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                              TRICORD SYSTEMS, INC.

                      1998 NON-EMPLOYEE DIRECTOR STOCK PLAN

  (AS AMENDED EFFECTIVE JANUARY 30, 1999, MARCH 30, 2000 AND NOVEMBER 2, 2000)

         1.   Purpose. The purpose of the 1998 Non-Employee Director Stock Plan
(the "Plan"), is to advance the interests of Tricord Systems, Inc. (the
"Company") and its stockholders by enabling the Company to attract and retain
the services of experienced and knowledgeable non-employee directors and to
increase the proprietary interests of such directors in the Company's long-term
success and progress and their identification with the interests of the
Company's stockholders.

         2.   Administration. The Plan will be administered by the Board or by a
committee of the Board. So long as the Company has a class of its equity
securities registered under section 12 of the Exchange act, any committee
administering the Plan will consist solely of two or more members of the Board
who are "non-employee directors" within the meaning of Rule 16b-3 under the
Exchange Act. Such a committee, if established, will act by majority approval of
the members, and a majority of the members of such a committee will constitute a
quorum. As used in the Plan, "Committee" will refer to the Board or to such a
committee, if established. All questions of interpretation of the Plan or of any
stock options and stock awards under the Plan (collectively, "Awards") shall be
determined by the Committee and such determination shall be final and binding
upon all persons having an interest in the Plan.

         3.   Participation in the Plan. Directors of the Company who are not
employees of the Company or any subsidiary of the Company shall be eligible to
participate in the Plan ("Eligible Directors").

         4.   Stock Subject to the Plan.

              (a)  Number of Shares. The maximum number of shares of Common
         Stock that shall be reserved for issuance under the Plan will be
         800,000 shares of the Company's common stock, $.01 par value (the
         "Common Stock"), subject to adjustment upon changes in capitalization
         of the Company as provided in subparagraph (b) below. The maximum
         number of shares authorized may be increased from time to time by
         approval of the Board of Directors and the stockholders of the Company.
         Shares of Common Stock that are issued as stock awards or that may be
         issued upon exercise of stock options granted under the Plan shall be
         applied to reduce the maximum number of shares of Common Stock
         remaining available for use under the Plan. The shares to be issued
         pursuant to the Plan may be, at the election of the Company, either
         treasury shares or shares authorized but unissued. Any shares of Common
         Stock that are subject to a stock option granted under the Plan (or any
         portion thereof) that lapses, expires or for any reason is terminated
         unexercised shall automatically again become available for use under
         the Plan.

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              (b)  Changes in Stock. In the event of any reorganization, merger,
         consolidation, recapitalization, liquidation, reclassification, stock
         dividend, stock split, combination of shares, rights offering, or
         extraordinary dividend or divestiture (including a spin-off), or any
         other change in the corporate structure or shares of the Company, the
         Committee (or, if the Company is not the surviving entity in any such
         transaction, the board of directors of the surviving corporation) shall
         make adjustments, determined by the Committee in its discretion to be
         appropriate, as to the number and kind of securities subject to and
         reserved under the Plan and, in order to prevent dilution or
         enlargement of rights of Eligible Directors, the number, kind and,
         where applicable, the exercise price of outstanding Awards granted
         under the Plan.

5.       Grant of Options.

              (a)  Non-Statutory Stock Options. All stock options granted under
         the Plan (the "Options") shall be non-statutory stock options not
         entitled to special tax treatment under Section 422 of the Internal
         Revenue Code of 1986, as amended to date and as may be amended from
         time to time (the "Code").

              (b)  Terms, Conditions and Form of Options. Each Option granted
         under the Plan shall be evidenced by a written agreement in such form
         as the Committee shall from time to time approve, which agreements
         shall comply with and be subject to the following terms and conditions:

                   (i) Grant of Options. At such time as additional Eligible
              Directors are first elected or appointed to the Board of Directors
              to fill new directorships or to fill vacancies, such Eligible
              Directors will be granted automatically, on a one-time basis on
              the date of their election or appointment, an Option to purchase
              25,000 shares of Common Stock. In addition to the one-time grant
              of an Option to purchase 25,000 shares as described above (the
              "One-Time Option"), an Option to purchase 20,000 shares of Common
              Stock (the "Annual Option") shall be granted on January 5, 1998
              and on each succeeding January 5 thereafter to each Eligible
              Director as of such dates.

