Document:

Exhibit 10.3

SECOND AMENDMENT TO

PORT OF DUBUQUE PUBLIC PARKING FACILITY

DEVELOPMENT AGREEMENT

This Second Amendment to Port of Dubuque Public
Parking Facility Development Agreement (the “Second Amendment”) is made as of
this 6th day of August, 2007 by and between the City of Dubuque, Iowa, a
municipal corporation of the State of Iowa (the “City”) and Diamond Jo, LLC
(f/k/a DJ Gaming Company, LLC), a Delaware limited liability company (“DJ”).

WHEREAS, the City and DJ are parties to a Port of
Dubuque Public Parking Facility Development Agreement dated as of February 5,
2007 (the “Original Development Agreement”), as amended by that First Amendment
to Port of Dubuque Public Parking Facility Development Agreement approved by
the City Council of the City on May 21, 2007 (the “First Amendment”) (the
Original Development Agreement as amended by the First Amendment shall be
referred to herein as the “Development Agreement”); and

WHEREAS, City and DJ now desire to further amend the
Development Agreement as set forth herein.

NOW, THEREFORE, the City and DJ agree that the
Development Agreement is hereby amended to read as follows:

Section 1.               Section
1.2(5)(d) of the Development Agreement shall be deleted and replaced with the
following provision:

(d)            Upon acceptance of the Public
Parking Facility by the City Council and after payment by City of all costs for
the design and construction of the Public Parking Facility, City shall refund
to DJ any balance in the Escrow Fund, if any, and all interest earned on the Initial
Advance.  Any remaining proceeds of the
Bonds described in Section 2.3 shall be applied as set forth in the resolution
of the City Council authorizing their issuance and Section 2.3(4).

Section 2.               Section
2.3(4) of the Development Agreement shall be deleted and replaced with the
following provision:

(4)            Proceeds of the Bonds shall be
applied only to the payment of capitalized interest thereon (if necessary),
debt service reserve funding, costs of issuance, and the payment of the costs
of the design and construction of the Public Parking Facility, including the
funding of a contingency amount equal to 10% of the fixed price, GMP for the
Public Parking Facility as provided in Section 1.2(5) above (the “Contingency
Amount”).  The terms of the Bonds shall
provide in substance that the portion of the Bonds issued for the payment of
the costs of the design and construction of the Public Parking Facility,
including the funding of

 

the Contingency Amount and
including the Bonds issued  in
anticipation of the construction of the North Facade Alternate, plus any income
earned thereon, and not so used for that purpose, shall be used by the City to
defease or call Bonds.

Section 3.               Except
as amended herein, all other terms and provisions of the Development Agreement
shall remain in full force and effect.

IN WITNESS WHEREOF, the parties have caused this
Second Amendment to be duly executed on or as of the day first above written.

	
   

  	
  CITY OF DUBUQUE, IOWA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Roy D. Buol

  
	
   

  	
   

  	
  Roy D. Buol, Mayor

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Jeanne F. Schneider

  	
   

  
	
   

  	
  Jeanne F. Schneider, City Clerk

  	
   

  
	
   

  	
  DIAMOND JO, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Natalie Schramm

  
	
   

  	
  Its:

  	
  Chief Financial OfficerExhibit
10.1

ARCTIC
CAT INC.

2007
OMNIBUS STOCK AND INCENTIVE PLAN

Table of
Contents

	
  

  	
   

  	
  

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.

  	
   

  	
  PURPOSE

  	
  1

  
	
  SECTION 2.

  	
   

  	
  DEFINITIONS

  	
  1

  
	
  SECTION 3.

  	
   

  	
  ADMINISTRATION

  	
  5

  
	
  (a)

  	
   

  	
  Power and Authority of the Committee

  	
  5

  
	
  (b)

  	
   

  	
  Power and Authority of the Board

  	
  5

  
	
  SECTION 4.

  	
   

  	
  SHARES AVAILABLE FOR AWARDS

  	
  5

  
	
  (a)

  	
   

  	
  Shares Available

  	
  5

  
	
  (b)

  	
   

  	
  Accounting for Awards

  	
  5

  
	
  (c)

  	
   

  	
  Adjustments

  	
  6

  
	
  (d)

  	
   

  	
  Award Limitations Under the Plan

  	
  6

  
	
   

  	
   

  	
  (i)

  	
  Section 162(m) Limitation for Certain Types of
  Awards

  	
  6

  
	
   

  	
   

  	
  (ii)

  	
  Section 162(m) Limitation for Performance Awards

  	
  6

  
	
   

  	
   

  	
  (iii)

  	
  Plan Limitation on Restricted Stock, Restricted
  Stock Units and Other Stock Grants

  	
  6

  
	
  SECTION 5.

  	
   

  	
  ELIGIBILITY

  	
  7

  
	
  SECTION 6.

  	
   

  	
  OPTIONS

  	
  7

  
	
  (a)

  	
   

  	
  Exercise Price

  	
  7

  
	
  (b)

  	
   

  	
  Option Term

  	
  7

  
	
  (c)

  	
   

  	
  Time and Method of Exercise

  	
  7

  
	
  (d)

  	
   

  	
  Directors Who Are Not Employees

  	
  8

  
	
  SECTION 7.

  	
   

  	
  STOCK APPRECIATION RIGHTS

  	
  8

  
	
  SECTION 8.

  	
   

  	
  RESTRICTED STOCK AND RESTRICTED STOCK UNITS

  	
  9

  
	
  (a)

  	
   

  	
  Restrictions

  	
  9

  
	
  (b)

  	
   

  	
  Issuance and Delivery of Shares

  	
  9

  
	
  SECTION 9.

  	
   

  	
  PERFORMANCE AWARDS

  	
  9

  

 

 i
 

Zz

	
  

  	
   

  	
  

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
   

  	
  OTHER STOCK GRANTS

  	
  10

  
	
  SECTION 11.

  	
   

  	
  GENERAL

  	
  10

  
	
  (a)

  	
   

  	
  Consideration for Awards

  	
  10

  
	
  (b)

  	
   

  	
  Awards May Be Granted Separately or Together

  	
  10

  
	
  (c)

  	
   

  	
  Forms of Payment under Awards

  	
  10

  
	
  (d)

  	
   

  	
  Limits on Transfer of Awards

  	
  11

  
	
  (e)

  	
   

  	
  Term of Awards

  	
  11

  
	
  (f)

  	
   

  	
  Restrictions; Securities Exchange Listing

  	
  11

  
	
  (g)

  	
   

  	
  Prohibition on Repricing

  	
  11

  
	
  SECTION 12.

  	
   

  	
  RIGHTS UPON TERMINATION OF EMPLOYMENT

  	
  11

  
	
  (a)

  	
   

  	
  Termination by Death or Disability

  	
  11

  
	
  (b)

  	
   

  	
  Termination by Reason of Retirement

  	
  12

  
	
  (c)

  	
   

  	
  Termination for Cause

  	
  13

  
	
  (d)

  	
   

  	
  Other Termination

  	
  13

  
	
  SECTION 13.

  	
   

  	
  TRANSFER, LEAVE OF ABSENCE, ETC

  	
  13

  
	
  SECTION 14.

  	
   

  	
  CHANGE IN CONTROL OF THE COMPANY

  	
  14

  
	
  (a)

  	
   

  	
  Change in Control

  	
  14

  
	
  (b)

  	
   

  	
  Total Market Value

  	
  15

  
	
  (c)

  	
   

  	
  Vesting Upon a Change in Control

  	
  15

  
	
  (d)

  	
   

  	
  Disposition of Awards

  	
  15

  
	
  (e)

  	
   

  	
  General Rule for Awards

  	
  16

  
	
  SECTION 15.

