Document:

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                                                                   EXHIBIT 10.28

                            MASTER LEASE NO. M2098870

                             MASTER LEASE AGREEMENT
                      LESSOR: CITICORP VENDOR FINANCE, INC.

                      LESSEE: SIGMATRON INTERNATIONAL INC.

                         PLACE OF ORGANIZATION: DELAWARE

CITICORP VENDOR FINANCE, INC.
700 EAST GATE DRIVE
MT. LAUREL, NJ
08054-5404
(856) 231-9600
(800) 257-8451

                          TERMS AND CONDITIONS OF LEASE

I. LEASE OF EQUIPMENT.

Lessor hereby Leases to Lessee, and Lessee hereby leases from Lessor, the
equipment, which is to be used for business purposes only, described in one or
more equipment schedules (the "Equipment Schedule") substantially in the form of
Exhibit A attached hereto, that may hereafter be executed by Lessor and Lessee
(the equipment, together with all replacement parts, repairs, additions,
substitutions and accessories shall be referred to as the "Equipment") on the
terms and conditions contained in this Lease ("Lease") and in any Equipment
Schedule. This Lease and each of the terms, covenants, conditions, provisions
and agreements herein contained will be incorporated into each Equipment
Schedule in full to the same extent as if each of the terms, covenants,
conditions, provisions and agreements had been repeated and set forth in full
therein, and this Master Lease Agreement shall control and be effective as to
all such Schedules except to the extent that the Master Lease Agreement may be
inconsistent with the terms and provisions of such Equipment Schedule, in which
event the terms and provisions of such Equipment Schedule shall prevail. Each
Equipment Schedule shall constitute a separate lease and a distinct and
independent obligation of the Lessee. The parties intend this Lease to be a
"Finance Lease" under Article 2A of the Uniform Commercial Code.

II. ORDER AND DELIVERY OF EQUIPMENT; LESSOR'S RIGHT TO TERMINATE.

Lessee hereby requests Lessor to order the Equipment from the Vendor named on
the Equipment Schedule and to arrange for delivery of the Equipment to Lessee at
Lessee's expense, and to lease the Equipment to Lessee. If the Equipment is not
delivered to and accepted by Lessee in form satisfactory to Lessor, within
ninety (90) days from the date Lessor orders the Equipment, Lessor may terminate
the applicable Equipment Schedule and its obligations thereunder. Lessee waives
any requirement of Lessor to furnish Lessee a copy of Lessor's purchase order
for the Equipment.

III. ACCEPTANCE.

Lessee shall, as Lessor's agent, immediately inspect the Equipment after it is
delivered and installed. Lessee agrees that on the date the Equipment is
available for first use (the "Acceptance Date"), it shall execute and deliver to
Lessor a Delivery and Acceptance Certificate substantially in the form of
Exhibit B attached. Notwithstanding the foregoing, unless Lessee shall notify
Lessor in writing to the contrary within five (5) days after the Acceptance
Date, Lessee shall be deemed to have irrevocably accepted the Equipment.
However, Lessee's confirmation to Lessor, by telephone or other means, of the
delivery and acceptance of the Equipment to and by Lessee in all respects shall
constitute Lessee's acknowledgement of its receipt of the Equipment in good
working condition, that all installation and other work necessary prior to use
thereof has been completed, that Lessee has inspected the Equipment and found it
to be satisfactory in all respects. Lessee understands that Lessor will be
relying upon such confirmation by Lessee as a condition of making payment for
the Equipment and therefore, such confirmation shall supercede any notice from
Lessee to the contrary received by Lessor within the above noted five (5) day
period after the Acceptance Date. THIS LEASE AND ALL EQUIPMENT SCHEDULES ARE
NONCANCELABLE and Lessee agrees to pay the total rent for the term, which shall
be the total amount of all rental payments stated in any Equipment Schedule (the
"Rent" or "Rental Payment"), plus any other sums provided for herein.

IV. TERM AND RENT.

(A) The initial term ("Initial Term") of any Equipment Schedule to which this
Lease relates shall commence on the Acceptance Date and shall be of such
duration as is prescribed in such Equipment Schedule plus the Interim Term (as
hereinafter defined). Advance Rent and any Security Deposit as provided in any
Equipment Schedule shall be payable upon the execution of the applicable
Equipment Schedule. Rental Payments shall commence (the "Commencement Date") on
the first day of the month following the Acceptance Date unless the Acceptance
Date is the first day of the applicable period, in which case the Commencement
Date shall be the first day of the applicable period. Interim Rent shall be
payable upon demand for the period between the Acceptance Date and the first day
of the month following the Acceptance Date ("Interim Term") at a daily rate
equal to the periodic rental provided in any Equipment Schedule divided by the
number of days in the period. Subsequent rental payments shall be due
periodically in advance on the first day of each successive period thereafter
until all Rent and other sums chargeable to Lessee hereunder are paid in full.
LESSEE'S OBLIGATION TO PAY RENT AND LESSEE'S OTHER MONETARY OBLIGATIONS
HEREUNDER ARE ABSOLUTE AND UNCONDITIONAL AND ARE NOT SUBJECT TO ANY ABATEMENT,
SET-OFF, DEFENSE OR COUNTERCLAIM FOR ANY REASON WHATSOEVER. Any Security Deposit
shall secure all obligations of Lessee hereunder and may be applied at Lessor's
discretion to any past due obligation of Lessee and to the extent not applied
shall be returned to Lessee, without interest, at the expiration of the
applicable Equipment Schedule. All payments of Rent shall be made to Lessor at
the address Lessor shall designate in writing.

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                                                                   EXHIBIT 10.28

(B) Whenever any payment is not made by Lessee within ten (10) days of when due
hereunder, Lessee agrees to pay to Lessor, as additional rent, interest on all
monies due Lessor from and after the date same is due at the rate of one and
one-quarter (1-1/4%) percent per month until paid, but as to each of the
foregoing in no event more than the maximum rate permitted by law.

