Document:

ex101_06092009.htm

    
      
        EXHIBIT
10.1

         

      

      
        The Shuffle Master,
Inc.

        

        2004
Equity Incentive Plan

        (as
Amended and Restated on January 28, 2009)

         

        
          

          
            
              
                 

              

              
                
                

                
                  

                

              

              
                 

              

            

          

        

        

        Table
of Contents

        

        
          	 
      	 
      	
                  Page

                
	
                  ARTICLE
      1.

                	
                   
      ESTABLISHMENT, PURPOSE, AND
      DURATION                                                                                                  

                	
                  A-1

                
	 
      	 
      	 
      
	
                  1.1)

                	
                   
      Establishment of the
      Plan                                                                                                  

                	
                  A-1

                
	
                  1.2)

                	
                   
      Purpose of the
      Plan                                                                                                  

                	
                  A-1

                
	
                  1.3)

                	
                   
      Duration of the
      Plan                                                                                                  

                	
                  A-1

                
	 
      	 
      	 
      
	
                  ARTICLE
      2.

                	
                   
      DEFINITIONS AND
      CONSTRUCTION                                                                                                  

                	
                  A-1

                
	 
      	 
      	 
      
	
                  2.1)

                	
                   
      Definitions                                                                                                  

                	
                  A-1

                
	
                  2.2)

                	
                   
      Gender and
      Number                                                                                                  

                	
                  A-4

                
	
                  2.3)

                	
                   
      Severability                                                                                                  

                	
                  A-4

                
	 
      	 
      	 
      
	
                  ARTICLE
      3.

                	
                   
      ADMINISTRATION                                                                                                  

                	
                  A-4

                
	 
      	 
      	 
      
	
                  3.1)

                	
                   
      The
      Committee                                                                                                  

                	
                  A-4

                
	
                  3.2)

                	
                   
      Authority of the
      Committee                                                                                                  

                	
                  A-5

                
	
                  3.3)

                	
                   
      Selection of
      Participants                                                                                                  

                	
                  A-5

                
	
                  3.4)

                	
                   
      Decisions
      Binding                                                                                                  

                	
                  A-5

                
	
                  3.5)

                	
                   
      Procedures of the
      Committee                                                                                                  

                	
                  A-5

                
	
                  3.6)

                	
                   
      Award
      Agreements                                                                                                  

                	
                  A-5

                
	
                  3.7)

                	
                   
      Conditions on
      Awards                                                                                                  

                	
                  A-5

                
	
                  3.8)

                	
                   
      Saturdays, Sundays and
      Holidays                                                                                                  

                	
                  A-5

                
	 
      	 
      	 
      
	
                  ARTICLE
      4.

                	
                   
      STOCK SUBJECT TO THE
      PLAN                                                                                                  

                	
                  A-6

                
	 
      	 
      	 
      
	
                  4.1)

                	
                   
      Number of
      Shares                                                                                                  

                	
                  A-6

                
	
                  4.2)

                	
                   
      Lapsed
      Awards                                                                                                  

                	
                  A-6

                
	
                  4.3)

                	
                   
      Adjustments in Authorized
      Shares                                                                                                  

                	
                  A-6

                
	 
      	 
      	 
      
	
                  ARTICLE
      5.

                	
                   
      ELIGIBILITY AND
      PARTICIPATION                                                                                                  

                	
                  A-6

                
	 
      	 
      	 
      
	
                  5.1)

                	
                   
      Eligibility                                                                                                  

                	
                  A-6

                
	
                  5.2)

                	
                   
      Actual
      Participation                                                                                                  

                	
                  A-7

                
	 
      	 
      	 
      
	
                  ARTICLE
      6.

                	
                   
      STOCK
      OPTIONS                                                                                                  

                	
                  A-7

                
	 
      	 
      	 
      
	
                  6.1)

                	
                   
      Grant of
      Options                                                                                                  

                	
                  A-7

                
	
                  6.2)

                	
                   
      Option
      Agreement                                                                                                  

                	
                  A-7

                
	
                  6.3)

                	
                   
      Option Exercise
      Price                                                                                                  

                	
                  A-7

                
	
                  6.4)

                	
                   
      Duration of
      Options                                                                                                  

                	
                  A-8

                
	
                  6.5)

                	
                   
      Exercise of
      Options                                                                                                  

                	
                  A-8

                
	
                  6.6)

                	
                   
      Manner of Exercise of
      Options                                                                                                  

                	
                  A-8

                
	
                  6.7)

                	
                   
      Restrictions on Stock
      Transferability                                                                                                  

                	
                  A-9

                
	
                  6.8)

                	
                   
      Termination Due to Death or
      Disability                                                                                                  

                	
                  A-9

                
	
                  6.9)

                	
                   
      Termination for Other
      Reasons                                                                                                  

                	
                  A-9

                
	
                  6.10)

                	
                   
      Nontransferability/Permitted Transfers of
      Options                                                                                                  

                	
                  A-10

                
	 
      	 
      	 
      

        

        
          

          
            
              
                 

              

              
                A-i 

                
                  

                

              

              
                 

              

            

        

        
          	
                  ARTICLE
      7.

                	
                   
      STOCK APPRECIATION
      RIGHTS                                                                                                  

                	
                  A-11

                
	 
      	 
      	 
      
	
                  7.1)

                	
                   
      Grant of Stock Appreciation
      Rights                                                                                                  

                	
                  A-11

                
	
                  7.2)

                	
                   
      Stock Appreciation Rights
      Agreement                                                                                                  

                	
                  A-11

                
	
                  7.3)

                	
                   
      Exercise of Stock Appreciation
      Rights                                                                                                  

                	
                  A-11

                
	
                  7.4)

                	
                   
      Payment of Stock Appreciation Right
      Amount                                                                                                  

                	
                  A-12

                
	
                  7.5)

                	
                   
      Form and Timing of
      Payment                                                                                                  

                	
                  A-12

                
	
                  7.6)

                	
                   
      Term of Stock Appreciation
      Rights                                                                                                  

                	
                  A-12

                
	
                  7.7)

                	
                   
      Termination Due to Death or
      Disability                                                                                                  

                	
                  A-12

                
	
                  7.8)

                	
                   
      Termination for Other
      Reasons                                                                                                  

                	
                  A-12

                
	
                  7.9)

                	
                   
      Nontransferability of Stock Appreciation
      Rights                                                                                                  

                	
                  A-12

                
	 
      	 
       	 
      
	
                  ARTICLE
      8.

                	
                   
      RESTRICTED
      STOCK                                                                                                  

                	
                  A-12

                
	 
      	 
      	 
      
	
                  8.1)

                	
                   
      Grant of Restricted
      Stock                                                                                                  

                	
                  A-12

                
	
                  8.2)

                	
                   
      Restricted Stock
      Agreement                                                                                                  

                	
                  A-13

                
	
                  8.3)

                	
                   
      Transferability                                                                                                  

                	
                  A-13

                
	
                  8.4)

                	
                   
      Other
      Restrictions                                                                                                  

                	
                  A-13

                
	
                  8.5)

                	
                   
      Certificate
      Legend                                                                                                  

                	
                  A-13

                
	
                  8.6)

                	
                   
      Removal of
      Restrictions                                                                                                  

                	
                  A-13

                
	
                  8.7)

                	
                   
      Voting Rights; Shareholder Rights
      Plan                                                                                                  

                	
                  A-13

                
	
                  8.8)

                	
                   
      Dividends and Other
      Distributions                                                                                                  

                	
                  A-13

                
	
                  8.9)

                	
                   
      Termination Due to Death or
      Disability                                                                                                  

                	
                  A-13

                
	
                  8.10)

                	
                   
      Termination for Other
      Reasons                                                                                                  

                	
                  A-14

                
	
                  8.11)

                	
                   
      Election Under Code Section
      83(b)                                                                                                  

                	
                  A-14

                
	 
      	  
       	 
      
	
                  ARTICLE
      8A.

                	
                   
      RESTRICTED STOCK
      UNITS                                                                                                  

                	
                  A-14

                
	 
      	 
      	 
      
	
                  8A.1)

                	
                   
      Award of Restricted Stock
      Units                                                                                                  

                	
                  A-14

                
	
                  8A.2)

                	
                   
      Restricted Stock Unit
      Agreement                                                                                                  

                	
                  A-14

                
	
                  8A.3)

                	
                   
      Terms of Restricted Stock Unit
      Awards                                                                                                  

                	
                  A-14

                
	
                  8A.4)

                	
                   
      Nontransferability of Restricted Stock
      Units                                                                                                  

                	
                  A-14

                
	
                  8A.5)

                	
                   
      Dividends and Other
      Distributions                                                                                                  

                	
                  A-14

                
	 
      	 
      	 
      
	
                  ARTICLE
      9.

                	
                   
      CHANGE IN
      CONTROL                                                                                                  

                	
                  A-15

                
	 
      	 
      	 
      
	
                  9.1)

                	
                   
      Acceleration of Vesting; Termination of Period of
    Restriction

                	
                  A-15

                
	
                  9.2)

                	
                   
      No Limitation on Exercise
      Period                                                                                                  

                	
                  A-15

                
	
                  9.3)

                	
                   
      No Extension of Exercise
      Period                                                                                                  

                	
                  A-15

                
	
                  9.4)

                	
                   
      Limitation on
      Payments                                                                                                  

                	
                  A-15

                
	 
      	 
      	 
      
	
                  ARTICLE
      10.

                	
                   
      BENEFICIARY
      DESIGNATION                                                                                                  

                	
                  A-15

                
	 
      	 
      	 
      
	
                  ARTICLE
      11.

                	
                   
      RIGHTS OF
      PARTICIPANTS                                                                                                  

                	
                  A-16

                
	 
      	 
      	 
      
	
                  11.1)

                	
                   
      Participation                                                                                                  

                	
                  A-16

                
	
                  11.2)

                	
                   
      No Implied
      Rights                                                                                                  

                	
                  A-16

                
	
                  11.3)

                	
                   
      No Right to Company
      Assets                                                                                                  

                	
                  A-16

                
	 
      	 
      	 
      
	
                  ARTICLE
      12.

                	
                   
      AMENDMENT, MODIFICATION, AND TERMINATION

                	
                  A-16

                
	 
      	 
      	 
      
	
                  12.1)

                	
                   
      Amendment, Modification, and
      Termination                                                                                                  

                	
                  A-16

                
	
                  12.2)

                	
                   
      Awards Previously
      Granted                                                                                                  

                	
                  A-17

                
	 
      	 
      	 
      

        

        

        
          
             

          

          
            A-ii 

            
              

            

          

          
             

          

        

        

        
          	
                  ARTICLE
      13.

                	
                   
      GOVERNMENT REGULATION AND REGISTRATION OF SHARES

                	
                  A-17

                
	 
      	 
      	 
      
	
                  13.1)

                	
                   
      General                                                                                                  

                	
                  A-17

                
	
                  13.2)

                	
                   
      Compliance as an SEC
      Registrant                                                                                                  

                	
                  A-17

                
	 
      	 
      	 
      
	
                  ARTICLE
      14.

                	
                   
      SUCCESSORS                                                                                                  

                	
                  A-17

                
	 
      	 
      	 
      
	
                  ARTICLE
      15.

                	
                   
      MISCELLANEOUS                                                                                                  

                	
                  A-17

                
	 
      	 
      	 
      
	
                  15.1)

                	
                   
      Rights as
      Shareholder                                                                                                  

                	
                  A-17

                
	
                  15.2)

                	
                   
      No Obligation to Exercise Option or SAR; Maintenance of
      Relationship

                	
                  A-17

                
	
                  15.3)

                	
                   
      Withholding
      Taxes                                                                                                  

                	
                  A-18

                
	
                  15.4)

                	
                   
      Purchase for Investment; Rights of Holder on Subsequent
      Registration

                	
                  A-18

                
	
                  15.5)

                	
                   
      Modification of Outstanding
      Awards                                                                                                  

                	
                  A-18

                
	
                  15.6)

                	
                   
      Liquidation                                                                                                  

                	
                  A-18

                
	
                  15.7)

                	
                   
      Restrictions on Issuance of
      Shares                                                                                                  

                	
                  A-18

                
	
                  15.8)

                	
                   
      Certain Limitations on Awards to Ensure Compliance with Code Section
      409A

                	
                  A-19

                
	 
      	 
      	 
      
	
                  ARTICLE
      16.

