FSI INTERNATIONAL INC
EX-10.1 1997 OMNIBUS STOCK PLAN
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>c63711ex10-1.txt
<DESCRIPTION>EX-10.1 1997 OMNIBUS STOCK PLAN
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                                                                    EXHIBIT 10.1

                             FSI INTERNATIONAL, INC.
                             1997 OMNIBUS STOCK PLAN
                      (as amended and restated April 2001)


         1.       Purpose. The purpose of the FSI International, Inc. 1997
Omnibus Stock Plan (the "Plan") is to motivate key personnel to produce a
superior return to the shareholders of the Company by offering such personnel an
opportunity to realize Stock appreciation, by facilitating Stock ownership and
by rewarding them for achieving a high level of corporate financial performance.
The Plan is also intended to facilitate recruiting and retaining key personnel
of outstanding ability by providing an attractive capital accumulation
opportunity. Additionally, the Plan is intended to provide Outside Directors
with an opportunity to acquire a proprietary interest in the Company, to
compensate Outside Directors for their contribution to the Company and to aid in
attracting and retaining Outside Directors.

         2.       Definitions.

                  2.1      The terms defined in this Section are used (and
capitalized) elsewhere in the Plan.

                           (a) "Affiliate" means any corporation that is a
                  "parent corporation" or "subsidiary corporation" of the
                  Company, as those terms are defined in Code Section 424(e) and
                  (f), or any successor provisions.

                           (b) "Agreement" means (i) a written contract
                  consistent with the terms of the Plan entered into between the
                  Company or an Affiliate and a Participant, (ii) containing the
                  terms and conditions of an Award in such form and not
                  inconsistent with this Plan as the Committee shall approve
                  from time to time, together with all amendments thereto, which
                  amendments may be unilaterally made by the Company (with the
                  approval of the Committee) unless such amendments are deemed
                  by the Committee to be materially adverse to the Participant
                  and not required as a matter of law.

                           (c) "Award" or "Awards" means a grant made under this
                  Plan in the form of Restricted Stock, Options, Stock
                  Appreciation Rights, Performance Units, Stock or any other
                  stock-based award.

                           (d) "Board" means the Board of Directors of the
                  Company.

                           (e) "Code" means the Internal Revenue Code of 1986,
                  as amended and in effect from time to time or any successor
                  statute.

                           (f) "Committee" means the two or more Non-Employee
                  Directors designated by the Board to administer the Plan under
                  Plan Section 3.1 and constituted so as to permit grants
                  thereby to comply with Exchange Act Rule 16b-3.

                           (g) "Company" means FSI International, Inc., a
                  Minnesota corporation, or the successor to all or
                  substantially all of its businesses by merger, consolidation,
                  purchase of assets or otherwise.

                           (h) "Effective Date" means the date specified in Plan
                  Section 12.1.

                           (i) "Employee" means an employee (including an
                  officer or director who is also an employee) of the Company or
                  an Affiliate.

                           (j) "Event" means any of the following:
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                           (1) The acquisition by any individual, entity or
                  group (within the meaning of Exchange Act Sections 13(d)(3) or
                  14(d)(2)) of beneficial ownership (within the meaning of
                  Exchange Act Rule 13d-3) of 30% or more of either (i) the then
                  outstanding shares of common stock of the Company (the
                  "Outstanding Company Common Stock") or (ii) the combined
                  voting power of the then outstanding voting securities of the
                  Company entitled to vote generally in the election of the
                  Board (the "Outstanding Company Voting Securities"); provided,
                  however, that the following acquisitions shall not constitute
                  an Event:

                               (A) any acquisition of common stock or voting
                           securities of the Company directly from the Company,

                               (B) any acquisition of common stock or voting
                           securities of the Company by the Company or any of
                           its wholly-owned Subsidiaries,

                               (C) any acquisition of common stock or voting
                           securities of the Company by any employee benefit
                           plan (or related trust) sponsored or maintained by
                           the Company or any of its Subsidiaries, or

                               (D) any acquisition by any corporation with
                           respect to which, immediately following such
                           acquisition, more than 70% of, respectively, the then
                           outstanding shares of common stock of such
                           corporation and the combined voting power of the then
                           outstanding voting securities of such corporation
                           entitled to vote generally in the election of
                           directors is then beneficially owned, directly or
                           indirectly, by all or substantially all of the
                           individuals and entities who were the beneficial
                           owners, respectively, of the Outstanding Company
                           Common Stock and Outstanding Company Voting
                           Securities immediately prior to such acquisition in
                           substantially the same proportions as was their
                           ownership, immediately prior to such acquisition, of
                           the Outstanding Company Common Stock and Outstanding
                           Company Voting Securities, as the case may be;

                           (2) Individuals who, as of the Effective Date,
                  constitute the Board (the "Incumbent Board") cease for any
                  reason to constitute at least a majority of the Board;
                  provided, however, that any individual becoming a director of
                  the Board subsequent to the Effective Date whose election, or
                  nomination for election by the Company's shareholders, was
                  approved by a vote of at least a majority of the directors
                  then comprising the Incumbent Board shall be considered a
                  member of the Incumbent Board, but excluding, for this
                  purpose, any such individual whose initial assumption of
                  office occurs as a result of an actual or threatened election
                  contest that was (or, if threatened, would have been) subject
                  to Exchange Act Rule 14a-11 or its successor provision;

                           (3) Approval by the shareholders of the Company of a
                  reorganization, merger, consolidation or statutory exchange of
                  Outstanding Company Voting Securities, unless immediately
                  following such reorganization, merger, consolidation or
                  exchange, all or substantially all of the individuals and
                  entities who were the beneficial owners, respectively, of the
                  Outstanding Company Common Stock and Outstanding Company
                  Voting Securities immediately prior to such reorganization,
                  merger, consolidation or exchange beneficially own, directly
                  or indirectly, more than 70% of, respectively, the then
                  outstanding shares of common stock and the combined voting
                  power of the then outstanding voting securities entitled to
                  vote generally in the election of directors, as the case may
                  be, of the corporation resulting from such reorganization,
                  merger, consolidation or exchange in substantially the same
                  proportions as was their ownership, immediately prior to such
                  reorganization, merger, consolidation or exchange, of the
                  Outstanding Company Common Stock and Outstanding Company
                  Voting Securities, as the case may



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                  be; or

                           (4) Approval by the shareholders of the Company of
                  (i) a complete liquidation or dissolution of the Company or
                  (ii) the sale or other disposition of all or substantially all
                  of the assets of the Company, other than to a corporation with
                  respect to which, immediately following such sale or other
                  disposition, more than 70% of, respectively, the then
                  outstanding shares of common stock of such corporation and the
                  combined voting power of the then outstanding voting
                  securities of such corporation entitled to vote generally in
                  the election of directors is then beneficially owned, directly
                  or indirectly, by all or substantially all of the individuals
                  and entities who were the beneficial owners, respectively, of
                  the Outstanding Company Common Stock and Outstanding Company
                  Voting Securities immediately prior to such sale or other
                  disposition in substantially the same proportion as was their
                  ownership, immediately prior to such sale or other
                  disposition, of the Outstanding Company Common Stock and
                  Outstanding Company Voting Securities, as the case may be.