(C) As used herein, "Actual Cost" means the cost to Lessor of purchasing and
delivering the Equipment to Lessee, including taxes. transportation and other
charges.

V. NO WARRANTIES BY LESSOR, DISCLAIMER OF IMPLIED WARRANTIES AND WAIVER OF
DEFENSES.

LESSOR IS NOT THE MANUFACTURER OR SUPPLIER OF OR A DEALER IN THE EQUIPMENT, AND
MAKES NO WARRANTY, EXPRESSED OR IMPLIED, TO ANYONE, AS TO THE SUITABILITY,
DURABILITY, DESIGN, CONDITION, CAPACITY, PERFORMANCE OR ANY OTHER ASPECT OF THE
EQUIPMENT OR ITS MATERIAL OR WORKMANSHIP INCLUDING THE WARRANTY OF
MERCHANTABILITY AND FITNESS FOR USE OR PURPOSE. AS TO LESSOR AND ITS ASSIGNS,
LESSEE LEASES THE EQUIPMENT "AS IS." LESSEE REPRESENTS THAT IT HAS SELECTED THE
EQUIPMENT AND THE SUPPLIER AND ACKNOWLEDGES THAT LESSOR HAS NOT RECOMMENDED THE
SUPPLIER. LESSOR SHALL HAVE NO OBLIGATION TO INSTALL, MAINTAIN, ERECT, TEST,
ADJUST, OR SERVICE THE EQUIPMENT, ALL OF WHICH LESSEE SHALL PERFORM, OR CAUSE
THE SAME TO BE PERFORMED BY QUALIFIED THIRD PARTIES. LESSOR AND LESSOR'S
ASSIGNEE SHALL NOT BE LIABLE TO LESSEE OR OTHERS FOR ANY LOSS, DAMAGE OR EXPENSE
OF ANY KIND OR NATURE CAUSED DIRECTLY OR INDIRECTLY BY ANY EQUIPMENT HOWEVER
ARISING, OR THE USE OR MAINTENANCE THEREOF OR THE FAILURE OF OPERATION THEREOF,
OR THE REPAIRS, SERVICE OR ADJUSTMENT THERETO. NO REPRESENTATION OR WARRANTY AS
TO THE EQUIPMENT OR ANY OTHER MATTER BY THE SUPPLIER OR OTHERS SHALL BE BINDING
ON LESSOR NOR SHALL THE BREACH OF SUCH RELIEVE LESSEE OF, OR IN ANY WAY AFFECT,
ANY OF LESSEE'S OBLIGATIONS TO LESSOR HEREIN. IF THE EQUIPMENT IS UNSATISFACTORY
FOR ANY REASON, LESSEE SHALL MAKE CLAIM ON ACCOUNT THEREOF SOLELY AGAINST
SUPPLIER, AND ANY OF SUPPLIER'S VENDORS, AND SHALL NEVERTHELESS PAY LESSOR ALL
RENT AND OTHER SUMS PAYABLE UNDER THIS LEASE. LESSOR HEREBY ASSIGNS TO LESSEE,
SOLELY FOR THE PURPOSE OF PROSECUTING SUCH A CLAIM, ALL (IF ANY) OF THE RIGHTS
WHICH LESSOR MAY HAVE AGAINST SUPPLIER AND SUPPLIER'S VENDORS FOR BREACH OF
WARRANTY OR OTHER REPRESENTATIONS RESPECTING THE EQUIPMENT. REGARDLESS OF CAUSE,
LESSEE WILL NOT ASSERT ANY CLAIM WIFATSOEVER AGAINST LESSOR FOR LOSS OF
ANTICIPATORY PROFITS OR ANY OTHER INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES,
NOR SHALL LESSOR BE RESPONSIBLE FOR ANY DAMAGES OR COSTS WHICH MAY BE ASSESSED
AGAINST LESSEE IN ANY ACTION FOR INFRINGEMENT OF ANY UNITED STATES LETTERS OF
PATENT. LESSOR MAKES NO WARRANTY AS TO THE TREATMENT OF THIS LEASE FOR TAX OR
ACCOUNTING PURPOSES. NOTWITHSTANDING ANY FEES WHICH MAY BE PAID BY LESSOR TO
SUPPLIER OR ANY AGENT OF SUPPLIER, LESSEE UNDERSTANDS AND AGREES THAT NEITHER
SUPPLIER NOR ANY AGENT OF SUPPLIER IS AN AGENT OF LESSOR OR IS AUTHORIZED TO
WAIVE OR ALTER ANY TERM OR CONDITION OF THIS LEASE.

VI. TITLE; PERSONAL PROPERTY.

The Equipment is, and shall at all times be owned by Lessor and Lessee shall
have no interest in the Equipment except that of a lessee. The Lessee shall have
no right to purchase or otherwise acquire title to or ownership of any of the
Equipment. If Lessor supplies Lessee with labels indicating that the Equipment
is owned by Lessor, Lessee shall affix such labels to and keep them in a
prominent place on the Equipment. LESSEE HEREBY AUTHORIZES LESSOR TO INSERT IN
ANY EQUIPMENT SCHEDULE THE SERIAL NUMBERS AND OTHER IDENTIFICATION DATA OF
EQUIPMENT WHEN DETERMINED BY LESSOR. To protect Lessor's rights in the Equipment
in the event this Lease is determined to be a security agreement, Lessee hereby
grants to Lessor a security interest in the Equipment, and all proceeds,
products, rents or profits from the sale, casualty loss or other disposition
thereof. Lessee hereby authorizes Lessor, at Lessee's expense, to cause this
Lease, or any statement or other instrument in respect of this Lease showing the
interest of Lessor in the Equipment, including Uniform Commercial Code financing
statements, to be filed or recorded and re-filed and re-recorded. Lessee agrees
to execute, deliver and file any statement or instrument requested by Lessor for
such purpose, and if certificates of title are issued or outstanding with
respect to any of the Equipment, Lessee will cause the interest of Lessor to be
properly noted thereon, and agrees to pay or reimburse Lessor for any reasonable
searches, filings, recordings, stamp fees or taxes related to the filing or
recording of any such instrument or statement, plus Lessor's handling charges.
Lessee shall, at its expense, protect and defend Lessor's title against all
persons claiming against or through Lessee and shall at all times keep the
Equipment free from any legal process or encumbrance whatsoever including
without limitation liens, attachments, levies and executions, and shall give
Lessor immediate written notice thereof and shall indemnify Lessor from any loss
caused thereby. Lessee shall, upon Lessor's request, execute or obtain from
third parties and deliver to Lessor such estoppel certificates, landlord's
waivers and such further instruments and assurances as Lessor deems necessary or
advisable for the confirmation or perfection of Lessor's rights hereunder. The
Equipment is, and shall at all times be and remain, personal property
notwithstanding that the Equipment or any part thereof may now be or hereafter
become, in any manner, affixed or attached to real property or any improvements
thereon.

