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                                                                    EXHIBIT 10.7

                               EXCHANGE AGREEMENT

THIS AGREEMENT ("Agreement") is made and entered into as of December 31, 2002,
by and among C2, Inc., a Wisconsin corporation ("C2"), Zero Zone, Inc., a
Wisconsin corporation ("Zero Zone"), and certain shareholders of Zero Zone
listed on the signature page hereto (individually, a "Selling Shareholder" and
together, the "Selling Shareholders").

                              W I T N E S S E T H:

WHEREAS, the Selling Shareholders own in the aggregate 18,315 shares (the
"Subject Shares") of common stock, $0.10 par value per share, of Zero Zone ("ZZ
Common Stock"), representing approximately twenty-nine and 41/100 percent
(29.41%) of the total shares of ZZ Common Stock issued and outstanding.

WHEREAS, C2 is the beneficial holder of the remaining 43,956 shares of ZZ Common
Stock, representing approximately seventy and 59/100 percent (70.59%) of the
total shares of ZZ Common Stock issued and outstanding.

WHEREAS, C2 desires to acquire from each Selling Shareholder, and each Selling
Shareholder desires to transfer to C2, the Subject Shares solely in exchange for
shares of common stock, $1 par value per share, of C2 ("C2 Common Stock") on the
terms and conditions hereinafter set forth.

NOW, THEREFORE, the parties, intending to be legally bound, hereby agree as
follows:

         1.       PURCHASE AND SALE OF THE SUBJECT SHARES. Subject to the terms
and conditions of this Agreement, each Selling Shareholder hereby transfers, and
C2 hereby purchases, the Subject Shares held by each Selling Shareholder in
exchange for shares of C2 Common Stock as detailed on the attached Schedule 1.

         2.       PURCHASE PRICE; EXCHANGE OF SHARES.

       2.1.       UPON THE EXECUTION OF THIS AGREEMENT AND DELIVERY BY EACH
     SELLING SHAREHOLDER OF A STOCK CERTIFICATE OR CERTIFICATES, DULY ENDORSED
     FOR TRANSFER OR ACCOMPANIED BY DULY EXECUTED STOCK POWERS, REPRESENTING THE
     SUBJECT SHARES BEING TRANSFERRED BY SUCH SELLING SHAREHOLDER HEREUNDER,
     EACH SELLING SHAREHOLDER SHALL BE ENTITLED TO RECEIVE IN EXCHANGE FOR HIS
     OR HER SUBJECT SHARES THAT NUMBER OF SHARES OF C2 COMMON STOCK EQUAL TO THE
     PRODUCT OF (a) THE NUMBER OF SUBJECT SHARES BEING SOLD BY SUCH SELLING
     SHAREHOLDER (AS LISTED OPPOSITE THE SELLING SHAREHOLDER'S NAME ON SCHEDULE
     1 ATTACHED HERETO) MULTIPLIED BY (b) 10.37401; PROVIDED, HOWEVER, THAT ANY
     FRACTIONAL SHARE OF C2 COMMON STOCK RESULTING FROM SUCH CALCULATION SHALL
     BE ROUNDED  UP TO THE NEAREST WHOLE SHARE. THE NUMBER OF SHARES OF C2
     COMMON STOCK TO BE RECEIVED BY EACH SELLING SHAREHOLDER IS SET FORTH ON
     SUCH SCHEDULE 1.

       2.2.       UPON RECEIPT BY C2 OF A COPY OF THIS AGREEMENT DULY EXECUTED
     BY A SELLING SHAREHOLDER AND DELIVERY BY SUCH SELLING SHAREHOLDER OF A
     STOCK CERTIFICATE OR CERTIFICATES PURSUANT TO SECTION 2.1 ABOVE, C2 SHALL
     PROMPTLY INSTRUCT ITS TRANSFER AGENT TO ISSUE AND DELIVER TO SUCH SELLING
     SHAREHOLDER A STOCK CERTIFICATE REPRESENTING THAT NUMBER OF SHARES OF C2
     COMMON STOCK BEING ISSUED TO SUCH SELLING SHAREHOLDER PURSUANT TO SECTION
     2.1 ABOVE.

       2.3.       THE PARTIES ACKNOWLEDGE AND AGREE THAT NO CONSIDERATION IS
     BEING PAID TO THE SELLING SHAREHOLDERS FOR THE SUBJECT SHARES OTHER THAN
     THE SHARES OF C2 COMMON STOCK BEING ISSUED TO THE SELLING SHAREHOLDERS
     PURSUANT TO SECTION 2.1 ABOVE.

         3.       REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.
Each of the Selling Shareholders severally, but not

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jointly, makes to C2 the following representations and warranties, each of which
is true and correct on the date hereof and shall survive the closing of the
transactions provided for herein.

                  (a)      THE SELLING SHAREHOLDER HAS, AND C2 WILL RECEIVE,
         GOOD AND MARKETABLE TITLE TO THE SUBJECT SHARES BEING TRANSFERRED BY
         SUCH SELLING SHAREHOLDER HEREUNDER, FREE AND CLEAR OF ALL MORTGAGES,
         LIENS, SECURITY INTERESTS, CLAIMS, PLEDGES, LICENSES, EQUITIES,
         OPTIONS, OR OTHER CHARGES OR ENCUMBRANCES OF ANY NATURE WHATSOEVER.

                  (b)      THE SELLING SHAREHOLDER HAS FULL POWER, LEGAL RIGHT
         AND AUTHORITY TO ENTER INTO, EXECUTE AND DELIVER THIS AGREEMENT AND TO
         CARRY OUT THE TRANSACTIONS CONTEMPLATED HEREBY.

                  (c)      THE SELLING SHAREHOLDER ACKNOWLEDGES THAT (i) C2 HAS
         MADE AVAILABLE ALL INFORMATION THAT HE OR SHE HAS REQUESTED CONCERNING
         C2 AND THE EXCHANGE OF THE SUBJECT SHARES FOR SHARES OF C2 COMMON STOCK
         (THE "EXCHANGE"); (ii) THE SELLING SHAREHOLDER HAS BEEN AFFORDED AN
         OPPORTUNITY TO ASK QUESTIONS OF AND RECEIVE ANSWERS FROM C2 MANAGEMENT
         CONCERNING C2, ITS BUSINESS, FINANCIAL RESULTS AND PROSPECTS, AND THE
         TERMS AND CONDITIONS OF THE EXCHANGE (INCLUDING, BUT NOT LIMITED TO, A
         TELEPHONIC DISCUSSION HELD ON FRIDAY, DECEMBER 27, 2002, BETWEEN
         WILLIAM T. DONOVAN, C2'S PRESIDENT AND CHIEF EXECUTIVE OFFICER, AND THE
         SELLING SHAREHOLDERS); AND (iii) THE SELLING SHAREHOLDER HAS HAD THE
         OPPORTUNITY TO OBTAIN ANY ADDITIONAL INFORMATION NECESSARY TO VERIFY
         THE ACCURACY OF INFORMATION OTHERWISE FURNISHED BY C2; ALL OF THE
         INFORMATION SO REQUESTED HAS BEEN PROVIDED, AND THE SELLING SHAREHOLDER
         REQUIRES NO ADDITIONAL INFORMATION TO EVALUATE THE MERITS AND RISKS OF
         THE EXCHANGE AND AN INVESTMENT IN C2 COMMON STOCK. EACH SELLING
         SHAREHOLDER ACKNOWLEDGES THAT INFORMATION ABOUT C2, ITS BUSINESS,
         FINANCIAL RESULTS, PROSPECTS AND OTHER RELEVANT MATTERS IS READILY
         AVAILABLE TO SUCH SELLING SHAREHOLDER BY ACCESSING THE SECURITIES AND
         EXCHANGE COMMISSION'S EDGAR DATABASE AT WWW.SEC.GOV.

                  (d)      THE SELLING SHAREHOLDER ACKNOWLEDGES THAT HE OR SHE
         IS FINANCIALLY SOPHISTICATED, THAT HE OR SHE HAS MADE HIS OR HER OWN
         INDEPENDENT DETERMINATION OF THE VALUE OF THE SUBJECT SHARES AND THE
         VALUE OF A SHARE OF C2 COMMON STOCK, AND THAT THE EXCHANGE RATIO FOR
         THE SUBJECT SHARES WAS DETERMINED THROUGH ARMS' LENGTH NEGOTIATION. THE
         SELLING SHAREHOLDER ACKNOWLEDGES THAT HE OR SHE HAS NOT RELIED ON ANY
         ORAL REPRESENTATION OR STATEMENT FROM ANY OF THE DIRECTORS, OFFICERS,
         EMPLOYEES, AGENTS, AFFILIATES OR REPRESENTATIVES OF C2 WITH RESPECT TO
         THE EXCHANGE, C2, THE VALUE OF THE SUBJECT SHARES, THE VALUE OF THE C2
         COMMON STOCK TO BE RECEIVED IN EXCHANGE THEREFOR OR OTHERWISE, AND
         FURTHER ACKNOWLEDGES THAT ALL REPRESENTATIONS, WARRANTIES, AGREEMENTS
         AND UNDERSTANDINGS BETWEEN THE PARTIES WITH RESPECT TO THE EXCHANGE OF
         THE SUBJECT SHARES FOR SHARES OF C2 COMMON STOCK ARE SET FORTH IN THIS
         AGREEMENT.

