Exhibit 10.d to MTS Systems Corporation Form 10-K dated October 1, 2005







Exhibit 10.d  














MTS SYSTEMS CORPORATION

2002 EMPLOYEE STOCK PURCHASE PLAN 







Effective January 1,
2002 







and 







As amended by the
FIRST AMENDMENT

Approved by the Board November 29, 2005 




















  









MTS SYSTEMS CORPORATION

2002 EMPLOYEE STOCK PURCHASE PLAN 



        WHEREAS,
MTS Systems Corporation (hereinafter the “Company”) established, effective as of
January 1, 1992, an employee stock purchase plan in accordance with Section 423 of the
Internal Revenue Code and authorized 250,000 (500,000 after the stock split) shares of its
Stock to be reserved for issuance under the plan; and 



        WHEREAS,
the plan will expire on April 25, 2002, and all of the shares of Stock authorized under
said plan will have been issued; and 



        WHEREAS,
the Board of Directors, at a meeting held on November 20, 2001, and subject to the
approval of its shareholders, authorized a new stock purchase plan to be established to
provide employees the opportunity to continue to purchase shares under such a plan. 



        THEREFORE,
the Company hereby establishes this plan as set forth herein: 



        1.   Establishment
of Plan. The Company proposes to grant to certain                employees of the
Company the opportunity to purchase Stock of the Company. Such                Stock shall
be purchased pursuant to the plan herein set forth which shall be                known as
the “MTS Systems Corporation 2002 Employee Stock Purchase                Plan” (hereinafter
referred to as the “Plan”). The Company                intends that the Plan
shall qualify as an “employee stock purchase                plan” under Section
423 of the Internal Revenue Code of 1986, as amended,                and shall be
construed in a manner consistent with the requirements of said                Section 423
and the regulations thereunder.  



        2.   Purpose. The
Plan is intended to encourage Stock ownership by                eligible Employees of the
Company, and by eligible Employees of any Subsidiaries                that adopt the Plan
with the consent of the Company. The Plan is further                intended to incent
Employees to remain in employment, improve operations,                increase profits,
and contribute more significantly to the Company’s                success, and to
permit the Company to compete with other corporations offering                similar
plans in obtaining and retaining the services of competent employees.  



        3.   Administration. 



	  	(a)  	  	The
Plan shall be administered by a stock purchase committee (hereinafter
               referred to as the “Committee”), consisting of two or more
directors                or employees of the Company, as designated by the Board of
Directors of the                Company (hereinafter referred to as the “Board of
Directors”). If the                Board fails to appoint such Committee, the Human
Resources Committee shall                administer the Plan. The Board of Directors
shall fill all vacancies in the                Committee and may remove any member of the
Committee at any time, with or                without cause.  






	  	(b)  	  	Unless
the Board of Directors limits the authority delegated to the Committee in
               its appointment, the Committee shall be vested with full authority to
make,                administer, and interpret such rules and regulations, as it deems
necessary to                administer the Plan. For all purposes of this Plan other than
the Plan’s                Section 3(b), references to the Committee shall also refer
to the Board of                Directors.  






	  	(c)  	  	The
Committee shall select its own chairman and hold its meetings at such times
               and places as it may determine. All determinations of the Committee shall
be                made by a majority of its members. Any decision, which is made in
writing and                signed by a majority of the members of the Committee, shall be
effective as                fully as though made by a majority vote at a meeting duly
called and held.  









  










	  	(d)  	  	The
determinations of the Committee shall be made in accordance with its
               judgment as to the best interests of the Company, its employees and its
               shareholders and in accordance with the purposes of the Plan; provided,
however,                that the provisions of the Plan shall be construed in a manner
consistent with                the requirements of Section 423 of the Internal Revenue
Code, as amended. Such                determinations shall be binding upon the Company
and the Participants in the                Plan unless otherwise determined by the Board
of Directors.  






	  	(e)  	  	No
member of the Board of Directors or the Committee shall be liable for any
               action or determination made in good faith with respect to the Plan or any
               option granted under it. The Company shall indemnify each member of the
               Committee against any and all claims, loss, damages, expenses (including
counsel                fees approved by the Committee), and liability (including any
amounts paid in                settlement with the Committee’s approval) arising
from any loss or damage                or depreciation which may result in connection
with the execution of the                member’s duties or the exercise of the
member’s discretion, or from                any other action or failure to act
hereunder, except when it is determined that                the member’s actions
were to be due to gross negligence or willful                misconduct of such member.  






	  	(f)  	  	The
Company shall pay all expenses of administering the Plan, other than costs
               associated with either any required tax withholding or the sale or other
               disposition of shares purchased under the Plan.  