  	
   

  	
  INCOME TAX COMPLIANCE

  	
  16

  
	
  SECTION 16.

  	
   

  	
  AMENDMENTS AND TERMINATION

  	
  18

  
	
  SECTION 17.

  	
   

  	
  NO TRUST OR FUND CREATED

  	
  18

  

 ii
 

 

 

	
  

  	
   

  	
  

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 18.

  	
   

  	
  RIGHTS OF ELIGIBLE PERSONS AND PARTICIPANTS

  	
  19

  
	
  (a)

  	
   

  	
  No Rights to Awards

  	
  19

  
	
  (b)

  	
   

  	
  Award Agreements

  	
  19

  
	
  (c)

  	
   

  	
  Plan Provisions Control

  	
  19

  
	
  (d)

  	
   

  	
  No Rights of Shareholders

  	
  19

  
	
  (e)

  	
   

  	
  No Limit on Other Compensation Arrangements

  	
  19

  
	
  (f)

  	
   

  	
  No Right to Employment

  	
  19

  
	
  SECTION 19.

  	
   

  	
  GENERAL PROVISIONS

  	
  19

  
	
  (a)

  	
   

  	
  Governing Law

  	
  19

  
	
  (b)

  	
   

  	
  Severability

  	
  19

  
	
  (c)

  	
   

  	
  No Fractional Shares

  	
  20

  
	
  (d)

  	
   

  	
  Compliance with Section 162(m)

  	
  20

  
	
  (e)

  	
   

  	
  Arrangements Upon Termination of Employment or
  Competitive Employment

  	
  20

  
	
  (f)

  	
   

  	
  Headings

  	
  20

  
	
  SECTION 20.

  	
   

  	
  EFFECTIVE DATE OF THE PLAN

  	
  20

  
	
  SECTION 21.

  	
   

  	
  TERM OF THE PLAN

  	
  21

  

 

 iii

ARCTIC CAT INC.

2007 OMNIBUS STOCK AND INCENTIVE PLAN

Section 1.              Purpose

The
purpose of the Plan is to enable Arctic Cat Inc. (the “Company”) and its Subsidiaries
to retain and attract executives, other key employees, consultants and
directors who contribute to the Company’s success by their ability, ingenuity
and industry, and to enable such individuals to participate in the long-term
success and growth of the Company by giving them a proprietary interest in the
Company, thereby aligning the interests of such persons with the Company’s
shareholders.

Section 2.              Definitions

As
used in the Plan, the following terms shall have the meanings set forth below:

(a)                                  “Action
Effective Date” shall have the meaning set forth in Section 14(d) of the Plan.

(b)                                 “Award”
shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted
Stock Unit, Performance Award or Other Stock Grant granted under the Plan.

(c)                                  “Award
Agreement” shall mean any written agreement, contract or other instrument or
document, including in electronic form, evidencing an Award granted under the
Plan.  Each Award Agreement shall be subject to the applicable terms and
conditions of the Plan and any other terms and conditions (not inconsistent
with the Plan) determined by the Committee.

(d)                                 “Board”
shall mean the Board of Directors of the Company.

(e)                                  “Cause”
shall mean, unless otherwise defined in the Award Agreement or another
agreement governing one or more Awards under this Plan, a felony conviction of
a Participant or the failure of a Participant to contest prosecution for a
felony, or a Participant’s willful misconduct or dishonesty, any of which is
directly and materially harmful to the business or reputation of the Company.

(f)                                    “Change
in Control” shall have the meaning set forth in Section 14(a) of the Plan.

(g)                                 “Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time, and
any regulations promulgated thereunder.

(h)                                 “Committee”
shall mean the Compensation and Human Resources Committee of the Board or any
other committee of the Board designated by the Board to administer the Plan or
any portion of the Plan.  The Committee shall be comprised of not less
than such number of Directors as shall be required to permit Awards

granted under the Plan to qualify under Rule 16b-3
and Section 162(m) of the Code, and each member of the Committee shall be
a “Non-Employee Director”; provided the Compensation Committee may have a
member or members who are not Non-Employee Directors so long as the Board has
established a separate Committee to grant Awards, all the members of which are
Non-Employee Directors.

(i)                                     “Company”
shall mean Arctic Cat Inc., a Minnesota corporation, and any successor
corporation.

(j)                                     “Deferred
Compensation” shall have the meaning set forth in Section 15.

(k)                                  “Director”
shall mean a member of the Board, including any Non-Employee Director.

(l)                                     “Disability”
shall mean permanent and total disability as determined by the Committee.

(m)                               “Early
Retirement” shall mean retirement, with consent of the Committee at the time of
retirement, from active employment with the Company and any Subsidiary or
Parent Corporation of the Company.

(n)                                 “Eligible
Person” shall mean any employee, officer, consultant, advisor or Director
providing services to the Company or any Subsidiary who the Committee
determines to be an Eligible Person.  An Eligible Person must be a natural
person.

(o)                                 “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

(p)                                 “Fair
Market Value” shall mean the value of the Shares on a given date as determined
by the Committee in accordance with Section 422 of the Code or any successor
provision and any applicable Treasury Department regulations with respect to “incentive
stock options,” or, if applicable, that will result in the Award being exempt
from the requirements of a “deferred compensation plan” under Section 409A of
the Code.

(q)                                 “Incentive
Stock Option” shall mean an option granted under Section 6 of the Plan
that is intended to qualify as an “incentive stock option” in accordance with
the terms of Section 422 of the Code or any successor provision.

(r)                                    “Incumbent
Directors” shall have the meaning set forth in Section 14(a)(ii) of the Plan.

(s)                                  “Insider”
shall mean an individual who is, on the relevant date, an officer, Director or
beneficial owner of ten percent (10%) or more of any class of the

 2
 

Company’s equity
securities of the Company, all as defined under Section 16 of the Exchange Act

(t)                                    “Non-Assumed
Award” shall have the meaning set forth in Section 14(c) of the Plan.

(u)                                 “Non-Employee
Director” shall mean any Director who is not also an employee of the Company or
a Subsidiary within the meaning of Rule 16b-3 and is an “outside director”
within the meaning of Section 162(m) of the Code.

(v)                                 “Non-Qualified
Stock Option” shall mean an option granted under Section 6 of the Plan
that is not an Incentive Stock Option.

(w)                               “Normal
Retirement” shall mean retirement from active employment with the Company and
any Subsidiary or Parent Corporation of the Company on or after (i) age 65 or
(ii) age 55 if the Participant has ever served the Company as a full-time
employee for at least 15 years.

(x)                                   “Option”
shall mean an Incentive Stock Option or a Non-Qualified Stock Option.

(y)                                 “Other
Stock Grant” shall mean any right granted under Section 10 of the Plan.

(z)                                   “Parent
Corporation” shall mean any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if each of the corporations
(other than the Company) owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in the
chain.

(aa)                            “Participant”
shall mean an Eligible Person who receives or holds an Award under the Plan.

(bb)                          “Performance
Award” shall mean any right granted under Section 9 of the Plan.

