Exhibit 10.5

ST. JUDE MEDICAL, INC.

2002 STOCK PLAN

(as amended)

SECTION 1. General Purpose of Plan; Definitions.

The name of this plan is the St. Jude Medical, Inc. 2002 Stock Plan (the
“Plan”). The purpose of the Plan is to enable the Company and its Subsidiaries
to retain and attract executives and other key employees, non-employee directors
and consultants who contribute to the Company’s success by their ability,
ingenuity and industry, and to enable such individuals to participate in the
long-term success and growth of the Company by giving them a proprietary
interest in the Company.

For purposes of the Plan, the following terms shall be defined as set forth
below:

 

a.

“Board” means the Board of Directors of the Company as it may be comprised from
time to time.

b.            “Cause” means a felony conviction of a participant or the failure
of a participant to contest prosecution for a felony, willful misconduct,
dishonesty or intentional violation of a statute, rule or regulation, any of
which, in the judgment of the Company, is harmful to the business or reputation
of the Company.

c.            “Code” means the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute.

d.            “Committee” means a committee of Directors appointed 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 Stock Options granted under
the Plan to qualify under Section 162(m) and Rule 16b-3, and each member of the
Committee shall be a Non-Employee Director and an Outside Director, who shall
serve at the pleasure of the Board. If at any time no Committee shall be in
office, then the functions of the Committee specified in the Plan shall be
exercised by the Board, unless the Plan specifically states otherwise.

e.            “Company” means St. Jude Medical, Inc., a corporation organized
under the laws of the State of Minnesota (or any successor corporation).

f.             “Consultant” means any person, including an advisor, engaged by
the Company, the Parent Corporation or a Subsidiary of the Company to render
services and who is compensated for such services and who is not an employee of
the Company, the Parent Corporation or any Subsidiary of the Company. A
Non-Employee Director may serve as a Consultant.

g.            “Continuous Status as an Employee or Consultant” shall mean the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case that an Employee becomes a Consultant or a
Consultant becomes an Employee, in either case without other interruption or
termination of service, or in the case of sick leave, military leave, or any
other leave of absence approved by the Administrator, provided that such leave
of absence is for a period of 90 days or less, unless reemployment after such
leave of absence is guaranteed by contract or statute.

 

h.

“Director” shall mean a member of the Board.

 

 

i.

“Disability” means permanent and total disability as determined by the
Committee.

j.             “Early Retirement” means retirement, with consent of the
Committee at the time of retirement, from active employment with the Company and
any Subsidiary or Parent Corporation of the Company.

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k.            “Fair Market Value” of Stock on any given date shall be determined
by the Committee as follows: (i) if the Stock is listed for trading, on the New
York Stock Exchange or one of more other national securities exchanges, the last
reported sales price on the New York Stock Exchange or such principal exchange
on the date in question, or if such Stock shall not have been traded on such
principal exchange on such date, the last reported sales price on the New York
Stock Exchange or such principal exchange on the first day prior thereto on
which such Stock was so traded; or (ii) if (i) is not applicable, by any means
deemed fair and reasonable by the Committee, which determination shall be final
and binding on all parties.

l.             “Incentive Stock Option” means any Stock Option intended to be
and designated as an “Incentive Stock Option” within the meaning of Section 422
of the Code.

 

m.

“Non-Employee Director” means a “Non-Employee Director” within the meaning of
Rule 16b-3.

n.            “Non-Qualified Stock Option” means any Stock Option that is not an
Incentive Stock Option, and is intended to be and is designated as a
“Non-Qualified Stock Option” or an Incentive Stock Option that ceases to so
qualify due to an amendment to such Stock Option.

o.            “Normal Retirement” means retirement from active employment with
the Company and any Subsidiary or Parent Corporation of the Company on or after
age 65.

p.            “Outside Director” means a Director who: (a) is not a current
employee of the Company or any member of an affiliated group which includes the
Company; (b) is not a former employee of the Company who receives compensation
for prior services (other than benefits under a tax-qualified retirement plan)
during the taxable year; (c) has not been an officer of the Company; (d) does
not receive remuneration from the Company, either directly or indirectly, in any
capacity other than as a Director, except as otherwise permitted under Code
Section 162(m) and regulations thereunder. For this purpose, remuneration
includes any payment in exchange for goods or services. This definition shall be
further governed by the provisions of Code Section 162(m) and regulations
promulgated thereunder.

q.            “Parent Corporation” means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if each of
the corporations (other than the Company) owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in the chain.