                	
                   
      REQUIREMENTS OF
      LAW                                                                                                  

                	
                  A-19

                
	 
      	 
      	 
      
	
                  16.1)

                	
                   
      Requirements of
      Law                                                                                                  

                	
                  A-19

                
	
                  16.2)

                	
                   
      Governing
      Law                                                                                                  

                	
                  A-19

                

        

        
          
             

          

          
            A-iii 

            
              

            

          

          
             

          

        

      

       

      
         

         

        
          ARTICLE
1.

           

          ESTABLISHMENT,
PURPOSE, AND DURATION

           

        1.1) Establishment of the
Plan.  This plan, known as "The Shuffle Master, Inc. 2004
Equity Incentive Plan" (as Amended and Restated on January 28, 2009) was
established effective as of February 17, 2004, subject to approval by the
shareholders of Shuffle Master, Inc. for the grant of Incentive Stock
Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock
Units and Restricted Stock to selected officers, employees and Contractors of
the Company, and was subsequently amended by a First Amendment on January 18,
2007, and was amended and restated on December 31, 2008, to solely incorporate
various provisions to comply with Section 409A of the Code, and again amended
and restated on January 28, 2009, subject to approval by the shareholders of
Shuffle Master, Inc., to increase the number of Shares available for issuance
under the Plan and to make other related technical changes.

         

        1.2) Purpose of the
Plan.  The purpose of the Plan is to promote the success of the
Company and its Subsidiaries by providing incentives to the Company’s officers,
employees and Contractors by linking their personal interests to the long-term
financial success of the Company and its Subsidiaries, and to growth in
shareholder value.

         

        1.3) Duration of the
Plan.  The Plan will commence on the effective date set forth
in Section 1.1, and shall remain in effect, subject to the right of the Board of
Directors to terminate the Plan at any time, until all Shares subject to it have
been purchased or acquired according to the provisions herein.  No
Awards may be granted under the Plan after the tenth anniversary of the
effective date of the Plan.

         

        
           

          ARTICLE
2.

           

          DEFINITIONS
AND CONSTRUCTION

           

        

         

        2.1) Definitions.  Whenever
used in the Plan, the following terms shall have the meanings set forth below
and, when the meaning is intended, the initial letter of the word is
capitalized:

         

        (a) "Award"
means, individually or collectively, a grant under this Plan of Options, Stock
Appreciation Rights, Restricted Stock Units or Restricted Stock.

         

        (b) “Beneficial
Owner” shall have the meaning ascribed to such term in Rule 13d-3 of the
General Rules and Regulations under the Exchange Act.

         

        (c) “Board”
or “Board of Directors” means the Board of Directors of the
Company.

         

        (d) “Cause”
shall include but not be limited to:  (i) willful breach of any
agreement entered into with the Company; (ii) misappropriation of the
Company’s property, fraud, embezzlement, breach of fiduciary duty, other acts of
dishonesty against the Company; or (iii) conviction of any felony or crime
involving moral turpitude.

         

        
          
            
               

            

             

          

          
            A-1

            
              

            

          

          
             

          

        

        (e) “Change
in Control” shall mean:

         

        
          	
                  (1)  

                	
                  That
      the Company has issued or the Company’s officers and directors have
      transferred (and/or assigned their voting rights related to) shares of
      Stock (or other securities convertible into or exchangeable for Stock)
      representing at least twenty percent (20%) of the outstanding Stock of the
      Company (including a series of similar transactions effected within six
      (6) months which, in the aggregate, result in the issuance and/or transfer
      of (and/or assignment of voting rights related to) at least twenty percent
      (20%) of the Company’s outstanding Stock) (the percentages set forth in
      this subsection to be computed after completion of the subject
      transactions and as though Shares “beneficially owned,” as defined in Rule
      13d-3 under the Exchange Act, were, in fact,
  owned);

                

        

         

        
          	
                  (2)  

                	
                  That
      the individuals who constitute the Board of Directors on the effective
      date of the Plan cease for any reason to constitute at least a majority of
      the Board, provided that any person becoming a director subsequent to the
      effective date of the Plan whose election, or nomination for election by
      the Company’s shareholders, was approved by a vote of at least a majority
      of the directors comprising the Board on the effective date of the Plan
      will, for purpose of this subsection, be considered as though such persons
      were a member of the Board of Directors on the effective date of the Plan;
      or

                

        

         

        
          	
                  (3)  

                	
                  A
      change in control of the Company of a nature that would be required to be
      reported pursuant to Section 13 or 15(d) of the Exchange Act, whether or
      not the Company is then subject to such reporting requirements, including,
      without limitation, such time as any Person becomes, after the effective
      date of the Plan, the “beneficial owner” (as defined in Rule 13d-3 under
      the Exchange Act), directly or indirectly, of forty percent (40%) or more
      of the combined voting power of the Company’s outstanding securities
      ordinarily having the right to vote at elections of
    directors;

                

        

         

        
          	
                   
      

                	
                  provided,
      however, to the extent required for purposes of compliance with Section
      409A, Change of Control of the Company shall not be deemed to occur unless
      the event(s) that causes such Change in Control also constitutes a “change
      in control event” (as such term is defined in Code Section 409A and the
      regulations issued thereunder), with respect to the
    Company.

                

        

         

        (f) “Code”
means the Internal Revenue Code of 1986, as amended from time to
time.

         

        (g) “Committee”
means a committee consisting solely of not less than three members of the Board
of Directors of the Company, each of whom is a director who satisfies each of
the following requirements:

         

        
          	
                  (1)  

                	
                  The
      director qualifies as a “non-employee director” within the meaning of, and
      to the extent required to comply with, Rule 16b-3 of the Exchange Act
      or any successor provision promulgated under the Exchange
    Act;

                

        

         

        
          	
                  (2)  

                	
                  The
      director qualifies as an “outside director” within the meaning of, and to
      the extent required to comply with, Code Section 162(m);
      and

                

        

         

        
          	
                  (3)  

                	
                  The
      director qualified as an “independent director” as defined in Rule
      4200(a)(14) of the Rules of The National Association of Securities
      Dealers, Inc., as amended from time to
time.

                

        

         

        The term
“Committee” shall refer to the Board of Directors of the Company during such
times as no committee is appointed by the Board of Directors and during such
times as the Board of Directors is acting in lieu of the Committee.

         

        
          
            
               

            

             

          

          
            A-2

            
              

            

          

          
             

          

        

         

                (h) “Company” means
Shuffle Master, Inc., a Minnesota corporation, or any successor thereto as
provided in Article 14.

         

        (i) “Contractor”
means an individual who is an agent of the Company or a Subsidiary or is
retained to provide consulting or other services to the Company or a Subsidiary,
and who is not an employee of the Company or any Subsidiary.  Unless
otherwise specified by an agreement in writing, a Contractor’s status as a
Contractor shall for purposes of the Plan be deemed to have terminated at such
time as the Committee shall determine.  A non-employee director of the
Company shall not be considered a Contractor for purposes of the
Plan.

         

        (j) “Disability”
means a physical or mental impairment which prevents a Participant from
performing his regularly-scheduled duties as an officer, employee or Contractor,
and which is expected to be of long duration or result in death.  All
determinations as to a Participant’s disability status shall be made by the
Committee in its discretion and on the basis of such evidence as it shall deem
appropriate; provided, however that if a Participant qualifies as disabled
within the definition of Code Section 22(e)(3) or qualifies for disability
income benefits under a long-term disability benefit plan or insurance policy
maintained by the Company or a long-term disability insurance policy maintained
by the Participant individually, such qualification shall be conclusive evidence
of the Participant’s disability for purposes of this Plan; further provided,
however, to the extent required for purposes of compliance with Section 409A, a
disability shall not be deemed to occur unless the disability constitutes a
“Disability” within the meaning of Code Section 409A(C).

         

        (k) “Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to
time.

         

        (l) “Fair
Market Value” means the price per Share of the common Stock of the Company
determined as follows:  (i) if the security is listed for trading on
one or more national securities exchanges or is quoted on the Nasdaq National
Market System (“Nasdaq NMS”), the reported last sales price on such principal
exchange or system on the date in question (if such security shall not have been
traded on such principal exchange or on the Nasdaq NMS on such date, the
reported last sales price on such principal exchange or on Nasdaq NMS on the
first day prior thereto on which such security was so traded);
or  (ii) if the security is not listed for trading on a national
securities exchange and is not quoted on Nasdaq NMS but is quoted on the Nasdaq
Small Cap System or is otherwise traded in the over-the-counter market, the mean
of the highest and lowest bid prices for such security on the date in question
(if there are no such bid prices for such security on such date, the mean of the
highest and lowest bid prices on the most recent day prior thereto (not to
exceed ten (10) days prior to the date in question) on which such prices
existed); or (iii) if neither (i) nor (ii) is applicable, by any means deemed
fair and reasonable by the Committee, which determination shall be final and
binding on all parties.  Fair Market Value relating to the exercise
price or base price of any Non-409A Option or SAR shall conform to requirements
under Code Section 409A.

         

        (m) “Family
Member” includes any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
including adoptive relationships, any person sharing the employee’s household
(other than a tenant or employee), a trust in which these persons have more than
fifty percent of the beneficial interest, a foundation in which these persons
(or the employee) control the management of assets, and any other entity in
which these persons (or the employee) own more than fifty percent of the voting
interests.

         

        (n) “409A
Awards” means Awards that constitute a deferral of compensation under Code
Section 409A and regulations thereunder.  “Non-409A Awards” mean
Awards other than 409A Awards.  For purposes of this Plan, all Awards
other than Restricted Stock Units are intended to be Non-409A
Awards.

         

        (o) “Incentive
Stock Option” means any stock option granted pursuant to this Plan as an
“incentive stock option” within the meaning of Section 422 of the
Code.

         

        
          
            
               

            

             

          

          
            A-3

            
              

            

          

          
             

          

        

        (p) “Nonqualified
Stock Option” means any stock option granted pursuant to this Plan other than as
an Incentive Stock Option.

         

        (q) “Option”
means an Incentive Stock Option or a Nonqualified Stock Option.

         

        (r) “Participant”
means an officer, employee or Contractor who has been granted an Award under the
Plan.

         

        (s) “Period
of Restriction” means the period during which the transfer or sale of Shares of
Restricted Stock by the Participant is restricted.

         

        (t) “Person”
shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group”
as defined in Section 13(d) thereof.

         

        (u) “Plan”
means this Shuffle Master, Inc. 2004 Equity Incentive Plan, as
amended.

         

        (v) “Restricted
Stock” means an Award of Stock granted to a Participant pursuant to Article
8.

         

        (w) “Restricted
Stock Unit” or “RSU” means an Award designated as a Restricted Stock Unit,
granted to a Participant pursuant to Article 8A.

         

        (x) “Securities
Act” means the Securities Act of 1933, as amended from time to
time.

         

        (y) “Subsidiary”
means any company in an unbroken chain of companies beginning with the Company,
if, at the time of granting the Award, each of the companies other than the last
company in the chain owns stock possessing more than fifty percent (50%) of the
total combined voting power of all classes of stock in one of the other
companies in such chain.  The term shall include any Subsidiaries
which become such after adoption of this Plan.

         

        (z) “Stock”
or “Shares” means the common stock of the Company.

         

        (aa) “Stock
Appreciation Right” or “SAR” means an Award designated as a Stock Appreciation
Right, granted to a Participant pursuant to Article 7.

         

        (bb) “Voting
Stock” shall mean securities of any class or classes of stock of a corporation,
the holders of which are ordinarily, in the absence of contingencies, entitled
to elect a majority of the corporate directors.

         

        2.2) Gender and
Number.  Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.

