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EXHIBIT 10.1

CABG MEDICAL, INC.

2000 LONG-TERM INCENTIVE PLAN

ARTICLE I - INTRODUCTION

	1.01	 	History. Effective as of May 26, 2000, the Board and shareholders of the
Corporation adopted the CABG Medical, Inc. 2000 Long-Term Incentive Plan.
	 
	1.02	 	Purpose. The primary purpose of the 2000 Long-Term Incentive Plan (the
Plan) is to advance the interests of CABG Medical, Inc. and its
shareholders by affording officers, employees, directors, consultants and
advisors of the Corporation and its Subsidiaries, upon whose judgment,
initiative and efforts the Corporation and its Subsidiaries largely depend
for the successful conduct of their business, a proprietary interest in
the growth and performance of the Corporation.

ARTICLE II - DEFINITIONS

	2.01	 	“Administrator” means the Board or, if the Board so directs, a
Compensation Committee of the Board (or any successor to such Committee),
which shall consist solely of two or more directors who shall be appointed
by and serve at the pleasure of the Board. To the extent necessary for
compliance with Rule 16b-3, or any successor provision, each of the
members of the Compensation Committee shall be a “non-employee director,”
as such term is defined in Rule 16b-3 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended from time to time.
To the extent necessary for compliance with Code Section 162(m), each of
the members of the Compensation Committee shall be an “outside director”
within the meaning of Code Section 162(m) and the regulations issued
thereunder.
	 
	2.02	 	“Affiliate” means a Parent or Subsidiary of the Corporation.
	 
	2.03	 	“Award” means the grant of any form of Incentive Stock Option,
Nonqualified Stock Option, Restricted Stock Award, Stock Appreciation
Right or Other Stock-Based Award, whether granted singly, in combination
or in tandem, to a Plan Participant pursuant to the Plan on such terms,
conditions and limitations as the Administrator may establish in order to
fulfill the objectives of the Plan.
	 
	2.04	 	“Award Agreement” means the agreement executed by the Corporation or its
Affiliate and a Participant that sets forth the terms, conditions and
limitations applicable to the Award.
	 
	2.05	 	“Board” means, at any particular time, the then duly elected and acting
directors of the Corporation.

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	2.06	 	“Corporation” means CABG Medical, Inc., a Minnesota corporation, and any
successor in interest by way of consolidation, operation of law, merger or
otherwise.
	 
	2.07	 	“Date of Grant” means the date an Award is approved by resolution of the
Administrator, or such later date as may be specified in such resolution.
	 
	2.08	 	“Effective Date” means the date the Plan is adopted by the Board under
Section 13.01 of Article XIII of the Plan.
	 
	2.09	 	“Eligible Employee” means an employee of the Corporation or an Affiliate.
	 
	2.10	 	“Fair Market Value” means, with respect to shares of Stock on any
applicable date:

	(a)	 	If the Stock is listed on the Nasdaq
National Market, Nasdaq SmallCap Market or an
established stock exchange, the price of such Stock at
the close of the regular trading session of such market
or exchange on such date, as reported by The Wall Street
Journal or a comparable reporting service, or, if no
sale of such Stock shall have occurred on that date, the
next preceding date on which there was such a reported
sale; or
	 
	(b)	 	If the Stock is not so listed on the
Nasdaq National Market, Nasdaq SmallCap Market or an
established stock exchange, the average of the closing
“bid” and “asked” prices quoted by the OTC Bulletin
Board, the National Quotation Bureau, or any comparable
reporting service on such date or, if there are no
quoted “bid” and “asked” prices on such date, on the
next preceding date for which there are such quotes; or
	 
	(c)	 	If the Stock is not publicly traded
as of the applicable date, the per share value of the
Stock on the applicable date as determined by the
Administrator by applying principles of valuation with
respect to such Stock, and the Administrator shall have
full authority and discretion in establishing such per
share value.

	2.11	 	“Incentive Stock Option” means an option to purchase Stock awarded to a
Participant under Article VI of this Plan that qualifies as an Incentive
Stock Option within the meaning of Internal Revenue Code Section 422.
	 
	2.12	 	“Internal Revenue Code” or “Code” means the Internal Revenue Code of
1986, as amended from time to time, and the regulations thereunder.

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	2.13	 	“Nonqualified Stock Option” means an option to purchase Stock awarded to
a Participant under Article VII of this Plan but which does not qualify as
an Incentive Stock Option.
	 
	2.14	 	“Other Stock-Based Award” means an Award of Stock and other Awards under
this Plan, including but not limited to those Awards pursuant to which
shares of Stock may be acquired in the future, such as Awards denominated
in Stock units, convertible securities and phantom securities.
	 
	2.15	 	“Outside Director” means a member of the Board who is not an employee of
the Corporation or any of its Affiliates.
	 
	2.16	 	“Parent” means a corporation as defined in Internal Revenue Code Section
424(e) applying such Section 424(e) by treating the Corporation as the
employer corporation.
	 