VII. MAINTENANCE, USE AND LOCATION.

Lessee shall, at its own cost and expense, maintain the Equipment in good
operating condition and repair and protect the Equipment from deterioration
other than normal wear and tear; shall use the Equipment in the regular course
of its business, within its normal operating capacity, without abuse; shall
comply with all laws, ordinances, regulations, requirements and rules with
respect to the use, maintenance and operation of the Equipment; shall not make
any modification, alteration or addition to the Equipment without the prior
written consent of Lessor, which shall not be unreasonably withheld, except for
engineering changes recommended by and made by the manufacturer; shall install
on the Equipment all engineering changes offered by the manufacturer without
charge which enhance the safety of the Equipment; shall not so affix the
Equipment to realty as to change its nature to real property or a fixture; and
shall keep the Equipment at the location shown herein, and shall not remove the

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                                                                   EXHIBIT 10.28

Equipment without prior written consent of Lessor. Lessee will grant access to
the Equipment to Lessor and Lessor's designee during normal working hours for
inspection, repair, preventative maintenance, installation of engineering
changes and for any other reasonable purpose. Lessee shall, during the term of
this Lease, at its own expense, enter into and maintain in force a contract with
the manufacturer or other acceptable maintenance company covering the
maintenance of the Equipment and furnish a copy thereof to Lessor upon request.
If Lessor incurs any costs or expenses to bring the Equipment up to good working
order and appearance, Lessee shall immediately reimburse Lessor for all such
costs or expenses.

VIII. RETURN OF EQUIPMENT; AUTOMATIC RENEWAL; END OF LEASE OPTION.

After the end of the Initial Term, this Lease shall be automatically renewed
unless Lessee shall provide to Lessor written notice of termination not less
than one hundred twenty (120) days and not more than one hundred eighty (180)
days prior to the end of the Initial Term. If such written notice of termination
is not timely provided to Lessor, or despite having provided Lessor with such
timely notice Lessee fails to return the Equipment to Lessor in connection with
the expiration of the Initial Term, this Lease shall be automatically renewed
for successive four (4) month terms until such time as Lessee shall provide
written notice to Lessor of termination not less than ninety (90) days prior to
the end of the then current term and return the Equipment to Lessor in
accordance with such notice. Unless Lessee purchases the Equipment or the term
of an Equipment Schedule- is renewed, within ten (10) days of the expiration or
earlier termination of the then current term, Lessee shall, at its expense,
deinstall, inspect, test and pack the Equipment and return the Equipment
(including all cable, wiring, connectors, accessories and attachments thereto),
freight and insurance prepaid, to such location as designated by Lessor in
writing, in good repair, condition and working order, ordinary wear and tear
resulting from proper use thereof only excepted. Further, the Equipment shall
conform to any additional specifications set forth in the applicable Equipment
Schedule. Lessee shall have the Equipment certified by the manufacturer as
acceptable for the manufacturer's standard maintenance contract (to the extent
available) and such certification shall be presented to Lessor at least fourteen
(14) days prior to redelivery to Lessor as provided herein. During each renewal
term of this Lease, Lessee shall pay Lessor Rent as provided herein for the use
of the Equipment equal to one hundred percent (100%) of the average annual
Rental Payment on a periodic basis (adjusted, as necessary, to the period and/or
any portion thereof indicated on the applicable Equipment Schedule) until such
time as the Equipment is returned to Lessor in accordance with the ninety (90)
day notice provision stated above. Nothing contained herein is intended to
relieve Lessee of its obligations to return the Equipment to Lessor as provided
herein or restrict Lessor's right to recover the Equipment in the event of the
failure of Lessee to so return the Equipment at the expiration or termination of
the applicable Equipment Schedule.

IX. RISK OF LOSS.

Lessee shall bear all risks of loss or damage to the Equipment ("Loss") from any
cause whatsoever, from the date of the shipment of the Equipment to Lessee until
its return to Lessor. Lessee shall promptly notify Lessor of any Loss and no
Loss shall relieve Lessee of the obligation to pay Rent or of any other
obligation under this Lease and any Equipment Schedule. In the event of a Loss,
Lessee, at the option of Lessee, shall either (a) repair the Equipment so as to
place it in as good condition as prior to the Loss, (b) replace the Equipment
with substantially identical Equipment in good condition and working order with
documentation creating clear title thereto in Lessor; or (c) pay to Lessor upon
demand the sum of the following amounts: (i) the aggregate Rent and other sums
then due and owing under the Equipment Schedule to which the Equipment is
subject plus (ii) the applicable stipulated loss value attached to the Equipment
Schedule and made part thereof (the "Stipulated Loss Values") opposite the Rent
payment number preceding the date of the Loss, or, if no Stipulated Loss Values
are attached to the Equipment Schedule, the present value of all unpaid Rent and
other sums due during the unexpired term of the Equipment Schedule plus Lessor's
anticipated value of the Equipment at the end of the Initial Term or any
applicable renewal term, calculated at a discount rate of four (4%) percent per
annum simple interest (or the lowest rate permitted by law). Upon Lessor's
receipt of replacement Equipment or payment as provided in (b) or (c) hereof,
Lessee and/or Lessee's insurer shall be entitled to Lessor's interest in said
item for salvage purposes, in its then condition and location, without warranty,
express or implied.