                  (e)      THE SELLING SHAREHOLDER HAS SUCH KNOWLEDGE AND
         EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT HE OR SHE IS CAPABLE
         OF EVALUATING THE MERITS AND RISKS OF ACQUIRING SHARES OF C2 COMMON
         STOCK AND OF MAKING AN INFORMED INVESTMENT DECISION WITH RESPECT
         THERETO; THE SELLING SHAREHOLDER HAS REVIEWED ALL OF THE INFORMATION
         PROVIDED BY C2, INCLUDING, WITHOUT LIMITATION, ALL PERIODIC REPORTS
         FILED BY C2 WITH THE SECURITIES EXCHANGE COMMISSION (THE "SEC") DURING
         THE LAST THREE YEARS UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
         AMENDED ("EXCHANGE ACT"), AND BY VIRTUE OF SUCH REVIEW THE SELLING
         SHAREHOLDER UNDERSTANDS THE MERITS AND RISKS OF AN INVESTMENT IN SHARES
         OF C2 COMMON STOCK. AS NOTED EARLIER, C2'S PERIODIC REPORTS AND OTHER
         FILINGS MADE WITH THE SEC PURSUANT TO THE EXCHANGE ACT ARE READILY
         AVAILABLE TO EACH SELLING SHAREHOLDER BY ACCESSING THE SEC'S EDGAR
         DATABASE AT WWW.SEC.GOV.

                  (f)      THE SELLING SHAREHOLDER ACKNOWLEDGES THAT C2'S LEGAL
         COUNSEL HAS PREPARED THIS AGREEMENT AT THE DIRECTION OF C2 AND HE OR
         SHE HAS RECEIVED NO REPRESENTATION FROM C2'S LEGAL COUNSEL ABOUT THE
         LEGAL, TAX OR OTHER CONSEQUENCES OF THIS AGREEMENT AND/OR THE

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         TRANSACTIONS CONTEMPLATED HEREBY. THE SELLING SHAREHOLDER HAS RELIED
         UPON HIS OR HER OWN LEGAL AND TAX COUNSEL TO THE EXTENT HE OR SHE DEEMS
         NECESSARY AS TO ALL MATTERS AND QUESTIONS CONCERNING THE EXCHANGE AND
         AN INVESTMENT IN SHARES OF C2 COMMON STOCK, AND THE SELLING SHAREHOLDER
         HAS NOT RELIED UPON ANY OPINION, WRITTEN OR ORAL, OF C2, ITS LEGAL
         COUNSEL OR ACCOUNTANTS. FURTHERMORE, THE SELLING SHAREHOLDER HAS
         OBTAINED, TO THE EXTENT HE OR SHE DEEMS NECESSARY, HIS OR HER OWN
         PROFESSIONAL ADVICE WITH RESPECT TO THE RISKS INVOLVED WITH THE
         EXCHANGE AND AN INVESTMENT IN SHARES OF C2 COMMON STOCK, AND THE
         SUITABILITY OF THE INVESTMENT IN C2 COMMON STOCK IN LIGHT OR HIS OR HER
         PERSONAL FINANCIAL CONDITION AND INVESTMENT NEEDS.

                  (g)      THE SELLING SHAREHOLDER'S FINANCIAL CONDITION IS SUCH
         THAT SUCH SELLING SHAREHOLDER IS ABLE TO BEAR THE RISK OF HOLDING
         SHARES OF C2 COMMON STOCK FOR AN INDEFINITE PERIOD OF TIME AND THE RISK
         OF LOSS OF THE ENTIRE INVESTMENT IN C2 COMMON STOCK. THE SELLING
         SHAREHOLDER BELIEVES THAT THE INVESTMENT IN SHARES OF C2 COMMON STOCK
         IS SUITABLE FOR HIM OR HER BASED UPON HIS OR HER INVESTMENT OBJECTIVES
         AND FINANCIAL NEEDS, AND HE OR SHE HAS ADEQUATE MEANS FOR PROVIDING FOR
         CURRENT FINANCIAL NEEDS AND CONTINGENCIES AND HAS NO NEED FOR LIQUIDITY
         OF INVESTMENT WITH RESPECT TO SHARES OF C2 COMMON STOCK.

                  (h)      THE SELLING SHAREHOLDER UNDERSTANDS AND ACKNOWLEDGES
         THAT THE SHARES OF C2 COMMON STOCK HE OR SHE RECEIVES IN THE EXCHANGE
         HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE SECURITIES ACT OF
         1933, AS AMENDED (THE "1933 ACT"), IN RELIANCE UPON THE EXEMPTION FROM
         REGISTRATION THEREUNDER AVAILABLE UNDER SECTION 4(2) OF THE 1933 ACT
         AND/OR REGULATION D THEREUNDER, AND HAVE NOT BEEN AND WILL NOT BE
         REGISTERED UNDER ANY STATE SECURITIES LAWS IN RELIANCE UPON CERTAIN
         EXEMPTIONS THEREFROM, IN EACH CASE BASED IN PART UPON THE
         REPRESENTATIONS MADE HEREIN. AS A RESULT, THE SELLING SHAREHOLDER
         UNDERSTANDS AND ACKNOWLEDGES THAT SUCH SHARES OF C2 COMMON SHARES MAY
         NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED, OR HYPOTHECATED IN
         THE UNITED STATES OR ANY OF ITS TERRITORIES IN THE ABSENCE OF AN
         EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT OR AN EXEMPTION
         FROM REGISTRATION UNDER THE 1933 ACT AND THE RULES AND REGULATIONS
         PROMULGATED BY THE SEC THEREUNDER. THE SELLING SHAREHOLDER UNDERSTANDS
         AND ACKNOWLEDGES THAT C2 IS UNDER NO OBLIGATION TO EFFECT REGISTRATION
         UNDER THE 1933 ACT OF THE SHARES OF C2 COMMON STOCK RECEIVED BY THE
         SELLING SHAREHOLDERS IN THE EXCHANGE, AND THAT C2 HAS NO INTENTION OF
         EFFECTING SUCH REGISTRATION.

                  (i)      THE SELLING SHAREHOLDER UNDERSTANDS AND ACKNOWLEDGES
         THAT THE SHARES OF C2 COMMON STOCK BEING RECEIVED IN THE EXCHANGE WILL
         BE SUBJECT TO THE STRICT TRANSFER RESTRICTIONS OF RULE 144 UNDER THE
         1933 ACT, INCLUDING RULE 144'S VOLUME LIMITATIONS AND ITS REQUIREMENTS
         AS TO AVAILABLE PUBLIC INFORMATION ABOUT C2 AND HOLDING PERIOD FOR THE
         SHARES OF C2 COMMON STOCK. WITHOUT LIMITING THE GENERALITY OF THE
         FOREGOING, THE SELLING SHAREHOLDER UNDERSTANDS AND ACKNOWLEDGES THAT
         THE SHARES OF C2 COMMON STOCK BEING RECEIVED IN THE EXCHANGE WILL BE
         SUBJECT UNDER RULE 144 TO A ONE-YEAR HOLDING PERIOD BEFORE SALE IS
         POSSIBLE. THE SELLING SHAREHOLDER IS FAMILIAR WITH THE PROVISIONS OF
         RULE 144 AND THE LIMITATIONS UPON THE AVAILABILITY AND APPLICABILITY OF
         SUCH RULE. THE SELLING SHAREHOLDER UNDERSTANDS AND ACKNOWLEDGES THAT A
         RESTRICTIVE LEGEND OR LEGENDS WILL BE PLACED ON THE CERTIFICATE(S)
         REPRESENTING, OR ANY STATEMENT DESCRIBING, HIS OR HER SHARES OF C2
         COMMON STOCK RECEIVED IN THE EXCHANGE.

                  (j)      THE SELLING SHAREHOLDER REPRESENTS THAT HE OR SHE IS
         A BONA FIDE RESIDENT OF THE STATE OF WISCONSIN.

                  (k)      THE SHARES OF C2 COMMON STOCK RECEIVED IN THE
         EXCHANGE ARE BEING ACQUIRED FOR THE SELLING SHAREHOLDER'S OWN ACCOUNT
         FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR SALE IN
         CONNECTION WITH, THE DISTRIBUTION THEREOF WITHIN THE MEANING OF THE

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         1933 ACT AND WILL NOT BE TRANSFERRED BY HIM OR HER IN VIOLATION OF THE
         1933 ACT OR THE THEN APPLICABLE RULES AND REGULATIONS THEREUNDER.

                  4.       REPRESENTATIONS AND WARRANTIES OF C2. C2 makes to the
Selling Shareholders the following representations and warranties, each of which
is true and correct on the date hereof and shall survive the closing of the
transactions provided for herein.

                  (a)      C2 IS A CORPORATION VALIDLY EXISTING AND IN ACTIVE
         STATUS UNDER THE LAWS OF THE STATE OF WISCONSIN.

                  (b)      C2 HAS ALL REQUISITE CORPORATE POWER AND AUTHORITY TO
         EXECUTE, DELIVER AND PERFORM THIS AGREEMENT, INCLUDING THE PURCHASE OF
         THE SUBJECT SHARES AND THE ISSUANCE OF SHARES OF C2 COMMON STOCK AS
         PROVIDED HEREIN.

                  (c)      C2 IS ACQUIRING THE SUBJECT SHARES FOR ITS OWN
         ACCOUNT FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR SALE IN
         CONNECTION WITH, THE DISTRIBUTION THEREOF WITHIN THE MEANING OF THE
         1933 ACT.

