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                                                                    EXHIBIT 10.1

                           HEALTH FITNESS CORPORATION

                             1995 STOCK OPTION PLAN
                       (AS AMENDED THROUGH MARCH 31, 2001)

                      ARTICLE 1. ESTABLISHMENT AND PURPOSE

     1.1 Establishment. Health Fitness Corporation (the "Company") hereby
establishes a plan providing for the grant of stock options to certain eligible
employees, directors and consultants of the Company and its subsidiaries. This
plan shall be known as the 1995 Stock Option Plan (the "Plan").

     1.2 Purpose. The purpose of the Plan is to advance the interests of the
Company and its shareholders by enabling the Company to attract and retain
persons of ability as employees, directors and consultants, 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 long-term economic objectives.

                             ARTICLE 2. DEFINITIONS

      The following terms shall 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 "Change in Control" means an event described in Article 11 below.

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

     2.4 "Committee" means the entity administering the Plan, as provided in
Article 3 below.

     2.5 "Common Stock" means the 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 below.

     2.6 "Disability" means the occurrence of an event which constitutes
permanent and total disability within the meaning of Section 22(e)(3) of the
Code.

     2.7 "Eligible Persons" means individuals who are (a) salaried employees
(including, without limitation, officers and directors who are also employees)
of the Company, (b) Non-Employee Directors, or (c) consultants to the Company.

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

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     2.9 "Fair Market Value" means, with respect to the Common Stock, as of any
date:

          (a) if the Common Stock is listed or admitted to unlisted trading
     privileges on any national securities exchange or is not so listed or
     admitted but transactions in the Common Stock are reported on the NASDAQ
     Stock Market, the mean between the reported high and low sale prices of the
     Common Stock on such exchange or by the NASDAQ Stock Market as of such date
     (or, if no shares were traded on such day, as of the next preceding day on
     which there was such a trade); or

          (b) if the Common Stock is not listed or admitted to unlisted trading
     privileges or reported on the Nasdaq Stock Market, and bid and asked prices
     therefor in the over-the-counter market are reported by the National
     Quotation Bureau, Inc. (or any comparable reporting service), the mean of
     the closing bid and asked prices as of such date, as reported by the
     National Quotation Bureau, Inc. (or a comparable reporting service); or

          (c) if the Common Stock is not listed or admitted to unlisted trading
     privileges, or reported on the NASDAQ Stock Market, and bid and asked
     prices are not reported, the price that the Committee determines in good
     faith in the exercise of its reasonable discretion. The Committee's
     determination as to the current value of the Common Stock shall be final,
     conclusive and binding for all purposes and on all persons, including,
     without limitation, the Company, the shareholders of the Company, the
     Optionees and their respective successors-in-interest. No member of the
     Board or the Committee shall be liable for any determination regarding
     current value of the Common Stock that is made in good faith.

     2.10 "Incentive Stock Option" means a right to purchase Common Stock
granted to an Optionee pursuant to Section 6.5 of the Plan that qualifies as an
incentive stock option within the meaning of Section 422 of the Code.

     2.11 "Non-Employee Director" means any member of the Board who is not an
employee of the Company or any Subsidiary.

     2.12 "Non-Statutory Stock Option" means a right to purchase Common Stock
granted to an Optionee pursuant to Section 6.5 of the Plan that does not qualify
as an Incentive Stock Option.

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

     2.14 "Optionee" means an Eligible Person who receives one or more Incentive
Stock Options or Non-Statutory Stock Options under the Plan.

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



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     2.16 "Retirement" means the retirement of an Optionee pursuant to and in
accordance with the regular retirement plan or practice of the Company or the
Subsidiary employing the Optionee.

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

     2.18 "Subsidiary" means any corporation that is a subsidiary corporation of
the Company (within the meaning of Section 424(f) of the Code).

     2.19 "Tax Date" means a date defined in Section 6.5(c) of the Plan.