 

r.

“Retirement” means Normal Retirement or Early Retirement.

s.             “Rule 16b-3” shall mean Rule 16b-3 promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as amended
from time to time, or any successor rule or regulation.

 

t.

“Stock” means the Common Stock of the Company.

u.            “Stock Option” means any option to purchase shares of Stock
granted pursuant to Section 5 below.

v.            “Subsidiary” means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations (other than the last corporation in the unbroken chain) owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.

SECTION 2. Administration.

a.            Power and Authority of the Committee. The Plan shall be
administered by the Committee. The Committee shall have the power and authority
to grant to eligible persons, pursuant to the terms of the Plan, Incentive Stock
Options and Non-Qualified Stock Options. In particular, the Committee shall have
the authority:

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(i)           to select the officers and other key employees of the Company and
its Subsidiaries and other eligible persons to whom Stock Options may from time
to time be granted hereunder;

(ii)          to determine whether and to what extent Incentive Stock Options or
Non-Qualified Stock Options, or a combination of each, are to be granted
hereunder;

 

(iii)

to determine the number of shares to be covered by each such award granted
hereunder;

(iv)         to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder (including, but not limited
to, any restriction on any Stock Option and/or the shares of Stock relating
thereto); provided, however, that in the event of a merger or asset sale, the
applicable provisions of Sections 5(c) of the Plan shall govern the acceleration
of the vesting of any Stock Option;

(v)          to determine whether, to what extent and under what circumstances
Stock and other amounts payable with respect to an award under this Plan shall
be deferred either automatically or at the election of the participant; and

(vi)         to designate special terms and conditions under which Stock Options
may be granted to eligible participants who work or reside outside of the United
States on behalf of the Company or any Subsidiary or Parent Corporation, which
terms and conditions may vary by jurisdiction but may not change the maximum
number of shares of Stock for which Stock Options may be granted pursuant to
Section 3 or the eligibility rules in Section 4.

The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements relating thereto);
and otherwise to supervise the administration of the Plan. All decisions made by
the Committee pursuant to the provisions of the Plan shall be final and binding
on all persons, including the Company and Plan participants.

The Company expects to have the Plan administered in accordance with
requirements for the award of “qualified performance-based compensation” within
the meaning of Section 162(m) of the Code.

b.            Delegation. The Committee may delegate to the president and/or
chief executive officer of the Company its powers and duties specified in
clauses (i), (ii), (iii), (iv), (v) and (vi) of Section 2(a), subject to such
terms, conditions and limitations as the Committee may establish in its sole
discretion; provided, however, that the Committee shall not delegate its powers
and duties under the Plan (i) with regard to officers or Directors of the
Company or any Parent Corporation or Subsidiary 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.

c.            Power and Authority of the Board of Directors. 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.

SECTION 3. Stock Subject to Plan.

The total number of shares of Stock reserved and available for distribution
under the Plan shall be 6,000,000. Such shares may consist, in whole or in part,
of authorized and unissued shares. If any shares of Stock that have been
optioned are not purchased or are forfeited, or if a Stock Option otherwise
terminates without delivery of any shares of Stock, then such shares shall again
be available for distribution in connection with future awards under the Plan.
Notwithstanding the foregoing, the number of shares of Stock available for
granting Incentive Stock Options under the Plan shall not exceed 6,000,000,
subject to adjustment as provided in the Plan and subject to the provisions of
Section 422 or 424 of the Code or any successor provision.

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In the event of any merger, reorganization, consolidation, recapitalization,
stock dividend, stock split, reverse stock split, other change in corporate
structure affecting the Stock, spin-off, split-up, or other distribution of
assets to shareholders, or other similar corporate transaction or event affects
the shares of Stock 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 an
appropriate adjustment automatically shall be made in the maximum numbers and
kind of securities to be purchased under the Plan with a corresponding
adjustment in the purchase price to be paid therefor; provided that the number
of shares of Stock subject to any award always shall be a whole number.