                  (d)      C2 HAS TAKEN ALL NECESSARY CORPORATE ACTION
         (INCLUDING, WITHOUT LIMITATION, THE APPROVAL OF ITS BOARD OF DIRECTORS)
         TO AUTHORIZE THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT
         AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREIN. THIS
         AGREEMENT HAS BEEN DULY AND VALIDLY EXECUTED AND DELIVERED BY C2 AND
         CONSTITUTES THE LEGAL, VALID AND BINDING OBLIGATION OF C2, ENFORCEABLE
         IN ACCORDANCE WITH ITS TERMS, EXCEPT AS SUCH ENFORCEMENT MAY BE LIMITED
         BY BANKRUPTCY, INSOLVENCY, MORATORIUM OR OTHER SIMILAR LAWS OR
         EQUITABLE PRINCIPLES PRESENTLY OR HEREAFTER IN EFFECT AFFECTING THE
         ENFORCEMENT OF CREDITORS' RIGHTS GENERALLY.

                  (e)      THE SHARES OF C2 COMMON STOCK ISSUABLE TO THE SELLING
         SHAREHOLDERS PURSUANT TO SECTION 2 OF THIS AGREEMENT, WHEN ISSUED IN
         ACCORDANCE WITH THE PROVISIONS HEREOF, WILL BE VALIDLY ISSUED, FULLY
         PAID, NONASSESSABLE (EXCEPT TO THE EXTENT PROVIDED IN SECTION
         180.0622(2)(b) OF THE WISCONSIN BUSINESS CORPORATION LAW) AND FREE OF
         PREEMPTIVE RIGHTS.

                  (f)      THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS
         AGREEMENT BY C2 AND THE CONSUMMATION BY IT OF THE TRANSACTIONS
         CONTEMPLATED HEREIN DO NOT REQUIRE THE CONSENT, WAIVER, APPROVAL,
         LICENSE OR AUTHORIZATION OF ANY THIRD PARTY OR PUBLIC AUTHORITY; DO NOT
         VIOLATE, WITH OR WITHOUT THE GIVING OF NOTICE AND/OR THE PASSAGE OF
         TIME, ANY PROVISION OF LAW APPLICABLE TO C2 OR C2'S AMENDED AND
         RESTATED ARTICLES OF INCORPORATION OR BYLAWS; AND DO NOT CONFLICT WITH
         OR RESULT IN A MATERIAL BREACH OR TERMINATION OF ANY MATERIAL PROVISION
         OF, OR CONSTITUTE A MATERIAL DEFAULT UNDER, OR RESULT IN THE CREATION
         OF ANY MATERIAL LIEN, CHARGE OR ENCUMBRANCE UPON ANY OF THE MATERIAL
         PROPERTY, ASSETS OR CAPITAL STOCK OF C2 PURSUANT TO ANY MORTGAGE, DEED
         OF TRUST, INDENTURE, OR OTHER AGREEMENT OR INSTRUMENT, OR ANY ORDER,
         JUDGMENT, DECREE, STATUTE, REGULATION OR ANY OTHER COMPARABLE
         RESTRICTION TO WHICH C2 IS A PARTY OR BY WHICH C2 OR ANY OF ITS ASSETS
         MAY BE BOUND.

                  5.       INDEMNIFICATION.

                5.1.       by selling shareholders. EACH SELLING SHAREHOLDER
         AGREES TO INDEMNIFY, DEFEND AND HOLD C2, AND ITS OFFICERS, EMPLOYEES,
         AFFILIATES, REPRESENTATIVES, AGENTS, SUCCESSORS AND PERMITTED ASSIGNS.
         FROM AND AGAINST ANY CLAIMS, LIABILITIES, ACTIONS, DAMAGES, COSTS OR
         EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) RESULTING FROM, OR

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         ARISING OUT OF THE INACCURACY OR BREACH OF ANY REPRESENTATION,
         WARRANTY, COVENANT OR AGREEMENT MADE BY SUCH SELLING SHAREHOLDER IN
         THIS AGREEMENT.

                5.2.       BY C2. C2 AGREES TO INDEMNIFY, DEFEND AND HOLD EACH
         SELLING SHAREHOLDER, AND HIS OR HER RESPECTIVE REPRESENTATIVES, AGENTS,
         SUCCESSORS AND PERMITTED ASSIGNS, HARMLESS FROM AND AGAINST ANY CLAIMS,
         LIABILITIES, ACTIONS, DAMAGES, COSTS OR EXPENSES (INCLUDING REASONABLE
         ATTORNEYS' FEES) RESULTING FROM, OR ARISING OUT OF THE INACCURACY OR
         BREACH OF ANY REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT MADE BY
         C2 IN THIS AGREEMENT.

                  6.       COORDINATION WITH EMPLOYEE STOCK AGREEMENT. Zero
Zone, C2, and Selling Shareholders Janice L. De Caluwe, John J. Duimstra, Steven
R. Gerds, Bruce R. Hierlmeier and David H. Morrow are parties to that certain
Employee Stock Agreement, dated as of March 12, 1999 (the "Employee Stock
Agreement"). Such parties covenant and agree that the rights and obligations
undertaken by each of them in the Employee Stock Agreement shall continue in
full force and effect, notwithstanding the sale of the Subject Shares to C2,
except that the Employee Stock Agreement is hereby amended to delete Articles I
through IX and Sections 11.1, 11.2, 11.9 and 11.15 in their entirety and they
shall be of no further force or effect. Such parties covenant and agree that
Article X and Sections 11.3, 11.4, 11.5, 11.6, 11.7. 11.8, 11.10, 11.11, 11.12,
11.13 and 11.14 of the Employee Stock Agreement shall continue in full force and
effect.

                  7.       COORDINATION WITH MANAGEMENT STOCK AGREEMENT. Zero
Zone, C2 and Selling Shareholder Jack Van Der Ploeg are parties to that certain
Management Stock Agreement, dated as of March 12, 1999 (the "Management Stock
Agreement"). Such parties covenant and agree that the rights and obligations
undertaken by each of them in the Management Stock Agreement shall continue in
full force and effect, notwithstanding the sale of the Subject Shares to C2,
except that the Management Stock Agreement shall be amended by deleting Articles
I through IX and Sections 11.1, 11.2, 11.9 and 11.15 in their entirety and they
shall be of no force or effect. Such parties covenant and agree that Article X
and Sections 11.3, 11.4, 11.5, 11.6, 11.7, 11.8, 11.10, 11.11, 11.12, 11.13 and
11.14 of the Management Stock Agreement shall continue in full force and effect.
Such parties understand and agree that any Zero Zone promissory note issued to
Selling Shareholder Jack Van Der Ploeg pursuant to Section 8.2 of the Management
Stock Agreement shall be unaffected by the amendments provided above, and that
any such promissory note shall be enforceable in accordance with its terms.

                  8.       MISCELLANEOUS.

                8.1.       THE RIGHTS OF A PARTY HEREUNDER MAY NOT BE ASSIGNED
         OR TRANSFERRED WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER PARTIES
         HERETO.

                8.2.       EACH SELLING SHAREHOLDER IS SEVERALLY, AND NOT
         JOINTLY, MAKING THE REPRESENTATIONS, WARRANTIES, COVENANTS AND
         AGREEMENTS CONTAINED IN THIS AGREEMENT, AND THE RIGHTS AND OBLIGATIONS
         OF EACH SELLING SHAREHOLDER UNDER THIS AGREEMENT SHALL BE ENFORCEABLE,
         AND SHALL CONTINUE IN FULL FORCE AND EFFECT, ACCORDING TO THEIR
         RESPECTIVE TERMS NOTWITHSTANDING THE INACCURACY OR BREACH OF ANY
         REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT BY ANY OTHER SELLING
         SHAREHOLDER UNDER THIS AGREEMENT.

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         8.3.     THIS AGREEMENT MAY NOT BE MODIFIED OR TERMINATED ORALLY, AND
     ANY PROPOSED AMENDMENT OR MODIFICATION SHALL BE IN WRITING AND SIGNED BY
     THE PARTIES HERETO. THIS DOCUMENT SETS FORTH THE ENTIRE AGREEMENT BETWEEN
     THE PARTIES HERETO WITH RESPECT TO THE EXCHANGE OF THE SUBJECT SHARES FOR
     SHARES OF C2 COMMON STOCK.

         8.4.     THIS AGREEMENT SHALL BE CONSTRUED AND INTERPRETED IN
     ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF WISCONSIN, EXCLUDING ANY
     CHOICE OF LAW RULES.

         8.5.     THIS AGREEMENT MAY BE EXECUTED IN COUNTERPARTS, EACH OF WHICH
     SHALL BE DEEMED AN ORIGINAL, BUT ALL OF WHICH WHEN TAKEN TOGETHER SHALL
     CONSTITUTE BUT ONE AND THE SAME INSTRUMENT.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
C2, INC. ("C2")                                    ZERO ZONE, INC. ("ZERO ZONE")

By:________________________________       By:___________________________________
Title:_____________________________       Title:________________________________

SELLING SHAREHOLDERS:

___________________________________       ______________________________________
Jack Van Der Ploeg                        Steven R. Gerds

___________________________________       ______________________________________
Janice L. De Caluwe                       Bruce R. Hierlmeier

___________________________________       ______________________________________
John J. Duimstra                          David H. Morrow

                                       7<PAGE>

                                                                    EXHIBIT 10.1

                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT

         Agreement dated as of March 5, 2003, between Computer Network
Technology Corporation, a Minnesota corporation, having a place of business at
6000 Nathan Lane North, Plymouth, MN 55442 (the "Company"), and Thomas G. Hudson
(the "Executive").

