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                                                                    EXHIBIT 10.6

                       HUTCHINSON TECHNOLOGY INCORPORATED
                               1996 INCENTIVE PLAN
                          (AS AMENDED AND RESTATED)(1)


     1.  PURPOSE. The purpose of this 1996 Incentive Plan (the "Plan") is to
promote the interests of Hutchinson Technology Incorporated, a Minnesota
corporation (the "Company"), and its shareholders by providing personnel of the
Company and any subsidiaries thereof with an opportunity to acquire a
proprietary interest in the Company and thereby develop a stronger incentive to
put forth maximum effort for the continued success and growth of the Company. In
addition, the opportunity to acquire a proprietary interest in the Company will
aid in attracting and retaining personnel of outstanding ability. This Plan
provides for the issuance of certain awards consisting of options granted as
provided in paragraph 5 hereof and stock awards granted as provided in paragraph
6 hereof.

     2.  ADMINISTRATION.

         (a) General. This Plan shall be administered by a committee of two or
more directors of the Company (the "Committee") appointed by the Company's Board
of Directors (the "Board"). If the Board has not appointed a committee to
administer this Plan, then the Board shall constitute the Committee. The
Committee shall have the power, subject to the limitations contained in this
Plan, to fix any terms and conditions for the grant or exercise of any award
under this Plan. No director shall serve as a member of the Committee unless
such director shall be a "non-employee director" as that term is defined in Rule
16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any successor statute or regulation comprehending the same
subject matter. A majority of the members of the Committee shall constitute a
quorum for any meeting of the Committee, and the acts of a majority of the
members present at any meeting at which a quorum is present or the acts
unanimously approved in writing by all members of the Committee shall be the
acts of the Committee. Subject to the provisions of this Plan, the Committee may
from time to time adopt such rules for the administration of this Plan as it
deems appropriate. The decision of the Committee on any matter affecting this
Plan or the rights and obligations arising under this Plan or any award granted
hereunder, shall be final, conclusive and binding upon all persons, including
without limitation the Company, shareholders and optionees.

         (b) Indemnification. To the full extent permitted by law, (i) no member
of the Committee or person to whom authority under this Plan is delegated shall
be liable for any action or determination taken or made in good faith with
respect to this Plan or any award granted hereunder and (ii) the members of the
Committee and each person to whom authority under this Plan is delegated shall
be entitled to indemnification by the Company against and from any loss incurred
by such member or person by reason of any such actions and determinations.



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(1)  Conformed copy, which includes all amendments through November 19, 2003.

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         (c) Delegation of Authority. The Committee may delegate all or any part
of its authority under this Plan to the Chief Executive Officer of the Company
for purposes of granting and administering awards granted to persons other than
persons who are then subject to the reporting requirements of Section 16 of the
Exchange Act ("Section 16 Individuals"). The Chief Executive Officer of the
Company may, in turn, delegate such authority to such other officer of the
Company as the Chief Executive Officer may determine.

         (d) Action by Board. Notwithstanding subparagraph 2(a), above, any
grant of awards hereunder to any director of the Company who is not an employee
of the Company at the time of grant ("Non-Employee Director Award"), and any
action taken by the Company with respect to any Non-Employee Director Award,
including any amendment thereto, and any modification of the terms, conditions
or restrictions relating to any stock award constituting a Non-Employee Director
Award, any acceleration of the vesting of any option constituting a Non-Employee
Director Award, any extension of the time within which any option constituting a
Non-Employee Director Award may be exercised, any determination pursuant to
paragraph 9 relating to the payment of the purchase price of Shares (as defined
in paragraph 3 below) subject to an option constituting a Non-Employee Director
Award, or any action pursuant to paragraph 10 relating to the payment of
withholding taxes, if any, through the use of Shares with respect to a
Non-Employee Director Award shall be subject to prior approval by the Board.

