Document:

EXHIBIT 10.8

                             PROUROCARE MEDICAL INC.

                               AMENDMENT NO. 1 TO

                                 2002 STOCK PLAN

      THIS AMENDMENT NO. 1 TO THE 2002 STOCK PLAN (the "Amendment"), dated as of
February 15, 2005, amends the 2002 Stock Plan (the "Plan") of ProUroCare Medical
Inc. (the "Company"), originally adopted by ProUroCare Inc., a Minnesota
corporation, and subsequently adopted by the Company after its acquisition of
ProUroCare Inc. The Company has adopted this Amendment to provide for expanded
means of exercising and transferring options granted hereunder. Except as
otherwise explicitly set forth herein, all provisions of the Plan shall remain
in full force and effect. Capitalized terms used in this Amendment without
definition shall have the meanings set forth in the Plan.

      NOW, THEREFORE, the Plan is amended as follows:

      1. Section 6.4 of the Plan is hereby amended to read in its entirety as
follows:

      6.4. Manner of Exercise. Subject to the conditions contained in this Plan
and in the agreement with the recipient evidencing such option, a stock option
may be exercised, in whole or in part, by giving written notice to the Company,
specifying the number of shares of Common Stock to be purchased and accompanied
by the full purchase price for such shares. The exercise price shall be payable:
(a) in United States dollars upon exercise of the option and may be paid by
cash, uncertified or certified check, or bank draft; (b) at the discretion of
the Committee, by delivery of shares of Common Stock already owned by the
participant in payment of all or any part of the exercise price, which shares
shall be valued for this purpose at the Fair Market Value of the Common Stock on
the date such option is exercised; or (c) at the discretion of the Committee, by
instructing the Company to withhold from the shares of Common Stock issuable
upon exercise of the stock option shares of Common Stock in payment of all or
any part of the exercise price and/or any related withholding-tax obligations,
which shares shall be valued for this purpose at the Fair Market Value or in
such other manner as may be authorized from time to time by the Committee. Any
shares of Common Stock delivered by a participant pursuant to clause (b) above,
must have been held by the participant for a period of not less than six (6)
months prior to the exercise of the option, unless otherwise determined by the
Committee. Prior to the issuance of shares of Common Stock upon the exercise of
a stock option, a participant shall have no rights as a stockholder with respect
to the shares of Common Stock issuable under such stock option. Except as
otherwise provided in the Plan, no adjustment will be made for dividends or
distributions declared as of a record date preceding the date on which a
participant becomes the holder of record of shares of Common Stock acquired upon
exercise of a stock option, except as the Committee may determine in its sole
discretion.

      2. This Amendment shall become effective as of February 15, 2005, the date
of its adoption by the Company's board of directors.

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      IN WITNESS WHEREOF, the Company has caused this Amendment to be executed
by the undersigned officer, as evidence of the adoption and approval hereof by
the Company's board of directors on February 15, 2005.

                                   PROUROCARE MEDICAL INC.

                                   /s/ Michael P. Grossman
                                   --------------------------------------------
                                   MICHAEL P. GROSSMAN, Chief Executive Officer

                                       2EXHIBIT 10.9

                             PROUROCARE MEDICAL INC.

                             2004 STOCK OPTION PLAN

      1.    Purpose.

The purpose of the 2004 Stock Option Plan (the "Plan") of ProUroCare Medical
Inc. (the "Company"), a Nevada corporation, is to increase shareholder value and
to advance the interests of the Company by furnishing a variety of economic
incentives (variously referred to hereinafter as the "Incentives") designed to
attract, retain and motivate employees, directors and consultants. Incentives
may consist of opportunities to purchase or receive shares of the Company's
common stock, $0.01 par value (the "Common Stock"), monetary payments, or both,
on terms and conditions determined under this Plan.

      2.    Administration.

            2.1 The Plan shall be administered by a committee of the Company's
      board of directors (the "Committee"). The Committee shall consist of not
      less than two directors of the Company who shall be appointed from time to
      time by the Company's board of directors. Each member of the Committee
      shall qualify both as a "non-employee director" within the meaning of Rule
      16b-3 of the Securities Exchange Act of 1934, as amended (together with
      the rules and regulations promulgated thereunder, the "Exchange Act"), and
      as an "outside director" as defined in Section 162(m) of the Internal
      Revenue Code of 1986, as amended (the "Code"). The Committee shall have
      complete discretion and authority to determine all provisions of all
      Incentives awarded under the Plan (consistent with the terms of the Plan),
      interpret the Plan, and make any other determination which it believes
      necessary and advisable for the proper administration of the Plan. The
      Committee's decisions and matters relating to the Plan shall be final and
      conclusive for the Company and its participants. No member of the
      Committee will be liable for any action or determination made in good
      faith with respect to the Plan or any Incentives granted under the Plan.
      The Committee will also have the authority under the Plan to amend or
      modify the terms of any outstanding Incentives in any manner; provided,
      however, that any such amended or modified terms are permitted by the Plan
      as then in effect, and any recipient of an Incentive adversely affected by
      such amended or modified terms has consented to such amendment or
      modification. No amendment or modification to an Incentive, however,
      whether pursuant to this Section 2 or any other provisions of the Plan,
      will be deemed to be a re-grant of such Incentive for purposes of this
      Plan. If at any time there is no Committee, then for purposes of the Plan
      the term "Committee" shall mean the Company's board of directors.