                         ARTICLE 3. PLAN ADMINISTRATION

     The Plan shall be administered by the Board or by a Committee of the Board
consisting of two or more directors who shall be appointed by and serve at the
pleasure of the Board. As long as the Company's securities are registered
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, then,
to the extent necessary for compliance with Rule 16b-3, or any successor
provision, each of the members of the Committee shall be a 'Non-Employee
Director.' For purposes of this paragraph, 'Non-Employee Director' shall have
the same meaning as set forth in Rule 16b-3, or any successor provision, as then
in effect, of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended. Members of a Committee, if established, shall be
appointed from time to time by the Board, shall serve at the pleasure of the
Board and may resign at any time upon written notice to the Board. A majority of
the members of the Committee shall constitute a quorum. The Committee shall act
by majority approval of its members, shall keep minutes of its meetings and
shall provide copies of such minutes to the Board. Action of the Committee may
be taken without a meeting if unanimous written consent thereto is given. Copies
of minutes of the Committee's meetings and of its actions by written consent
shall be provided to the Board and kept with the corporate records of the
Company. As used in this Plan, the term "Committee" will refer either to the
Board or to such a Committee, if established.

     In accordance with the provisions of the Plan, the Committee shall select
the Optionees from Eligible Persons; shall determine the number of shares of
Common Stock to be subject to Options granted pursuant to the Plan, the time at
which such Options are granted, the Option exercise price, Option period and the
manner in which each such Option vests or becomes exercisable; and shall fix
such other provisions of such Options as the Committee may deem necessary or
desirable and as consistent with the terms of the Plan. The Committee shall
determine the form or forms of the agreements with Optionees which shall
evidence the particular terms, conditions, rights and duties of the Company and
the Optionees under Options granted pursuant to the Plan. The Committee shall
have the authority, subject to the provisions of the Plan, to establish, adopt
and revise such rules and regulations relating to the Plan as it may deem
necessary or advisable for the administration of the Plan. With the consent of
the Optionee affected thereby, the Committee may amend or modify the terms of
any outstanding Incentive Stock Option or Non-Statutory Stock Option in any
manner, provided that the amended or modified terms are permitted by the Plan as
then in effect. Without limiting the generality of the foregoing sentence, the
Committee may, with the consent of the Optionee affected thereby, modify the
exercise price, 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

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terminate any restrictions relating to an Incentive Award, extend, renew or
accept the surrender of any outstanding Incentive Stock Option or Non-Statutory
Stock Option, to the extent not previously exercised, and the Committee may
authorize the grant of new Options in substitution therefor to the extent not
previously exercised.

      Each determination, interpretation or other action made or taken by the
Committee pursuant to the provisions of the Plan shall be conclusive and binding
for all purposes and on all persons, including, without limitation, the Company
and its Subsidiaries, the shareholders of the Company, the Committee and each of
the members thereof, the directors, officers and employees of the Company and
its Subsidiaries, and the Optionees and their respective successors in interest.
No member of the Committee shall be liable for any action or determination made
in good faith with respect to the Plan or any Option granted under the Plan.

                      ARTICLE 4. SHARES SUBJECT TO THE PLAN

     4.1 Number. The maximum number of shares of Common Stock that shall be
reserved for issuance under the Plan shall be Two Million (2,000,000), subject
to adjustment upon changes in the capitalization of the Company as provided in
Section 4.3 below. Shares of Common Stock that may be issued upon exercise of
Options shall be applied to reduce the maximum number of shares of Common Stock
remaining available for use under the Plan.

     4.2 Unused Stock. Any shares of Common Stock that are subject to an Option
(or any portion thereof) that lapses, expires or for any reason is terminated
unexercised shall automatically again become available for use under the Plan.