         3. SHARES. The shares that may be made subject to awards granted under
this Plan shall be authorized and unissued shares of Common Stock of the
Company, par value $.01 per share ("Shares," and each individually a "Share"),
and they shall not exceed 3,750,000 Shares in the aggregate, subject to
adjustment as provided in paragraph 14, below, except that, if any option lapses
or terminates for any reason before such option has been completely exercised,
the Shares covered by the unexercised portion of such option may again be made
subject to options granted under this Plan.

         4. ELIGIBLE PARTICIPANTS. Stock awards and options may be granted under
this Plan to any full-time employee of the Company, or any parent or subsidiary
thereof, including any such person who is also an officer or director of the
Company or any parent or subsidiary thereof. Stock awards and non-statutory
stock options (as defined in subparagraph 5(a) below) also may be granted to (i)
any other employee of the Company, or any parent or subsidiary thereof, (ii) any
director of the Company who is not an employee of the Company or any parent or
subsidiary thereof, (iii) other individuals or entities who are not employees
but who provide services to the Company or a parent or subsidiary thereof in the
capacity of an advisor or consultant, and (iv) any individual or entity that the
Company desires to induce to become an employee, advisor or consultant, but any
such grant shall be contingent upon such individual or entity becoming employed
by the Company or a parent or subsidiary thereof. References herein to
"employment" and similar terms (except "employee") shall include the providing
of services in the capacity of an advisor or consultant or as a director. The
employees and other individuals and entities to whom options may be granted
pursuant to this paragraph 4 are referred to herein as "Eligible Participants."

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     5.  TERMS AND CONDITIONS OF EMPLOYEE, ADVISOR, CONSULTANT AND DIRECTOR
OPTIONS.

         (a) General. Subject to the terms and conditions of this Plan, the
Committee may, from time to time during the term of this Plan, grant to such
Eligible Participants as the Committee may determine options to purchase such
number of Shares of the Company on such terms and conditions as the Committee
may determine. In determining the Eligible Participants to whom options shall be
granted and the number of Shares to be covered by each option, the Committee may
take into account the nature of the services rendered by the respective Eligible
Participants, their present and potential contributions to the success of the
Company, and such other factors as the Committee in its sole discretion may deem
relevant. The date and time of approval by the Committee of the granting of an
option shall be considered the date and the time of the grant of such option.
The Committee in its sole discretion may designate whether an option granted to
an employee is to be considered an "incentive stock option" (as that term is
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or any amendment thereto) or a non-statutory stock option (an option
granted under this Plan that is not intended to be an "incentive stock option").
The Committee may grant both incentive stock options and non-statutory stock
options to the same employee. However, if an incentive stock option and a
non-statutory stock option are awarded simultaneously, such options shall be
deemed to have been awarded in separate grants, shall be clearly identified, and
in no event shall the exercise of one such option affect the right to exercise
the other. To the extent that the aggregate Fair Market Value (as defined in
paragraph 8 below) of Shares with respect to which incentive stock options are
exercisable for the first time by any employee during any calendar year (under
all plans of the Company and its parent and subsidiary corporations) exceeds
$100,000, such options shall be treated as non-statutory stock options. The
maximum number of Shares subject to options that may be granted to any one
Eligible Participant under the Plan in any fiscal year of the Company may not
exceed 100,000 Shares (subject to adjustment pursuant to paragraph 14 hereof).
Notwithstanding the foregoing, no incentive stock option may be granted under
this Plan unless this Plan is approved by the shareholders of the Company within
twelve months after the effective date of this Plan.

         (b) Purchase Price. The purchase price of each Share subject to an
option granted pursuant to this paragraph 5 shall be fixed by the Committee,
subject, however, to the remainder of this subparagraph 5(b). For non-statutory
stock options, such purchase price may be set at any price the Committee may
determine; provided, however, that such purchase price shall be not less than
85% of the Fair Market Value of a Share on the date of grant. For incentive
stock options, such purchase price shall be no less than 100% of the Fair Market
Value of a Share on the date of grant, provided that if such incentive stock
option is granted to an employee who owns, or is deemed under Section 424(d) of
the Code to own, at the time such option is granted, stock of the Company (or of
any parent or subsidiary of the Company) possessing more than 10% of the total
combined voting power of all classes of stock therein (a "10% Shareholder"),
such purchase price shall be no less than 110% of the Fair Market Value of a
Share on the date of grant.