         Notwithstanding the above, an Event shall not be deemed to occur with
respect to a recipient of an Award if the acquisition of the 30% or greater
interest referred to in paragraph (1) is by a group, acting in concert, that
includes that recipient of an Award or if at least 30% of the then outstanding
common stock or combined voting power of the then outstanding voting securities
(or voting equity interests) of the surviving corporation or of any corporation
(or other entity) acquiring all or substantially all of the assets of the
Company shall be beneficially owned, directly or indirectly, immediately after a
reorganization, merger, consolidation, statutory share exchange or disposition
of assets referred to in paragraphs (3) or (4) by a group, acting in concert,
that includes that recipient of an Award.

                  (k) "Exchange Act" means the Securities Exchange Act of 1934,
         as amended and in effect from time to time, or any successor statute.

                  (l) "Exchange Act Rule 16b-3" means Rule 16b-3 promulgated by
         the Securities and Exchange Commission under the Exchange Act as now in
         force and in effect from time to time or any successor regulation.

                  (m) "Fair Market Value" as of any date means, unless otherwise
         expressly provided in the Plan:

                      (i) the closing price of a Share on the date immediately
                  preceding that date or, if no sale of Shares shall have
                  occurred on that date, on the next preceding day on which a
                  sale of Shares occurred

                          (A) on the composite tape for New York Stock Exchange
                      listed shares, or

                          (B) if the Shares are not quoted on the composite tape
                      for New York Stock Exchange listed shares, on the
                      principal United States Securities Exchange registered
                      under the Exchange Act on which the Shares are listed, or

                          (C) if the Shares are not listed on any such exchange,
                      on the National Association of Securities Dealers, Inc.
                      Automated Quotations National Market System, or

                      (ii) if clause (i) is inapplicable, the mean between the
                  closing "bid" and the closing "asked" quotation of a Share on
                  the date immediately preceding that date, or, if no closing
                  bid or asked quotation is made on that date, on the next
                  preceding day on which a closing bid and asked quotation is
                  made, on the National Association of




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                  Securities Dealers, Inc. Automated Quotations System or any
                  system then in use, or

                           (iii) if clauses (i) and (ii) are inapplicable, what
                  the Committee determines in good faith to be 100% of the fair
                  market value of a Share on that date, using such criteria as
                  it shall determine, in its sole discretion, to be appropriate
                  for valuation.

         However, if the applicable securities exchange or system has closed for
the day at the time the event occurs that triggers a determination of Fair
Market Value, whether the grant of an Award, the exercise of an Option or Stock
Appreciation Right or otherwise, all references in this paragraph to the "date
immediately preceding that date" shall be deemed to be references to "that
date". In the case of an Incentive Stock Option, if this determination of Fair
Market Value is not consistent with the then current regulations of the
Secretary of the Treasury, Fair Market Value shall be determined in accordance
with those regulations. The determination of Fair Market Value shall be subject
to adjustment as provided in Plan Section 16.

                  (n) "Fundamental Change" shall mean a dissolution or
         liquidation of the Company, a sale of substantially all of the assets
         of the Company, a merger or consolidation of the Company with or into
         any other corporation, regardless of whether the Company is the
         surviving corporation, or a statutory share exchange involving capital
         stock of the Company.

                  (o) "Incentive Stock Option" means any Option designated as
         such and granted in accordance with the requirements of Code Section
         422 or any successor provision.

                  (p) "Insider" as of a particular date means any person who, as
         of that date is an officer of the Company as defined under Exchange Act
         Rule 16a-1(f) or its successor provision.

                  (q) "Non-Employee Director" means a member of the Board who is
         considered a non-employee director within the meaning of Exchange Act
         Rule 16b-3(b)(3) or its successor provision.

                  (r) "Non-Statutory Stock Option" means an Option other than an
         Incentive Stock Option.

                  (s) "Option" means a right to purchase Stock, including both
         Non-Statutory Stock Options and Incentive Stock Options.

                  (t) "Outside Director" means a director who is not an
         Employee.

                  (u) "Participant" means a person or entity to whom an Award is
         or has been made in accordance with the Plan.

                  (v) "Performance Cycle" means the period of time as specified
         in an Agreement over which Performance Units are to be earned.

                  (w) "Performance Units" means an Award made pursuant to Plan
         Section 11.

                  (x) "Plan" means this FSI International, Inc. 1997 Omnibus
         Stock Plan, as may be amended and in effect from time to time.

                  (y) "Restricted Stock" means Stock granted under Plan Section
         7 so long as such Stock remains subject to one or more restrictions.

                  (z) "Section 16" or "Section 16(b)" means Section 16 or
         Section 16(b), respectively, of the Exchange Act or any successor
         statute and the rules and regulations promulgated thereunder as in
         effect and as amended from time to time.



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                           (aa) "Share" means a share of Stock.

                           (bb) "Stock" means the common stock, no designated
                  par value, of the Company.

                           (cc) "Stock Appreciation Right" means a right, the
                  value of which is determined in relation to the appreciation
                  in value of Shares pursuant to an Award granted under Plan
                  Section 10.

                           (dd) "Subsidiary" means a "subsidiary corporation",
                  as that term is defined in Code Section 424(f), or any
                  successor provision.

                           (ee) "Successor" with respect to a Participant means
                  the legal representative of an incompetent Participant, and if
                  the Participant is deceased the estate of the Participant or
                  the person or persons who may, by bequest or inheritance, or
                  pursuant to the terms of an Award, acquire the right to
                  exercise an Option or Stock Appreciation Right or to receive
                  cash and/or Shares issuable in satisfaction of an Award in the
                  event of the Participant's death.

                           (ff) "Term" means the period during which an Option
                  or Stock Appreciation Right may be exercised or the period
                  during which the restrictions or terms and conditions placed
                  on Restricted Stock or any other Award are in effect.

                           (gg) "Transferee" means any member of the
                  Participant's immediate family (i.e., his or her children,
                  step-children, grandchildren and spouse) or to one or more
                  trusts for the benefit of such family members or partnerships
                  in which such family members are the only partners.