(cc)                            “Performance
Goal” shall mean one or more of the following performance goals, either
individually, alternatively or in any combination, applied on a Company, Subsidiary
or business unit basis:  revenue, cash flow, gross profit, earnings before
interest and taxes, earnings before interest, taxes, depreciation and
amortization and net earnings, earnings per share, margins (including one or
more of gross, operating and net income margins), returns (including one or
more of return on assets, equity, investment, capital and revenue and total
stockholder return), stock price, working capital, market share, cost
reductions, workforce satisfaction and diversity goals, employee retention,
customer satisfaction, completion of key projects and strategic plan
development and implementation.  Such goals may reflect absolute entity or
business unit performance or a relative comparison to the performance of a peer
group of entities, prior periods of performance, or other external measure of
the selected performance criteria.  

 3
 

Pursuant to rules and
conditions adopted by the Committee on or before the 90th day of the applicable performance period for
which Performance Goals are established, the Committee may appropriately adjust
any evaluation of performance under such goals to exclude the effect of certain
events, including any of the following events:  asset write-downs;
litigation or claim judgments or settlements; changes in tax law, accounting
principles or other such laws or provisions affecting reported results;
severance, contract termination and other costs related to exiting certain
business activities; and gains or losses from the disposition of businesses or
assets or from the early extinguishment of debt.  Performance Goals may include individual objectives
or other subjective criteria.

(dd)                          “Person”
shall mean any individual or entity, including a corporation, partnership,
limited liability company, association, joint venture or trust.

(ee)                            “Plan”
shall mean the Arctic Cat Inc. 2007 Omnibus Stock and Incentive Plan, as
amended from time to time, the provisions of which are set forth herein.

(ff)                                “Restricted
Stock” shall mean any Share granted under Section 8 of the Plan.

(gg)                          “Restricted
Stock Unit” shall mean any unit granted under Section 8 of the Plan
evidencing the right to receive a Share (or a cash payment equal to the Fair
Market Value of a Share) at some future date.

(hh)                          “Retirement”
shall mean Normal Retirement or Early Retirement.

(ii)                                  “Rule 16b-3”
shall mean Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Exchange Act, or any successor rule or regulation.

(jj)                                  “Section
162(m)” shall mean Section 162(m) of the Code and the applicable Treasury
Regulations promulgated thereunder.

(kk)                            “Share”
or “Shares” shall mean the common stock, $.01 par value per share, of the
Company (the “Common Stock”) or such other securities or property as may become
subject to Awards pursuant to an adjustment made under Section 4(c) of the
Plan.  Class B common stock of the
Company shall be considered Shares hereunder only following conversion to
Common Stock of the Company.

(ll)                                  “Specified
Employee” shall have the meaning set forth in Section15 of the Plan.

(mm)                      “Stock
Appreciation Right” shall mean any right granted under Section 7 of the
Plan.

(nn)                          “Subsidiary”
shall mean any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if each of the corporations (other than
the last corporation in the unbroken chain) owns stock

 4
 

possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in the chain.

(oo)                          “Total
Market Value” shall have the meaning set forth in Section 14(b) of the Plan.

Section 3.              Administration

(a)           Power and Authority
of the Committee.  The Plan shall be administered by the
Committee.  Subject to the express provisions of the Plan and to
applicable law, the Committee shall have full power and authority to: 
(i) designate Participants; (ii) determine the type or types of Awards
to be granted to each Participant under the Plan; (iii) determine the
number of Shares to be covered by (or the method by which payments or other
rights are to be determined in connection with) each Award; (iv) determine
the terms and conditions of any Award or Award Agreement; (v) amend the
terms and conditions of any Award or Award Agreement and accelerate the
exercisability of any Option or waive any restrictions relating to any Award;
(vi) extend the exercise period in accordance with the terms of the Plan;
(vii) determine whether, to what extent and under what circumstances Awards may
be exercised in cash, Shares, other securities, other Awards or other property,
or canceled, forfeited or suspended; (viii) interpret and administer the
Plan and any instrument or agreement, including any Award Agreement, relating
to the Plan; (ix) establish, amend, suspend or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; (x) delegate to one or more executive officers of
the Company the authority to grant Awards and/or to administer the Plan or any
aspect of it; provided, however, that only the Committee may
grant Awards that qualify under Rule 16b-3 and Section 162(m) of the
Code; and (xi) make any other determination and take any other action,
prospectively or retrospectively, that the Committee deems necessary or
desirable for the administration of the Plan.  Unless otherwise expressly
provided in the Plan, all designations, determinations, interpretations and
other decisions under or with respect to the Plan or any Award or Award
Agreement shall be within the sole discretion of the Committee, may be made at
any time and shall be final, conclusive and binding upon any Eligible Person
and any holder or beneficiary of any Award.

(b)           Power and Authority
of the Board.  Notwithstanding anything to the contrary contained
herein, the Board may, at any time and from time to time, exercise the powers
and duties of the Committee under the Plan without any further action of the
Committee, and in that event, any reference to Committee shall also refer to
the Board.

Section 4.              Shares Available for Awards

(a)           Shares Available. 
Subject to adjustment as provided in Section 4(c) of the Plan, the
aggregate number of Shares that may be issued under the Plan shall be 1,900,000.

(b)           Accounting for
Awards.  For purposes of this Section 4, if an Award entitles the
holder thereof to receive or purchase Shares, the number of Shares covered by
such Award or to which such Award relates shall be counted on the date of grant
of such Award against the aggregate number of Shares available for granting
Awards under the Plan.  If an Award terminates or is forfeited or
cancelled without the issuance of any Shares, or if any Shares

 5
 

covered by an
Award or to which an Award relates are not issued for any other reason, then
the number of Shares counted against the aggregate number of Shares available
under the Plan with respect to such Award, to the extent of any such
termination, forfeiture, cancellation or other event, shall again be available
for granting Awards under the Plan.   If
Shares of Restricted Stock are forfeited prior to vesting, whether or not
dividends have been paid on such Shares, then the number of Shares counted against
the aggregate number of Shares available under the Plan with respect to such
Award of Restricted Stock, to the extent of any such forfeiture by the Company,
shall again be available for granting Awards under the Plan.

(c)           Adjustments. 
In the event that the Committee shall determine that any dividend or other
distribution (whether in the form of cash, Shares, other securities or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase or exchange
of Shares or other securities of the Company, issuance of warrants or other
rights to purchase Shares or other securities of the Company or any other
similar corporate transaction, equity restructuring or event affects the
Shares, then the Committee shall make an appropriate adjustment that will
equalize the fair value of such Shares or Awards before and after the
transaction, restructuring or event, including but not limited to making
adjustment to any or all of (i) the number and type of Shares (or other
securities or other property) that thereafter may be made the subject of
Awards, (ii) the number and type of Shares (or other securities or other
property) subject to outstanding Awards, (iii) the purchase price or
exercise price with respect to any Award and (iv) the limitations contained in
Section 4(d) of the Plan; provided, however, that with respect to
Incentive Stock Options, in the event of a transaction described in 424(c) of
the Code, the adjustments shall satisfy Section 424(e)(1) of the Code.

(d)           Award Limitations
Under the Plan

(i)              Section 162(m)
Limitation for Certain Types of Awards.  No Eligible Person may be
granted Options, Stock Appreciation Rights or any other Award or Awards under
the Plan, the value of which Award or Awards is based solely on an increase in
the value of the Shares after the date of grant of such Award or Awards, for
more than 250,000 Shares (subject to adjustment as provided in
Section 4(c) of the Plan) in the aggregate in any calendar year.

(ii)           Section 162(m)
Limitation for Performance Awards.  The maximum amount payable
pursuant to all Performance Awards to any Participant in the aggregate in any
calendar year shall be $5,000,000 in value, whether payable in cash, Shares or
other property, based on the value at the time the Award is made.  This limitation does not apply to, but rather
shall be independent of, any Award subject to the limitation contained in
Section 4(d)(i) of the Plan.

