    3.3  CHANGE IN CONTROL.

         (a)  IMPACT OF CHANGE IN CONTROL.  If any events constituting a Change
    in Control (as defined in the Plan) of the Company occur, this Option will
    become immediately exercisable in full and will remain exercisable until
    the Time of Termination, regardless of whether the Optionee remains in the
    employ of the Company or any Subsidiary.  In addition, if a Change in
    Control of

                                          24


<PAGE>

    the Company occurs, the Committee, in its sole discretion and without the
    consent of the Optionee, may determine that the Optionee will receive, with
    respect to some or all of the Option Shares, 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 (as defined in the Plan) of such Option
    Shares immediately prior to the effective date of such Change in Control of
    the Company over the option exercise price per share of this Option.

         (b)  Excess Parachute Payment Tax Gross-Up:

              (i)  The parties hereto acknowledge that the protections set
         forth in this Paragraph 3.3(b) are important, and it is agreed that
         the Optionee should not have to bear the burden of any excise tax that
         might be levied under Section 4999 of the Code in the event that a
         portion of the payments or benefits payable to the Optionee by the
         Company or others, either pursuant to this Agreement or otherwise, are
         treated as an excess parachute payment.  The parties, therefore, have
         agreed as set forth in this Paragraph 3.3(b).

              (ii) Anything in this Agreement to the contrary notwithstanding,
         if it shall be determined that any payment or benefit provided by the
         Company, or any other person to or for the benefit of the Optionee
         (whether paid or payable or provided or providable pursuant to the
         terms of this Agreement or otherwise, but determined without regard to
         any additional payments required under this Paragraph 3.3(b)) (a
         "Payment") would be subject to the excise tax imposed by Section 4999
         of the Code or any interest or penalties are incurred by the Optionee
         with respect to such excise tax (such excise tax, together with any
         such interest and penalties, are hereinafter collectively referred to
         as the "Excise Tax"), then the Company shall pay to or on behalf of
         the Optionee an additional payment (a "Gross-Up Payment") in an amount
         such that after payment by the Optionee of all taxes (including any
         interest or penalties imposed with respect to such taxes), including,
         without limitation, any income taxes (and any interest and penalties
         imposed with respect thereto) and Excise Tax, Optionee will be in the
         same after-tax position as if no Excise Tax had been imposed.

4.  MANNER OF OPTION EXERCISE.

    4.1  NOTICE.  This Option may be exercised by the Optionee in whole or in
part from time to time, subject to the conditions contained in the Plan and in
this Agreement, by delivery, in person, by facsimile or electronic transmission
or through the mail, to the Company at its principal executive office in Fargo,
North Dakota (Attention: Chief Financial Officer), of a written notice of
exercise.  Such notice must be in a form satisfactory to the Committee, must
identify the Option, must specify the number of Option Shares with respect to
which the Option is being exercised, and must be signed by the person or persons
so exercising the Option.  Such notice must be accompanied by payment in full of
the total purchase price of the Option Shares purchased.  In the event that the
Option is being exercised, as provided by the Plan and Section 3.2 above, by any
person or persons other than the Optionee, the notice must be accompanied by
appropriate proof of right of such person or persons to exercise the Option.  As
soon as practicable after the effective exercise of the Option, the Optionee
will be recorded on the stock transfer books of the Company as the owner of the
Option Shares purchased, and the Company will deliver to the Optionee one or
more duly issued stock certificates evidencing such ownership.

                                          25


<PAGE>

    4.2  PAYMENT.  At the time of exercise of this Option, the Optionee must
pay the total purchase price of the Option Shares to be purchased entirely in
cash (including a check, bank draft or money order, payable to the order of the
Company); provided, however, that the Committee, in its sole discretion and upon
terms and conditions established by the Committee, may allow such payment to be
made, in whole or in part, by tender of Previously Acquired Shares (as such term
is defined in the Plan), or by a combination of cash and tender of Previously
Acquired Shares.  In the event the Optionee is permitted to pay the total
purchase price of this Option in whole or in part with Previously Acquired
Shares, the value of such shares will be equal to their Fair Market Value (as
defined in the Plan) on the date of exercise of this Option.

