**Exhibit 10.2**

**DIAMETRICS MEDICAL, INC.**

**2006 INCENTIVE COMPENSATION PLAN**

**I. INTRODUCTION**

1.1. **Purposes.** Thepurposes of the 2006 Incentive Compensation Plan (the “**Plan**”) of Diametrics Medical, Inc. (the “**Company**”) are (i) to align the interests of the Company’s stockholders and the recipients of awards underthis Plan by increasing the proprietary interest of such recipients in the Company’s growth and success, (ii) to advance the interests of the Company by attracting and retaining directors, officers, other employees, consultants,independent contractors and agents and (iii) to motivate such persons to act in the best interests of the Company and its stockholders. 

1.2.**Certain Definitions****.**

**“Agreement”** shall mean the written agreement evidencing an award hereunderbetween the Company and the recipient of such award. 

**“Board”** shall mean the Board of Directors of the Company.

**“Bonus Stock”** shall mean shares of Common Stock which are not subject to a Restriction Period or Performance Measures.

**“Bonus Stock Award”** shall mean an award of Bonus Stock under this Plan. 

**“Cause”** shall mean the willful and continued failure to substantially perform the duties assigned by the Company (other than a failureresulting from the optionee’s Disability), the willful engaging in conduct which is demonstrably injurious to the Company or any Subsidiary, monetarily or otherwise, including conduct that, in the reasonable judgment of the Company, no longerconforms to the standard of the Company’s executives or employees, any act of dishonesty, commission of a felony, or a significant violation of any statutory or common law duty of loyalty to the Company. 

**“Change in Control”** shall have the meaning set forth in Section 5.8(b). 

**“Code”** shall mean the Internal Revenue Code of 1986, as amended. 

**“Committee”** shall mean the Committee designated by the Board, consisting of two more members of the Board, each of whom may be(i) a “Non-Employee Director” within the meaning of Rule 16b-3 under the Exchange Act and (ii) an “outside director” within the meaning of Section 162(m) of the Code. 

**“Common Stock”** shall mean the common stock, $1.00 par value, of the Company. 

**“Company”** has the meaning specified in Section 1.1. 

**“Disability”** shall mean the inability of the holder of an award to perform substantially such holder’s duties and responsibilities for a continuous period of at least six months, as determinedsolely by the Committee. 

**“ERISA”** shall mean the Employee Retirement Income Security Act of 1974, as amended.

**“Exchange Act”** shall mean the Securities Exchange Act of 1934, as amended. 

**“Fair Market Value”**shall mean, as of any date, the value of Common Stock determined as follows: 

(i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation The Nasdaq Stock Market, itsFair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in *The WallStreet Journal* or such other source as the Committee deems reliable; 

(ii) If the Common Stock is regularly quoted by a recognizedsecurities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination; 

(iii) In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Committee; or

(iv) Notwithstanding clause (iii) above, as otherwise determined in good faith by the Committee. 

**“Free-Standing SAR”** shall mean an SAR which is not issued in tandem with, or by reference to, an option, which entitles the holderthereof to receive, upon exercise, shares of Common Stock (which may be Restricted Stock), cash or a combination thereof with an aggregate value equal to the excess of the Fair Market Value of one share of Common Stock on the date of exercise overthe base price of such SAR, multiplied by the number of such SARs which are exercised. 

**“Incentive Stock Option”** shallmean an option to purchase shares of Common Stock that meets the requirements of Section 422 of the Code, or any successor provision, which is intended by the Committee to constitute an Incentive Stock Option. 

**“Incumbent Board”** shall have the meaning set forth in Section 5.8(b)(2). 

**“Non-Employee Director”** shall mean any director of the Company who is not an officer or employee of the Company or any Subsidiary.

**“Non-Statutory Stock Option”** shall mean an option to purchase shares of Common Stock which is not an Incentive StockOption. 

**“Outstanding Common Stock”** shall have the meaning set forth in Section 5.8(b)(1). 

**“Outstanding Voting Securities”** shall have the meaning set forth in Section 5.8(b)(1). 

 

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**“Performance Measures”** shall mean the criteria and objectives, established by theCommittee, which shall be satisfied or met (i) as a condition to the exercisability of all or a portion of an option or SAR, (ii) as a condition to the grant of a Stock Award or (iii) during the applicable Restriction Period orPerformance Period as a condition to the holder’s receipt, in the case of a Restricted Stock Award, of the shares of Common Stock subject to such award, or, in the case of a Restricted Stock Unit Award or Performance Share Award, of the sharesof Common Stock subject to such award and/or of payment with respect to such award. Such criteria and objectives may include one or more of the following: the attainment by a share of Common Stock of a specified Fair Market Value for a specifiedperiod of time, earnings per share, return to stockholders (including dividends), return on equity, earnings of the Company, revenues, market share, cash flow or cost reduction goals, or any combination of the foregoing. If the Committee desiresthat compensation payable pursuant to any award subject to Performance Measures be “qualified performance-based compensation” within the meaning of Section 162(m) of the Code, the Performance Measures (i) shall be established bythe Committee no later than the end of the first quarter of the Performance Period or Restriction Period, as applicable (or such other time designated by the Internal Revenue Service) and (ii) shall satisfy all other applicable requirementsimposed under Treasury Regulations promulgated under Section 162(m) of the Code, including the requirement that such Performance Measures be stated in terms of an objective formula or standard. 