(iii)           Plan Limitation on Restricted Stock, Restricted Stock Units and Other
Stock Grants.  No more than 633,000 Shares, subject to
adjustment as provided in Section 4(c) of the Plan, shall be available under
the Plan for issuance pursuant to grants of Restricted Stock, Restricted Stock
Units and Other Stock Grants; provided, however, that if any
Awards of Restricted Stock Units terminate or are forfeited or cancelled
without the issuance of any Shares or if Shares of Restricted Stock are
forfeited prior to

 6
 

vesting,
whether or not dividends have been paid on such Shares, then the Shares subject
to such termination, forfeiture or cancellation by the Company shall again be
available for grants of Restricted Stock, Restricted Stock Units and Other
Stock Grants for purposes of this limitation on grants of such Awards.

Section 5.              Eligibility

Any
Eligible Person shall be eligible to be designated a Participant.  In
determining which Eligible Persons shall receive an Award and the terms of any
Award, the Committee may take into account the nature of the services rendered
by the respective Eligible Persons, their present and potential contributions
to the success of the Company or such other factors as the Committee, in its
discretion, shall deem relevant.  Notwithstanding the foregoing, an
Incentive Stock Option may only be granted to full-time or part-time employees
(which term as used herein includes, without limitation, officers and Directors
who are also employees), and an Incentive Stock Option shall not be granted to
an employee of a Subsidiary unless such Subsidiary is also a “subsidiary
corporation” of the Company within the meaning of Section 424(f) of the
Code or any successor provision.

Section 6.              Options

The Committee is hereby authorized to grant Options to
Eligible Persons with the following terms and conditions and with such
additional terms and conditions not inconsistent with the provisions of the
Plan as the Committee shall determine:

(a)           Exercise Price. 
The purchase price per Share purchasable under an Option shall be determined by
the Committee; provided,
however, that such
purchase price shall not be less than 100% of the Fair Market Value of a Share
on the date of grant of such Option; provided  further, that the
Committee may designate a per share exercise price below Fair Market Value on the
date of grant (A) to the extent necessary or appropriate, as determined by the
Committee, to satisfy applicable legal or regulatory requirements of a foreign
jurisdiction or (B) if the Option is granted in substitution for a stock option
previously granted by an entity that is acquired by or merged with the Company
or a Subsidiary.  If an employee owns or
is deemed to own (by reason of the attribution rules applicable under Section
424(d) of the Code) more than 10% of the combined voting power of all classes
of stock of the Company or any Parent Corporation or Subsidiary and an
Incentive Stock Option is granted to such employee, the option price shall be
no less than 110% of the Fair Market Value of the Stock on the date the option
is granted.

(b)           Option Term. 
The term of each Option shall be fixed by the Committee at the time of grant,
but shall not be longer than 10 years from the date of grant.  If an employee owns or is deemed to own (by
reason of the attribution rules of Section 424(d) of the Code) more than 10% of
the combined voting power of all classes of stock of the Company or any Parent
Corporation or Subsidiary and an Incentive Stock Option is granted to such
employee, the term of such option shall be no more than five years from the
date of grant.

(c)           Time and Method of
Exercise.  The Committee shall
determine the time or times at which an Option may be exercised in whole or in
part and the method or methods by which, and the form or forms (including,
without limitation, cash, Shares, other securities, other Awards

 7
 

or other property,
or any combination thereof, having a Fair Market Value on the exercise date
equal to the applicable exercise price) in which, payment of the exercise price
with respect thereto may be made or deemed to have been made.  If the Committee provides, in its discretion,
that any option is exercisable only in installments, the Committee may waive
such installment exercise provisions at any time, provided, however,
that unless the Option has been approved by the Board, the Committee or the
shareholders of the Company, an Option to a director, officer or a 10%
shareholder of the Company or its Subsidiaries shall not be exercisable for a
period of six (6) months after the date of the grant unless otherwise permitted
under rules, policies or interpretations established by the Securities and
Exchange Commission in connection with a Change in Control of the Company as
contemplated by Section 14 of the Plan or as otherwise provided in the Plan.

(d)           Directors Who Are
Not Employees.  Each person who is
not an employee of the Company or its Subsidiaries who on and after the date
this Plan is adopted by the shareholders of the Company is, or within the prior
two (2) years has been, elected or reelected as a director of the Company at any
annual or special meeting of the shareholders of the Company or appointed as a
director of the Company by action of the Board during the period between
shareholder meetings, shall (i) as of the date of such election, reelection or
action and (ii) as of the date of each subsequent annual or special meeting of
the shareholders of the Company at which action is taken to elect any director
and such director who is not an employee (A) has served as a director for at
least six (6) months and (B) is serving an unexpired term as a director,
automatically be granted an Option to purchase 6,000 shares of the Company’s
Stock at an exercise price per share equal to 100% of the Fair Market Value of
a share of the Company’s Stock on the date of the grant of the Option; provided
that any such Director may decline receipt of said Option. All such Options
shall be designated as Non-Qualified Stock Options and shall be subject to the
same terms and provisions as are then in effect with respect to the grant of
Non-Qualified Stock Options to officers and key employees of the Company,
except that the term of each such Option shall expire ten (10) years from the
date of grant.

Nothing in this Section 6(d) shall limit the ability
of the Board or the Committee to provide additional or substitute Awards to any
Director.  In the event any discretionary
Award is granted to members of the Committee, such Award shall be granted by
the Board and if necessary to comply with applicable rules of the Securities
and Exchange Commission, shall not be exercisable for a period of six (6)
months from the date of grant.

This Section 6(d) shall supersede and replace the
provisions of the Company’s 2002 Stock Plan granting options to Non-Employee
Directors.

Section
7.              Stock Appreciation
Rights

The
Committee is hereby authorized to grant Stock Appreciation Rights to Eligible
Persons subject to the terms of the Plan and any applicable Award
Agreement.  A Stock Appreciation Right granted under the Plan shall confer
on the holder thereof a right to receive upon exercise thereof the excess of
(i) the Fair Market Value of one Share on the date of exercise (or, if the
Committee shall so determine, at any time during a specified period before or
after the date of exercise) over (ii) the grant price of the Stock
Appreciation Right as determined by the Committee, which grant price shall not
be less than 100% of the Fair Market Value of one Share

 8
 

on the date of
grant of the Stock Appreciation Right; provided, however, that
the Committee may designate a per share grant price below Fair Market Value on
the date of grant (A) to the extent necessary or appropriate, as
determined by the Committee, to satisfy applicable legal or regulatory
requirements of a foreign jurisdiction or (B) if the Stock Appreciation
Right is granted in substitution for a stock appreciation right previously
granted by an entity that is acquired by or merged with the Company or a
Subsidiary. Subject to the terms of the Plan, the grant price, term, methods of
exercise, dates of exercise, methods of settlement and any other terms and
conditions (including conditions or restrictions on the exercise thereof) of
any Stock Appreciation Right shall be as determined by the Committee; provided,
however, that no Stock Appreciation Right may be exercisable after ten
(10) years from its date of grant.

