Document:

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                                                                     Exhibit 4.1

                         CERTIFICATE OF DESIGNATIONS OF
                      SERIES E CONVERTIBLE PREFERRED STOCK
                                       OF
                            DIAMETRICS MEDICAL, INC.
                             a Minnesota corporation

     The undersigned, being the duly elected and acting Chief Executive Officer
of Diametrics Medical, Inc., a Minnesota corporation (the "Corporation"), hereby
certifies that pursuant to the authority contained in Article 3 of the
Corporation's Amended and Restated Articles of Incorporation, as amended, and in
accordance with the provisions of Minnesota Statutes, Section 302A.401, Subd.
3(b), the Corporation's Board of Directors has adopted the following resolutions
creating a series of its Preferred Stock designated as Series E Convertible
Preferred Stock:

     WHEREAS, the Corporation's Amended and Restated Articles of Incorporation
provides for a class of shares known as Preferred Stock, issuable from time to
time in one or more series; and

     WHEREAS, the Board of Directors of the Corporation is authorized to
determine or alter the rights, preferences, privileges and restrictions granted
to or imposed upon any wholly unissued shares of Preferred Stock, to fix the
number of shares constituting any such series, and to determine the designation
thereof, or any of any of them.

     NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby fixes
and determines the designations of, the number of shares constituting, and the
rights, preferences, privileges and restrictions relating to, a new series of
Preferred Stock as follows:

     (a) Designation. The series of Preferred Stock is hereby designated Series
E Convertible Preferred Stock (the "Series E Preferred Stock").

     (b) Authorized Shares. The number of authorized shares constituting the
Series E Preferred Stock shall be 15,000 shares of such series.

     (c) Dividends. Subject to the prior rights of holders of all classes of
stock at the time outstanding having prior rights as to dividends, the holder of
the Series E Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors, out of any assets of the Corporation legally
available therefor, such dividends as may be declared from time to time by the
Board of Directors.

     (d) Liquidation Preference.

          (i) Preference upon Liquidation, Dissolution or Winding Up. In the
event of any dissolution or winding up of the Corporation, whether voluntary or
involuntary, holders of each outstanding share of Series E Preferred Stock shall
be entitled to be paid first out of the assets of the Corporation available for
distribution to shareholders, whether such assets are capital, surplus or
earnings, an amount equal to $100 (the "Series E Purchase Price") per share of
Series E Preferred Stock held (as adjusted for any stock splits, stock dividends
or recapitalizations of the Series E Preferred Stock) and any declared but
unpaid dividends on such share, before any payment shall be made to the holders
of the Common Stock, or any other stock of the Corporation ranking junior to the
Series E Preferred Stock with regard to any distribution of assets upon
liquidation, dissolution or winding up of the Corporation. The holders of the
Series E Preferred Stock shall be entitled to share ratably, in accordance with
the respective preferential amounts payable on such stock, in any distribution
which is not sufficient to pay in full the aggregate of the amounts payable
thereon. If, upon any liquidation, dissolution or winding up of the Corporation,
the assets to be distributed to the holders of the Series E Preferred Stock
shall be insufficient to permit payment to such shareholders of the full
preferential amounts aforesaid, then all of the assets of the Corporation
available for distribution to shareholders shall be distributed to the holders
of Series E Preferred Stock. Each holder of the Series E Preferred Stock shall
be entitled to receive that portion of the assets available for distribution as
the number of outstanding shares of Series E Preferred Stock held by such holder
bears to the total number of shares of Series E Preferred Stock. Such payment
shall constitute payment in full to the holders of the Series E Preferred Stock
upon

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the liquidation, dissolution or winding up of the Corporation. After such
payment shall have been made in full, or funds necessary for such payment shall
have been set aside by the Corporation in trust for the account of the holders
of Series E Preferred Stock, so as to be available for such payment, such
holders of Series E Preferred Stock shall be entitled to no further
participation in the distribution of the assets of the Corporation.

          (ii) Consolidation, Merger and Other Corporate Events. A consolidation
or merger of the Corporation (except into or with a subsidiary corporation) or a
sale, lease, mortgage, pledge, exchange, transfer or other disposition of all or
substantially all of the assets of the Corporation or any reclassification of
the stock of the Corporation (other than a change in par value or from no par to
par, or from par to no par or as the result of an event described in subsections
(iv) through (vii) of paragraph (g)), shall be regarded as a liquidation,
dissolution or winding up of the affairs of the Corporation within the meaning
of this paragraph (d); provided, however, that a sale of the Corporation's
intermittent blood testing business shall not be deemed to constitute a sale of
all or substantially all of the assets of the Corporation for purposes of this
paragraph (d). In no event shall the issuance of new classes of stock, whether
senior, junior or on a parity with the Series E Preferred Stock, be deemed a
"reclassification" under or otherwise limited by the terms hereof.

          (iii) Distribution of Cash and Other Assets. In the event of a
liquidation, dissolution or winding up of the Corporation resulting in the
availability of assets other than cash for distribution to the holders of the
Series E Preferred Stock, the holders of the Series E Preferred Stock shall be
entitled to a distribution of cash and/or assets equal to the value of the
liquidation preference stated in subsection (i) of this paragraph (d), which
valuation shall be made solely by the Board of Directors, and provided that such
Board of Directors was acting in good faith, shall be conclusive.