**“Performance Period”** shall mean any period designated by the Committee during which the Performance Measures applicable to a PerformanceShare Award shall be measured. 

**“Performance Share”** shall mean a right, contingent upon the attainment of specifiedPerformance Measures within a specified Performance Period, to receive one share of Common Stock, which may be Restricted Stock, or in lieu of all or a portion thereof, the Fair Market Value of such Performance Share in cash. 

**“Performance Share Award”** shall mean an award of Performance Shares under this Plan. 

**“Permanent and Total Disability”** shall have the meaning set forth in Section 22(e)(3) of the Code or any successor thereto.

**“Person”** shall have the meaning set forth in Section 5.8(b)(1). 

**“Post-Termination Exercise Period”** shall mean the period specified in or pursuant to Section 2.3(a), Section 2.3(b),Section 2.3(d) or Section 2.3(e) following termination of employment with or service to the Company during which an option or SAR may be exercised. 

**“Restricted Stock”** shall mean shares of Common Stock which are subject to a Restriction Period. 

**“Restricted Stock Award”** shall mean an award of Restricted Stock under this Plan. 

**“RestrictionPeriod”**shall mean any period designated by the Committee during which (i) the Common Stock subject to a Restricted Stock Award may not be sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or disposed of,except as provided in this Plan or the Agreement relating to such award, or (ii) the conditions to vesting applicable to a Restricted Stock Unit Award shall remain in effect. 

 

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**“Restricted Stock Unit”** shall mean a right to receive one share of Common Stock or, inlieu thereof, the Fair Market Value of such share of Common Stock in cash, which shall be contingent upon the expiration of a specified Restriction Period and which may, in addition thereto, be contingent upon the attainment of specified PerformanceMeasures within a specified Performance Period. 

**“Restricted Stock Unit Award”** shall mean an award of Restricted StockUnits under this Plan. 

**“Restriction Period”**shall mean any period designated by the Committee during which (i) theCommon Stock subject to a Restricted Stock Award may not be sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or disposed of, except as provided in this Plan or the Agreement relating to such award, or (ii) theconditions to vesting applicable to a Restricted Stock Unit Award shall remain in effect. 

**“Retirement”** shall meantermination of employment with or service to the Company by reason of retirement on or after age 65. 

**“SAR”** shall mean astock appreciation right which may be a Free-Standing SAR or a Tandem SAR. 

**“Stock Award”** shall mean a Restricted StockAward, a Restricted Stock Unit Award or a Bonus Stock Award. 

**“Subsidiary”** and **“Subsidiaries”** shall havethe meanings set forth in Section 1.4. 

**“Tandem SAR”** shall mean an SAR which is granted in tandem with, or byreference to, an option (including a Non-Statutory Stock Option granted prior to the date of grant of the SAR), which entitles the holder thereof to receive, upon exercise of such SAR and surrender for cancellation of all or a portion of suchoption, shares of Common Stock (which may be Restricted Stock), cash or a combination thereof with an aggregate value equal to the excess of the Fair Market Value of one share of Common Stock on the date of exercise over the base price of such SAR,multiplied by the number of shares of Common Stock subject to such option, or portion thereof, which is surrendered. 

**“TaxDate”** shall have the meaning set forth in Section 5.5. 

**“Ten Percent Holder”** shall have the meaning setforth in Section 2.1(a). 

1.3. **Administration.** This Plan shall be administered by the Committee. Any one or a combination of thefollowing awards may be made under this Plan to eligible persons: (i) options to purchase shares of Common Stock in the form of Incentive Stock Options or Non-Statutory Stock Options, (ii) SARs in the form of Tandem SARs or Free-StandingSARs, (iii) Stock Awards in the form of Restricted Stock, Restricted Stock Units or Bonus Stock and (iv) Performance Shares. The Committee shall, subject to the terms of this Plan, select eligible persons for participation in this Plan anddetermine the form, amount and timing of each award 

 

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to such persons and, if applicable, the number of shares of Common Stock, the number of SARs and the number ofPerformance Shares subject to such an award, the exercise price or base price associated with the award, the time and conditions of exercise or settlement of the award and all other terms and conditions of the award, including, without limitation,the form of the Agreement evidencing the award. The Committee may, in its sole discretion and for any reason at any time, subject to the requirements of Section 162(m) of the Code and regulations thereunder in the case of an award intended tobe qualified performance-based compensation, take action such that (i) any or all outstanding options and SARs shall become exercisable in part or in full, (ii) all or a portion of the Restriction Period applicable to any outstandingRestricted Stock Award or Restricted Stock Unit Award shall lapse, (iii) all or a portion of the Performance Period applicable to any outstanding Performance Share Award shall lapse and (iv) the Performance Measures applicable to anyoutstanding award (if any) shall be deemed to be satisfied at the maximum or any other level. The Committee shall, subject to the terms of this Plan, interpret this Plan and the application thereof, establish rules and regulations it deems necessaryor desirable for the administration of this Plan and may impose, incidental to the grant of an award, conditions with respect to the award, such as limiting competitive employment or other activities. All such interpretations, rules, regulations andconditions shall be final, binding and conclusive. 