Section
8.              Restricted
Stock and Restricted Stock Units

The
Committee is hereby authorized to grant Restricted Stock and Restricted Stock
Units to Eligible Persons with the following terms and conditions and with such
additional terms and conditions not inconsistent with the provisions of the
Plan as the Committee shall determine:

(a)           Restrictions. 
Shares of Restricted Stock and Restricted Stock Units shall be subject to such
restrictions as the Committee may impose (including, without limitation, any
limitation on the right to vote a Share of Restricted Stock or the right to
receive any dividend or other right or property with respect thereto), which
restrictions may lapse separately or in combination at such time or times, in
such installments or otherwise as the Committee may deem appropriate.  Notwithstanding the foregoing, the Committee
may permit acceleration of vesting of such Awards in the event of the
Participant’s death, disability or retirement or a change in control of the
Company.

(b)           Issuance and
Delivery of Shares.  Any Restricted Stock granted under the Plan shall
be issued at the time such Awards are granted and may be evidenced in such
manner as the Committee may deem appropriate, including book-entry registration
or issuance of a stock certificate or certificates, which certificate or
certificates shall be held by the Company.  Such certificate or
certificates shall be registered in the name of the Participant and shall bear
an appropriate legend referring to the restrictions applicable to such
Restricted Stock.  Shares representing Restricted Stock that is no longer
subject to restrictions shall be delivered to the Participant promptly after
the applicable restrictions lapse or are waived.  In the case of
Restricted Stock Units, no Shares shall be issued at the time such Awards are
granted.  Upon the lapse or waiver of restrictions and the restricted
period relating to Restricted Stock Units evidencing the right to receive
Shares, such Shares shall be issued and delivered to the holder of the
Restricted Stock Units.

Section
9.              Performance
Awards

The
Committee is hereby authorized to grant to Eligible Persons Performance Awards
which are intended to be “qualified performance-based compensation” within the
meaning of Section 162(m).  A Performance Award granted under the Plan may
be payable in cash or in Shares (including, without limitation, Restricted
Stock).  Performance Awards shall, to the extent required by Section
162(m), be conditioned solely on the achievement of one or more objective
Performance Goals, and such Performance Goals shall be established by the
Committee within

 9
 

the time period
prescribed by, and shall otherwise comply with the requirements of, Section
162(m).  Subject to the terms of the Plan and any applicable Award
Agreement, the Performance Goals to be achieved during any performance period,
the length of any performance period, the amount of any Performance Award
granted, the amount of any payment or transfer to be made pursuant to any
Performance Award and any other terms and conditions of any Performance Award
shall be determined by the Committee.  The Committee shall also certify in
writing that such Performance Goals have been met prior to payment of the
Performance Awards to the extent required by Section 162(m).  Nothing in this Section 9 shall prohibit the
Committee from granting any Award that is not intended to satisfy the
requirements of Section 162(m).

Section
10.            Other Stock
Grants

The
Committee is hereby authorized, subject to the terms of the Plan, to grant to
Eligible Persons Shares without restrictions thereon as are deemed by the
Committee to be consistent with the purpose of the Plan.  Subject to the
terms of the Plan and any applicable Award Agreement, such Other Stock Grant
may have such terms and conditions as the Committee shall determine.  In the event Other Stock Grants are awarded
to members of the Committee, such Award shall be granted by the Board.

Section 11.            General

(a)           Consideration
for Awards.  Awards may be granted for no cash consideration or for
cash or any other consideration as determined by the Committee or required by
applicable law.

(b)           Awards
May Be Granted Separately or Together.  Awards may, in the discretion
of the Committee, be granted either alone or in addition to, in tandem with or
in substitution for any other Award or any award granted under any plan of the
Company or any Subsidiary.  Awards granted in addition to or in tandem
with other Awards or in addition to or in tandem with awards granted under any
such other plan of the Company or any Subsidiary may be granted either at the
same time as or at a different time from the grant of such other Awards or
awards; provided, however, that any Stock Appreciation Right that
is part of an Incentive Stock Option must be granted only at time of the grant
of the Incentive Stock Option.

(c)           Forms
of Payment under Awards.  Subject to the terms of the Plan and of any
applicable Award Agreement, payments or transfers to be made by the Company or a
Subsidiary upon the grant, exercise or payment of an Award may be made in such
form or forms as the Committee shall determine (including, without limitation,
cash, Shares, other securities, other Awards or other property or any
combination thereof), and may be made in a single payment or transfer, in
installments or on a deferred basis, in each case in accordance with rules and
procedures established by the Committee.  Such rules and procedures may
include, without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments.  Any payment to a Specified Employee that
constitutes Deferred Compensation (as those terms are defined in Section 15 of
the Plan) shall comply with the delay in payment provisions set forth in
Section 15(e) hereof.

 10
 

(d)           Limits
on Transfer of Awards.  Except as otherwise provided by the terms of
this Plan, no Award and no right under any such Award shall be transferable by
a Participant other than by will or by the laws of descent and distribution. 
The Committee may establish procedures as it deems appropriate for a
Participant to designate a Person or Persons, as beneficiary or beneficiaries,
to exercise the rights of the Participant and receive any property
distributable with respect to any Award in the event of the Participant’s
death.  The Committee, in its discretion and subject to such additional
terms and conditions as it determines, may permit a Participant to transfer a
Non-Qualified Stock Option to any “family member” (as such term is defined in
the General Instructions to Form S-8 (or any successor to such Instructions or
such Form) under the Securities Act of 1933, as amended) at any time that such
Participant holds such Option, provided that such transfers may not be for
value (i.e., the transferor may
not receive any consideration therefore) and the family member may not make any
subsequent transfers other than by will or by the laws of descent and
distribution.  Each Award under the Plan or right under any such Award
shall be exercisable during the Participant’s lifetime only by the Participant
(except as provided herein or in an Award Agreement or amendment thereto
relating to a Non-Qualified Stock Option) or, if permissible under applicable
law, by the Participant’s guardian or legal representative.  No Award or
right under any such Award may be pledged, alienated, attached or otherwise
encumbered, and any purported pledge, alienation, attachment or encumbrance
thereof shall be void and unenforceable against the Company or any Subsidiary.

(e)           Term
of Awards.  The term of each Award shall be for a period not longer
than 10 years from the date of grant.

(f)            Restrictions;
Securities Exchange Listing.  All Shares or other securities delivered
under the Plan pursuant to any Award or the exercise thereof shall be subject
to such stop transfer orders and other restrictions as the Committee may deem
advisable under the Plan, applicable federal or state securities laws and
regulatory requirements, and the Committee may direct appropriate stop transfer
orders and cause other legends to be placed on the certificates for such Shares
or other securities to reflect such restrictions.  If the Shares or other
securities are traded on a securities exchange, the Company shall not be
required to deliver any Shares or other securities covered by an Award unless
and until such Shares or other securities have been and continue to be admitted
for trading on such securities exchange.

(g)           Prohibition
on Repricing.  Except as provided in Section 4(c) of the Plan, no
Option or Stock Appreciation Right may be (i)  amended to reduce its initial exercise or
grant price, (ii) canceled and replaced with Options or Stock Appreciation
Rights having a lower exercise or grant price or with any other type of Award,
or (iii) repurchased for cash, without the approval of the shareholders of the
Company.