         (c) Vesting. Each option agreement provided for in paragraph 7 shall
specify when each option granted under this Plan shall become exercisable with
respect to the Shares covered by the option. Notwithstanding the provisions of
any option agreement provided for in paragraph 7, the


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Committee may, in its sole discretion, declare at any time that any option
granted under this Plan shall be immediately exercisable.

         (d) Termination. Each option granted pursuant to this paragraph 5 shall
expire, and all rights to purchase Shares thereunder shall terminate, on the
earliest of:

               (i) ten years after the date such option is granted (or in the
     case of an incentive stock option granted to a 10% Shareholder, five years
     after the date such option is granted) or on such date prior thereto as may
     be fixed by the Committee on or before the date such option is granted;

               (ii) the expiration of the period after the termination of the
     optionee's employment within which the option is exercisable as specified
     in paragraph 11(b) or 11(c), whichever is applicable (provided that the
     Committee may, in any option agreement provided for in paragraph 7 or by
     Committee action with respect to any outstanding option, extend the periods
     specified in paragraph 11(b) and 11(c)); or

               (iii) the date, if any, fixed for cancellation pursuant to
     paragraph 12(c) or 13 below.

     6. TERMS AND CONDITIONS OF EMPLOYEE, ADVISOR, CONSULTANT AND DIRECTOR STOCK
AWARDS. The Committee may, from time to time during the term of this Plan, grant
stock awards to such Eligible Participants as the Committee may determine, such
stock awards consisting of grants of Shares to be issued to the designated
Eligible Participants. In determining the Eligible Participants to whom stock
awards shall be granted and the number of Shares to be covered by each stock
award, the Committee may take into account the nature of the services rendered
by the respective Eligible Participants, their present and potential
contributions to the success of the Company, and such other factors as the
Committee in its sole discretion may deem relevant. Shares issued pursuant to
any stock award may be unrestricted or may be subject to such conditions,
limitations and restrictions, if any, as the Committee may determine, including,
if the Committee shall so provide in the written agreement pursuant to paragraph
7 providing for a stock award, or any amendment thereto, the lapse or
modification of conditions or restrictions with respect to the stock award upon
the occurrence of a Change In Control, as defined in paragraph 12. The maximum
number of Shares that may be granted as stock awards under this Plan shall not
exceed 150,000 (subject to adjustment pursuant to paragraph 14 hereof) and the
maximum number of Shares that may be granted to any one Eligible Participant
pursuant to any stock award under this Plan in any fiscal year of the Company
may not exceed 100,000 Shares (subject to adjustment pursuant to paragraph 14
hereof).

     7. OPTION AGREEMENTS. All options granted under this Plan shall be
evidenced by a written agreement in such form or forms as the Committee may from
time to time determine, which agreement shall, among other things, designate
whether the options being granted thereunder are non-statutory stock options or
incentive stock options. Stock awards granted under this Plan may, but need not,
be made subject to a written agreement in such form or forms as the Committee
may from time to time determine.