5.  RIGHTS OF OPTIONEE; TRANSFERABILITY.

    5.1  EMPLOYMENT.  Nothing in this Agreement will interfere with or limit in
any way the right of the Company or any Subsidiary to terminate the employment
of the Optionee at any time, nor confer upon the Optionee any right to continue
in the employ of the Company or any Subsidiary at any particular position or
rate of pay or for any particular period of time.

    5.2  RIGHTS AS A SHAREHOLDER.  The Optionee will have no rights as a
shareholder unless and until all conditions to the effective exercise of this
Option (including, without limitation, the conditions set forth in Sections 4
and 6 of this Agreement) have been satisfied and the Optionee has become the
holder of record of such shares.  No adjustment will be made for dividends or
distributions with respect to this Option as to which there is a record date
preceding the date the Optionee becomes the holder of record of such shares,
except as may otherwise be provided in the Plan or determined by the Committee
in its sole discretion.

    5.3  RESTRICTIONS ON TRANSFER.  Except pursuant to testamentary will or the
laws of descent and distribution or as otherwise expressly permitted by the
Plan, no right or interest of the Optionee in this Option prior to exercise may
be assigned or transferred, or subjected to any lien, during the lifetime of the
Optionee, either voluntarily or involuntarily, directly or indirectly, by
operation of law or otherwise.  The Optionee will, however, be entitled to
designate a beneficiary to receive this Option upon such Optionee's death, and,
in the event of the Optionee's death, exercise of this Option (to the extent
permitted pursuant to Section 3.2(a) of this Agreement) may be made by the
Optionee's legal representatives, heirs and legatees.

6.  WITHHOLDING TAXES.

    The Company is entitled to (a) withhold and deduct from future wages of the
Optionee (or from other amounts that may be due and owing to the Optionee from
the Company), or make other arrangements for the collection of, all legally
required amounts necessary to satisfy any federal, state or local withholding
and employment-related tax requirements attributable to the grant or exercise
of, or a disqualifying disposition with respect to, this Option or otherwise
incurred with respect to this Option, or (b) require the Optionee promptly to
remit the amount of such withholding to the Company before acting on the
Optionee's notice of exercise of this Option.  In the event that the Company is
unable to withhold such amounts, for whatever reason, the Optionee agrees to pay
to the Company an amount equal to the amount the Company would otherwise be
required to withhold under federal, state or local law.

7.  ADJUSTMENTS.

    In the event of any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, divestiture or extraordinary dividend
(including a spin-off), or any other change in the corporate structure or shares
of the

                                          26


<PAGE>

Company, the Committee (or, if the Company is not the surviving corporation in
any such transaction, the board of directors of the surviving corporation), in
order to prevent dilution or enlargement of the rights of the Optionee, will
make appropriate adjustment (which determination will be conclusive) as to the
number, kind and exercise price of securities subject to this Option.

8.  LIMITATION OF LIABILITY.

    Nothing in this Agreement will be construed to (a) limit in any way the
right of the Company to terminate the employment or service of the Optionee at
any time, or (b) be evidence of any agreement or understanding, express or
implied, that the Company will retain the Optionee in any particular position,
at any particular rate of compensation or for any particular period of time.

9.  SUBJECT TO PLAN.

    The Option and the Option Shares granted and issued pursuant to this
Agreement have been granted and issued under, and are subject to the terms of,
the Plan.  The terms of the Plan are incorporated by reference in this Agreement
in their entirety, and the Optionee, by execution of this Agreement,
acknowledges having received a copy of the Plan.  The provisions of this
Agreement will be interpreted as to be consistent with the Plan, and any
ambiguities in this Agreement will be interpreted by reference to the Plan.  In
the event that any provision of this Agreement is inconsistent with the terms of
the Plan, the terms of the Plan will prevail.