        4.   Duration
and Phases of the Plan. 



	  	(a)  	  	The
Plan will commence on January 1, 2002 and will terminate December 31, 2011,
               except that any Phase commenced prior to such termination shall, if
necessary,                be allowed to continue beyond such termination until
completion. Notwithstanding                the foregoing, this Plan shall be considered
of no force or effect and any                options granted shall be considered null and
void unless the holders of a                majority of all of the issued and outstanding
shares of Stock approve the Plan                within twelve (12) months after the date
of its adoption by the Board of                Directors. The Plan year shall be the same
as the Company’s fiscal year,                ending each September 30.  






	  	(b)  	  	The
Plan shall be carried out in one or more offering periods                (“Phases”)
being for a period determined by the Committee prior to the                commencement
of a Phase, provided that no Phase, shall be for a period of less                than
three (other than the first Phase, which may be shorter) nor for a period
               of longer than twelve months. No Phase shall run concurrently with any
other                Phase but a Phase may commence immediately after the termination of
the                preceding Phase. The existence and date of commencement of a Phase
(the                “Commencement Date”) shall be determined by the Committee
and shall                terminate on a date (the “Termination Date”)
determined by the                Committee consistent with the limitations specified
above, provided that the                commencement of the first Phase shall be within
twelve months before or after                the date of approval of the Plan by the
shareholders of the Company. In the                event all of the Stock reserved for
grant of options hereunder is issued                pursuant to the terms hereof prior to
the commencement of one or more Phases                scheduled by the Committee or the
number of shares remaining is so small, in the                opinion of the Committee,
as to render administration of any succeeding Phase                impracticable, such
Phase or Phases shall be canceled. Phases shall be numbered                successively
as Phase 1, Phase 2, Phase 3, etc.  









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	  	(c)  	  	 The
Board of Directors may elect to accelerate the Termination Date of any Phase
               effective on the date specified by the Board of Directors in the event of
(i)                any consolidation or merger of the Company in which the Company is not
the                continuing or surviving corporation or pursuant to which shares of
Stock would                be converted into cash, securities or other property, other
than a merger of the                Company in which shareholders immediately prior to
the merger have the same                proportionate ownership of stock in the surviving
corporation immediately after                the merger; or (ii) any sale, lease,
exchange or other transfer (in one                transaction or a series of related
transactions) of all or substantially all of                the assets of the Company.
Subject to any required action by the shareholders,                if the Company shall
be involved in any merger or consolidation, in which it is                not the
surviving corporation, and if the Board of Directors does not accelerate
               the Termination Date of the Phase, each outstanding option shall pertain
to and                apply to the securities or other rights to which a holder of the
number of                shares subject to the option would have been entitled.  






	  	(d)  	  	A
dissolution or liquidation of the Company shall cause each outstanding option
               to terminate, provided in such event that, immediately prior to such
dissolution                or liquidation, each Participant shall be repaid the payroll
deductions credited                to the Participant’s account with Interest.  






        5.   Eligibility. All
Employees who have completed twelve or more                months of continuous
employment service for the Company prior to the                Commencement Date of a
Phase, shall be eligible to participate in such Phase.                Any Employee who is
a member of the Board of Directors of the Company and who                satisfies the
above requirements shall be eligible to participate in the Plan.  



        6.   Participation. 



	  	(a)  	  	Participation
in the Plan is voluntary. An eligible Employee may elect to                participate in
the Plan, and thereby become a “Participant” in the                Plan, by
completing the enrollment form provided by the Company and delivering                it
to the Company or its designated representative at such time prior to the
               Commencement Date of that Phase as the Committee determines. The first
               Commencement Date shall be a date after January 1, 2002 as determined by
the                Committee. [Last Sentence Amended by Board Resolution
January                2004] A Participant who ceases to be an eligible Employee,
although still                employed by the Company, shall continue to be treated as a
Participant for the                remainder of the current Phase.  






	  	(b)  	  	 [First
sentence amended by Board Resolution January 2004] Once enrolled                in
the Plan, a Participant will continue to participate in the Plan until he or
               she withdraws from the Plan pursuant to Section 9(a), or until
contributions are                discontinued under Section 8(a)(iv)(A) or Section 9(e).
A Participant who                withdraws from the Plan pursuant to Section 9(a) may
again become a Participant,                if the Participant is then an eligible
Employee, by proceeding as provided in                Section 6(a) above, which shall be
effective as of the next Commencement Date. A                Participant whose payroll
deductions were discontinued because of Section                8(a)(iv)(A) will
automatically resume participation at the Commencement Date of                the next
Phase of the Plan that ends in the next calendar year, if he or she is
               then an eligible Employee. A Participant whose payroll deductions were
               discontinued because of Section 9(e) will automatically resume
participation at                the Commencement Date of the next Phase after the
Participant is again permitted                to make deferrals under the MTS Systems
Corporation Retirement Plan, if he or                she is then an eligible Employee. [Last
Sentence Amended by First                Amendment] Notwithstanding the foregoing,
automatic resumption for Phase 8                shall not occur at the end of Phase 7,
and each Participant who wants to                participate in the Plan for Phase 8 must
make a new payroll deduction election                to do so.  