     4.3 Change in Shares, Adjustments, Etc. If the number of outstanding shares
of Common Stock is increased or decreased or changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation by reason of any reorganization, merger,
consolidation, recapitalization, reclassification, stock dividend, stock split,
reverse stock split, combination of shares, rights offering or any other change
in the corporate structure or shares of the Company, the Committee (or, if the
Company is not the surviving corporation in any such transaction, the board of
directors of the surviving corporation) shall make appropriate adjustment as to
the number and kind of securities subject to and reserved under the Plan and, in
order to prevent dilution or enlargement of the rights of Optionees, the number
and kind of securities subject to outstanding Options. Any such adjustment in
any outstanding Option shall be made without change in the aggregate purchase
price applicable to the unexercised portion of the Option but with an
appropriate adjustment in the price for each share or other unit of any security
covered by the Option. However, no change shall be made in the terms of any
outstanding Incentive Stock Options as a result of any such change in the
corporate structure or shares of the Company, without the consent of the
Optionee affected thereby, that would disqualify that Incentive Stock Option
from treatment under Section 422 of the Code or would be considered a
modification, extension or renewal of an option under Section 424(h) of the
Code.

                             ARTICLE 5. ELIGIBILITY

     Incentive Stock Options or Non-Statutory Stock Options shall be granted
only to those Eligible Persons who, in the judgment of the Committee, are
performing, or during the term of an

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Option, will perform, vital services in the management, operation and
development of the Company or a Subsidiary, and significantly contribute or are
expected to significantly contribute to the achievement of long-term corporate
economic objectives. Optionees may be granted from time to time one or more
Incentive Stock Options and/or Non-Statutory Stock Options under the Plan, in
any case as may be determined by the Committee in its sole discretion. The
number, type, terms and conditions of Options granted to various Eligible
Persons need not be uniform, consistent or in accordance with any plan, whether
or not such Eligible Persons are similarly situated. The Committee may grant
both an Incentive Stock Option and a Non-Statutory Stock Option to the same
Optionee a the same time or at different times. Incentive Stock Options and
Non-Statutory Stock Options, whether granted at the same or different times,
shall be deemed to have been awarded in separate grants, shall be clearly
identified, and in no event will the exercise of one Option affect the right to
exercise any other Option or affect the number of shares of Common Stock for
which any other Option may be exercised. Upon determination by the Committee
that an Option is to be granted to an Optionee, written notice shall be given
such person specifying such terms, conditions, rights and duties related
thereto. Each Optionee shall enter into an agreement with the Company, in such
form as the Committee shall determine and which is consistent with the
provisions of the Plan, specifying the terms, conditions, rights and duties of
Incentive Stock Options and Non-Statutory Stock Options granted under the Plan.
Options shall be deemed to be granted as of the date specified in the grant
resolution of the Committee, which date shall be the date of the related
agreement with the Optionee.

                        ARTICLE 6. DURATION AND EXERCISE

     6.1 Manner of Option Exercise. An Option may be exercised by an Optionee in
whole or in part from time to time, subject to the conditions contained herein
and in the agreement evidencing such Option, by delivery, in person or through
certified or registered mail, or written notice of exercise to the Company at
its principal executive office (Attention: Secretary), and by paying in full the
total Option exercise price for the shares of Common Stock purchased in
accordance with Section 6.3. Such notice shall be in a form satisfactory to the
Committee and shall specify the particular Option (or portion thereof) that is
being exercised and the number of shares with respect to which the Option is
being exercised. Subject to Section 9.1, the exercise of the Option shall be
deemed effective upon receipt of such notice and payment. As soon as practicable
after the effective exercise of the Option, the Company shall record on the
stock transfer books of the Company the ownership of the shares purchased in the
name of the Optionee, and the Company shall deliver to the Optionee one or more
duly issued stock certificates evidencing such ownership.

     6.2 Method of Payment of Option Exercise Price. At the time of the exercise
of an Incentive Stock Option or a Non-Statutory Stock Option, the Optionee may
determine whether the total purchase price of the shares to be purchased shall
be paid solely in cash or by transfer from the Optionee to the Company of
previously acquired shares of Common Stock, or by a combination thereof. In the
event the Optionee elects to pay the purchase price in whole or in part with
previously acquired shares of Common Stock, the value of such shares shall be
equal to their Fair Market Value on the date of exercise. The Committee may
reject an Optionee's election to pay all or part of the purchase price with
previously acquired shares of Common Stock and require such purchase price to be
paid entirely in cash if, in the sole discretion of the Committee, payment in
previously acquired shares would cause the Company to be required to

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recognize a charge to earnings in connection therewith. For purposes of this
Section 6.2, "previously acquired shares" shall include both shares of Common
Stock that are already owned by the Optionee at the time of exercise and shares
of Common Stock that are to be acquired pursuant to the exercise of the Option
concerned. In its sole discretion, the Committee may determine either at the
time of grant or exercise of an Incentive Stock Option or an Non-Statutory Stock
Option, to permit a Optionee to pay all or any portion of the purchase price by
deliver of a promissory note in form and substance acceptable to the Committee.

