A.S.V., INC.
                            2004 STOCK INCENTIVE PLAN
 
SECTION 1.        PURPOSE
 
         The purpose of the Plan is to promote the interests of the Company and
its shareholders by aiding the Company in attracting and retaining employees,
officers, consultants, advisors and directors capable of assuring the future
success of the Company, to offer such persons incentives to put forth maximum
efforts for the success of the Company's business and to compensate such persons
through various stock-based arrangements and provide them with opportunities for
stock ownership in the Company, thereby aligning the interests of such persons
with the Company's shareholders.
 
SECTION 2.        DEFINITIONS
 
         As used in the Plan, the following terms shall have the meanings set
forth below:
 
         (a)      "Affiliate" shall mean (i) any entity that, directly or
indirectly through one or more intermediaries, is controlled by the Company and
(ii) any entity in which the Company has a significant equity interest, in each
case as determined by the Committee.
 
         (b)      "Award" shall mean any Option, Stock Appreciation Right,
Restricted Stock, Restricted Stock Unit, Performance Award or Other Stock Grant
granted under the Plan.
 
         (c)      "Award Agreement" shall mean any written agreement, contract
or other instrument or document evidencing an Award granted under the Plan. Each
Award Agreement shall be subject to the applicable terms and conditions of the
Plan and any other terms and conditions (not inconsistent with the Plan)
determined by the Committee.
 
         (d)      "Board" shall mean the Board of Directors of the Company.
 
         (e)      "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any regulations promulgated thereunder.
 
         (f)      "Committee" shall mean the Compensation Committee of the Board
or any successor committee of the Board designated by the Board to administer
the Plan. The Committee shall be comprised of not less than such number of
Directors as shall be required to permit Awards granted under the Plan to
qualify under Rule 16b-3 and Section 162(m) of the Code, and each member of the
Committee shall be a "Non-Employee Director"
 
         (g)      "Company" shall mean A.S.V., Inc., a Minnesota corporation,
and any successor corporation.
 
         (h)      "Director" shall mean a member of the Board, including any
Non-Employee Director.
 
         (i)      "Eligible Person" shall mean any employee, officer,
consultant, advisor or director providing services to the Company or any
Affiliate who the Committee determines to be an Eligible Person. An Eligible
Person must be a natural person.
 
         (j)      "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
 
         (k)      "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair market
value of such property determined by such methods or procedures as shall be
established from time to time by the Committee. Notwithstanding the foregoing
and unless otherwise determined
 
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by the Committee, the Fair Market Value of a Share as of a given date shall be,
if the Shares are then listed on the Nasdaq National Market, the closing sale
price of one Share as reported on the Nasdaq National Market on such date or, if
the Nasdaq National Market is not open for trading on such date, on the most
recent preceding date when it is open for trading.
 
         (l)      "Incentive Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is intended to qualify as an "incentive stock
option" in accordance with the terms of Section 422 of the Code or any successor
provision.
 
         (m)      "Non-Employee Director" shall mean any Director who is not
also an employee of the Company or an Affiliate within the meaning of Rule 16b-3
and an "outside director" within the meaning of Section 162(m) of the Code.
 
         (n)      "Non-Qualified Stock Option" shall mean an option granted
under Section 6(a) of the Plan that is not an Incentive Stock Option.
 
         (o)      "Option" shall mean an Incentive Stock Option or a
Non-Qualified Stock Option.
 
         (p)      "Other Stock Grant" shall mean any right granted under Section
6(e) of the Plan.
 
         (q)      "Participant" shall mean an Eligible Person designated to be
granted an Award under the Plan.
 
         (r)      "Performance Award" shall mean any right granted under Section
6(d) of the Plan.
 
