Document:

Prepared by MERRILL CORPORATION www.edgaradvantage.com

   FARGO ELECTRONICS, INC.

AMENDED AND RESTATED

1998 STOCK OPTION AND GRANT PLAN  

SECTION
1.  GENERAL PURPOSE OF THE PLAN; DEFINITIONS  

    The
name of the plan is the Fargo Electronics, Inc. 1998 Stock Option and Grant Plan (the "Plan"). The purpose of the Plan is to encourage and enable the officers, employees,
directors, consultants, advisors, and other key persons of Fargo Electronics, Inc. (the "Company") and its Subsidiaries (as defined below) upon whose judgment, initiative and efforts the
Company largely depends for the successful conduct of its business to acquire a proprietary interest in the Company. It is anticipated that providing such persons with a direct stake in the Company's
welfare will assure a closer identification of their interests with those of the Company, thereby stimulating their efforts on the Company's behalf and strengthening their desire to remain with the
Company. 

    The
following terms shall be defined as set forth below: 

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

    "Award" or "Awards, "except where referring to a particular category of grant under the
Plan, shall include Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock Awards and Unrestricted Stock Awards. 

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

    "Code" means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations. 

    "Committee" has the meaning specified in Section 2. 

    "Effective Date" means the date on which the Plan is approved by stockholders as set forth in Section 13. 

    "Fair Market Value" of the Stock on any given date (or, if no shares were traded or quoted on such date, as of the next preceding date
on which there was such a trade or quote) means (i) the average of the reported high and low sale prices of the Stock as of 4:00 p.m. New York time if the Stock is listed, admitted to
unlisted trading privileges or reported on any foreign or national securities exchange or on the Nasdaq National Market or an equivalent foreign market on which sale prices are reported; or
(ii) if the Stock is not so listed, admitted to unlisted trading privileges or reported, the closing bid price as of 4:00 p.m. New York time as reported by the Nasdaq SmallCap Market,
OTC Bulletin Board or the National Quotation Bureau, Inc. or other comparable service; or (iii) if the Stock is not so listed or reported, or if there are no transactions or quotations
within the last ten trading days or trading has been halted for extraordinary reasons, such price as the Committee determines in good faith in the exercise of its reasonable discretion with reference
to the rules and principles of valuation set forth in Section 20.2031-2 of the Treasury Regulations. 

    "Incentive Stock Option" means any Stock Option designated and qualified as an "incentive stock option" as defined in
Section 422 of the Code. 

    "Independent Director" means a member of the Board who is not an employee or officer of the Company or any Subsidiary. 

    "Initial Public Offering" means the first underwritten public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended, covering the offer and sale of Stock to the public. 

    "Non-Qualified Stock Option" means any Stock Option that is not an Incentive Stock Option. 

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    "Option" or "Stock Option" means any option to purchase shares of Stock granted
pursuant to Section 5. 

    "Restricted Stock Award" means any Award granted pursuant to Section 6. 

    "Stock" means the Common Stock, par value $.01 per share, of the Company, subject to adjustments pursuant to Section 3. 

    "Subsidiary" means any corporation or other entity (other than the Company) in any unbroken chain of corporations or other entities,
beginning with the Company, if each of the corporations or entities (other than the last corporation or entity in the unbroken chain) owns stock or other interests possessing 50% or more of the
economic interest or the total combined voting power of all classes of stock or other interests in one of the other corporations or entities in the chain. 

    "Unrestricted Stock Award" means any Award granted pursuant to Section 7. 

SECTION
2.  ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT PARTICIPANTS AND DETERMINE AWARDS  

    (a)  Committee.  The Plan shall be administered by the Board of Directors of the Company, or at the
discretion of the Board, by a committee of the Board of not less than two Independent Directors. On and after the date the Company becomes subject to the Act, each member of the Committee shall be a
"non-employee director" within the meaning of Rule 16b-3(a)(3) and, if the Board so determines in its sole discretion, shall be an "outside director" within the meaning
of Section 162(m) of the Code and the regulations promulgated thereunder. All references herein to the "Committee" shall be deemed to refer to the entity then responsible for administration of
this Plan at the relevant time (i.e., either the Board of Directors or a committee of the Board, as applicable). 

    (b)  Powers of Committee.  The Committee shall have the power and authority to grant Awards consistent
with the terms of the Plan, including the power and authority: 

     (i) to
select the officers, employees, Independent Directors, consultants, advisors and key persons of the Company and its Subsidiaries to whom Awards may from time to
time be granted; 

    (ii) to
determine the time or times of grant, and the extent, if any, of Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock Awards and
Unrestricted Stock Awards or any combination of the foregoing, granted to any one or more participants; 

    (iii) to
determine the number of shares of Stock to be covered by any Award; 

    (iv) to
determine and modify from time to time the terms and conditions, including restrictions, not inconsistent with the terms of the Plan, of any Award, which terms
and conditions may differ among individual Awards and participants, and to approve the form of written instruments evidencing the Awards; 

    (v) to
accelerate at any time the exercisability or vesting of all or any portion of any Award and/or to include provisions in Awards providing for such acceleration; 

    (vi) to
impose any limitations on Awards granted under the Plan, including limitations on transfers, repurchase provisions and the like and to exercise repurchase
rights or obligations; 

   (vii) subject
to the provisions of Section 5(a)(iii), to extend at any time the period in which Stock Options may be exercised; 

   (viii) to
determine at any time whether, to what extent, and under what circumstances Stock and other amounts payable with respect to an Award shall be deferred either
automatically or at the election of the participant and whether and to what extent the Company shall pay or credit amounts constituting interest (at rates determined by the Committee) or dividends or
deemed dividends on such deferrals; and 

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    (ix) at any time to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and proceedings as it shall deem
advisable; to interpret the terms and provisions of the Plan and any Award (including related written instruments); to make all
determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection with the Plan; and to otherwise supervise the administration of the Plan. 

    All
decisions and interpretations of the Committee shall be binding on all persons, including the Company and Plan participants. 

    (c)  Delegation of Authority to Grant Awards.  The Committee, in its discretion, may delegate to the
Chief Executive Officer of the Company all or part of the Committee's authority and duties with respect to Awards, including the granting thereof, to individuals who are not subject to the reporting
and other provisions of Section 16 of the Act or "covered employees" within the meaning of Section 162(m) of the Code. The Committee may revoke or amend the terms of a delegation at any
time but such action shall not invalidate any prior actions of the Committee's delegate or delegates that were consistent with the terms of the Plan. 