                   The written agreement evidencing each Option granted under
              the Plan shall be dated as of the applicable date of grant (the
              "Date of Grant"). An Eligible Director accepting such a grant of
              an Option (an "Optionee") shall execute and return a copy of such
              option agreement to the Committee.

                   (ii) Option Exercise Price. The per share price to be paid by
              the Optionee at the time an Option is exercised shall be 100% of
              the Fair Market Value of one share of Common Stock on the Date of
              Grant. For purposes of the Plan, "Fair Market Value" shall mean,
              with respect to the Common Stock, as of any date, (or, if no
              shares were traded or quoted on such date, as of the next
              preceding day on which there was such a trade or quote) (A) the
              closing sale price of the Common Stock if the Common Stock is
              listed, admitted to unlisted trading privileges or reported on any
              foreign or national securities exchange or on the

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              Nasdaq National Market or an equivalent foreign market on which
              sale prices are reported; (B) if the Common Stock is not so
              listed, admitted to unlisted trading privileges or reported, the
              closing bid price as reported by the Nasdaq SmallCap Market, OTC
              Bulletin Board or the National Quotation Bureau, Inc. or other
              comparable service; or (C) if the Common Stock is not so listed or
              reported, such price as the Committee determines in good faith in
              the exercise of its reasonable discretion.

                   (iii) Exercisability and Duration of Options. Each One-Time
              Option shall become exercisable each month on a cumulative basis
              with respect to 2.78% of the total shares covered by the Option,
              commencing one month after its Date of Grant and shall terminate
              five years after its Date of Grant. Each Annual Option shall
              become exercisable in full six months after its Date of Grant and
              shall terminate five years after its Date of Grant.

                   (iv) Termination of Directorship. Each Option shall terminate
              and may no longer be exercised if and when the Optionee ceases to
              serve as a director of the Company, except (A) if the Optionee
              ceases to serve as a director of the Company by reason of death or
              the occurrence of an event which constitutes permanent and total
              disability (within the meaning of Section 22(e)(3) of the Code),
              then the Option shall remain exercisable to the extent that the
              Option was exercisable as of such termination until the earlier of
              the expiration of one year after such termination or the remaining
              term of the Option, (B) if the Optionee ceases to serve as a
              director of the Company by reason of his or her retirement, then
              the Option shall remain exercisable to the extent that the Option
              was exercisable on the date of retirement until the earlier of the
              expiration of three months after such retirement or the remaining
              term of the Option, (C) if the Optionee ceases to serve as a
              director of the Company for any other reason, other than voluntary
              termination or termination for "cause," then the Option shall
              remain exercisable to the extent that the Option was exercisable
              on the date the Optionee ceased to serve as a director of the
              Company until the earlier of the expiration of three months after
              the date the Optionee ceased to serve as a director of the Company
              or the remaining term of the Option, and (D) if the Optionee
              ceases to serve as a director of the Company as a result of
              voluntary termination by the Optionee or termination by the
              Company for "cause," then all outstanding Options then held by
              such Optionee shall immediately terminate without notice of any
              kind and no Options then held by the Optionee shall thereafter be
              exercisable.

                   (v)  Manner of Option Exercise. An Option may be exercised by
              an Optionee in whole or in part from time to time, subject to the
              conditions contained in the Plan and in the agreement evidencing
              such Option, by giving written notice of exercise to the Company
              at its principal executive office (such notice to specify the
              particular Option that is being exercised and the number of shares
              with respect to which the Option is being exercised) accompanied
              by payment, in cash or personal check payable to the Company, of
              the total purchase price of the shares to be purchased under the
              Option. The Company shall not be required to sell or

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              issue any shares under any outstanding Option if, in the sole
              opinion of the Committee, the issuance of such shares would
              constitute a violation by the Optionee or the Company of any
              applicable law or regulation of any governmental authority,
              including without limitation federal and state securities laws.