The Committee may delegate some or all of its power and authority hereunder to theBoard or the President and Chief Executive Officer or other executive officer of the Company as the Committee deems appropriate; provided, however, that (i) the Committee may not delegate its power and authority to the Board or the Presidentand Chief Executive Officer or other executive officer of the Company with regard to the grant of an award to any person who is a “covered employee” within the meaning of Section 162(m) of the Code or who, in the Committee’sjudgment, is likely to be a covered employee at any time during the period an award hereunder to such employee would be outstanding and (ii) the Committee may not delegate its power and authority to the President and Chief Executive Officer orother executive officer of the Company with regard to the selection for participation in this Plan of an officer or other person subject to Section 16 of the Exchange Act or decisions concerning the timing, pricing or amount of an award to suchan officer or other person. 

No member of the Board or Committee, and neither the President and Chief Executive Officer nor any otherexecutive officer to whom the Committee delegates any of its power and authority hereunder, shall be liable for any act, omission, interpretation, construction or determination made in connection with this Plan in good faith, and the members of theBoard and the Committee and the President and Chief Executive Officer or other executive officer shall be entitled to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including attorneys’ fees)arising therefrom to the full extent permitted by law, except as otherwise may be provided in the Company’s Articles of Incorporation and/or Bylaws, in each case, as the same may be amended from time to time, and under any directors’ andofficers’ liability insurance that may be in effect from time to time. 

A majority of the Committee shall constitute a quorum. Theacts of the Committee shall be either (i) acts of a majority of the members of the Committee present at any meeting at which a quorum is present or (ii) acts approved in writing by all of the members of the Committee without a meeting.

 

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1.4. **Eligibility.** Participants in this Plan shall consist of such directors (including Non-EmployeeDirectors), officers and other employees, persons expected to become directors, officer and other employees, consultants, independent contractors and agents of the Company, its subsidiaries from time to time (individually a“**Subsidiary**” and collectively the “**Subsidiaries**”) as the Committee in its sole discretion may select from time to time. For purposes of this Plan, references to employment shall also mean an agency or independentcontractor relationship and references to employment by the Company shall also mean employment by a Subsidiary. The Committee’s selection of a person to participate in this Plan at any time shall not require the Committee to select such personto participate in this Plan at any other time. 

1.5. **Shares Available.** Subject to adjustment as provided in Section 5.7, 361,243 sharesof Common Stock shall be available under this Plan, reduced by the sum of the aggregate number of shares of Common Stock which become subject to outstanding options, outstanding Free-Standing SARs, outstanding Stock Awards and outstandingPerformance Shares. To the extent that shares of Common Stock subject to an outstanding option (except to the extent shares of Common Stock are issued or delivered by the Company in connection with the exercise of a Tandem SAR), Free-Standing SAR,Stock Award or Performance Share are not issued or delivered by reason of the expiration, termination, cancellation or forfeiture of such award or by reason of the delivery or withholding of shares of Common Stock to pay all or a portion of theexercise price of an award, if any, or to satisfy all or a portion of the tax withholding obligations relating to an award, then such shares of Common Stock shall again be available under this Plan. 

**II. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS**

2.1.**Stock Options.** The Committee may, in its discretion, grant options to purchase shares of Common Stock to such eligible persons as may be selected by the Committee. Each option, or portion thereof, that is not an Incentive Stock Option,shall be a Non-Statutory Stock Option. An Incentive Stock Option may not be granted to any person who is not an employee of the Company or any parent or subsidiary (as defined in Section 424 of the Code). Each Incentive Stock Option shall begranted within ten years of the date this Plan is adopted by the Board. To the extent that the aggregate Fair Market Value (determined as of the date of grant) of shares of Common Stock with respect to which options designated as Incentive StockOptions are exercisable for the first time by a participant during any calendar year (under this Plan or any other plan of the Company, or any parent or subsidiary as defined in Section 424 of the Code) exceeds the amount (currently $100,000)established by the Code, such options shall constitute Non-Statutory Stock Options. 

Options shall be subject to the following terms andconditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable: 

(a) **Number of Shares and Purchase Price.** The number of shares of Common Stock subject to an option and the purchase price per share of Common Stock purchasable upon exercise of the option shall bedetermined by the Committee; provided, however, that the purchase price per share of Common Stock purchasable upon exercise of an Incentive Stock Option shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date ofgrant of such option; provided further, that if an Incentive Stock Option shall be granted to any person who, at the time such option is granted, owns capital stock possessing more than 

 

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ten percent of the total combined voting power of all classes of capital stock of the Company (or of any parent or subsidiary as defined in Section 424of the Code) (a “**Ten Percent Holder**”), the purchase price per share of Common Stock shall be not less than 110% of the Fair Market Value of a share of Common Stock on the date of grant of such option. 

(b) **Option Period and Exercisability.** The period during which an option may be exercised shall be determined by the Committee; provided,however, that no Incentive Stock Option shall be exercised later than ten years after its date of grant; provided further, that if an Incentive Stock Option shall be granted to a Ten Percent Holder, such option shall not be exercised later than fiveyears after its date of grant. The Committee may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant of an option or to the exercisability of all or a portion of an option. The Committeeshall determine whether an option shall become exercisable in cumulative or non-cumulative installments and in part or in full at any time. An exercisable option, or portion thereof, may be exercised only with respect to whole shares of CommonStock. 