SECTION
3.  STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION  

    (a)  Stock Issuable.  The maximum number of shares of Stock reserved and available for issuance under the
Plan at any time is equal to fifteen percent (15%) of the Stock of the Company outstanding at the time of determination, including all shares of Stock issuable upon the exercise of any conversion or
exchange rights contained in any security convertible into or exchangeable for shares of Stock; provided, that without limiting the foregoing but subject to adjustment as provided in
Section 3(b) of the Plan, the maximum number of shares of Stock that will be available for issuance upon exercise of Incentive Stock Options is 1,200,000. Notwithstanding any other provisions
of the Plan to the contrary, no participant in the Plan may be granted any Awards with respect to more than 200,000 shares of Stock in the aggregate in any fiscal year of the Company (subject to
adjustment as provided in Section 3(b) of the Plan); provided, however, that a participant who is first appointed or elected as an officer, hired as an employee or retained as a consultant by
the Company or who receives a promotion that results in an increase in responsibilities or duties may be granted, during the fiscal year of such appointment, election, hiring, retention or promotion,
Awards relating to up to 400,000 shares of Stock (subject to adjustment as provided in Section 3(b) of the Plan). For purposes of the foregoing limitations, the shares of Stock underlying any
Awards which are forfeited, canceled, reacquired by the Company, satisfied without the issuance of Stock or otherwise terminated (other than by exercise) shall be added back to the shares of Stock
available for issuance under the Plan. Subject to such overall limitation, shares of Stock may be issued up to such maximum number pursuant to any type or types of Award. The shares available for
issuance under the Plan may be authorized but unissued shares of Stock or shares of Stock reacquired by the Company. 

    (b)  Recapitalization.  If, through or as a result of any merger, consolidation, sale of all or
substantially all of the assets of the Company, reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar transaction, the outstanding shares of Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the
Company or any successor company, or additional shares or new or different shares or other securities of the Company or any successor Company or other non-cash assets are distributed with
respect to such shares of Stock or other securities, the Committee shall make an appropriate or proportionate adjustment in (i) the maximum number of shares reserved for issuance under the
Plan, (ii) the number of Stock Options that can be granted to any one individual participant, (iii) the number and kind of shares or other securities subject to any then outstanding
Awards under the Plan, and (iv) the price for each share subject to any then outstanding Stock Options or other Awards under the Plan, without changing the aggregate exercise price (i.e., the
exercise price multiplied by the number of shares) as to which such Stock Options or other Awards remain exercisable. The adjustment by the 

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Committee shall be final, binding and conclusive. No fractional shares of Stock shall be issued under the Plan resulting from any such adjustment, but the Committee in its discretion may make a cash
payment in lieu of fractional shares. 

    The
Committee may also adjust the number of shares subject to outstanding Awards and the exercise price and the terms of outstanding Awards to take into consideration material changes
in accounting practices or principles, extraordinary dividends, acquisitions or dispositions of stock or property or any other event if it is determined by the Committee that such adjustment is
appropriate to avoid distortion in the operation of the Plan, provided that no such adjustment shall be made in the case of an Incentive Stock Option, without the consent of the participant, if it
would constitute a modification, extension or renewal of the Option within the meaning of Section 424(h) of the Code. 

    (c)  Mergers and Other Transactions.  In the case of (i) a merger or consolidation of the Company
with or into another corporation (with respect to which less than a majority of the outstanding voting power of the surviving or consolidated corporation is held by shareholders of the Company
immediately prior to such event), (ii) the sale or transfer of all or substantially all of the properties and assets of the Company and its subsidiaries (iii) any purchase by any party
(or group of affiliated parties) other than an Investor (as defined in that certain Stockholders' Agreement dated as of February 18, 1998) of shares of capital stock of the Company (either
through a negotiated stock purchase or a tender for such shares), the effect of which is that such party (or group of affiliated parties) that did not beneficially own a majority of the voting power
of the outstanding shares of capital stock of the Company immediately prior to such purchase beneficially owns at least a majority of such voting power immediately after such purchase, so long as, in
each case, the holders of all outstanding shares of the Company's Series A 8% Redeemable Preferred Stock and Convertible Participating Preferred Stock shall have received prior to such event or
in connection therewith full payment in respect of such shares in accordance with the terms thereof or (iv) a change in the composition of the Board such that the Continuity Directors (defined
below) cease for any reason to constitute at least a majority of the Board (in each case, a "Transaction"), all unvested Options and other Awards which are not vested as of the effective date of such
Transaction shall become vested as of such effective date, except as the Committee may otherwise specify with respect to particular Awards. Upon the effectiveness of the
Transaction, the Plan and all outstanding Options and other Awards granted hereunder shall terminate, unless provision is made in connection with the Transaction for the assumption of Awards
heretofore granted, or the substitution of such Awards of new Awards of the successor entity or parent thereof, with appropriate adjustment as to the number and kind of shares and, if appropriate, the
per share exercise prices, as provided in Section 3(b) above. In the event of such termination, each optionee shall be permitted to exercise for a period of at least 15 days prior to the
date of such termination all outstanding Options and other Awards held by such optionee which are then exercisable or become exercisable upon the effectiveness of the Transaction. For purposes of this
Section 3, "Continuity Directors" of the Company will mean any individuals who are members of the Board on the effective date of the Plan and any individual who subsequently becomes a member of
the Board whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the Continuity Directors (either by specific vote or by approval of
the Company's proxy statement in which such individual is named as a nominee for director without objection to such nomination). 

    (d)  Substitute Awards.  The Committee may grant Awards under the Plan in substitution for stock and
stock based awards held by employees of another corporation who become employees of the Company or a Subsidiary as the result of a merger or consolidation of the employing corporation with the Company
or a Subsidiary or the acquisition by the Company or a Subsidiary of property or stock of the employing corporation. The Committee may direct that the substitute awards be granted on such terms and
conditions as the Committee considers appropriate in the circumstances. 