X. INSURANCE.

Lessee shall keep the Equipment insured against all risks of loss or damage from
every cause whatsoever for not less than the full replacement value thereof or
the amount stated in Section IX(c) herein, whichever is greater, and shall carry
public liability and property damage insurance covering the Equipment and its
use in amounts customary for such Equipment. All such insurance shall be in form
and amount and with companies acceptable to Lessor and name Lessor and its
assignee as loss payee, as their interests may appear, with respect to property
damage coverage and as additional insured, with respect to public liability
coverage. Lessee shall pay the premiums therefor and deliver said policies, or
duplicates thereof or certificates of coverage therefor to Lessor, with long
form Lender's Loss Payable endorsement upon the policy or policies or by
independent instrument, that provides Lessor a right to thirty (30) days'
written notice before the policy can be altered or canceled and the right
without obligation to payment of premium. Should Lessee fail to provide such
insurance coverage, Lessor may obtain such coverage for its benefit or for the
benefit of Lessee and charge Lessee therefor. Lessee hereby appoints Lessor as
Lessee's attorney-in-fact to make claim for, receive payment of, and execute and
endorse all documents, checks, or drafts for loss or damage under any said
insurance policies and to apply the proceeds in furtherance of the exercise of
Lessee's options as provided herein.

XI. TAXES AND CHARGES.

This Lease is intended to be a net lease, and all payments hereunder are
intended to be net to Lessor to the extent permitted by applicable law. Lessee
shall pay directly (or, at Lessor's option, reimburse Lessor for) all license
fees, assessments and other government charges, and all sales, use, excise,
franchise, personal property and any other similar tax or taxes (herein
collectively called "Charges") now or hereafter imposed, levied or assessed by
any state, federal or local government or agency upon any of the Equipment or
upon the leasing, purchase, ownership, use, possession, financing or operation
thereof, or upon the receipt of rental payments therefor, even if Lessee's
status provides for its exemption from the Charges (excluding income taxes on
Rental Payments, except any such tax on Rental Payments which is a substitution
for, or relieves Lessee from, the payment of taxes which Lessee would otherwise
be obligated to pay or reimburse Lessor as herein provided) before the same
shall become in

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                                                                   EXHIBIT 10.28

default or subject to the payment of any penalty or interest. Lessee shall
supply Lessor with receipts or other evidence of payment of all Charges as may
reasonably be requested by Lessor. Lessee shall further comply with all state
and local laws requiring the filing of ad valorem or other tax returns relating
to any Charges. Lessee shall notify the Lessor of the imposition of, or, to
Lessee's knowledge, the proposed imposition of, any Charges by supplying to
Lessor (within five (5) days after receipt thereof by Lessee) a copy of the
invoice or other documents respecting such Charges. Unless otherwise directed by
Lessor in writing, Lessor shall pay all personal property taxes with respect to
the Equipment and Lessee shall reimburse Lessor therefor upon demand.

XII. LEASE IRREVOCABILITY AND OTHER COVENANTS AND REPRESENTATIONS OF LESSEE.

LESSEE AGREES THAT THIS LEASE AND EACH EQUIPMENT SCHEDULE ARE IRREVOCABLE FOR
THE FULL TERM HEREOF AND THEREOF AND LESSEE'S OBLIGATIONS UNDER THIS LEASE AND
EACH EQUIPMENT SCHEDULE ARE ABSOLUTE AND SHALL CONTINUE WITHOUT ABATEMENT AND
REGARDLESS OF ANY DISABILITY OF LESSEE TO USE THE EQUIPMENT OR ANY PART THEREOF
BECAUSE OF ANY REASON INCLUDING, BUT NOT LIMITED TO WAR, ACT OF GOD,
GOVERNMENTAL REGULATIONS, STRIKE, LOSS, DAMAGE, DESTRUCTION, OBSOLESCENCE,
FAILURE OF OR DELAY IN DELIVERY, FAILURE OF THE EQUIPMENT TO OPERATE PROPERLY,
TERMINATION BY OPERATION OF LAW, OR ANY OTHER CAUSE. LESSEE REPRESENTS THAT: IT
IS DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE
JURISDICTION IN WHICH THE ACTIVITIES OF LESSEE REQUIRE SUCH QUALIFICATION; THIS
LEASE HAS BEEN AND EACH EQUIPMENT SCHEDULE WILL BE DULY AUTHORIZED BY ALL
NECESSARY ACTION ON ITS PART, IS A VALID, BINDING AND LEGALLY ENFORCEABLE
OBLIGATION OF LESSEE IN ACCORDANCE WITH ITS TERMS AND IS NOT IN ANY RESPECT
INCONSISTENT WITH OR IN VIOLATION OF LESSEE'S CERTIFICATE OR ARTICLES OF
INCORPORATION OR BY-LAWS OR ANY LAW, REGULATION, ORDER OR AGREEMENT BINDING UPON
LESSEE; THE EQUIPMENT SHALL BE USED BY LESSEE SOLELY FOR BUSINESS PURPOSES; AND
THAT ALL FINANCIAL AND OTHER INFORMATION SUBMITTED TO LESSOR WAS AND WILL BE
TRUE AND CORRECT.

XIII. FINANCIAL STATEMENTS

Lessee agrees to deliver to Lessor annual financial statements and such
quarterly financial statements, as Lessor requests.