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        7.   Payroll
Deductions.  



	  	(a)  	  	[(a)
Amended by First Amendment] Upon enrollment, except as provided in                the
next sentence, a Participant shall elect to make contributions to the Plan
               by payroll deductions, in whole percentages of 1% to 10% of Pay or such
lesser                percentage as determined by the Committee, but not in excess of the
limit                specified in Section 8(a)(iv)(A) below for each Phase until the
Employee ceases                to be a Participant as described in Section 6(b) above. In
the event the Company                anticipates that the maximum contribution specified
in Section 8(a)(iv)(A) for                the Phase will apply to a Participant, the
Participant may designate a dollar                amount. Payroll deductions for a
Participant shall commence on the first payday                after the Commencement Date
of the Phase and shall terminate on the last payday                immediately prior to
or coinciding with the Termination Date of that Phase                unless sooner
terminated by the Participant as provided in Section 7 and 9                hereof.
Except for payroll deduction, a Participant may not make any separate                cash
payments into the Participant’s account under the Plan.  






	  	(b)  	  	In
the event that the Participant’s Pay for any pay period is terminated or
               reduced from the compensation rate for such a period as of the
Commencement Date                of the Phase for any reason so that the amount actually
withheld on behalf of                the Participant as of the Termination Date of the
Phase is less than the amount                anticipated to be withheld over the Phase as
determined on the Commencement Date                of the Phase, then the extent to which
the Participant may exercise the                Participant’s option shall be based
on the amount actually withheld on the                Participant’s behalf. In the
event of a change in the pay period of any                Participant, such as from
bi-weekly to monthly, an appropriate adjustment shall                be made to the
deduction in each new pay period so as to ensure the deduction of                the
proper amount authorized by the Participant.  






	  	(c)  	  	A
Participant may withdraw from participation in the Phase and terminate the
               Participant’s payroll deduction authorized at such times as
determined by                the Committee and shall have the rights provided in Section
9. No Participant                shall be entitled to increase or decrease the amount to
be deducted during a                Phase after the Commencement Date of that Phase.  






	  	(d)  	  	All
payroll deductions made for Participants shall be credited to their
               respective accounts under the Plan.  






        8.   Options. 



	  	(a)  	  	Grant
of Option.  






	  	  	(i)  	  	A
Participant who is employed by the Company as of the Commencement Date of a
                    Phase shall be granted an option as of such date to purchase shares
of Stock to                     be determined by dividing the total amount credited to
that Participant’s                     account under Section 7 hereof by the
applicable option price set forth in                     Section 8(a)(ii) hereof, subject
to the limitations of Sections 8(a)(iv)(A),                     8(a)(iv)(B) and
8(a)(iv)(C) and Section 10 hereof.  









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	  	  	(ii) 	  	The
option price for such shares of Stock shall be the lower of:  






	  	  	  	A. 	  	Eighty-five
percent (85%) of the Fair Market Value of such shares of Stock on           the
Commencement Date of the Phase; or  






	  	  	  	B. 	  	Eighty-five
percent (85%) of the Fair Market Value of such shares of Stock on           the
Termination Date of the Phase.  






	  	  	(iii)  	  	Stock
options granted pursuant to the Plan may be evidenced by agreements in
                    such form as the Committee shall approve, provided that all Employees
shall have                     the same rights and privileges and provided further that
such options shall                     comply with and be subject to the terms and
conditions set forth herein. The                     Committee may conclude that
agreements are not necessary.  






	  	  	(iv) 	  	Anything
herein to the contrary notwithstanding, no Participant shall be granted           an
option hereunder:  






	  	  	  	A.  	  	Which
permits the Participant’s rights to purchase shares of Stock under           all
employee stock purchase plans of the Company, its Subsidiaries or its           parent,
if any, to accrue at a rate which exceeds $25,000 of the Fair Market           Value of
such Stock (determined at the time such option is granted) for each           calendar
year in which such option is outstanding at any time. In the case of           shares
purchased during a Phase that commenced in the current calendar year, the           limit
shall be equal to $25,000 minus the Fair Market Value of the shares that           the
Participant previously purchased in the current calendar year under the Plan
          and all other employee stock purchase plans of the Company. In the case of
          shares purchased during a Phase that commenced in the immediately preceding
          calendar year, the limit shall be equal to $50,000 minus the Fair Market Value
          of the shares that the Participant previously purchased under this Plan and all
          other employee stock purchase plans of the Company in the current calendar year
          and in the immediately preceding calendar year.  