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    (e)  Limitation on Change in Control Payments.  Notwithstanding anything in this Section 3 to the
contrary, if, with respect to a participant, the acceleration of the exercisability of an Option as provided in this Section 3, together with any other "payments" that such participant has the
right to receive from the Company or any corporation that is a member of an "affiliated group" (as defined in Section 1504(a) of the Code without regard to Section 1504(b) of the Code)
of which the Company is a member, would constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Code), then the "payments" to such participant pursuant to this
Section 3 will be reduced to the largest amount as will result in no portion of such "payments" being subject to the excise tax imposed by Section 4999 of the Code but if and only if so
reducing such payments or benefits results in the participant receiving a greater net benefit than the participant would have received had a reduction not occurred and an excise tax had been paid by
the participant under Section 4999 of the Code; provided, however, that if a participant is subject to a separate agreement with the Company or a Subsidiary that expressly addresses the
potential application of Sections 280G or 4999 of the Code (including, without limitation, that "payments" under such agreement or otherwise will be reduced, that the participant will have the
discretion to determine which "payments" will be reduced, that such "payments" will not be reduced or that such "payments" will be "grossed up" for tax purposes), then this Section 3(e) will
not apply, and any "payments" to a participant pursuant to Section 3(c) will be treated as "payments" arising under such separate agreement. The determination as to whether any such decrease in
the payments or benefits to be made or provided in connection with this Section 3 is necessary must be made in good faith by legal counsel or a certified public accountant selected by the
Company and reasonably
acceptable to the participant, and such determination will be conclusive and binding upon the participant and the Company. 

SECTION
4.  ELIGIBILITY  

    Participants
in the Plan will be such officers and other employees, Independent Directors, consultants, advisors and other key persons of the Company and its Subsidiaries who are
responsible for or contribute to the management, growth or profitability of the Company and its Subsidiaries as are selected from time to time by the Committee, in its sole discretion. 

SECTION
5.  STOCK OPTIONS  

    Any
Stock Option granted under the Plan shall be pursuant to a stock option agreement which shall be in such form as the Committee may from time to time approve. Option agreements
need not be identical. 

    Stock
Options granted under the Plan may be either Incentive Stock Options or Non-Qualified Stock Options. Incentive Stock Options may be granted only to employees of the
Company or any Subsidiary that is a "subsidiary corporation" within the meaning of Section 424(t) of the Code. Non-Qualified Stock Options may be granted to officers, employees,
Independent Directors, advisors, consultants and other key persons of the Company and its Subsidiaries. To the extent that any Option does not qualify as an Incentive Stock Option, it shall be deemed
a Non-Qualified Stock Option. No Incentive Stock Option shall be granted under the Plan after February 17, 2008. 

    (a)  Terms of Stock Options.  Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable: 

    (i)  Exercise Price.  The exercise price per share for the Stock covered by a Stock Option shall be
determined by the Committee at the time of grant but in the case of Incentive Stock Options shall not be less than 100% of the Fair Market Value on the date of grant. 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 or
subsidiary corporation and an Incentive Stock Option is granted to such employee, the option price of such Incentive Stock Option shall be not less than 110% of the Fair Market 

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Value on the grant date. The exercise price per share under a Non-Qualified Stock Option will not be less than 85% of the Fair Market Value of one share of Stock on the date of grant. 

    (ii)  Grant of Discount Options in Lieu of Cash Compensation.  The Committee is authorized to establish,
from time to time, a plan permitting participants to elect to receive a Non-Qualified Stock Option in lieu of any cash bonus or other compensation to which such participant may become
entitled. The exercise price per share shall be determined by the Committee. The number of shares of Stock subject to the Stock Option shall be determined by dividing the amount of the waived cash
compensation by the difference between the Fair Market Value of the Stock on the date the Stock Option is granted and the exercise price per share of the Stock Option. The Stock Option shall be
granted for a whole number of shares so determined; the value of any fractional share shall be paid in cash. 

    (iii)  Option Term.  The term of each Stock Option shall be fixed by the Committee, but no Incentive
Stock Option shall be exercisable more than ten years after the date the option is granted. 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 or subsidiary corporation 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. 

    (iv)  Exercisability Rights of a Stockholder.  Stock Options shall become vested and exercisable at such
time or times, whether or not in installments, as shall be determined by the Committee at or after the grant date; provided, however, that Stock Options
granted in lieu of cash compensation shall be exercisable in full as of the grant date. The Committee may at any time accelerate the exercisability of all or any portion of any Stock Option. An
optionee shall have the rights of a stockholder only as to shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options. 

    (v)  Method of Exercise.  Stock Options may be exercised in whole or in part, by giving written notice of
exercise to the Company, specifying the number of shares to be purchased. Payment of the purchase price may be made by one or more of the following methods; provided, however, that the methods set
forth in subsections (B) and (C) below shall become available only after the closing of the Initial Public Offering: 

    (A) In
cash, by certified or bank check or other instrument acceptable to the Committee; 

    (B) In
the form of shares of Stock that are not then subject to restrictions under any Company plan and that have been held by the optionee free of such restrictions
for at least six months, if permitted by the Committee in its discretion. Such surrendered shares shall be valued at Fair Market Value on the exercise date; 

    (C) By
the optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company
cash or a check payable and acceptable to the Company to pay the purchase price; provided that in the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker
shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Committee shall prescribe as a condition of such payment procedure; or 

    (D) By
the optionee delivering to the Company a secured promissory note if the Board has authorized the loan of funds to the optionee for the purpose of enabling or
assisting the optionee to effect the exercise of the optionee's Stock Option. 

Payment
instruments will be received subject to collection. The delivery of certificates representing the shares of Stock to be purchased pursuant to the exercise of a Stock Option will be contingent
upon receipt from the optionee (or a purchaser acting in his stead in accordance with the 

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provisions of the Stock Option) by the Company of the full purchase price for such shares and the fulfillment of any other requirements contained in the Stock Option or applicable provisions of laws. 

    (vi)  Termination.  Unless otherwise provided in the option agreement or determined by the Committee,
upon the optionee's termination of employment (or other business relationship) with the Company and its Subsidiaries, the optionee's rights in the optionee's Stock Options shall automatically
terminate. 

    (vii)  Annual Limit on Incentive Stock Options.  To the extent required for "incentive stock option"
treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the shares of Stock with respect to which Incentive Stock Options granted under
this Plan and any other plan of the Company or its parent and subsidiary corporations become exercisable for the first time by an optionee during any calendar year shall not exceed $100,000. To the
extent that any Stock Option exceeds this limit, it shall constitute a Non-Qualified Stock Option. 