XIV. DEFAULT AND REMEDIES.

(A) The occurrence of any one or more of the following shall be deemed to be an
"Event of Default": (a) Lessee fails to pay any Rent or any other amount
hereunder when due; or (b) Lessee is in default under any other agreement
between Lessee and Lessor, or upon an event of default under any other agreement
entered into by guarantors, the vendor of the Equipment, principals of Lessee or
others, which agreements) was or were executed to induce Lessor to enter into
this Lease or the applicable Equipment Schedule; or (e) Lessee fails to perform
or observe any of the terms, covenants or conditions contained in this Lease,
any Equipment Schedule or other lease or other agreement between Lessor and
Lessee, other than as provided above, and Lessee fails to cure any such breach
within ten (10) days after notice thereof or (d) any representation of Lessee
contained in this Lease or any other agreement between Lessor and Lessee, or in
any credit or other information submitted to Lessor in connection with this
transaction is untrue or incorrect; or (e) Lessee sells substantially all of its
assets out of the ordinary course of business, merges or consolidates with any
other person; or (f) Lessee becomes insolvent or makes an assignment for the
benefit of creditors; or (g) a receiver, trustee, conservator or liquidator of
Lessee or of all or a substantial part of its assets is appointed with or
without the application or consent of Lessee; or (h) a voluntary petition is
filed by or an involuntary petition is filed against Lessee under the Bankruptcy
Code or any amendment thereto, or under any other insolvency law or laws,
providing for the relief to debtors.

(B)    Upon an Event of Default, the Lessor may, to the extent permitted by
       applicable law, exercise any one or more of the following remedies:

       (i) Terminate this Lease with respect to all or any part of the
       Equipment;

       (ii) Recover from Lessee all Rent and other amounts then due and as they
       shall thereafter become due hereunder and under the Equipment Schedules;

       (iii) To the extent permitted by applicable law, take possession of any
       or all items of Equipment wherever the same may be located, without
       demand or notice, without any court order or other process of law and
       without liability to Lessee for any damages occasioned by such taking of
       possession, and any such taking of possession shall not constitute a
       termination of this Lease;

       (iv) Declare the entire unpaid balance of Rent and other amounts for the
       unexpired term of each Equipment Schedule immediately due and payable and
       recover from Lessee, with respect to any and all items of Equipment (with
       or without repossessing same), the Stipulated Loss Value attached to each
       Equipment Schedule opposite the Rent Payment number preceding the date of
       such Event of Default or, if no Stipulated Loss Values are attached to
       the applicable Equipment Schedule, the present value of all unpaid Rent
       and other sums due during the unexpired term of that Equipment Schedule
       plus Lessor's anticipated value of the Equipment at the end of the
       Initial Term or any applicable renewal term of the Equipment Schedule,
       calculated at a discount rate of four (4%) percent per annum simple
       interest (or the lowest discount rate permitted by law);

       (v) Upon repossession or surrender of any Equipment, Lessor shall sell,
       lease or otherwise dispose of such Equipment in a commercially reasonable
       manner, with or without notice and on public or private bid, and apply
       the net proceeds thereof (after deducting all expenses, including
       attorneys' fees incurred in connection therewith), to the sum of (iv)
       above;

       (vi) Declare any other Equipment Schedules and leases between Lessor and
       Lessee in default and exercise any of the remedies provided for herein;
       and

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                                                                   EXHIBIT 10.28

       (vii) Pursue any other remedy available at law or in equity, including
       but not limited to seeking damages or specific performance and/or
       obtaining an injunction.

(C) Lessee shall be liable and shall pay to Lessor all pre and post judgment
expenses incurred by Lessor in connection with the enforcement of any of
Lessor's remedies, including all expenses of repossessing, storing, shipping,
repairing, and selling the Equipment, and Lessor's pre and post-judgment
attorneys' fees and costs reasonably incurred. Lessor and Lessee acknowledge the
difficulty in establishing a value for the unexpired lease term and owing to
such difficulty agree that the provisions of this Section XIV represent an
agreed measure of damages and are not to be deemed a forfeiture or penalty. In
the event Lessor disposes of the Equipment, Lessor shall give Lessee credit for
any sums received by Lessor from the sale or rental of the Equipment after
deduction of the expenses of such sale or rental.

(D) All remedies of Lessor hereunder are cumulative, are in addition to any
other remedies provided for by law, and may, to the extent permitted by law, be
exercised concurrently or separately. The exercise of any one remedy shall not
be deemed to be an election of such remedy or to preclude the exercise of any
other remedy. No failure on the part of Lessor to exercise and no delay in
exercising any right or remedy shall operate as a waiver thereof or modify the
terms of this Lease or any Equipment Schedule. A waiver of default shall not be
a waiver of any other or subsequent default. If this Lease is determined to be
subject to any laws limiting the amount chargeable or collectible by Lessor then
Lessor's recovery shall in no event exceed the maximum amounts permitted by law.

XV. INDEMNITY.

Lessee shall indemnify and hold Lessor, its agents, employees, successors and
assigns, harmless from and against any and all claims, actions, suits,
proceedings, costs, expenses, damages and liabilities, including attorney's
fees, all of the foregoing on a pre and post judgment basis, arising out of,
connected with, or resulting from the Equipment, any Equipment Schedule or this
Lease, including without limitation, the manufacture, selection, delivery,
possession, use, lease, operation, removal or return of the Equipment.

XVI. REPRODUCTION OF DOCUMENTS.

This Lease, any Equipment Schedule and all related documents, including (a)
amendments, addendums, consents, waivers and modifications which may be executed
contemporaneously or subsequently herewith, (b) documents received by the Lessor
from the Lessee, and (c) financial statements, certificates and other
information previously or subsequently furnished to the Lessor, may be
reproduced by the Lessor by any photographic, photostatic, microfilm,
micro-card, miniature photographic, compact disk reproduction or other similar
process and the Lessor may destroy any original document so reproduced. The
Lessee agrees and stipulates that any such reproduction shall, to the extent
permitted by applicable law, be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not the reproduction was made by the Lessor in the
regular course of business) and that any enlargement, facsimile or further
reproduction of the reproduction shall likewise be admissible in evidence.