(c) **Method of Exercise.** An option may be exercised (i) by giving written notice to the Company specifying thenumber of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company’s satisfaction) either (A) in cash, (B) by delivery (either actual delivery or byattestation procedures established by the Company) of shares of Common Stock having an aggregate Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) byauthorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the date of exercise, equal to the amount necessary to satisfy such obligation, (D) incash by a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise or (E) a combination of (A), (B) and (C), in each case to the extent set forth in the Agreement relating to the option,(ii) if applicable, by surrendering to the Company any Tandem SARs which are canceled by reason of the exercise of the option and (iii) by executing such documents as the Company may reasonably request. The Company shall have solediscretion to disapprove of an election pursuant to any of clauses (B)-(E). Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by theoptionee. No certificate representing Common Stock shall be delivered until the full purchase price therefor has been paid (or arrangement made for such payment to the Company’s satisfaction). 

2.2. **Stock Appreciation Rights.** The Committee may, in its discretion, grant SARs to such eligible persons as may be selected by the Committee. TheAgreement relating to an SAR shall specify whether the SAR is a Tandem SAR or a Free-Standing SAR. 

SARs shall be subject to the followingterms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable: 

(a) **Number of SARs and Base Price.** The number of SARs subject to an award shall be determined by the Committee. Any Tandem SAR related to an Incentive Stock Option shall be granted at the same time thatsuch Incentive Stock Option is granted. The base price of a Tandem SAR shall be the purchase price per share of Common Stock of the related option. The base price of a Free-Standing SAR shall be determined by the Committee. 

 

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(b) **Exercise Period and Exercisability.** The Agreement relating to an award of SARs shallspecify whether such award may be settled in shares of Common Stock (including shares of Restricted Stock) or cash or a combination thereof. The period for the exercise of an SAR shall be determined by the Committee; provided, however, that noTandem SAR shall be exercised later than the expiration, cancellation, forfeiture or other termination of the related option. The Committee may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to thegrant of an SAR or to the exercisability of all or a portion of an SAR. The Committee shall determine whether an SAR may be exercised in cumulative or non-cumulative installments and in part or in full at any time. An exercisable SAR, or portionthereof, may be exercised, in the case of a Tandem SAR, only with respect to whole shares of Common Stock and, in the case of a Free-Standing SAR, only with respect to a whole number of SARs. If an SAR is exercised for shares of Restricted Stock, acertificate or certificates representing such Restricted Stock shall be issued in accordance with Section 3.2(c) and the holder of such Restricted Stock shall have such rights of a stockholder of the Company as determined pursuant toSection 3.2(d). Prior to the exercise of an SAR for shares of Common Stock, including Restricted Stock, the holder of such SAR shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to such SARand shall have rights as a stockholder of the Company in accordance with Section 5.10. 

(c) **Method of Exercise.** A TandemSAR may be exercised (i) by giving written notice to the Company specifying the number of whole SARs which are being exercised, (ii) by surrendering to the Company any options which are canceled by reason of the exercise of the Tandem SARand (iii) by executing such documents as the Company may reasonably request. A Free-Standing SAR may be exercised (i) by giving written notice to the Company specifying the whole number of SARs which are being exercised and (ii) byexecuting such documents as the Company may reasonably request. 

2.3. **Termination of Employment or Service****.**

(a) **Disability.** Subject to paragraph (e) below, and unless otherwise specified in the Agreement relating to an option or SAR, as thecase may be, if the employment with or service to the Company of the holder of an option or SAR terminates by reason of Disability, each option and SAR held by such holder shall be exercisable only to the extent that such option or SAR, as the casemay be, is exercisable on the effective date of such holder’s termination of employment or service and may thereafter be exercised by such holder (or such holder’s legal representative or similar person) until and including the earliest tooccur of (i) the date which is six months (or such other period as set forth in the Agreement relating to such option or SAR) after the effective date of such holder’s termination of employment or service and (ii) the expiration dateof the term of such option or SAR. 

(b) **Retirement.** Unless otherwise specified in the Agreement relating to an option or SAR,as the case may be, if the employment with or service to the Company of the holder of an option or SAR terminates by reason of Retirement, each option and SAR held by such holder shall be fully exercisable and may thereafter be exercised by suchholder (or such holder’s legal representative or similar person) until the expiration date of the term of such option or SAR. 

 

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(c) **Death.** Unless otherwise specified in the Agreement relating to an option or SAR, as thecase may be, if the employment with or service to the Company of the holder of an option or SAR terminates by reason of death, each option and SAR held by such holder shall be exercisable only to the extent that such option or SAR, as the case maybe, is exercisable on the date of such holder’s death, and may thereafter be exercised by such holder’s executor, administrator, legal representative, beneficiary or similar person until and including the earliest to occur of (i) thedate which is six months (or such other period as set forth in the Agreement relating to such option or SAR) after the date of death and (ii) the expiration date of the term of such option or SAR. 