    (b)  Reload Options.  At the discretion of the Committee, Options granted under the Plan may include a
"reload" feature pursuant to which an optionee exercising an option by the delivery of a number of shares of Stock in accordance with Section 5(a)(v)(B) hereof would automatically be granted an
additional Option (with an exercise price equal to the Fair Market Value of the Stock on the date the additional Option is granted and with the same expiration date as the original Option being
exercised, and with such other terms as the Committee may provide) to purchase that number of shares of Stock equal to the number delivered to exercise the original Option. 

    (c)  Non-transferability of Options.  No Stock Option shall be transferable by the optionee
otherwise than by will or by the laws of descent and distribution and all Stock Options shall be exercisable, during the optionee's lifetime, only by the optionee. Notwithstanding the foregoing, the
Committee may provide in an option agreement that the optionee may transfer, without consideration for the transfer, Non-Qualified Stock Options to members of the optionee's immediate
family, to trusts for the benefit of such family members, to partnerships in which such family members are the only partners; or to charitable organizations; provided,
however, that the transferee agrees in writing to be bound by the terms and conditions of this Plan and the applicable Option Agreement. 

SECTION
6.  RESTRICTED STOCK AWARDS  

    (a)  Nature of Restricted Stock Awards.  A Restricted Stock Award is an Award entitling the recipient to
acquire, at par value or such other purchase price determined by the Committee, shares of Stock subject to such restrictions and conditions as the Committee may determine at the time of grant
("Restricted Stock"). Conditions may be based on continuing employment (or other business relationship) and/or achievement of pre-established performance goals and objectives. The grant of
a Restricted Stock Award is contingent on the recipient executing the Restricted Stock Award agreement. The terms and conditions of each such agreement shall be determined by the Committee, and such
terms and conditions may differ among individual Awards and participants. 

    (b)  Rights as a Stockholder.  Upon execution of a written instrument setting forth the Restricted Stock
Award and paying any applicable purchase price, a participant shall have the rights of a stockholder with respect to the voting of the Restricted Stock, subject to such conditions contained in the
written instrument evidencing the Restricted Stock Award. Unless the Committee shall otherwise determine, certificates evidencing the Restricted Stock shall remain in the possession of the Company
until such Restricted Stock is vested as provided in Section 6(d) below and the participant shall be required, as a condition of the grant, to deliver to the Company a stock power endorsed in
blank. 

    (c)  Restrictions.  Restricted Stock may not be sold, assigned, transferred, pledged or otherwise
encumbered or disposed of except as specifically provided herein or in the written instrument 

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evidencing the Restricted Stock Award. If a participant's employment (or other business relationship) with the Company and its Subsidiaries terminates for any reason, or upon such other events as may
be stated in the instrument evidencing the Restricted Stock Award, the Company or its assigns shall have the right or shall agree, as may be specified in the relevant restricted stock agreement, to
repurchase same or all of the shares of Stock subject to the Award at such purchase price as shall be set forth in such instrument. 

    (d)  Vesting of Restricted Stock.  The Committee at the time of grant shall specify the date or dates
and/or the attainment of pre-established performance goals, objectives and other conditions on which Restricted Stock shall become vested, subject to such further rights of the Company or
its assigns as may be specified in the instrument evidencing the Restricted Stock Award. 

    (e)  Waiver, Deferral and Reinvestment of Dividends.  The written instrument evidencing the Restricted
Stock Award may require or permit the immediate payment, waiver, deferral or investment of dividends paid on the Restricted Stock. 

SECTION
7.  UNRESTRICTED STOCK AWARDS  

    (a)  Grant or Sale of Unrestricted Stock.  The Committee may, in its sole discretion, grant (or sell at a
purchase price determined by the Committee) an Unrestricted Stock Award to any participant, pursuant to which such participant may receive shares of Stock free of any vesting restrictions
("Unrestricted Stock") under the Plan. Unrestricted Stock Awards may be granted or sold as described in the preceding sentence in respect of past services or other valid consideration, or in lieu of
any cash compensation due to such individual. 

    (b)  Elections to Receive Unrestricted Stock In Lieu of Compensation.  Upon the request of a participant
and with the consent of the Committee, each such participant may, pursuant to an advance written election delivered to the Company no later than the date specified by the Committee, receive a portion
of the cash compensation otherwise due to such participant in the form of shares of Unrestricted Stock either currently or on a deferred basis. 

    (c)  Restrictions on Transfers.  The right to receive shares of Unrestricted Stock on a deferred basis
may not be sold, assigned, transferred, pledged or otherwise encumbered, other than by will or the laws of descent and distribution. 

SECTION
8.  TAX WITHHOLDING  

    (a)  Payment by Participant.  Each participant shall, no later than the date as of which the value of an
Award or of any Stock or other amounts received thereunder first becomes includable in the gross income of the participant for Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of, any federal, state, or local taxes of any kind required by law to be withheld with respect to such income. The Company and its Subsidiaries shall,
to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the participant. 

    (b)  Payment in Stock.  Subject to approval by the Committee, a participant may elect to have such tax
withholding obligation satisfied, in whole or in part, by (i) authorizing the Company to withhold from shares of Stock to be issued pursuant to any Award a number of shares with an aggregate
Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due, or (ii) transferring to the Company shares of Stock owned by the participant with
an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due. 

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SECTION 9.  TRANSFER, LEAVE OF ABSENCE, ETC.  

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

    (a) a
transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another; or 

    (b) an
approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Committee otherwise so provides in writing. 

SECTION
10.  AMENDMENTS AND TERMINATION  The Board may, at any time, amend or discontinue the Plan and the Committee may,
at any time, amend or cancel any outstanding Award (or provide substitute Awards at the same or reduced exercise or purchase price or with no exercise or purchase price in a manner not inconsistent
with the terms of the Plan, but such price, if any, must satisfy the requirements which would apply to the substitute or amended Award if it were then initially granted under this Plan for the purpose
of satisfying changes in law or for any other lawful purpose), but no such action shall adversely affect rights under any outstanding Award without the holder's consent. No amendments to the Plan will
be effective without approval of the stockholders of the Company if stockholder approval is then required to ensure that Incentive Stock Options granted under the Plan are qualified under
Section 422 of the Code or to satisfy the rules of any stock exchange, Nasdaq or similar regulatory body. 