                                   WITNESSETH

         WHEREAS, the Executive has assumed duties of a responsible nature to
the benefit of the Company and to the satisfaction of the Board of Directors
(the "Board") of the Company and its Compensation Committee;

         WHEREAS, the Board and its Compensation Committee believes it to be in
the best interests of the Company to enter into this Agreement to assure
Executive's continuing services to the Company including, but not limited to,
under circumstances in which there is a Change of Control (as defined below);

         WHEREAS, the Board and its Compensation Committee believes it is
imperative to diminish the inevitable distraction of the Executive by virtue of
the personal uncertainties and risks created by a pending or threatened Change
of Control and to encourage the Executive's full attention and dedication to the
Company currently and in the event of any threatened or pending Change of
Control, and to provide the Executive with compensation and benefits
arrangements upon a Change of Control which ensure that the compensation and
benefits expectations of the Executive will be satisfied and which are
competitive with those of other corporations; and

         WHEREAS, in order to accomplish all the above objectives, the Board and
its Compensation Committee has authorized the Company to enter into this
Agreement;

         NOW, THEREFORE, in consideration of the mutual promises herein
contained, the Company and the Executive hereby agree as follows:

         1.       CERTAIN DEFINITIONS.

                  (a)      The "Effective Date" shall mean the date hereof.

                  (b)      The "Change of Control Date" shall mean the first
         date during the Employment Period (as defined in Section 1(d)) on which
         a Change of Control (as defined in Section 2) occurs. Anything in this
         Agreement to the contrary notwithstanding, if a Change of Control
         occurs and if the Executive's employment with the Company is terminated
         or the Executive ceases to be Chief Executive Officer ("CEO") of the
         Company prior to the date on which the Change of Control occurs, and if
         it is reasonably demonstrated by the Executive that such termination of
         employment or cessation of status as CEO (i) was at the request of a
         third party who has taken steps reasonably calculated to effect the
         Change of Control or (ii) otherwise arose in connection with or
         anticipation of the Change of Control, then for all purposes of this
         Agreement the

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         "Change of Control Date" shall mean the date immediately prior to the
         date of such termination of employment or cessation of status as CEO.

                  (c)      "Compensation Committee" shall mean the Compensation
         Committee of the Board of Directors.

                  (d)      The "Employment Period" shall mean the period
         commencing on the Effective Date and ending on the earlier to occur of
         (i) the third anniversary of such date or (ii) the first day of the
         month next following the Executive's 65th birthday ("Normal Retirement
         Date"); provided, however, that on each anniversary of the Effective
         Date, and on each successive annual anniversary of such date thereafter
         (such date and each annual anniversary thereof shall be hereinafter
         referred to as the "Renewal Date"), the Employment Period shall be
         automatically extended so as to terminate on the earlier of (x) three
         years from such Renewal Date or (y) the Executive's Normal Retirement
         Date, unless at least 90 days prior to the Renewal Date the Company
         shall give notice to the Executive that the Employment Period shall not
         be so extended; and provided, further, that upon the occurrence of a
         Change of Control Date, the Employment Period shall automatically be
         extended so as to terminate on the earlier to occur of (1) the third
         anniversary of such date or (2) the Executive's Normal Retirement Date.

         2.       CHANGE OF CONTROL. For the purpose of this Agreement, a
"Change of Control" or "Change in Control" shall mean:

                  (a)      The acquisition by an individual, entity or group
         (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
         Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial
         ownership (within the meaning of Rule 13d-3 promulgated under the
         Exchange Act) of 40% or more of either (i) the then outstanding shares
         of common stock of Company (the "Outstanding Company Common Stock") or
         (ii) the combined voting power of the then outstanding voting
         securities of the Company entitled to vote generally in the election of
         directors (the "Outstanding Company Voting Securities"); provided,
         however, that the following acquisitions shall not constitute a Change
         of Control: (w) any acquisition directly from the Company, (x) any
         acquisition by the Company or any of its subsidiaries, (y) any
         acquisition by any employee benefit plan (or related trust) sponsored
         or maintained by the Company or any of its subsidiaries or (z) any
         acquisition by any corporation with respect to which, following such
         acquisition, more than 60% of, respectively, the then outstanding
         shares of common stock of such corporation and the combined voting
         power of the then outstanding voting securities of such corporation
         entitled to vote generally in the election of directors, is then
         beneficially owned, directly or indirectly, by all or substantially all
         of the individuals and entities who were beneficial owners,
         respectively of the Outstanding Company Common Stock and Outstanding
         Company Voting Securities in substantially the same proportions as
         their ownership, immediately prior to such acquisition, of the
         Outstanding Company Common Stock and Outstanding Company Voting
         Securities, as the case may be; or

                                       2

<PAGE>

                  (b)      Individuals who, as of the date hereof, constitute
         the Company's Board of Directors (the "Incumbent Board") cease for any
         reason to constitute at least a majority of the Company Board of
         Directors; provided, however, that any individual becoming a director
         subsequent to the date hereof whose election, or nomination for
         election by the Company's shareholders, was approved by a vote of at
         least a majority of the directors then comprising the Incumbent Board
         shall be considered as though such individual were a member of the
         Incumbent Board, but excluding, for this purpose, any such individual
         whose initial assumption of office occurs as a result of either an
         actual or threatened election contest (as such terms are used in Rule
         14a-11 of Regulation 14A promulgated under the Exchange Act) or other
         actual or threatened solicitation of proxies or consents; or

                  (c)      Completion by the Company of a reorganization, merger
         or consolidation, in each case, with respect to which all or
         substantially all of the individuals and entities who were the
         beneficial owners, respectively, of the Outstanding Company Common
         Stock and Outstanding Company Voting Securities immediately prior to
         such reorganization, merger or consolidation, beneficially own,
         directly or indirectly, less than 60% of, respectively, of the then
         outstanding shares of common stock and the combined voting power of the
         then outstanding voting securities entitled to vote generally in the
         election of directors, as the case may be, of the corporation resulting
         from such reorganization, merger or consolidation in substantially the
         same proportions as their ownership, immediately prior to such
         reorganization, merger or consolidation of the Outstanding Company
         Common Stock and the Outstanding Company Voting Securities, as the case
         may be; or

                  (d)      Completion by the Company of (i) a complete
         liquidation or dissolution of Company or (ii) the sale or other
         disposition of all or substantially all of the assets of the Company,
         other than to a corporation, with respect to which following such sale
         or other disposition, more than 60% of, respectively, the then
         outstanding shares of common stock of such corporation and the combined
         voting power of the then outstanding voting securities of such
         corporation entitled to vote generally in the election of directors is
         then beneficially owned, directly or indirectly, by all or
         substantially all of the individuals and entities who were the
         beneficial owners, respectively, of the Outstanding Company Common
         Stock and Outstanding Company Voting Securities immediately prior to
         such sale or other disposition in substantially the same proportion as
         their ownership, immediately prior to such sale or other disposition,
         of the Outstanding Company Common Stock and Outstanding Company Voting
         Securities, as the case may be.

         3.       EMPLOYMENT PERIOD. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company, during the Employment Period under the terms and conditions
provided herein.

                                       3

<PAGE>

         4.       TERMS OF EMPLOYMENT.

                  (a)      Position and Duties.

                           (i)      During the Employment Period and prior to a
                  Change of Control Date, (A) if the Board determines that the
                  Executive has been performing his duties in accordance with
                  Section 4(a)(iii) hereof, the Board shall re-appoint the
                  Executive to the position of CEO with substantially similar
                  duties to those performed by the Executive on the Effective
                  Date, and (B) the Executive's services shall be performed at
                  the Executive's location on the Effective Date, the Company's
                  headquarters, or a location where a substantial activity for
                  which the Executive has responsibility is located.

                           (ii)     During the Employment Period and on and
                  following a Change of Control Date, (A) the Executive's
                  position (including status, offices, titles and reporting
                  relationships), authority, duties and responsibilities shall
                  be at least commensurate in all material respects with the
                  most significant of those held, exercised and assigned at any
                  time during the 180-day period immediately preceding the
                  Change of Control Date and (B) the Executive's services shall
                  be performed at the location where the Executive was employed
                  immediately preceding the Change of Control Date or any office
                  or location less than fifty (50) miles from such location.

                           (iii)    During the Employment Period, and excluding
                  any periods of vacation and sick leave to which the Executive
                  is entitled, the Executive agrees to devote reasonable
                  attention and time during normal business hours to the
                  business and affairs the Company and, to the extent necessary
                  to discharge the responsibilities assigned to the Executive
                  hereunder, to use the Executive's reasonable best efforts to
                  perform faithfully and efficiently such responsibilities.
                  During the Employment Period it shall not be a violation of
                  this Agreement for the Executive to (A) serve on corporate,
                  civic or charitable boards or committees, (B) deliver
                  lectures, fulfill speaking engagements or teach at educational
                  institutions and (C) manage personal investments, so long as
                  such activities do not significantly interfere with the
                  performance of the Executive's responsibilities as an employee
                  of the Company in accordance with this Agreement. It is also
                  expressly understood and agreed that to the extent that such
                  activities have been conducted by the Executive prior to the
                  Effective Date, the continued conduct of such activities (or
                  the conduct of activities similar in nature and scope thereto)
                  subsequent to the Effective Date shall not thereafter be
                  deemed to interfere with the performance of the Executive's
                  responsibilities to the Company.

                  (b)      Compensation.

                           (i)      Base Salary. During the Employment Period,
                  the Company shall pay the Executive a base salary (x) through
                  April 30, 2003, at an annual rate of

                                       4

<PAGE>

                  $350,000, and (y) from and after May 1, 2003, at an annual
                  rate of $367,500 and during each succeeding 12 month period
                  ending April 30, at a rate not less than his base salary in
                  effect on the last day of the preceding 12-month period ending
                  April 30. During the Employment Period, base salary shall be
                  reviewed at least annually and shall be adjusted as agreed
                  between the Compensation Committee of the Board of Directors
                  and Executive (in the event no agreement is reached, Base
                  Salary shall remain unchanged). Any increase in base salary
                  shall not serve to limit or reduce any other obligation to the
                  Executive under this Agreement. Base Salary shall not be
                  reduced after any such increase except in connection with
                  Company wide reductions applied to other senior executives of
                  the Company. Base salary under Section 4(b)(i) shall
                  hereinafter be referred to as the "Base Salary."