(d) **Other Termination.** Subject to paragraph (e) below and unless otherwise specified in the Agreement relating to an option or SAR, asthe case may be, if the employment with or service to the Company of the holder of an option or SAR terminates for any reason other than Disability, Retirement or death or for Cause, each option and SAR held by such holder shall be exercisable onlyto the extent that such option or SAR is exercisable on the effective date of such holder’s termination of employment or service and may thereafter be exercised by such holder (or such holder’s legal representative or similar person) untiland including the earliest to occur of (i) the date which is 30 days (or such longer period as set forth in the Agreement relating to such option or SAR) after the effective date of such holder’s termination of employment or service and(ii) the expiration date of the term of such option or SAR. 

(e) **Termination of Employment - Incentive Stock Options.**Unless otherwise specified in the Agreement relating to the option, if the employment with the Company of a holder of an Incentive Stock Option terminates by reason of Permanent and Total Disability, each Incentive Stock Option held by such optioneeshall be exercisable to the extent set forth in Section 2.3(a), and may thereafter be exercised by such optionee (or such optionee’s legal representative or similar person) until and including the earliest to occur of (i) the datewhich is one year (or such shorter period as set forth in the Agreement relating to such option) after the effective date of such optionee’s termination of employment and (ii) the expiration date of the term of such option. 

(g). **Cause.** Notwithstanding anything to the contrary in this Plan or in any Agreement relating to an Option or SAR, as the case may be, ifthe employment with or service to the Company of the holder of an option or SAR is terminated by the Company for Cause, each option and SAR held by such holder shall be automatically canceled on the effective date of such holder’s terminationof employment or service. 

**III. STOCK AWARDS**

3.1. **Stock Awards.** The Committee may, in its discretion, grant Stock Awards to such eligible persons as may be selected by the Committee. The Agreement relating to a Stock Award shall specify whether the Stock Award is aRestricted Stock Award, a Restricted Stock Unit Award or Bonus Stock Award. 

3.2. **Terms of Restricted Stock Awards**. Restricted Stock Awardsshall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable. 

 

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(a) **Number of Shares and Other Terms.** The number of shares of Common Stock subject to aRestricted Stock Award and the Restriction Period, Performance Period (if any) and Performance Measures (if any) applicable to a Restricted Stock Award shall be determined by the Committee. 

(b) **Vesting and Forfeiture.** The Agreement relating to a Restricted Stock Award shall provide, in the manner determined by the Committee, inits discretion, and subject to the provisions of this Plan, for the vesting of the shares of Common Stock subject to such award. 

(c)**Stock Issuance.** During the Restriction Period, the shares of Restricted Stock shall be held by a custodian in book entry form with restrictions on such shares duly noted or, alternatively, a certificate or certificates representing aRestricted Stock Award shall be registered in the holder’s name and may bear a legend, in addition to any legend which may be required pursuant to Section 6.6, indicating that the ownership of the shares of Common Stock represented by suchcertificate is subject to the restrictions, terms and conditions of this Plan and the Agreement relating to the Restricted Stock Award. Upon termination of any applicable Restriction Period (and the satisfaction or attainment of applicablePerformance Measures) the Company shall remove the restrictions from the requisite number of any shares of Common Stock that are held in book entry form and all certificates evidencing ownership of the requisite number of shares of Common Stockshall be delivered to the holder of such award. 

(d) **Rights with Respect to Restricted Stock Awards.** Unless otherwise setforth in the Agreement relating to a Restricted Stock Award, and subject to the terms and conditions of a Restricted Stock Award, the holder of such award shall have all rights as a stockholder of the Company, including, but not limited to, votingrights, the right to receive dividends and the right to participate in any capital adjustment applicable to all holders of Common Stock; provided, however, that a distribution with respect to shares of Common Stock, other than aregular cash dividend, shall be deposited with the Company and shall be subject to the same restrictions as the shares of Common Stock with respect to which such distribution was made. 

3.3. **Terms of Restricted Stock Unit Awards.** Restricted Stock Unit Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistentwith the terms of this Plan, as the Committee shall deem advisable. 

(a) **Number of Shares and Other Terms.** The number ofshares of Common Stock subject to a Restricted Stock Unit Award and the Restriction Period, Performance Period (if any) and Performance Measures (if any) applicable to a Restricted Stock Unit Award shall be determined by the Committee. 

(b) **Vesting and Forfeiture.** The Agreement relating to a Restricted Stock Unit Award shall provide, in the manner determined by theCommittee, in its discretion, and subject to the provisions of this Plan, for the vesting of such Restricted Stock Unit Award. 

3.4. **Settlement ofVested Restricted Stock Unit Awards.**The Agreement relating to a Restricted Stock Unit Award shall specify (i) whether such award may be settled in shares of Common Stock or cash or a combination thereof and (ii) whether the holderthereof shall be entitled to receive, on a current or deferred basis, dividend equivalents, and, if determined by the Committee, interest on, or the deemed reinvestment of, any deferred dividend equivalents, with 

 

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respect to the number of shares of Common Stock subject to such award. Prior to the settlement of a Restricted Stock UnitAward, the holder of such award shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to such award. 