SECTION
11.  STATUS OF PLAN  

    With
respect to the portion of any Award which has not been exercised and any payments in cash, Stock or other consideration not received by a participant, a participant shall have no
rights greater than those of a general creditor of the Company unless the Committee shall otherwise expressly determine in connection with any Award or Awards. In its sole discretion, the Committee
may authorize the creation of trusts or other arrangements to meet the Company's obligations to deliver Stock or make payments with respect to Awards hereunder, provided that the existence of such
trusts or other arrangements is consistent with the foregoing sentence. 

SECTION
12.  GENERAL PROVISIONS  

    (a)  No Distribution Compliance with Legal Requirements.  The Committee may require each person acquiring
Stock pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof. 

    No
shares of Stock shall be issued pursuant to an Award until all applicable securities law and other legal and stock exchange or similar requirements have been satisfied. The
Committee may require the placing of such stop-orders and restrictive legends on certificates for Stock and Awards as it deems appropriate. 

    (b)  Other Compensation Arrangements; No Employment Rights.  Nothing contained in this Plan shall prevent
the Board from adopting other or additional compensation arrangements, including trusts, and such arrangements may be either generally applicable or applicable only in specific cases. The adoption
of this Plan and the grant of Awards do not confer upon any employee any right to continued employment with the Company or any Subsidiary. 

SECTION
13.  EFFECTIVE DATE OF PLAN  

    This
Plan shall become effective upon approval by the holders of a majority of the shares of Stock of the Company present or represented and entitled to vote at a meeting of
stockholders. Subject to such approval by the stockholders and to the requirement that no Stock may be issued hereunder prior 

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to such approval, Stock Options and other Awards may be granted hereunder on and after adoption of this Plan by the Board. 

SECTION
14.  GOVERNING LAW  

    This
Plan shall be governed by Delaware law except to the extent such law is preempted by federal law. 

Adopted
and Effective: February 18, 1998 

Amended:
May 25, 1999 

Amended
and Restated: February 7, 2000 

10Prepared by MERRILL CORPORATION www.edgaradvantage.com

   FARGO ELECTRONICS, INC.

2001 EMPLOYEE STOCK PURCHASE PLAN  

1.  Purpose.  The purpose of this 2001 Employee Stock Purchase Plan (the "Plan") is to advance the interests of Fargo
Electronics, Inc. ("the Company") and its stockholders by providing eligible employees of the Company and its Participating Subsidiaries with an opportunity to acquire an ownership interest in
the Company through the purchase of Common Stock of the Company on favorable terms through payroll deductions. The Company intends that the Plan qualify as an "employee stock purchase plan" under
Section 423 of the Code. Accordingly, provisions of the Plan will be construed so as to extend and limit participation in a manner consistent with the requirements of Section 423 of the
Code. 

2.  Definitions.  

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

    2.2  "Change in Control"  means an event described in Section 10.1 of the Plan. 

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

    2.4  "Committee"  means the group of individuals administering the Plan, as provided in Section 3
of the Plan. 

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

    2.6  "Compensation"  means all gross cash compensation (including wage, salary, incentive, bonus,
commission and overtime earnings) paid by the Company or any Participating Subsidiary to a Participant, including amounts that would have constituted compensation but for a Participant's election to
defer or reduce compensation pursuant to any deferred compensation, cafeteria, capital accumulation or any other similar plan of the Company; provided, however, that the Committee, in its sole
discretion, may expand or limit the amounts that will be deemed compensation for purposes of the Plan in such manner as it deems appropriate. 

    2.7  "Designated Broker"  has the meaning set forth in Section 5.1 of this Plan. 

    2.8  "Eligible Employee"  means any employee of the Company or a Participating Subsidiary (other than an
employee whose customary employment with the Company or a Participating Subsidiary is for 20 hours or less per week or five months or less per calendar year) who, with respect to any Offering
Period, has been continuously employed by the Company or a Participating Subsidiary for at least one month prior to the Offering Commencement Date for such Offering Period. With respect to a
Subsidiary that has been acquired by the Company and designated as a Participating Subsidiary or a Subsidiary that is otherwise subsequently designated by the Committee as a Participating Subsidiary,
the period of employment of employees of such Participating Subsidiary occurring prior to the time of such acquisition or designation will be included for purposes of determining whether an employee
has been employed for the requisite period of time under the Plan. 

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

    2.10  "Fair Market Value"  means, with respect to the Common Stock, as of any date (or, if no shares were
traded or quoted on such date, as of the next preceding date on which there was such a trade or quote) (a) the mean between the reported high and low sale prices of the Common Stock at the end
of the regular trading session, which as of the effective date of this Plan is 4:00 p.m., New York City time, if the Common Stock is listed, admitted to unlisted trading privileges or reported
on any foreign or national securities exchange or on the Nasdaq National Market or an equivalent foreign market on which sale prices are reported; (b) if the Common Stock is not so listed,
admitted to 

1

 

unlisted trading privileges or reported, the closing bid price at the end of the regular trading session, which as of the effective date of this Plan is 4:00 p.m., New York City time, as
reported by the Nasdaq SmallCap Market, OTC Bulletin Board, National Quotation Bureau, Inc. or other comparable service; or (c) if the Common Stock is not so listed or reported, such
price as the Committee determines in good faith in the exercise of its reasonable discretion. 

    2.11  "Offering Commencement Date"  means the first day of an Offering Period. 

    2.12  "Offering Period"  means any of the offerings to Participants of Options under the Plan, each
continuing for a period of six months, as described in Section 6 of the Plan, except as otherwise set forth in Section 6.2 of the Plan. 

    2.13  "Offering Termination Date"  means the last day of an Offering Period. 

    2.14  "Option"  means a right to purchase shares of Common Stock granted to a Participant in connection
with an Offering Period pursuant to Section 8 of the Plan 

    2.15  "Participant"  means an Eligible Employee who elects to participate in the Plan pursuant to
Section 5 of the Plan. 

    2.16  "Participating Subsidiary"  means a Subsidiary that has been designated by the Committee from time
to time, in its sole discretion, as a corporation whose Eligible Employees may participate in the Plan. 