                   (vi) Nontransferability. No Option granted under the Plan
              shall be assignable or transferable during the lifetime of the
              Optionee, either voluntarily or involuntarily, or subjected to any
              lien, directly or indirectly, by operation of law or otherwise,
              including execution, levy, garnishment, attachment, pledge or
              bankruptcy. In the event of an Optionee's death, an Optionee's
              rights and interest in any Option shall be transferable by
              testamentary will or the laws of descent and distribution, and the
              exercise of any Options (to the extent permitted pursuant to
              paragraph 5(b)(iv)(A) above) may be made by the Participant's
              legal representatives, heirs or legatees. An Option shall be
              exercisable during the Optionee's lifetime only by the Optionee.

                   (vii) Successive Options. Successive Options may be granted
              to the same Optionee, whether or not the Options previously
              granted to such Optionee remain unexercised. An Optionee may
              exercise an Option if then exercisable, notwithstanding that
              Options previously granted to such Optionee remain unexercised.

                   (viii) Withholding. The Company may require an Optionee to
              promptly pay the Company the amount of any federal, state or local
              withholding tax attributable to the Optionee's exercise of an
              Option before acting on the Optionee's notice of exercise of the
              Option.

         6.   Annual Retainer Payment. Each Eligible Director shall receive an
annual retainer payment of $10,000 in the discretion of the Board by action of a
majority of the Board in cash or Common Stock, commencing on November 1, 1997
and continuing on each succeeding November 1. If payment is made in Common
Stock, each Eligible Director shall receive such number of shares of Common
Stock as equals $10,000 divided by the Fair Market Value of one share of Common
Stock as of each immediately preceding October 31.

         7.   Meeting Fees. Each Eligible Director shall receive meeting fees of
$1,500 payable in the discretion of the Board by action of a majority of the
Board in cash or Common Stock, for each Board meeting attended and for each
Committee meeting attended if separate from each Board meeting. If payment is
made in Common Stock, each Eligible Director shall receive such number of shares
of Common Stock as equals $1,500 divided by the Fair Market Value of one share
of Common Stock as of each immediately preceding day prior to such meetings. In
addition, each Eligible Director shall receive such number of shares of Common
Stock as equals any unpaid meeting payments due them through the February 20,
1998 Board meeting, divided by the Fair Market Value of one share of Common
Stock on February 20, 1998.

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         8.   Limitation of Rights.

              (a)  No Right to Continue as a Director. Neither the Plan, nor the
         granting of an Award nor any other action taken pursuant to the Plan,
         shall constitute or be evidence of any agreement or understanding,
         express or implied, that the Company will retain a director for any
         period of time, or at any particular rate of compensation.

              (b)  Rights as a Stockholder. No Optionee shall have any rights as
         a stockholder with respect to any shares of Common Stock covered by an
         Option granted pursuant to the Plan until the Optionee shall have
         become the holder of record of such shares, and no adjustments shall be
         made for dividends or other distributions or other rights as to which
         there is a record date preceding the date the Optionee becomes the
         holder of record of such shares.

         9.   Amendment of the Plan. The Board may amend the Plan from time to
time in such respects as the Board may deem advisable in order that Awards under
the Plan will conform to any change in applicable laws or regulations or in any
other respect the Board may deem to be in the best interests of the Company;
provided, however, that no amendments to the Plan will be effective without
approval of the stockholders of the Company if stockholder approval of the
amendment is then required pursuant to section 422 of the Code or the rules of
Nasdaq or any stock exchange. The Board may suspend or terminate the Plan or any
portion thereof at any time. No termination, suspension or amendment of the Plan
shall alter any outstanding Option without the consent of the Optionee affected
thereby; provided, however, that this sentence shall not impair the right of the
Committee to take whatever action it deems appropriate under paragraph 4(b)
above.

         10.  Effective Date and Duration of the Plan. The Plan shall be
effective as of February 20, 1998, on the date of adoption by the Board. The
Plan shall terminate at midnight on February 20, 2003 and may be terminated
prior thereto by action of the Board, and no Award shall be granted after such
termination. Options outstanding upon termination of the Plan may continue to be
exercised in accordance with their terms.

         11.  Governing Laws. The Plan and all rights and obligations under the
Plan shall be construed in accordance with and governed by the laws of the State
of Minnesota, notwithstanding any conflicts of law principles.