            2.2 In the event of (i) any reorganization, merger, consolidation,
      recapitalization, liquidation, reclassification, stock dividend, stock
      split, combination of shares, rights offering, extraordinary dividend or
      divestiture, including a spinoff, or any other similar change in corporate
      structure or shares, (ii) any purchase, acquisition, sale or disposition
      of a significant amount of assets or a significant business, (iii) any
      change in accounting principles or practices, or (iv) any other similar
      change, in each case with respect to the Company or any other entity whose
      performance is relevant to the grant or vesting of an Incentive, the
      Committee (or, if the Company is not the surviving corporation in any such
      transaction, the board of directors of the surviving corporation) may,
      without the consent of any affected recipient of an Incentive, amend or

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      modify the vesting criteria of any outstanding Incentive based, in whole
      or in part, on the financial performance of the Company (or any subsidiary
      or division thereof) or such other entity so as equitably to reflect such
      event, with the desired result that the criteria for evaluating such
      financial performance of the Company or such other entity will be
      substantially the same (in the sole discretion of the Committee or the
      board of directors of the surviving corporation) following such event as
      prior to such event; provided, however, that the amended or modified terms
      are permitted by the Plan as then in effect.

      3.    Eligible Participants.

Employees of the Company or its subsidiaries, including officers and employees
of the Company or its subsidiaries), directors and consultants, advisors or
other independent contractors who provide services to the Company or its
subsidiaries, including members of any advisory board, shall become eligible to
receive Incentives under the Plan when designated by the Committee. Participants
may be designated individually or by groups or categories (for example, by pay
grade) as the Committee deems appropriate. Participation by Company officers or
its subsidiaries and any performance objectives relating to such officers must
be approved by the Committee. Participation by others and any performance
objectives relating to others may be approved by groups or categories (for
example, by pay grade) and authority to designate participants who are not
officers and to set or modify such performance objectives may be delegated.

      4.    Types of Incentives.

Incentives under the Plan may be granted in any combination of the following
forms: (a) incentive stock options and non-statutory stock options under Section
6; (b) stock-appreciation rights ("SARs") under Section 7; (c) stock awards
under Section 8; (d) restricted stock under Section 8; and (e) performance
shares under Section 9.

      5.    Shares Subject to the Plan.

            5.1 Subject to adjustment as provided in Section 11.6, the number of
      shares of Common Stock which may be issued under the Plan shall not exceed
      1,500,000 shares of Common Stock. Shares of Common Stock issued under the
      Plan or that are currently subject to outstanding Incentives will be
      applied to reduce the maximum number of shares of Common Stock remaining
      available for issuance under the Plan.

            5.2 To the extent that cash in lieu of shares of Common Stock is
      delivered upon the exercise of an SAR pursuant to Section 7.4, the Company
      shall be deemed, for purposes of applying the limitation on the number of
      shares, to have issued the greater of the number of shares of Common Stock
      which it was entitled to issue upon such exercise or upon the exercise of
      any related option. In the event that a stock option or SAR granted
      hereunder expires or is terminated or canceled unexercised or unvested as
      to any shares of Common Stock, such shares may again be issued under the
      Plan either pursuant to stock options, SARs or otherwise. In the event
      that shares of Common Stock are issued hereunder as restricted stock or
      pursuant to a stock award and thereafter are forfeited or reacquired by
      the Company pursuant to rights reserved upon issuance thereof, such
      forfeited and reacquired shares may again be issued under the Plan, either
      as restricted stock, pursuant to stock awards or otherwise. The Committee
      may also determine to cancel, and agree to the cancellation of, stock
      options in order to make a participant eligible for the grant of a stock
      option at a lower price than the option to be canceled.

      6.    Stock Options.

A stock option is a right to purchase shares of Common Stock from the Company.
The Committee may designate whether an option is to be considered an incentive

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stock option or a non-statutory stock option. To the extent that any incentive
stock option granted under the Plan ceases for any reason to qualify as an
"incentive stock option" for purposes of Section 422 of the Code, such incentive
stock option will continue to be outstanding for purposes of the Plan but will
thereafter be deemed to be a non-statutory stock option. Each stock option
granted by the Committee under this Plan shall be subject to the following terms
and conditions:

            6.1 Price. The option price per share shall be determined by the
      Committee, subject to adjustment under Section 11.6.

            6.2 Number. The number of shares of Common Stock subject to the
      option shall be determined by the Committee, subject to adjustment as
      provided in Section 11.6. The number of shares of Common Stock subject to
      a stock option shall be reduced in the same proportion that the holder
      thereof exercises a SAR if any SAR is granted in conjunction with or
      related to the stock option. No individual may receive options to purchase
      more than 1,000,000 shares in any year.