         

        2.3) Severability.  In
the event any provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of the
Plan, and the Plan shall be construed and enforced as if the illegal or invalid
provision had not been included.

         

        
           

          ARTICLE
3.

           

          ADMINISTRATION

           

           

        

        3.1) The
Committee.  The Plan shall be administered by the Committee,
the members of which shall be appointed from time to time by, and shall serve at
the discretion of, the Board of Directors.

         

         

        
          
            
               

            

             

          

          
            A-4

            
              

            

          

          
             

          

        

         

        
          3.2) Authority of the
Committee.  Subject to the provisions of the Plan, the
Committee shall have full power to construe and interpret the Plan; to
establish, amend or waive rules for its administration; to accelerate the
vesting of any Option or SAR, or the termination of any Period of Restriction
under any Award agreement, or other instrument relating to an Award under the
Plan; and (subject to the provisions of Article 12)
to amend the terms and conditions of any outstanding Option, SAR, RSU or
Restricted Stock Award to the extent such terms and conditions are within the
discretion of the Committee as provided in the Plan, provided, however, that any
such modification would not result in penalties imposed by Code Section 409A and
that such actions may only be taken to the extent permitted by Code Section
409A.  Except as required by Section 4.3 and as provided in
Article 12, in no event shall the Committee have the right to (i) cancel
outstanding Options or SARs for the purpose of replacing or regranting such
Options or SARs with an exercise price that is less than the original exercise
price of the Option or SAR or (ii) change the exercise price of an Option
or SAR to an exercise price that is less than the original exercise price
without first obtaining the approval of shareholders of the
Company.  Notwithstanding the foregoing, as provided in Section 12.2,
no action of the Committee (other than pursuant to Section 4.3) may, without the
consent of the person or persons holding Restricted Stock or any outstanding
Option or Stock Appreciation Right, adversely affect the rights of such person
or persons.

        

         

        3.3) Selection of
Participants.  Subject to the provisions of Section 5.2,
the Committee shall have the authority to grant Awards under the Plan, from time
to time, to such current officers, employees and Contractors as it may select;
provided, however, that Incentive Stock Options may only be granted to
employees.  Without amending the Plan, the Committee may grant Awards
to eligible employees who are foreign nationals on such terms and conditions
different from those specified in this Plan as may, in the judgment of the
Committee, be necessary or desirable to foster and promote achievement of the
purposes of the Plan, and, in furtherance of such purposes, the Committee may
make such modification, amendments, procedures, subplans, and the like as may be
necessary or advisable to comply with provisions of laws in other countries in
which the Company operates or has employees.

         

        3.4) Decisions
Binding.  All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders or
resolutions of the Board of Directors shall be final, conclusive and binding on
all persons, including the Company and its Subsidiaries, its stockholders,
employees, and Participants and their estates and beneficiaries, and such
determinations and decisions shall not be reviewable.

         

        3.5) Procedures of the
Committee.  All determinations of the Committee shall be made
by not less than a majority of its members present at the meeting (in person or
otherwise) at which a quorum is present.  A majority of the entire
Committee shall constitute a quorum for the transaction of
business.  Any action required or permitted to be taken at a meeting
of the Committee may be taken without a meeting if a unanimous written consent,
which sets forth the action, is signed by each member of the Committee and filed
with the minutes for proceedings of the Committee.  Service on the
Committee shall constitute service as a director of the Company so that members
of the Committee shall be entitled to indemnification, limitation of liability
and reimbursement of expenses with respect to their services as members of the
Committee to the same extent that they are entitled under the Company’s Articles
of Incorporation and Minnesota law for their services as directors of the
Company.

         

        3.6) Award
Agreements.  Awards under the Plan shall be evidenced by an
Award agreement, which shall be signed by an officer of the Company and by the
Participant, and shall contain such terms and conditions as are approved by the
Committee.  Such terms and conditions need not be the same in all
cases.

         

        3.7) Conditions on
Awards.  Notwithstanding any other provision of the Plan, the
Board or the Committee may impose such conditions on any Award (including,
without limitation, impositions on the time of exercise of Options and SARs to
specified periods) as it deems appropriate.

         

        3.8) Saturdays, Sundays and
Holidays.  When a date referenced in an Award agreement falls
on a Saturday, Sunday or other day when the Company’s general office is closed,
the date referenced will revert back to the day prior to such date.

         

        
          
            
               

            

             

          

          
            A-5

            
              

            

          

          
             

          

        

         

         

        
          
            ARTICLE
4.

             

            STOCK
SUJECT TO THE PLAN

        

        4.1) Number of
Shares.  Subject to adjustment as provided in Section 4.3,
the aggregate number of Shares that may be delivered under the Plan shall not
exceed Five Million Two Hundred Thousand (5,200,000) Shares, of which no more
than Two Million Five Hundred Ninety Thousand (2,590,000) Shares may be granted
as Restricted Stock pursuant to Article 8.  For purposes of
determining at any time the number of shares that may be delivered pursuant to
this Section 4.1, the exercise of a Stock Appreciation Right, whether paid in
cash or Stock, shall be treated as a delivery of, and a reduction to remaining
available shares by, that number of Shares which corresponds to the number of
Shares with respect to which the Stock Appreciation Right is
exercised.

         

        4.2) Lapsed
Awards.  If any Award granted under this Plan terminates,
expires, or lapses for any reason, any Stock subject to such Award again shall
be available for the grant of an Award under the Plan, subject to Section
7.1.

         

        4.3) Adjustments in Authorized
Shares.  In the event that the outstanding Shares of the
Company are changed into or exchanged for a different number or kind of shares
or other securities of the Company or of another company by reason of any
reorganization, merger, consolidation, recapitalization, reclassification, stock
split, reverse stock split, combination of shares or dividends payable in
capital stock, an appropriate adjustment shall be made in the number and kind of
Shares as to which Awards may be granted under the Plan and as to which
outstanding Options and SARs or portions thereof then unexercised shall be
exercisable, to the end that the proportionate interest of the Participant shall
be maintained as before the occurrence of such event; such adjustment in
outstanding Options and SARs shall be made without change in the total price
applicable to the unexercised portion of such Awards and with a corresponding
adjustment in the exercise price per Share.  No such adjustment shall
be made hereunder which shall, within the meaning of any applicable sections of
the Code, constitute a modification, extension or renewal of an Award or a grant
of additional benefits to a participant.

         

        (a) If the
Company is a party to a merger, consolidation, reorganization, or similar
corporate transaction and if, as a result of that transaction, its Shares are
exchanged for:  (i) other securities of the Company and/or (ii)
securities of another company which has assumed the outstanding Awards under the
Plan or has substituted for such Awards its own awards, then each Participant
shall be entitled (subject to the conditions stated herein or in such
substituted awards, if any), in respect of that Participant’s Awards, to rights
with respect to such other securities of the Company or of such other company as
are sufficient in the determination of the Committee to ensure that the value of
the Participant’s Awards immediately before the corporate transaction is
equivalent to the value of such Awards immediately after the transaction, taking
into account the exercise price of Options and SARs before such transaction, the
Fair Market Value of Shares immediately before such transaction and the Fair
Market Value immediately after the transaction of the securities then subject to
that Award (or to the award substituted for that Award, if any).  The
Committee shall make the determinations specified in this subsection (b) in the
event of any transaction described in this subsection (b), and its determination
shall be binding on all Participants.

         

        (b) Upon the
happening of any such corporate transaction, the class and aggregate number of
Shares subject to the Plan which have been heretofore or may be hereafter
granted under the Plan shall be appropriately adjusted to reflect the events
specified in this Section 4.3.

         

        
           

          ARTICLE
5. 

           

          ELIGIBILITY
AND PARTICIPATION

           

        

         

        5.1) Eligibility.  Awards
may be granted only to a person who on the date of grant is an officer, employee
or Contractor of the Company or a Subsidiary of the Company.  All
officers, employees and Contractors of the Company or a Subsidiary are eligible
to receive Awards under the Plan; provided, however, that only employees shall
be eligible for a grant of Incentive Stock Options.  No officer,
employee or Contractor shall have any right to be granted an Award under this
Plan even if previously granted an Award.  

         

        Without
amending the Plan, the Committee may grant Awards to eligible employees who are
foreign nationals on such terms and conditions different from those specified in
this Plan as may, in the judgment of the Committee, be necessary or desirable to
foster and promote achievement of the purposes of the Plan, and in furtherance
of such purposes, the Committee may make such modification, amendments,
procedures, subplans, and the like as may be necessary or advisable to comply
with provisions of laws in other countries in which the Company operates or has
employees.

         

        
          
            
               

            

             

          

          
            A-6

            
              

            

          

          
             

          

        

         

         

        5.2) Actual
Participation.  Awards shall be granted as follows:

         

        (a) The
Committee may grant such type(s) of Awards to such officers, employees and
Contractors of the Company or a Subsidiary at such times as the Committee shall
determine; provided, however, that Incentive Stock Options shall be granted only
to employees.  Awards granted under this subsection shall contain such
terms and conditions may be as determined by the Committee at the time of
grant.

         

        (b) The
maximum number of Shares with respect to which Awards may be granted to any
Participant for any fiscal year of the Company is Five Hundred Sixty-Two
Thousand Five Hundred (562,500) Shares.  For purposes of these maximum
limits, the grant of a Stock Appreciation Right shall be treated as the grant of
an Option for that number of Shares which corresponds to the number of Shares
with respect to which the Stock Appreciation Right is or may become
exercisable.  

         

        

          ARTICLE
6.

           

          STOCK
OPTIONS

           

        

         

        6.1) Grant of
Options.  Subject to the terms and provisions of the Plan,
Options may be granted to Participants at any time and from time to time as
shall be determined by the Committee.  The Committee shall have the
sole discretion, subject to the requirements of the Plan, to determine the
actual number of Shares subject to Options granted to any Participant, and to
determine whether an Option shall be granted as an Incentive Stock Option or a
Nonqualified Stock Option.  The Committee may specify the period of
time over which vesting shall occur, and may in its discretion further provide
for the acceleration of vesting upon the attainment of such goals as the
Committee may determine in its discretion.  The previous provisions of
this Section 6.1 notwithstanding, the aggregate Fair Market Value (determined at
the time the Option is granted) of the Stock with respect to which an Incentive
Stock Option under this Plan or any other plan of the Company or its
Subsidiaries is exercisable for the first time by a Participant during any
calendar year shall not exceed $100,000.

         

        To the
extent that the aggregate Fair Market Value (determined as of the date an
Incentive Stock Option is granted) of the Shares with respect to which the
Incentive Stock Options are exercisable for the first time by a Participant
during any calendar year (under the Plan and any other incentive stock option
plans of the Company or any Subsidiary) exceeds $100,000 (or such other amount
as may be prescribed by the Code from time to time), such excess Options will be
treated as Nonqualified Stock Options.  The determination will be made
by taking Incentive Stock Options into account in the order in which they were
granted.  If such excess only applies to a portion of an Incentive
Stock Option, the Committee, in its discretion, will designate which Shares will
be treated as Shares to be acquired upon exercise of an Incentive Stock
Option.

         

        6.2) Option
Agreement.  Each Option grant shall be evidenced by an Option
agreement that shall specify the Participant, the Option exercise price, the
duration of the Option, the number of Shares to which the Option pertains, and
such other provisions, including vesting, as the Committee shall
determine.  If not specified by the Committee at the time an Option is
granted, such Option shall vest at the rate of 25% on each of the first four
anniversaries of the date of grant.

         

        6.3) Option Exercise
Price.  The Option exercise price per share of Stock covered by
the Option shall be determined by the Committee, but may not be less than the
Fair Market Value of the Stock on the date the Option is
granted; provided, however, that the exercise price of any Incentive Stock
Option granted to an employee who, on the date of execution of the Option
agreement owns more than ten percent (10%) of the total combined voting power of
all series of Stock then outstanding, shall be at least one hundred ten percent
(110%) of the Fair Market Value of a Share on the date of execution of the
Option agreement.