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

         3.       Administration and Indemnification.

                  3.1      Administration.

                           (a) The Committee shall administer the Plan. The
                  Committee shall have exclusive power to (i) make Awards, (ii)
                  determine when and to whom Awards will be granted, the form of
                  each Award, the amount of each Award (except as to the amount
                  of the Initial Outside Director Option and the Annual Outside
                  Director Option, as provided in Plan Section 9.3), and any
                  other terms or conditions of each Award consistent with the
                  Plan, and (iii) determine whether, to what extent and under
                  what circumstances, Awards may be settled, paid or exercised
                  in cash, Shares or other Awards, or other property or
                  canceled, forfeited or suspended. Each Award shall be subject
                  to an Agreement which has been authorized by the Committee.

                           (b) Notwithstanding any provision of the Plan to the
                  contrary, in order to facilitate compliance with the tax,
                  securities, foreign exchange, probate or other applicable
                  provisions of the laws in other countries in which the Company
                  or its Affiliates operate or have key employees or
                  non-employee directors, the Committee, in its discretion,
                  shall have the power and authority to (i) determine which (if
                  any) Employees, Directors, and/or Consultants rendering
                  services or employed outside the U.S. are eligible to
                  participate in the Plan or to receive any type of award
                  hereunder; (ii) determine which non-U.S.-based Affiliates or
                  operations (e.g., branches, representative offices)
                  participate in the Plan or any type of award hereunder; (iii)
                  modify the terms and conditions of any awards made to such
                  Employees, Directors, and/or Consultants, or with respect to
                  such non-U.S.-based Affiliates or operations; and (iv)
                  establish sub-plans, modify methods of exercise, modify
                  payment restrictions on sale or transfer of shares and other
                  terms and




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<PAGE>   6

                  procedures to the extent deemed necessary or desirable by the
                  Committee to comply with applicable laws of the non-U.S.
                  jurisdiction.

                           (c) Solely for purposes of determining and
                  administering Awards to Participants who are not Insiders, the
                  Committee may delegate all or any portion of their authority
                  under the Plan to one or more persons who are not Non-Employee
                  Directors.

                           (d) To the extent within its discretion and subject
                  to Plan Sections 15 and 16, other than price, the Committee
                  may amend the terms and conditions of any outstanding Award.

                           (e) It is the intent that the Plan and all Awards
                  granted pursuant to it shall be administered by the Committee
                  so as to permit the Plan and Awards to comply with Exchange
                  Act Rule 16b-3, except in such instances as the Committee, in
                  its discretion, may so provide. If any provision of the Plan
                  or of any Award would otherwise frustrate or conflict with the
                  intent expressed in this Section 3.1(e), that provision to the
                  extent possible shall be interpreted and deemed amended in the
                  manner determined by the Committee so as to avoid the
                  conflict. To the extent of any remaining irreconcilable
                  conflict with this intent, the provision shall be deemed void
                  as applicable to Insiders to the extent permitted by law and
                  in the manner deemed advisable by the Committee.

                           (f) The Committee's interpretation of the Plan and of
                  any Award or Agreement made under the Plan and all related
                  decisions or resolutions of the Board or Committee shall be
                  final and binding on all parties with an interest therein.
                  Consistent with its terms, the Committee shall have the power
                  to establish, amend or waive regulations to administer the
                  Plan. In carrying out any of its responsibilities, the
                  Committee shall have discretionary authority to construe the
                  terms of the Plan and any Award or Agreement made under the
                  Plan.

                  3.2      Indemnification. Each person who is or shall have
been a member of the Committee, or of the Board, and any other person to whom
the Committee delegates authority under the Plan, shall be indemnified and held
harmless by the Company, to the extent permitted by law, against and from any
loss, cost, liability or expense that may be imposed upon or reasonably incurred
by such person in connection with or resulting from any claim, action, suit or
proceeding to which such person may be a party or in which such person may be
involved by reason of any action taken or failure to act, made in good faith,
under the Plan and against and from any and all amounts paid by such person in
settlement thereof, with the Company's approval, or paid by such person in
satisfaction of any judgment in any such action, suit or proceeding against such
person, provided such person shall give the Company an opportunity, at the
Company's expense, to handle and defend the same before such person undertakes
to handle and defend it on such person's own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such person or persons may be entitled under the Company's Articles of
Incorporation or By-laws, as a matter of law, or otherwise, or any power that
the Company may have to indemnify them or hold them harmless.

         4.       Shares Available Under the Plan.

                           (a) The number of Shares available for distribution
                  under this Plan shall not exceed 3,100,000 (subject to
                  adjustment pursuant to Plan Section 16).

                           (b) Any Shares subject to the terms and conditions of
                  an Award under this Plan that are not used because the terms
                  and conditions of the Award are not met may again be used for
                  an Award under the Plan. But Shares with respect to which a
                  Stock Appreciation Right has been exercised whether paid in
                  cash and/or in Shares may not again be awarded under this
                  Plan.

                           (c) Any unexercised or undistributed portion of any
                  terminated, expired, exchanged, or forfeited Award, or any
                  Award settled in cash in lieu of Shares (except as provided in
                  Plan Section 4(b)) shall be available for further Awards.



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                           (d) For the purposes of computing the total number of
                  Shares granted under the Plan, the following rules shall apply
                  to Awards payable in Shares where appropriate:


                               (i)   each Option shall be deemed to be the
                           equivalent of the maximum number of Shares that may
                           be issued upon exercise of the particular Option;


                               (ii)  an Award (other than an Option) payable in
                           some other security shall be deemed to be equal to
                           the number of Shares to which it relates;


                               (iii) where the number of Shares available under
                           the Award is variable on the date it is granted, the
                           number of Shares shall be deemed to be the maximum
                           number of Shares that could be received under that
                           particular Award; and


                               (iv)  where two or more types of Awards (all of
                           which are payable in Shares) are granted to a
                           Participant in tandem with each other, such that the
                           exercise of one type of Award with respect to a
                           number of Shares cancels at least an equal number of
                           Shares of the other, each such joint Award shall be
                           deemed to be the equivalent of the maximum number of
                           Shares available under the largest single Award.

                  Additional rules for determining the number of Shares granted
under the Plan may be made by the Committee, as it deems necessary or desirable.

                           (e) No fractional Shares may be issued under the
                  Plan; however, cash shall be paid in lieu of any fractional
                  Share in settlement of an Award.