	  	  	  	B.  	  	Which
permits the Participant to purchase shares of Stock under all employee           stock
purchase plans of the Company, its Subsidiaries or its parent, if any, in
          excess of 10,000 shares per Phase under the Plan; or  






	  	  	  	C.  	  	If
immediately after the grant such Participant would own and/or hold           outstanding
options to purchase stock possessing five percent (5%) or more of           the total
combined voting power or value of all classes of stock of the Company,           its
parent, if any, or of any Subsidiary of the Company. For purposes of
          determining stock ownership under this Section, the rules of Section 424(d) of
          the Internal Revenue Code, as amended, shall apply.  






	  	  	(v)  	  	The
grant of an option pursuant to this Plan shall not affect in any way the
                    right or power of the Company to make adjustments, reclassifications,
                    reorganizations or changes of its capital or business structure or to
merge or                     to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of                     its business or assets.  









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	  	(b) 	  	Exercise
of Option.  






	  	  	(i)  	  	 Unless
a Participant gives written notice to the Company pursuant to Section 9
                    prior to the Termination Date of a Phase to withdraw, the Participant’s
                    option for the purchase of shares will be exercised automatically for
the                     Participant as of such Termination Date for the purchase of that
number of full                     and fractional shares (rounded to the nearest 1/100th of
a share) of                     Stock that the accumulated payroll deductions in the
Participant’s account                     at that time will purchase at the
applicable option price set forth in Section                     8(a)(ii), and subject to
the limitations set forth in Sections 8(a)(iv)(A),                     8(a)(iv)(B) and
8(a)(iv)(C), and Section 10 hereof.  






	  	  	(ii)  	  	The
Company shall, in addition, return to the Participant a cash payment equal
                    to the balance, if any, in the Participant’s account which was
not used for                     the purchase of Stock, without Interest, as promptly as
practicable after the                     Termination Date of any Phase, or at the
election of the Committee, apply such                     amount to the purchase of
shares in the next Phase, if the Employee is then                     eligible.  






	  	  	(iii)  	  	[(iii)
Amended by First Amendment] The Committee may appoint a
                    registered broker dealer to act as agent for the Company in holding
and                     performing ministerial duties in connection with the Plan,
including, but not                     limited to, maintaining records of Stock ownership
by Participants and holding                     Stock in its own name for the benefit of
the Participants. No trust or escrow                     arrangement shall be express or
implied by the exercise of such duties by the                     agent. A Participant
may, at any time, request of the agent that any shares                     allocated to
the Participant be registered in the name of the Participant, in
                    which event the agent shall issue a certificate for the whole number
of shares                     in the name of the Participant and shall deliver to the
Participant any cash for                     fractional shares, based on the then Fair
Market Value of the shares on the date                     of issuance.  






	  	  	(iv)  	  	[(iv)
Amended by First Amendment] The Participant may direct the
                    Committee or its agent to register the Participant’s account in
joint                     tenancy with the Participant, or to register any shares in the
name of the                     Participant and a joint tenant, provided that the joint
tenant must be a natural                     person. The designation of a joint tenant
shall be applied to any shares in the                     account or registered under the
Plan in the name of the Participant and any                     additional shares
allocated to the account or registered in the name of the                     Participant
until further changed by the Participant. The Participant may change
                    from a designated joint tenant to the Participant only and may change
the named                     joint tenant with respect to the account or any shares,
provided that any such                     change in joint tenant shall apply to any
shares only when the restrictions                     described in Section 8(d) lapse.  






	  	(c)  	  	Unless
the Committee designates otherwise, a Participant may elect to have any
               dividends on a Participant’s shares automatically reinvested in
additional                shares of Stock in lieu of receiving dividends in the form of
cash. Any shares                purchased through the reinvestment of dividends will be
purchased on the open                market. Such purchases shall be governed by the
requirements of the                Company’s dividend reinvestment program.  