                           (ii)     Additional Compensation. In addition to Base
                  Salary, the Executive shall be participate in the Company's
                  Success Share Bonus Arrangement under terms and conditions
                  determined each year by the Compensation Committee of the
                  Board of Directors of the Company (which, currently is a 65%
                  incentive opportunity and beginning May 1, 2003, shall be a
                  100% incentive opportunity for the applicable year).

                           (iii)    Fringe Benefits. While Executive is employed
                  by the Company under this Agreement, the Company shall provide
                  Executive such insurance and other benefits as are provided
                  from time to time by the Company to its other executives, in
                  accordance with the Company's benefits practices then in
                  effect.

         5.       TERMINATION.

                  (a)      Death or Disability. This Agreement shall terminate
         automatically upon the Executive's death. If the Company determines in
         good faith that the Disability of the Executive has occurred (pursuant
         to the definition of "Disability" set forth below), it may give to the
         Executive written notice of its intention to terminate the Executive's
         employment hereunder. In such event, the Executive's employment with
         the Company shall terminate effective on the 90th day after receipt by
         the Executive of such notice given at any time after a period of six
         consecutive months of Disability and while such Disability is
         continuing (the "Disability Effective Date"), provided that, within the
         90 days after such receipt, the Executive shall not have returned to
         full-time performance of the Executive's duties. For purposes of this
         Agreement, "Disability" means disability which, at least six months
         after its commencement, is determined to be total and permanent by a
         physician selected by the Company or its insurers and acceptable to the
         Executive or the Executive's legal representative (such agreement as to
         acceptability not to be withheld unreasonably). During such six month
         period and until the Disability Effective Date, Executive shall be
         entitled to all compensation provided for under Section 4 hereof.

                                       5

<PAGE>

                  (b)      Cause. During the Employment Period, the Company may
         terminate the Executive's employment with the Company for "Cause." For
         purposes of this Agreement, "Cause" means (i) an act or acts of
         personal dishonesty taken by the Executive and intended to result in
         substantial personal enrichment of the Executive at the expense of the
         Company, (ii) repeated violations by the Executive of the Executive's
         obligations under Section 4(a) of this Agreement which are demonstrably
         willful and deliberate on the Executive's part and which are not
         remedied in a reasonable period of time after receipt of written notice
         from the Company or (iii) the conviction of the Executive of a felony.

                  (c)      Good Reason. During the Employment Period, the
         Executive's employment hereunder may be terminated by the Executive for
         Good Reason. For purposes of this Agreement, "Good Reason" means:

                           (i)      the assignment to the Executive of any
                  duties inconsistent in any respect with Executive's position
                  (including status, offices, titles and reporting
                  relationships), authority, duties or responsibilities as
                  contemplated by Section 4(a)(i) or (ii) of this Agreement
                  (including, without limitation, failure to nominate the
                  Executive to the Board or Executive ceasing to be the Chief
                  Executive Officer of the Company), or any other action by the
                  Company which results in a diminution in such position,
                  authority, duties or responsibilities;

                           (ii)     the failure by the Company to appoint the
                  Executive to the position of CEO or any other action by the
                  Company which results in the diminution of the Executive's
                  position, authority, duties, or responsibilities;

                           (iii)    (x) any failure by the Company to comply
                  with any of the provisions of Section 4(b) of this Agreement
                  or (y) after the Change of Control Date, any failure of the
                  Company to pay Base Salary in accordance with Section 4(b)(i)
                  or failure to pay Additional Compensation on a basis
                  comparable (with respect to targets and incentive opportunity)
                  to that applicable to the Executive with respect to the year
                  immediately preceding the year in which the Change in Control
                  occurs;

                           (iv)     the Company requiring the Executive to be
                  based at any office or location other than that described in
                  Sections 4(a)(i)(B) or 4(a)(ii)(B) hereof, except for travel
                  reasonably required in the performance of the Executive's
                  responsibilities;

                           (v)      any purported termination by the Company of
                  the Executive's employment otherwise than as expressly
                  permitted by this Agreement; or

                           (vi)     any failure by the Company to comply with
                  and satisfy Section 12(c) of this Agreement.

                                       6

<PAGE>

                  Prior to giving a Notice of Termination for Good Reason,
         Executive shall notify the Company within 30 days of action the Company
         has taken in such 30 day period, together with any other similar
         actions within the prior six months, which Executive believes
         constitutes Good Reason. The Company shall have 30 days to cure such
         circumstances, and if not cured to the reasonable satisfaction of the
         Executive, then Executive may give such Notice of Termination for Good
         Reason.

                  (d)      Notice of Termination. Any termination of the
         Executive's employment hereunder by the Company for Cause or by the
         Executive for Good Reason shall be communicated by Notice of
         Termination to such other party hereto given in accordance with Section
         14(b) of this Agreement. For purposes of this Agreement, a "Notice of
         Termination" means a written notice which (i) indicates the specific
         termination provision in this Agreement relied upon, (ii) sets forth in
         reasonable detail the facts and circumstances claimed to provide a
         basis for termination of the Executive's employment under the provision
         so indicated and (iii) if the Date of Termination (as defined below) is
         other than the date of receipt of such notice, specifies the
         termination date (which date shall be not more than fifteen (15) days
         after the giving of such notice). Further, a Notice of Termination for
         Cause is required to include a copy of a resolution duly adopted by the
         affirmative vote of not less than three-quarters (3/4) of the entire
         membership of the Board (excluding the Executive) at a meeting of the
         Board which was called and held for the purpose of considering such
         termination (after reasonable notice to the Executive and an
         opportunity for the Executive, together with the Executive's counsel,
         to be heard before the Board) finding that, in the good faith opinion
         of the Board, the Executive was guilty of conduct set forth in the
         definition of Cause herein, and specifying the particulars thereof in
         detail.

                  (e)      Date of Termination. "Date of Termination" means the
         date of receipt of the Notice of Termination or any later date
         specified therein, as the case may be; provided, however, that (i) if
         the Executive's employment hereunder is terminated by the Company other
         than for Cause or Disability, the Date of Termination shall be the date
         on which the Company notifies the Executive of such termination and
         (ii) if the Executive's employment hereunder is terminated by reason of
         death or Disability, the Date of Termination shall be the date of death
         of the Executive or the Disability Effective Date, as the case may be.

         6.       OBLIGATIONS OF THE COMPANY UPON TERMINATION.

                  (a)      Death. If the Executive's employment hereunder is
         terminated by reason of the Executive's death, this Agreement shall
         terminate without further obligations to the Executive's legal
         representatives under this Agreement, other than those obligations
         accrued or earned and vested (if applicable) by the Executive as of the
         Date of Termination, including, for this purpose (i) the Executive's
         full Base Salary through the Date of Termination at the rate in effect
         on the Date of Termination, disregarding any reduction in Base Salary
         in violation of this Agreement (the "Highest Base Salary") and (ii) any
         compensation previously deferred by the Executive (together with any
         accrued

                                       7

<PAGE>

         interest thereon) and not yet paid by the Company in accordance with
         the applicable plan (to the extent vested) and any accrued vacation pay
         not yet paid by the Company (such amounts specified in clauses (i) and
         (ii) are hereinafter referred to as "Accrued Obligations"). All such
         Accrued Obligations shall be paid to the Executive's estate or
         beneficiary, as applicable, in a lump sum in cash within 30 days of the
         Date of Termination. Anything in this Agreement to the contrary
         notwithstanding, the Executive's family shall be entitled to receive
         benefits at least equal to the most favorable benefits provided by the
         Company and any of its subsidiaries to surviving families of employees
         of the Company and such subsidiaries under such plans, programs,
         practices and policies relating to family death benefits, if any, in
         accordance with the most favorable plans, programs, practices and
         policies of the Company and its subsidiaries in effect on the date of
         the Executive's death with respect to other key employees of the
         Company and its subsidiaries and their families.

                  (b)      Disability. If the Executive's employment is
         terminated by reason of the Executive's Disability, this Agreement
         shall terminate without further obligations to the Executive, other
         than those obligations accrued or earned and vested (if applicable) by
         the Executive as of the Date of Termination, including for this
         purpose, all Accrued Obligations. All such Accrued Obligations shall be
         paid to the Executive in a lump sum in cash within 30 days of the Date
         of Termination. Anything in this Agreement to the contrary
         notwithstanding, the Executive shall be entitled after the Disability
         Effective Date to receive disability and other benefits at least equal
         to the most favorable of those provided by the Company and its
         subsidiaries to disabled employees and/or their families in accordance
         with such plans, programs, practices and policies relating to
         disability, if any, in accordance with the most favorable plans,
         programs, practices and policies of the Company and its subsidiaries in
         effect on or after the Effective Date or, if more favorable to the
         Executive and /or the Executive's family, as in effect at any time
         thereafter with respect to other key employees of the Company and its
         subsidiaries and their families.

                  (c)      Cause; Other than for Good Reason. If the Executive's
         employment shall be terminated for Cause, this Agreement shall
         terminate without further obligations to the Executive other than those
         obligations accrued or earned and vested (if applicable) by the
         Executive as of the Date of Termination, including for this purpose all
         Accrued Obligations. If the Executive terminates employment other than
         for Good Reason, this Agreement shall terminate without further
         obligations to the Executive, other than those obligations accrued or
         earned and vested (if applicable) by the Executive through the Date of
         Termination, including for this purpose, all Accrued Obligations. All
         such Accrued Obligations shall be paid to the Executive in a lump sum
         in cash within 30 days of the Date of Termination.