                           (f) The maximum number of Shares that may be awarded
                  to a Participant in any calendar year in the form of Options
                  is 100,000 and the maximum number of Shares that may be
                  awarded to a Participant in any calendar year in the form of
                  Stock Appreciation Rights is 100,000.

         5.       Eligibility. Participation in the Plan shall be limited to
Employees and to individuals or entities who are not Employees but who provide
services to the Company or an Affiliate, including services provided in the
capacity of a consultant, advisor or director. The granting of Awards is solely
at the discretion of the Committee, except that Incentive Stock Options may only
be granted to Employees and Awards to Outside Directors are subject to the
limits of Section 9.3(g).

         6.       General Terms of Awards.

                  6.1      Amount of Award. Each Agreement shall set forth the
number of Shares of Restricted Stock, Stock or Performance Units subject to the
Agreement, or the number of Shares to which the Option subject to the Agreement
applies or with respect to which payment upon the exercise of the Stock
Appreciation Right subject to the Agreement is to be determined, as the case may
be, together with such other terms and conditions applicable to the Award as
determined by the Committee acting in its sole discretion.

                  6.2      Term. Each Agreement, other than those relating
solely to Awards of Shares without restrictions, shall set forth the Term of the
Option, Stock Appreciation Right, Restricted Stock or other Award or the
Performance Cycle for the Performance Units, as the case may be. Acceleration of
the expiration of the applicable Term is permitted, upon such terms and
conditions as shall be set forth in the Agreement, which may, but need not,
include without limitation, acceleration resulting from the occurrence of an
Event or in the event of the Participant's death or retirement. Acceleration of
the Performance Cycle of Performance Units shall be subject to Plan Section
11.2.

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<PAGE>   8

                  6.3      Transferability. Except as provided in this Section,
during the lifetime of a Participant to whom an Award is granted, only that
Participant (or that Participant's legal representative) may exercise an Option
or Stock Appreciation Right, or receive payment with respect to Performance
Units or any other Award. No Award of Restricted Stock (prior to the expiration
of the restrictions), Options, Stock Appreciation Rights or Performance Units or
other Award may be sold, assigned, transferred, exchanged or otherwise
encumbered other than pursuant to a qualified domestic relations order as
defined in the Code or Title 1 of the Employee Retirement Income Security Act
("ERISA") or the rules thereunder; any attempted transfer in violation of this
Section 6.3 shall be of no effect. Notwithstanding the immediately preceding
sentence, the Committee, in an Agreement or otherwise at its discretion, may
provide (i) that the Award subject to the Agreement shall be transferable to a
Successor in the event of a Participant's death, or (ii) that the Award (other
than Incentive Stock Options) may be transferable to a Transferee. Any Award
held by a Transferee shall continue to be subject to the same terms and
conditions that were applicable to that Award immediately prior to the transfer
thereof to the Transferee.

                  6.4      Termination of Employment. No Option or Stock
Appreciation Right may be exercised by a Participant, all Restricted Stock held
by a Participant or any other Award then subject to restrictions shall be
forfeited, and no payment with respect to Performance Units for which the
applicable Performance Cycle has not been completed shall be made, if the
Participant's employment or other relationship with the Company and its
Affiliates shall be voluntarily terminated or involuntarily terminated with or
without cause prior to the expiration of the Term of the Option, Stock
Appreciation Right, Restricted Stock or other Award, or the completion of the
Performance Cycle, as the case may be, except as, and to the extent, provided in
the Agreement applicable to that Award. An Award may be exercised by, or paid
to, a Transferee or the Successor of a Participant following the death of the
Participant to the extent, and during the period of time, if any, provided in
the applicable Agreement.

                  6.5      Rights as Shareholder. Each Agreement shall provide
that a Participant shall have no rights as a shareholder with respect to any
securities covered by an Award if and until the date the Participant becomes the
holder of record of the Stock, if any, to which the Award relates.

         7.       Restricted Stock Awards.

                           (a) An Award of Restricted Stock under the Plan shall
                  consist of Shares subject to restrictions on transfer and
                  conditions of forfeiture, which restrictions and conditions
                  shall be included in the applicable Agreement. The Committee
                  may provide for the lapse or waiver of any such restriction or
                  condition based on such factors or criteria as the Committee,
                  in its sole discretion, may determine.

                           (b) Except as otherwise provided in the applicable
                  Agreement, each Stock certificate issued with respect to an
                  Award of Restricted Stock shall either be deposited with the
                  Company or its designee, together with an assignment separate
                  from the certificate, in blank, signed by the Participant, or
                  bear such legends with respect to the restricted nature of the
                  Restricted Stock evidenced thereby as shall be provided for in
                  the applicable Agreement.

                           (c) The Agreement shall describe the terms and
                  conditions by which the restrictions and conditions of
                  forfeiture upon awarded Restricted Stock shall lapse. Upon the
                  lapse of the restrictions and conditions, Shares free of
                  restrictive legends, if any, relating to such restrictions
                  shall be issued to the Participant or a Successor or
                  Transferee.

                           (d) A Participant or a Transferee with a Restricted
                  Stock Award shall have all the other rights of a shareholder
                  including, but not limited to, the right to receive dividends
                  and the right to vote the Shares of Restricted Stock.

                           (e) No more than 100,000 of the total number of
                  Shares available for Awards under the Plan shall be issued
                  during the term of the Plan as Restricted Stock. This
                  limitation shall be calculated pursuant to the applicable
                  provisions of Plan Sections 4 and 16.



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<PAGE>   9

         8.       Other Awards. The Committee may from time to time grant Stock
and other Awards under the Plan including without limitations those Awards
pursuant to which Shares are or may in the future be acquired, Awards
denominated in Stock units, securities convertible into Stock and phantom
securities. The Committee, in its sole discretion, shall determine the terms and
conditions of such Awards provided that such Awards shall not be inconsistent
with the terms and purposes of this Plan. The Committee may, at its sole
discretion, direct the Company to issue Shares subject to restrictive legends
and/or stop transfer instructions that are consistent with the terms and
conditions of the Award to which the Shares relate.

         No more than 25,000 of the total number of Shares available for Awards
under the Plan shall be issued during the term of the Plan in the form of Stock
without restrictions.

         9.       Stock Options.

                  9.1      Terms of All Options.

                           (a) An Option shall be granted pursuant to an
                  Agreement as either an Incentive Stock Option or a
                  Non-Statutory Stock Option. The purchase price of each Share
                  subject to an Option shall be determined by the Committee and
                  set forth in the Agreement, but shall not be less than 100% of
                  the Fair Market Value of a Share as of the date the Option is
                  granted (except as provided in Plan Section 19).