         

        
          
            
               

            

             

          

          
            A-7

            
              

            

          

          
             

          

        

         

        6.4) Duration of
Options.  No Option may be exercised after ten (10) years from
the date on which the Option was granted.  If an earlier expiration
date is not specified by the Committee at the time of grant, each Option shall
expire at the close of business on the tenth (10th) anniversary of the date of
grant.  The previous provisions of this Section 6.4
notwithstanding, each Incentive Stock Option shall expire no later than at the
close of business on the date preceding the tenth (10th) anniversary of the date
of grant, and each Incentive Stock Option granted to an employee who, on the
date of execution of the Option Agreement owns more than ten percent (10%) of
the total combined voting power of all series of Stock then outstanding, shall
expire no later than the close of business on the date preceding the fifth (5th)
anniversary of the date of grant.

         

        6.5) Exercise of
Options.  Options granted under the Plan shall be exercisable
at such times and be subject to such restrictions and conditions as the
Committee shall in each instance approve, which need not be the same for all
Participants.  All Options within a single grant need not be exercised
at one time.

         

        6.6) Manner of Exercise of
Options.  An Option may be exercised in whole or in part, at
such time or times, and with such rights with respect to such Shares of Stock,
as provided in the applicable Option agreement.  An Option shall be
exercisable only by:  (i) written notice to the Company of intent
to exercise the Option with respect to a specified number of Shares of Stock;
(ii) tendering to the Company the original Option agreement (or a
replacement Option agreement satisfactory to the Committee); and
(iii) payment to the Company of the exercise price for the number of Shares
of Stock with respect to which the Option is then exercised.  Except
as set forth in the next sentence, payment of the exercise price may be made in
any of the following manners:

         

        (a) cash,
including certified check, bank draft or postal or express money
order;

         

        (b) personal
check (provided that if payment of the exercise price is made by personal check
and such personal check is not timely paid by the drawer’s bank, such payment
shall be deemed not to have been made and any Shares issued upon such exercise
shall be deemed void and never issued);

         

        (c) by
surrender for cancellation of Shares of Stock which:

         

        
          	
                  (1)  

                	
                  were
      acquired by the Participant (or person exercising the Option) other than
      by exercise of an Option;

                

        

         

        
          	
                  (2)  

                	
                  were
      acquired by the Participant (or person exercising the Option) upon
      exercise of an Option where the Option Shares being surrendered have been
      held by the Participant (or person exercising the Option) for at least six
      months after such exercise; or

                

        

         

        
          	
                  (3)  

                	
                  were
      acquired by the Participant (or person exercising the Option) upon
      exercise of an Option where the Option Shares being surrendered have been
      held by the Participant (or person exercising the Option) for six months
      or less after such exercise but only if the Participant (or person
      exercising the Option) has obtained prior approval of the specific
      surrender (such approval to specify at least the date of grant of the
      Option being exercised, the dates of grant and exercise of the Option
      pursuant to which Shares to be surrendered were acquired, and the number
      of Option Shares to be surrendered) by the
  Committee;

                

        

         

        and which
have a Fair Market Value equal to the exercise price of the Options being
exercised (if the Shares surrendered have a Fair Market Value in excess of the
exercise price of the Options being exercised, the Company shall promptly pay to
the Participant or person exercising the Option an amount equal to the excess of
such Fair Market Value over the exercise price, not to exceed the Fair Market
Value of one Share); or 

         

        (d) by
any other method of payment which the Committee shall approve before, at, or
after the date of grant of such Options.

         

        
          
            
               

            

             

          

          
            A-8

            
              

            

          

          
             

          

        

         

         

        An Option
shall be deemed to have been exercised immediately prior to the close of
business on the date the Company is in receipt of the original Option agreement,
written notice of intent to exercise the Option, and payment for the number of
Shares being acquired upon exercise of the Option.  The Participant
shall be treated for all purposes as the holder of record of the Option Stock as
of the close of business on such date, except where Shares are held for unpaid
withholding taxes.  As promptly as practicable on or after such date,
the Company shall issue and deliver to the Participant a certificate or
certificates for the Option Stock issuable upon such exercise; provided,
however, that such delivery shall be deemed effected for all purposes when the
Company, or the stock transfer agent for the Company, shall have deposited such
certificates in the United States mail, postage prepaid, addressed to the
Participant at the address specified in the written notice of
exercise.

         

        Notwithstanding
the foregoing listing of permissible manners of payment of exercise price, the
Committee shall have the right from time to time to cancel, limit or suspend as
to any one, some, or all Option(s) and as to any one, some, or all Participants,
the right to make payment under any one or more manners of payment (other than
the payment by cash, certified check, bank draft or postal or express money
order), including other methods of payment previously approved by the Committee
under the authority granted in subsection (d) of this Section 6.6.

         

        There
shall be no exercise at any one time for fewer than one hundred (100) Shares (or
such lesser number of Shares as the Committee may from time to time determine in
its discretion) or all of the remaining Shares then purchasable by the
Participant or person exercising the Option.

         

        When
Shares of Stock are issued pursuant to the exercise of an Option, the fact of
such issuance shall be noted on the Option agreement by the Company before the
Option agreement is returned.  When all Shares of Stock covered by the
Option agreement have been issued, or the Option shall expire, the Option
agreement shall be canceled and retained by the Company.

         

        6.7) Restrictions on Stock
Transferability.  The Committee shall impose such restrictions
on any Shares acquired pursuant to the exercise of an Option under the Plan as
it may deem advisable, including, without limitation, restrictions under
applicable Federal securities law, under the requirements of any stock exchange
upon which such Shares are then listed and under any blue sky or state
securities laws applicable to such Shares.

         

        6.8) Termination Due to Death or
Disability.  If a Participant ceases to be an officer, employee
or Contractor by reason of death, any of such Participant’s outstanding Options
which were not vested and exercisable on his date of death shall immediately
become 100% vested, and all of the Participant’s outstanding Options shall be
exercisable at any time prior to the expiration date of the Options, but only
within twelve (12) months following the date of death, whichever period is
shorter.  Options may be exercised by such person or persons as shall
have acquired the Participant’s rights under the Option pursuant to Article 10
or, in the absence of an effective beneficiary designation, by will or by the
laws of descent and distribution.

         

                
If a Participant ceases to be an officer, employee or Contractor by reason of
Disability, any of such Participant’s outstanding Options which were not vested
and exercisable on the date the Committee determines that the Participant has
incurred a Disability shall immediately become 100% vested, and all of the
Participant’s outstanding Options shall be exercisable at any time prior to the
expiration date of the Options, but only within twelve (12) months following the
date of Disability as determined by the Committee, whichever period is
shorter.

         

                Notwithstanding
the foregoing, the Committee may, for any Participant, in its sole discretion,
lengthen the exercise period of any Nonqualified Option for a period which does
not exceed the Option’s expiration date, if it deems this is in the best
interest of the Company.

         

        6.9) Termination for Other
Reasons.  If a Participant ceases to be an officer, employee or
Contractor for any reason other than death, Disability or for
Cause:

         

        
          
            
               

            

             

          

          
            A-9

            
              

            

          

          
             

          

        

                (a) Any of
such Participant’s outstanding Nonqualified Options which were then vested and
exercisable shall be exercisable at any time prior to the expiration date of
such Options, but only within
twelve
(12) months following the date of his termination as an officer, employee or
Contractor, whichever period is shorter, and

         

        (b) Any of
such Participant’s outstanding Incentive Stock Options which were then vested
and exercisable shall be exercisable at any time prior to the expiration date of
such Options, but only within three (3) months following the date of his
termination as an officer, employee or Contractor, whichever period is shorter;
provided, however, that in the event of the Participant’s death during the three
(3) month period following the date of his termination as an officer, employee
or Contractor, and prior to the expiration date of such Options, any such
Options then vested and unexercised may be exercised within twelve (12) months
following the date of termination by the person or persons who shall have
acquired the Participant’s rights thereunder pursuant to Article 10 or, in the
absence of an effective beneficiary designation, by will or the laws of descent
and distribution.

         

               
Any Options not then vested and exercisable shall be forfeited back to the
Company.

         

        If the
Participant’s position as an officer, employee or Contractor terminates for
Cause, all of the Participant’s outstanding Options, whether or not then vested,
shall be immediately forfeited back to the Company.

         

        6.10) Nontransferability/Permitted
Transfers of Options.  Except as permitted by subsections (b)
and (c) below, each Option granted hereunder shall, by its terms, not be
transferable by the Participant and shall be, during the Participant’s lifetime,
exercisable only by the Participant or Participant’s guardian or legal
representative.  Except as permitted by subsections (b) and (c) below,
each Option granted under the Plan and the rights and privileges thereby
conferred shall not be transferred, assigned or pledged in any way (whether by
operation of law or otherwise), and shall not be subject to execution,
attachment or similar process.  Upon any attempt to so transfer,
assign, pledge, or otherwise dispose of the Option, or of any right or privilege
conferred thereby, contrary to the provisions of the Option or the Plan, or upon
levy of any attachment or similar process upon such rights and privileges, the
Option, and such rights and privileges, shall immediately become null and
void.

         

        (a) Each
Incentive Stock Option granted hereunder shall, by its terms, be transferable
only by will or pursuant to the laws of descent and distribution, and shall be,
during the Participant’s lifetime, exercisable only by the Participant or his
guardian or legal representative.

         

        
          	
                            (b)  

                	
                  Each
      Nonqualified Stock Option granted hereunder shall, by its terms, be
      transferable:

                

        

         

        
          	
                  (1)  

                	
                  by
      the Participant to a Participant’s Family Member (or to a trust in which
      the Participant’s Family Member or Family Members have more than fifty
      percent (50%) of the beneficial interest) by a bona fide gift or pursuant
      to a domestic relations order in settlement of marital property
      rights;

                

        

         

        
          	
                  (2)  

                	
                  by
      will or pursuant to the laws of descent and distribution;
    or

                

        

         

        
          	
                  (3)  

                	
                  as
      otherwise permitted pursuant to the rules or regulations adopted by the
      Securities and Exchange Commission (“SEC”) under the Securities Act or the
      interpretations of such rules and regulations as announced by the SEC from
      time to time.

                

        

         

        Any
permitted transfer shall be effective only when accepted by the Company subject
to the Company receiving documentation reasonably satisfactory to it of such
gift, transfer pursuant to domestic relations order, or transfer pursuant to
will or pursuant to the laws descent and distribution.  Upon
effectiveness of any permitted transfer, the rights under any Option shall be
exercisable only by the permitted transferee or such transferee’s guardian or
legal representative.  Except as permitted by this subsection, each
Option granted under the Plan and the rights and privileges thereby conferred
shall not be further transferred, assigned or pledged in any way (whether by
operation of law or otherwise), and shall not be subject to execution,
attachment or similar process.  Upon any attempt to so further
transfer, further assign, pledge, or otherwise further dispose of the Option, or
of any right or privilege conferred thereby, contrary to the provisions of the
Option or the Plan, or upon levy of any attachment or similar process upon such
rights and privileges, the Option, and such rights and privileges, shall
immediately become null and void.  No permitted transfer shall cause
any change in the terms of any Option except the identity of the person(s)
entitled to exercise such Option and to receive the common Stock issuable upon
exercise of the Option.  Without limiting the generality of the
foregoing, any Option shall be subject to termination upon the termination as an
officer, employee or Contractor, death or Disability of the Participant to whom
the Option was originally granted by the Company without reference to the
employment, death or Disability of any permitted transferee.  In the
event of any transfer of an Option, the obligations of the Company owed to the
Participant shall be owed to the transferee and references in this Plan or in
any Option Agreement to the Participant shall, unless the context otherwise
requires, refer to the transferee.

         

        
          
            
               

            

             

          

          
            A-10

            
              

            

          

          
             

          

        

         

         

         

        
          ARTICLE
7.  

           

          STOCK
APPRECIATION RIGHTS

           

        

         

        7.1) Grant of Stock Appreciation
Rights.  Subject to the terms and provisions of the Plan, Stock
Appreciation Rights may be granted to Participants, at the discretion of the
Committee, exercisable in any of the following forms as designated by the
Committee at the time of grant:

         

        (a) in lieu
of Options;

         

        (b) in
addition to Options;

         

        (c) independent
of Options; or

         

        (d) in any
combination of (a), (b), or (c).