XVII. ASSIGNMENT; WAIVER OF DEFENSES; QUIET ENJOYMENT.

LESSEE SHALL NOT ASSIGN, TRANSFER, PLEDGE, HYPOTHECATE, OR OTHERWISE DISPOSE OF,
ENCUMBER OR PERMIT A LIEN UPON OR AGAINST ANY INTERESTS IN THIS LEASE, ANY
EQUIPMENT SCHEDULE OR THE EQUIPMENT OR PERMIT THE EQUIPMENT TO BE USED BY ANYONE
OTHER THAN LESSEE OR LESSEE'S EMPLOYEES WITHOUT LESSOR'S PRIOR WRITTEN CONSENT.
Lessor may, without consent or notice to Lessee, assign or transfer this Lease
or any Equipment Schedule or grant a security interest in any Equipment, any
Rental Payments, or any other sums due or to become due hereunder, and in such
event Lessor's assignee, transferee or grantee shall have all the rights,
powers, privileges, and remedies of Lessor hereunder. Lessee agrees that,
following its receipt of notice of any assignment by Lessor of this Lease, any
Equipment Schedule or the Rental Payments payable hereunder, it will pay the
Rent Payments due hereunder directly to the assignee (or to whomever the
assignee shall designate). Lessee agrees that no assignee of Lessor shall be
bound to perform any duty, covenant condition or warranty attributable to
Lessor, and Lessee further agrees not to raise any claim or defense arising out
of this Lease or otherwise which it may have against Lessor as a defense,
counterclaim, or offset to any action by an assignee or secured party hereunder.
Upon Lessor's request, Lessee will execute a consent and acknowledgment of
Lessor's assignment to its assignee. Nothing contained herein is intended to
relieve Lessor of any of its obligations. Provided Lessee is not in default
hereunder, Lessee shall quietly use and enjoy the Equipment, subject to the
terms hereof, free from interference from Lessor or any party claiming by,
through or under Lessor.

XVIII. PERFORMANCE BY LESSOR OF LESSEE'S OBLIGATIONS.

In the event Lessee fails to comply with any provisions of this Lease, Lessor
shall have the right, but shall not be obligated, to effect such compliance on
behalf of Lessee upon ten (10) days prior written notice to Lessee. In such
event, all monies expended by, and all expenses of Lessor in effecting such
compliance shall be deemed to be additional rent, and shall be paid by Lessee to
Lessor at the time of the next rent payment, together with interest at the rate
of one and one-quarter (1-1/4%) percent per month but in no event more than the
maximum permitted by law.

XIX. GOVERNING LAW; JURISDICTION AND VENUE; WAIVER OF TRIAL BY JURY AND RIGHTS
AND REMEDIES UNDER THE UNIFORM COMMERCIAL CODE.

THIS LEASE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW JERSEY. LESSEE
CONSENTS TO THE PERSONAL JURISDICTION OF THE FEDERAL AND STATE COURTS OF THE
STATE OF NEW JERSEY WITH RESPECT TO ANY ACTION ARISING OUT OF THIS LEASE, ANY
EQUIPMENT SCHEDULE OR THE EQUIPMENT, PROVIDED, HOWEVER, LESSOR MAY, IN ITS SOLE
DISCRETION, ENFORCE THIS LEASE AND ANY EQUIPMENT SCHEDULE IN ANY COURT HAVING
LAWFUL JURISDICTION THEREOF. THIS MEANS ANY LEGAL ACTION ARISING OUT OF THIS
LEASE MAY BE

                                       5

<PAGE>   6

                                                                   EXHIBIT 10.28

FILED IN NEW JERSEY, AND LESSEE MAY BE REQUIRED TO DEFEND AND LITIGATE ANY SUCH
ACTION IN NEW JERSEY. LESSEE AGREES THAT SERVICE OF PROCESS IN ANY SUIT MAY BE
MADE BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO LESSEE AT THE
ADDRESS SET FORTH HEREIN. TO THE EXTENT PERMITTED BY LAW, LESSEE WAIVES TRIAL BY
JURY IN ANY ACTION BY OR AGAINST LESSOR RELATED TO OR ARISING OUT OF THIS
AGREEMENT OR THE EQUIPMENT AND WAIVES ANY AND ALL RIGHTS AND REMEDIES GRANTED TO
LESSEE BY ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE AND ANY RIGHTS NOW OR
HEREAFTER GRANTED BY STATUTE OR OTHERWISE THAT MAY LIMIT OR MODIFY LESSOR'S
RIGHTS AS DESCRIBED IN THIS LEASE OR THE EQUIPMENT SCHEDULES. LESSEE WAIVES THE
RIGHT TO FILE ANY AMENDMENTS OR TERMINATIONS OF FINANCING STATEMENTS WITHOUT
LESSOR'S SIGNATURE. AFTER LESSEE HAS FULFILLED ALL OF ITS OBLIGATIONS UNDER THE
LEASE, AND AT LESSEE'S REQUEST AND AT ITS SOLE EXPENSE, LESSOR AGREES TO EXECUTE
UCC TERMINATION STATEMENTS RELEASING THEIR INTEREST IN THE EQUIPMENT.

XX. GENERAL.

This Lease shall inure to the benefit of and is binding upon the heirs,
legatees, personal representatives, successors and permitted assigns of the
parties hereto. Time is of the essence of this Lease. This Lease and any
Equipment Schedule shall be effective when accepted by Lessor. This Lease and
the Equipment Schedules contain the entire agreement between Lessor and Lessee
with respect to the subject matter hereof. and all negotiations and
understandings have been merged herein. No modification of this Lease shall be
effective unless in writing and executed by both Lessor and Lessee. All
covenants and obligations of Lessee to be performed pursuant to this Lease,
including all payments to be made by Lessee hereunder, shall survive the
expiration or earlier termination of this Lease. If more than one Lessee is
named in this Lease, the liability of each shall be joint and several. In the
event any provision of this Lease shall be unenforceable, then such provision
shall be deemed deleted, however, all other provisions hereof shall remain in
full force and effect. Service of all notices under this Lease shall be
sufficient if given personally, mailed to the party intended at its address set
forth in the Equipment Schedule, or at such other addresses said party may
provide in writing from time to time by certified mail, or overnight mail
service, or sent via facsimile transmission. Any such notice mailed to said
address shall be deemed effective three (3) days after it is deposited in the
United States mail, duly addressed and with postage prepaid; all notices sent by
other means shall be deemed effective when received.