10. MISCELLANEOUS.

    10.1  BINDING EFFECT.  This Agreement will be binding upon the heirs,
executors, administrators and successors of the parties to this Agreement.

    10.2  GOVERNING LAW.  This Agreement and all rights and obligations under
this Agreement will be construed in accordance with the Plan and governed by the
laws of the State of Delaware, without regard to conflicts of laws provisions.
Any legal proceeding related to this Agreement will be brought in an appropriate
Delaware or North Dakota (which is to apply the law of Delaware) court, and the
parties to this Agreement consent to the exclusive jurisdiction of such court
for this purpose.

    10.3  ENTIRE AGREEMENT.  This Agreement and the Plan set forth the entire
agreement and understanding of the parties to this Agreement with respect to the
grant and exercise of this Option and the administration of the Plan and
supersede all prior agreements, arrangements, plans and understandings relating
to the grant and exercise of this Option and the administration of the Plan.

    10.4  AMENDMENT AND WAIVER.  Other than as provided in the Plan, this
Agreement may be amended, waived, modified or canceled only by a written
instrument executed by the parties to this Agreement or, in the case of a
waiver, by the party waiving compliance.

                                          27


<PAGE>

    The parties to this Agreement have executed this Agreement effective the
day and year first above written.

                                            RDO EQUIPMENT CO.
                                            By
                                               ---------------------------
                                            Its
                                                --------------------------


By execution of this Agreement,             OPTIONEE
the Optionee acknowledges having
received a copy of the Plan.

                                            ------------------------------
                                            (Signature)

                                            ------------------------------
                                            (Name and Address)


                                            ------------------------------

                                            ------------------------------



                                          28
<PAGE>
                                                                               
                     NON-STATUTORY STOCK OPTION AGREEMENT
                                       
     THIS AGREEMENT is entered into and effective as of this ____ day of 
______________, ____ (the "Date of Grant"), by and between RDO Equipment Co. 
(the "Company") and ___________________ (the "Optionee").

     A.   The Company has adopted the RDO Equipment Co.. 1996 Stock Incentive 
Plan (the "Plan") authorizing the Board of Directors of the Company, or a 
committee as provided for in the Plan (the Board or such a committee to be 
referred to as the "Committee"), to grant non-statutory stock options to 
employees, non-employee directors, consultants and independent contractors of 
the Company and its Subsidiaries (as defined in the Plan).

     B.   The Company desires to give the Optionee an inducement to acquire a 
proprietary interest in the Company and an added incentive to advance the 
interests of the Company by granting to the Optionee an option to purchase 
shares of Class A Common Stock of the Company pursuant to the Plan, subject 
to the satisfaction of any conditions to such award as the Committee may have 
made to the grant of such option.

     Accordingly, the parties agree as follows:

1.   GRANT OF OPTION.

     The Company hereby grants to the Optionee the right, privilege, and 
option (the "Option") to purchase ____________________________ (________) 
shares (the "Option Shares") of the Company's Class A Common Stock, $0.01 par 
value (the "Common Stock"), according to the terms and subject to the 
conditions hereinafter set forth and as set forth in the Plan.  The Option is 
not intended to be an "incentive stock option," as that term is used in 
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").

2.   OPTION EXERCISE PRICE.

     The per share price to be paid by Optionee in the event of an exercise 
of the Option will be $______.

3.   DURATION OF OPTION AND TIME OF EXERCISE.

     3.1     INITIAL PERIOD OF EXERCISABILITY.  The Option will become 
exercisable with respect to the Option Shares in _____________ (_____) 
installments.  The following table sets forth the initial dates of 
exercisability of each installment and the number of Option Shares as to 
which this Option will become exercisable on such dates:

     Initial Date of                           Number of Option
     Exercisability                      Shares Available for Exercise
     --------------                      -----------------------------

_____________, ______                                   _________
_____________, ______                                   _________
_____________, ______                                   _________
_____________, ______                                   _________


<PAGE>

_____________, ______                                   _________

The foregoing rights to exercise this Option will be cumulative with respect to
the Option Shares becoming exercisable on each such date, but in no event will
this Option be exercisable after, and this Option will become void and expire
as to all unexercised Option Shares at 5:00 p.m. (Fargo, North Dakota time) on
___________ __, ____ (the "Time of Termination").