Section
12.            Rights Upon
Termination of Employment

(a)           Termination by Death or
Disability.  Unless otherwise determined by
the Committee in an Award Agreement or in writing after the Award
Agreement is issued, if a Participant’s employment by the Company and any Subsidiary or
Parent Corporation terminates by reason of death or Disability:

 11
 

(i)            all outstanding
Options and Stock Appreciation Rights (other than Shares subject to Performance
Awards) then held by the Participant may thereafter be immediately exercised,
to the extent then exercisable (or on such accelerated basis as the Committee
shall determine at or after grant), and remain exercisable for a period of
twelve months (or such shorter period as the Committee shall specify at grant)
from the date of such death or Disability or until the expiration of the stated
term of the option, whichever period is shorter; provided, however,
that in the event of termination of employment by reason of death or Disability,
if an Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code as a result of
Committee action, the Option will thereafter be treated as a Non-Qualified
Stock Option;

(ii)           all Restricted Stock
and Restricted Stock Units (other than Shares subject to Performance Awards) then
held by the Participant will become fully vested; and

(iii)          all Performance
Awards and Other Stock Grants then held by the Participant will vest and/or
continue to vest in the manner determined by the Committee and set forth in the
Award Agreement evidencing such Performance Award or Other Stock Grant, or as
otherwise determined by the Committee.

(b)           Termination by Reason
of Retirement.  Unless otherwise determined by
the Committee in an Award Agreement or in writing after the Award
Agreement is issued, if a Participant’s employment by the Company or any Subsidiary or
Parent Corporation terminates by reason of Retirement:

(i)            all outstanding
Options and Stock Appreciation Rights (other than Shares subject to Performance
Awards) then held by the Participant that have not vested as of such
termination will either continue to vest in accordance with its terms in the
manner determined by the Committee and set forth in the Award Agreement
evidencing such Option or Stock Appreciation Right or, if so provided in the
Award Agreement or in writing after the Award Agreement is issued, become fully
vest on the date of Retirement, and in either case shall remain exercisable until
(A) the date twelve months (or such earlier date as the Committee shall specify
at grant) from the date such Option or Stock Appreciation Right becomes fully
vested or the date of Retirement, whichever is later, or (B) the expiration of
the stated term of the Option, if earlier; provided, however,
that in the event of termination of employment by reason of Retirement, if an
Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code as a result of
Committee action, the Option will thereafter be treated as a Non-Qualified
Stock Option;

(ii)           all Restricted Stock
and Restricted Stock Units (other than Shares subject to Performance Awards) then
held by the Participant that have not vested as of such termination will vest
and/or continue to vest in the manner determined by the Committee and set forth
in the Award Agreement evidencing such Restricted Stock or Restricted Stock
Units; and

 12

(iii)          all
Performance Awards and Other Stock Grants then held by the Participant will
vest and/or continue to vest in the manner set forth in the Award Agreement
evidencing such Performance Award or Other Stock Grant, or as otherwise
determined by the Committee.

(c)           Termination for Cause.  Unless otherwise determined by the Committee
in an Award Agreement or in writing after the Award Agreement is issued, if the Participant’s
employment by the Company and any Subsidiary or Parent Corporation terminates for Cause:

(i)            all outstanding
Options and Stock Appreciation Rights (other than Shares subject to Performance
Awards) then held by the Participant may be exercised, to the extent then
exercisable, no later than the date of such termination;

(ii)           all Restricted Stock
and Restricted Stock Units (other than Shares subject to Performance Awards) then
held by the Participant that have not vested as of such termination will be
terminated and forfeited; and

(iii)          all Performance
Awards and Other Stock Grants then held by the Participant will be terminated
and forfeited, except as set forth in the Award Agreement evidencing such
Performance Award or Other Stock Grant, or as otherwise determined by the
Committee.

(d)           Other Termination.  Unless otherwise determined by the Committee
in an Award Agreement or in writing after the Award Agreement is issued, if a Participant’s employment
by the Company and any Subsidiary or Parent Corporation terminates for any
reason other than death, Disability, Retirement or Cause:

(i)            all Outstanding Stock
Options and Stock Appreciation Rights (other than Shares subject to Performance
Awards) may be exercised to the extent it was exercisable at such termination
for the lesser of one month or the balance of the option’s term;

(ii)           all Restricted Stock
and Restricted Stock Units (other than Shares subject to Performance Awards) then
held by the Participant that have not vested as of such termination will be
terminated and forfeited; and

(iii)          all Performance
Awards and Other Stock Grants then held by the Participant will vest and/or
continue to vest in the manner set forth in the Award Agreement evidencing such
Performance Award or Other Stock Grant, or as otherwise determined by the
Committee.

Section 13.            Transfer, Leave of Absence, etc.

For
purposes of the Plan, the following events shall not be deemed a termination of
employment:

 13
 

(a)           a transfer of an
employee from the Company to a Parent Corporation or Subsidiary, or from a
Parent Corporation or Subsidiary to the Company, or from one Subsidiary to
another;

(b)           a leave of absence,
approved in writing by the Committee, for military service or sickness, or for
any other purpose approved by the Company if the period of such leave does not
exceed ninety (90) days (or such longer period as the Committee may approve, in
its sole discretion); and

(c)           a leave of absence in
excess of ninety (90) days, approved in writing by the Committee, but only if
the employee’s right to reemployment is guaranteed either by a statute or by
contract, and provided that, in the case of any leave of absence, the employee
returns to work within thirty (30) days after the end of such leave.

Section 14.            Change in Control of the Company

(a)           Change in Control. “Change in Control”
of the Company shall mean a change in control which would be required to be
reported in response to Item 6(e) on Schedule 14A of Regulation 14A promulgated
under the Exchange Act, whether or not the Company is then subject to such
reporting requirement, including, without limitation, if:

(i)            Any “person” (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act), other than a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any Subsidiary or Parent Corporation, becomes a “beneficial
owner” (as defined in Rule 13d-3 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 (other than
Suzuki Motor Corporation, the holder of more than 30% of such securities on the
date of this Plan); or

(ii)           During any period of
two consecutive years (not including any period ending prior to the effective
date of this Plan), the Incumbent Directors cease for any reason to constitute
at least a majority of the Board. The term “Incumbent Directors” shall mean
those individuals who are members of the Board of Directors on the effective
date of this Plan and any individual who subsequently becomes a member of the
Board (other than a director designated by a person who has entered into
agreement with the Company to effect a transaction contemplated by this Section
14(a)(iii) or in connection with the settlement of a proxy contest) whose
election or nomination for election by the Company’s shareholders was approved
by a vote of at least a majority of the then Incumbent Directors; or

(iii)          In the event (x) the
Company consummates a merger, consolidation, share exchange, division or other
reorganization of the Company with any corporation or entity, other than an
entity owned at least 80% by the Company, unless immediately after such
transaction, the shareholders of the Company immediately prior to such
transaction beneficially own, directly or indirectly, 51% or more of the
combined voting power of resulting entity’s outstanding voting securities as
well as 51% or more of the Total

 14
 

Market Value of the resulting entity, or in the case
of a division, 51% or more of the combined voting power of the outstanding
voting securities of each entity resulting from the division as well as 51% or
more of the Total Market Value of each such entity, in each case in
substantially the same proportion as such shareholders owned shares of the
Company prior to such transaction; (y) the Company consummates an agreement for
the sale or disposition (in one transaction or a series of transactions) of
assets of the Company, the total consideration of which is greater than 51% of
the Total Market Value of the Company; or (z) the Company adopts a plan of
complete liquidation or winding up of the Company.

(b)           Total Market Value.  “Total Market Value” shall mean the aggregate
market value of the Company’s or the resulting entity’s outstanding common
stock (on a fully diluted basis) plus the aggregate market value of the Company’s
or the resulting entity’s other outstanding equity securities as measured by
the exchange rate of the transaction or by such other method as the Committee
determines where there is not a readily ascertainable exchange rate.