         

        The
Committee shall have the sole discretion, subject to the requirements of the
Plan, to determine the actual number of Shares subject to SARs granted to any
Participant.  The Committee may specify the period of time over which
vesting shall occur, and may in its discretion further provide for the
acceleration of vesting upon the attainment of such goals as the Committee may
determine in its discretion.  The exercise price of a SAR shall not,
however, be less than the Fair Market Value of a share of Stock on the date of
grant.

         

        7.2) Stock Appreciation Rights
Agreement.  Each grant of a SAR, and the terms and conditions
governing the exercise of the SAR, shall be evidenced by a SAR
agreement.  If not specified by the Committee at the time a SAR is
granted, such SAR shall vest at the rate of 25% on each of the first four
anniversaries of the date of grant.

         

        Option
Stock with respect to which a SAR shall have been exercised may not be subject
again to an Award under the Plan.

         

        7.3) Exercise of Stock
Appreciation Rights. SARs granted in
lieu of Options may be exercised for all or part of the Shares subject to the
related Option upon the surrender of the related Options representing the right
to purchase an equivalent number of Shares.  The SAR may be exercised
only with respect to the Shares for which its related Option is then
exercisable.

         

        (a) SARs
granted in addition to Options shall be deemed to be exercised upon the exercise
of the related Options.  

         

        (b) Subject
to Section 7.1, SARs granted independently of Options may be exercised upon
whatever terms and conditions the Committee, in its sole discretion, imposes
upon the SARs, including, but not limited to, a corresponding proportional
reduction in previously granted Options.

        
          
            
               

            

             

          

          
            A-11

            
              

            

          

          
             

          

        

        
7.4) Payment
of Stock Appreciation Right Amount.  Upon exercise of
the SAR, the holder shall be entitled to receive payment of an amount
determined by multiplying:

        
        (a) The
difference between:  (i)  the Fair Market Value of a Share
on the date of exercise and (ii) the exercise price established by the Committee
on the date of grant; by

         

        (b) The
number of Shares with respect to which the SAR is exercised.

         

        7.5) Form and Timing
of Payment.  Payment to a Participant, upon SAR
exercise, will be made in cash or stock, at the discretion of the Committee, as
soon as administratively possible after exercise.

         

        7.6) Term of Stock Appreciation
Rights.  The term of a SAR granted under the Plan shall be
determined by the Committee, but shall not exceed ten (10) years.  If
not specified by the Committee at the time of grant, each SAR shall expire at
the close of business on the date preceding the tenth (10th) anniversary of the
date of grant.

         

        7.7) Termination Due to Death or
Disability.  If a Participant ceases to be an officer, employee
or Contractor by reason of death, any of such Participant’s outstanding SARs
which were not vested and exercisable on his date of death shall immediately
become 100% vested, and all of the Participant’s outstanding SARs shall be
exercisable at any time prior to the expiration date of the SARs, but only
within twelve (12) months following the date of death, whichever period is
shorter.  SARs may be exercised by such person or persons as shall
have acquired the Participant’s rights under the SAR pursuant to Article 10 or,
in the absence of an effective beneficiary designation, by will or by the laws
of descent and distribution.

         

        If a
Participant ceases to be an officer, employee or Contractor by reason of
Disability, any of such Participant’s outstanding SARs which were not vested and
exercisable on the date the Committee determines that the Participant has
incurred a Disability shall immediately become 100% vested, and all of the
Participant’s outstanding SARs shall be exercisable at any time prior to the
expiration date of the SARs, but only within twelve (12) months following the
date of Disability as determined by the Committee, whichever period is
shorter.

         

        Notwithstanding
the foregoing, the Committee may, for any Participant, in its sole discretion,
lengthen the exercise period of any SAR for a period which does not exceed the
SAR’s expiration date, if it deems this is in the best interest of the
Company.

         

        7.8) Termination for Other
Reasons.  If  Participant ceases to be an officer,
employee or Contractor for any reason other than death, Disability or for Cause,
any of such Participant’s outstanding SARs which were then vested and
exercisable shall be exercisable at any time prior to the expiration date of
such SARs, but only within twelve (12) months following the date of his
termination as an officer, employee or Contractor, whichever period is
shorter.  Any SARs not then vested and exercisable shall be forfeited
back to the Company.

         

        If the
Participant’s position as an officer, employee or Contractor shall terminate for
Cause, all of the Participant’s outstanding SARs, whether or not then vested,
shall be immediately forfeited back to the Company.

         

        7.9) Nontransferability of Stock
Appreciation Rights.  No SAR granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
and all SARs granted to a Participant under the Plan shall be exercisable during
his lifetime only by such Participant.

        
 

        
          ARTICLE
8. 

           

          RESTRICTED
STOCK

           

        

         

        8.1) Grant of Restricted
Stock.  Subject to the terms and provisions of the Plan, the
Committee, at any time and from time to time, may grant Shares of Restricted
Stock under the Plan to such Participants, in such amounts, with such purchase
price (if any) and under such other conditions as it shall
determine.  The Committee shall specify the period of time over which
the lapse of a Period of Restriction established pursuant to Sections 8.2, 8.3,
and 8.4 (i.e., the period of time over which such Shares of Restricted Stock
shall vest) shall occur, and may in its discretion further provide for the
acceleration of the lapse of a Period of Restriction upon the attainment of such
goals as the Committee may determine in its discretion.  Restricted
Stock shall at all times for purposes of the Plan be valued at its Fair Market
Value without regard to restrictions.  If not specified by the
Committee at the time of grant of Restricted Stock, the Period of Restriction
shall lapse with respect to 25% of the number of shares of Restricted Stock
granted as of each of the first four anniversaries of the date of
grant.

        
          
            
               

            

             

          

          
            A-12

            
              

            

          

          
             

          

        

         

         

        8.2) Restricted Stock
Agreement.  Each Restricted Stock grant shall be evidenced by a
Restricted  Stock agreement that shall specify the Period(s) of
Restriction, the number of Shares of Restricted Stock granted, and such other
provisions as the Committee shall determine.

         

        8.3) Transferability.  Except
as otherwise provided in this Article 8, the Shares of Restricted Stock granted
hereunder may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the termination of the applicable Period of
Restriction.  Upon any attempt to transfer, assign, pledge, or
otherwise dispose of Shares of Restricted Stock, or any right or privilege
conferred thereby, contrary to the provisions of the Restricted Stock agreement
or the Plan, upon levy of an attachment or similar process upon such rights or
privileges, the Shares of Restricted Stock shall immediately become forfeited to
the Company.  All rights with respect to the Restricted Stock granted
to a Participant under the Plan shall be exercisable during his lifetime only by
such Participant.

         

        8.4) Other
Restrictions.  The Committee may impose such other restrictions
on any Shares of Restricted Stock granted pursuant to the Plan as it may deem
advisable, and the Committee may legend certificates representing Restricted
Stock to give appropriate notice of such restrictions.

         

        8.5) Certificate  Legend.  In
addition to any legends placed on certificates pursuant to Section 8.4, each
certificate representing Shares of Restricted Stock granted pursuant to the Plan
shall bear the following, or substantially similar, legend:

         

        “The sale
or other transfer of the shares of stock represented by this certificate,
whether voluntary, involuntary, or by operation of law, is subject to certain
restrictions on transfer set forth in The Shuffle Master, Inc. 2004 Equity
Incentive Plan, in the rules and administrative procedures established pursuant
to such Plan, and in a Restricted Stock agreement dated __________.  A
copy of the Plan, such rules and procedures, and such Restricted Stock agreement
may be obtained from the Secretary of Shuffle Master, Inc.”

         

        8.6) Removal of
Restrictions.  Except as otherwise provided in this Article 8,
Shares of Restricted Stock granted under the Plan shall become freely
transferable by the Participant after the last day of the Period of
Restriction.  Once the Shares are released from the restrictions, the
Participant shall be entitled to have the legend required by Section 8.5 removed
from his Stock certificate.

         

        8.7) Voting  Rights;
Shareholder Rights Plan.  During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder may exercise
full voting rights with respect to those Shares, and shall be covered by the
provisions of Company’s Shareholder Rights Plan.

         

        8.8) Dividends and Other
Distributions.  During the Period of Restriction, Participants
holding Shares of Restricted Stock granted hereunder shall be entitled to
receive all dividends and other distributions paid with respect to those Shares
while they are so held.  If any such dividends or distributions are
paid in Shares, those Shares shall be subject to the same restrictions on
transferability as the Shares of Restricted Stock with respect to which they
were paid.

         

        8.9) Termination Due to Death or
Disability.  If a Participant ceases to be an officer, employee
or Contractor because of his death or his Disability during a Period of
Restriction, any remaining period of the Period of Restriction applicable to the
Restricted Stock shall automatically terminate and, except as otherwise provided
in Section 8.4, the Shares of Restricted Stock shall thereafter be free of
restrictions and be fully transferable.

         

        
          
            
               

            

             

          

          
            A-13

            
              

            

          

          
             

          

        

         

        8.10) Termination for Other
Reasons.  If a Participant ceases to be an officer, employee or
Contractor for any reason other than for death or Disability during a Period of
Restriction, then all Shares of Restricted Stock still subject to restrictions
as of the date of such termination shall automatically be forfeited and returned
to the Company and any amounts paid by the Participant to the Company for the
purchase of such Shares shall be returned to the Participant; provided, however,
that the Committee, in its sole discretion, may waive or modify the automatic
forfeiture of any or all such Shares of Restricted Stock as it deems
appropriate.

         

        8.11) Election Under Code Section
83(b).  As a condition to the receipt of Restricted Stock, the
Participant shall be deemed to have agreed, and shall confirm such agreement in
writing as requested by the Committee, that he will not exercise the election
permitted under Code Section 83(b) without informing the Company of his election
within ten (10) days of such election.  If a Participant fails to give
timely notification to the Company, the Committee may, in its discretion, cause
the forfeiture of some portion of the Shares of Restricted Stock with respect to
which the election was made.

         

        

           ARTICLE
8A.

           

          RESTRICTED
STOCK UNITS

        

        
 

        8A.1) Awards of Restricted Stock
Units.  Subject
to the terms and conditions of the Plan, the Committee may, at any time and from
time to time, make awards of Restricted Stock Units under the Plan to
Participants in such amounts and subject to such terms and conditions as the
Committee shall deem appropriate, provided, however that such terms and
conditions do not violate Code Section 409A.

        

        8A.2) Restricted Stock Unit
Agreement.  All Awards of Restricted Stock Units made pursuant
to this Plan will be evidenced by a Restricted Stock Unit agreement that will be
in such form (which need not be the same for each Participant) as the Committee
will from time to time approve, and will comply with and be subject to the terms
and conditions of this Plan.

        

        8A.3) Terms of Restricted Stock
Unit Awards.  Restricted Stock Units shall be subject to such
terms and conditions as the Committee may impose, provided, however, that such
terms and conditions do not violate Code Section 409A.  These terms
and conditions may include restrictions based upon completion of a specified
period of service with the Company or upon completion of the performance goals
as set out in advance in the Participant's individual Restricted Stock Unit
agreement.  The terms of Restricted Stock Units may vary from
Participant to Participant and between groups of Participants.  At the
time of grant, the Committee shall specify the date or dates on which the
Restricted Stock Units shall become fully vested and nonforfeitable, and may
specify such conditions to vesting as it deems appropriate.  At the
time of grant, the Committee shall specify the maturity date applicable to each
grant of Restricted Stock Units which shall be no earlier than the vesting date
or dates of the Award and may be determined at the election of the grantee if
such grantee executes an Election Form that complies with Section 409A at the
time of such grant.  If no such election is made, the vested
Restricted Stock Unit (or any portion thereof) shall (subject to applicable law)
mature and be paid out within thirty (30) days following vesting of the award or
any portion thereof.  On the maturity date, the Company
shall  transfer to the Participant one unrestricted, fully
transferable share of Stock for each Restricted Stock Unit scheduled to be paid
out on such date and not previously forfeited.