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     8. FAIR MARKET VALUE. For purposes of this Plan, the "Fair Market Value" of
a Share at a specified date shall, unless otherwise expressly provided in this
Plan, mean the closing sale price of a Share on the date immediately preceding
such date or, if no sale of Shares shall have occurred on that date, on the next
preceding day on which a sale of Shares occurred, on the Composite Tape for New
York Stock Exchange listed shares or, if Shares are not quoted on the Composite
Tape for New York Stock Exchange listed shares, on the Nasdaq National Market or
any similar system then in use or, if Shares are not included in the Nasdaq
National Market or any similar system then in use, the mean between the closing
"bid" and the closing "asked" quotation of a Share on the date immediately
preceding the date as of which such Fair Market Value is being determined, or,
if no closing bid or asked quotation is made on that date, on the next preceding
day on which a quotation is made, on the Nasdaq SmallCap Market or any similar
system then in use, provided that if the Shares in question are not quoted on
any such system, Fair Market Value shall be what the Committee determines in
good faith to be 100% of the fair market value of a Share as of the date in
question. Notwithstanding anything stated in this paragraph 8, if the applicable
securities exchange or system has closed for the day by the time the
determination is being made, all references in this paragraph to the date
immediately preceding the date in question shall be deemed to be references to
the date in question.

     9.  MANNER OF EXERCISE OF OPTIONS. A person entitled to exercise an option
granted under this Plan may, subject to its terms and conditions and the terms
and conditions of this Plan, exercise it in whole at any time, or in part from
time to time, by delivery to the Company at its principal executive office, to
the attention of its Vice President, Human Resources, of written notice of
exercise, specifying the number of Shares with respect to which the option is
being exercised, or by such other means as the Board or Committee may approve.
The purchase price of the Shares with respect to which an option is being
exercised shall be payable in full at the time of exercise, provided that, to
the extent permitted by law, the holder of an option may simultaneously exercise
an option and sell all or a portion of the Shares thereby acquired pursuant to a
brokerage or similar relationship and use the proceeds from such sale to pay the
purchase price of such Shares. The purchase price of each Share on the exercise
of any option shall be paid in full in cash (including check, bank draft or
money order) or, at the discretion of the person exercising the option, by
delivery to the Company of unencumbered Shares, by a reduction in the number of
Shares delivered upon exercise of the option, or by a combination of cash and
such Shares (in each case such Shares having an aggregate Fair Market Value on
the date of exercise equal to the amount of the purchase price being paid
through such delivery or reduction of Shares); provided, however, that no person
shall be permitted to pay any portion of the purchase price with Shares if the
Committee, in its sole discretion, determines that payment in such manner is
undesirable. The granting of an option to a person shall give such person no
rights as a shareholder except as to Shares issued to such person.

     10. TAX WITHHOLDING. Delivery of Shares pursuant to a stock award or upon
exercise of any non-statutory stock option granted under this Plan shall be
subject to any required withholding taxes. A person receiving a stock award or
exercising a non-statutory stock option may, as a condition precedent to
receiving the Shares, be required to pay the Company a cash amount equal to the
amount of any required withholdings. In lieu of all or any part of such a cash
payment, the Committee may, but shall not be required to, provide in any option
agreement provided for in paragraph 7 (or provide by Committee action with
respect to any outstanding option) that a person




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exercising an option may cover all or any part of the required withholdings, and
any additional withholdings up to the amount needed to cover the individual's
full FICA and federal, state and local income tax liability with respect to
income arising from the exercise of the option, through the delivery to the
Company of unencumbered Shares, through a reduction in the number of Shares
delivered to the person exercising the option or through a subsequent return to
the Company of Shares delivered to the person exercising the option (in each
case, such Shares having an aggregate Fair Market Value on the date of exercise
equal to the amount of the withholding taxes being paid through such delivery,
reduction or subsequent return of Shares).