         (s)      "Performance Goal" shall mean one or more of the following
performance goals, either individually, alternatively or in any combination,
applied on a corporate, subsidiary or group basis: revenue, cash flow, earnings
(including one or more of gross profit, earnings before interest and taxes,
earnings before interest, taxes, depreciation and amortization and net
earnings), earnings per share (basic or diluted), margins (including one or more
of gross, operating and net income margins), returns (including one or more of
return on assets, equity, investment, capital and revenue and total stockholder
return), stock price, economic value added, working capital, market share, cost
reductions, workforce satisfaction and diversity goals, employee retention,
customer satisfaction, completion of key projects and strategic plan development
and implementation. Such goals may reflect absolute entity or group performance
or a relative comparison to the performance of a peer group of entities or other
external measure of the selected performance criteria. Pursuant to rules and
conditions adopted by the Committee on or before the 90th day of the applicable
performance period for which Performance Goals are established, the Committee
may appropriately adjust any evaluation of performance under such goals to
exclude the effect of certain events, including any of the following events:
asset write-downs; litigation or claim judgments or settlements; changes in tax
law, accounting principles or other such laws or provisions affecting reported
results; severance, contract termination and other costs related to exiting
certain business activities; and gains or losses from the disposition of
businesses or assets or from the early extinguishment of debt.
 
         (t)      "Person" shall mean any individual or entity, including a
corporation, partnership, limited liability company, association, joint venture
or trust.
 
         (u)      "Plan" shall mean the A.S.V., Inc. 2004 Stock Incentive Plan,
as amended from time to time, the provisions of which are set forth herein.
 
         (v)      "Restricted Stock" shall mean any Share granted under Section
6(c) of the Plan.
 
         (w)      "Restricted Stock Unit" shall mean any unit granted under
Section 6(c) of the Plan evidencing the right to receive a Share (or a cash
payment equal to the Fair Market Value of a Share) at some future date.
 
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         (x)      "Rule 16b-3" shall mean Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Exchange Act, or any successor rule
or regulation.
 
         (y)      "Section 162(m)" shall mean Section 162(m) of the Code and the
applicable Treasury Regulations promulgated thereunder.
 
         (z)      "Share" or "Shares" shall mean a share or shares of common
stock, $.10 par value per share, of the Company or such other securities or
property as may become subject to Awards pursuant to an adjustment made under
Section 4(c) of the Plan.
 
         (aa)     "Stock Appreciation Right" shall mean any right granted under
Section 6(b) of the Plan.
 
SECTION  3.       ADMINISTRATION
 
         (a)      Power and Authority of the Committee. The Plan shall be
administered by the Committee. Subject to the express provisions of the Plan and
to applicable law, the Committee shall have full power and authority to: (i)
designate Participants; (ii) determine the type or types of Awards to be granted
to each Participant under the Plan; (iii) determine the number of Shares to be
covered by (or the method by which payments or other rights are to be determined
in connection with) each Award; (iv) determine the terms and conditions of any
Award or Award Agreement; (v) amend the terms and conditions of any Award or
Award Agreement and accelerate the exercisability of any Option or waive any
restrictions relating to any Award; (vi) determine whether, to what extent and
under what circumstances Awards may be exercised in cash, Shares, other
securities, other Awards or other property, or canceled, forfeited or suspended;
(vii) determine whether, to what extent and under what circumstances cash,
Shares, other securities, other Awards, other property and other amounts payable
with respect to an Award under the Plan shall be deferred either automatically
or at the election of the holder thereof or the Committee; (viii) interpret and
administer the Plan and any instrument or agreement, including any Award
Agreement, relating to the Plan; (ix) establish, amend, suspend or waive such
rules and regulations and appoint such agents as it shall deem appropriate for
the proper administration of the Plan; and (x) make any other determination and
take any other action that the Committee deems necessary or desirable for the
administration of the Plan. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations and other decisions under or with
respect to the Plan or any Award or Award Agreement shall be within the sole
discretion of the Committee, may be made at any time and shall be final,
conclusive and binding upon any Eligible Person and any holder or beneficiary of
any Award.
 
         (b)      Power and Authority of the Board. Notwithstanding anything to
the contrary contained herein, the Board may, at any time and from time to time,
without any further action of the Committee, exercise the powers and duties of
the Committee under the Plan unless the exercise of such powers and duties by
the Board would cause the Plan not to comply with the requirements of Section
162(m) of the Code.
 