        

        8A.4) Nontransferability of
Restricted Stock Units.  No RSU granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated
prior to the maturity date.

        

        8A.5) Dividends and Other
Distributions.  At any time prior to the maturity date of a
Restricted Stock Unit Award granted hereunder, the holder of such RSU shall be
entitled to receive from the Company the equivalent value of dividends or other
distributions payable with respect to that number of Shares subject to such
RSU.   If any such dividends or other distributions are paid in
Shares, a Participant’s RSU shall be adjusted to reflect such dividend or
distribution with any additional RSUs being subject to the same terms and
conditions as the underlying RSU.

        
          
            
               

            

             

          

          
            A-14

            
              

            

          

          
             

          

        

         

        
          ARTICLE
9. 

           

          CHANGE
IN CONTROL

           

           

        

        9.1) Acceleration of Vesting;
Termination of Period of Restriction.  Notwithstanding any
requirements for vesting, time of exercisability or Period of Restriction of any
Award as set forth in any Award agreement or as otherwise determined by the
Committee, any Award granted under this Plan, to the extent not already
terminated, shall become vested and immediately exercisable, and any Period of
Restriction shall terminate, upon a Change in Control.

         

        9.2) No Limitation on Exercise
Period.  Nothing in Section 9.1 shall limit or shorten the
period during which any Option or SAR is exercisable.  If an Option or
SAR provides for exercisability during a limited period after a contingency is
satisfied, and the initial exercisability of the Option or SAR is accelerated by
means of Section 9.1, the expiration of such Option or SAR shall be delayed
until the contingency has been satisfied and the Option or SAR shall thereafter
remain exercisable for the balance of the period initially contemplated by the
grant.  (For example, if an Option or SAR is granted providing that it
shall be exercisable for a period of twelve (12) months after a triggering
event, and such Option or SAR is subject to the provisions of Section 9.1
providing that it shall become immediately exercisable, it shall thereafter
remain exercisable until such triggering event has occurred and twelve (12)
months has passed.)

         

        9.3) No Extension of Exercise
Period.  Any acceleration or extension of exercisability
pursuant to Section 9.1 shall not extend such exercisability beyond the
expiration or maximum term set forth in the Award agreement.

         

        9.4) Limitation on
Payments.  Notwithstanding anything in this Article 9 to
the contrary, if the Company is then subject to the provisions of Code
Section 280G, and if the acceleration of the vesting of an Option, SAR or
RSU, the termination of a Period of Restriction or the payment of cash in
exchange for all or part of an Option or SAR (which acceleration or payment
could be deemed a "payment" within the meaning of Code Section 280G(b)(2)),
together with any other payments which the Participant has the right to receive
from the Company or any company that is a member of an "affiliated group" (as
defined in Code Section 1504(a) without regard to Code
Section 1504(b)) of which the Company is a member, would constitute a
"parachute payment" (as defined in Code Section 280G(b)(2)), then the
payments to the Participant shall be reduced to the largest amount as will
result in no portion of such payments being subject to the excise tax imposed by
Code Section 4999 (with payments scheduled later in time being reduced
first, and those scheduled earlier in time being reduced last); provided,
however, that if such Participant is subject to a separate agreement with the
Company or a Subsidiary which specifically provides that payments attributable
to one or more forms of employee stock incentives or to payments made in lieu of
employee stock incentives will not reduce any other payments under such
agreement, even if it would constitute an excess parachute payment, then the
limitations of this Section 9.4 will, to that extent, not
apply.

         

        

          ARTICLE
10. 

           

          BENEFICIARY
DESIGNATION

        Each
Participant under the Plan may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively and who may include
a trustee under a will or living trust) to whom any benefit under the Plan is to
be paid in case of his death.  Each designation will revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Participant in writing
with the Committee during his lifetime.  In the absence of any such
designation or if all designated beneficiaries predecease the Participant,
benefits remaining unpaid at the Participant’s death shall be paid pursuant to
the Participant’s will or by the laws of descent and distribution.

         

        
          
            
               

            

             

          

          
            A-15

            
              

            

          

          
             

          

        

         

        
          ARTICLE
11. 

           

          RIGHTS
OF PARTICIPANTS

           

           

        

        11.1) Participation.  No
officer, employee or Contractor shall have a right to be selected as a
Participant, or, having been so selected, to be selected again as a
Participant.

         

        11.2) No Implied
Rights.  Neither the establishment of the Plan nor any
amendment thereof shall be construed as giving any Participant, beneficiary, or
any other person any legal or equitable right unless such right shall be
specifically provided for in the Plan or conferred by specific action of the
Committee in accordance with the terms and provisions of the
Plan.  Except as expressly provided in this Plan, neither the Company
nor any of its Subsidiaries shall be required or be liable to make any payment
under the Plan.

         

        11.3) No Right to Company
Assets.  Neither the Participant nor any other person shall
acquire, by reason of the Plan, any right in or title to any assets, funds or
property of the Company or any of its Subsidiaries whatsoever including, without
limiting the generality of the foregoing, any specific funds, assets, or other
property which the Company or any of its Subsidiaries, in its sole discretion,
may set aside in anticipation of a liability hereunder.  Any benefits
which become payable hereunder shall be paid from the general assets of the
Company or the applicable subsidiary.  The Participant shall have only
a contractual right to the amounts, if any, payable hereunder unsecured by any
asset of the Company or any of its Subsidiaries.  Nothing contained in
the Plan constitutes a guarantee by the Company or any of its Subsidiaries that
the assets of the Company or the applicable subsidiary shall be sufficient to
pay any benefit to any person.

         

        

          ARTICLE
12.

           

          AMENDMENT,
MODIFICATION, AND TERMINATION

           

        

         

        12.1) Amendment, Modification, and
Termination.  This Plan shall terminate at such time as the
Board of Directors may determine; provided, however, that no Award may be
granted under the Plan after the tenth anniversary of its effective
date.  Any termination shall not affect any Awards then outstanding
under the Plan.  At any time and from time to time, the Board may
amend or modify the Plan.  If the approval of the shareholders of the
Company is required by the Code, by the insider trading rules of Section 16 of
the Exchange Act, by any national securities exchange or system on which the
Stock is then listed or reported (such as Nasdaq), or by any regulatory body
having jurisdiction with respect hereto, no amendment or modification
which:

         

        (a) increases
the total amount of Stock which may be issued under this Plan, except as
provided in Section 4.3; or

         

        (b) changes
the class of Persons eligible to participate in the Plan;

         

        (c) materially
increases the cost of the Plan or materially increase the benefits to
Participants;

         

        (d) extends
the maximum period after the date of grant during which Options or Stock
Appreciation Rights may be exercised; or

         

        (e) re-prices
any previously granted Award by lowering the exercise price or canceling any
previously granted Options or Stock Appreciation Rights with a subsequent
replacement or re-grant of a new award of the same or different type or a
payment in cash at a time when the exercise price of the applicable Option or
Stock Appreciation Rights exceeds the Fair Market Value of the underlying
Shares, except as provided in Section 4.3; 

         

        
          shall be
effective prior to the date that such amendment or modification has been
approved by both the Board and the shareholders of the
Company.

        

        
          
            
               

            

             

          

          
            A-16

            
              

            

          

          
             

          

        

         

         

        12.2) Awards Previously
Granted.  No termination, amendment or modification of the Plan
shall, other than pursuant to Section 4.3 hereof, in any manner adversely affect
any Award theretofore granted under the Plan, without the written consent of the
Participant.  Except as required pursuant to Section 4.3, no
previously granted Option shall be re-priced by lowering the exercise price
thereof, nor shall a previously granted Option be cancelled with a subsequent
replacement or re-grant of that same Option with a lower exercise price, without
prior approval of the shareholders of the Company.

         

        

          ARTICLE
13.

           

          GOVERNMENT
REGULATION AND REGISTRATION OF SHARES

           

        

         

        13.1) General.  The
Plan, and the grant and exercise of Awards hereunder, and the Company’s
obligations under Awards, shall be subject to all applicable Federal and state
laws, rules and regulations and to the approvals of any regulatory or
governmental agency as may be required.

         

        13.2) Compliance as an SEC
Registrant.  The obligations of the Company with respect to
Awards shall be subject to all applicable laws, rules and regulations and such
approvals by any governmental agencies as may be required, including without
limitation, the Securities and Exchange Commission, and the rules and
regulations of any securities exchange or association on which the Company’s
common stock may be listed or quoted.  For so long as the common stock
of the Company is registered under the Exchange Act, the Company shall use its
reasonable efforts to comply with any legal requirements (a) to maintain a
registration statement in effect under the Securities Act with respect to all
Shares of the applicable class or series of Stock that may be issued to
Participants under the Plan and (b) to file in a timely manner all reports
required to be filed by it under the Exchange Act.

        
 

        
          ARTICLE
14.

           

          SUCCESSORS

        All
obligations of the Company under the Plan, with respect to Awards granted
hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation or otherwise, of all or substantially all of the business
and/or assets of the Company.

         

        

          ARTICLE
15. 

           

          MISCELLANEOUS

         

        15.1) Rights as
Shareholder.  A Participant granted a SAR or RSU under the Plan
shall not by reason thereof have any rights of a shareholder of the Company, and
a Participant granted an Option under the Plan shall not by reason thereof have
any right of a shareholder of the Company with respect to the Shares covered by
such Option until the exercise of such Option is effective.

         

        15.2) No Obligation to Exercise
Option or SAR; Maintenance of Relationship.  The granting of an
Option or SAR shall impose no obligation upon the Participant to exercise such
Option or SAR. Nothing in the Plan or in any Award agreement entered into
pursuant hereto shall be construed to confer upon a Participant any right to
employment, service as a consultant, consultant or as a member of the Company's
Board of Directors or interfere in any way with the right of the Company to
terminate his or her relationship with the Company at any time.

         

        
          
            
               

            

             

          

          
            A-17

            
              

            

          

          
             

          

        

        15.3) Withholding
Taxes.  Whenever, under the Plan, Shares are to be issued in
connection with an RSU or upon exercise of the Options granted hereunder and
prior to the delivery of any certificate or certificates for said shares by the
Company, and whenever a Period of Restriction lapses with respect to Restricted
Stock, the Company shall have the right to require the Participant to remit to
the Company an amount sufficient to satisfy any federal and state withholding or
other taxes resulting therefrom. In the event that withholding taxes are not
paid by the date of exercise of an Option, the maturity of an RSU or the lapse
of a Period of Restriction, to the extent permitted by law, the Company shall
have the right, but not the obligation, to cause such withholding taxes to be
satisfied by reducing the number of Shares deliverable upon the exercise of the
Option, by forfeiting Shares of Restricted Stock, or by offsetting such
withholding taxes against amounts otherwise due from the Company to the
Participant as director's fee or otherwise. If withholding taxes are paid by
reduction of the number of Shares deliverable to Participant or the forfeiture
of Shares of Restricted Stock, such Shares shall be valued at the Fair Market
Value as of the business day preceding the date of exercise of the Option or the
lapse of the Period of Restriction.

         

        15.4) Purchase for Investment;
Rights of Holder on Subsequent Registration.  Unless the Shares
to be issued upon exercise of an Option or granted as Restricted Stock have been
effectively registered under the Securities Act, the Company shall be under no
obligation to issue any such Shares unless the Participant shall give a written
representation and undertaking to the Company which is satisfactory in form and
scope to counsel for the Company and upon which, in the opinion of such counsel,
the Company may reasonably rely, that he is acquiring the Shares to be issued to
him for his or her own account as an investment and not with a view to, or for
sale in connection with, the distribution of any such Shares, and that he or she
will make no transfer of the same except in compliance with any rules and
regulations in force at the time of such transfer under the Securities Act, or
any other applicable law, and that if Shares are issued without such
registration a legend to this effect may be endorsed on the securities so issued
and a “stop transfer” restriction may be placed in the stock transfer records of
the Company.  In the event that the Company shall, nevertheless, deem
it necessary or desirable to register under the Securities Act or other
applicable statutes any such Shares, or to qualify any such Shares for exemption
from the Securities Act or other applicable statutes, then the Company shall
take such action at its own expense and may require from each participant such
information in writing for use in any registration statement, prospectus,
preliminary prospectus, or offering circular as is reasonably necessary for such
purpose and may require reasonable indemnity to the Company and its officers and
directors from such holder against all losses, claims, damages, and liabilities
arising from such use of the information so furnished and caused by any untrue
statement of any material fact required to be stated therein or necessary to
make the statement therein not misleading in light of the circumstances under
which they were made.

