**Exhibit 10.25**

 

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**Executive Quarterly**

**PerformanceIncentive Plan**

 

**Effective January 1,2006**

 

**PerformancePeriod: January 1 – December 31, 2006**

 

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| ****                                               | **Executive  Performance Incentive Plan** |
|----------------------------------------------------|-------------------------------------------|
| **Effective  January 1, 2006**                |
| **Performance  Period**                            |
| ** January 1  - December 31, 2006** |

 

# **I.**              Purposeof the Plan

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**ev3**Inc.’s compensation philosophy is to pay for performance. The purpose of the **ev3** Inc. Executive Performance IncentivePlan (the “Plan”) is to align the interests of **ev3** Inc. and its subsidiaries (the “Company”), executive-levelemployees, and stockholders by providing annual incentives for the achievementof key business and individual performance measures that are critical to thesuccess of the Company and linking a significant portion of each executiveemployee’s annual compensation to the achievement of such measures.

 

# **II.**            EligibleParticipants

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The Company willdetermine eligibility criteria for the Plan on an annual basis and in its solediscretion. For 2006, the Plan covers the following:  (i) all regular, salaried, exempt UnitedStates employees in Levels 7 and above, and (ii) international andexpatriate/inpatriate employees in Levels 7 and above who are determined by theCompany to be eligible for participation (“Executives” or “Participants”). Notwithstandingthe foregoing, Participants in positions covered by sales compensation plansare not eligible Participants in the Plan.

 

The Plan year runsfrom January 1 - December 31 of each year (the “Plan Year”). Payoutswill be made on a quarterly basis (the “Plan Quarter”). Participants with lessthan a full Plan Quarter of service or whose incentive target percent haschanged during a Plan Quarter may be eligible to participate in the planon a prorated basis, determined by the percentage of time they were eligible toparticipate during that Plan Quarter under applicable criteria. Participantswith less than one full month of eligible service in a Plan Quarter will not beeligible to receive an award under the Plan for that Plan Quarter.

 

# **III.**           Administrationof the Plan

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The CompensationCommittee of the Board of Directors of the Company will administer the Plan. TheCompensation Committee, in its sole discretion, may delegate to theCompany’s Chief Executive Officer activities relating to Plan administrationthat are not required to be exercised by the Compensation Committee underapplicable laws, rules, regulations and the Compensation Committee Charter. Non-delegableactivities include, but are not limited to, any determination of the finalpayouts under the Plan. All decisions of the Compensation Committee will befinal and binding upon all parties, including the Company and PlanParticipants.

 

# **IV.**           IncentiveTargets

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Incentive targetshave been established for all eligible Plan Participants based upon their levelof responsibility within the Company and impact on the business. Theseincentive targets represent the incentive (as a percent of a Plan Participant’sbase salary) that a Participant is eligible to receive under the Plan. It isthe Company’s intention to provide significant incentive and rewardopportunities to its Executives for world-class performance achievement.

 

# **V.**            IndividualPerformance Measures

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Individualperformance measures for a Plan Year are established during the annual goalsetting process. Additionally, performance measures are established for each ofthe four quarters of the Plan Year. For each Plan Quarter, all Participantswill be assigned the Company’s quarterly goals as their individual objectivesfor the Plan Quarter. Individual objectives other than the Company’s quarterlygoals must be must be agreed to and approved by the Compensation Committee.

 

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# **VI.**           CompanyPerformance Measures

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For each PlanQuarter, the Compensation Committee, together with input from the Company’s ChiefExecutive Officer, will identify critical Company performance measures anddetermine the incentive pool funding for the Plan based on achievement of suchCompany performance measures. The 2006 Company performance measures are:

 

•      WorldwideRevenue

•      WorldwideOperating Expense

•      WorldwideGross Margin

•      EBITDAProfitable

 

TheCompensation Committee also will take into consideration the relativeperformance by each division of the Company with regard to Divisional Revenue,Operating Expenses, and Gross Margin.

 

# **VII.**         IncentivePool Funding

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Theincentive pool funding is the amount of money that is available fordistribution to Plan Participants under the Plan based on achievement of theCompany performance measures. Appendix A describes in more detail howthe four Company performance measures will impact the incentive pool funding. Theincentive pool is funded quarterly on the following basis:  20% of the annual pool in Q1, 20% of theannual pool in Q2, 20% of the annual pool in Q3 and 40% of the annual pool inQ4.

 

# **VIII.**        IndividualIncentive Payment Criteria, Calculation, and Payout

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A Plan Participantmust be actively employed by the Company on the last day of the month of thePlan Quarter to be eligible for an incentive payment under the Plan for thatPlan Quarter.