         (c)      Delegation. The Committee may delegate to one or more officers
or Directors of the Company, subject to such terms, conditions and limitations
as the Committee may establish in its sole discretion, the authority to grant
Options; provided, however, that the Committee shall not delegate such authority
(i) with regard to grants of Options to be made to officers or directors of the
Company or any Affiliate who are subject to Section 16 of the Exchange Act or
(ii) in such a manner as would cause the Plan not to comply with the
requirements of Section 162(m) of the Code.
 
SECTION 4.        SHARES AVAILABLE FOR AWARDS
 
         (a)      Shares Available. Subject to adjustment as provided in Section
4(c) of the Plan, the aggregate number of Shares that may be issued under the
Plan shall be 1,500,000.
 
         (b)      Accounting for Awards. For purposes of this Section 4, if an
Award entitles the holder thereof to receive or purchase Shares, the number of
Shares covered by such Award or to which such Award relates shall be counted on
the date of grant of such Award against the aggregate number of Shares available
for granting Awards
 
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under the Plan. If an Award terminates or is forfeited or cancelled without the
issuance of any Shares, or if any Shares covered by an Award or to which an
Award relates are not issued for any other reason, then the number of Shares
counted against the aggregate number of Shares available under the Plan with
respect to such Award, to the extent of any such termination, forfeiture,
cancellation or other event, shall again be available for granting Awards under
the Plan. If Shares of Restricted Stock are forfeited or otherwise reacquired by
the Company prior to vesting, whether or not dividends have been paid on such
Shares, then the number of Shares counted against the aggregate number of Shares
available under the Plan with respect to such Award of Restricted Stock, to the
extent of any such forfeiture or reacquisition by the Company, shall again be
available for granting Awards under the Plan. Shares that are withheld in full
or partial payment to the Company of the purchase or exercise price relating to
an Award or in connection with the satisfaction of tax obligations relating to
an Award shall again be available for granting Awards under the Plan. Any
previously issued Shares that are used by a Participant as full or partial
payment to the Company of the purchase or exercise price relating to an Award or
in connection with the satisfaction of tax obligations relating to an Award
shall again be available for granting Awards under the Plan.
 
         (c)      Adjustments. In the event that the Committee shall determine
that any dividend or other distribution (whether in the form of cash, Shares,
other securities or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and type of Shares (or other securities or other property) that
thereafter may be made the subject of Awards, (ii) the number and type of Shares
(or other securities or other property) subject to outstanding Awards and (iii)
the purchase price or exercise price with respect to any Award.
 
         (d)      Award Limitations Under the Plan
 
                  (i)      Section 162(m) Limitation for Certain Types of
         Awards. No Eligible Person may be granted Options, Stock Appreciation
         Rights or any other Award or Awards under the Plan, the value of which
         Award or Awards is based solely on an increase in the value of the
         Shares after the date of grant of such Award or Awards, for more than
         250,000 Shares (subject to adjustment as provided in Section 4(c) of
         the Plan) in the aggregate in any calendar year.
 
                  (ii)     Section 162(m) Limitation for Performance Awards. The
         maximum amount payable pursuant to all Performance Awards to any
         Participant in the aggregate in any calendar year shall be $2,000,000
         in value, whether payable in cash, Shares or other property. This
         limitation does not apply to any Award subject to the limitation
         contained in Section 4(d)(i) of the Plan.
 
                  (iii)    Limitation on Incentive Stock Options. The number of
         Shares available for granting Incentive Stock Options under the Plan
         shall not exceed 1,500,000, subject to adjustment as provided in
         Section 4(c) of the Plan and subject to the provisions of Section 422
         or 424 of the Code or any successor provision.
 
SECTION 5.        ELIGIBILITY
 
         Any Eligible Person shall be eligible to be designated a Participant.
In determining which Eligible Persons shall receive an Award and the terms of
any Award, the Committee may take into account the nature of the services
rendered by the respective Eligible Persons, their present and potential
contributions to the success of the Company or such other factors as the
Committee, in its discretion, shall deem relevant. Notwithstanding the
foregoing, an Incentive Stock Option may only be granted to full-time or
part-time employees (which term as used herein includes, without limitation,
officers and Directors who are also employees), and an Incentive Stock Option
shall not be granted to an employee of an Affiliate unless such Affiliate is
also a "subsidiary corporation" of the Company within the meaning of Section
424(f) of the Code or any successor provision.
 