SECTION 4. Eligibility.

Officers, other key employees of the Company or any Parent Corporation or
Subsidiary, members of the Board, and Consultants who are responsible for or
contribute to the management, growth and profitability of the business of the
Company or any Parent Corporation or Subsidiary are eligible to be granted Stock
Options under the Plan. The participants under the Plan shall be selected from
time to time by the Committee, in its sole discretion, from among those
eligible, and the Committee shall determine, in its sole discretion, the number
of shares of Stock covered by each award.

Notwithstanding the foregoing, in accordance with Section 162(m) of the Code, no
person shall receive grants of Stock Options under this Plan which exceed
500,000 shares during any fiscal year of the Company.

SECTION 5. Stock Options.

Any Stock Option granted under the Plan shall be in such form as the Committee
may from time to time approve.

The Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options. The Committee shall have the
authority to grant any participant Incentive Stock Options, Non-Qualified Stock
Options, or both types of options. To the extent that any option does not
qualify as an Incentive Stock Option, it shall constitute a separate
Non-Qualified Stock Option.

Anything in the Plan to the contrary notwithstanding, no term of this Plan
relating to Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be so exercised, so
as to disqualify either the Plan or any Incentive Stock Option under Section 422
of the Code. The preceding sentence shall not preclude any modification or
amendment to an outstanding Incentive Stock Option, whether or not such
modification or amendment results in disqualification of such Stock Option as an
Incentive Stock Option, provided that the optionee consents in writing to the
modification or amendment.

Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.

a.            Consideration for Awards. Awards of Stock Options under the Plan
may be granted for no cash consideration or for such other consideration as may
be determined by the Committee or required by applicable law.

b.            Option Exercise Price. The price per share of Stock purchasable
under a Stock Option shall be no less than 100% of Fair Market Value on the date
the option is granted. If an employee owns or is deemed to own (by reason of the
attribution rules applicable under Section 424(d) of the Code) more than 10% of
the combined voting power of all classes of stock of the Company or any Parent
Corporation or Subsidiary and an Incentive Stock Option is granted to such
employee, the option exercise price shall be no less than 110% of Fair Market
Value of the Stock on the date the option is granted. The Committee may not
reprice options without shareholder approval.

c.            Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than eight years after
the date the option is granted. If an employee owns or is deemed to own (by
reason of the attribution rules of Section 424(d) of the Code) more than 10% of
the combined voting power of all classes of stock of the Company or any Parent
Corporation or Subsidiary and an Incentive Stock Option is granted to such
employee, the term of such option shall be no more than five years from the date
of grant.

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d.            Time and Method of Exercise. The Committee shall determine the
time or times at which a Stock Option may be exercised in whole or in part and
the method or methods by which, and the form or forms (including cash, shares of
Stock, other securities or property, or any combination thereof, but not
including Stock Options, promissory notes, or any other form of a loan) in
which, payment of the exercise price with respect thereto may be made or deemed
to have been made.

e.            When Options Are Transferable. No Incentive Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution, and all Incentive Stock Options shall be exercisable, during
the optionee’s lifetime, only by the optionee. Non-Qualified Stock Options may
be transferred by gift, without consideration, by the optionee under a written
instrument acceptable to the Committee, to a member of the optionee’s family, as
defined in Section 267 of the Code, or to a trust or similar entity whose sole
beneficiaries are the optionee and/or members of the optionee’s family;
provided, however, that such transfer and the exercise thereof shall not violate
any federal or state securities laws. Upon the transfer, the donee shall have
all rights of the optionee and shall be subject to all the terms and conditions
imposed on such Stock Options.

f.             Termination by Death. If an optionee’s employment by or service
as a Director to the Company or any Parent Corporation or Subsidiary terminates
by reason of death, any Stock Option held by such optionee at the time of death
may thereafter be exercised, to the extent then exercisable, by the legal
representative of the estate or by the legatee of the optionee under the will of
the optionee, but may not be exercised after 12 months from the date of such
death or the expiration of the stated term of the option, whichever period is
shorter. In the event of termination of employment or service as a Director by
reason of death, if, pursuant to its terms, any Incentive Stock Option is
exercised after the expiration of the exercise periods that apply for purposes
of Section 422 of the Code, the option will thereafter be treated as a
Non-Qualified Stock Option.