            6.3 Term and Time for Exercise. Subject to earlier termination as
      provided in Section 11.4, the term of each stock option shall be
      determined by the Committee but shall not exceed ten (10) years and one
      day from the date of grant. Each stock option shall become exercisable at
      such time or times during its term as shall be determined by the Committee
      at the time of grant. The Committee may in its discretion accelerate the
      exercisability of any stock option. Subject to the foregoing and with the
      approval of the Committee, all or any part of the shares of Common Stock
      with respect to which the right to purchase has accrued may be purchased
      by the Company at the time of such accrual or at any time or times
      thereafter during the term of the option.

            6.4 Manner of Exercise. Subject to the conditions contained in this
      Plan and in the agreement with the recipient evidencing such option, a
      stock option may be exercised, in whole or in part, by giving written
      notice to the Company, specifying the number of shares of Common Stock to
      be purchased and accompanied by the full purchase price for such shares.
      The exercise price shall be payable (a) in United States dollars upon
      exercise of the option and may be paid by cash; uncertified or certified
      check; or bank draft; (b) at the discretion of the Committee, by delivery
      of shares of Common Stock already owned by the participant in payment of
      all or any part of the exercise price, which shares shall be valued for
      this purpose at the Fair Market Value (as defined in Section 11.12 below)
      on the date such option is exercised; or (c) at the discretion of the
      Committee, by instructing the Company to withhold from the shares of
      Common Stock issuable upon exercise of the stock option shares of Common
      Stock in payment of all or any part of the exercise price and/or any
      related withholding-tax obligations, which shares shall be valued for this
      purpose at the Fair Market Value or in such other manner as may be
      authorized from time to time by the Committee. Any shares of Common Stock
      delivered by a participant pursuant to clause (b) above must have been
      held by the participant for a period of not less than six (6) months prior
      to the exercise of the option, unless otherwise determined by the
      Committee. Prior to the issuance of shares of Common Stock upon the
      exercise of a stock option, a participant shall have no rights as a
      shareholder with respect to shares of Common Stock issuable under such
      stock option. Except as otherwise provided in the Plan, no adjustment will
      be made for dividends or distributions declared as of a record date
      preceding the date on which a participant becomes the holder of record of
      shares of Common Stock acquired upon exercise of a stock option, except as
      the Committee may determine in its sole discretion.

            6.5 Incentive Stock Options. Notwithstanding anything in the Plan to
      the contrary, the following additional provisions shall apply to the grant
      of stock options which are intended to qualify as incentive stock options
      (as such term is defined in Section 422 of the Code):

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                  (a) The aggregate Fair Market Value (determined as of the time
            the option is granted) of the shares of Common Stock with respect to
            which incentive stock options are exercisable for the first time by
            any participant during any calendar year (under the Plan and any
            other incentive stock-option plans of the Company or any subsidiary
            or parent corporation of the Company) shall not exceed $100,000. The
            determination will be made by taking incentive stock options into
            account in the order in which they were granted.

                  (b) Any certificate for an incentive stock option authorized
            under the Plan shall contain such other provisions as the Committee
            shall deem advisable, but shall in all events be consistent with and
            contain all provisions required in order to qualify the options as
            incentive stock options.

                  (c) All incentive stock options must be granted within ten
            (10) years from the earlier of the date on which this Plan was
            adopted by board of directors or the date this Plan was approved by
            the Company's shareholders.

                  (d) Unless sooner exercised, all incentive stock options shall
            expire no later than ten (10) years after the date of grant. No
            incentive stock option may be exercisable after ten (10) years from
            its date of grant (or five (5) years from its date of grant if, at
            the time of grant, the participant owns, directly or indirectly,
            more than ten percent (10%) of the total combined voting power of
            all classes of stock of the Company or any parent or subsidiary
            corporation of the Company).

                  (e) The exercise price for a share of Common Stock under an
            incentive stock options shall be not less than one hundred percent
            (100%) of the Fair Market Value of one share of Common Stock on the
            date of grant; provided, however, that the exercise price shall be
            one hundred ten percent (110%) of the Fair Market Value if, at the
            time the incentive stock option is granted, the participant owns,
            directly or indirectly, more than ten percent (10%) of the total
            combined voting power of all classes of stock of the Company or any
            parent or subsidiary corporation of the Company.

      7.    Stock-Appreciation Rights.

An SAR is a right to receive, without payment to the Company, a number of shares
of Common Stock, cash, or any combination thereof, the amount of which is
determined pursuant to the formula set forth in Section 7.4. An SAR may be
granted (a) with respect to any stock option granted under this Plan, either
concurrently with the grant of such stock option or at such later time as
determined by the Committee (as to all or any portion of the shares of Common
Stock subject to the stock option), or (b) alone, without reference to any
related stock option. Each SAR granted by the Committee under this Plan shall be
subject to the following terms and conditions:

            7.1 Number; Exercise Price. Each SAR granted to any participant
      shall relate to such number of shares of Common Stock as shall be
      determined by the Committee, subject to adjustment as provided in Section
      11.6. In the case of an SAR granted with respect to a stock option, the
      number of shares of Common Stock to which the SAR pertains shall be
      reduced in the same proportion that the holder of the option exercises the
      related stock option. The exercise price of an SAR will be determined by
      the Committee, in its discretion, at the date of grant but may not be less
      than one hundred percent (100%) of the Fair Market Value of one share of
      Common Stock on the date of grant.