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SECTION 6.        AWARDS
 
         (a)      Options. The Committee is hereby authorized to grant Options
to Eligible Persons with the following terms and conditions and with such
additional terms and conditions not inconsistent with the provisions of the Plan
as the Committee shall determine:
 
                  (i)      Exercise Price. The purchase price per Share
         purchasable under an Option shall be determined by the Committee;
         provided, however, that such purchase price shall not be less than 100%
         of the Fair Market Value of a Share on the date of grant of such
         Option.
 
                  (ii)     Option Term. The term of each Option shall be fixed
         by the Committee at the time of grant.
 
                  (iii)    Time and Method of Exercise. The Committee shall
         determine the time or times at which an Option may be exercised in
         whole or in part and the method or methods by which, and the form or
         forms (including, without limitation, cash, Shares, other securities,
         other Awards or other property, or any combination thereof, having a
         Fair Market Value on the exercise date equal to the applicable exercise
         price) in which, payment of the exercise price with respect thereto may
         be made or deemed to have been made.
 
         (b)      Stock Appreciation Rights. The Committee is hereby authorized
to grant Stock Appreciation Rights to Eligible Persons subject to the terms of
the Plan and any applicable Award Agreement. A Stock Appreciation Right granted
under the Plan shall confer on the holder thereof a right to receive upon
exercise thereof the excess of (i) the Fair Market Value of one Share on the
date of exercise (or, if the Committee shall so determine, at any time during a
specified period before or after the date of exercise) over (ii) the grant price
of the Stock Appreciation Right as determined by the Committee, which grant
price shall not be less than 100% of the Fair Market Value of one Share on the
date of grant of the Stock Appreciation Right; provided, however, that the
Committee may designate a per share grant price below Fair Market Value on the
date of grant (A) to the extent necessary or appropriate, as determined by the
Committee, to satisfy applicable legal or regulatory requirements of a foreign
jurisdiction or (B) if the Stock Appreciation Right is granted in substitution
for a stock appreciation right previously granted by an entity that is acquired
by or merged with the Company or an Affiliate. Subject to the terms of the Plan,
the grant price, term, methods of exercise, dates of exercise, methods of
settlement and any other terms and conditions (including conditions or
restrictions on the exercise thereof) of any Stock Appreciation Right shall be
as determined by the Committee.
 
         (c)      Restricted Stock and Restricted Stock Units. The Committee is
hereby authorized to grant Restricted Stock and Restricted Stock Units to
Eligible Persons with the following terms and conditions and with such
additional terms and conditions not inconsistent with the provisions of the Plan
as the Committee shall determine:
 
                  (i)      Restrictions. Shares of Restricted Stock and
         Restricted Stock Units shall be subject to such restrictions as the
         Committee may impose (including, without limitation, any limitation on
         the right to vote a Share of Restricted Stock or the right to receive
         any dividend or other right or property with respect thereto), which
         restrictions may lapse separately or in combination at such time or
         times, in such installments or otherwise as the Committee may deem
         appropriate.
 
                  (ii)     Issuance and Delivery of Shares. Any Restricted Stock
         granted under the Plan shall be issued at the time such Awards are
         granted and may be evidenced in such manner as the Committee may deem
         appropriate, including book-entry registration or issuance of a stock
         certificate or certificates, which certificate or certificates shall be
         held by the Company. Such certificate or certificates shall be
         registered in the name of the Participant and shall bear an appropriate
         legend referring to the restrictions applicable to such Restricted
         Stock. Shares representing Restricted Stock that is no longer subject
         to restrictions shall be delivered to the Participant promptly after
         the applicable restrictions lapse or are waived. In the case of
         Restricted Stock Units, no Shares shall be issued at the time such
         Awards are granted. Upon the lapse or
 
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         waiver of restrictions and the restricted period relating to Restricted
         Stock Units evidencing the right to receive Shares, such Shares shall
         be issued and delivered to the holder of the Restricted Stock Units.
 