          (iv) Distribution to Junior Security Holders. After the payment or
distribution to the holders of the Series E Preferred Stock of the full
preferential amounts aforesaid, the holders of the Common Stock then
outstanding, or any other stock of the Corporation ranking as to assets upon
liquidation, dissolution or winding up of the Corporation junior to the Series E
Preferred Stock, shall be entitled to receive ratably all of the remaining
assets of the Corporation.

          (v) Preference; Priority. References to a stock that is "senior" to,
on a "parity" with or "junior" to other stock as to liquidation shall refer,
respectively, to rights of priority of one series or class of stock over another
in the distribution of assets on any liquidation, dissolution or winding up of
the Corporation. The Series E Preferred Stock shall be senior to the Common
Stock of the Corporation and senior to any subsequent series of Preferred Stock
issued by the Corporation.

     (e) Redemption. The Corporation, at its option, may, on or before May 12,
2004, redeem at any time all, or from time to time any portion, of the then
outstanding Series E Preferred Stock on any date set by the Board of Directors,
at a cash redemption price equal to $100 per share plus, in each case, (A) an
amount in cash equal to $2 per share for each month the Series E Preferred Stock
was outstanding prior to redemption, and (B) all dividends on the Series E
Preferred Stock declared and unpaid on such share to the date fixed for
redemption (such sum being hereinafter referred to as the "Redemption Price").

     In case of the redemption of less than all of the then outstanding Series E
Preferred Stock, the Corporation shall designate by lot, or in such other manner
as the Board of Directors may determine, the shares to be redeemed, or shall
effect such redemption on a pro rata basis. Notwithstanding the foregoing, the
Corporation shall not redeem less than all of the Series E Preferred Stock at
any time outstanding until all dividends declared and in arrears upon all Series
E Preferred Stock then outstanding shall have been paid for all past dividend
periods.

     Not more than 10 nor less than 5 days prior to the redemption date, notice
by first class mail, postage prepaid, shall be given to the holders of record of
the Series E Preferred Stock to be redeemed, addressed to such shareholders at
their last addresses as shown on the stock books of the Corporation. Each such
notice of redemption shall specify the date fixed for redemption; the Redemption
Price; the place or places of payment; that the right of holders of Series E
Preferred Stock called for redemption to exercise their conversion right
pursuant to paragraph (e) shall expire as to such shares on the date of notice
of redemption (provided that there is no default in payment of the Redemption
Price); that payment of the Redemption Price will be made upon presentation and
surrender of

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certificates representing the shares of Series E Preferred Stock; and that
declared but unpaid dividends to the date fixed for redemption will be paid on
the date fixed for redemption.

     Any notice which is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not a holder of the Series E
Preferred Stock receives such notice; and failure so to give such notice, or any
defect in such notice, to the holders of any shares designated for redemption
shall not affect the validity of the proceedings for the redemption of any other
shares of Series E Preferred Stock. On or after the date fixed for redemption as
stated in such notice, each holder of the shares called for redemption (other
than shares which have been duly surrendered for conversion at or before the
close of business on the date fixed for redemption) shall surrender the
certificate or certificates evidencing such shares to the Corporation at the
place designated in such notice and shall thereupon be entitled to receive
payment of the Redemption Price. If fewer than all the shares represented by any
such surrendered certificate or certificates are redeemed, a new certificate
shall be issued representing the unredeemed shares. If, on the date fixed for
redemption, funds necessary for the redemption shall be available therefor and
shall have been irrevocably deposited or set aside, then, notwithstanding that
the certificates evidencing any shares so called for redemption shall not have
been surrendered, the dividends with respect to the shares so called shall cease
to accumulate on and after the date fixed for redemption, such shares shall no
longer be deemed outstanding, the holders thereof shall cease to be
shareholders, and all rights whatsoever with respect to such shares (except the
right of the holders thereof to receive the Redemption Price without interest
upon surrender of their certificates) shall terminate.

     (f) Voting Rights. Except as otherwise required by law, the holder of
shares of Series E Preferred Stock shall not have the right to vote on matters
that come before the shareholders.

     (g) Conversion Rights. The holders of Series E Preferred Stock will have
the following conversion rights:

          (i) Right to Convert. Subject to and in compliance with the provisions
of this paragraph (g), any issued and outstanding shares of Series E Preferred
Stock may, at the option of the holder, be converted at any time or from time to
time into fully paid and nonassessable shares of Common Stock at the conversion
rate in effect at the time of conversion, determined as provided herein;
provided, that a holder of Series E Preferred Stock may at any given time
convert only up to that number of shares of Series E Preferred Stock so that,
upon conversion, such holder's beneficial ownership (as calculated pursuant to
Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of the Company's
Common Stock is not more than 9.99% of the Company's Common Stock then
outstanding.