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	  	(d) 	  	[First
sentence amended by First Amendment] For a period                beginning on the
date of exercise and ending on the later of: (i) 12 months from                the date
of exercise or (ii) 24 months from the date of grant of the option
               pursuant to this Plan, each share of Stock so acquired may not, without
the                consent of the Committee (which consent shall be provided in a uniform
and                nondiscriminatory manner for similarly situated Participants) be sold,
               transferred (including changing the joint tenant on the Participant’s
               account or registered shares, the payment of the price upon the subsequent
               exercise of any option, or the payment of income taxes on the exercise),
pledged                or encumbered. The Committee may waive such restrictions with
respect to Stock                acquired upon the exercise of options granted or to be
granted during any Phase                of the Plan, either prior to or at any time
subsequent to the Commencement Date                of the Phase and may establish uniform
rules for the transfer of such Stock                during such period. During the period
such shares are subject to the                restrictions of this subsection (d), such
shares shall be held by the transfer                agent or the Company, or an
appropriate legend describing the restriction and                referencing the Plan
shall be placed on the certificate evidencing such Stock.  






        9.   Withdrawal
or Termination of Participation. 



	  	(a)  	  	A
Participant may, at any time prior to the Termination Date of a Phase,
               withdraw all deductions from Pay then credited to the Participant’s
account                by giving written notice to the Company. Promptly upon receipt of
such notice of                withdrawal, all such deductions credited to the Participant’s
account will                be paid to the Participant with Interest accrued thereon and
no further payroll                deductions by the Participant to this Plan will be
permitted during the Phase.                In such event, the option granted the
Participant under that Phase of the Plan                will lapse immediately. Partial
withdrawals of payroll deductions hereunder may                not be made. A Participant
who withdraws the Participant’s participation                during a Phase shall
not be permitted to recommence participation until the next                Commencement
Date. A Participant’s withdrawal will not have any effect upon                the
Participant’s eligibility to participate in any succeeding Phase of the
               Plan that commences after the next Commencement Date or in any similar
plan that                may hereafter be adopted by the Company.  






	  	(b)  	  	Notwithstanding
the provisions of Section 9(a) above, if a Participant files                reports
pursuant to Section 16 of the Securities Exchange Act of 1934 (at the
               Commencement Date of a Phase or becomes obligated to file such reports
during a                Phase) then such a Participant shall not have the right to
withdraw all or a                portion of the accumulated deductions from Pay except in
accordance with                Sections 9(c) and (d) below.  






	  	(c)  	  	In
the event of the death of a Participant, the person or persons specified in
               Section 14 may give notice to the Company within 60 days of the death of
the                Participant electing to purchase the number of full shares which the
accumulated                payroll deductions in the account of such deceased Participant
will purchase at                the option price specified in Section 8(a)(ii) and have
the balance in the                account distributed in cash with Interest accrued
thereon to the person or                persons specified in Section 14. If no such
notice is received by the Company                within said 60 days, the accumulated
payroll deductions will be distributed in                full in cash with Interest
accrued thereon to the person or persons specified in                Section 14.  









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	  	(d)  	  	Upon
termination of Participant’s employment for any reason other than
               death of the Participant, the Company shall return to the Participant,
with                Interest, any payroll deductions credited to the Participant’s
account                during that Phase.  






	  	(e)  	  	In
the event the Participant’s participation is suspended under the MTS
               Systems Corporation Retirement Plan as a result of receiving a hardship
               withdrawal, the Participant shall be immediately and automatically
suspended                from the Plan and all payroll deductions shall be discontinued.
The Participant                shall again participate in the Plan as provided in Section
6(b) above.  






	  	(f)  	  	The
Committee shall be entitled to make such rules, regulations and
               determination as it deems appropriate under the Plan in respect of any
leave of                absence taken by or disability of any Participant. Without
limiting the                generality of the foregoing, the Committee shall be entitled
to determine:  






	  	  	(i)  	  	Whether
or not any such leave of absence shall constitute a termination of
               employment for purposes of the Plan; and  






	  	  	(ii)  	  	The
impact, of any, of any such leave of absence on options under the Plan
                    theretofore granted to any Participant who takes such leave of
absence.  






        10.   Stock
Reserved for Options. 



	  	(a)  	  	The
maximum number of shares of Stock to be issued upon the exercise of options
               to be granted under the Plan shall be 750,000. Such shares may, at the
election                of the Board of Directors, be either shares authorized but not
issued or shares                acquired in the open market by the Company. Shares
subject to the unexercised                portion of any lapsed or expired option may
again be subject to option under the                Plan.  






	  	(b)  	  	If
the total number of shares of Stock for which options are to be granted for a
               given Phase as specified in Section 8 exceeds the number of shares then
               remaining available under the Plan (after deduction of all shares for
which                options have been exercised or are then outstanding) and if the
Committee does                not elect to cancel such Phase pursuant to Section 4, the
Committee shall make a                pro rata allocation of the shares remaining
available in as uniform and                equitable a manner as it shall consider
practicable. In such event, the options                to be granted and the payroll
deductions to be made pursuant to the Plan, which                would otherwise be
affected, may, in the discretion of the Committee, be reduced                accordingly.
The Committee shall give written notice of such reduction to each
               Participant affected.  