                           (b) The purchase price of the Shares with respect to
                  which an Option is exercised shall be payable in full at the
                  time of exercise, provided that to the extent permitted by
                  law, the Agreement may permit some or all Participants to
                  simultaneously exercise Options and sell the Shares thereby
                  acquired pursuant to a brokerage or similar relationship and
                  use the proceeds from the sale as payment of the purchase
                  price of the Shares. The purchase price may be payable in
                  cash, in Shares having a Fair Market Value as of the date the
                  Option is exercised equal to the purchase price of the Shares
                  being purchased pursuant to the Option, or a combination
                  thereof, as determined by the Committee and provided in the
                  Agreement but no fractional Shares will be issued or accepted.

                           (c) The Committee may provide, in an Agreement or
                  otherwise, that a Participant who exercises an Option and pays
                  the Option price in whole or in part with Shares then owned by
                  the Participant will be entitled to receive another Option
                  covering the same number of shares tendered and with a price
                  of no less than Fair Market Value on the date of grant of such
                  additional Option ("Reload Option"). Unless otherwise provided
                  in the Agreement, a Participant, in order to be entitled to a
                  Reload Option, must pay with Shares that have been owned by
                  the Participant for at least the preceding 180 days.

                           (d) Each Option shall be exercisable in whole or in
                  part on the terms provided in the Agreement. In no event shall
                  any Option be exercisable at any time after the expiration of
                  its Term. When an Option is no longer exercisable, it shall be
                  deemed to have lapsed or terminated.

                  9.2      Incentive Stock Options. In addition to the other
                  terms and conditions applicable to all Options:

                           (i) the aggregate Fair Market Value (determined as of
                  the date the Option is granted) of the Shares with respect to
                  which Incentive Stock Options held by an individual first
                  become exercisable in any calendar year (under this Plan and
                  all other incentive stock option plans of the Company and its
                  Affiliates) shall not exceed $100,000 (or such other limit as
                  may be required by the Code) if this limitation is necessary
                  to qualify the Option as an Incentive Stock Option and to the
                  extent an Option or Options granted to a Participant exceed
                  this limit the Option or Options shall be treated as a
                  Non-Statutory Stock Option;


                                       9
<PAGE>   10

                           (ii)  an Incentive Stock Option shall not be
                  exercisable more than 10 years after the date of grant (or
                  such other limit as may be required by the Code) if this
                  limitation is necessary to qualify the Option as an Incentive
                  Stock Option;


                           (iii) the Agreement covering an Incentive Stock
                  Option shall contain such other terms and provisions that the
                  Committee determines necessary to qualify this Option as an
                  Incentive Stock Option; and


                           (iv)  notwithstanding any other provision of this
                  Plan to the contrary, no Participant may receive an Incentive
                  Stock Option under the Plan if, at the time the Award is
                  granted, the Participant owns (after application of the rules
                  contained in Code Section 424(d), or its successor provision),
                  Shares possessing more than ten percent of the total combined
                  voting power of all classes of stock of the Corporation or its
                  subsidiaries, unless (i) the option price for that Incentive
                  Stock Option is at least 110 percent of the Fair Market Value
                  of the Shares subject to that Incentive Stock Option on the
                  date of grant and (ii) that Option is not exercisable after
                  the date five years from the date that Incentive Stock Option
                  is granted.

                  9.3      Terms and Conditions of Outside Directors' Options.

                           (a) Initial Outside Directors' Options. Subject to
                  the terms and conditions of this Plan, any Outside Director
                  first elected or appointed to the Board on or after January
                  24, 2001 shall receive, by virtue of serving as a director of
                  the Company, a single grant of a Non-Statutory Stock Option to
                  purchase 20,000 Shares (an "Initial Outside Director Option").

                           (b) Vesting of Initial Outside Directors' Options.
                  Subject to the provisions of Plan Section 9.3(e), Initial
                  Outside Directors' Options granted pursuant to this Plan shall
                  vest and become exercisable six months after the date of
                  grant. Each Initial Outside Directors' Option, to the extent
                  exercisable, shall be exercisable in whole or in part

                           (c) Annual Outside Director Option Grants. For the
                   Annual Meeting of Shareholders to be held January 24, 2001
                   and for each Annual Meeting of Shareholders thereafter during
                   the term of this Plan, each Outside Director serving as an
                   Outside Director of the Company immediately following the
                   Annual Meeting shall be granted, by virtue of serving as an
                   Outside Director of the Company, a Non-Statutory Stock Option
                   to purchase 7,500 Shares (an "Annual Outside Director
                   Option"). Each Annual Outside Director Option shall be deemed
                   to be granted to each Outside Director immediately after an
                   Annual Meeting and shall be granted regardless of whether or
                   not an Outside Director previously received, or
                   simultaneously receives, an Initial Outside Director Option.
                   Initial Outside Director Options and Annual Outside Director
                   Options together are sometimes referred to as "Outside
                   Director Options."

                           (d) Vesting of Annual Director Options. Subject to
                   the provisions of Plan Section 9.3(e), Annual Outside
                   Director Options shall vest and become exercisable in full on
                   the January 1st following the date of grant. Each Option, to
                   the extent exercisable, shall be exercisable in whole or in
                   part.

                           (e) Termination of Initial and Annual Outside
                   Directors' Options. Each Outside Director Option granted
                   pursuant to this Plan and all rights to purchase Shares
                   thereunder shall terminate on the earliest of:

                           (i)  ten years after the date that the Outside
                                Director Option was granted;

                           (ii) the expiration of the period specified in the
                                Agreement after the death or


                                       10
<PAGE>   11

                                 permanent disability of an Outside Director; or

                           (iii) ninety days after the date the Outside Director
                                 ceases to be a director of the Company,
                                 provided, however, that the option shall be
                                 exercisable during this 90-day period only to
                                 the extent the option was exercisable as of the
                                 date the person ceases to be an Outside
                                 Director unless the cessation results from the
                                 director's death or permanent disability.
                                 Notwithstanding the preceding sentence, if an
                                 Outside Director who resigns or whose term
                                 expires then becomes a consultant or Employee
                                 of the Company within ninety days of such
                                 resignation or term expiration, the Outside
                                 Director Options of such person shall continue
                                 in full force and effect.

                           In no event shall an Option be exercisable at any
                   time after its original expiration date. When an Option is no
                   longer exercisable, it shall be deemed to have lapsed or
                   terminated and will no longer be outstanding.