      6.3 Rights as a Shareholder. The Optionee shall have no rights as a
shareholder with respect to any shares of Common Stock covered by an Option
until the Optionee shall have become the holder of record of such shares, and no
adjustment shall be made for dividends or other distributions or other rights as
to which there is a record date preceding the date the Optionee becomes the
holder of record except as the Committee may determine pursuant to Section 4.3.

      6.4   Incentive Stock Options.

            (a) Incentive Stock Option Exercise Price. The per share price to be
      paid by the Optionee at the time an Incentive Stock Option is exercised
      will be determined by the Committee, but shall not be less than (i) 100%
      of the Fair Market Value of one share of Common Stock on the date the
      Option is granted, or (ii) 110% of the Fair Market Value of one share of
      Common Stock on the date the Option is granted if, at that time the Option
      is granted, the Optionee owns, directly or indirectly (as determined
      pursuant to Section 424(d) of the Code), more than 10% of the total
      combined voting power of all classes of stock of the Company, any
      Subsidiary or any parent corporation of the Company (within the meaning of
      Section 424(e) of the Code).

            (b) Aggregate Limitation of Stock Subject to Incentive Stock
      Options. Notwithstanding any other provision of the Plan, the aggregate
      Fair Market Value (determined as of the date an Incentive Stock Option is
      granted) of the shares of Common Stock with respect to which incentive
      stock options (within the meaning of Section 422 of the Code) are
      exercisable for the first time by an Optionee during any calendar year
      (under the Plan and any other incentive stock option plans of the Company,
      any Subsidiary or any parent corporation of the Company (within the
      meaning of Section 424(e) of the Code)) shall not exceed $100,000 (or such
      other amount as may be prescribed by the Code from time to time; provided,
      however, that if the exercisability or vesting of an Incentive Stock
      Option is accelerated as permitted under the provisions of this Plan and
      such acceleration would result in a violation of the limit imposed by this
      Section 6.4(b), such acceleration shall be of full force and effect but
      the number of shares of Common Stock which exceed such limit shall be
      treated as having been granted pursuant to a Non-Statutory Stock Option;
      and provided, further, that the limits imposed by this Section 6.4(b)
      shall be applied to all outstanding Incentive Stock Options (under this
      Plan and any other incentive stock option plans of the Company, any
      Subsidiary or any parent corporation of the Company (within the meaning of
      Section 424(e) of the Code)) in chronological order according to the dates
      of grant.


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            (c) Duration of Incentive Stock Options. The period during which an
      Incentive Stock Option may be exercised shall be fixed by the Committee at
      the time such Option is granted, but in no event shall such period exceed
      ten years from the date the Option is granted or, in the case of any
      Optionee that owns, directly or indirectly (as determined pursuant to
      Section 424(d) of the Code) more than 10% of the total combined voting
      power of all classes of stock of the Company, any Subsidiary or any parent
      corporation of the Company (within the meaning of Section 424(e) of the
      Code), five years from the date the Incentive Stock Option is granted. An
      Incentive Stock Option shall become exercisable at such times and in such
      installments (which may be cumulative) as shall be determined by the
      Committee at the time the Option is granted. Upon the completion of its
      exercise period, an Incentive Stock Option, to the extent not then
      exercised, shall expire. Except as otherwise provided in Article 7 or 11,
      all Incentive Stock Options granted to an Optionee hereunder shall
      terminate and may no longer be exercised if the Optionee ceases to be an
      employee of the Company and all Subsidiaries or if the Optionee is an
      employee of a Subsidiary and the Subsidiary ceases to be a Subsidiary of
      the Company (unless the Optionee continues as an employee of the Company
      or another Subsidiary).