                  (iii)    Forfeiture. Except as otherwise determined by the
         Committee, upon a Participant's termination of employment or
         resignation or removal as a Director (in either case, as determined
         under criteria established by the Committee) during the applicable
         restriction period, all Shares of Restricted Stock and Restricted Stock
         Units held by the Participant at such time subject to restriction shall
         be forfeited and reacquired by the Company; provided, however, that the
         Committee may, when it finds that a waiver would be in the best
         interest of the Company, waive in whole or in part any or all remaining
         restrictions with respect to Shares of Restricted Stock or Restricted
         Stock Units.
 
         (d)      Performance Awards. The Committee is hereby authorized to
grant to Eligible Persons Performance Awards which are intended to be "qualified
performance-based compensation" within the meaning of Section 162(m). A
Performance Award granted under the Plan may be payable in cash or in Shares
(including, without limitation, Restricted Stock). Performance Awards shall, to
the extent required by Section 162(m), be conditioned solely on the achievement
of one or more objective Performance Goals, and such Performance Goals shall be
established by the Committee within the time period prescribed by, and shall
otherwise comply with the requirements of, Section 162(m). Subject to the terms
of the Plan and any applicable Award Agreement, the Performance Goals to be
achieved during any performance period, the length of any performance period,
the amount of any Performance Award granted, the amount of any payment or
transfer to be made pursuant to any Performance Award and any other terms and
conditions of any Performance Award shall be determined by the Committee. The
Committee shall also certify in writing that such Performance Goals have been
met prior to payment of the Performance Awards to the extent required by Section
162(m).
 
         (e)      Other Stock Grants. The Committee is hereby authorized,
subject to the terms of the Plan, to grant to Eligible Persons Shares without
restrictions thereon as are deemed by the Committee to be consistent with the
purpose of the Plan. Subject to the terms of the Plan and any applicable Award
Agreement, such Stock Awards may have such terms and conditions as the Committee
shall determine.
 
         (f)      General
 
                  (i)      Consideration for Awards. Awards may be granted for
         no cash consideration or for any cash or other consideration as
         determined by the Committee or required by applicable law.
 
                  (ii)     Awards May Be Granted Separately or Together. Awards
         may, in the discretion of the Committee, be granted either alone or in
         addition to, in tandem with or in substitution for any other Award or
         any award granted under any plan of the Company or any Affiliate.
         Awards granted in addition to or in tandem with other Awards or in
         addition to or in tandem with awards granted under any such other plan
         of the Company or any Affiliate may be granted either at the same time
         as or at a different time from the grant of such other Awards or
         awards.
 
                  (iii)    Forms of Payment under Awards. Subject to the terms
         of the Plan and of any applicable Award Agreement, payments or
         transfers to be made by the Company or an Affiliate upon the grant,
         exercise or payment of an Award may be made in such form or forms as
         the Committee shall determine (including, without limitation, cash,
         Shares, other securities, other Awards or other property or any
         combination thereof), and may be made in a single payment or transfer,
         in installments or on a deferred basis, in each case in accordance with
         rules and procedures established by the Committee. Such rules and
         procedures may include, without limitation, provisions for the payment
         or crediting of reasonable interest on installment or deferred
         payments.
 