                  (d)      Good Reason; Other Than for Cause, Disability or
                           Death.

                           (1)      If, during the Employment Period and prior
                  to a Change of Control the Company shall terminate the
                  Executive's employment hereunder other than

                                       8

<PAGE>

                  for Cause, Disability, or death or if the Executive shall
                  terminate his employment hereunder for Good Reason:

                                    (i)      the Company shall pay to the
                           Executive in a lump sum in cash within thirty (30)
                           days (or such longer period necessary for the release
                           referred to in Section 10(f) to become irrevocable)
                           after the Date of Termination the aggregate of the
                           following amounts:

                  A. to the extent not theretofore paid, the Executive's Highest
                           Base Salary through the Date of Termination; and

                                             B.     subject to execution of the
                                    release referred to in Section 10(f) and the
                                    lapse of any period necessary for such
                                    release to become irrevocable, an amount
                                    equal to 200% of the Highest Base Salary and
                                    200% of Additional Compensation that would
                                    be paid if the Company met its plan for the
                                    fiscal year in which the termination
                                    occurred; and

                                             C.     (I) in the case of
                                    compensation previously deferred by the
                                    Executive, all amounts previously deferred
                                    (together with any accrued interest thereon)
                                    in accordance with the applicable plan and
                                    not yet paid by the Company; and all such
                                    deferred amounts shall become fully vested
                                    as of the Date of Termination, and (II) any
                                    accrued vacation pay not yet paid by the
                                    Company; and

                                             D.     the Company shall, for a
                                    period of two years continue benefits to the
                                    Executive and/or the Executive's family at
                                    least equal to those which would have been
                                    provided to them in accordance with the
                                    plans, programs, practices and policies
                                    described in Section 4(b)(iii) including
                                    health insurance and life insurance, in
                                    accordance with the most favorable plans,
                                    practices, programs or policies of the
                                    Company and its subsidiaries in effect on
                                    the date of termination; provided that the
                                    Company shall not be required to provide a
                                    benefit or benefits under this Section to
                                    the extent Executive is reemployed during
                                    such two year period and such subsequent
                                    employer provides a comparable benefit or
                                    benefits. For purposes of eligibility for
                                    retiree benefits pursuant to such plans,
                                    practices, programs and policies, the
                                    Executive shall be considered to have
                                    remained employed by the Company for the
                                    duration of such two year period and to have
                                    retired on the last day of such period.

                                             E.     in addition to the
                                    foregoing, one hundred percent (100%) of
                                    Executive's unvested options shall
                                    immediately vest and

                                       9

<PAGE>

                                    shall remain exercisable for the same period
                                    as an option held by a retiring section 16
                                    officer or Board member.

                                             F.     the Company shall provide
                                    the Executive with tax planning and
                                    financial counseling services for a period
                                    of two years following the Date of
                                    Termination on the same basis as such
                                    services were provided or made available to
                                    him immediately prior to the Date of
                                    Termination.

                           (2)      If, during the Employment Period and on and
                  after a Change of Control Date the Company shall terminate the
                  Executive's employment hereunder other than for Cause,
                  Disability, or death or if the Executive shall terminate his
                  employment hereunder for Good Reason:

                                    (i)      the Company shall pay to the
                           Executive in a lump sum in cash within thirty (30)
                           (or such longer period necessary for the release
                           referred to in Section 10(f) to become irrevocable)
                           days after the Date of Termination the aggregate of
                           the following amounts:

                  A. to the extent not theretofore paid, the Executive's Highest
                           Base Salary through the Date of Termination; and

                                             B.     subject to execution of the
                                    release referred to in Section 10(f) and the
                                    lapse of any period necessary for such
                                    release to become irrevocable, an amount
                                    equal to 300% of the Highest Base Salary and
                                    300% of Additional Compensation that would
                                    be paid if the Company met its plan for the
                                    fiscal year in which the termination
                                    occurred; and

                                             C.     (I) in the case of
                                    compensation previously deferred by the
                                    Executive, all amounts previously deferred
                                    (together with any accrued interest thereon)
                                    in accordance with the applicable plan and
                                    not yet paid by the Company; and all such
                                    deferred amounts shall become fully vested
                                    as of the Date of Termination, and (II) any
                                    accrued vacation pay not yet paid by the
                                    Company; and

                                             D.     the Company shall, for a
                                    period of three years continue benefits to
                                    the Executive and/or the Executive's family
                                    at least equal to those which would have
                                    been provided to them in accordance with the
                                    plans, programs, practices and policies
                                    described in Section 4(b)(iii) including
                                    health insurance and life insurance, in
                                    accordance with the most favorable plans,
                                    practices, programs or policies of the
                                    Company and its subsidiaries in effect on
                                    the date of termination; provided that the
                                    Company shall not be required to provide a
                                    benefit or benefits under this Section to
                                    the

                                       10

<PAGE>

                                    extent Executive is reemployed during such
                                    three year period and such subsequent
                                    employer provides a comparable benefit or
                                    benefits. For purposes of eligibility for
                                    retiree benefits pursuant to such plans,
                                    practices, programs and policies, the
                                    Executive shall be considered to have
                                    remained employed by the Company for the
                                    duration of such three year period and to
                                    have retired on the last day of such period.

                                             E.     in addition to the
                                    foregoing, all of Executive's unvested
                                    options shall immediately vest if not
                                    previously vested pursuant to Section 6(e)
                                    hereof and shall remain exercisable for the
                                    same period as an option held by a retiring
                                    section 16 officer or Board member.

                                             F.     the Company shall provide
                                    the Executive with tax planning and
                                    financial counseling services for a period
                                    of three years following the Date of
                                    Termination on the same basis as such
                                    services were provided or made available to
                                    him immediately prior to the Date of
                                    Termination or the Change of Control Date,
                                    whichever is more favorable.

                  (e)      All of Executive's unvested options shall immediately
         vest upon completion of a Change of Control, if at the time of
         completion such options are not substituted or continued by the
         acquiror, regardless of whether Executive's employment is terminated.

         7.       NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plans, programs, policies or practices,
provided by Company, the Company or any of their respective subsidiaries and for
which the Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any stock option, restricted
stock or other agreements with Company, the Company or any of their respective
subsidiaries. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy, practice or program of
Company, the Company or any of their respective subsidiaries at or subsequent to
the Date of Termination shall be payable in accordance with such plan, policy
practice or program.

         8.       FULL SETTLEMENT. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement. The Company
agrees to pay, to the full extent permitted by law, all legal fees and expenses,
as incurred by the Company, the Executive and others, which the Executive may
reasonably incur as a result of any contest (regardless of the

                                       11

<PAGE>

outcome thereof) by the Company or others of the validity or enforceability of,
or liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by the Executive about
the amount of any payment pursuant to Section 9 of this Agreement), plus in each
case interest at the applicable Federal rate provided for in Section 7872(f)(2)
of the Internal Revenue Code of 1986, as amended (the "Code").

         9.       CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.

                  (a)      Anything in this Agreement to the contrary
         notwithstanding, in the event it shall be determined that any payment
         or distribution by the Company, any individual or entity whose actions
         result in a Change of Control, or their respective subsidiaries or
         affiliates to or for the benefit of the Executive (whether paid or
         payable or distributed or distributable pursuant to the terms of this
         Agreement or otherwise, but determined without regard to any additional
         payments required under this Section 9, including, but not limited to,
         any amounts in respect of (i) options to acquire shares of Company
         common stock and (ii) restricted shares of Company common stock (a
         "Payment"), would be subject to the excise tax imposed by Section 4999
         of the Code or any interest or penalties with respect to such excise
         tax (such excise tax, together with any such interest and penalties,
         are hereinafter collectively referred to as the "Excise Tax"), then the
         Executive shall be entitled to receive an additional payment (a
         "Gross-Up Payment") from the Company in an amount such that after
         payment by the Executive of all taxes (including any interest or
         penalties imposed with respect to such taxes), including, without
         limitation, any income taxes, employment taxes (and any interest and
         penalties imposed with respect thereto) and Excise Tax, imposed upon
         the Gross-Up Payment, the Executive retains, after taking into account
         the phase out of itemized deductions and personal exemptions
         attributable to such Gross-Up Payment, an amount of the Gross-Up
         Payment equal to the Excise Tax imposed upon Payments.

                  (b)      Subject to the provisions of Section 9(c), all
         determinations required to be made under this Section 9, including
         whether a Gross-Up Payment is required and the amount of such Gross-Up
         Payment, shall be made by the firm of independent public accountants
         selected by the Company (which firm shall not audit the Company's
         financial statements) (the "Accounting Firm") which shall provide
         detailed supporting calculations both to the Company and the Executive
         within 30 business days of the Date of Termination, or such earlier
         time as is requested by the Company. In the event that the Accounting
         Firm is serving as accountant or auditor for the individual, entity or
         company effecting the Change of Control, the Executive shall appoint
         another nationally recognized accounting firm to make the
         determinations required hereunder (which accounting firm shall then be
         referred to as the Accounting Firm hereunder). All fees and expenses of
         the Accounting Firm shall be borne solely by the Company. Any Gross- Up
         Payment, as determined pursuant to this Section 9, shall be paid to the
         Executive upon the receipt of the Accounting Firm's determination. If
         the Accounting Firm determines that no Excise Tax is payable by the
         Executive, it shall furnish the Executive with a written opinion that
         failure to report the Excise Tax on the Executive's applicable federal
         income tax return would not result in the imposition of a negligence or
         a similar penalty. Any

                                       12

<PAGE>

         determination by the Accounting Firm shall be binding upon the Company
         and the Executive. As a result of the uncertainty in the application of
         Section 4999 of the Code at the time of the initial determination by
         the Accounting Firm hereunder, it is possible that Gross-up Payments
         which will not have been made by the Company should have been made
         ("Underpayment"), consistent with the calculations required to be made
         hereunder. In the event that the Company exhausts its remedies pursuant
         to Section 9(c) and the Executive thereafter is required to make a
         payment of any Excise Tax, the Accounting Firm shall determine the
         amount of the Underpayment that has occurred and any such Underpayment
         shall be promptly paid by the Company to or for the benefit of the
         Executive.