            7.2 Duration. Subject to earlier termination as provided in Section
      11.4, the term of each SAR shall be determined by the Committee but shall

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      not exceed ten (10) years and one day from the date of grant. Unless
      otherwise provided by the Committee, each SAR shall become exercisable at
      such time or times, to such extent and upon such conditions as the stock
      option, if any, to which it relates is exercisable. The Committee may in
      its discretion accelerate the exercisability of any SAR.

            7.3 Exercise. An SAR may be exercised, in whole or in part, by
      giving written notice to the Company, specifying the number of SARs which
      the holder wishes to exercise. Upon receipt of such written notice, the
      Company shall, within ninety (90) days thereafter, deliver to the
      exercising holder certificates for the shares of Common Stock or cash, or
      both, as determined by the Committee, to which the holder is entitled
      pursuant to Section 7.4.

            7.4 Payment. Subject to the right of the Committee to deliver cash
      in lieu of shares of Common Stock (which, as it pertains to Company
      officers and directors, shall comply with all requirements of the Exchange
      Act), the number of shares of Common Stock which shall be issuable upon
      the exercise of an SAR shall be determined by dividing:

                  (a) the number of shares of Common Stock as to which the SAR
            is exercised multiplied by the amount of the appreciation in such
            shares (i.e., the amount by which the Fair Market Value of the
            shares of Common Stock subject to the SAR on the exercise date
            exceeds (1) in the case of an SAR related to a stock option, the
            exercise price of the shares of Common Stock under the stock option
            or (2) in the case of an SAR granted alone and without reference to
            a related stock option, an amount which shall be determined by the
            Committee at the time of grant, subject to adjustment under Section
            11.6); by

                  (b) the Fair Market Value of a share of Common Stock on the
            exercise date.

            In lieu of issuing shares of Common Stock upon the exercise of a
      SAR, the Committee may elect to pay the holder of the SAR cash equal to
      the Fair Market Value on the exercise date of any or all of the shares
      which would otherwise be issuable. No fractional shares of Common Stock
      shall be issued upon the exercise of an SAR; instead, the holder of the
      SAR shall be entitled to receive a cash adjustment equal to the same
      fraction of the Fair Market Value of a share of Common Stock on the
      exercise date or to purchase the portion necessary to make a whole share
      at its Fair Market Value on the date of exercise.

      8.    Stock Awards and Restricted Stock.

A stock award consists of the transfer by the Company to a participant of shares
of Common Stock, without other payment therefor, as additional compensation for
services rendered to the Company. The participant receiving a stock award will
have all voting, dividend, liquidation and other rights with respect to the
shares of Common Stock issued to a participant as a stock award under this
Section 8 upon the participant becoming the holder of record of such shares. A
share of restricted stock consists of shares of Common Stock which are sold or
transferred by the Company to a participant at a price determined by the
Committee (which price shall be at least equal to the minimum price required by
applicable law for the issuance of a share of Common Stock) and subject to
restrictions on their sale or other transfer by the participant, which
restrictions and conditions may be determined by the Committee as long as such
restrictions and conditions are not inconsistent with the terms of the Plan. The
transfer of Common Stock pursuant to stock awards and the transfer and sale of
restricted stock shall be subject to the following terms and conditions:

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            8.1 Number of Shares. The number of shares to be transferred or sold
      by the Company to a participant pursuant to a stock award or as restricted
      stock shall be determined by the Committee.

            8.2 Sale Price. The Committee shall determine the price, if any, at
      which shares of restricted stock shall be sold or granted to a
      participant, which may vary from time to time and among participants and
      which may be below the Fair Market Value of such shares of Common Stock at
      the date of sale.

            8.3 Restrictions. All shares of restricted stock transferred or sold
      hereunder shall be subject to such restrictions as the Committee may
      determine, including without limitation any or all of the following:

                  (a) a prohibition against the sale, transfer, pledge or other
            encumbrance of the shares of restricted stock, such prohibition to
            lapse at such time or times as the Committee shall determine
            (whether in annual or more frequent installments, at the time of the
            death, disability or retirement of the holder of such shares, or
            otherwise);

                  (b) a requirement that the holder of shares of restricted
            stock forfeit, or (in the case of shares sold to a participant)
            resell back to the Company at his or her cost, all or a part of such
            shares in the event of termination of his or her employment or
            consulting engagement during any period in which such shares are
            subject to restrictions; or

                  (c) such other conditions or restrictions as the Committee may
            deem advisable.