3.5. **Bonus Stock Awards.** The number of shares of Common Stock subject to a Bonus Stock Award or Restricted Stock Unit Award shall be determined by the Committee. Bonus Stock Awards shall not be subject to any PerformanceMeasures or Restriction Periods. 

3.6. **Termination of Employment or Service.**All of the terms relating to the satisfaction of PerformanceMeasures and the termination of the Restriction Period relating to a Restricted Stock Award or any forfeiture and cancellation of such award upon a termination of employment with or service to the Company of the holder of such award, whether byreason of Disability, Retirement, death or any other reason, shall be determined by the Committee. 

**IV. PERFORMANCE SHARE AWARDS**

4.1. **Performance Share Awards.** The Committee may, in its discretion, grant Performance Share Awards to such eligible persons as may beselected by the Committee. 

4.2. **Terms of Performance Share Awards.** Performance Share Awards shall be subject to the following terms andconditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable. 

(a) **Number of Performance Shares and Performance Measures.** The number of Performance Shares subject to any award and the Performance Measures and Performance Period applicable to such award shall bedetermined by the Committee. 

(b) **Vesting and Forfeiture.** The Agreement relating to a Performance Share Award shall provide,in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of such award, if specified Performance Measures are satisfied or met during the specified Performance Period, and for theforfeiture of all or a portion of such award, if specified Performance Measures are not satisfied or met during the specified Performance Period. 

(c) **Settlement of Vested Performance Share Awards.** The Agreement relating to a Performance Share Award (i) shall specify whether such award may be settled in shares of Common Stock (including shares of Restricted Stock)or cash or a combination thereof and (ii) may specify whether the holder thereof shall be entitled to receive, on a current or deferred basis, dividend equivalents, and, if determined by the Committee, interest on or the deemed reinvestment ofany deferred dividend equivalents, with respect to the number of shares of Common Stock subject to such award. If a Performance Share Award is settled in shares of Restricted Stock, a certificate or certificates representing such Restricted Stockshall be issued in accordance with Section 3.2(c) and the holder of such Restricted Stock shall have such rights of a stockholder of the Company as determined pursuant to Section 3.2(d). Prior to the settlement of a Performance Share Awardin shares of Common Stock, including Restricted Stock, the holder of such award shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to such award and shall have rights as a stockholder of theCompany in accordance with Section 5.10. 

 

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**4.3 Termination of Employment.** All of the terms relating to the satisfaction of PerformanceMeasures and the termination of the Performance Period relating to a Performance Share Award, or any forfeiture and cancellation of such award upon a termination of employment with or service to the Company of the holder of such award, whether byreason of Disability, Retirement, death or other termination, shall be determined by the Committee. 

**V. GENERAL**

5.1. **Effective Date and Term of Plan.** This Plan shall be submitted to the stockholders of the Company for approval and, if approved by the affirmative voteof a majority of the voting power of the shares present and entitled to vote thereon at a meeting of stockholders, shall become effective as of August 11, 2006. No option may be exercised prior to the date of such stockholder approval. ThisPlan shall terminate upon the earlier to occur of (i) the date when shares of Common Stock are no longer available for the grant, exercise or settlement of awards or (ii) ten years after the date this Plan is adopted, unless terminatedearlier by the Board. Termination of this Plan shall not affect the terms or conditions of any award granted prior to termination. 

In the event that thisPlan is not approved by the stockholders of the Company on or before May 31, 2007, this Plan and any awards granted hereunder shall be null and void. 

5.2. **Amendments.** The Board may amend this Plan as it shall deem advisable, subject to any requirement of stockholder approval required by applicable law, rule or regulation, including Section 162(m) and Section 422of the Code; provided, however, that no amendment shall be made without stockholder approval if such amendment would (a) increase the maximum number of shares of Common Stock available under this Plan (subject to Section 5.7),(b) effect any change inconsistent with Section 422 of the Code or (c) extend the term of this plan. No amendment may impair the rights of a holder of an outstanding award without the consent of such holder. 

5.3. **Agreement.** No award shall be valid until an Agreement is executed by the Company and the recipient of such award and, upon execution by each party anddelivery of the Agreement to the Company, such award shall be effective as of the effective date set forth in the Agreement. 

5.4.**Non-Transferability of Awards.** Unless otherwise specified in the Agreement relating to an award, no award shall be transferable other than by will, the laws of descent and distribution or pursuant to beneficiary designation proceduresapproved by the Company. Except to the extent permitted by the foregoing sentence or the agreement relating to an award, each award may be exercised or settled during the holder’s lifetime only by the holder or the holder’s legalrepresentative or similar person. Except to the extent permitted by the second preceding sentence or the agreement relating to an award, no award may be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whetherby operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of any such award, such award and all rights thereundershall immediately become null and void. 