	  	(c)  	  	The
Participant (or a joint tenant named pursuant to Section 10(d) hereof) shall
               have no rights as a shareholder with respect to any shares subject to the
               Participant’s option until the date of the issuance of a Stock
certificate                evidencing such shares. No adjustment shall be made for
dividends (ordinary or                extraordinary, whether in cash, securities or other
property), distributions or                other rights for which the record date is
prior to the date such Stock                certificate is actually issued, except as
otherwise provided in Section 12                hereof.  









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	  	(d)  	  	The
shares of Stock to be delivered to a Participant pursuant to the exercise of
               an option under the Plan will be registered in the name of the Participant
or,                if the Participant so directs by written notice to the Committee prior
to the                Termination Date of that Phase of the Plan, in the names of the
Participant and                one other person the Participant may designate as the
Participant’s joint                tenant with rights of survivorship, to the extent
permitted by law.  






        11.   Accounting and Use of Funds. Payroll deductions for each
Participant                shall be credited to an account established for the
Participant under the Plan.                Such account shall be solely for bookkeeping
purposes and no separate fund or                trust shall be established hereunder and
the Company shall not be obligated to                segregate such funds. All funds from
payroll deductions received or held by the                Company under the Plan may be
used, without limitation, for any corporate                purpose by the Company.  



        12.   Adjustment
Provision. 



	  	(a)  	  	Subject
to any required action by the shareholders of the Company, the number of
               shares covered by each outstanding option, and the price per share thereof
in                each such option, shall be proportionately adjusted for any increase or
decrease                in the number of issued shares of Stock resulting from a
subdivision or                consolidation of shares or the payment of a share dividend
(but only on the                shares) or any other increase or decrease in the number
of such shares effected                without receipt of consideration by the Company.  






	  	(b)  	  	In
the event of a change in the shares of the Company as presently constituted,
               which is limited to a change of all its authorized shares with par value
into                the same number of shares with a different par value or without par
value, the                shares resulting from any such change shall be deemed to be the
shares within                the meaning of this Plan.  






	  	(c)  	  	To
the extent that the foregoing adjustments relate to shares or securities of
               the Company, such adjustments shall be made by the Committee, and its
               determination in that respect shall be final, binding and conclusive,
provided                that each option granted pursuant to this Plan shall not be
adjusted in a manner                that causes the option to fail to continue to qualify
as an option issued                pursuant to an “employee stock purchase plan” within
the meaning of                Section 423 of the Code.  






	  	(d)  	  	Except
as hereinbefore expressly provided in this Section 12, no Participant
               shall have any right by reason of any subdivision or consolidation of
shares of                any class or the payment of any stock dividend or any other
increase or decrease                in the number of shares of any class or by reason of
any dissolution,                liquidation, merger, or consolidation or spin-off of
assets or stock of another                corporation, and any issue by the Company of
shares of any class, or securities                convertible into shares of any class,
shall not affect, and no adjustment by                reason thereof shall be made with
respect to, the number or price of shares                subject to the option.  






        13.   Non-Transferability
of Options. 



	  	(a)  	  	Options
granted under any Phase of the Plan shall not be transferable except                under
the laws of descent and distribution and shall be exercisable only by the
               Participant during the Participant’s lifetime and after the
               Participant’s death only by the Participant’s beneficiary of the
               representative of the Participant’s estate as provided in Section
9(c)                hereof.  









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	  	(b)  	  	Neither
payroll deductions credited to a Participant’s account, nor any
               rights with regard to the exercise of an option or to receive shares of
Stock                under any Phase of the Plan may be assigned, transferred, pledged or
otherwise                disposed of in any way by the Participant. Any such attempted
assignment,                transfer, pledge or other disposition shall be null and void
and without effect,                except that the Company may, at its option, treat such
act as an election to                withdraw funds in accordance with Section 9.  






        14.   Designation
of Beneficiary. 



	  	(a)  	  	A
Participant may file a written designation of a beneficiary who is to receive
               any cash credited to the Participant’s account under any Phase of the
Plan                in the event of such Participant’s death prior to exercise of
the                Participant’s option pursuant to Section 8 hereof, or to exercise
the                Participant’s option and become entitled to any Stock and/or cash
upon such                exercise in the event of the Participant’s death prior to
exercise of the                option pursuant to Section 8 hereof. The Participant may
change the beneficiary                designation at any time upon receipt of a written
notice by the Company.  