g.            Termination by Reason of Disability. If an optionee’s employment
by or service as a Director to the Company or any Subsidiary or Parent
Corporation terminates by reason of Disability, any Stock Option held by such
optionee may thereafter be exercised, to the extent it was exercisable at the
time of termination due to Disability, but may not be exercised after 12 months
from the date of such termination of employment or service as a Director or the
expiration of the stated term of the option, whichever period is shorter. In the
event of termination of employment or service as a Director by reason of
Disability, if, pursuant to its terms, any Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for purposes of
Section 422 of the Code, the option will thereafter be treated as a
Non-Qualified Stock Option.

h.            Termination by Reason of Retirement. If an optionee’s employment
by the Company or any Subsidiary or Parent Corporation terminates by reason of
Retirement, any Stock Option held by such optionee may thereafter be exercised,
to the extent it was exercisable at the time of termination due to Retirement,
but may not be exercised after 36 months from the date of such termination of
employment or the expiration of the stated term of the option, whichever period
is shorter. In the event of termination of employment by reason of Retirement,
if, pursuant to its terms, any Incentive Stock Option is exercised after the
expiration of the exercise periods that apply for purposes of Section 422 of the
Code, the option will thereafter be treated as a Non-Qualified Stock Option.

i.             Other Termination. If an optionee’s Continuous Status as an
Employee or Consultant terminates (other than upon the optionee’s death,
Disability or Retirement), any Stock Option held by such optionee may thereafter
be exercised to the extent it was exercisable at the time of such termination,
but may not be exercised after (i) 90 days after such termination or (ii) the
expiration of the stated term of the option, whichever period is shorter.
Notwithstanding the foregoing, if a Non-Employee Director’s service to the
Company terminates (other than upon such Non-Employee Director’s death or
Disability), whether or not such service to the Company was provided as a
Consultant or a Director, any Stock Option held by such Non-Employee Director
may thereafter be exercised to the extent it was exercisable at the time of such
termination. In the event of termination of an optionee’s employment or service
as a Director by reason other than death, Disability or Retirement and if,
pursuant to its terms, any Incentive Stock Option is exercised after the
expiration of the exercise periods that apply for purposes of Section 422 of the
Code, the option will thereafter be treated as a Non-Qualified Stock Option. In
the event an optionee’s employment with or service as a Director to the Company
is terminated for Cause, all unexercised Options granted to such optionee shall
terminate immediately.

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j.             Annual Limit on Incentive Stock Options. The aggregate Fair
Market Value (determined as of the time the Stock Option is granted) of the
Common Stock with respect to which an Incentive Stock Option under this Plan or
any other plan of the Company and any Subsidiary or Parent Corporation is
exercisable for the first time by an optionee during any calendar year shall not
exceed $100,000.

 

k.

Grants of Stock Options to Non-Employee Directors.

(i)           Each Non-Employee Director who, on or after May 1, 2002 is(A)
elected, re-elected or serving an unexpired term as a Director of the Company at
any annual meeting of holders of the Stock; or (B) elected as a Director of the
Company at any special meeting of holders of Stock, shall, as of the date of
such election, re-election or annual or special meeting, automatically be
granted a Stock Option to purchase 4,000 shares of Stock at an exercise price
per share equal to 100% of the Fair Market Value of the Stock on such date. In
the case of a special meeting, the action of the holders of shares in electing a
Non-Employee Director shall constitute the granting of the Stock Option to such
Director and, in the case of an annual meeting, the action of the holders of
shares in electing or re-electing a Non-Employee Director shall constitute the
granting of the Stock Option to such Director and to any other Non-Employee
Director who shall be designated as serving an unexpired term as a Director of
the Company in the notice or proxy materials for the meeting; and the date when
the holders of shares shall take such action shall be the date of grant of the
Stock Option.