            In order to enforce the restrictions imposed by the Committee
      pursuant to Section 8.3, the participant receiving restricted stock shall
      enter into an agreement with the Company setting forth the conditions of
      the grant. Shares of restricted stock shall be registered in the name of
      the participant and deposited, together with a stock power endorsed in
      blank, with the Company unless otherwise determined by the Committee. Each
      such certificate shall bear a legend in substantially the following form:

                  THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF
                  COMMON STOCK REPRESENTED BY IT ARE SUBJECT TO THE TERMS AND
                  CONDITIONS (INCLUDING CONDITIONS OF FORFEITURE) CONTAINED IN
                  THE 2004 STOCK OPTION PLAN OF PROUROCARE MEDICAL INC., (THE
                  "COMPANY"), AND AN AGREEMENT ENTERED INTO BETWEEN THE
                  REGISTERED OWNER AND THE COMPANY. A COPY OF THE 2004 STOCK
                  OPTION PLAN AND THE AGREEMENT IS AVAILABLE FROM THE COMPANY
                  UPON REQUEST.

            8.4 End of Restrictions. Subject to Section 11.5, at the end of any
      time period during which the shares of restricted stock are subject to
      forfeiture and restrictions on transfer, such shares will be delivered
      free of all restrictions to the participant or to the participant's legal
      representative, beneficiary or heir.

            8.5 Shareholder. Subject to the terms and conditions of the Plan,
      each participant receiving restricted stock shall have all the rights of a
      shareholder with respect to shares of stock during any period in which
      such shares are subject to forfeiture and restrictions on transfer,

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      including without limitation the right to vote such shares. Dividends paid
      in cash or property other than Common Stock with respect to shares of
      restricted stock shall be paid to the participant currently. Unless the
      Committee determines otherwise in its sole discretion, any dividends or
      distributions (including regular quarterly cash dividends) paid with
      respect to shares of Common Stock subject to the restrictions set forth
      above will be subject to the same restrictions as the shares to which such
      dividends or distributions relate. In the event the Committee determines
      not to pay dividends or distributions currently, the Committee will
      determine in its sole discretion whether any interest will be paid on such
      dividends or distributions. In addition, the Committee in its sole
      discretion may require such dividends and distributions to be reinvested
      (and in such case the participant consents to such reinvestment) in shares
      of Common Stock that will be subject to the same restrictions as the
      shares to which such dividends or distributions relate.

      9.    Performance Shares.

A performance share consists of an award which shall be paid in shares of Common
Stock, as described below. The grant of a performance share shall be subject to
such terms and conditions as the Committee deems appropriate, including the
following:

            9.1 Performance Objectives. Each performance share will be subject
      to performance objectives respecting the Company or one of its operating
      units to be achieved by the participant before the end of a specified
      period. The Committee shall determine the terms and conditions of each
      grant and the number of performance shares granted. If the performance
      objectives are achieved, the participant will be paid in shares of Common
      Stock as determined by the Committee. If such objectives are not met, each
      grant of performance shares may provide for lesser payments in accordance
      with formulae established in the award.

            9.2 Not Shareholder. The grant of performance shares to a
      participant shall not create any rights in such participant as a
      shareholder of the Company, until the payment of shares of Common Stock
      with respect to an award.

            9.3 No Adjustments. No adjustment shall be made in performance
      shares granted on account of cash dividends which may be paid or other
      rights which may be issued to the holders of Common Stock prior to the end
      of any period for which performance objectives were established.

            9.4 Expiration of Performance Share. If any participant's employment
      or consulting engagement with the Company is terminated for any reason
      other than normal retirement, death or disability prior to the achievement
      of the participant's stated performance objectives, all the participant's
      rights on the performance shares shall expire and terminate unless
      otherwise determined by the Committee. In the event of termination of
      employment or consulting by reason of death, disability, or normal
      retirement, the Committee, in its own discretion may determine what
      portions, if any, of the performance shares should be paid to the
      participant.

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      10.   Change of Control.

            10.1 Change in Control. For purposes of this Section 10, a "Change
      in Control" of the Company will mean the following:

                  (a) the sale, lease, exchange or other transfer, directly or
            indirectly, of substantially all of the assets of the Company (in
            one transaction or in a series of related transactions) to a person
            or entity not controlled by the Company;

                  (b) the approval by the Company's shareholders of any plan or
            proposal for the liquidation or dissolution of the Company;

                  (c) upon any person becoming, after the effective date of the
            Plan, a "beneficial owner" (as defined in Rule 13d-3 of the Exchange
            Act) of (i) 20% or more, but not 50% or more, of the combined voting
            power of the Company's outstanding securities ordinarily having the
            right to vote at elections of directors, unless the transaction
            resulting in such ownership has been approved in advance by the
            Continuing Directors (as defined below), or (ii) 50% or more of the
            combined voting power of the Company's outstanding securities
            ordinarily having the right to vote at elections of directors
            (regardless of any approval by the Continuing Directors); provided,
            however, that a financing transaction involving a traditional
            institution or venture-capital firm shall be excluded from this
            definition;

                  (d) a merger or consolidation to which the Company is a party,
            but only if the Company's shareholders immediately prior to
            effective date of such merger or consolidation have "beneficial
            ownership" (as defined in Rule 13d-3 of the Exchange Act),
            immediately following the effective date of such merger or
            consolidation, of securities of the surviving corporation
            representing (i) 50% or more, but less than 80%, of the combined
            voting power of the surviving corporation's then-outstanding
            securities ordinarily having the right to vote at elections of
            directors, unless such merger or consolidation has been approved in
            advance by the Continuing Directors, or (ii) less than 50% of the
            combined voting power of the surviving corporation's
            then-outstanding securities ordinarily having the right to vote at
            elections of directors (regardless of any approval by the Continuing
            Directors); or

                  (e) after the date the Company's securities are first sold in
            a registered public offering, the Continuing Directors cease for any
            reason to constitute at least a majority of the Board.