     3.2     TERMINATION OF EMPLOYMENT OR OTHER SERVICE.

     (a)     TERMINATION DUE TO DEATH OR DISABILITY.  In the event that the 
Optionee's employment or other service with the Company and all Subsidiaries 
is terminated by reason of the Optionee's death or Disability (as defined in 
the Plan), this Option will become immediately exercisable in full and will 
remain exercisable for a period of one year after such termination (but in no 
event after the Time of Termination).

     (b)     TERMINATION DUE TO RETIREMENT.  In the event that the Optionee's 
employment or other service with the Company and all Subsidiaries is 
terminated by reason of Retirement (as defined in the Plan), all outstanding 
Options then held by the Optionee will remain exercisable to the extent 
exercisable as of such termination for a period of 90 days after such 
termination (but in no event after the Time of Termination).

     (c)     TERMINATION FOR REASONS OTHER THAN DEATH, DISABILITY OR 
RETIREMENT.  In the event the Optionee's employment or other service with the 
Company and all Subsidiaries is terminated for any reason other than death, 
Disability or Retirement, or the Optionee is in the employ or other service 
of a Subsidiary and the Subsidiary ceases to be a Subsidiary of the Company 
(unless the Optionee continues in the employ or other service of the Company 
or another Subsidiary), all outstanding Options then held by the Optionee 
will remain exercisable to the extent exercisable as of such termination for 
a period of 90 days after such termination (but in no event after the Time of 
Termination), provided however, that if the Optionee materially breaches the 
terms of any confidentiality or noncompete agreement entered into with the 
Company or any Subsidiary, whether such breach occurs before or after 
termination of the Optionee's employment or other service with the Company or 
any Subsidiary, the Committee may, in its sole discretion and without the 
consent of the Optionee, immediately terminate all rights of the Optionee 
under this Plan and this Agreement.

     3.3     CHANGE IN CONTROL.

     (a)     IMPACT OF CHANGE IN CONTROL.  If any events constituting a 
Change in Control (as defined in the Plan) of the Company occur, this Option 
will become immediately exercisable in full and will remain exercisable until 
the Time of Termination, regardless of whether the Optionee remains in the 
employ or service of the Company or any Subsidiary.  In addition, if a Change 
in Control of the Company occurs, the Committee, in its sole discretion and 
without the consent of the Optionee, may determine that the Optionee will 
receive, with respect to some or all of the Option Shares, 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 (as defined in the Plan) 
of such Option Shares immediately prior to the effective date of such Change 
in Control of the Company over the option exercise price per share of this 
Option.

                               2

<PAGE>

     (b)     Excess Parachute Payment Tax Gross-Up:

             (i)     The parties hereto acknowledge that the protections set 
                     forth in this Paragraph 3.3(b) are important, and it is 
                     agreed that the Optionee should not have to bear the 
                     burden of any excise tax that might be levied under 
                     Section 4999 of the Code in the event that a portion of 
                     the payments or benefits payable to the Optionee by the 
                     Company or others, either pursuant to this Agreement or 
                     otherwise, are treated as an excess parachute payment.  
                     The parties, therefore, have agreed as set forth in this 
                     Paragraph 3.3(b).

             (ii)    Anything in this Agreement to the contrary notwithstanding,
                     if it shall be determined that any payment or benefit 
                     provided by the Company, or any other person to or for the 
                     benefit of the Optionee (whether paid or payable or 
                     provided or providable pursuant to the terms of this 
                     Agreement or otherwise, but determined without regard to 
                     any additional payments required under this Paragraph 
                     3.3(b)) (a "Payment") would be subject to the excise tax 
                     imposed by Section 4999 of the Code or any interest or 
                     penalties are incurred by the Optionee with respect to 
                     such excise tax (such excise tax, together with any such
                     interest and penalties, are hereinafter collectively 
                     referred to as the "Excise Tax"), then the Company shall 
                     pay to or on behalf of the Optionee an additional payment 
                     (a "Gross-Up Payment") in an amount such that after 
                     payment by the Optionee of all taxes (including any 
                     interest or penalties imposed with respect to such taxes), 
                     including, without limitation, any income taxes (and any 
                     interest and penalties imposed with respect thereto) and 
                     Excise Tax, Optionee will be in the same after-tax position
                     as if no Excise Tax had been imposed.