                  (iv)     Limits on Transfer of Awards. Except as otherwise
         provided by the Committee or the terms of this Plan, no Award and no
         right under any such Award shall be transferable by a Participant other
         than by will or by the laws of descent and distribution. The Committee
         may establish procedures as it deems appropriate for a Participant to
         designate a Person or Persons, as beneficiary or beneficiaries, to
 
 
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         exercise the rights of the Participant and receive any property
         distributable with respect to any Award in the event of the
         Participant's death. The Committee, in its discretion and subject to
         such additional terms and conditions as it determines, may permit a
         Participant to transfer a Non-Qualified Stock Option to any "family
         member" (as such term is defined in the General Instructions to Form
         S-8 (or any successor to such Instructions or such Form) under the
         Securities Act of 1933, as amended) at any time that such Participant
         holds such Option, provided that such transfers may not be for value
         (i.e., the transferor may not receive any consideration therefore) and
         the family member may not make any subsequent transfers other than by
         will or by the laws of descent and distribution. Each Award under the
         Plan or right under any such Award shall be exercisable during the
         Participant's lifetime only by the Participant (except as provided
         herein or in an Award Agreement or amendment thereto relating to a
         Non-Qualified Stock Option) or, if permissible under applicable law, by
         the Participant's guardian or legal representative. No Award or right
         under any such Award may be pledged, alienated, attached or otherwise
         encumbered, and any purported pledge, alienation, attachment or
         encumbrance thereof shall be void and unenforceable against the Company
         or any Affiliate.
 
                  (v)      Term of Awards. The term of each Award shall be for
         such period as may be determined by the Committee.
 
                  (vi)     Restrictions; Securities Exchange Listing. All Shares
         or other securities delivered under the Plan pursuant to any Award or
         the exercise thereof shall be subject to such stop transfer orders and
         other restrictions as the Committee may deem advisable under the Plan,
         applicable federal or state securities laws and regulatory
         requirements, and the Committee may direct appropriate stop transfer
         orders and cause other legends to be placed on the certificates for
         such Shares or other securities to reflect such restrictions. If the
         Shares or other securities are traded on a securities exchange, the
         Company shall not be required to deliver any Shares or other securities
         covered by an Award unless and until such Shares or other securities
         have been admitted for trading on such securities exchange.
 
                  (vii)    Prohibition on Option Repricing. Except as provided
         in Section 4(c) of the Plan, no Option or Stock Appreciation Right may
         be amended to reduce its initial exercise or grant price and no Option
         or Stock Appreciation Right shall be canceled and replaced with Options
         or Stock Appreciation Rights having a lower exercise or grant price,
         without the approval of the shareholders of the Company.
 
SECTION 7.        AMENDMENT AND TERMINATION; ADJUSTMENTS
 
         (a)      Amendments to the Plan. The Board may amend, alter, suspend,
discontinue or terminate the Plan at any time; provided, however, that,
notwithstanding any other provision of the Plan or any Award Agreement, without
the approval of the shareholders of the Company, no such amendment, alteration,
suspension, discontinuation or termination shall be made that, absent such
approval:
 
                  (i)      violates the rules or regulations of the National
         Association of Securities Dealers, Inc. or any other securities
         exchange applicable to the Company;
 
                  (ii)     increases the number of shares authorized under the
         Plan as specified in Section 4(a) of the Plan;
 
                  (iii)    increases the number of shares subject to the
         limitations contained in Section 4(d) of the Plan;
 
                  (iv)     permits the repricing of Options or Stock
         Appreciation Rights, as prohibited by Section 6(f)(vii) of the Plan; or
 
                  (v)      would prevent the grant of Options or Stock
         Appreciation Rights that would qualify under Section 162(m) of the
         Code.
 
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         (b)      Amendments to Awards. The Committee may waive any conditions
of or rights of the Company under any outstanding Award, prospectively or
retroactively. Except as otherwise provided herein or in an Award Agreement, the
Committee may not amend, alter, suspend, discontinue or terminate any
outstanding Award, prospectively or retroactively, if such action would
adversely affect the rights of the holder of such Award, without the consent of
the Participant or holder or beneficiary thereof.
 
         (c)      Correction of Defects, Omissions and Inconsistencies. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any Award or Award Agreement in the manner and
to the extent it shall deem desirable to implement or maintain the effectiveness
of the Plan.
 