                  (c)      The Executive shall notify the Company in writing of
         any claim by the Internal Revenue Service that, if successful, would
         require the payment by the Company of the Gross- Up Payment. Such
         notification shall be given as soon as practicable but no later than
         ten business days after the Executive knows of such claim and shall
         apprise the Company of the nature of such claim and the date on which
         such claim is requested to be paid. The Executive shall not pay such
         claim prior to the expiration of the thirty-day period following the
         date on which it gives such notice to the Company (or such shorter
         period ending on the date that any payment of taxes with respect to
         such claim is due). If the Company notifies the Executive in writing
         prior to the expiration of such period that it desires to contest such
         claim, the Executive shall:

                           (i)      give the Company any information reasonably
                  requested by the Company relating to such claim,

                           (ii)     take such action in connection with
                  contesting such claim as the Company shall reasonably request
                  in writing from time to time, including, without limitation,
                  accepting legal representation with respect to such claim by
                  an attorney reasonably selected by the Company,

                           (iii)    cooperate with the Company in good faith in
                  order to effectively contest such claim,

                           (iv)     permit the Company to participate in any
                  proceedings relating to such claim; provided, however, that
                  the Company shall bear and pay directly all costs and expenses
                  (including additional interest and penalties) incurred in
                  connection with such contest and shall indemnify and hold the
                  Executive harmless, on an after-tax basis, for any Excise Tax
                  or income tax, including interest and penalties with respect
                  thereto, imposed as a result of such representation and
                  payment of costs and expenses.

                           Without limitation on the foregoing provisions of
                  this Section 9(c), the Company shall control all proceedings
                  taken in connection with such contest and, at its sole option,
                  may pursue or forgo any and all administrative appeals,
                  proceedings, hearings and conferences with the taxing
                  authority in respect of such

                                       13

<PAGE>

                  claim and may, at its sole option, pay such claim and direct
                  the Executive to sue for a refund or contest the claim in any
                  permissible manner, and the Executive agrees to prosecute such
                  contest to a determination before any administrative tribunal,
                  in a court of initial jurisdiction and in one or more
                  appellate courts, as the Company shall determine; provided,
                  however, that if the Company pays such claim and directs the
                  Executive to sue for a refund, the Company shall indemnify and
                  hold the Executive harmless, on an after-tax basis, from any
                  Excise Tax or income tax, including interest or penalties with
                  respect thereto, imposed with respect to such payment; and
                  further provided that any extension of the statute of
                  limitations relating to payment of taxes for the taxable year
                  of the Executive with respect to which such contested amount
                  is claimed to be due is limited solely to such contested
                  amount. Furthermore, the Company's control of the contest
                  shall be limited to issues with respect to which a Gross-Up
                  Payment would be payable hereunder and the Executive shall be
                  entitled to settle or contest, as the case may be, any other
                  issue raised by the Internal Revenue Service or any other
                  taxing authority.

                  (d)      If, after the receipt by the Executive of an amount
         paid by the Company pursuant to Section 9(c), the Executive becomes
         entitled to receive any refund with respect to such claim, the
         Executive shall (subject to the Company's complying with the
         requirements of Section 9(c)) promptly pay to the Company the amount of
         such refund (together with any interest paid or credited thereon after
         taxes applicable thereto). If, after the receipt by the Executive of an
         amount paid by the Company pursuant to Section 9(c), a determination is
         made that the Executive shall not be entitled to any refund with
         respect to such claim, and the Company does not notify the Executive in
         writing of its intent to contest such denial of refund prior to the
         expiration of thirty days after such determination, then Executive
         shall be under no obligation to repay such amount and the amount of
         such payment shall offset, to the extent thereof, the amount of
         Gross-Up Payment required to be paid.

         10.      CERTAIN COVENANTS OF EXECUTIVE.

                  (a)      As used in Section 10 and Section 11, the Company
         shall include the Company and each corporation, partnership, or other
         entity that controls the Company, is controlled by the Company, or is
         under common control with the Company (in each case "control" meaning
         the direct or indirect ownership of 50% or more of all outstanding
         equity interests).

                  (b)      While Executive is employed by the Company and,
         following the termination of the Executive 's employment for any
         reason, until the first anniversary of the Date of Termination,
         Executive will not, directly or indirectly:

                           (i)      employ or attempt to employ any director,
                  officer, or employee of the Company, or otherwise interfere
                  with or disrupt any employment relationship (contractual or
                  other) of the Company;

                                       14

<PAGE>

                           (ii)     solicit, request, advise, or induce any
                  present or potential customer, supplier, or other business
                  contact of the Company to cancel, curtail, or otherwise change
                  its relationship with the Company; or

                           (iii)    publicly criticize or disparage in any
                  manner or by any means the Company or its management,
                  policies, operations, products, services, practices, or
                  personnel.

                  (c)      Executive hereby acknowledges and agrees that all
         non-public information and data of the Company, including without
         limitation that related to product and service formulation, customers,
         pricing, sales, and financial results (collectively, "Trade Secrets")
         are of substantial value to the Company, provide it with a substantial
         competitive advantage in its business, and are and have been maintained
         in the strictest confidence as trade secrets. Except as permitted by
         the Board, or as appropriate in the performance of Executive's duties
         in the normal course of business, Executive shall not at any time
         disclose or make accessible to anyone any Trade Secrets.

                  (d)      Executive acknowledges and agrees that this Section
         10 and each provision hereof are reasonable and necessary to ensure
         that the Company receives the expected benefits of this Agreement and
         that violation of this Section 10 will harm the Company to such an
         extent that monetary damages alone would be an inadequate remedy.
         Consequently, in the event of any violation or threatened violation by
         Executive of any provision of this Section 10, the Company shall be
         entitled to an injunction (in addition to all other remedies it may
         have) restraining Executive from committing or continuing such
         violation. If any provision or application of this Section 10 is held
         unlawful or unenforceable in any respect, this Section 10 shall be
         revised or applied in a manner that renders it lawful and enforceable
         to the fullest extent possible.

                  (e)      Upon termination of Executive's employment for any
         reason, Executive covenants to resign from the Board effective no later
         than the Termination Date.

                  (f)      Prior to the payment of any amount pursuant to
         Sections 6(d)(1)(i)(B), 6(d)(2)(i)(B) and Section 9, Executive shall
         have executed the release in the form set forth as Exhibit A (with the
         blanks appropriately filled in) and the release shall have become
         irrevocable.

         11.      CREATIONS.

                  (a)      Executive hereby transfers and assigns to the Company
         (or its designee) all right, title, and interest of Executive in and to
         every idea, concept, invention, and improvement (whether patented or
         not) conceived by Executive and all copyrighted or copyrightable matter
         created by Executive that relates to the Company's business
         (collectively, "Creations"). Executive shall communicate promptly and
         disclose to the Company, in such form as the Company may request, all
         information, details, and data

                                       15

<PAGE>

         pertaining to each Creation. Every copyrightable Creation, regardless
         of whether copyright protection is sought or preserved by the Company,
         shall be "work for hire" as defined in 17 U.S.C. Section 101 and the
         Company shall own all rights in and to such matter throughout the
         world, without the payment of any royalty or other consideration to
         Executive or anyone claiming through Executive.

                  (b)      All right, title, and interest in and to any and all
         trademarks, trade names, service marks, and logos adopted, used, or
         considered for use by the Company during Executive's employment
         (whether or not developed by Executive) to identify the Company's
         products or services (collectively, the "Marks") and all other
         materials, ideas, or other property conceived, created, developed,
         adopted, or improved by Executive solely or jointly during Executive's
         employment by the Company and relating to its business, shall be owned
         exclusively by the Company. Executive shall not have, and will not
         claim to have, any right, title, or interest of any kind in or to the
         Marks or such other property.

                  (c)      Executive shall execute and deliver to the Company
         such formal transfers and assignments and such other documents as the
         Company may request to permit the Company (or its designee) to file and
         prosecute such registration applications and other documents it deems
         useful to protect its rights under this Agreement. Any idea,
         copyrightable matter, or other property relating to the Company's
         business and disclosed by Executive prior to the first anniversary of
         the Date of Termination shall be deemed to be governed hereby unless
         proved by Executive to have been first conceived and made after the
         Date of Termination.

                  (d)      Executive acknowledges and understands that this
         Agreement does not apply to any invention that qualifies fully under
         the provisions of Minnesota Statutes Annotated Sections 181.78(1) and
         (2), the text of which is attached as Exhibit B. Employee acknowledges
         this section shall serve as written notice to Employee as required by
         Minnesota Statutes Annotated Section 181.78(3).

         12.      SUCCESSORS.

                  (a)      This Agreement is personal to the Executive and
         without the prior written consent of the Company shall not be
         assignable by the Executive otherwise than by will or the laws of
         descent and distribution. This Agreement shall inure to the benefit of
         and be enforceable by the Executive's legal representatives.