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

            (e) Withholding Taxes. The Company is entitled to withhold and
      deduct from future wages of the Optionee, or make other arrangements for
      the collection of, all legally required amounts necessary to satisfy any
      federal, state or local withholding tax requirements attributable to any
      action by the Optionee, including, without limitation, a disposition of
      shares of Common Stock described in Section 6.4(d) above, that causes the
      Incentive Stock Option to cease to quality as an incentive stock option
      within the meaning of Section 422 of the Code.

      6.5   Non-Statutory Stock Options.



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            (a) Option Exercise Price. The per share price to be paid by the
      Optionee at the time a Non-Statutory Stock Option is exercised will be
      determined by the Committee, but shall not be less than 85% of the Fair
      Market Value of one share of Common Stock on the date the Option is
      granted.

            (b) Duration of Non-Statutory Stock Options. The period during which
      a Non-Statutory Stock Option may be exercised shall be fixed by the
      Committee at the time such Option is granted, but in no event shall such
      period exceed 10 years and one month from the date the Option is granted.
      A Non-Statutory Stock Option shall become exercisable at such times and in
      such installments (which may be cumulative) as shall be determined by the
      Committee at the time the Option is granted. Upon the completion of its
      exercise period, a Non-Statutory Stock Option, to the extent not then
      exercised, shall expire. Except as otherwise provided in Articles 7 or 11,
      all Non-Statutory Stock Options granted hereunder to an Optionee who is an
      employee of the Company or any Subsidiaries shall terminate and may no
      longer be exercised if the Optionee ceases to be an employee of the
      Company or a Subsidiary or if the Optionee is an employee of a Subsidiary
      and the Subsidiary ceases to be a Subsidiary of the Company (unless the
      Optionee continues as an employee of the Company or another Subsidiary). A
      Non-Statutory Stock Option granted hereunder to an Optionee who is not an
      employee of the Company or a Subsidiary will terminate as determined by
      the Committee at the time of grant.

            (c)   Withholding Taxes.

                  (i) The Company is entitled to (aa) withhold and deduct from
            future wages of the Optionee, or make other arrangements for the
            collection of, all legally required amounts necessary to satisfy any
            federal, state or local withholding tax requirements attributable to
            the Optionee's exercise of a Non-Statutory Stock Option or otherwise
            incurred with respect to the Option, or (bb) require the Optionee
            promptly to remit the amount of such withholding to the Company
            before acting on the Optionee's notice of exercise or the Option.

                  (ii) The Committee may, in its discretion and subject to such
            rules as the Committee may adopt, permit an Optionee to satisfy, in
            whole or in part, any withholding tax obligation which may arise in
            connection with the exercise of a Non-Statutory Stock Option either
            by electing to have the Company withhold from the shares of Common
            Stock to be issued upon exercise that number of shares of Common
            Stock, or by electing to deliver to the Company already-owned shares
            of Common Stock, in either case having a Fair Market Value, on the
            date such tax is determined under the Code (the "Tax Date"), equal
            to the amount necessary to satisfy the withholding amount due. An
            Optionee's election to have the Company withhold shares of Common
            Stock or to deliver already-owned shares of Common Stock upon
            exercise is irrevocable and is subject to the consent or disapproval
            of the Committee. When shares of Common Stock are issued prior to
            the Tax Date to an Optionee making such an election, the Optionee
            shall agree

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            in writing to surrender that number of shares on the Tax Date
            having an aggregate Fair Market Value equal to the tax due.

            ARTICLE 7. EFFECT OF TERMINATION OF EMPLOYMENT ON OPTIONS

      7.1 Termination of Employment or Other Service Due to Death, Disability or
Retirement. In the event an Optionee's employment or other service is terminated
with the Company and all Subsidiaries by reason of his death, Disability or
Retirement, all outstanding Incentive Stock Options and Non-Statutory Stock
Options then held by the Optionee shall become immediately exercisable in full
and remain exercisable for a period of three months in the case of Retirement
and one year in the case of death or Disability, provided, however, that an
exercise may not occur after the expiration date thereof in any event. The
Company shall undertake to use its best efforts to notify the Optionee or his
heirs or representatives, as the case may be, of the last date by which Options
may be exercised pursuant to this Section 7.1, at least thirty (30) days in the
case of Retirement and at least sixty (60) days in the case of death or
Disability, prior to such date.