          (ii) Mechanics of Conversion. Before any holder of Series E Preferred
Stock shall be entitled to convert the same into shares of Common Stock, he
shall surrender the certificate or certificates therefor, duly endorsed, at the
office of the Corporation or of any transfer agent for the Common Stock, and
shall give written notice to the Corporation at such office that he elects to
convert the same and shall state therein the number of shares of Series E
Preferred Stock being converted. Thereupon, the Corporation shall promptly issue
and deliver at such office to such holder of Series E Preferred Stock a
certificate or certificates for the number of shares of Common Stock to which he
shall be entitled. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of the shares of
Series E Preferred Stock to be converted, and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date.

          (iii) Conversion Price. The number of shares into which one share of
Series E Preferred Stock shall be convertible shall be determined by dividing
$100 (the "Series E Purchase Price") by the then existing Conversion Price (as
set forth below), which shall be subject to adjustment from time to time in
certain instances, as provided below in this paragraph (g)(iii) (the "Conversion
Ratio"). The "Conversion Price" per share for the Series E Preferred Stock shall
be equal to 88% of the Market Price (as defined below), rounded to the nearest
penny; provided, however, that in no event shall the Conversion Price be less
than $0.35 per share (the "Floor Price") or exceed $0.75 per share (the "Ceiling
Price"). Both the Floor Price and Ceiling Price shall be further adjusted upon
the occurrence of any event in paragraph (g)(iv)-(viii).

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     For purposes of determining the Conversion Price, the "Market Price" shall
equal the volume weighted average trading price of the Corporation's Common
Stock, as obtained from the Nasdaq Stock Market, Bloomberg Financial Services or
another similar service, for the five consecutive trading days immediately
preceding the conversion date (which may include trading days prior to the date
the Series E Preferred Stock is first issued (the "Original Issue Date").

     For purposes of illustration only, if the Market Price is $0.50 at time of
conversion, the Conversion Ratio will be $100/$0.44 = 227.2727 to 1, allowing
the 15,000 shares of Series E Preferred Stock to be converted into 3,409,091
shares of Common Stock. On the other hand, if the Market Price is $1.00 at time
of conversion, the Conversion Ratio will be $100/$0.75 = 133.3333 to 1, allowing
the 15,000 shares of Preferred Stock to be converted into 2,000,000 shares of
Common Stock. Similarly, if the Market Price is $0.30 at time of conversion, the
Conversion Ratio will be $100/$0.35 = 285.7143 to 1, allowing the 15,000 shares
of Preferred Stock to be converted into 4,285,715 shares of Common Stock, the
maximum number of shares of Common Stock into which the Series E Preferred Stock
may be converted.

          (iv) Adjustment for Stock Splits and Combinations. If the Corporation
shall at any time, or from time to time after the Original Issuance Date, effect
a subdivision of the outstanding Common Stock, the Conversion Price in effect
immediately prior thereto shall be proportionately decreased, and conversely, if
the Corporation shall at any time or from time to time after the Original
Issuance Date combine the outstanding shares of Common Stock, the Conversion
Price then in effect immediately before the combination shall be proportionately
increased. Any adjustment under this paragraph (g)(iv) shall become effective at
the close of business on the date the subdivision or combination becomes
effective.

          (v) Adjustment for Certain Dividends and Distributions. In the event
the Corporation at any time, or from time to time after the Original Issuance
Date, shall make or issue, or fix a record date for the determination of holders
of Common Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Conversion
Price for the Series E Preferred Stock then in effect shall be decreased as of
the time of such issuance or, in the event such a record date shall have been
fixed, as of the close of business on such record date, by multiplying the
Conversion Price for such Series E Preferred Stock then in effect by a fraction:

               (A) the numerator of which shall be the total number of shares of
     Common Stock issued and outstanding immediately prior to the time of such
     issuance or the close of business on such record date, and

               (B) the denominator of which shall be the total number of shares
     of Common Stock issued and outstanding immediately prior to the time of
     such issuance or the close of business on such record date plus the number
     of shares of Common Stock issuable in payment of such dividend or
     distribution;

provided, however, if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed
therefor, the Conversion Price for the Series E Preferred Stock shall be
recomputed accordingly as of the close of business on such record date and
thereafter, the Conversion Price for the Series E Preferred Stock shall be
adjusted pursuant to this paragraph (g)(v) as of the time of actual payment of
such dividends or distributions.

          (vi) Adjustments for Other Dividends and Distributions. In the event
the Corporation at any time or from time to time after the Original Issuance
Date shall make or issue, or fix a record date for the determination of holders
of Common Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, then and in
each such event provision shall be made so that the holders of such Series E
Preferred Stock shall receive upon conversion thereof in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of the
Corporation that they would have received had their Series E Preferred Stock
been converted into Common Stock on the date of such event and had thereafter,
during the period from the date of such event to and including the conversion
date, retained such

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securities receivable by them as aforesaid during such period giving application
to all adjustments called for during such period under this paragraph (g) with
respect to the rights of the holders of the Series E Preferred Stock.

          (vii) Adjustment for Reclassification Exchange or Substitution. If the
Common Stock issuable upon the conversion of the Series E Preferred Stock shall
be changed into the same or a different number of shares of any class or classes
of stock, whether by capital reorganization, reclassification or otherwise
(other than a subdivision or combination of shares or stock dividend provided
for above, or a reorganization, merger, consolidation or sale of assets provided
for elsewhere in this paragraph (g)), then and in each such event the holder of
each share of Series E Preferred Stock shall have the right thereafter to
convert such share into the kind and amount of shares of stock and other
securities and property receivable upon such reorganization, reclassification or
other change, by holders of the number of shares of Common Stock into which such
shares of Series E Preferred Stock might have been converted immediately prior
to such reorganization, reclassification, or change, all subject to further
adjustment as provided herein.