 

The incentivepayment under the Plan for any eligible Plan Participant for a particular PlanQuarter will vary depending upon the approved incentive pool funding level forthat Plan Quarter, the Participant’s base salary as of the last month of thePlan Quarter, the Participant’s incentive target for that Plan Quarter, and theParticipant’s overall individual performance during that Plan Quarter, relativeperformance to other Executives and achievement of objectives relative to othereligible Executives. The total of incentive payments to all eligible PlanParticipants may not exceed the funding pool(s) established by theCompensation Committee for each Plan Quarter.

 

Assoon as practicable after the Compensation Committee has received theappropriate financial and other data after the end of each Plan Quarter,individual incentive payments under the Plan, the Compensation Committee willcertify in writing the amount of each incentive payment to be made to each PlanParticipant under the Plan. Individual incentive payments under the Plan willbe made in a lump sum, less applicable withholding taxes, as soon as reasonablypracticable thereafter.

 

TheCompensation Committee reserves the responsibility to recognize individualperformance and to provide appropriate differential incentive compensation.

 

# **IX.**           PlanDiscretion

 

All benefits payable under the Plan are discretionary and no PlanParticipant shall have any right to payment under the Plan until actually paid.

 

To the extentnecessary with respect to any Plan Quarter, in order to avoid any unduewindfall or hardship due to external causes, the Compensation Committee may,without the consent of any affected Plan Participants, revise one or more ofthe Company performance measures or otherwise make adjustments to payouts underthe Plan to take into account any acquisition or disposition by the

 

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Company notplanned for at the time the Company performance measures were established, anychange in accounting principles or standards, or any extraordinary ornon-recurring event or item, so as equitably to reflect such event or events,such that the criteria for evaluating whether a Company performance measure hasbeen achieved will be substantially the same (as determined by the CompensationCommittee) following such event as prior to such event.

 

# **X.**            Termination,Suspension, or Modification

 

The Company may terminate,suspend, modify and if suspended, may reinstate or modify, all or part ofthe Plan at any time, with or without notice to the Plan Participants. Exceptionsto the eligibility of, or the extent to which the Plan applies to, anyparticular Plan Participant must be approved, on a case-by-case basis, by theCompensation Committee.

 

# **XI.**           Limitationof Liability

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No member of the Company’s Board of Directors, the CompensationCommittee, any officer, employee, or agent of the Company, or any other personparticipating in any determination of any question under the Plan, or in theinterpretation, administration, or application of the Plan, shall have anyliability to any party for any action taken, or not taken, in good faith underthe Plan.

 

# **XII.**         NoRight to Employment

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This document setsforth the terms of the Plan and it is not intended to be a contract oremployment agreement between any Plan Participant and the Company. Nothing contained in the Plan (or in any otherdocuments related to the Plan) shall confer upon any employee or PlanParticipant any right to continue in the employ or other service of the Companyor constitute any contract or limit in any way the right of the Company tochange such person’s compensation or other benefits or to terminate theemployment or other service of such person with or without cause or notice.

 

# **XIII.**        Non-Assignability

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Except for the designation of a beneficiary(ies) to receive payments ofbenefits for a particular Plan Quarter following a Plan Participant’s deathafter the completion of such Plan Quarter, no amount payable at any time underthe Plan shall be subject to sale, transfer, assignment, pledge, attachment, orother encumbrance of any kind. Any attempt to sell, transfer, assign, pledge,attach, or otherwise encumber any such benefits, whether currently orthereafter payable, shall be void.

 

# **XIV.**        WithholdingTaxes

 

The Company isentitled to withhold and deduct from any payments made pursuant to the Plan orfrom future wages of a Plan Participant (or from other amounts that may bedue and owing to the Plan Participant from the Company), or make otherarrangements for the collection of, all legally required amounts necessary tosatisfy any and all federal, state, and local withholding andemployment-related tax requirements attributable to any payment made pursuantto the Plan.

 

# **XV.**         UnfundedStatus of Plan

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The Plan shall be unfunded. No provisions of the Plan shall require theCompany, for the purpose of satisfying any obligations under the Plan, topurchase assets or place any assets in a trust or other entity to which contributionsare made or otherwise to segregate any assets. Plan Participants shall have norights under the Plan other than as unsecured general creditors of the Company.

 

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# **XVI.**        Other

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Except to theextent in connection with other matters of corporate governance and authority(all of which shall be governed by the laws of the Company’s jurisdiction ofincorporation), the validity, construction, interpretation, administration andeffect of the Plan and any rules, regulations, and actions relating to the Planwill be governed by and construed exclusively in accordance with the internal,substantive laws of the State of Minnesota, without regard to the conflict oflaw rules of the State of Minnesota or any other jurisdiction.

 

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