      7.2   Termination of Employment or Other Service for Reasons Other than
Death, Disability or Retirement.


            (a) Except as otherwise provided in Article 11 or as otherwise
      determined by the Committee at the time of grant of an Incentive Stock
      Option, in the event an Optionee's employment or other service is
      terminated with the Company and all Subsidiaries for any reason other than
      his death, Disability or Retirement, each Incentive Stock Option then held
      by the Optionee shall completely terminate on the earlier of (i) the close
      of business on the three-month anniversary date of such termination of
      employment and (ii) the expiration date of such Incentive Stock Option. In
      such period following termination of employment, the Incentive Stock
      Option shall be exercisable only to the extent the Option was exercisable
      on the vesting date immediately preceding such termination of employment
      but had not previously been exercised. To the extent an Incentive Stock
      Option is not exercisable on the date of termination of employment or if
      the Optionee does not exercise the Option within the time specified in
      this subsection (a), all rights of the Optionee under the Plan and such
      Incentive Stock Option shall terminate.

            (b) Except as otherwise provided in Article 11 and subsection (c)
      below, in the event an Optionee's employment or other service is
      terminated with the Company and all Subsidiaries for any reason other than
      his death, Disability or Retirement no Non-Statutory Stock Option then
      held by the Optionee shall thereafter be exercisable.

            (c) Notwithstanding the provisions of subsection (b) above, upon an
      Optionee's termination of employment or other service with the Company and
      all Subsidiaries, the Committee may, in its sole discretion (which may be
      exercised before or following such termination), cause Non-Statutory Stock
      Options then held by such Optionee to become exercisable and to remain
      exercisable following such termination of employment or other service in
      the manner determined by the Committee; provided, however, that no Option
      shall be exercisable after the expiration date thereof in any event.


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      7.3 Date of Termination. For purposes of the Plan, an Optionee's
employment or other service shall be deemed to have terminated on the date that
the Optionee ceases to perform services for the Company or the last day of the
pay period covered by the Optionee's final paycheck, as the case may be.
Notwithstanding the foregoing, the employee Optionee shall not be deemed to have
ceased to be an employee for purposes of the Plan until the later of the 91st
day of any bona fide leave of absence approved by the Company or a Subsidiary
for the Optionee (including, without limitation any layoff) or the expiration of
the period of any bona fide leave of absence approved by the Company or a
Subsidiary for the Optionee (including without limitation any layoff) during
which the Optionee's right to reemployment is guaranteed either by statute or
contract.

                     ARTICLE 8. RIGHTS OF EMPLOYEES; OPTIONEES

      8.1 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company or any Subsidiary to terminate the employment of
any Eligible Person or Optionee at any time, nor confer upon any Eligible Person
or Optionee any right to continue in the employ of the Company or any
Subsidiary.

      8.2 Nontransferability. No right or interest of any Optionee in an Option
granted pursuant to the Plan shall be assignable or transferable during the
lifetime of the Optionee, either voluntarily or involuntarily, or subjected to
any lien, directly or indirectly, by operation of law, or otherwise, including
execution, levy, garnishment, attachment, pledge or bankruptcy. In the event of
an Optionee's death, an Optionee's rights and interest in any Options shall be
transferable by testamentary will or the laws of descent and distribution, and
payment of any amounts due under the Plan shall be made to, and exercise of any
Options (to the extent permitted pursuant to Section 7.1) may be made by, the
Optionee's legal representatives, heirs or legatees. If in the opinion of the
Committee an Optionee holding any Option is disabled from caring for his or her
affairs because of mental condition, physical condition or age, any payments due
the Optionee may be made to, and any rights of the Optionee under the Plan shall
be exercised by, such Optionee's guardian, conservator or other legal personal
representative upon furnishing the Committee with evidence satisfactory to the
Committee of such status.