     11. TRANSFERABILITY AND TERMINATION OF EMPLOYMENT.

         (a) Transferability. During the lifetime of an optionee, only such
optionee or his or her guardian or legal representative may exercise options
granted under this Plan, and no option granted under this Plan shall be
assignable or transferable by the optionee otherwise than by will or the laws of
descent and distribution or pursuant to a domestic relations order as defined by
the Code or Title I of the Employee Retirement Income Security Act, or the rules
thereunder; provided, however, that any optionee may transfer a non-statutory
stock option granted under this Plan to a member or members of his or her
immediate family (i.e., his or her children, grandchildren and spouse) or to one
or more trusts for the benefit of such family members or partnerships in which
such family members are the only partners, if (i) the option agreement with
respect to such options expressly so provides either at the time of initial
grant or by amendment to an outstanding option agreement and (ii) the optionee
does not receive any consideration for the transfer. Any options held by any
such transferee shall continue to be subject to the same terms and conditions
that were applicable to such options immediately prior to their transfer and may
be exercised by such transferee as and to the extent that such option has become
exercisable and has not terminated in accordance with the provisions of the Plan
and the applicable option agreement. For purposes of any provision of this Plan
relating to notice to an optionee or to vesting or termination of an option upon
the death, disability or termination of employment of an optionee, the
references to "optionee" shall mean the original grantee of an option and not
any transferee.

         (b) Termination of Employment During Lifetime. During the lifetime of
an optionee, an option granted to such optionee may be exercised only while the
optionee is employed by the Company or by a parent or subsidiary thereof, and
only if such optionee has been continuously so employed since the date the
option was granted, except that:

             (i) an option shall continue to be exercisable for three months
     after termination of the optionee's employment (provided, however, that if
     (a) the optionee has been employed by the Company for at least ten years
     (whether or not consecutive), and (b) the optionee's employment with the
     Company terminates after the optionee has reached age 55, then an option
     shall continue to be exercisable at any time within three years after
     termination of the optionee's employment), but only to the extent that the
     option was exercisable immediately prior to such optionee's termination of
     employment;


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               (ii) in the case of an optionee who is disabled (as hereinafter
     defined) while employed, an option shall continue to be exercisable within
     three years after termination of such optionee's employment; and

               (iii) as to any optionee whose termination occurs following a
     declaration pursuant to paragraph 13 below, an option may be exercised at
     any time permitted by such declaration.

         (c) Termination Upon Death. With respect to an optionee whose
employment terminates by reason of death, any option granted to such optionee
may be exercised within three years after the death of such optionee.

         (d) Vesting Upon Disability or Death. In the event of the disability
(as hereinafter defined) or death of an optionee, any option granted to such
optionee that was not previously exercisable shall become immediately
exercisable in full if the disabled or deceased optionee shall have been
continuously employed by the Company or a parent or subsidiary thereof between
the date such option was granted and the date of such disability or death.
"Disability" of an optionee shall mean any physical or mental incapacitation
whereby such optionee is therefore unable for a period of twelve consecutive
months or for an aggregate of twelve months in any twenty-four consecutive month
period to perform his or her duties for the Company or any parent or subsidiary
thereof. "Disabled," with respect to any optionee, shall mean that such optionee
has incurred a Disability.

         (e) Transfers and Leaves of Absence. Neither the transfer of employment
of a person to whom an option is granted between any combination of the Company,
a parent corporation or a subsidiary thereof, nor a leave of absence granted to
such person and approved by the Committee, shall be deemed a termination of
employment for purposes of this Plan. The terms "parent" or "parent corporation"
and "subsidiary" as used in this Plan shall have the meaning ascribed to "parent
corporation" and "subsidiary corporation", respectively, in Sections 424(e) and
(f) of the Code.

         (f) Right to Terminate Employment. Nothing contained in this Plan, or
in any option granted pursuant to this Plan, shall confer upon any optionee any
right to continued employment by the Company or any parent or subsidiary of the
Company or limit in any way the right of the Company or any such parent or
subsidiary to terminate such optionee's employment at any time.

         (g) Expiration Date. In no event shall any option be exercisable at any
time after the time it shall have expired in accordance with paragraph 5(d) of
this Plan. When an option is no longer exercisable, it shall be deemed to have
lapsed or terminated and will no longer be outstanding.