(c)           Vesting Upon a Change
in Control.  Except as otherwise provided in an
Award or as provided in the next sentence, if a Change in Control occurs, and
if the agreements effectuating the Change in Control do not provide for the
assumption or substitution of all Awards granted under this Plan, with respect
to any Award granted under this Plan that is not so assumed or substituted (a “Non-Assumed
Award”), such Awards shall immediately vest and be exercisable and any
restrictions thereon shall lapse. Notwithstanding the foregoing, unless the
Committee determines at or prior to the Change in Control, no Award that is
subject to any Performance Goal for which the performance period has not
expired, shall accelerate at the time of a Change in Control.

(d)           Disposition of Awards. Except as otherwise
provided in an Award Agreement, the Committee, in its sole and absolute
discretion, may, with respect to any or all of such Non-Assumed Awards, take
any or all of the following actions to be effective as of the date of the Change
in Control (or as of any other date fixed by the Committee occurring within the
thirty (30) day period immediately preceding the date of the Change in Control,
but only if such action remains contingent upon the effectuation of the Change
in Control) (such date referred to as the “Action Effective Date”):

(i)            Unilaterally cancel
such Non-Assumed Award in exchange for: (x) whole and/or fractional Shares (or
for whole Shares and cash in lieu of any fractional Share) or whole and/or
fractional shares of a successor (or for whole shares of a successor and cash
in lieu of any fractional share) that, in the aggregate, are equal in value to the
Fair Market Value of: (I) in the case of Options or Stock Appreciation Rights,
the Shares that could be purchased subject to such Non-Assumed Award less the
aggregate exercise price for the Options or Stock Appreciation Rights with
respect to such Shares; (II) in the case of Restricted Stock, Restricted Stock
Units, Performance Awards and Other Stock Grants, Shares subject to such Award determined
as of the Action Effective Date (taking into account vesting), less the value
of any consideration payable on exercise; or (y) cash or other property equal
in value to the Fair Market Value of (I) in the case of Options or

 15
 

Stock Appreciation Rights, the Shares that could be
purchased subject to such Non-Assumed Award less the aggregate exercise price
for the Options or Stock Appreciation Rights with respect to such Shares or (II)
in the case of Restricted Stock, Restricted Stock Units, Stock Appreciation
Rights, Performance Awards and Other Stock Grants, Shares subject to such Award
determined as of the Action Effective Date (taking into account vesting) less
the value of any consideration payable on exercise.

(ii)           In the case of
Options, unilaterally cancel such Non-Assumed Option after providing the holder
of such Option with (1) an opportunity to exercise such Non-Assumed Option to
the extent vested within a specified period prior to the date of the Change in
Control, and (2) notice of such opportunity to exercise prior to the
commencement of such specified period.

(iii)          Notwithstanding
anything to the contrary in any Award Agreement or the Plan, with respect to
any Non-Assumed Awards after satisfaction of one of the foregoing, the
Participant will only be entitled to the cash or other property and shall not
have any right to the Shares or any shares of the successor.

However, notwithstanding the
foregoing, to the extent that the recipient of a Non-Assumed Award is an
Insider, payment of cash in lieu of whole or fractional Shares or shares of a
successor may only be made to the extent that such payment (A) has met the
requirements of an exemption under Rule 16b-3, or (B) is a subsequent
transaction the terms of which were provided for in a transaction initially
meeting the requirements of an exemption under Rule 16b-3. Unless an Award
Agreement provides otherwise, the payment of cash in lieu of whole or
fractional Shares or in lieu of whole or fractional shares of a successor shall
be considered a subsequent transaction approved by the original grant of an
Option.

(e)           General Rule for
Awards.  If a Change in Control occurs,
then, except to the extent otherwise provided in the Award Agreement pertaining
to a particular Award or as otherwise provided in this Plan, each Award shall
be governed by applicable law and the documents effectuating the Change in
Control.

Section 15.            Income Tax Compliance

(a)           In order to comply with
all applicable federal, state, local or foreign income tax laws or regulations,
the Company may take such action as it deems appropriate to ensure that all
applicable federal, state, local or foreign payroll, withholding, income or
other taxes, which are the sole and absolute responsibility of a Participant,
are withheld or collected from such Participant.  In order to assist a
Participant in paying all or a portion of applicable taxes to be withheld or
collected upon exercise or receipt of (or the lapse of restrictions relating
to) an Award, the Committee, in its discretion and subject to such additional terms
and conditions as it may adopt, may permit the Participant to satisfy such tax
obligation by (i) electing to have the Company withhold a portion of the
Shares otherwise to be delivered upon exercise or receipt of (or the lapse of
restrictions relating to) such Award with a Fair Market Value equal to the
amount of such taxes, provided that the maximum amount shall not exceed the
amount of the required withholding, or (ii) delivering to the Company
Shares other than Shares issuable upon exercise

 16
 

or receipt of (or
the lapse of restrictions relating to) such Award with a Fair Market Value
equal to the amount of such taxes.

(b)           “Deferred Compensation”
means any Stock Incentive under this Plan that provides for the “deferral of
compensation” under a “nonqualified deferred compensation plan” (as those terms
are defined under Code Section 409A) and that would be subject to the taxes
specified in Code Section 409A(a)(1) if and to the extent that the Plan and the
Award Agreement do not meet or are not operated in compliance with the
requirements of Code Section 409A(a)(2), (3) and (4) and the regulations
promulgated thereunder, Deferred Compensation shall not include any amount that
is otherwise exempt from the requirements of Code Section 409A and the regulations
promulgated thereunder.

(c)           “Specified Employee”
means a Participant who is a key employee as described in Code Section
416(i)(1)(A)(i), (ii) and (iii) (and disregarding paragraph (5) thereof) at any
time during the 12 months ending on each December 31, beginning December 31,
2007, or such other “identification date” that applies consistently for all
plans that provide “deferred compensation” that is subject to the requirements
of Code Section 409A and regulations promulgated thereunder.  Each Participant will be identified as a
Specified Employee in accordance with the regulations promulgated under Code Section
409A, including with respect to the spin-off or merger of the company with any
other company, and such identification shall apply for the twelve (12) month
period commencing on the first day of the fourth month following the
identification date.  Notwithstanding the
foregoing, no Participant shall be a Specified Employee unless the stock of the
Company (or other member of a “controlled group of corporations” as determined
under Code Section 1563) is publicly traded on an established securities market
as of the date of a Participant’s “separation from service” as defined in Code
Section 409A and the regulations promulgated thereunder.

(d)           Except to the extent
such acceleration or deferral is permitted or complies with the requirements of
Code Section 409A and the regulations promulgated thereunder, neither the
Committee nor a Participant may accelerate or defer the time or schedule of any
payment of, or the amount scheduled to be paid under, an Award that constitutes
Deferred Compensation; provided, however, that payment shall be permitted
if it is in accordance with a fixed date or schedule or on account of “separation
from service,” “disability, “ death, “change in control” or “unforeseeable
emergency” as those items are defined under Code Section 409A and the
regulations promulgated thereunder.

(e)           Notwithstanding anything
to the contrary in the Plan, unless the Award Agreement specifically provides otherwise,
the Committee may not make payment to a Specified Employee of any Award that
constitutes Deferred Compensation earlier than six (6) months following the
Participant’s “separation from service” as defined for purposes of Code Section
409A (or if earlier, upon the Specified Employee’s death), except as permitted
under Code Section 409A.  Any payments
that otherwise would be payable to the Specified Employee during the foregoing six
(6) month period will be accumulated and payment will be delayed until the
first date after the six (6) month period. 
The Committee may specify in the Award Agreement that the amount of the
Deferred Compensation delayed shall accumulate interest or earnings during the
period of such delay.