      8.3 Non-Exclusivity of the Plan. Nothing contained in the Plan is intended
to amend, modify or rescind any previously approved compensation plans or
programs entered into by the Company. The Plan will be construed to be an
addition to any and all such other plans or programs. Neither the adoption of
the Plan nor the submission of the Plan to the shareholders of the Company for
approval will be construed as creating any limitations on the power or authority
of the Board to adopt such additional or other compensation arrangements as the
Board may deem necessary or desirable.


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                ARTICLE 9. SHARE ISSUANCE AND TRANSFER RESTRICTIONS

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

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

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

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

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

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

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      SUCH STATE LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
      ACT AND SUCH STATE LAWS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO
      THE SATISFACTION OF THE COMPANY.

              ARTICLE 10. 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 Stock Options and Non-Statutory Stock
Options under the Plan shall conform to any change in applicable laws or
regulations or in any other respect that the Board may deem to be in the best
interests of the Company; provided, however, that no amendment shall, either
directly or indirectly, (a) materially increase the total number of shares of
Common Stock as to which Options may be granted under the Plan, except as
provided in Section 4.3 of the Plan; (b) materially increase the benefits
accruing to Optionees under the Plan; or (c) materially modify the requirements
as to eligibility for participation in the Plan without the approval of the
shareholders, but only if such approval is required for compliance with the
requirements of any applicable law or regulation; and provided, further, that
the Plan may not, without the approval of the shareholders, be amended in any
manner that will cause Incentive Stock Options to fail to meet the requirements
of Internal Revenue Code Section 422. No termination, suspension or amendment of
the Plan shall alter or impair any outstanding Option without the consent of the
Optionee affected thereby; provided, however, that this sentence shall not
impair the right of the Committee to take whatever action it deems appropriate
under Section 4.3.

                          ARTICLE 11. CHANGE IN CONTROL

      If, during the term of an Option, (i) the Company merges or consolidates
with any other corporation and is not the surviving corporation after such
merger or consolidation; (ii) the Company transfers all or substantially all of
its business and assets to any other person; or (iii) more than 50% of the
Company's outstanding voting shares are purchased by any other person, the
Committee may, in its sole discretion, provide for the acceleration of the right
to exercise the option prior to the anticipated effective date of any of the
foregoing transactions or take any other action as it may deem appropriate to
further the purposes of this Plan or protect the interests of the Optionee.

                     ARTICLE 12. EFFECTIVE DATE OF THE PLAN

      12.1 Effective Date. The Plan is effective as of February 25, 1995, the
effective date it was adopted by the Board subject to the approval of the
shareholders within 12 months. Options may be granted under the Plan prior to
shareholder approval if made subject to shareholder approval.

      12.2 Duration of the Plan. The Plan shall terminate at midnight on ten
(10) years from February 25, 1995 and may be terminated prior thereto by Board
action, and no Options shall be granted after such termination. Options
outstanding upon termination of the Plan may continue to be exercised in
accordance with their terms.




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                            ARTICLE 13. MISCELLANEOUS

      13.1 Governing Law. The Plan and all agreements hereunder shall be
construed in accordance with and governed by the laws of the State of Minnesota
without regard to the conflict of laws provisions of any jurisdictions. All
parties agree to submit to the jurisdiction of the state and federal courts of
Minnesota with respect to matters relating to the Plan and agree not to raise or
assert the defense that such forum is not convenient for such party.

      13.2 Gender and Number. Except when otherwise indicated by the context,
reference to the masculine gender in the Plan shall include, when used, the
feminine gender and any term used in the singular shall also include the plural.

      13.3 Construction. Wherever possible, each provision of this Plan shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Plan shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity without invalidating the remainder of such provision
or the remaining provisions of this Plan.

      13.4 Successors and Assigns. This Plan shall be binding upon and inure to
the benefit of the successors and permitted assigns of the Company, including,
without limitation, whether by way of merger, consolidation, operation of law,
assignment, purchase or other acquisition of substantially all of the assets or
business of the Company, and any and all such successors and assigns shall
absolutely and unconditionally assume all of the Company's obligations under the
Plan.

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




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