IN WITNESS WHEREOF, the parties have executed this Lease as
of                          , 2001
  -------------------------

LESSEE: SIGMATRON INTERNATIONAL, INC.

BY:      /s/ Linda K. Blake
   -----------------------------------------------------------------------------

         Linda K. Blake CFO
--------------------------------------------------------------------------------
         (PRINT OR TYPE NAME & TITLE OF ABOVE SIGNER)

ATTEST:

BY:      /s/ Gary R. Fairhead
   -----------------------------------------------------------------------------

         Gary R. Fairhead CEO
--------------------------------------------------------------------------------
         (PRINT OR TYPE NAME  & TITLE OF ABOVE SIGNER)

LESSOR:  CITICORP VENDOR FINANCE, INC.

BY:
   -----------------------------------------------------------------------------

         (PRINT OR TYPE NAME & TITLE OF ABOVE SIGNER)

                                       6
<PAGE>   7

                                                                   EXHIBIT 10.28

                                                         Date:  February 8, 2001

SigmaTron International, Inc.
2201 Landmeier Rd.
Elk Grove Village, Inc. 60007

Re: Lease No. 200029352 between Sigmatron International Inc. as lessee
("Lessee") and Citicorp Vendor Finance, Inc., as lessor ("Lessor")

Dear Sir/Madam:

     For good and valuable consideration, the receipt of which is hereby
acknowledged and intending to be legally bound, the parties hereto agree as
follows:

     1.   Provided no Event of Default exists uncured and notwithstanding
          anything contained in the Lease to the contrary, Lessor hereby grants
          to Lessee the option to purchase the equipment subject to the Lease
          (the "Equipment") at the end of the initial term of the Lease for
          $1.00 (the "Purchase Option"). Lessee shall exercise the Purchase
          Option by giving Lessor not less than 30 days written notice prior to
          the last day of the initial term of the Lease. IF THE PURCHASE OPTION
          IS EXERCISED, THE EQUIPMENT WILL BE SOLD BY LESSOR TO LESSEE "AS IS,
          WHERE IS", WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT
          LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
          PURPOSE OR USE, OR WARRANTY OF TITLE.

     2.   In the event that Lessee does not elect to purchase the Equipment
          under the Purchase Option or the Purchase Option is deemed null and
          void under the circumstances described in Paragraph I herein, Lessee
          shall return the Equipment in accordance with the terms and conditions
          of the Lease.

     3.   Capitalized terms used but not defined herein shall have the meanings
          ascribed to such terms in the Lease.

     4.   Except to the extent expressly modified by this letter agreement, the
          terms and conditions of the Lease shall remain unchanged and in full
          force and effect.

     Each of the parties hereto has caused this letter agreement to be executed
by its duty authorized officers, all as of the date first above written.

SigmaTron International, Inc                 Citicorp Vendor Finance, Inc.

BY:      /s/ Linda K. Blake                  BY:      /s/ Daniel J. Ferguson
   ---------------------------------            --------------------------------

TITLE:   CFO                                 TITLE:   Vice President
      ------------------------------               -----------------------------

<PAGE>   8

                                                                   EXHIBIT 10.28

                          CITICORP VENDOR FINANCE, INC.

                        EQUIPMENT SCHEDULE NO: 200029352

This Equipment Schedule ("Equipment Schedule") to that certain Master Lease
Agreement Number M2098870 (hereinafter called the "Master Lease") between Lessor
and the Lessee whose name appears below, together with the Master Lease,
constitutes a lease of the Equipment described below (hereinafter, collectively,
this "Lease"). All the terms and conditions of the Master Lease are incorporated
herein as if all said terms and conditions were fully set forth herein. All
capitalized terms used but not defined herein shall have the meanings given such
terms in the Master Lease. It is the intent of the parties that this Equipment
Schedule be separately enforceable as a complete and independent lease,
independent of all other Equipment Schedules to the Master Lease.

<TABLE>
<CAPTION>
<S>          <C>               <C>                         <C>              <C>        <C>                          <C>
-----------------------------------------------------------------------------------------------------------------------------------
LESSEE:                                                   SUPPLIER:
SIGINATRON INTERNATIONAL, INC.                            PETLOCK INC.
2201 LANDMEIER RD.                                        139 W. MINDDANO STREET
ELK GROVE VILLAGE, IL 60007                               RIALTO, CA 92316
-----------------------------------------------------------------------------------------------------------------------------------
  QTY.    DESCRIPTION OF EQUIPMENT (Indicate If Used Equipment)                     (MODEL NO.)                    (SERIAL NO.)
-----------------------------------------------------------------------------------------------------------------------------------
   1      Used Genrad 2284 E Test System
          With additional 6 Combo 11 Cards, I Analog Function Option, I Deep Serial Memory Option, I Open Express single user
          license, I Basic Scan Single User License.
          As well as all attachments, replacements, substitutions and accessories.
-----------------------------------------------------------------------------------------------------------------------------------
EQUIPMENT LOCATION IF DIFFERENT THAN ABOVE:

751 PILOT RD. LAS VEGAS, NV 89119
-----------------------------------------------------------------------------------------------------------------------------------
INITIAL TERM  RENTAL          TOTAL NO. AND AMOUNT OF EACH RENTAL          ADVANCE RENTAL PAYMENT TO     SECURITY DEPOSIT
OF LEASE      PAYMENTS        PAYMENT DURING INTITAL TERM OF LEASE         BE APPLIED TO
              PAYABLE                                                      THE FIRST 01 MONTH(S) AND
48 MONTHS     PERIODICALLY
--
              AS FOLLOWS      48 RENTAL PAYMENTS OF $2,635.00  EA. PLUS    THE LAST 01 MONTH(S) RENTAL   $0
                              SALES TAX (IF APPLICABLE)
              MONTHLY                                                      PAYMENTS TOTALING $5,270.00

                                                                           (ADVANCE PAYMENTS MUST
                                                                           ACCOMPANY LEASE APPLICATON)

-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

MONTHLY RENT:  The first payment of monthly rent is due and payable on the
Commencement Date. Subsequent payments of monthly rent are due and payable on
the first day of each succeeding month.