    2.17  "Purchase Price"  means, with respect to any Offering Period, the lower of (a) 85% of the
Fair Market Value of one share of Common Stock on the Offering Commencement Date, or (b) 85% of the Fair Market Value of one share of Common Stock on the Offering Termination Date. 

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

    2.19  "Subsidiary"  means any subsidiary corporation of the Company within the meaning of
Section 424(f) of the Code. 

    2.20  "Termination of Employment"  means a Participant's complete termination of employment with the
Company and all Participating Subsidiaries for any reason, including death, disability or retirement. In the event that a Participant is in the employ of a Participating Subsidiary and the
Participating
Subsidiary ceases to be a Participating Subsidiary of the Company for any reason, such event will be deemed a termination of employment unless the Participant continues in the employ of the Company or
another Participating Subsidiary. 

3.  Administration.  

    The
Plan will be administered by the Board or by a committee of the Board. So long as the Company has a class of its equity securities registered under Section 12 of the
Exchange Act, any committee administering the Plan will consist solely of two or more members of the Board who are "non-employee directors" within the meaning of
Rule 16b-3 under the Exchange Act. Such a committee, if established, will act by majority approval of the members (but may also take action with the written consent of a majority of
the members of such committee), and a majority of the members of such a committee will constitute a quorum. As used in the Plan, "Committee" will refer to the Board or to such a committee, if
established. To the extent consistent with corporate law, the Committee may delegate to any officers of the Company the duties, power and authority of the Committee under the Plan pursuant to such
conditions or limitations as the Committee may establish; provided, however, that only the Committee may exercise such duties, power and authority with respect to Participants who are subject to
Section 16 of the Exchange Act. The Committee may exercise its duties, power and authority under the Plan in its sole discretion without the consent of any Participant or other party, unless
the Plan specifically provides otherwise. Each determination, interpretation or other action made or taken by the Committee pursuant to the provisions of the Plan will be final, 

2

 

conclusive and binding for all purposes and on all persons, including, without limitation, the Company, the stockholders of the Company, the Participants and their respective
successors-in-interest. No member of the Committee will be liable for any action or determination made in good faith with respect to the Plan or any Option granted under the
Plan. 

4.  Shares Available for Issuance; Adjustments for Certain Events.  

    4.1  Maximum Number of Shares Available.  Subject to adjustment as provided in Section 4.3 of the
Plan, the maximum number of shares of Common Stock that will be available for issuance under the Plan will be 250,000 shares of Common Stock, which may either be authorized but unissued shares or
shares held by the Company in its treasury. If the total number of shares of Common Stock that would otherwise be issuable upon the exercise of Options granted pursuant to Section 8 of the Plan
on any Offering Termination Date exceeds the number of shares then available for issuance under the Plan, the Committee will make a pro rata allocation of the shares of Common Stock remaining
available for issuance under the Plan in as uniform and equitable a manner as it deems appropriate. 

    4.2  Accounting for Options.  Shares of Common Stock that are issued under the Plan or that are subject
to outstanding Options will be applied to reduce the maximum number of shares of Common Stock remaining available for issuance under the Plan. Any shares of Common Stock that are subject to an Option
that is terminated unexercised will automatically again become available for issuance under the Plan. 

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

5.  Participation.  

    5.1  Participation.  Participation in the Plan is voluntary and is not a condition of employment.
Eligible Employees may elect to participate in the Plan, beginning with the first Offering Period to commence after such person becomes an Eligible Employee, by properly completing a participation
agreement authorizing payroll deductions on the form of participation agreement provided by the Company and filing the participation agreement with the Company's Human Resources Department or the
stock brokerage or other financial services firm designated by the Company ("Designated Broker") not later than the 10th business day immediately preceding the Offering Commencement Date
of the first Offering Period in which the Participant wishes to participate. An Eligible Employee who elects to participate with respect to an Offering Period will be deemed to have elected to
participate in each subsequent Offering Period, unless such Participant properly completes and files a notice of withdrawal form in the manner described in Section 9.1 of the Plan. 

    5.2  Limitation on Participation.  Notwithstanding Section 8.1 or any other provisions of the Plan
to the contrary, an Eligible Employee will not be granted an Option under the Plan: 

    (a)
if, immediately after the grant of such Option, such Eligible Employee (or any other person whose stock ownership would be attributed to such Eligible Employee pursuant to
Section 424(d) of the Code) would own stock or options possessing 5% or more of the total combined voting power or value of all
classes of stock of the Company or of its "parent" or "subsidiary" corporations (within the meaning of Section 424 of the Code); 

3

 

    (b) if such Option would permit such Eligible Employee to purchase Common Stock under the Plan and any other "employee stock purchase plans" (within the meaning of Section 423
of the Code) of the Company and its Subsidiaries to accrue (i.e., become exercisable) at a rate that exceeds $25,000 of the Fair Market Value of such shares of Common Stock (determined at the time
such Option is granted) for each calendar year in which such Option is outstanding at any time; or 

    (c)
if such Option would permit the Eligible Employee to purchase more than 250 shares of Common Stock under the Plan in any given Offering Period (subject to adjustment pursuant to
Section 4.3 of the Plan). 

6.  Offering Periods.  

    6.1  Generally.  Options to purchase shares of Common Stock will be offered to Participants under the
Plan through a continuous series of Offering Periods, each continuing for three months, commencing on January 1, April 1, July 1 and October 1 of each year and terminating
on March 31, June 30, September30 and December 31 of each year, as the case may be, except as otherwise provided in Sections 6.2 and 6.3 of the Plan. The first Offering Period
will commence on January 1, 2001. 

    6.2  Discretion to Change Offering Periods.  Notwithstanding the foregoing, and without limiting the
authority of the Committee under Section 3, 4.3 and 14 of the Plan, the Committee, in its sole discretion, may (a) accelerate the Offering Termination Date of the then current Offering
Period and provide for the exercise of Options thereunder by Participants in accordance with Section 8.2 of the Plan, or (b) accelerate the Offering Termination Date of the then current
Offering Period and provide that all payroll deductions credited to the accounts of Participants will be paid to Participants as soon as practicable after such Offering Termination Date and that all
Options for such Offering Period will automatically be canceled and will no longer be exercisable, if such change is announced at least five (5) days prior to the newly scheduled Offering
Termination Date. In addition, the Board of Directors of the Company will have the power to change the duration and/or frequency of Offering Periods with respect to future offerings without
stockholder approval if such change is announced at least five (5) days prior to the scheduled beginning of the first Offering Period to be affected. 