         

        15.5) Modification of Outstanding
Awards.  The Committee may accelerate the exercisability of an
outstanding Option or SAR, or reduce the Period of Restriction of outstanding
Restricted Stock, and may authorize modification of any outstanding Award with
the consent of the Participant when and subject to such conditions as are deemed
to be in the best interests of the Company and in accordance with the purposes
of the Plan; provided however, that except as provided in Section 4.3
hereof, no previously granted Option or SAR will be repriced by lowering the
exercise price thereof, nor will a previously granted Option or SAR be cancelled
with a subsequent replacement or regrant of a new award of the same or different
type or a payment in cash at a time when the exercise price of the applicable
Option or SAR exceeds the Fair Market Value of the underlying Shares, without
the prior approval of the shareholders of the Company, and further provided that
such modifications may only be taken to the extent permitted by Code Section
409A.

         

        15.6) Liquidation.  Upon
the complete liquidation of the Company, any unexercised Options or SARs
theretofore granted under this Plan shall be deemed canceled, except as
otherwise provided in Section 4.3 in connection with a merger,
consolidation or reorganization of the Company.

         

        15.7) Restrictions on Issuance of
Shares.  Notwithstanding provisions of this Plan to the
contrary, the Company may delay the issuance of Shares covered by the exercise
of any Option and the delivery of a certificate for such Shares until one of the
following conditions shall be satisfied:

         

        (a) The
Shares with respect to which the Option has been exercised are at the time of
the issue of such Shares effectively registered under applicable Federal and
state securities acts as now in force or hereafter amended; or

         

        
          
            
               

            

             

          

          
            A-18

            
              

            

          

          
             

          

        

        (b) A
no-action letter in respect of the issuance of such Shares shall have been
obtained by the Company from the Securities and Exchange Commission and any
applicable state securities commissioner; or

         

        (c) Counsel
for the Company shall have given an opinion, which opinion shall not be
unreasonably conditioned or withheld, that such Shares are exempt from
registration under applicable federal and state securities acts as now in force
or hereafter amended.  It is intended that all exercise of Options
shall be effective, and the Company shall use its best efforts to bring about
compliance with the above conditions within a reasonable time, except that the
Company shall be under no obligation to cause a registration statement or a
post-effective amendment to any registration statement to be prepared at its
expense solely for the purpose of covering the issue of Shares in respect of
which any Option may be exercised.

         

        15.8) Certain Limitations on
Awards to Ensure Compliance with Code Section 409A.  For
purposes of this Plan, references to an award term or event (including any
authority or right of the Company or a Participant) being "permitted" under Code
Section 409A mean, for a 409A Award, that the term or event will not cause the
Participant to be liable for payment of interest or a tax penalty under Code
Section 409A and, for a Non-409A Award, that the term or event will not cause
the Award to be treated as subject to Code Section 409A.  Other
provisions of the Plan notwithstanding, the terms of any 409A Award and any
Non-409A Award, including any authority of the Company and rights of the
Participant with respect to the Award, shall be limited to those terms permitted
under Code Section 409A, and any terms not permitted under Code Section 409A
shall be automatically modified and limited to the extent necessary to conform
with Code Section 409A.  For this purpose, other provisions of the
Plan notwithstanding, the Company shall have no authority to accelerate
distributions relating to 409A Awards in excess of the authority permitted under
Code Section 409A, and any distribution subject to Code Section 409A(a)(2)(A)(i)
(separation from service) to a "key employee" as defined under Code Section
409A(a)(2)(B)(i), shall not occur earlier than the earliest time permitted under
Code Section 409A(a)(2)(B)(i).  Notwithstanding any other provisions
of the Plan, the Company does not guarantee to any Participant or any other
person that any Award intended to be exempt from Section 409A of the Code shall
be so exempt, nor that any Award intended to comply with Section 409A of the
Code shall so comply, nor will the Company indemnify, defend or hold harmless
any individual with respect to the tax consequences of any such
failure.

         

        

          ARTICLE
16.

           

          REQUIREMENTS
OF LAW

           

        

         

        16.1) Requirements of
Law.  The granting of Awards and the issuance of Shares of
Stock under this Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

         

        16.2) Governing
Law.  The Plan, and all agreements hereunder, to the extent not
covered by Federal law, shall be construed in accordance with and governed by
the laws of the State of Minnesota without giving effect to the principles of
the conflicts of laws.

         

        
          
            
               

            

             

          

          
            A-19termsdoc09-a2.htm

     

     

     

     

    
Exhibit 4.1

    
 

    CITIBANK
CREDIT CARD ISSUANCE TRUST

    

    Citiseries

    Class
2009-A2 Notes

    

    Issuer
Certificate

    Pursuant to Sections 202 and
301(h) of the Indenture

    

    Reference
is made to the Indenture, dated as of September 26, 2000, as amended by
Amendment No. 1 thereto dated as of November 14, 2001, each between Citibank
Credit Card Issuance Trust (the "Issuer") and Deutsche Bank Trust Company
Americas, as trustee (the "Indenture").  Capitalized terms used herein
that are not otherwise defined have the meanings set forth in the Indenture. All
references herein to designated Sections are to the designated Sections of the
Indenture.

    

    Section
301(h) provides that the Issuer may from time to time create a tranche of Notes
either by or pursuant to an Issuer Certificate setting forth the principal terms
thereof.  Pursuant to this Issuer Certificate, there is hereby created
a tranche of Notes having the following terms:

    

    Series
Designation:  Citiseries.  This series is included in
Group 1.

    

    Tranche
Designation:  $1,250,000,000 Floating Rate Class 2009-A2 Notes
of May 2012 (Legal Maturity Date May 2014) (hereinafter, the "Class 2009-A2
Notes")

    

    Currency:  The Class
2009-A2 Notes will be payable, and denominated, in Dollars.

    

    Denominations:  The
Class 2009-A2 Notes will be issuable in minimum denominations of $100,000 and
multiples of $1,000 in excess of that amount.

    

    Issuance Date:  June
9, 2009

    

    Initial Principal
Amount:  $1,250,000,000

    

    Issue
Price:  100%

    

    Interest Rate:  The
Class 2009-A2 Notes will accrue interest with respect to any interest period at
a per annum rate equal to the Class 2009-A2 Note Rate for such interest period,
calculated on the basis of the actual number of days in such interest period
divided by 360.  The "Class 2009-A2 Note Rate" means, with respect to
the first interest period, 1.90281% per annum and, with respect to each interest
period thereafter, a per annum rate equal to LIBOR for such interest period plus
1.55%.

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    The
Issuer will determine LIBOR for each applicable interest period on the second
business day before the beginning of that interest period.  For
purposes of calculating LIBOR, a business day is any day on which dealings in
deposits in U.S. Dollars are transacted in the London interbank
market.

    

    "LIBOR" means, as of any date
of determination, the rate for deposits in U.S. Dollars for the Designated
Maturity (commencing on the first day of the relevant interest period) which
appears on the Reuters Screen LIBOR01 Page as of 11:00 a.m., London time, on
such date. If such rate does not appear on the Reuters Screen LIBOR01 Page, the
rate for that day will be determined on the basis of the rates at which deposits
in U.S. Dollars are offered by the Reference Banks at approximately 11:00 a.m.,
London time, on that day to prime banks in the London interbank market for the
Designated Maturity (commencing on the first day of the relevant interest
period). The Issuer will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate for that day will be the arithmetic mean of
the quotations. If fewer than two quotations are provided as requested, the rate
for that day will be the arithmetic mean of the rates quoted by major banks in
New York City, selected by the Issuer, at approximately 11:00 a.m., New York
City time, on that day for loans in U.S. Dollars to leading European banks for a
period of the Designated Maturity (commencing on the first day of the relevant
interest period).

    

    "Reuters Screen LIBOR01 Page"
means the display page currently so designated on the Reuters Monitor Money
Rates service (or such other page as may replace that page on that service or
any successor service for the purpose of displaying comparable rates or
prices).

    

    "Designated Maturity" means
one month.

    

    "Reference Banks" means four
major banks in the London interbank market selected by the Issuer.

    

    Scheduled Interest Payment
Dates:  The 15th day of each month, beginning July
2009.

    

    Each
payment of interest on the Class 2009-A2 Notes will include all interest accrued
from and including the preceding Interest Payment Date -- or, for the first
interest period, from and including the Issuance Date -- to and including the
day preceding the current Interest Payment Date, plus any interest accrued but
not previously paid.

    

    The first
deposit targeted to be made to the Interest Funding sub-Account for the Class
2009-A2 Notes will be on the July 14, 2009 Interest Deposit Date and in an
amount equal to $2,378,512.50.

    

    

    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

    

    Expected Principal Payment
Date:  May 15, 2012

    

    Legal Maturity
Date:  May 15, 2014

    

    Monthly Principal
Date:  For the month in which the Expected Principal Payment
Date occurs, May 15, 2012, and for each other month, the 15th day of such month,
or if such day is not a Business Day, the next following Business
Day.

    

    Required Subordinated Amount of Class
B Notes:  $74,786,375

    

    Required Subordinated Amount of Class
C Notes:  $99,715,125

    

    Controlled Accumulation
Amount:  $104,166,667

    

    Form of Notes:  The
Class 2009-A2 Notes will be issued as Global Notes.  The Global Notes
will initially be registered in the name of Cede & Co., as nominee of The
Depository Trust Company, and will be exchangeable for individual Notes only in
accordance with the provisions of Section 204(c).

    

    Additional Issuances of Class 2009-A2
Notes:  The Issuer may at any time and from time to time issue
additional Class 2009-A2 Notes, subject to the satisfaction of (i) the
conditions precedent set forth in Section 311(a) and (ii) the following
conditions:

    

    
      	
               
      

            	
              (a)
      the Issuer has obtained written confirmation from each Rating Agency that
      there will be no Ratings Effect with respect to the then outstanding Class
      2009-A2 Notes as a result of the issuance of such additional Class 2009-A2
      Notes;

            

    

    

    
      	
               
      

            	
              (b)
      as of the date of issuance of the additional Class 2009-A2 Notes, all
      amounts due and owing to the Holders of the then outstanding Class 2009-A2
      Notes have been paid and there is no Nominal Liquidation Amount Deficit
      with respect to the then outstanding Class 2009-A2
  Notes;

            

    

    

    
      	
               
      

            	
              (c)
      the additional Class 2009-A2 Notes will be fungible with the original
      Class 2009-A2 Notes for federal income tax
  purposes;

            

    

    

    
      	
               
      

            	
              (d)
      if Holders of the then outstanding Class 2009-A2 Notes have benefit of a
      Derivative Agreement, the Issuer will have obtained a Derivative Agreement
      for the benefit of the Holders of the additional Class 2009-A2 Notes;
      and

            

    

    

    

    
      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

    

    
      	
               
      

            	
              (e)
      the ratio of the Controlled Accumulation Amount to the Initial Dollar
      Principal Amount of the Class 2009-A2 Notes, including the additional
      Class 2009-A2 Notes, will be equal to the ratio of the Controlled
      Accumulation Amount (before giving effect to the additional issuance) to
      the Initial Dollar Principal Amount of the Class 2009-A2 Notes, excluding
      the additional Class 2009-A2 Notes.

            

    

    

    As of the
date of issuance of additional Class 2009-A2 Notes, the Outstanding Dollar
Principal Amount and Nominal Liquidation Amount of the Class 2009-A2 Notes will
be increased to reflect the Initial Dollar Principal Amount of the additional
Class 2009-A2 Notes.