CHATTEL PAPER: To the extent this Lease may be considered "chattel paper" as
defined in the Uniform Commercial Code, only Counterpart Number One of any of
the manually executed counterparts of this Equipment Schedule incorporating the
terms of the Master Lease Agreement, shall constitute the original of this
Lease, and no interest in this Lease may be created or transferred except by
transfer of possession of that counterpart.

RENTAL PAYMENTS: The parties agree that the Rental Payments are predicated on
the yield of like term Treasury Notes, as quoted daily in The Wall Street
Journal, of 4.96% as of January 26, 2001. Any increase in the yield of like term
Treasury Notes prior to the Acceptance Date will increase the effective lease
rate basis point for basis point.

EQUIPMENT SCHEDULE ACCEPTED BY:

<TABLE>
<CAPTION>

<S>                                                 <C>
SIGMATRON INTERNATIONAL, INC.                       CITICORP VENDOR FINANCE, INC.
                                                    700 EAST GATE DRIVE
                                                    MT. LAUREL, NJ  08054-5404

By:      /s/ Linda K. Blake                         By:
   --------------------------------------------     -----------------------------------------
         (AUTHORIZED SIGNATURE)                              (AUTHORIZED SIGNATURE)

         Linda K. Blake  CFO
-----------------------------------------------     --------------------------------------------
(PRINT OR TYPE NAME & TITLE OF ABOVE SIGNER)        (PRINT OR TYPE NAME & TITLE OF ABOVE SIGNER)

</TABLE>

<PAGE>   9

                                                                   EXHIBIT 10.28

                    EQUIPMENT SCHEDULE COUNTERPART NO. 1 OF 1
                 EQUIPMENT SCHEDULE-MASTER LEASE REVISED 11/9/00
                     CERTIFICATE OF DELIVERY AND ACCEPTANCE
                      EQUIPMENT SCHEDULE NUMBER: 200029352
                                  DATED: 3-5-01

In compliance with the terms, conditions and provisions of the Master Lease
Agreement Number M2098870, dated, 3-5-01 , ("The Lease") by and between the
undersigned ("Lessee") and Citicorp Vendor Finance, Inc. ("Lessor"), Lessee
hereby:

(a) certifies and warrants to the Lessor that all the Equipment described in the
above referenced Equipment Schedule (the "Equipment") has been delivered,
inspected, fully installed and is operational, and has not been previously used
or placed in service for its specifically assigned function for the first time,
unless otherwise expressly indicated on the Equipment Schedule, prior to the
Acceptance Date as indicated below;

(b) accepts all the Equipment for all purposes under the Lease  and all
attendant documents as of such Acceptance Date;

(c) restates and reaffirms, as of such Acceptance Date, each of the
representations, warranties and covenants given to Lessor in the Lease;

(d) acknowledges and represents that it has reviewed and approves of all of the
purchase documents for the Equipment, if any.

(e) confirms that this acceptance is irrevocable.

ACCEPTANCE DATE:  March 15, 2001
                --------------------

SIGMATRON INTERNATIONAL, INC.

BY:      /s/ Linda K. Blake
   -----------------------------------------

TITLE:   CFO
      --------------------------------------<PAGE>   1

                                                                    EXHIBIT 10.1

                           HEALTH FITNESS CORPORATION

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

                      ARTICLE 1. ESTABLISHMENT AND PURPOSE

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

     1.2 Purpose. The purpose of the Plan is to advance the interests of the
Company and its shareholders by enabling the Company to attract and retain
persons of ability as employees, directors and consultants, by providing an
incentive to such individuals through equity participation in the Company and by
rewarding such individuals who contribute to the achievement by the Company of
its long-term economic objectives.

                             ARTICLE 2. DEFINITIONS

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

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

     2.2 "Change in Control" means an event described in Article 11 below.

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

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

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

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

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

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

<PAGE>   2

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

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

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

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

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

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

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

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

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

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

                                       2
<PAGE>   3

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

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

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

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

                         ARTICLE 3. PLAN ADMINISTRATION

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

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

                                       3
<PAGE>   4

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

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

                      ARTICLE 4. SHARES SUBJECT TO THE PLAN

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

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

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

                             ARTICLE 5. ELIGIBILITY

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

                                       4
<PAGE>   5

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

                        ARTICLE 6. DURATION AND EXERCISE

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

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

                                       5
<PAGE>   6

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

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

      6.4   Incentive Stock Options.

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

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

                                       6
<PAGE>   7

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

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

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

      6.5   Non-Statutory Stock Options.

                                       7
<PAGE>   8

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

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

            (c)   Withholding Taxes.

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

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

                                       8
<PAGE>   9

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

            ARTICLE 7. EFFECT OF TERMINATION OF EMPLOYMENT ON OPTIONS

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

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

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

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

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

                                       9
<PAGE>   10

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

                     ARTICLE 8. RIGHTS OF EMPLOYEES; OPTIONEES

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

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

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

                                       10
<PAGE>   11

                ARTICLE 9. SHARE ISSUANCE AND TRANSFER RESTRICTIONS

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

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

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

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

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

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

                                       11
<PAGE>   12

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

              ARTICLE 10. PLAN AMENDMENT, MODIFICATION AND TERMINATION

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

                          ARTICLE 11. CHANGE IN CONTROL

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

                     ARTICLE 12. EFFECTIVE DATE OF THE PLAN

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

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

                                       12
<PAGE>   13

                            ARTICLE 13. MISCELLANEOUS

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

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

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

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

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

                                       13

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