                           (f) Allocation of Common Shares. If as of a date on
                   which an Option or Options are to be awarded pursuant to the
                   provisions of this Section 9.3, the number of Shares
                   available for issuance under the Plan as of this date are
                   less than the number of options to purchase Shares that
                   otherwise would be awarded, then the following formula shall
                   determine how the remaining number of Shares are to be
                   allocated:

                           (i)  if only one Outside Director is to receive an
                                Option on the date, then that Outside Director
                                shall receive an Option to purchase Shares
                                equal to the number of Shares remaining;


                           (ii) if two or more Outside Directors are to receive
                                Options on the date:


                                (1) all Initial Outside Director Options shall
                                    first be awarded; if, however, the number of
                                    Shares available is less than the number of
                                    options to purchase Shares that would
                                    otherwise be awarded as Initial Outside
                                    Director Options then each Outside Director
                                    eligible to receive an Initial Outside
                                    Director Option shall receive the number of
                                    Options that results from the following
                                    equation: the whole number of Shares
                                    available divided by the number of Outside
                                    Directors eligible to receive such an
                                    Option, provided, however, that no
                                    fractional shares shall be awarded; and if
                                    such allocation occurs, any remaining Shares
                                    shall not be awarded and shall be deemed not
                                    subject to distribution for purposes of Plan
                                    Section 4; and


                                (2) If on that date all Initial Outside Director
                                    Options to be awarded are awarded in the
                                    full amount or if no Initial Outside
                                    Director Options are to be awarded, then
                                    each Outside Director eligible for an Annual
                                    Outside Director Option shall receive an
                                    Annual Outside Director Option to purchase
                                    Shares in the amount that results from the
                                    following equation: the whole number of
                                    Shares available divided by the number of
                                    Outside Directors eligible for an Annual
                                    Outside Director Option, provided, however,
                                    that no fractional shares shall be awarded;
                                    and any remaining Shares shall not be
                                    awarded and shall be deemed not subject to
                                    distribution for purposes of Plan Section 4.

                           (g) Non-exclusivity of Section 9.3. The provisions of
                   this Section 9.3 are not intended to be exclusive; however,
                   the Committee, in its discretion, may grant Options or other
                   Awards to an Outside Director, but only in substitution for
                   Outside Director Options held by that

                                       11
<PAGE>   12

                  director.

         10.      Stock Appreciation Rights. An Award of a Stock Appreciation
Right shall entitle the Participant (or a Successor or Transferee), subject to
terms and conditions determined by the Committee, to receive upon exercise of
the Stock Appreciation Right all or a portion of the excess of (i) the Fair
Market Value of a specified number of Shares as of the date of exercise of the
Stock Appreciation Right over (ii) a specified price that shall not be less than
100% of the Fair Market Value of such Shares as of the date of grant of the
Stock Appreciation Right. A Stock Appreciation Right may be granted in
connection with part or all of, in addition to, or completely independent of an
Option or any other Award under this Plan. If issued in connection with a
previously or contemporaneously granted Option, the Committee may impose a
condition that exercise of a Stock Appreciation Right cancels a pro rata portion
of the Option with which it is connected and vice versa. Each Stock Appreciation
Right may be exercisable in whole or in part on the terms provided in the
Agreement. Notwithstanding anything to the contrary stated in the Plan, no Stock
Appreciation Right shall be exercisable by a Participant or Successor or
Transferee prior to six months from the date of grant except in the event of the
death or disability of the Participant. No Stock Appreciation Right shall be
exercisable at any time after the expiration of its Term. When a Stock
Appreciation Right is no longer exercisable, it shall be deemed to have lapsed
or terminated. Upon exercise of a Stock Appreciation Right, payment to the
Participant or a Successor or Transferee shall be made at such time or times as
shall be provided in the Agreement in the form of cash, Shares or a combination
of cash and Shares as determined by the Committee and provided in the Agreement.
The Agreement may provide for a limitation upon the amount or percentage of the
total appreciation on which payment (whether in cash and/or Shares) may be made
in the event of the exercise of a Stock Appreciation Right.

         11.      Performance Units.

                  11.1     Initial Award.

                           (a) An Award of Performance Units under the Plan
                  shall entitle the Participant or a Successor or Transferee to
                  future payments of cash, Shares or a combination of cash and
                  Shares, as determined by the Committee and provided in the
                  Agreement, based upon the achievement of pre-established
                  performance targets. These performance targets may, but need
                  not, include without limitation targets relating to one or
                  more of the Company's or a group's, unit's, Affiliate's or an
                  individual's performance. The Agreement may establish that a
                  portion of the total potential of a Participant's Award will
                  be paid for performance that exceeds the minimum target but
                  falls below the maximum target applicable to the Award. The
                  Agreement shall also provide for the timing of the payment.

                           (b) Following the conclusion or acceleration of each
                  Performance Cycle, the Committee shall determine the extent to
                  which (i) performance targets have been attained, (ii) any
                  other terms and conditions with respect to an Award relating
                  to the Performance Cycle have been satisfied and (iii) payment
                  is due with respect to an Award of Performance Units.

                  11.2     Acceleration and Adjustment. The Agreement may permit
an acceleration of the Performance Cycle and an adjustment of performance
targets and payments with respect to some or all of the Performance Units
awarded to a Participant, upon such terms and conditions as shall be set forth
in the Agreement, upon the occurrence of certain events, which may, but need not
include without limitation an Event, a Fundamental Change, a recapitalization, a
change in the accounting practices of the Company, a change in the Participant's
title or employment responsibilities, the Participant's death or retirement or,
with respect to payments in Shares with respect to Performance Units, a
reclassification, stock dividend, stock split or stock combination as provided
in Plan Section 16. The Agreement also may provide for a limitation on the value
of an Award of Performance Units that a Participant may receive.

         12.      Effective Date and Duration of the Plan.

                  12.1     Effective Date. The Plan became effective as of
January 22, 1997.

                                       12
<PAGE>   13

                  12.2     Duration of the Plan. The Plan shall remain in effect
until all Stock subject to it shall be distributed or until all Awards have
expired or lapsed, or the Plan is terminated pursuant to Plan Section 15 or
until January 23, 2007 (the "Termination Date"); provided, however, Awards made
prior to the Termination Date may be exercised, vested or otherwise effectuated
beyond the Termination Date unless limited in the Agreement or otherwise. No
Award of an Incentive Stock Option shall be made more than 10 years after the
Effective Date (or such other limit as may be required by the Code) if this
limitation is necessary to qualify the Option as an Incentive Stock Option. The
date and time of approval by the Committee of the granting of an Award (or such
other time as the Committee may designate) shall be considered the date and time
at which the Award is made or granted.