     12. CHANGE IN CONTROL.

         For purposes of this Plan, a "Change in Control" of the Company shall
be deemed to occur if any of the following occur:


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         (a) (1) Any "person" (as such term is used in Sections 13(d) and 14(d)
         of the Exchange Act) acquires or becomes a "beneficial owner" (as
         defined in Rule 13d-3 or any successor rule under the Exchange Act),
         directly or indirectly, of securities of the Company representing 30%
         or more of the combined voting power of the Company's then outstanding
         securities entitled to vote generally in the election of directors
         ("Voting Securities"), provided, however, that the following shall not
         constitute a Change in Control pursuant to this paragraph (a)(1):

                   (A)   any acquisition or beneficial ownership by the Company
                         or a Subsidiary;

                   (B)   any acquisition or beneficial ownership by any employee
                         benefit plan (or related trust) sponsored or maintained
                         by the Company or one or more of its Subsidiaries;

                   (C)   any acquisition or beneficial ownership by any
                         corporation with respect to which, immediately
                         following such acquisition, more than 70% of both the
                         combined voting power of the Company's then outstanding
                         Voting Securities and the Shares of the Company is then
                         beneficially owned, directly or indirectly, by all or
                         substantially all of the persons who beneficially owned
                         Voting Securities and Shares of the Company immediately
                         prior to such acquisition in substantially the same
                         proportions as their ownership of such Voting
                         Securities and Shares, as the case may be, immediately
                         prior to such acquisition;

               (2) A majority of the members of the Board of Directors of the
         Company shall not be Continuing Directors. "Continuing Directors" shall
         mean: (A) individuals who, on the date hereof, are directors of the
         Company, (B) individuals elected as directors of the Company subsequent
         to the date hereof for whose election proxies shall have been solicited
         by the Board of Directors of the Company or (C) any individual elected
         or appointed by the Board of Directors of the Company to fill vacancies
         on the Board of Directors of the Company caused by death or resignation
         (but not by removal) or to fill newly-created directorships;

               (3) Approval by the shareholders of the Company of a
         reorganization, merger or consolidation of the Company or a statutory
         exchange of outstanding Voting Securities of the Company, unless
         immediately following such reorganization, merger, consolidation or
         exchange, all or substantially all of the persons who were the
         beneficial owners, respectively, of Voting Securities and Shares of the
         Company immediately prior to such reorganization, merger, consolidation
         or exchange beneficially own, directly or indirectly, more than 70% of,
         respectively, the combined voting power of the then outstanding voting
         securities entitled to vote generally in the election of directors and
         the then outstanding shares of Common Stock, as the case may be, of the
         corporation resulting from such reorganization, merger, consolidation
         or exchange in substantially the same proportions as their ownership,
         immediately prior to such reorganization, merger,



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<PAGE>

         consolidation or exchange, of the Voting Securities and Stock of the
         Company, as the case may be; or

               (4) Approval by the shareholders of the Company of (x) a complete
         liquidation or dissolution of the Company or (y) the sale or other
         disposition of all or substantially all of the assets of the Company
         (in one or a series of transactions), other than to a corporation with
         respect to which, immediately following such sale or other disposition,
         more than 70% of, respectively, the combined voting power of the then
         outstanding voting securities of such corporation entitled to vote
         generally in the election of directors and the then outstanding shares
         of Common Stock of such corporation is then beneficially owned,
         directly or indirectly, by all or substantially all of the persons who
         were the beneficial owners, respectively, of the Voting Securities and
         Shares of the Company immediately prior to such sale or other
         disposition in substantially the same proportions as their ownership,
         immediately prior to such sale or other disposition, of the Voting
         Securities and Shares of the Company, as the case may be.

         (b) Acceleration of Vesting. Notwithstanding anything in subparagraph
5(c) above to the contrary, if a Change of Control of the Company shall occur,
then, without any action by the Committee or the Board, each option granted
under this Plan and not already exercised in full or otherwise terminated,
expired or canceled shall become immediately exercisable in full.