          (viii) Reorganization, Mergers, Consolidations or Sales of Assets. If
at any time or from time to time there shall be a capital reorganization of the
Common Stock (other than a subdivision, combination, reclassification or
exchange of shares provided for elsewhere in this paragraph (g)) or a merger or
consolidation of the Corporation with or into another corporation, or the sale
of all or substantially all of the Corporation's properties and assets to any
other person, then, as a part of such reorganization, merger, consolidation or
sale, provision shall be made so that the holders of the Series E Preferred
Stock shall thereafter be entitled to receive upon conversion of such Series E
Preferred Stock, the number of shares of stock or other securities or property
of the Corporation or of the successor corporation resulting from such merger or
consolidation or sale, to which a holder of Common Stock deliverable upon
conversion would have been entitled on such capital reorganization, merger,
consolidation or sale. In any such case, appropriate adjustment shall be made in
the application of the provisions of this paragraph (g) with respect to the
rights of the holders of the Series E Preferred Stock after the reorganization,
merger, consolidation or sale to the end that the provisions of this paragraph
(g) (including adjustment of the Conversion Price then in effect and the number
of shares purchasable upon conversion of the Series E Preferred Stock) shall be
applicable after that event as nearly equivalent as may be practicable.

          (ix) Certificate of Adjustment. In each case of an adjustment or
readjustment of the Conversion Price for the number of shares of Common Stock or
other securities issuable upon conversion of the Series E Preferred Stock, the
Corporation shall compute such adjustment or readjustment in accordance herewith
and the Corporation's Chief Financial Officer shall prepare and sign a
certificate showing such adjustment or readjustment, and shall mail such
certificate by first class mail, postage prepaid, to each registered holder of
the Series E Preferred Stock at the holder's address as shown in the
Corporation's books. The certificate shall set forth such adjustment or
readjustment, showing in detail the facts upon which such adjustment or
readjustment is based.

          (x) Notices of Record Date. In the event of (A) any taking by the
Corporation of a record of the holders of any class or series of securities for
the purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution or (B) any reclassification or recapitalization
of the capital stock of the Corporation, any merger or consolidation of the
Corporation or any transfer of all or substantially all of the assets of the
Corporation to any other corporation, entity or person, or any voluntary or
involuntary dissolution, liquidation or winding up of the Corporation, the
Corporation shall mail to each holder of Series E Preferred Stock at least 10
days prior to the record date specified therein, a notice specifying (1) the
date on which any such record is to be taken for the purpose of such dividend or
distribution and a description of such dividend or distribution, (2) the date on
which any such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up is expected to become effective
and (3) the time, if any is to be fixed, as to when the holders of record of
Common Stock (or other securities) shall be entitled to exchange their shares,
of Common Stock (or other securities) for securities or other property
deliverable upon such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up.

          (xi) Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of the Series E Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to the product of such fraction multiplied by
the fair market value of

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one share of the Corporation's Common Stock on the date of conversion, as
determined in good faith by the Board of Directors.

          (xii) Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series E Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series E Preferred Stock, and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of Series E Preferred Stock, the
Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose.

          (xiii) Notices. Any notice required by the provisions of this
paragraph (g) to be given to the holders of shares of Series E Preferred Stock
shall be deemed given (A) if deposited in the United States mail, postage
prepaid, or (B) if given by any other reliable or generally accepted means
(including by facsimile or by a nationally recognized overnight courier
service), in each case addressed to each holder of record at his address (or
facsimile number) appearing on the books of the Corporation.

          (xiv) Payment of Taxes. The Corporation will pay all transfer taxes
and other governmental charges that may be imposed in respect of the issue or
delivery of shares of Common Stock upon conversion of shares of Series E
Preferred Stock.

          (xv) No Dilution or Impairment. The Corporation shall not amend its
Articles of Incorporation or participate in any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, for the purpose of avoiding or seeking to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, without the approval of a majority of the then
outstanding Series E Preferred Stock.

     (h) No Reissuance of Preferred Stock. Any shares of Series E Preferred
Stock acquired by the Corporation by reason of purchase, conversion or otherwise
shall be canceled, retired and eliminated from the shares of Series E Preferred
Stock that the Corporation shall be authorized to issue. All such shares shall
upon their cancellation become authorized but unissued shares of Preferred Stock
and may be reissued as part of a new series of Preferred Stock subject to the
conditions and restrictions on issuance set forth in the Articles of
Incorporation or in any certificate of designation creating a series of
Preferred Stock or any similar stock or as otherwise required by law.

     (i) Severability. If any right, preference or limitation of the Series E
Preferred Stock set forth herein is invalid, unlawful or incapable of being
enforced by reason of any rule, law or public policy, all other rights,
preferences and limitations set forth herein that can be given effect without
the invalid, unlawful or unenforceable right, preference or limitation shall
nevertheless remain in full force and effect, and no right, preference or
limitation herein shall be deemed dependent upon any other such right,
preference or limitation unless so expressed herein.