	  	(b)  	  	Upon
the death of a Participant and upon receipt by the Company of proof deemed
               adequate by it of the identity and existence at the Participant’s
death of                a beneficiary validly designated under the Plan, the Company
shall in the event                of the Participant’s death, allow such beneficiary
to exercise the                Participant’s option pursuant to Section 9(c) if such
beneficiary is living                on the Termination Date of the Phase and deliver to
such beneficiary the                appropriate shares of Stock and/or cash after
exercise of the option. In the                event there is not validly designated
beneficiary under the Plan who is living                at the time of the Participant’s
death or in the event the option lapses,                the Company shall deliver the
cash credited to the account of the Participant                with Interest to the
executor or administrator of the estate of the Participant,                or if no such
executor or administrator has been appointed to the knowledge of                the
Company, it may, in its discretion, deliver such cash to the spouse (or, if
               no surviving spouse, to any one or more children of the Participant), or
if no                spouse or child is known to the Company, then to such relatives of
the                Participant known to the Company as would be entitled to such amounts,
under the                laws of intestacy in the deceased Participant’s domicile as
though named as                the designated beneficiary hereunder. The Company will not
be responsible for or                be required to give effect to the disposition of any
cash or Stock or the                exercise of any option in accordance with any will or
other testamentary                disposition made by such Participant or in accordance
with the provision of any                law concerning intestacy, or otherwise. No
designated beneficiary shall, prior                to the death of a Participant by whom
the Participant has been designated,                acquire any interest in any Stock or
in any option or in the cash credited to                the Participant’s account
under any Phase of the Plan.  






        15.   Amendment
and Termination. The Plan may be terminated at any time                by the Board
of Directors provided that, except as permitted in Section 4(c)                with
respect to an acceleration of the Termination Date of any Phase, no such
               termination will take effect with respect to any options then outstanding.
Also,                the Board may, from time to time, amend the Plan as it may deem
proper and in                the best interests of the Company or as may be necessary to
comply with Section                423 of the Internal Revenue Code of 1986, as amended,
or other applicable laws                or regulations; provided, however, that no such
amendment shall, without prior                approval of the shareholders of the Company
(1) increase the total number of                shares for which options may be granted
under the Plan (except as provided in                Section 12 herein), (2) permit
aggregate payroll deductions in excess of ten                percent (10%) of a
Participant’s compensation as of the Commencement Date                of a Phase, or
(3) impair any outstanding option.  







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        16.   Notices. All
notices or other communications in connection with                the Plan or any Phase
thereof shall be in the form specified by the Committee                and shall be
deemed to have been duly given when received by the Participant or                the
Participant’s designated personal representative or beneficiary or by
               the Company or its designated representative, as the case may be.  



        17.   Participation
of Subsidiaries. 



	  	(a)  	  	The
Employees of any Subsidiary of the Company that adopts this Plan by action
               of its Board of Directors with the consent of the Company, shall be
entitled to                participate in the Plan on the same basis as Employees of the
Company, unless                the Board of Directors of the Company determines
otherwise. Effective as of the                date of coverage of any Subsidiary, any
references herein to the                “Company” shall be interpreted as
referring to such Subsidiary.  






	  	(b)  	  	In
the event that any Subsidiary, which is covered under the Plan, ceases to be
               a Subsidiary of the Company, the employees of such Subsidiary shall be
               considered to have terminated their employment for purposes of Section 9
hereof                as of the date such Subsidiary ceases to be such a Subsidiary.  






        18.   Definitions. 



	  	(a)  	  	“Employee” means
any common law employee, including an officer, of the                Company or any
Participating Subsidiary who as of the day immediately preceding                the
Commencement Date of a Phase is customarily employed by the Company for more
               than twenty (20) hours per week and more than five (5) months in a
calendar                year.  






	  	(b)  	  	“Fair
Market Value” of a share of Stock shall be the closing price of                the
Stock on the applicable date or the nearest prior business day on which
               trading occurred on the exchange on which the Stock is traded or on the
Nasdaq                Stock Market. If the Stock is not traded on any exchange or listed
on the Nasdaq                Stock Market, the Committee shall determine the Fair Market
Value of a share of                Stock for each valuation date in a manner acceptable
under Section 423 of the                Internal Revenue Code of 1986, as amended.  






	  	(c)  	  	“Interest” means
the interest rate on a six-month certificate of                deposit as published in
the Wall Street Journal on the business day coincident                with or immediately
prior to the Commencement Date, or such other similar rate                as determined
by the Committee before the Commencement Date, which rate shall                remain in
effect until changed by the Committee. Such interest rate shall be                applied
to 1⁄2 of the Participant’s account.  