SECTION 8.        INCOME TAX WITHHOLDING
 
         In order to comply with all applicable federal, state, local or foreign
income tax laws or regulations, the Company may take such action as it deems
appropriate to ensure that all applicable federal, state, local or foreign
payroll, withholding, income or other taxes, which are the sole and absolute
responsibility of a Participant, are withheld or collected from such
Participant. In order to assist a Participant in paying all or a portion of
applicable taxes to be withheld or collected upon exercise or receipt of (or the
lapse of restrictions relating to) an Award, the Committee, in its discretion
and subject to such additional terms and conditions as it may adopt, may permit
the Participant to satisfy such tax obligation by (i) electing to have the
Company withhold a portion of the Shares otherwise to be delivered upon exercise
or receipt of (or the lapse of restrictions relating to) such Award with a Fair
Market Value equal to the amount of such taxes or (ii) delivering to the Company
Shares other than Shares issuable upon exercise or receipt of (or the lapse of
restrictions relating to) such Award with a Fair Market Value equal to the
amount of such taxes. The election, if any, must be made on or before the date
that the amount of tax to be withheld is determined.
 
SECTION 9.        GENERAL PROVISIONS
 
         (a)      No Rights to Awards. No Eligible Person or other Person shall
have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Eligible Persons or holders or
beneficiaries of Awards under the Plan. The terms and conditions of Awards need
not be the same with respect to any Participant or with respect to different
Participants.
 
         (b)      Award Agreements. No Participant will have rights under an
Award granted to such Participant unless and until an Award Agreement shall have
been duly executed on behalf of the Company and, if requested by the Company,
signed by the Participant.
 
         (c)      Plan Provisions Control. In the event that any provision of an
Award Agreement conflicts with or is inconsistent in any respect with the terms
of the Plan as set forth herein or subsequently amended, the terms of the Plan
shall control.
 
         (d)      No Rights of Shareholders. Except with respect to Shares of
Restricted Stock as to which the Participant has been granted the right to vote,
neither a Participant nor the Participant's legal representative shall be, or
have any of the rights and privileges of, a shareholder of the Company with
respect to any Shares issuable to such Participant upon the exercise or payment
of any Award, in whole or in part, unless and until such Shares have been
issued.
 
         (e)      No Limit on Other Compensation Arrangements. Nothing contained
in the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.
 
         (f)      No Right to Employment. The grant of an Award shall not be
construed as giving a Participant the right to be retained as an employee of the
Company or any Affiliate, or a Director to be retained as a Director, nor will
it affect in any way the right of the Company or an Affiliate to terminate a
Participant's employment at any time, with or without cause. In addition, the
Company or an Affiliate may at any time dismiss a Participant from
 
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employment free from any liability or any claim under the Plan or any Award,
unless otherwise expressly provided in the Plan or in any Award Agreement.
 
         (g)      Governing Law. The validity, construction and effect of the
Plan or any Award, and any rules and regulations relating to the Plan or any
Award, shall be determined in accordance with the internal laws, and not the law
of conflicts, of the State of Minnesota.
 
         (h)      Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the purpose or intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction
or Award, and the remainder of the Plan or any such Award shall remain in full
force and effect.
 
         (i)      No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and an Eligible
Person or any other Person. To the extent that any Person acquires a right to
receive payments from the Company or any Affiliate pursuant to an Award, such
right shall be no greater than the right of any unsecured general creditor of
the Company or any Affiliate.
 
         (j)      No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash shall be paid in lieu of any fractional Shares or whether such
fractional Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.
 
         (k)      Headings. Headings are given to the Sections and subsections
of the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
 
SECTION 10.       EFFECTIVE DATE OF THE PLAN
 
         The Plan shall be subject to approval by the shareholders of the
Company at the annual meeting of shareholders of the Company to be held on June
4, 2004 and the Plan shall be effective as of the date of such shareholder
approval.
 
SECTION 11.       TERM OF THE PLAN
 
         The Plan shall terminate at midnight on June 3, 2014, unless terminated
before then by the Board. Awards may be granted under the Plan until the Plan
terminates or until all Shares available for Awards under the Plan have been
purchased or acquired; provided, however, that Incentive Stock Options may not
be granted following the 10-year anniversary of the Board's adoption of the Plan
(April 13, 2004). The Plan shall remain in effect as long as any Awards are
outstanding.
 
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