5.5. **Tax Withholding.** The Company shall have the right to require, prior to the issuance or deliveryof any shares of Common Stock or the payment of any cash pursuant to an award made 

 

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hereunder, payment by the holder of such award of any Federal, state, local or other taxes which may be required to bewithheld or paid in connection with such award. An Agreement may provide that (i) the Company shall withhold whole shares of Common Stock which would otherwise be delivered to a holder, having an aggregate Fair Market Value determined as of thedate the obligation to withhold or pay taxes arises in connection with an award (the “**Tax Date**”), or withhold an amount of cash which would otherwise be payable to a holder, in the amount necessary to satisfy any such obligation or(ii) the holder may satisfy any such obligation by any of the following means: (A) a cash payment to the Company, (B) delivery (either actual delivery or by attestation procedures established by the Company) to the Company of MatureShares having an aggregate Fair Market Value, determined as of the Tax Date, equal to the amount necessary to satisfy any such obligation, (C) authorizing the Company to withhold whole shares of Common Stock which would otherwise be deliveredhaving an aggregate Fair Market Value, determined as of the Tax Date, or withhold an amount of cash which would otherwise be payable to a holder, equal to the amount necessary to satisfy any such obligation, (D) in the case of the exercise ofan option, a cash payment by a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise or (E) any combination of (A), (B) and (C), in each case to the extent set forth in the Agreementrelating to the award; provided, however, that the Company shall have sole discretion to disapprove of an election pursuant to any of clauses (B)-(E). Shares of Common Stock to be delivered or withheld may not have an aggregate Fair Market Value inexcess of the amount determined by applying the minimum statutory withholding rate. Any fraction of a share of Common Stock which would be required to satisfy such an obligation shall be disregarded and the remaining amount due shall be paid in cashby the holder. 

5.6. **Restrictions on Shares.** Each award made hereunder shall be subject to the requirement that if at any time the Companydetermines that the listing, registration or qualification of the shares of Common Stock subject to such award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action isnecessary or desirable as a condition of, or in connection with, the exercise or settlement of such award or the delivery of shares thereunder, such award shall not be exercised or settled and such shares shall not be delivered unless such listing,registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company may require that certificates evidencing shares of Common Stock delivered pursuantto any award made hereunder bear a legend indicating that the sale, transfer or other disposition thereof by the holder is prohibited except in compliance with the Securities Act of 1933, as amended, and the rules and regulations thereunder.

5.7. **Adjustment.** In the event of any stock split, reverse stock split, stock dividend, recapitalization, reclassification, reorganization,merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or event, or any distribution of the Company’s equity securities without the receipt of consideration by the Company, thenumber and class of securities available under this Plan or for Stock Awards, the number and class of securities subject to each outstanding option and the purchase price per security, the terms of each outstanding SAR, the number and class ofsecurities subject to each outstanding Stock Award, and the terms of each outstanding Performance Share shall be appropriately adjusted by the Committee, such adjustments to be made in the case of outstanding options and SARs without an increase inthe aggregate purchase price or base price. The decision of the Committee regarding any such adjustment shall be final, binding and conclusive. 

 

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If any such adjustment would result in a fractional security being (a) available under this Plan, such fractionalsecurity shall be disregarded, or (b) subject to an award under this Plan, the Company shall pay the holder of such award, in connection with the first vesting, exercise or settlement of such award in whole or in part occurring after suchadjustment, an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value on the vesting, exercise or settlement date over(B) the exercise or base price, if any, of such award. 

5.8. **Change in Control****.**

(a) (1) Notwithstanding any provision in this Plan or any Agreement, in the event of a Change in Control pursuant to Section (b)(3) or (4) belowin connection with which the holders of Common Stock receive shares of common stock that are registered under Section 12 of the Exchange Act, there shall be substituted for each share of Common Stock available under this Plan, whether or notthen subject to an outstanding award, the number and class of shares into which each outstanding share of Common Stock shall be converted pursuant to such Change in Control. In the event of any such substitution, the purchase price per share in thecase of an option and the base price in the case of an SAR shall be appropriately adjusted by the Committee (whose determination shall be final, binding and conclusive), such adjustments to be made in the case of outstanding options and SARs withoutan increase in the aggregate purchase price or base price. 

(2) Notwithstanding any provision in this Plan or any Agreement, in the eventof a Change in Control pursuant to Section (b)(1) or (2) below, or in the event of a Change in Control pursuant to Section (b)(3) or (4) below in connection with which the holders of Common Stock receive consideration other than shares ofcommon stock that are registered under Section 12 of the Exchange Act, each outstanding award shall be surrendered to the Company by the holder thereof, and each such award shall immediately be canceled by the Company, and the holder shallreceive, within ten days of the occurrence of a Change in Control, a cash payment from the Company in an amount equal to (i) in the case of an option, the number of shares of Common Stock then subject to such option, multiplied by the excess,if any, of the greater of (A) the highest per share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (B) the Fair Market Value of a share of Common Stock on the date of occurrenceof the Change in Control, over the purchase price per share of Common Stock subject to the option, (ii) in the case of a Free-Standing SAR, the number of shares of Common Stock then subject to such SAR, multiplied by the excess, if any, of thegreater of (A) the highest per share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (B) the Fair Market Value of a share of Common Stock on the date of occurrence of the Changein Control, over the base price of the SAR, (iii) in the case of a Restricted Stock Award, Restricted Stock Unit Award or Performance Share Award, the number of shares of Common Stock or the number of Performance Shares, as the case may be,then subject to such award, multiplied by the greater of (A) the highest per share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (B) the Fair Market Value of a share of CommonStock on the date of occurrence of the Change in Control. In the event of a Change in Control, each Tandem SAR shall be surrendered by the holder thereof and shall be canceled simultaneously with the cancellation of the related option. The Companymay, but is not required to, cooperate with any person who is subject to Section 16 of the Exchange Act to assure that any cash payment in accordance with the foregoing to such person is made in compliance with Section 16 and the rules andregulations thereunder. 