     IN WITNESS WHEREOF, Diametrics Medical, Inc. has caused this Certificate of
Designations of Series E Preferred Stock to be executed by David B. Kaysen, its
Chief Executive Officer, this 12th day of May 2003.

                                                         /s/ David B. Kaysen
                                                         -----------------------
                                                         Chief Executive Officer

                                       6<PAGE>

                                                                    Exhibit 10.1

                            DIAMETRICS MEDICAL, INC.
                              AMENDED AND RESTATED
                             1990 STOCK OPTION PLAN
                            (as amended May 21, 2003)

1.   Purpose of Plan.

     This Plan shall be known as the "DIAMETRICS MEDICAL, INC. 1990 STOCK OPTION
PLAN" and is hereinafter referred to as the "Plan." The purpose of the Plan is
to aid in maintaining and developing personnel capable of assuring the future
success of Diametrics Medical, Inc., a Minnesota corporation (the "Company"), to
offer such personnel additional incentives to put forth maximum efforts for the
success of the business, and to afford them an opportunity to acquire a
proprietary interest in the Company through stock options and other long-term
incentive awards as provided herein. Options granted under this Plan may be
either incentive stock options ("Incentive Stock Options") within the meaning of
Section 422 of the Internal Revenue Code of 1986 (the "Code"), or options which
do not qualify as Incentive Stock Options. Awards granted under this Plan shall
be SARs, restricted stock or performance awards as hereinafter described.

2.   Stock Subject to Plan.

     Subject to the provisions of Section 15 hereof, the stock to be subject to
options or other awards under the Plan shall be the Company's authorized but
unissued shares of Common Stock, par value $.01 per share. Such shares may be
either authorized but unissued shares, or issued shares which have been
reacquired by the Company. Subject to adjustment as provided in Section 15
hereof, the maximum number of shares on which options may be exercised or other
awards issued under this Plan shall be 5,200,000 shares. If an option or award
under the Plan expires, or for any reason is terminated or unexercised with
respect to any shares, such shares shall again be available for options or
awards thereafter granted during the term of the Plan.

3.   Administration of Plan.

     (a) The Plan shall be administered by a committee (the "Committee") of two
or more members of the Board of Directors of the Company, none of whom shall be
officers or employees of the Company and all of whom shall be "disinterested
persons" with respect to the Plan within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
successor rule or regulation thereto. The members of any such committee shall be
appointed by and serve at the pleasure of the Board of Directors.

     (b) The Committee shall have plenary authority in its discretion, but
subject to the express provisions of the Plan: (i) to determine the purchase
price of the Common Stock covered by each option or award, (ii) to determine the
employees to whom and the time or times at which such options and awards shall
be granted and the number of shares to be subject to each, (iii) to determine
the form of payment to be made upon the exercise of an SAR or in connection with
performance awards, either cash, Common Stock of the Company or a combination
thereof, (iv) to determine the terms of exercise of each option and award, (v)
to accelerate the time at which all or any part of an option or award may be
exercised, (vi) to amend or modify the terms of any option or award with the
consent of the optionee, (vii) to interpret the Plan, (viii) to prescribe, amend
and rescind rules and regulations relating to the Plan, (ix) to determine the
terms and provisions of each option and award agreement under the Plan (which
agreements need not be identical), including the designation of those options
intended to be Incentive Stock Options, and (x) to make all other determinations
necessary or advisable for the administration of the Plan, subject to the
exclusive authority of the Board of Directors under Section 16 herein to amend
or terminate the Plan.

     (c) The Committee shall select one of its members as its Chairman and shall
hold its meetings at such times and places as it may determine. A majority of
its members shall constitute a quorum, provided that if the

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Committee is comprised of no more than two members, all of its members must be
present to constitute a quorum. All determinations of the Committee shall be
made by not less than a majority of its members, provided that if the Committee
is comprised of no more than two members, such determinations may not be made by
less than all of its members. Any decision or determination reduced to writing
and signed by all of the members of the Committee shall be fully effective as if
it had been made by a majority vote at a meeting duly called and held. The grant
of an option or award shall be effective only if a written agreement shall have
been duly executed and delivered by and on behalf of the Company following such
grant. The Committee may appoint a Secretary and may make such rules and
regulations for the conduct of business as it shall deem advisable.

     (d) The Chief Executive Officer of the Company shall have the authority, as
granted by the Committee pursuant to clause (ix) of subsection (b) of this
Section 3, to grant, pursuant to the Plan, options or other awards to eligible
persons who are not considered by the Company as its officers or directors for
purposes of Section 16 of the Securities Exchange Act of 1934, as amended. The
Chief Executive Officer of the Company shall provide information as to any
grants made pursuant to this subsection to the Committee at their next meeting.