         (c) Cash Payment. If a Change in Control of the Company shall occur,
then, so long as a majority of the members of the Board are Continuing
Directors, the Committee, in its sole discretion, and without the consent of the
holder of any option affected thereby, may determine that some or all
outstanding options shall be cancelled as of the effective date of any such
Change in Control and that the holder or holders of such cancelled options shall
receive, with respect to some or all of the Common Shares subject to such
options, as of the date of such cancellation, cash in an amount, for each Share
subject to an option, equal to the excess of the per Share Fair Market Value of
such Shares immediately prior to such Change in Control of the Company over the
exercise price per Share of such options.

         (d) Limitation on Change in Control Payments. Notwithstanding anything
in subparagraph 12(b) or 12(c) above or paragraph 13 below to the contrary, if,
with respect to an optionee, the acceleration of the exercisability of an option
or the payment of cash in exchange for all or part of an option as provided in
subparagraph 12(b) or 12(c) above or paragraph 13 (which acceleration or payment
could be deemed a "payment" within the meaning of Section 280G(b)(2) of the
Code), together with any other payments which such optionee has the right to
receive from the Company or any corporation which 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), then such
acceleration of exercisability and payments pursuant to subparagraph 12(b) or
12(c) above or paragraph 13 shall be reduced to the largest amount as, in the
sole judgment of the Committee, will result in no portion of such payments being
subject to the excise tax imposed by Section 4999 of the Code.


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<PAGE>


     13. DISSOLUTION, LIQUIDATION, MERGER. In the event of (a) the proposed
dissolution or liquidation of the Company, (b) a proposed sale of substantially
all of the assets of the Company or (c) a proposed merger, consolidation of the
Company with or into any other entity, regardless of whether the Company is the
surviving corporation, or a proposed statutory share exchange with any other
entity (the actual effective date of the dissolution, liquidation, sale, merger,
consolidation or exchange being herein called an "Event"), the Committee may,
but shall not be obligated to, either (i) if the Event is a merger,
consolidation or statutory share exchange, make appropriate provision for the
protection of outstanding options granted under this Plan by the substitution,
in lieu of such options, of options to purchase appropriate voting Common Stock
(the "Survivor's Stock") of the corporation surviving any such merger or
consolidation or, if appropriate, the parent corporation of the Company or such
surviving corporation, or, alternatively, by the delivery of a number of shares
of the Survivor's Stock which has a Fair Market Value as of the effective date
of such merger, consolidation or statutory share exchange equal to the product
of (x) the excess of (A) the Event Proceeds per Share (as hereinafter defined)
covered by the option as of such effective date over (B) the exercise price per
Share of the Shares subject to such option, times (y) the number of Shares
covered by such option or (ii) declare, at least twenty days prior to the Event,
and provide written notice to each optionee of the declaration, that each
outstanding option, whether or not then exercisable, shall be canceled at the
time of, or immediately prior to the occurrence of, the Event (unless it shall
have been exercised prior to the occurrence of the Event). In connection with
any declaration pursuant to clause (ii) of the preceding sentence, the Committee
may, but shall not be obligated to, cause payment to be made, within twenty days
after the Event, in exchange for each cancelled option to each holder of an
option that is cancelled, of cash equal to the amount (if any), for each Share
covered by the canceled option, by which the Event Proceeds per Share (as
hereinafter defined) exceeds the exercise price per Share covered by such
option. At the time of any declaration pursuant to clause (ii) of the first
sentence of this paragraph 13, each option that has not previously expired
pursuant to subparagraph 5(d)(i) or 5(d)(ii) of this Plan or been cancelled
pursuant to paragraph 12(c) of this Plan shall immediately become exercisable in
full and each holder of an option shall have the right, during the period
preceding the time of cancellation of the option, to exercise his or her option
as to all or any part of the Shares covered thereby. In the event of a
declaration pursuant to clause (ii) of the first sentence of this paragraph 13,
each outstanding option granted pursuant to this Plan that shall not have been
exercised prior to the Event shall be canceled at the time of, or immediately
prior to, the Event, as provided in the declaration, and this Plan shall
terminate at the time of such cancellation, subject to the payment obligations
of the Company provided in this paragraph 13. Notwithstanding the foregoing, no
person holding an option shall be entitled to the payment provided in this
paragraph 13 if such option shall have expired pursuant to subparagraph 5(d)(i)
or 5(d)(ii) of this Plan or been cancelled pursuant to paragraph 12(c) of this
Plan. For purposes of this paragraph 13, "Event Proceeds per Share" shall mean
the cash plus the fair market value, as determined in good faith by the
Committee, of the non-cash consideration to be received per Share by the
shareholders of the Company upon the occurrence of the Event.