(ii)          Each Non-Employee Director who, on or after May 1, 2002, is
appointed as a Director of the Company at any time other than at an annual or
special meeting of holders of the Stock shall, as of the date of such
appointment, automatically be granted a Stock Option to purchase a pro rata
number of shares of Stock, which number shall be calculated by dividing 4,000 by
the number of months that shall occur from the date of such Non-Employee
Director’s appointment to the date of the next annual or special meeting of the
holders of the Stock. For purposes of this clause (ii), the number of months
counted towards such pro rata grant shall include the calendar month during
which the Non-Employee Director is appointed as a Director, irrespective of the
actual date of appointment, but shall not include the month during which the
next annual or special meeting is held, irrespective of the actual date of such
meeting.

(iii)        All Stock Options granted pursuant to this Section 5(k) shall be
designated as Non-Qualified Stock Options and shall be subject to the same terms
and provisions as are then in effect with respect to the grant of Non-Qualified
Stock Options to officers and key employees of the Company, except that (A) the
term of each such option shall be equal to eight years, which term,
notwithstanding the provisions in Section 5(i), shall not expire upon the
termination of service as a Director; and (B) the Stock Option shall become
exercisable beginning six months after the date the option is granted. Upon
termination of such Director’s service as a Director of the Company, the
unvested portion of any and all Stock Options then held by such Director shall
not thereafter be exercisable. Subject to the foregoing, all provisions of this
Plan not inconsistent with the foregoing shall apply to Stock Options granted
pursuant to this Section 5(k). Stock Options issued under this Section 5(k)
shall be in lieu of and in substitution for any new awards of Stock Options that
otherwise would be granted under the terms of the St. Jude Medical, Inc. 2000
Stock Option Plan or any prior stock option plan of the Company from and after
May 1, 2002. Nothing herein shall limit the right of the Board to issue Stock
Options to any Non-Employee Director under the terms of this Plan in addition to
those provided for under this Section 5(k), provided that no Non-Employee
Director shall be granted Stock Options under this Plan, including the Options
awarded under this Section 5(k), in excess of 7,500 shares in any calendar year.

SECTION 6. Transfer, Leave of Absence, etc.

For purposes of this Plan, the following events shall not be deemed a
termination of employment:

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a.            a transfer of an employee from the Company to a Parent Corporation
or Subsidiary, or from a Parent Corporation or Subsidiary to the Company, or
from one Subsidiary to another;

b.            a leave of absence, approved in writing by the Committee, for
military service or sickness, or for any other purpose approved by the Committee
if the period of such leave does not exceed 90 days (or such longer period as
the Committee may approve, in its sole discretion); and

c.            a leave of absence in excess of 90 days, approved by the
Committee, but only if the employee’s right to reemployment is guaranteed either
by a statute or by contract, and provided that, in the case of any leave of
absence, the employee returns to work within 30 days after the end of such
leave.

SECTION 7. Amendments and Termination.

The Board may amend, alter or discontinue the Plan, but no amendment, alteration
or discontinuation shall be made which would impair the rights of an optionee
under a Stock Option theretofore granted, without the optionee’s consent, and no
amendment or alteration shall be made which would

 

(i)

cause the Plan to no longer comply with Rule 16b-3, Section 422 of the Code or
any other regulatory requirements;

 

(ii)

materially increase the benefits accruing to participants under this plan;

 

(iii)

materially increase the aggregate number of securities that may be issued under
this Plan except pursuant to the second paragraph of Section 3 which permits
adjustments in the number of shares of stock in certain events such as a stock
split or dividend in a manner that is “appropriate in order to prevent dilution
or enlargement of the benefits or potential benefits intended to be made
available under the Plan...” or

 

(iv)

materially modify the requirements as to eligibility for participation in this
plan unless the amendment or alteration shall be subject to shareholder
approval.

The Committee may amend the terms of any award or option theretofore granted,
prospectively or retroactively and to the extent such amendment is consistent
with the terms of this Plan, but no such amendment shall impair the rights of
any holder without his or her consent

except to the extent authorized under the Plan. However, the Committee may not
reprice options, either by lowering the exercise price of outstanding options or
canceling outstanding options and granting replacement options with lower
exercise prices, without shareholder approval.