                                       5<PAGE>   1
March 13, 2000

Greg Dahl
3814 Upton Ave S.
Minneapolis, MN 55410

Dear Greg:

On behalf of Tricord Systems, Inc., I am pleased to extend to you the following
offer to join the Tricord Team as Vice President of Marketing and Business
Development of the Company. This offer is subject to your acceptance and
approval by Tricord's Board of Directors. This offer letter is not an employment
contract, and you will be deemed an at-will employee of Tricord.

Set forth below are the terms of your employment:

         1.   Your employment will commence on March 14th, 2000. During your
              employment with the Company, you will make yourself available to
              perform such duties, consistent with your other business and
              employment activities, as may be agreed to by the Chief Operating
              Officer of the Company and you.

         2.   Your base salary in connection with such employment will be
              $150,000 per year. Tricord's pay periods are the 15th and the end
              of the month. You will be eligible for a bonus of up to 5% of your
              base pay for the year 2000, and up to 20% of your base pay for
              each year thereafter, subject to performance objectives to be set
              by the Chief Operating Officer. This bonus will be paid annually
              for the year 2000 within 60 days after the end of the calendar
              year and quarterly for each year thereafter.

         3.   You will be granted, effective as of the date you commence
              employment, an incentive stock option (the "Option") to purchase
              250,000 shares (the "Option Shares") of the Company's common stock
              at an exercise price equal to the closing bid price of the common
              stock on the first trading day prior to the date you commence
              employment. You should note, however, that the number of shares
              subject to the Option that will actually qualify for incentive
              stock option tax treatment will be limited by the provisions of
              the Internal Revenue Code. The Option will be granted under the
              terms of the Company's 1998 Stock Incentive Plan (the "1998 Plan")
              and the standard form of option agreement thereunder. The Option
              will become exercisable in 37 installments as follows: (i) 25% of
              the Option Shares will become exercisable 12 months after the date
              of grant; and (ii) 75% of the Option Shares will become
              exercisable in 36 equal monthly installments thereafter (i.e.,
              approximately 2.083% of the Option Shares for each full month of
              continuous service thereafter).

         4.   You agree to execute prior to commencing employment the Company's
              standard form of nondisclosure/confidentiality agreement and to
              abide by the terms of such agreement.

         5.   Pursuant to authority granted under Section 13.3 of the 1998 Plan
              and the proviso at the end of Section 13.5 of the 1998 Plan, in
              the event that your employment with the Company is terminated
              within 24 months following a Change in Control of the Company as a
              result of death, disability, termination by the Company without
              "cause" (as defined in the 1998 Plan) or resignation by you for
              "good reason" (which is defined as a significant reduction or

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              reassignment of your responsibilities, a reduction in your base
              salary or requiring you to be based more than 30 miles from where
              your office is located prior to a Change in Control of the
              Company), (i) your Option (to the extent held at least six months
              from the date of grant) will become immediately exercisable in
              full as of such termination and will remain exercisable for the
              remainder of its term and (ii) the limitation on such acceleration
              of exercisability set forth in Section 13.5 of the 1998 Plan will
              only be applied to the extent that the application of such
              limitation would result in the receipt by you, on an after-tax
              basis, of a greater amount than if such limitation had not been
              applied.

         5.   If your employment with the Company is terminated without "cause"
              (as such term is defined in the 1998 Plan), you will receive a
              lump sum cash payment equal to six months of your then current
              base salary.

         6.   You represent that neither commencing employment with the Company
              nor performing your duties on behalf of the Company will conflict
              with, constitute a breach under, or give any third party rights to
              Company intellectual property pursuant to, any agreement, contract
              or other arrangement to which you are subject.

         7.   You agree that at no time will you use any trade secrets or other
              intellectual property of your current employer or any other third
              party while performing your duties for the Company.

As an employee, you will have the opportunity to participate in the Tricord
Employee Benefit Package, subject to eligibility requirements of the various
plans.

Please indicate your acceptance of this offer by signing and returning this
letter to me. Your employment will be effective upon approval by the Board of
Directors.

I am confident that you will make a significant contribution to the success and
growth of Tricord, and we are looking forward to having you on the Tricord Team.

Very truly yours,

/s/ Joan M. Wrabetz

Joan M. Wrabetz

ACCEPTANCE:

/s/ Greg Dahl
--------------------------------
Greg Dahl

March 14, 2000

DATE OF BOARD APPROVAL:                , 2000

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