            10.2 Continuing Directors. For purposes of this Section 10, the
      "Continuing Directors" of the Company will mean any individuals who are
      members of the Company's board of directors on the effective date of the
      Plan and any individual who subsequently becomes a director whose election
      or nomination for election by the Company's shareholders was approved by a
      vote of at least a majority of the Continuing Directors (either by
      specific vote or by approval of the Company's proxy statement in which
      such individual is named as a nominee for director without objection to
      such nomination).

            10.3 Acceleration of Incentives. Without limiting the authority of
      the Committee under the Plan, if a Change in Control of the Company occurs
      whereby the acquiring entity or successor to the Company does not assume

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      the Incentives or replace them with substantially equivalent incentive
      awards, then, unless otherwise provided by the Committee in its sole
      discretion in the agreement evidencing an Incentive at the time of grant,
      as of the date of the Change of Control: (a) all outstanding options and
      SARs will vest and will become immediately exercisable in full and will
      remain exercisable for the remainder of their respective terms, regardless
      of whether the participant to whom such options or SARs have been granted
      remains in the employ or service of the Company or any subsidiary of the
      Company or any acquiring entity or successor to the Company; (b) the
      restrictions on all shares of restricted stock awards shall lapse
      immediately; and (c) all performance shares shall be deemed to be met and
      payment made immediately.

            10.4 Cash Payment for Options. If a Change in Control of the Company
      occurs, then the Committee, if approved by the Committee in its sole
      discretion either in an agreement evidencing an option at the time of
      grant or at any time after the grant of an option, and without the consent
      of any participant affected thereby, may determine that:

                  (a) some or all participants holding outstanding stock options
            will receive, with respect to some or all of the shares of Common
            Stock subject to such options, as of the effective date of any such
            Change in Control of the Company, cash in an amount equal to the
            excess of the Fair Market Value of such shares immediately prior to
            the effective date of such Change in Control of the Company over the
            exercise price per share of such options; and

                  (b) any options as to which, as of the effective date of any
            such Change in Control, the Fair Market Value of the shares of
            Common Stock subject to such options is less than or equal to the
            exercise price per share of such options, shall terminate as of the
            effective date of any such Change in Control.

            If the Committee makes a determination as set forth in subparagraph
      (a) of this Section 10.4, then, as of the effective date of any such
      Change in Control of the Company, such options will terminate as to such
      shares and the participants formerly holding such options will only have
      the right to receive such cash payment(s). If the Committee makes a
      determination as set forth in subparagraph (b) of this Section 10.4, then,
      as of the effective date of any such Change in Control of the Company,
      such options will terminate, become void and expire as to all unexercised
      shares of Common Stock subject to such options on such date, and the
      participants formerly holding such options will have no further rights
      with respect to such options.

      11. General.

            11.1 Effective Date. The Plan will become effective upon approval by
      the Company's board of directors.

            11.2 Duration. The Plan shall remain in effect until all Incentives
      granted under the Plan have either been satisfied by the issuance of
      shares of Common Stock or the payment of cash or have been terminated
      under the terms of the Plan and all restrictions imposed on shares of
      Common Stock in connection with their issuance under the Plan have lapsed.
      No Incentives may be granted under the Plan after the tenth anniversary of
      the date the Plan is approved by the shareholders of the Company.

            11.3 Non-Transferability of Incentives. No stock option, SAR,
      restricted stock or performance award may be transferred, pledged or
      assigned by the holder thereof (except, in the event of the holder's
      death, by will or the laws of descent and distribution to the limited

                                       9
<PAGE>

      extent provided in the Plan or the Incentive), or pursuant to a qualified
      domestic relations order as defined by the Code or Title I of the Employee
      Retirement Income Security Act, or the rules thereunder, and the Company
      shall not be required to recognize any attempted assignment of such rights
      by any participant. Notwithstanding the preceding sentence, stock options
      may be transferred by the holder thereof to such holder's spouse,
      children, grandchildren or parents (collectively, the "Family Members"),
      to trusts for the benefit of Family Members, to partnerships or limited
      liability companies in which Family Members are the only partners or
      shareholders, or to entities exempt from federal income taxation pursuant
      to Section 501(c)(3) of the Code. During a participant's lifetime, a stock
      option may be exercised only by him or her, by his or her guardian or
      legal representative or by the transferees permitted by the preceding
      sentence.