4.     MANNER OF OPTION EXERCISE.

       4.1     NOTICE.  This Option may be exercised by the Optionee in whole 
or in part from time to time, subject to the conditions contained in the Plan 
and in this Agreement, by delivery, in person, by facsimile or electronic 
transmission or through the mail, to the Company at its principal executive 
office in Fargo, North Dakota (Attention: Chief Financial Officer), of a 
written notice of exercise.  Such notice must be in a form satisfactory to 
the Committee, must identify the Option, must specify the number of Option 
Shares with respect to which the Option is being exercised, and must be 
signed by the person or persons so exercising the Option.  Such notice must 
be accompanied by payment in full of the total purchase price of the Option 
Shares purchased.  In the event that the Option is being exercised, as 
provided by the Plan and Section 3.2 above, by any person or persons other 
than the Optionee, the notice will be accompanied by appropriate proof of 
right of such person or persons to exercise the Option.  As soon as 
practicable after the effective exercise of the Option, the Optionee will be 
recorded on the stock transfer books of the Company as the owner of the 
Option Shares purchased, and the Company will deliver to the Optionee one or 
more duly issued stock certificates evidencing such ownership.

     4.2     PAYMENT.  At the time of exercise of this Option, the Optionee 
will pay the total purchase price of the Option Shares to be purchased 
entirely in cash (including a check, bank draft 

                               3

<PAGE>

or money order, payable to the order of the Company); provided, however, that 
the Committee, in its sole discretion and upon terms and conditions 
established by the Committee, may allow such payment to be made, in whole or 
in part, by tender of Previously Acquired Shares (as such term is defined in 
the Plan), or by a combination of cash and tender of Previously Acquired 
Shares.  In the event the Optionee is permitted to pay the total purchase 
price of this Option in whole or in part with Previously Acquired Shares, the 
value of such shares will be equal to their Fair Market Value (as defined in 
the Plan) on the date of exercise of this Option.

5.     RIGHTS OF OPTIONEE; TRANSFERABILITY.

       5.1     EMPLOYMENT OR SERVICE.  Nothing in this Agreement will 
interfere with or limit in any way the right of the Company or any Subsidiary 
to terminate the employment or service of the Optionee at any time, nor 
confer upon the Optionee any right to continue in the employ or service of 
the Company or any Subsidiary at any particular position or rate of pay or 
for any particular period of time.

       5.2     RIGHTS AS A SHAREHOLDER.  The Optionee will have no rights as 
a shareholder unless and until all conditions to the effective exercise of 
this Option (including, without limitation, the conditions set forth in 
Sections 4 and 6 of this Agreement) have been satisfied and the Optionee has 
become the holder of record of such shares.  No adjustment will be made for 
dividends or distributions with respect to this Option as to which there is a 
record date preceding the date the Optionee becomes the holder of record of 
such shares, except as may otherwise be provided in the Plan or determined by 
the Committee in its sole discretion.

       5.3     RESTRICTIONS ON TRANSFER.  Except pursuant to testamentary 
will or the laws of descent and distribution or as otherwise expressly 
permitted by the Plan, no right or interest of the Optionee in this Option 
prior to exercise may be assigned or transferred, or subjected to any lien, 
during the lifetime of the Optionee, either voluntarily or involuntarily, 
directly or indirectly, by operation of law or otherwise.  The Optionee will, 
however, be entitled to designate a beneficiary to receive this Option upon 
such Optionee's death, and, in the event of the Optionee's death, exercise of 
this Option (to the extent permitted pursuant to Section 3.2(a) of this 
Agreement) may be made by the Optionee's legal representatives, heirs and 
legatees.