 

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(3) In the event of a Change of Control, the Committee may, in its discretion, elect to(i) accelerate the exercisability of any or all outstanding options, (ii) accelerate the Restriction Period applicable to any or all outstanding Restricted Stock Awards and Restricted Stock Unit Awards, (iii) accelerate thePerformance Period applicable to any or all outstanding Performance Shares or (iv) deem satisfied any or all Performance Measures applicable to any or all outstanding awards. 

(b) Unless the Committee shall otherwise determine, a “Change in Control” shall mean: 

(1) the acquisition by any individual, entity or group (a “**Person**”), including any “person” within the meaning ofSection 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of a majority or more of either (i) the then outstanding shares of common stock of the Company(the “**Outstanding Common Stock**”) or (ii) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the “**Outstanding VotingSecurities**”); excluding, however, the following: (A) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being soexercised, converted or exchanged was acquired directly from the Company), (B) any acquisition by the Company, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporationcontrolled by the Company or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (3) of this Section 5.8(b); provided further, that for purposes ofclause (B), if any Person (other than the Company or any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company) shall become the beneficial owner of 50% or more of theOutstanding Common Stock or 50% or more of the Outstanding Voting Securities by reason of an acquisition by the Company, and such Person shall, after such acquisition by the Company, become the beneficial owner of any additional shares of theOutstanding Common Stock or any additional Outstanding Voting Securities and such beneficial ownership is publicly announced, such additional beneficial ownership shall constitute a Change in Control; 

(2) individuals who, as of the date hereof, constitute the Board of Directors (the “**Incumbent Board**”) cease for any reason to constituteat least a majority of such Board; provided that any individual who becomes a director of the Company subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, was approved by the vote of at least amajority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatenedelection contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not bedeemed a member of the Incumbent Board; 

 

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(3) the consummation of a reorganization, merger or consolidation or sale or other disposition of all orsubstantially all of the assets of the Company (a “**Corporate Transaction**”); excluding, however, a Corporate Transaction pursuant to which (i) all or substantially all of the individuals or entities who are the beneficialowners, respectively, of the Outstanding Common Stock and the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than a majority of, respectively, the outstanding sharesof common stock, and the combined voting power of the outstanding securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, acorporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediatelyprior to such Corporate Transaction, of the Outstanding Common Stock and the Outstanding Voting Securities, as the case may be and (ii) individuals who were members of the Incumbent Board will constitute at least a majority of the members ofthe board of directors of the corporation resulting from such Corporate Transaction; or 

(4) the consummation of a plan of completeliquidation or dissolution of the Company. 

5.9. **No Right of Participation or Employment.** No person shall have any right to participate inthis Plan. Neither this Plan nor any award made hereunder shall confer upon any person any right to continued employment by the Company, any Subsidiary or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiaryor any affiliate of the Company to terminate the employment of any person at any time without liability hereunder. 

5.10. **Rights asStockholder.** No person shall have any right as a stockholder of the Company with respect to any shares of Common Stock or other equity security of the Company which is subject to an award hereunder unless and until such person becomes astockholder of record with respect to such shares of Common Stock or equity security. 

5.11. **Designation of Beneficiary.** If permitted by theCompany, a holder of an award may file with the Committee a written designation of one or more persons as such holder’s beneficiary or beneficiaries (both primary and contingent) in the event of the holder’s death. To the extent anoutstanding option or SAR granted hereunder is exercisable, such beneficiary or beneficiaries shall be entitled to exercise such option or SAR. 

Each beneficiary designation shall become effective only when filed in writing with the Committee during the holder’s lifetime on a form prescribed by the Committee. The spouse of a married holder domiciled in a community propertyjurisdiction shall join in any designation of a beneficiary other than such spouse. The filing with the Committee of a new beneficiary designation shall cancel all previously filed beneficiary designations. 

If a holder fails to designate a beneficiary, or if all designated beneficiaries of a holder predecease the holder, then each outstanding option and SARhereunder held by such holder, to the extent exercisable, may be exercised by such holder’s executor, administrator, legal representative or similar person. 

 

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5.12. **Governing Law.** This Plan, each award hereunder and the related Agreement, and all determinations madeand actions taken pursuant thereto, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Minnesota, or if the Company is reincorporated in another state by merger orotherwise, the laws of such other state, and construed in accordance therewith without giving effect to principles of conflicts of laws. 

5.13.**Foreign Employees.** Without amending this Plan, the Committee may grant awards to eligible persons who are foreign nationals on such terms and conditions different from those specified in this Plan as may in the judgment of theCommittee be necessary or desirable to foster and promote achievement of the purposes of this Plan and, in furtherance of such purposes the Committee may make such modifications, amendments, procedures, subplans and the like as may be necessary oradvisable to comply with provisions of laws in other countries or jurisdictions in which the Company or its Subsidiaries operates or has employees. 

* * * 

 

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