            11.4 Effect of Termination or Death. In the event that a participant
      ceases to be an employee of or consultant to the Company, or the
      participant's other service with the Company is terminated, for any
      reason, including death, any Incentives may be exercised or shall expire
      at such times as may be determined by the Committee in its sole discretion
      in the agreement evidencing an Incentive. Notwithstanding the other
      provisions of this Section 11.4, upon a participant's termination of
      employment or other service with the Company and all subsidiaries, the
      Committee may, in its sole discretion (which may be exercised at any time
      on or after the date of grant, including following such termination),
      cause options and SARs (or any part thereof) then held by such participant
      to become or continue to become exercisable and/or remain exercisable
      following such termination of employment or service and restricted stock
      awards, performance shares and stock awards then held by such participant
      to vest and/or continue to vest or become free of transfer restrictions,
      as the case may be, following such termination of employment or service,
      in each case in the manner determined by the Committee; provided, however,
      that no Incentive may remain exercisable or continue to vest beyond its
      expiration date. Any incentive stock option that remains unexercised more
      than one (1) year following termination of employment by reason of death
      or disability or more than three (3) months following termination for any
      reason other than death or disability will thereafter be deemed to be a
      non-statutory stock option.

            11.5 Additional Conditions. Notwithstanding anything in this Plan to
      the contrary: (a) the Company may, if it shall determine it necessary or
      desirable for any reason, at the time of award of any Incentive or the
      issuance of any shares of Common Stock pursuant to any Incentive, require
      the recipient of the Incentive, as a condition to the receipt thereof or
      to the receipt of shares of Common Stock issued pursuant thereto, to
      deliver to the Company a written representation of present intention to
      acquire the Incentive or the shares of Common Stock issued pursuant
      thereto for his or her own account for investment and not for
      distribution; and (b) if at any time the Company further determines, in
      its sole discretion, that the listing, registration or qualification (or
      any updating of any such document) of any Incentive or the shares of
      Common Stock issuable pursuant thereto is necessary on any securities
      exchange or under any federal or state securities law, or that the consent
      or approval of any governmental regulatory body is necessary or desirable
      as a condition of, or in connection with the award of any Incentive, the
      issuance of shares of Common Stock pursuant thereto, or the removal of any
      restrictions imposed on such shares, such Incentive shall not be awarded
      or such shares of Common Stock shall not be issued or such restrictions
      shall not be removed, as the case may be, in whole or in part, unless such
      listing, registration, qualification, consent or approval shall have been
      effected or obtained free of any conditions unacceptable to the Company.
      Notwithstanding any other provision of the Plan or any agreements entered
      into pursuant to the Plan, the Company will not be required to issue any
      shares of Common Stock under this Plan, and a participant may not sell,
      assign, transfer or otherwise dispose of shares of Common Stock issued
      pursuant to any Incentives granted under the Plan, unless (a) there is in
      effect with respect to such shares a registration statement under the
      Securities Act of 1933, as amended (the "Securities Act"), and any
      applicable state or foreign securities laws or an exemption from such
      registration under the Securities Act and applicable state or foreign

                                       10
<PAGE>

      securities laws, and (b) there has been obtained any other consent,
      approval or permit from any other regulatory body which the Committee, in
      its sole discretion, deems necessary or advisable. The Company may
      condition such issuance, sale or transfer upon the receipt of any
      representations or agreements from the parties involved, and the placement
      of any legends on certificates representing shares of Common Stock, as may
      be deemed necessary or advisable by the Company in order to comply with
      such securities law or other restrictions.

            11.6 Adjustment. In the event of any merger, consolidation or
      reorganization of the Company with any other corporation or corporations,
      there shall be substituted for each of the shares of Common Stock then
      subject to the Plan, including shares subject to restrictions, options or
      achievement-of-performance share objectives, the number and kind of shares
      of stock or other securities to which the holders of the shares of Common
      Stock will be entitled pursuant to the transaction. In the event of any
      recapitalization, reclassification, stock dividend, stock split,
      combination of shares or other similar change in the corporate structure
      of the Company or shares of the Company, the exercise price of an
      outstanding Incentive and the number of shares of Common Stock then
      subject to the Plan, including shares subject to restrictions, options or
      achievements of performance shares, shall be adjusted in proportion to the
      change in outstanding shares of Common Stock in order to prevent dilution
      or enlargement of the rights of the participants. In the event of any such
      adjustments, the purchase price of any option, the performance objectives
      of any Incentive, and the shares of Common Stock issuable pursuant to any
      Incentive shall be adjusted as and to the extent appropriate, in the
      discretion of the Committee, to provide participants with the same
      relative rights before and after such adjustment.

            11.7 Incentive Plans and Agreements. Except in the case of stock
      awards, the terms of each Incentive shall be stated in a plan or agreement
      approved by the Committee. The Committee may also determine to enter into
      agreements with holders of options to reclassify or convert certain
      outstanding options, within the terms of the Plan, as Incentive Stock
      Options or as non-statutory stock options and in order to eliminate SARs
      with respect to all or part of such options and any other previously
      issued options.