 17
 

(f)            The Committee may
reform any provision in an Award intended to be exempt from Code Section 409A
to maintain to the maximum extent practicable the original intent of the
applicable provisions without violating the provisions of Code Section 409A and
to preserve the economic benefits intended by the Award.

(g)           Dividend and Dividend
Equivalents.  The Committee may grant
dividend or dividend equivalents to any Participant and shall determine the
time and manner of payment of the dividend or dividend equivalent; provided,
however, that any dividend equivalent that is intended to be exempt from
the requirements of Section 409A of the Code shall be stated as a separate
arrangement.

Section 16.            Amendments and Termination

(a)           The Board may amend,
alter, or discontinue the Plan, but no amendment, alteration, or
discontinuation shall be made (i) which would impair the rights of a
Participant under an Award theretofore granted, without the Participant’s consent,
or (ii) which without the approval of the shareholders of the Company would
cause the Plan to no longer comply with Rule 16b-3, Section 422 of the Code or
any other regulatory requirements or (iii) without the approval of the shareholders
of the Company, which would result in a repricing of any Award theretofore
granted hereunder.  Further, Section 6(d)
shall not be amended more than once every six (6) months, other than to comport
with changes in the Code, the Employee Retirement Income Security Act, or the
rules thereunder.

(b)           The Committee may
amend the terms of any Award theretofore granted, prospectively or
retroactively, but, subject to Section 3 above or as otherwise provided in this
Plan, no such amendment shall impair the rights of any Participant without his
or her consent.

(c)           The Committee may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or in any Award or Award Agreement in the manner and to the extent it
shall deem desirable to implement or maintain the effectiveness of the Plan.

Section 17.            No Trust or Fund Created

The Plan is intended to constitute
an “unfunded” plan for incentive and deferred compensation.  Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Subsidiary and an Eligible
Person or any other Person.  To the
extent that any Person acquires a right to receive payments from the Company or
any Subsidiary pursuant to an Award, such right shall be no greater than the
right of any unsecured general creditor of the Company or any Subsidiary.  In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Shares or payments in lieu of or with respect to Awards
granted hereunder; provided, however, that the existence of such
trusts or other arrangements is consistent with the unfunded status of the
Plan.

 18
 

Section 18.            Rights of Eligible Persons and Participants

(a)           No Rights to Awards. 
No Eligible Person or other Person shall have any claim to be granted any Award
under the Plan, and there is no obligation for uniformity of treatment of
Eligible Persons or holders or beneficiaries of Awards under the Plan. 
The terms and conditions of Awards need not be the same with respect to any Participant
or with respect to different Participants.

(b)           Award Agreements. 
No Participant will have rights under an Award granted to such Participant
unless and until an Award Agreement shall have been duly executed on behalf of
the Company and, if requested by the Company, signed by the Participant.

(c)           Plan Provisions
Control.  In the event that any provision of an Award Agreement
conflicts with or is inconsistent in any respect with the terms of the Plan as
set forth herein or subsequently amended, the terms of the Plan shall control.

(d)           No Rights of
Shareholders.  Except with respect to Shares of Restricted Stock or
Other Stock Awards as to which the Participant has been granted the right to
vote, neither a Participant nor the Participant’s legal representative shall
be, or have any of the rights and privileges of, a shareholder of the Company
with respect to any Shares issuable to such Participant upon the exercise or
payment of any Award, in whole or in part, unless and until such Shares have
been issued.

(e)           No Limit on Other
Compensation Arrangements.  Nothing contained in the Plan shall
prevent the Company or any Subsidiary from adopting or continuing in effect
other or additional compensation arrangements, and such arrangements may be
either generally applicable or applicable only in specific cases.

(f)            No Right to
Employment.  The grant of an Award shall not be construed as giving a
Participant the right to be retained as an employee of the Company or any Subsidiary,
or a Director to be retained as a Director, or as a Consultant to be retained
as a Consultant, nor will it affect in any way the right of the Company or a
Subsidiary to terminate a Participant’s employment at any time, with or without
cause.  In addition, the Company or a Subsidiary may at any time dismiss a
Participant from employment free from any liability or any claim under the Plan
or any Award, unless otherwise expressly provided in the Plan or in any Award
Agreement.

Section 19.            General
Provisions

(a)           Governing Law. 
The validity, construction and effect of the Plan or any Award, and any rules
and regulations relating to the Plan or any Award, shall be determined in
accordance with the internal laws, and not the law of conflicts, of the State
of Minnesota.

(b)           Severability. 
If any provision of the Plan or any Award is or becomes or is deemed to be
invalid, illegal or unenforceable in any jurisdiction or would disqualify the
Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable laws,
or if it cannot be so construed or deemed amended without, in the determination
of the Committee, materially altering the purpose

 19
 

or intent of the
Plan or the Award, such provision shall be stricken as to such jurisdiction or
Award, and the remainder of the Plan or any such Award shall remain in full
force and effect.

(c)           No Fractional Shares. 
No fractional Shares shall be issued or delivered pursuant to the Plan or any
Award, and the Committee shall determine whether cash shall be paid in lieu of
any fractional Shares or whether such fractional Shares or any rights thereto
shall be canceled, terminated or otherwise eliminated.

(d)           Compliance with
Section 162(m).  It is intended that
the Plan shall comply with and meet all the requirements of Section 162(m) of
the Code so that Awards hereunder which are made to Participants who are “covered
employees” (as defined in Section 162(m) of the Code) shall constitute “performance-based”
compensation within the meaning of Section 162(m) of the Code.  If any
provision of the Plan would disqualify the Plan or would not otherwise permit
the Plan to comply with Section 162(m) as so intended, such provision shall be
construed or deemed amended to conform to the requirements or provisions of
Section 162(m).

(e)           Arrangements Upon Termination of Employment or Competitive Employment.       At the time of grant, the Committee may provide in connection with any Award granted under this Plan that the Shares received as a result of such grant shall be subject to a repurchase right in favor of the Company, pursuant to which the Participant shall be required to offer to the Company upon termination of employment for any reason any shares that the Participant acquired under the Plan, with the price being the then Fair Market Value of the Shares or, in the case of a termination for Cause, an amount equal to the cash consideration paid for the Shares if lower than the Fair Market Value of the Shares, subject to such other terms and conditions as the Committee may specify at the time of grant. The Committee may, at the time of the grant of an Award under the Plan, provide the Company with the right to repurchase, or require the forfeiture of, Shares acquired pursuant to the Plan by any Participant who, at any time within two years after termination of employment with the Company, directly or indirectly competes with, or is employed by a competitor of, the Company.

(f)            Headings. 
Headings are given to the Sections and subsections of the Plan or any Award
Agreement solely as a convenience to facilitate reference.  Such headings
shall not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.

Section 20.            Effective Date of the Plan

The
Plan shall be effective upon its adoption by the Board,  provided,  however,
that in the event the Plan is not approved by the shareholders of the Company
at the annual meeting of shareholders of the Company currently scheduled on August
8, 2007, the Plan will be terminated and all Awards granted under the Plan will
be terminated and deemed null and void,
provided  further, that no Award may vest and no Shares may
be issued under the Plan prior to approval of the Plan by the shareholders of
the Company.

 20
 

Section 21.            Term of the Plan

The
Plan shall terminate at midnight on June 20, 2017, unless terminated before
then by the Board.  No Awards shall be granted after termination of the
Plan.  The Plan shall remain in effect as
long as any Awards are outstanding.

 21

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}]]