7.  Payroll Deductions.  

    7.1  Payroll Deduction Plan.  This Plan will be operated as a payroll deduction plan. By completing and
filing a participation agreement, a Participant will elect to have payroll deductions made from such Participant's total Compensation (in whole percentages from a minimum of 1% to a maximum of 10%, or
such other minimum or maximum percentages as the Committee may from time to time establish, but not to exceed 10%) on each payday during the time he or she is a Participant in the Plan in such amount
as such Participant designates on the participation agreement. 

    7.2  Commencement of Payroll Deductions.  All payroll deductions will commence on the first payroll paid
following the Offering Commencement Date of the first Offering Period in which the Participant wishes to participate and will continue until terminated by the Participant as provided in
Section 9.1 of this Plan. 

    7.3  Participants' Accounts.  All payroll deductions authorized by a Participant will be credited as of
each payday to an account established under the Plan for the Participant. Such account will be solely for bookkeeping purposes, no separate fund, trust or other segregation of such amounts will be
established or made and the amounts represented by such account will be held as part of the Company's general assets, usable for any corporate purpose. A Participant may not make any separate cash
payment or contribution to such Participant's account. No interest will accrue on amounts held in such accounts under the Plan. 

    7.4  Ability to Increase or Decrease Payroll Deductions.  A Participant may increase or decrease the
amount of his or her payroll deductions under the Plan (subject to such limitations on the frequency of 

4

 

such changes as may be imposed by rules adopted by the Committee from time to time) by properly completing an amended participation agreement and filing it with the Company's Human Resources
Department or Designated Broker not less than 15 days prior to the commencement of the pay period for which such change in payroll deductions is to be effective or, with respect to commissions,
bonuses or other Compensation that is indeterminate and subject to performance goals or criteria, not less than 10 days prior to the date that such performance related Compensation is paid. A
Participant may withdraw from participation in the Plan at any time as provided in Section 9.1 of the Plan. 

    7.5  Limitations on Payroll Deductions.  Notwithstanding the foregoing, a Participant's payroll
deductions may be decreased by the Company to zero percent (0%) at any time during any Offering Period scheduled to end during the then current calendar year as a result of the limitations set forth
in
Section 5.2(b) of the Plan or in order to avoid unnecessary payroll contributions as a result of application of the maximum share limit set forth in Section 5.2(c) of the Plan. Payroll
deductions will re-commence at the rate provided in such Participant's participation agreement at the beginning of the first Offering Period that is scheduled to end in the following
calendar year, unless terminated by the Participant as provided in Section 9.1 of the Plan. 

8.  Options.  

    8.1  Grant of Options.  With respect to any Offering Period, each Participant participating in such
Offering Period will be granted, by operation of the Plan on the Offering Commencement Date for such Offering Period, subject to the limitations contained in Section 5.2 of the Plan, an Option
to purchase (at the Purchase Price) as many full shares of Common Stock as such Participant will be able to purchase with the accumulated payroll deductions credited to such Participant's account
during such Offering Period plus the balance (if any) carried forward from the Participant's payroll deduction account from the preceding Offering Period. 

    8.2  Exercise of Options.  

    (a) Unless
a Participant withdraws from the Plan as provided in Section 9.1 of the Plan, the Participant's Option for the purchase of shares of Common Stock
granted with respect to an Offering Period will be exercised automatically at the Offering Termination Date of such Offering Period for the purchase of the number of full shares of Common Stock that
the accumulated payroll deductions in such Participant's account as of such Offering Termination Date will purchase at the applicable Purchase Price. 

    (b) A
Participant may only purchase one or more full shares in connection with the automatic exercise of an Option granted for any Offering Period. The portion of any
balance remaining in a Participant's payroll deduction account at the close of business on the Offering Termination Date of any Offering Period that is less than the purchase price of one full share
of Common Stock will be carried forward into the Participant's payroll deduction account for the following Offering Period. In no event, however, will the balance carried forward be equal to or
greater than the purchase price of one full share of Common Stock on the Offering Termination Date of an Offering Period. 

    (c) No
Participant (or any person claiming through such Participant) will have any interest in any Common Stock subject to an Option under the Plan until such Option
has been exercised, at which point such interest will be limited to the interest of a purchaser of the Common Stock purchased upon such exercise pending the delivery of such Common Stock. 

    (d) As
promptly as practicable after the Offering Termination Date of each Offering Period, the Company will issue the shares of Common Stock purchased upon exercise of
such Participant's Option granted for such Offering Period, registered in the name of the Participant or, if the Participant so directs on his or her participation agreement, in the names of the
Participant and his or her spouse. The Committee may determine, in its sole discretion, the manner of delivery of 

5

 

shares of Common Stock purchased under the Plan, which may be by electronic account entry into new or existing brokerage or other accounts, delivery of physical stock certificates or such other means
as the Committee deems appropriate. 

    (e) At
the time the Option is exercised, in whole or in part, or at the time some or all of the Company's Common Stock issued under the Plan is disposed of, the
Participant must make adequate provision for the Company's federal, state or other tax withholding obligations, if any, that arise upon the exercise of the Option or the disposition of the Common
Stock. At any time, the Company may, but will not be obligated to, withhold from the Participant's compensation the amount necessary for the Company to meet applicable withholding obligations,
including any withholding required to make available to the Company any tax deductions or benefits attributable to sale or early disposition of the Common Stock by the Participant. 

9.  Withdrawal From Plan.  

    9.1  Voluntary Withdrawal.  A Participant may, at any time on or before 5:00 p.m., Minnesota time,
on the 15th day of the last month of an Offering Period, terminate his or her participation in the Plan and withdraw all, but not less than all, of the payroll deductions credited to such
Participant's account under the Plan by giving written notice to the Company's Human Resources Department or the Designated Broker, as directed by the Company. Such notice must state that the
Participant wishes to terminate his or her participation in the Plan and request the withdrawal of all of the Participant's payroll deductions held under the Plan. All of the Participant's payroll
deductions credited to his or her account will be paid to such Participant as soon as practicable after receipt of the notice of withdrawal, such Participant's Option for such Offering Period will
automatically be canceled and will no longer be exercisable, and no further payroll deductions for the purchase of shares of Common Stock under the Plan will be made. 