4.   Eligibility.

     Incentive Stock Options may only be granted under this Plan to any full or
part-time employee (which term as used herein includes, but is not limited to,
officers and directors who are also employees) of the Company and of its present
and future subsidiary corporations within the meaning of Section 424(f) of the
Code (herein called "subsidiaries"). Full or part-time employees, non-employee
directors, consultants or independent contractors to the Company or one of its
subsidiaries shall be eligible to receive options which do not qualify as
Incentive Stock Options and awards. In determining the persons to whom options
and awards shall be granted and the number of shares subject to each, the
Committee may take into account the nature of services rendered by the
respective employees or consultant their present and potential contributions to
the success of the Company and such other factors as the Committee in its
discretion shall deem relevant. A person who has been granted an option or award
under this Plan may be granted additional options or awards under the Plan if
the Committee shall so determine; provided, however, that for Incentive Stock
Options granted after December 31, 1986, to the extent the aggregate fair market
value (determined at the time the Incentive Stock Option is granted) of the
Common Stock with respect to which all Incentive Stock Options are exercisable
for the first time by an employee during any calendar year (under all plans
described in subsection (d) of Section 422 of the Code of his employer
corporation and its parent and subsidiary corporations) exceeds $100,000, such
options shall be treated as options which do not qualify as Incentive Stock
Options. Nothing in the Plan or in any agreement thereunder shall confer on any
employee any right to continue in the employ of the Company or any of its
subsidiaries or affect, in any way, the right of the Company or any of its
subsidiaries to terminate his or her employment at any time.

5.   Price.

     The option price for all Incentive Stock Options granted under the Plan
shall be determined by the Committee but shall not be less than 100% of the fair
market value of the Common Stock at the date of grant of such option. The option
price for options granted under the Plan which do not qualify as Incentive Stock
Options and, if applicable, the price for all awards shall also be determined by
the Committee. For purposes of the preceding sentence and for all other
valuation purposes under the Plan, the fair market value of shares of Common
Stock shall be (i) the closing price of the Common Stock as reported for
composite transactions if the Common Stock is then traded on a national
securities exchange, (ii) the last sale price if the Common Stock is then quoted
on the NASDAQ National Market System, or (iii) the average of the closing
representative bid and asked prices of the Common Stock as reported on NASDAQ on
the date as of which the fair market value is being determined. If on the date
of grant of any option or award hereunder the Common Stock is not traded on an
established securities market, the Committee shall make a good faith attempt to
satisfy the requirements of this Section 5 and in connection therewith shall
take such action as it deems necessary or advisable.

                                      -2-

<PAGE>

6.   Term.

     Each option and award and all rights and obligations thereunder shall
expire on the date determined by the Committee and specified in the option or
award agreement. The Committee shall be under no duty to provide terms of like
duration for options or awards granted under the Plan, but the term of an
Incentive Stock Option may not extend more than ten (10) years from the date of
grant of such option and the term of options granted under the Plan which do not
qualify as Incentive Stock Options may not extend more than fifteen (15) years
from the date of granting of such option.

7.   Exercise of Option or Award.

     (a) The Committee shall have full and complete authority to determine
whether an option or award will be exercisable in full at any time or from time
to time during the term thereof, or to provide for the exercise thereof in such
installments, upon the occurrence of such events (such as termination of
employment for any reason) and at such times during the term of the option as
the Committee may determine and specify in the option or award agreement.

     (b) The exercise of any option or award granted hereunder shall only be
effective at such time that the sale of Common Stock pursuant to such exercise
will not violate any state or federal securities or other laws. Only to the
extent required in order to comply with Rule 16b-3 under the Exchange Act, in
the case of an option or other award granted to a person considered by the
Company as one of its officers or directors for purposes of Section 16 of the
Exchange Act, the terms of the option or other award will require that such
shares are not disposed of by such officer or director for a period of at least
six months from the date of grant.

     (c) An optionee or grantee electing to exercise an option or award shall
give written notice to the Company of such election and of the number of shares
subject to such exercise. The full purchase price of such shares shall be
tendered with such notice of exercise. Payment shall he made to the Company in
cash (including bank check, certified check, personal check, or money order),
or, at the discretion of the Committee and as specified by the Committee, (i) by
delivering certificates for the Company's Common Stock already owned by the
optionee or grantee having a fair market value as of the date of grant equal to
the full purchase price of the shares, or (ii) by delivering the optionee's or
grantee's promissory note, which shall provide for interest at a rate not less
than the minimum rate required to avoid the imputation of income, original issue
discount or a below-market-rate loan pursuant to Sections 483, 1274 or 7872 of
the Code or any successor provisions thereto, provided, however, that the
interest rate shall not be less than the market rate that would otherwise be
available to the optionee or grantee from a third-party lender on the date of
exercise of the option or award, as determined by the Committee, or (iii) a
combination of cash, the optionee's or grantee promissory note and such shares.
The fair market value of such tendered shares shall be determined as provided in
Section 5 herein. The optionee's or grantee's promissory note shall be a full
recourse liability of the optionee and may, at the discretion of the Committee,
be secured by a pledge of the shares being purchased. Until such person has been
issued the shares subject to such exercise, he or she shall possess no rights as
a shareholder with respect to such shares.

8.   Stock Appreciation Rights.

     (a) Grant. At the time of grant of an option or award under the Plan (or at
any other time), the Committee, in its discretion, may grant a Stock
Appreciation Right ("SAR") evidenced by an agreement in such form as the
Committee shall from time to time approve. Any such SAR may be subject to
restrictions on the exercise thereof as may be set forth in the agreement
representing such SAR, which agreement shall comply with and be subject to the
following terms and conditions and any additional terms and conditions
established by the Committee that are consistent with the terms of the Plan.