         13.      Plan Does Not Affect Employment Status.

                           (a) Status as an eligible Employee shall not be
                  construed as a commitment that any Award will be made under
                  the Plan to that eligible Employee or to eligible Employees
                  generally.

                           (b) Nothing in the Plan or in any Agreement or
                  related documents shall confer upon any Employee or
                  Participant any right to continue in the employment of the
                  Company or any Affiliate or constitute any contract of
                  employment or affect any right that the Company or any
                  Affiliate may have to change such person's compensation, other
                  benefits, job responsibilities, or title, or to terminate the
                  employment of such person with or without cause.

         14.      Tax Withholding. The Company shall have the right to withhold
from any cash payment under the Plan to a Participant or other person (including
a Successor or a Transferee) an amount sufficient to cover any required
withholding taxes. The Company shall have the right to require a Participant or
other person receiving Shares under the Plan to pay the Company a cash amount
sufficient to cover any required withholding taxes before actual receipt of
those Shares. In lieu of all or any part of a cash payment from a person
receiving Shares under the Plan, the Committee may permit the individual to
cover all or any part of the required withholdings, and to cover any additional
withholdings up to the amount needed to cover the individual's full FICA and
federal, state and local income taxes with respect to income arising from
payment of the Award, through a reduction of the number of Shares delivered or a
subsequent return to the Company of Shares held by the Participant or other
person, in each case valued in the same manner as used in computing the
withholding taxes under the applicable laws.

         15.      Amendment, Modification and Termination of the Plan.

                  (a) The Board may at any time and from time to time terminate,
         suspend or modify the Plan. Except as limited in (b) below, the
         Committee may at any time alter or amend any or all Agreements under
         the Plan to the extent permitted by law. However, no such action may,
         without further approval of the shareholders of the Company, be
         effective if such approval is required in order that the Plan conform
         to the requirements of Code Section 422.

                  (b) No termination, suspension, or modification of the Plan
         will materially and adversely affect any right acquired by any
         Participant or Successor or Transferee under an Award granted before
         the date of termination, suspension, or modification, unless otherwise
         agreed to by the Participant in the Agreement or otherwise, or required
         as a matter of law; but it will be conclusively presumed that any
         adjustment for changes in capitalization provided for in Plan Sections
         11.2 or 16 does not adversely affect these rights.

         16.      Adjustment for Changes in Capitalization. Subject to any
required action by the Company's shareholders, appropriate adjustments, so as to
prevent enlargement of rights or inappropriate dilution - (i) in the aggregate
number and type of Shares available for Awards under the Plan, (ii) in the
limitations on the number of Shares that may be issued to an individual
Participant as an Option or a Stock Appreciation Right in any calendar year or
that may be issued in the form of Restricted Stock or Shares without
restrictions, (iii) in the number and type of Shares and amount of cash subject
to Awards then outstanding, (iv) in the Option price as to any outstanding
Options and, (v) subject to Plan Section 11.2, in outstanding Performance Units
and payments with respect to outstanding Performance Units - may be made by the
Committee in its sole discretion to give effect to adjustments

                                       13
<PAGE>   14

made in the number or type of Shares through a Fundamental Change (subject to
Plan Section 17), recapitalization, reclassification, stock dividend, stock
split, stock combination or other relevant change, provided that fractional
Shares shall be rounded to the nearest whole Share.

         17.      Fundamental Change. In the event of a proposed Fundamental
Change, the Committee may, but shall not be obligated to:

                  (a) if the Fundamental Change is a merger or consolidation or
         statutory share exchange, make appropriate provision for the protection
         of the outstanding Options and Stock Appreciation Rights by the
         substitution of options, stock appreciation rights and appropriate
         voting common stock of the corporation surviving any merger or
         consolidation or, if appropriate, the parent corporation of the Company
         or such surviving corporation to be issuable upon the exercise of
         Options or used to calculate payments upon the exercise of Stock
         Appreciation Rights, in lieu of options, stock appreciation rights and
         capital stock of the Company; or

                  (b) at least 30 days prior to the occurrence of the
         Fundamental Change, declare, and provide written notice to each holder
         of an Option or Stock Appreciation Right of the declaration, that each
         outstanding Option and Stock Appreciation Right, whether or not then
         exercisable, shall be canceled at the time of, or immediately prior to
         the occurrence of the Fundamental Change in exchange for payment to
         each holder of an Option or Stock Appreciation Right, within ten days
         after the Fundamental Change, of cash equal to (i) for each Share
         covered by the canceled Option, the amount, if any, by which the Fair
         Market Value (as hereinafter defined in this Section) per Share exceeds
         the exercise price per Share covered by such Option or (ii) for each
         Stock Appreciation Right, the price determined pursuant to Section 10,
         except that Fair Market Value of the Shares as of the date of exercise
         of the Stock Appreciation Right, as used in clause (i) of Plan Section
         10, shall be deemed to mean Fair Market Value for each Share with
         respect to which the Stock Appreciation Right is calculated determined
         in the manner hereinafter referred to in this Section. At the time of
         the declaration provided for in the immediately preceding sentence,
         each Stock Appreciation Right that has been outstanding for at least
         six months and each Option shall immediately become exercisable in full
         and each person holding an Option or a Stock Appreciation Right shall
         have the right, during the period preceding the time of cancellation of
         the Option or Stock Appreciation Right, to exercise the Option as to
         all or any part of the Shares covered thereby or the Stock Appreciation
         Right in whole or in part, as the case may be. In the event of a
         declaration pursuant to this Plan Section 17(b), each outstanding
         Option and Stock Appreciation Right granted pursuant to the Plan that
         shall not have been exercised prior to the Fundamental Change shall be
         canceled at the time of, or immediately prior to, the Fundamental
         Change, as provided in the declaration. Notwithstanding the foregoing,
         no person holding an Option or a Stock Appreciation Right shall be
         entitled to the payment provided for in this Section 17(b) if such
         Option or Stock Appreciation Right shall have expired pursuant to the
         Agreement. For purposes of this Section only, "Fair Market Value" per
         Share shall mean the cash plus the fair market value, as determined in
         good faith by the Committee, of the non-cash consideration to be
         received per Share by the shareholders of the Company upon the
         occurrence of the Fundamental Change, notwithstanding anything to the
         contrary provided in the Plan.