            11.8 Withholding.(a) The Company shall have the right to (i)
      withhold and deduct from any payments made under the Plan or from future
      wages of the participant (or from other amounts that may be due and owing
      to the participant from the Company or a subsidiary of the Company), or
      make other arrangements for the collection of, all legally required
      amounts necessary to satisfy any and all foreign, federal, state and local
      withholding and employment-related tax requirements attributable to an
      Incentive, or (ii) require the participant promptly to remit the amount of
      such withholding to the Company before taking any action, including
      issuing any shares of Common Stock, with respect to an Incentive. At any
      time when a participant is required to pay to the Company an amount
      required to be withheld under applicable income tax laws in connection
      with a distribution of Common Stock or upon exercise of an option or SAR,
      the participant may satisfy this obligation in whole or in part by
      electing (the "Election") to have the Company withhold from the
      distribution shares of Common Stock having a value up to the amount
      required to be withheld. The value of the shares to be withheld shall be
      based on the Fair Market Value of the Common Stock on the date that the
      amount of tax to be withheld shall be determined (the "Tax Date").

                  (b) The Committee may disapprove of any Election, may suspend
            or terminate the right to make Elections, or may provide with
            respect to any Incentive that the right to make Elections shall not

                                       11
<PAGE>

            apply to such Incentive. An Election is irrevocable.

                  (c) If a participant is a Company officer or director within
            the meaning of Section 16 of the Exchange Act, then an Election is
            subject to the following additional restrictions: (a) no Election
            shall be effective for a Tax Date which occurs within six (6) months
            of the grant or exercise of the award, except that this limitation
            shall not apply in the event death or disability of the participant
            occurs prior to the expiration of the six-month period; and (b) the
            Election must be made either six months prior to the Tax Date or
            must be made during a period beginning on the third business day
            following the date of release for publication of the Company's
            quarterly or annual summary statements of sales and earnings and
            ending on the twelfth business day following such date.

            11.9 No Continued Employment, Engagement or Right to Corporate
      Assets. No participant under the Plan shall have any right, because of his
      or her participation, to continue in the employ of the Company for any
      period of time or to any right to continue his or her present or any other
      rate of compensation. Nothing contained in the Plan shall be construed as
      giving an employee, a consultant, such persons' beneficiaries or any other
      person any equity or interests of any kind in the assets of the Company or
      creating a trust of any kind or a fiduciary relationship of any kind
      between the Company and any such person.

            11.10 Deferral Permitted. Payment of cash or distribution of any
      shares of Common Stock to which a participant is entitled under any
      Incentive shall be made as provided in the Incentive. Payment may be
      deferred at the option of the participant if provided in the Incentive.

            11.11 Amendment of the Plan. The Board may amend, suspend or
      discontinue the Plan at any time; provided, however, that no amendments to
      the Plan will be effective without approval of the shareholders of the
      Company if shareholder approval of the amendment is then required pursuant
      to Section 422 of the Code or the rules of any stock exchange or Nasdaq or
      similar regulatory body. No termination, suspension or amendment of the
      Plan may adversely affect any outstanding Incentive without the consent of
      the affected participant; provided, however, that this sentence will not
      impair the right of the Committee to take whatever action it deems
      appropriate under Section 11.6 of the Plan.

            11.12 Definition of Fair Market Value. For purposes of this Plan,
      the "Fair Market Value" of a share of Common Stock at a specified date
      shall, unless otherwise expressly provided in this Plan, be the amount
      which the Committee or the Company's board of directors determines in good
      faith in the exercise of its reasonable discretion to be one hundred
      percent (100%) of the fair market value of such a share as of the date in
      question; provided, however, that notwithstanding the foregoing, if such
      shares are listed on a U.S. securities exchange or are quoted on the
      Nasdaq National Market System, Nasdaq SmallCap Stock Market ("Nasdaq"), or
      the Over-The-Counter Bulletin Board ("OTCBB"), then Fair Market Value
      shall be determined by reference to the last sale price of a share of
      Common Stock on such U.S. securities exchange or Nasdaq, or the average of
      the bid and ask price on the OTCBB, on the applicable date. If such U.S.
      securities exchange or Nasdaq is closed for trading on such date, or if
      the Common Stock does not trade on such date, then the last sale price
      used shall be the one on the date the Common Stock last traded on such
      U.S. securities exchange or Nasdaq.

            11.13 Breach of Confidentiality, Assignment of Inventions, or
      Non-Compete Agreements. Notwithstanding anything in the Plan to the
      contrary, in the event that a participant materially breaches the terms of
      any confidentiality, assignment-of-inventions, or noncompete agreement
      entered into with the Company or any parent or subsidiary of the Company,
      whether such breach occurs before or after termination of such
      participant's employment or other service with the Company or any

                                       12
<PAGE>

      subsidiary, the Committee in its sole discretion may immediately terminate
      all rights of the participant under the Plan and any agreements evidencing
      an Incentive then held by the participant without notice of any kind.

            11.14 Governing Law. The validity, construction, interpretation,
      administration and effect of the Plan and any rules, regulations and
      actions relating to the Plan will be governed by and construed exclusively
      in accordance with the laws of the State of [Minnesota], notwithstanding
      the conflicts-of-law principles of Minnesota or any other jurisdiction.

            11.15 Successors and Assigns. The Plan will be binding upon and
      inure to the benefit of the successors and permitted assigns of the
      Company and the participants in the Plan.

                                       13

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