                                      -3-

<PAGE>

     (b) Exercise. An SAR shall be exercised by the delivery to the Company of a
written notice which shall state that the holder thereof elects to exercise his
or her SAR as to the number of shares specified in the notice and which shall
further state what portion, if any, of the SAR exercise amount (hereinafter
defined) the holder thereof requests be paid to in cash and what portion, if
any, is to be paid in Common Stock of the Company. The Committee promptly shall
cause to be paid to such holder the SAR exercise amount either in cash, in
Common Stock of the Company, or any combination of cash and shares as the
Committee may determine. Such determination may be either in accordance with the
request made by the holder of the SAR or in the sole and absolute discretion of
the Committee. The SAR exercise amount is the excess of the fair market value of
one share of the Company's Common Stock on the date of exercise over the per
share exercise price in respect of which the SAR was granted, multiplied by the
number of shares as to which the SAR is exercised. For the purposes hereof, the
fair market value of the Company's shares of Common Stock shall be determined as
provided in Section 5 herein.

9.   Restricted Stock Awards.

     Awards of Common Stock subject to forfeiture and transfer restrictions may
be granted by the Committee. Any restricted stock award shall be evidenced by an
agreement in such form as the Committee shall from time to time approve, which
agreement shall comply with and be subject to the following terms and conditions
and any additional terms and conditions established by the Committee that are
consistent with the terms of the Plan:

     (a) Grant of Restricted Stock Awards. Each restricted stock award made
under the Plan shall be for such number of shares of Common Stock as shall be
determined by the Committee and set forth in the agreement containing the terms
of such restricted stock award. Such agreement shall set forth a period of time
during which the grantee must remain in the continuous employment of the Company
in order for the forfeiture and transfer restrictions to lapse. If the Committee
so determines, the restrictions may lapse during such restricted period in
installments with respect to specified portions of the shares covered by the
restricted stock award. The agreement may also, in the discretion of the
Committee, set forth performance or other conditions that will subject the
Common Stock to forfeiture and transfer restrictions. The Committee may, at its
discretion, waive all or any part of the restrictions applicable to any or all
outstanding restricted stock awards.

     (b) Delivery of Common Stock and Restrictions. At the time of a restricted
stock award, a certificate representing the number of shares of Common Stock
awarded thereunder shall be registered in the name of the grantee. Such
certificate shall be held by the Company or any custodian appointed by the
Company for the account of the grantee subject to the terms and conditions of
the Plan, and shall bear such a legend setting forth the restrictions imposed
thereon as the Committee, in its discretion, may determine. The grantee shall
have all rights of a shareholder with respect to the Common Stock, including the
right to receive dividends and the right to vote such shares, subject to the
following restrictions: (i) the grantee shall not be entitled to delivery of the
stock certificate until the expiration of the restricted period and the
fulfillment of any other restrictive conditions set forth in the restricted
stock agreement with respect to such Common Stock; (ii) none of the shares of
Common Stock may be sold, assigned, transferred, pledged, hypothecated or
otherwise encumbered or disposed of during such restricted period or until after
the fulfillment of any such other restrictive conditions; and (iii) except as
otherwise determined by the Committee, all of the Common Stock shall be
forfeited and all rights of the grantee to such Common Stock shall terminate,
without further obligation on the part of the Company, unless the grantee
remains in the continuous employment of the Company for the entire restricted
period in relation to which such shares of Common Stock were granted and unless
any other restrictive conditions relating to the restricted stock award are met.
Any Common Stock, any other securities of the Company and any other property
(except for cash dividends) distributed with respect to the Common Stock subject
to restricted stock awards shall be subject to the same restrictions, terms and
conditions as such restricted Common Stock.

     (c) Termination of Restrictions. At the end of the restricted period and
provided that any other restrictive conditions of the restricted stock award are
met, or at such earlier time as otherwise determined by the

                                      -4-

<PAGE>

Committee, all restrictions set forth in the agreement relating to the
restricted stock award or in the Plan shall lapse as to the restricted Common
Stock subject thereto, and a stock certificate for the appropriate number of
shares of Common Stock, free of the restrictions and the restricted stock
legend, shall be delivered to the grantee or his beneficiary or estate, as the
case may be.

10.  Performance Awards.

     The Committee is further authorized to grant performance awards
("Performance Award"). Subject to the terms of this Plan and any applicable
award agreement, Performance Awards granted under the Plan (i) may be
denominated or payable in cash, Common Stock (including, without limitation,
restricted stock), other securities, other awards, or other property and (ii)
shall confer on the holder thereof rights valued as determined by the Committee,
in its discretion, and payable to, or exercisable by, the holder of the
Performance Awards, in whole or in part, upon the achievement of such
performance goals during such performance periods as the Committee, in its
discretion, shall establish. Subject to the terms of this Plan and any
applicable award agreement, the performance goals to be achieved during any
performance period, the length of any performance period, the amount of any
Performance Awards granted, and the amount of any payment or transfer to be made
by the grantee and by the Company under any Performance Awards shall be
determined by the Committee.