         18.      Forfeitures. An Agreement may provide that in the event a
Participant has received or been entitled to payment of cash, delivery of
Shares, or a combination thereof pursuant to an Award within six months prior to
the Participant's termination of employment with the Company and its Affiliates,
the Committee, in its sole discretion, may require the Participant to return or
forfeit the cash and/or Shares received with respect to the Award (or its
economic value as of (i) the date of the exercise of Options or Stock
Appreciation Rights, (ii) the date of, and immediately following, the lapse of
restrictions on Restricted Stock or the receipt of Shares without restrictions,
or (iii) the date on which the right of the Participant to payment with respect
to Performance Units vests, as the case may be) in the event of certain
occurrences specified in the Agreement. The Committee's right to require
forfeiture must be exercised within 90 days after discovery of such an
occurrence but in no event later than 15 months after the Participant's
termination of employment with the Company and its Affiliates. The occurrences
may, but need not, include competition with the Company or any Affiliate,
unauthorized disclosure of material proprietary information of the Company or
any Affiliate, a violation of applicable business ethics policies of the Company
or


                                       14
<PAGE>   15

Affiliate or any other occurrence specified in the Agreement within the period
or periods of time specified in the Agreement.

         19.      Corporate Mergers, Acquisitions, Etc. The Committee may also
grant Options, Stock Appreciation Rights, Restricted Stock or other Awards under
the Plan having terms, conditions and provisions that vary from those specified
in this Plan provided that any such awards are granted in substitution for, or
in connection with the assumption of, existing options, stock appreciation
rights, restricted stock or other award granted, awarded or issued by another
corporation and assumed or otherwise agreed to be provided for by the Company
pursuant to or by reason of a transaction involving a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation to which the Company or a subsidiary is a party.

         20.      Unfunded Plan. The Plan shall be unfunded and the Company
shall not be required to segregate any assets that may at any time be
represented by Awards under the Plan. Neither the Company, its Affiliates, the
Committee, nor the Board of Directors shall be deemed to be a trustee of any
amounts to be paid under the Plan nor shall anything contained in the Plan or
any action taken pursuant to its provisions create or be construed to create a
fiduciary relationship between the Company and/or its Affiliates, and a
Participant or Successor or Transferee. To the extent any person acquires a
right to receive an Award under the Plan, this right shall be no greater than
the right of an unsecured general creditor of the Company.

         21.      Limits of Liability.

                  (a) Any liability of the Company to any Participant with
         respect to an Award shall be based solely upon contractual obligations
         created by the Plan and the Award Agreement.

                  (b) Except as may be required by law, neither the Company nor
         any member of the Board of Directors or of the Committee, nor any other
         person participating in any determination of any question under the
         Plan, or in the interpretation, administration or application of the
         Plan, shall have any liability to any party for any action taken, or
         not taken, in good faith under the Plan.

         22.      Compliance with Applicable Legal Requirements. No certificate
for Shares distributable pursuant to this Plan shall be issued and delivered
unless the issuance of the certificate complies with all applicable legal
requirements including, without limitation, compliance with the provisions of
applicable state securities laws, the Securities Act of 1933, as amended and in
effect from time to time or any successor statute, the Exchange Act and the
requirements of the exchanges on which the Company's Shares may, at the time, be
listed.

         23.      Deferrals and Settlements. The Committee may require or permit
Participants to elect to defer the issuance of Shares or the settlement of
Awards in cash under such rules and procedures as it may establish under the
Plan. It may also provide that deferred settlements include the payment or
crediting of interest on the deferral amounts.

         24.      Other Benefit and Compensation Programs. Payments and other
benefits received by a Participant under an Award made pursuant to the Plan
shall not be deemed a part of a Participant's regular, recurring compensation
for purposes of the termination, indemnity or severance pay laws of any country
and shall not be included in, nor have any effect on, the determination of
benefits under any other employee benefit plan, contract or similar arrangement
provided by the Company or an Affiliate unless expressly so provided by such
other plan, contract or arrangement, or unless the Committee expressly
determines that an Award or portion of an Award should be included to accurately
reflect competitive compensation practices or to recognize that an Award has
been made in lieu of a portion of competitive cash compensation.

         25.      Beneficiary Upon Participant's Death. To the extent that the
transfer of a Participant's Award at his or her death is permitted under an
Agreement, a Participant's Award shall be transferable at death to the estate or
to the person who acquires the right to succeed to the Award by bequest or
inheritance.



                                       15
<PAGE>   16

         26.      Change in Control Payments.

                  (a) Notwithstanding the provisions of Plan Section 17 above,
         if any Award, either alone or together with other payments in the
         nature of compensation to a Participant that are contingent on a change
         in the ownership or effective control of the Company or in the
         ownership of a substantial portion of the assets of the Company or
         otherwise, would result in any portion thereof being subject to an
         excise tax imposed under Code Section 4999, or any successor provision,
         or would not be deductible in whole or in part by the Company, an
         affiliate of the Company (as defined in Code Section 1504, or any
         successor provision), or other person making such payments as a result
         of Code Section 280G, or any successor provision, such Award and/or
         such other benefits and payments shall be reduced (but not below zero)
         to the largest aggregate amount as will result in no portion thereof
         being subject to such an excise tax or being not so deductible.

                  (b) For purposes of Plan Section 26(a), (i) no portion of
         payments the receipt or enjoyment of which a Participant shall have
         effectively waived in writing prior to the date of distribution of an
         Award shall be taken into account; (ii) no portion of such Award,
         benefits and other payments shall be taken into account that in the
         opinion of tax counsel selected by the Company's independent auditors
         and acceptable to the Participant does not constitute a "parachute
         payment" within the meaning of Code Section 280G(b)(2), or any
         successor provision; and (iii) the value of any non-cash benefit or any
         deferred payment or benefit included in such payment shall be
         determined by the Company's independent auditors in accordance with the
         principles of Code Sections 280G(d)(3) and (4) or any successor
         provisions;

                  (c) Any Award not paid as a result of this Plan Section 26 or
         reduced to zero as a result of the limitations imposed hereby, shall
         remain outstanding in full force and effect in accordance with the
         other terms and provisions of this Plan.

         27.      Requirements of Law.

                  (a) To the extent that Federal laws do not otherwise control,
         the Plan and all determinations made and actions taken pursuant to the
         Plan shall be governed by the laws of Minnesota without regard to its
         conflicts of law principles and construed accordingly.

                  (b) In the event any provision of the Plan shall be held
         illegal or invalid for any reason, the illegality or invalidity shall
         not effect 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.

         28.      Termination of Other Plan. Effective upon the approval of the
Plan by the Company's shareholders on January 22, 1997, the Company's 1994
Omnibus Stock Plan and the Company's Directors' Nonstatutory Stock Option Plan
("Prior Plans") terminated. Thereafter, all grants and awards made under the
Prior Plans prior to the approval by the shareholders shall continue in
accordance with the terms of the Prior Plans.




                                       16
</TEXT>
</DOCUMENT>