	  	(d)  	  	“Pay” means
(i) the total compensation paid in cash to a Participant                by the Company
and any Subsidiary, including salary, wages, bonuses, incentive
               compensation, commissions, overtime pay and shift premiums, plus (ii) any
               pre-tax contributions made by the Participant under Section 401(k) or 125
of the                Code. “Pay” shall exclude all non-cash items, moving or
relocation                allowances, cost-of-living equalization payments, car
allowances, tuition                reimbursements, imputed income attributable to cars or
life insurance, severance                pay, fringe benefits, contributions or benefits
received under employee benefit                plans, income attributable to the exercise
of options, and similar items.                [Last Sentence Amended by First Amendment]
Except to the extent required                by applicable law or as otherwise determined
by the Committee in a uniform and                nondiscriminatory manner, the definition
of Pay shall be interpreted and                administered in a manner consistent with
the definition of compensation as                determined from time to time for
purposes of elective deferrals under the                qualified retirement plan of the
Company.  









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	  	(e)  	  	“Stock” means
the common stock of the Company, $.25 par value.  






	  	(f)  	  	“Subsidiary” means
any domestic corporation defined as a subsidiary of                the Company in Section
424(f) of the Internal Revenue Code of 1986, as amended.  






        19.   Miscellaneous. 



	  	(a)  	  	The
Plan shall not, directly or indirectly, create any right for the benefit of
               any Employee or class of Employees to purchase any shares of Stock under
the                Plan, or create in any Employee or class of Employees any right with
respect to                continuation of employment by the Company, and it shall not be
deemed to                interfere in any way with the Company’s right to terminate,
or otherwise                modify, an Employee’s employment at any time.  






	  	(b)  	  	The
provisions of the Plan shall, in accordance with its terms, be binding upon,
               and inure to the benefit of, all successors of each Employee participating
in                the Plan, including, without limitation, such Employee’s estate
and the                executors, administrators or trustees thereof, heirs and legatees,
and any                receiver, trustee in bankruptcy, or representative of creditors of
such                Employee.  






	  	(c)  	  	As
a condition of the obligations of the Company under this Plan, each
               Participant must, no later than the date as of which any part of the value
of an                option under this Plan first becomes includable as compensation in
the gross                income of the Participant for federal income tax purposes, pay
to the Company,                or make arrangements satisfactory to the Company regarding
payment of, any                federal, state, or local taxes of any kind required by law
to be withheld with                respect to such value. The Company or any Subsidiary,
to the extent permitted by                law, may deduct any such taxes from any payment
of any kind otherwise due to the                Participant. If the Committee permits, a
Participant may elect by written notice                to the Company to satisfy part or
all of the withholding tax requirements under                this Section 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
(including by attestation) 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                the this Section, and in the event shares of Stock are withheld, the
amount                withheld will not exceed the minimum required federal, state and
FICA                withholding amount. Any such election will be in accordance with, and
subject                to, applicable tax and securities laws, regulations and rulings.  






	  	(d)  	  	The
law of the State of Minnesota will govern all matters relating to this Plan
               except to the extent it is superseded by the laws of the United States.  






	  	(e)  	  	The
offering of the shares hereunder 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. The Company shall make                every reasonable effort to effect
such registration or qualification or to                obtain such consent or approval.  









12 










	  	(f)  	  	The
Plan is expressly made subject to (i) the approval by shareholders of the
               Company, and (ii) at the Company’s election, the receipt from the
Internal                Revenue Service of a determination letter or ruling, in scope and
content                satisfactory to Company legal counsel, respecting the
qualification of the Plan                within the meaning of Section 423 of the
Code. If the Plan is not so                approved by the shareholders and if, at the
election of the Company, the                aforesaid determination letter or ruling from
the Internal Revenue Service is                not received on or before one year after
the Plan’s adoption by the Board                of Directors, the Plan shall not
come into effect. In such case, the accumulated                payroll deductions
credited to the account of each Participant shall forthwith                be repaid to
the Participant with Interest.  






	  	(g)  	  	[Amended
by First Amendment] Notwithstanding any provision in this Plan                to the
contrary, payroll deduction elections and cancellations or amendments
               thereto, withdrawals decisions, beneficiary designations, and any other
decision                or election by a Participant under this Plan may be accomplished
by electronic                or telephonic means, which includes but is not limited to
the Internet, and                which are not otherwise prohibited by law and which are
in accordance with                procedures and/or systems approved or arranged by the
Employer or its delegates.  








Plan Approved by Board of Directors:
November 20, 2001 



Plan Approved by
Stockholders: January 29, 2002 



First Amendment Approved by Board of
Directors: November 29, 2005 


















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