11.  Income Tax Withholding and Tax Bonuses.

     (a) In order to comply with all applicable federal or state income tax laws
or regulations, the Company may take such action as it deems appropriate to
ensure that applicable federal or state payroll, withholding, income or other
taxes, which are the sole and absolute responsibility of an optionee or grantee
under the Plan, are withheld or collected from such optionee or grantee at the
required tax withholding rate. In order to assist an optionee or grantee in
paying all federal and state taxes to be withheld or collected upon exercise of
an option or award which does not qualify as an Incentive Stock Option
hereunder, the Committee, in its absolute discretion and subject to such
additional terms and conditions as it may adopt, shall permit the optionee or
grantee to satisfy such tax obligation by (i) electing to have the Company
withhold a portion of the shares otherwise to be delivered upon exercise of such
option or award with a fair market value, determined in accordance with Section
5 herein, equal to the required tax withholding or (ii) delivering to the
Company Common Stock other than the shares issuable upon exercise of such option
or award with a fair market value, determined in accordance with Section 5,
equal to the required tax withholding. The "required" tax withholding is the
employer's minimum statutory withholding based on minimum statutory withholding
rates for federal and state tax purposes, including employee payroll taxes, that
are applicable to an optionee's or grantee's taxable income generated upon
exercise of an option or award. Withholdings in excess of the required tax
withholding are not allowed.

     (b) The Committee shall have the authority, at the time of grant of an
option under the Plan or at any time thereafter, to approve tax bonuses to
designated optionees or grantees to be paid upon their exercise of options or
awards granted hereunder. The amount of any such payments shall be determined by
the Committee. The Committee shall have full authority in its absolute
discretion to determine the amount of any such tax bonus and the terms and
conditions affecting the vesting and payment thereafter.

12.  Additional Restrictions.

     The Committee shall have full and complete authority to determine whether
all or any part of the Common Stock of the Company acquired upon exercise of any
of the options or awards granted under the Plan shall be subject to restrictions
on the transferability thereof or any other restrictions affecting in any manner
the optionee's or grantee's rights with respect thereto, but any such
restriction shall be contained in the agreement relating to such options or
awards.

                                      -5-

<PAGE>

13.  Ten Percent Shareholder Rule.

     Notwithstanding any other provision in the Plan, if at the time an option
is otherwise to be granted pursuant to the Plan the optionee owns directly or
indirectly (within the meaning of Section 424(d) of the Code) Common Stock of
the Company possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or its parent or subsidiary
corporations, if any (within the meaning of Section 422(b)(6) of the Code), then
any Incentive Stock Option to be granted to such optionee pursuant to the Plan
shall satisfy the requirements of Section 422(c)(5) of the Code, and the option
price shall be not less than 110% of the fair market value of the Common Stock
of the Company determined as described herein, and such option by its terms
shall not be exercisable after the expiration of five (5) years from the date
such option is granted.

14.  Non-Transferability.

     No option may be sold, pledged, assigned, hypothecated, transferred, or
disposed of in any manner other than (i) by will or by the laws of descent or
distribution, or (ii) in the case of options that are not Incentive Stock
Options, to members of the optionee's immediate family or to one or more trusts
for the benefit of the optionee or members of his or her immediate family, and
the option may be exercised, during the lifetime of the Optionee, only by the
optionee or a permitted transferee.

15.  Dilution or Other Adjustments.

     If there shall be any change in the Common Stock through merger,
consolidation, reorganization, recapitalization, dividend in the form of stock
(of whatever amount), stock split or other change in the corporate structure,
appropriate adjustments in the Plan and outstanding options and awards shall be
made by the Committee. In the event of any such changes, adjustments shall
include, where appropriate, changes in the aggregate number of shares subject to
the Plan, the number of shares and the price per share subject to outstanding
options and awards and the amount payable upon exercise of outstanding awards,
in order to prevent dilution or enlargement of option or award rights.

16.  Amendment or Discontinuance of Plan.

     The Board of Directors may amend or discontinue the Plan at any time.
Subject to the provisions of Section 15 no amendment of the Plan, however, shall
without shareholder approval: (i) increase the maximum number of shares under
the Plan as provided in Section 2 herein, (ii) decrease the minimum price
provided in Section 5 herein, (iii) extend the maximum term under Section 6, or
(iv) modify the eligibility requirements for participation in the Plan. The
Board of Directors shall not alter or impair any option or award theretofore
granted under the Plan without the consent of the holder of the option.

17.  Time of Granting.

     Nothing contained in the Plan or in any resolution adopted or to be adopted
by the Board of Directors or by the shareholders of the Company, and no action
taken by the Committee or the Board of Directors (other than the execution and
delivery of an option or award agreement), shall constitute the granting of an
option or award hereunder.

18.  Effective Date and Termination of Plan.

     (a) The Plan was approved by the Board of Directors on June 29, 1990 and
shall be approved by the shareholders of the Company within twelve (12) months
thereof.

                                      -6-

<PAGE>

     (b) Unless the Plan shall have been discontinued as provided in Section 16
hereof, the Plan shall terminate June 29, 2005. No option or award may be
granted after such termination, but termination of the Plan shall not, without
the consent of the optionee or grantee, alter or impair any rights or
obligations under any option or award theretofore granted.

                                      -7-

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