6.     WITHHOLDING TAXES.

       The Company is entitled to (a) withhold and deduct from future wages 
of the Optionee (or from other amounts that may be due and owing to the 
Optionee from the Company), or make other arrangements for the collection of, 
all legally required amounts necessary to satisfy any federal, state or local 
withholding and employment-related tax requirements attributable to the grant 
or exercise of this Option or otherwise incurred with respect to this Option, 
or (b) require the Optionee promptly to remit the amount of such withholding 
to the Company before acting on the Optionee's notice of exercise of this 
Option. In the event that the Company is unable to withhold such amounts, for 
whatever reason, the Optionee agrees to pay to the Company an amount equal to 
the amount the Company would otherwise be required to withhold under federal, 
state or local law.

                                  4

<PAGE>

7.     ADJUSTMENTS.

       In the event of any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, divestiture or extraordinary dividend
(including a spin-off), or any other change in the corporate structure or
shares of the Company, the Committee (or, if the Company is not the surviving
corporation in any such transaction, the board of directors of the surviving
corporation), in order to prevent dilution or enlargement of the rights of the
Optionee, will make appropriate adjustment (which determination will be
conclusive) as to the number, kind and exercise price of securities subject to
this Option.

8.     LIMITATION OF LIABILITY.

       Nothing in this Agreement will be construed to (a) limit in any way 
the right of the Company to terminate the employment or service of the 
Optionee at any time, or (b) be evidence of any agreement or understanding, 
express or implied, that the Company will retain the Optionee in any 
particular position, at any particular rate of compensation or for any 
particular period of time.

9.     SUBJECT TO PLAN.

       The Option and the Option Shares granted and issued pursuant to this 
Agreement have been granted and issued under, and are subject to the terms 
of, the Plan.  The terms of the Plan are incorporated by reference in this 
Agreement in their entirety, and the Optionee, by execution of this 
Agreement, acknowledges having received a copy of the Plan.  The provisions 
of this Agreement will be interpreted as to be consistent with the Plan, and 
any ambiguities in this Agreement will be interpreted by reference to the 
Plan.  In the event that any provision of this Agreement is inconsistent with 
the terms of the Plan, the terms of the Plan will prevail.

10.    MISCELLANEOUS.

       10.1    BINDING EFFECT.  This Agreement will be binding upon the 
heirs, executors, administrators and successors of the parties to this 
Agreement.

       10.2    GOVERNING LAW.  This Agreement and all rights and obligations 
under this Agreement will be construed in accordance with the Plan and 
governed by the laws of the State of Delaware, without regard to conflicts of 
laws provisions. Any legal proceeding related to this Agreement will be 
brought in an appropriate Delaware or North Dakota (which is to apply the law 
of Delaware) court, and the parties to this Agreement consent to the 
exclusive jurisdiction of the court for this purpose.

       10.3    ENTIRE AGREEMENT.  This Agreement and the Plan set forth the 
entire agreement and understanding of the parties to this Agreement with 
respect to the grant and exercise of this Option and the administration of 
the Plan and supersede all prior agreements, arrangements, plans and 
understandings relating to the grant and exercise of this Option and the 
administration of the Plan.

       10.4    AMENDMENT AND WAIVER.  Other than as provided in the Plan, 
this Agreement may be amended, waived, modified or canceled only by a written 
instrument executed by the parties to this Agreement or, in the case of a 
waiver, by the party waiving compliance.

                                   5

<PAGE>

       The parties to this Agreement have executed this Agreement effective 
as of the day and year first above written.

                                            RDO EQUIPMENT CO.

                                            By________________________________

                                            Its_______________________________


By execution of this Agreement,             OPTIONEE
the Optionee acknowledges having
received a copy of the Plan.
                                            ----------------------------------
                                            (Signature)

                                            ----------------------------------
                                            (Name and Address)


                                            ----------------------------------

                                            ----------------------------------

                                  6