                  (b)      This Agreement shall inure to the benefit of and be
         binding upon Company and the Company and their respective successors
         and assigns.

                  (c)      The Company will require any successor (whether
         direct or indirect, by purchase, merger, consolidation or otherwise) to
         all or substantially all of its business and/or assets to assume
         expressly and agree to perform this Agreement in the same manner and to
         the same extent that the Company would be required to perform it if no

                                       16

<PAGE>

         such succession had taken place. As used in this Agreement, "Company"
         shall mean as hereinbefore defined and any successor to its business
         and/or assets as aforesaid which assumes and agrees to perform this
         Agreement by operation of law, or otherwise.

         13.      ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, or the breach of this Agreement, other than claims
for specific performance or injunctive relief pursuant to Section 10, shall be
settled by arbitration conducted in Minneapolis, Minnesota in accordance with
the Center for Public Resources Rules for Non-Administered Arbitration of
Business Disputes by a sole arbitrator selected by the parties from the Center
for Public Resources Panels of Distinguished Neutrals. The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16 and
judgment upon any award rendered by the arbitrator may be entered in any
Minnesota state or United States federal court sitting in Minneapolis,
Minnesota. The arbitrator shall not award either damages in excess of actual
damages or attorneys' fees, but may award the prevailing party reasonable costs.
The parties to this Agreement irrevocably submit to the jurisdiction of said
arbitrator and court and agree that all such claims may be heard and determined
only by such arbitrator and that all judgments may be entered in only such
courts.

         14.      MISCELLANEOUS.

                  (a)      This Agreement shall be governed by and construed in
         accordance with the laws of the State of Minnesota, without reference
         to principles of conflict of laws. The captions of this Agreement are
         not part of the provisions hereof and shall have no force or effect.
         This Agreement may not be amended or modified otherwise than by a
         written agreement executed by the parties hereto or their respective
         successors and legal representatives.

                  (b)      All notices and other communications hereunder shall
         be in writing and shall be given by hand delivery to the other party or
         by registered or certified mail, return receipt requested, postage
         prepaid, addressed as follows:

                           If to the Executive:     If to the Company:

                           Thomas G. Hudson         Computer Network Technology
                           (at home address         Corporation
                           separately notified)     6000 Nathan Lane North
                                                    Plymouth, MN  55442
                                                    Attention:  Board of
                                                    Directors

         or to such other address as either party shall have furnished to the
         other in writing in accordance herewith. Notice and communications
         shall be effective when actually received by the addressees.

                  (c)      The invalidity or unenforceability of any provision
         of this Agreement shall not affect the validity or enforceability of
         any other provision of this Agreement.

                                       17

<PAGE>

                  (d)      The Company may withhold from any amounts payable
         under this Agreement such Federal, state or local taxes as shall be
         required to be withheld pursuant to any applicable law or regulation.

                  (e)      The Executive's failure to insist upon strict
         compliance with any provision hereof shall not be deemed to be a waiver
         of such provision or any other provision thereof.

                  (f)      Words or terms used in this Agreement which connote
         the masculine gender are deemed to apply equally to female executives.

                  (g)      The Change of Control Agreement dated as of July 1,
         2002 between the Company and Executive and the Employment Agreement
         dated June 9, 1996 between the Company and Executive are hereby
         terminated and are of no further force an effect.

                          [Remainder of page is blank.]

                                       18

<PAGE>

         IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors and Compensation
Committee, the Company has caused those present to be executed in its name on
its behalf, all as of the day and year first above written.

                                    EXECUTIVE

                                    /s/ Thomas G. Hudson
                                    --------------------------------------------
                                    Name:

                                    COMPUTER NETWORK TECHNOLOGY
                                     CORPORATION,

                                    By  /s/ John A. Rollwagen
                                      ------------------------------------------

                                       19

<PAGE>

                                    EXHIBIT A

                                RELEASE AGREEMENT

         Computer Network Technology Corporation (the "Company") and Thomas G.
Hudson ("Executive") agree as follows:

         WHEREAS, the Company and Executive are parties to that certain Amended
and Restated Employment Agreement dated ______ (the "Employment Agreement"); and

         WHEREAS, the Company and Executive have agreed to terminate the
Employment Agreement releasing each other from all further obligations except
those specifically identified therein as surviving such termination.

         THEREFORE, in consideration of the covenants and obligations set forth
below, the Company and Executive agree as follows:

         1.       Separation from Employment. Executive's employment with the
Company will terminate on _________________.

         2.       Severance. The Company agrees to pay Executive severance
benefits in accordance with the terms of the Employment Agreement commencing as
soon as practicable following the expiration of the rescission period referred
to below.

         3.       Release of Claims. After adequate opportunity to review this
Release Agreement and to obtain the advice of legal counsel of Executive's
choice, Executive hereby releases, acquits and forever discharges the Company,
and all of its directors, officers, agents, employees, affiliates, parents,
successors and assigns, from any and all liability whatsoever arising from or
relating to (i) his employment by the Company, (ii) his separation from
employment with the Company, or (iii) any other claim or liability, excluding
liabilities from claims arising under this Release Agreement or under Sections
6(d) and 9 of the Employment Agreement. Subject to the foregoing, by this
Release, Executive gives up any right to make a claim, bring a lawsuit, or
otherwise seek money damages or court orders as a result of his employment by
the Company, his separation from employment with the Company, or otherwise.
Executive hereby acknowledges and intends that this Release applies to any
statutory or common law claims which have arisen through the date of Executive's
signature below, including but not limited to, any and all claims of unpaid
wages, stock options, wrongful termination, defamation, intentional or negligent
infliction of emotional distress, negligence, breach of contract, fraud, and any
claims under the Age Discrimination in Employment Act (ADEA), Title VII of the
Civil Rights Act of 1964, the Americans with Disabilities Act, the Minnesota
Human Rights Act (MHRA), the Family and Medical Leave Act, the Employee
Retirement Income Security Act, and any other local, state or federal statutes.
Executive acknowledges that this Release includes all claims Executive is
legally permitted to release and as such does not apply to any claim for
reemployment benefits, nor does it preclude Executive from filing a charge of
discrimination with the state Department of Human Rights or the federal Equal
Employment Opportunity Commission although Executive would not be able

                                       20

<PAGE>

to recover any damages if Executive filed such a charge. This Release includes
but is not limited to all claims relating to Executive's employment and the
separation of Executive's employment. This Release Agreement shall be binding
upon Executive and upon his heirs, administrators, representatives, executors,
successors and assigns. Notwithstanding anything to the contrary contained
herein, in no event shall this Release Agreement constitute a release by the
Executive of his rights with respect to accrued benefits to which he would
otherwise be entitled under any of the Company's employee benefit plans,
programs or other employee benefit arrangements (excluding any severance plans
or arrangements).

         4.       Entire Agreement. This Release Agreement contains the entire
agreement between Executive and the Company with respect to the subject matter
hereof. No modification or amendment to this Release Agreement shall be valid or
binding unless made in writing and signed by the parties. This Release Agreement
will be interpreted under the laws of Minnesota.

         5.       Notification of Rescission Rights.

                  a)       This Release Agreement contains a release of certain
legal rights which Executive may have under the ADEA or the MHRA. Executive
should consult with an attorney regarding such release and other aspects of this
Release Agreement before signing.

                  b)       The termination of Executive's employment by the
Company will not be affected by Executive's acceptance or failure to accept this
Release Agreement. If Executive does not accept the terms hereof, or if
Executive revokes his acceptance of this Release Agreement, the Company will not
provide to him the benefits described herein.

                  c)       Executive has twenty-one (21) days to consider
whether or not to sign this agreement, starting from the date he first receives
a copy of this agreement. Executive may sign this agreement at any time during
this twenty-one (21) day period.

                  d)       After Executive has accepted this Release Agreement
by signing it, he may revoke his acceptance for a period of fifteen (15) days
after the date he signed this Release Agreement. This Release Agreement will not
be effective until this fifteen (15) day revocation period has expired.

                  e)       If Executive wishes to revoke his acceptance of this
Release Agreement he must notify the Company in writing within the fifteen (15)
day revocation period. Such notice must be delivered to the Company in person or
mailed by certified mail, return receipt requested, addressed to: Computer
Network Technology Corporation, 6000 Nathan Lane North, Plymouth, MN 55442,
Attention: Board of Directors). If Executive fails to properly deliver or mail
such written revocation as instructed, the revocation will not be effective.

                                       21

<PAGE>

I first received a copy of this Release Agreement on _____________________.

Date:____________________                    ________________________________
                                             Thomas G. Hudson

I agree to accept the terms of this Release Agreement.

Date:____________________                    ________________________________
                                             Thomas G. Hudson

COMPUTER NETWORK TECHNOLOGY CORPORATION

By:_____________________________
   Name:
   Title:
   Date:

                                       22

<PAGE>

                                    EXHIBIT B

Minnesota Statutes Annotated Section 181.78 provides as follows:

         Subdivision 1. Any provision in an employment agreement that provides
that an employee shall assign or offer to assign any of the employee's rights in
an invention to the employer shall not apply to an invention for which no
equipment, supplies, facility or trade secret information of the employer was
used and that was developed entirely on the employee's own time, and

         (1)      that does not relate (a) directly to the business of the
employer or (b) to the actual or demonstrably anticipated research or
development, or

         (2)      that does not result from any work performed by the employee
for the employer. Any provision that purports to apply to such an invention is
to that extent against the public policy of this state and is to that extent
unenforceable.

         Subdivision 2. No employer shall require a provision made void and
unenforceable by subdivision 1 as a condition of employment or continuing
employment.

                                       23

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