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<PAGE>


     14. ADJUSTMENTS. 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 does not survive any such
transaction, a comparable committee of the Board of Directors of the surviving
corporation) may, without the consent of any holder of an option, make such
adjustment as it determines in its discretion to be appropriate as to the number
and kind of securities subject to and reserved under this Plan and, in order to
prevent dilution or enlargement of rights of participants in this Plan, the
number and kind of securities issuable upon exercise of outstanding options and
the exercise price thereof.

     15. SUBSTITUTE OPTIONS. Options may be granted under this Plan from time to
time in substitution for stock options held by employees of other corporations
who are about to become employees of the Company, or any parent or subsidiary
thereof, or whose employer is about to become a subsidiary of the Company, as
the result of a merger or consolidation of the Company or a subsidiary of the
Company with another corporation, the acquisition by the Company or a subsidiary
of the Company of all or substantially all the assets of another corporation or
the acquisition by the Company or a subsidiary of the Company of at least 50% of
the issued and outstanding stock of another corporation. The terms and
conditions of the substitute options so granted may vary from the terms and
conditions set forth in this Plan to such extent as the Board at the time of the
grant may deem appropriate to conform, in whole or in part, to the provisions of
the stock options in substitution for which they are granted, but with respect
to stock options which are incentive stock options, no such variation shall be
permitted which affects the status of any such substitute option as an incentive
stock option.

     16. COMPLIANCE WITH LEGAL REQUIREMENTS.

         (a) General. No certificate for Shares distributable under this Plan
shall be issued and delivered unless the issuance of such certificate complies
with all applicable legal requirements including, without limitation, compliance
with the provisions of applicable state securities laws, the Securities Act of
1933, as amended, and the Exchange Act.

         (b) Rule 16b-3. With respect to Section 16 Individuals, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Exchange Act. To the extent any provision of
this Plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.

     17. GOVERNING LAW. To the extent that federal laws do not otherwise
control, this Plan and all determinations made and actions taken under this Plan
shall be governed by the laws of the State of Minnesota, without regard to the
conflicts of law provisions thereof, and construed accordingly.

     18. AMENDMENT AND DISCONTINUANCE OF PLAN. The Board may at any time amend,
suspend or discontinue this Plan; provided, however, that no amendment to this
Plan shall, without the consent of the holder of the option, alter or impair any
option previously granted under this Plan. To the


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<PAGE>


extent considered necessary to comply with applicable provisions of the Code,
any such amendments to this Plan may be made subject to approval by the
shareholders of the Company.

     19. TERM.

         (a) Effective Date. This Plan shall be effective as of November 19,
1996, provided that this Plan is approved and ratified by the affirmative vote
of the holders of a majority of the outstanding Shares present or represented
and entitled to vote in person or by proxy at a meeting of the shareholders of
the Company no later than March 31, 1997. Awards may be granted hereunder prior
to such shareholder approval, but such awards shall be subject to such
shareholder approval. If this Plan is not so approved by such holders, any
awards granted under this Plan subject to such approval shall be null and void.

         (b) Termination. This Plan shall remain in effect until all Shares
subject to it are distributed or this Plan is terminated under paragraph 18
above. No award of an incentive stock option shall be made under this Plan more
than ten years after the effective date of this Plan (or such other limit as may
be required by the Code) if such limitation is necessary to qualify the option
as an incentive stock option.




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