SECTION 8. Unfunded Status Of Plan.

The Plan is intended to constitute an “unfunded” plan for incentive and deferred
compensation. With respect to any payments not yet made to a participant by the
Company, nothing contained herein shall give any such participant any rights
that are greater than those of a general creditor of the Company. In its sole
discretion, the Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to deliver Stock or
payments in lieu of or with respect to awards hereunder, provided, however, that
the existence of such trusts or other arrangements is consistent with the
unfunded status of the Plan.

SECTION 9. General Provisions.

a.            The Committee may require each person purchasing shares of Stock
pursuant to a Stock Option under the Plan to represent to and agree with the
Company in writing that the optionee is acquiring the shares without a view to
distribution thereof. The certificates for such shares may include any legend
which the Committee deems appropriate to reflect any restrictions on transfer.

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All certificates for shares of Stock delivered under the Plan shall be subject
to such stock-transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations and other requirements of the Securities
and Exchange Commission, any stock exchange upon which the Stock is then listed,
and any applicable federal or state securities laws, and the Committee may cause
a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

b.            Nothing contained in this Plan shall prevent the Board of
Directors from adopting other or additional compensation arrangements, subject
to shareholder approval if such approval is required; and such arrangements may
be either generally applicable or applicable only in specific cases. The
adoption of the Plan shall not confer upon any employee of the Company or any
Subsidiary any right to be retained as an employee or Consultant of the Company
or a Subsidiary or Parent Corporation, as the case may be, or a Non-Employee
Director to be retained as a Director, nor shall it interfere in any way with
the right of the Company, Parent Corporation or a Subsidiary to dismiss a
participant in the Plan from employment or service at any time, with or without
cause.

c.            Each participant shall, no later than the date as of which any
part of the value of an award first becomes includible as compensation in the
gross income of the participant for any federal tax purposes, pay to the
Company, or make arrangements satisfactory to the Committee regarding payment
of, any federal, state or local taxes of any kind required by law to be withheld
with respect to the award. The obligations of the Company under the Plan shall
be conditional on such payment or arrangements and the Company, Parent
Corporation and a Subsidiary shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
participant. With respect to any award under the Plan, if the terms of such
award so permit, a participant may elect by written notice to the Company to
satisfy part or all of the minimum tax withholding requirements associated with
the exercise of the award by (i) authorizing the Company to retain from the
number of shares of Stock that would otherwise be deliverable to the
participant, or (ii) delivering to the Company from shares of Stock already
owned by the participant, that number of shares having an aggregate Fair Market
Value equal to part or all of the tax payable by the participant under this
Section 9(c). Any such election shall be in accordance with, and subject to,
applicable tax and securities laws, regulations and rulings.

d.            The internal law, and not the law of conflicts, of the State of
Minnesota, shall govern all questions concerning the validity, construction and
effect of the Plan or any Stock Option, and any rules and regulations relating
to the Plan or any Stock Option.

SECTION 10. Effective Date of Plan.

The Plan shall be effective on February 15, 2002 (the date of approval by the
Board), subject to the approval by shareholders of the Company. If the Plan is
not so approved by the shareholders on or before one year after this Plan’s
adoption by the Board, this Plan shall not come into effect. The offering of the
shares of Stock hereunder also shall be subject to the effecting by the Company
of any registration or qualification of the shares under any federal or state
law or the obtaining of the consent or approval of any governmental regulatory
body which the Company shall determine, in its sole discretion, is necessary or
desirable as a condition to or in connection with the offering or the issue or
purchase of the shares covered thereby.

SECTION 11. Term of Plan.

Stock Options shall be granted under the Plan only during a 10-year period
beginning on the effective date of the Plan, unless the Plan is terminated
earlier pursuant to Section 7 of the Plan. However, unless otherwise expressly
provided in the Plan or in an applicable option agreement, any Stock Option
theretofore granted may extend beyond the end of such 10-year period, and the
authority of the Committee provided for hereunder with respect to the Plan and
any awards, and the authority of the Board to amend the Plan, shall extend
beyond the termination of the Plan.

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