    

    Any
outstanding Class 2009-A2 Notes and any additional Class 2009-A2 Notes will be
equally and ratably entitled to the benefits of the Indenture without
preference, priority or distinction.

    

    Optional Redemption Provisions other
than Section 1202 "Clean-Up Call":  None

    

    Notice of Early Redemption
Event: The Issuer shall notify the Federal Reserve Bank of New York, its
custodian and all Registered Noteholders of the Class 2009-A2 Notes of the
occurrence of any Early Redemption Event when it delivers notice of such Early
Redemption Event to the Trustee and the Rating Agencies pursuant to Section
1203.

    

    Additional Early Redemption Events or
changes to Early Redemption Events:  None

    

    Additional Events of Default or
changes to Events of Default:  None

    

    Business Day: means any day
other than (a) a Saturday or Sunday or (b) any other day on which national
banking associations or state banking institutions in New York, New York or
South Dakota, or any other state in which the principal executive offices of any
Additional Seller are located, are authorized or obligated by law, executive
order or governmental decree to be closed.

    

    Securities Exchange
Listing:  Application will be made to list the Class 2009-A2
Notes on the Irish Stock Exchange.

    

    
      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

    

    The Class
2009-A2 Notes shall have such other terms as are set forth in the form of Note
attached hereto as Exhibit A.  Pursuant to Section 202, the form of
Note attached hereto has been approved by the Issuer.

    

    

    
      	 
      	
              CITIBANK
      CREDIT CARD ISSUANCE TRUST

            
	 
      	
              By    Citibank
      (South Dakota), National Association,

            
	 
      	
              as Managing
      Beneficiary

            
	 
      	 
      
	 
      	 
      
	 
      	
              /s/ Douglas C.
      Morrison

            
	 
      	
              ----------------------------------------

            
	 
      	
              Douglas C.
    Morrison

            
	 
      	
              Vice
  President

            

    

    

    Dated:  June
9, 2009

    

    

    
      
        
           

        

        
          5

          
            

          

        

        
           

        

      

    

    

    Citiseries

     

    Class
2009-A2 Notes

    

    Reference
is made to the resolutions adopted by the Board of Directors of Citibank (South
Dakota), National Association ("Citibank (South Dakota)") on April 26, 2000, as
amended on September 25, 2001 and October 25, 2006. The resolutions authorize
Citibank (South Dakota) from time to time to issue and sell, or to arrange for
or participate in the issuance and sale of, one or more series and/or classes of
pass-through certificates, participation certificates, commercial paper, notes
or other securities representing ownership interests in, or backed by, pools of
credit card receivables or interests therein ("Receivables") in an aggregate
principal amount such that up to $125,000,000,000 of such certificates,
commercial paper, notes or securities are outstanding at any one time and to
sell, transfer, convey or assign Receivables to trusts or other special purpose
entities in connection therewith on such terms as to be determined by the
Citibank (South Dakota) Pricing and Loan Committee (the "Pricing and Loan
Committee").

    

    The
undersigned, a duly authorized member of the Pricing and Loan Committee, on
behalf of such Pricing and Loan Committee, does hereby certify that the terms of
the tranche of Notes set forth in and to be created by the preceding Issuer
Certificate and the increase in the Invested Amount of the Collateral
Certificate resulting from the issuance of such Notes have been approved by such
Pricing and Loan Committee. In addition, the following underwriting/selling
agent terms with respect to this tranche of Notes have been approved by such
Pricing and Loan Committee:

    

    Issue
Price:  100%

    

    Underwriting
Commission:  0.25%

    

    Proceeds
to Issuer:  99.75%

    

    Representative
of the Underwriters:  Citigroup Global Markets Inc.

    

    

    The
preceding Issuer Certificate and this certification of Pricing and Loan
Committee approval shall be, continuously from the time of their execution,
official records of Citibank (South Dakota).

    

    

    

    
      	
              /s/
      Douglas C. Morrison

              ----------------------------------------------

            
	
              Douglas
      C. Morrison

            
	
              Member
      of the Pricing and Loan Committee

            
	
              Citibank
      (South Dakota), National
Association

            

    

    

    

    Dated:  June
9, 2009

    

    
      
        
           

        

        
          6

          
            

          

        

        
           

        

      

    

    

    Exhibit
A

    

    FORM
OF

    

    CITISERIES

    

    FLOATING
RATE CLASS 2009-A2 NOTES OF MAY 2012

    (Legal
Maturity Date May 2014)

    

    

    
      	
              $___,000,000

            	 
      	
              REGISTERED

            
	
              CUSIP
      No. 17305E EN1

            	 
      	
              No.
      R-

            

    

    

    UNLESS
THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.

    

    THE
PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN AND IN THE INDENTURE
REFERRED TO BELOW. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

    

    

    CITIBANK
CREDIT CARD ISSUANCE TRUST

    

    CITISERIES

    

    FLOATING
RATE CLASS 2009-A2 NOTES OF MAY 2012

    (Legal
Maturity Date May 2014)

    

    

    CITIBANK
CREDIT CARD ISSUANCE TRUST, a trust formed and existing under the laws of the
State of Delaware (including any successor, the "Issuer"), for value received,
hereby promises to pay to CEDE & CO., or its registered assigns, the
principal amount of ________ HUNDRED MILLION DOLLARS
($___,000,000).  The Expected Principal Payment Date for this Note is
May 15, 2012.  The Legal Maturity Date for this Note is May 15,
2014.

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    The
Issuer hereby promises to pay interest on this Note on the 15th day of each
month, beginning July 2009, until the principal of this Note is paid or made
available for payment, subject to certain limitations set forth in the
Indenture.  Interest will accrue on the outstanding principal amount
of this Note for each interest period in an amount equal to the product of (i)
the actual number of days in such interest period divided by 360, (ii) a rate
per annum equal to the Class 2009-A2 Note Rate for such interest period, and
(iii) the outstanding principal amount of this Note as of the preceding Interest
Payment Date (after giving effect to any payments of principal made on the
preceding Interest Payment Date) or, in the case of the first Interest Payment
Date, the initial principal amount of this Note.  The Class 2009-A2
Note Rate will be determined as provided in the Indenture.

    

    If any
Interest Payment Date or Principal Payment Date of this Note falls on a day that
is not a Business Day, the required payment of interest or principal will be
made on the following Business Day.

    

    This Note
is one of the Citiseries, Class 2009-A2 Notes issued pursuant to the Indenture,
dated as of September 26, 2000 (as amended and otherwise modified from time to
time, the "Indenture") between the Issuer and Deutsche Bank Trust Company
Americas, as Trustee. For purposes of this Note, the term "Indenture" includes
any supplemental indenture or Issuer Certificate relating to the Citiseries,
Class 2009-A2 Notes. This Note is subject to all of the terms of the Indenture.
All terms used in this Note that are not otherwise defined herein and that are
defined in the Indenture will have the meanings assigned to them
therein.

    

    The
principal of and interest on this Note are payable in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.

    

    Each
Holder by acceptance of this Note, and each owner of a beneficial interest in
this Note by acceptance of a beneficial interest in this Note, is deemed to have
consented to such amendments to the Pooling and Servicing Agreement and other
operative documents as are necessary to permit the Seller to retain sale
treatment for accounting purposes of the transfer of assets to the Master Trust,
in accordance with the provisions of Financial Accounting Standards Board SFAS
No. 140.

    

    Reference
is made to the further provisions of this Note set forth on the reverse hereof,
which will have the same effect as though fully set forth on the face of this
Note.

    

    Unless
the certificate of authentication hereon has been executed by the Trustee whose
name appears below by manual signature, this Note will not

    

    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

    

    be
entitled to any benefit under the Indenture, or be valid or obligatory for any
purpose.

    

    IN
WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or
in facsimile, by an Issuer Authorized Officer.

    

    
      	 
      	
              CITIBANK
      CREDIT CARD ISSUANCE TRUST

            
	 
      	 
      
	 
      	
              By:       CITIBANK
      (SOUTH DAKOTA),

            
	 
      	
              NATIONAL
      ASSOCIATION,

            
	 
      	
              as
      Managing Beneficiary of

            
	 
      	
              Citibank
      Credit Card Issuance Trust

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:
      __________________________________

            
	 
      	
              Douglas C.
    Morrison

            
	 
      	
              Vice
  President

            

    

    

    Dated:  June
9, 2009

    

    

    

    

    TRUSTEE'S
CERTIFICATE OF AUTHENTICATION

    

    

    This is
one of the Notes designated above and referred to in the within mentioned
Indenture.

    

    

    
      	 
      	
              DEUTSCHE
      BANK TRUST COMPANY AMERICAS,

            
	 
      	
              as
      Trustee under the Indenture

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:
      _________________________________

            
	 
      	
              Authorized
    Signatory

            

    

    

    Dated:  June
9, 2009

    

    

    

    

    

    
      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

    

    REVERSE
OF NOTE

    

    This Note
is one of a duly authorized issue of Notes of the Issuer, designated as its
Citiseries Floating Rate Class 2009-A2 Notes of May 2012 (Legal Maturity Date
May 2014) (herein called the "Notes"), all issued under an Indenture, to which
Indenture reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Trustee and the Holders of the
Notes.

    

    This Note
ranks pari passu with all other Class A Notes of the same series, as set forth
in the Indenture. This Note is secured to the extent, and by the collateral,
described in the Indenture.

    

    The
Issuer will pay interest on overdue interest as set forth in the Indenture to
the extent lawful.

    

    Each
Holder by acceptance of this Note, and each owner of a beneficial interest in
this Note by acceptance of a beneficial interest in this Note, agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer or the Trustee on the Notes, against the Issuer, the Issuer
Trustee, Citibank (South Dakota), the Trustee or any affiliate, officer,
employee or director of any of them, and the obligation of the Issuer to pay
principal of or interest on this Note or any other amount payable to the Holder
of this Note will be subject to Article V of the Indenture.

    

    Each
Holder by acceptance of this Note, and each owner of a beneficial interest in
this Note by acceptance of a beneficial interest in this Note, agrees that this
Note is intended to be debt of Citibank (South Dakota) for federal, state and
local income and franchise tax purposes, and agrees to treat this Note
accordingly for all such purposes, unless otherwise required by a taxing
authority.

    

    Each
Holder by acceptance of this Note, and each owner of a beneficial interest in
this Note by acceptance of a beneficial interest in this Note, agrees that it
will not at any time institute against the Issuer, or join in any institution
against the Issuer of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceeding, or other proceedings under any United States federal
or state bankruptcy or similar law in connection with any obligations relating
to this Note, the Indenture or any Derivative Agreement.

    

    This Note
and the Indenture will be construed in accordance with and governed by the laws
of the State of New York.

    

    No
reference herein to the Indenture and no provision of this Note or of the
Indenture will alter or impair the obligation of the Issuer, which is absolute
and unconditional, to pay the principal of and interest on this Note at the
times, place and rate, and in the coin or currency, herein
prescribed.

    

    Certain
amendments may be made to the Indenture without the consent of the Holder of
this Note.  This Note must be surrendered for final payment of
principal and interest.

    

    

    

    
      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

    

    ASSIGNMENT

    

    

    Social
Security or taxpayer I.D. or other identifying number of
assignee:____________________

    

    FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto

    

    ___________________________________________________________________

    

    ___________________________________________________________________

    (name and
address of assignee)

    

    the
within Note and all rights thereunder, and hereby irrevocably constitutes and
appoints __________________________________________________________, attorney,
to transfer said Note on the books kept for registration thereof, with full
power of substitution in the premises.

    

    Dated:  ____________________________

    

    _________________________*

    
      	
               
      

            	
              Signature
      Guaranteed:

            

    

    

    

    

    

    ----------------

    *    NOTE:
The signature to this assignment must correspond with the name of the registered
owner as it appears on the face of the within Note in every particular without
alteration, enlargement or any change whatsoever.

    

    

    

    

    

    

    5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00159-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00159-of-00352.parquet"}]]