    9.2  Termination of Employment.  

    (a) Upon
the Termination of Employment of a Participant at any time, the payroll deductions credited to such Participant's account will be paid to such Participant as
soon as practicable after the effective date of such Termination of Employment (or, in the case of death, to the person or persons entitled thereto under Sections 11 and 12.3 of the Plan), such
Participant's Option for the then current Offering Period will automatically be canceled and will no longer be exercisable, and no further payroll deductions for the purchase of shares of Common Stock
under the Plan will be made. 

    (b) Unless
the Committee otherwise determines in its sole discretion, a Participant's employment will, for purposes of the Plan, be deemed to have terminated on the
date recorded on the personnel or other records of the Company or the Participating Subsidiary for which the Participant provides employment, as determined by the Committee in its sole discretion
based upon such records. 

    9.3  Effect of Withdrawal.  A Participant's withdrawal pursuant to Section 9.1 of the Plan will
not have any effect upon such Participant's eligibility to participate in a subsequent Offering Period (so long as such Participant completes and files a new participation agreement pursuant to
Section 5 of the Plan) or in any similar plan that may hereafter be adopted by the Company. 

10.  Change in Control.  

    10.1  Change in Control.  For purposes of this Section 10, a "Change in Control" of the Company
will mean the following: 

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

6

 

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

    (c) any
person becomes after the effective date of the Plan the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of (i) 20% or more, but less than 50%, of the combined voting power of the Company's outstanding securities ordinarily having the right to vote at elections of directors, unless the
transaction resulting in such ownership has been approved in advance by the Continuity Directors (as defined in Section 10.2 below), or (ii) 50% or more of the combined voting power of
the Company's outstanding securities ordinarily having the right to vote at elections of directors (regardless of any approval by the Continuity Directors); 

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

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

    10.2  Continuity Directors.  For purposes of this Section 10, "Continuity Directors" of the
Company will mean any individuals who are members of the Board on the effective date of the Plan and any individual who subsequently becomes a member of the Board whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least a majority of the Continuity Directors (either by specific vote or by approval of the Company's proxy statement in which such
individual is named as a nominee for director without objection to such nomination). 

    10.3  Adjustment of Offering Period.  Without limiting the authority of the Committee under Sections 3,
4.3 and 14 of the Plan, if a Change in Control of the Company occurs, the Committee, in its sole discretion, may (a) accelerate the Offering Termination Date of the then current Offering Period
and provide for the exercise of Options thereunder by Participants in accordance with Section 8.3 of the Plan, or (b) accelerate the Offering Termination Date of the then current
Offering Period and provide that all payroll deductions credited to the accounts of Participants will be paid to Participants as soon as practicable after such Offering Termination Date and that all
Options for such Offering Period will automatically be canceled and will no longer be exercisable. 

11.  Designation of Beneficiary.  

    A
Participant may file with the Company's Human Resources Department a written designation of a beneficiary who is to receive shares of Common Stock and cash, if any, under the Plan
in the event of such Participant's death prior to delivery of such shares or cash to such Participant. Such designation of beneficiary may be changed by the Participant at any time by written notice
the Company's Human Resources Department. In the event of the death of a Participant in the absence of a valid designation of a beneficiary who is living at the time of such Participant's death,
(a) the Company will deliver such shares of Common Stock and cash to the executor or administrator of the estate of the Participant, or (b) if to the Company's knowledge no such executor
or administrator has been appointed, the Company, in its sole discretion, may deliver such shares of Common Stock and cash to the spouse or to any one or more dependents or relatives of the
Participant or, if no spouse, dependent or relative is known to the Company, to such other person as the Company may designate. 

7

 

12.  Rights of Eligible Employees and Participants; Transferability.  

    12.1  No Right to Employment.  Nothing in the Plan will interfere with or limit in any way the right of
the Company or any Participating Subsidiary to terminate the employment of any Eligible Employee or Participant at any time, nor confer upon any Eligible Employee or Participant any right to continue
in the employ of the Company or any Participating Subsidiary. 

    12.2  Rights as a Stockholder.  As a holder of an Option under the Plan, a Participant will have no
rights as a stockholder unless and until such Option is exercised and the Participant becomes the holder of record of shares of Common Stock. Except as otherwise provided in the Plan, no adjustment
will be made for dividends or distributions with respect to Options as to which there is a record date preceding the date the Participant becomes the holder of record of such shares, except as the
Committee may determine in its sole discretion. 

    12.3  Restrictions on Transfer.  Neither payroll deductions credited to a Participant's account nor any
rights with regard to the exercise of an Option or to receive shares of Common Stock under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the
laws of descent and distribution, or as provided in Section 11 of the Plan) by the Participant. Any such attempt at assignment, transfer, pledge or other disposition will be without effect,
except that the Company may treat such act as an election to withdraw from the Plan in accordance with Section 9.1 of the Plan. During his or her lifetime, a Participant's Option to purchase
shares of Common Stock under the Plan is exercisable only by such Participant. 

13.  Securities Law and Other Restrictions.  

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

14.  Amendment or 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
Options under the Plan will conform to any change in applicable laws or regulations or in any other respect the Board may deem to be in the best interests of the Company; provided, however, that no
amendments to the Plan will be effective without approval of the stockholders of the Company if stockholder approval of the amendment is then required pursuant to Section 423 of the Code or the
rules of any stock exchange or Nasdaq or similar regulatory body. Upon termination of the Plan, the Committee, in its sole discretion, may take any of the actions described in Section 10.3 of
the Plan. 

15.  Effective Date of Plan.  

    Subject
to shareholder approval, the Plan will be effective as of January 1, 2001. If shareholder approval is not obtained prior to October 1, 2001, the Plan will no
longer be deemed effective, and all Options will automatically be canceled and will no longer be exercisable. The Plan will terminate at midnight on December 31, 2010 and may be terminated
prior to such time by Board action, and no Option will be granted after such termination. 

8

 

16.  Miscellaneous.  

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

    16.2  Successors and Assigns.  The Plan will be binding upon and inure to the benefit of the successors
and permitted assigns of the Company and the Participants. 

9

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