	2.17	 	“Participant” means an Eligible Employee, Outside Director, officer,
consultant or advisor to whom an Award has been made under the Plan.
	 
	2.18	 	“Plan” means the CABG Medical, Inc. 2000 Long-Term Incentive Plan, as set
forth herein, as the same may be from time to time amended.
	 
	2.19	 	“Restricted Stock Award” means shares of Stock awarded to a Participant
under Article VIII of this Plan.
	 
	2.20	 	“Section 16(b) Participant” means a Participant who is subject to the
provisions of Section 16(b) of the Securities Exchange Act of 1934, or its
successor, as amended.
	 
	2.21	 	“Stock” means the Corporation’s Common Stock, $.01 par value.
	 
	2.22	 	“Stock Appreciation Right” means an Award which entitles the Participant
to a payment of cash or shares of Stock under Article IX.
	 
	2.23	 	“Subsidiary” means a corporation as defined in Internal Revenue Code
Section 424(f) applying such Section 424(f) by treating the Corporation as
the employer corporation.

ARTICLE III - ADMINISTRATION

	3.01	 	Administration. Except for those matters expressly reserved to the Board
pursuant to any provisions of the Plan, the Administrator shall have full
responsibility for administration of the Plan, which responsibility shall
include, but shall not be limited to, the following:

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	(a)	 	The Administrator shall review and
approve any and all Awards to be made to Participants
recommended by the management of the Corporation or its
Subsidiaries in accordance with and subject to the
provisions of the Plan;
	 
	(b)	 	The Administrator shall, subject to
the provisions of the Plan, establish, adopt and revise
such rules and procedures for administering the Plan,
shall prescribe the form of the Award Agreements (which
may vary from Participant to Participant) evidencing
each Award, and shall make all other determinations as
it may deem necessary or advisable for the
administration of the Plan;
	 
	(c)	 	The Administrator shall, subject to
the provisions of the Plan, determine the number and
type of Awards and all terms and conditions that shall
apply to such Awards. The Administrator may, in its
discretion, consider the recommendations of the
management of the Corporation or its Subsidiaries when
determining such terms and conditions for such Awards.
	 
	(d)	 	The Administrator shall have the
exclusive authority to interpret the provisions of the
Plan, and each such interpretation or determination
shall be conclusive and binding for all purposes and on
all persons, including, but not limited to, the
Corporation and its Subsidiaries, the shareholders of
the Corporation and its Subsidiaries, the Administrator
and each of its members thereof, the directors, officers
and employees of the Corporation and its Subsidiaries,
and the Participants and the respective
successors-in-interest of all of the foregoing;
	 
	(e)	 	The Administrator shall keep minutes
of its meetings regarding the Plan.

ARTICLE IV - STOCK SUBJECT TO PLAN

	4.01	 	Number. Subject to the approval of the Corporation’s shareholders, the
total number of shares of Stock available for grants to Participants
directly or indirectly under all forms of Awards under the Plan shall not
exceed 2,000,000 shares, except to the extent adjustments are made
pursuant to Section 4.03 of the Plan. Shares of Stock to be awarded may
be either treasury or authorized but unissued shares.
	 
	4.02	 	Unused Shares. In the event a Restricted Stock Award, Other Stock-Based
Award, an Incentive Stock Option or a Nonqualified Stock Option granted
under

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	 	 	the Plan for any reason expires or is terminated prior to the
exercise thereof, the shares of Stock allocable to such portion of
the Restricted Stock Award, Other Stock-Based Award, Incentive
Stock Option or Nonqualified Stock Option shall continue to be
reserved for grants of Restricted Stock Awards, Other Stock-Based
Award, Incentive Stock Options or Nonqualified Stock Options under
the Plan.
	 
	4.03	 	Capital Adjustments. In the event of an increase or decrease in the
number of shares of Stock or in the event the Stock is changed into or
exchanged for a different number or kind of shares of stock or other
securities of the Corporation or of another corporation by reason of a
reorganization, merger, consolidation, divestiture (including a spin-off),
liquidation, recapitalization, reclassification, stock dividend, stock
split, combination of shares, rights offering or any other change in the
corporate structure or shares of the Corporation, the Board (or, if the
Corporation is not the surviving corporation in any such transaction, the
board of directors of the surviving corporation), in its sole discretion,
shall adjust the number and kind of securities subject to and reserved
under the Plan and, to prevent the dilution or enlargement of rights of
Participants, shall adjust the number and kind of securities subject to
outstanding Awards and, where applicable, the option price per share for
such securities. Additional shares which may be credited to such
outstanding Awards shall be subject to the same restrictions that apply to
the securities with respect to which the adjustment relates.
	 
	 	 	Unless otherwise specified in the Award Agreement, in the event of
an acquisition of the Corporation through a merger, consolidation,
exchange, reorganization, extraordinary dividend, divestiture
(including a spin-off), liquidation of the Corporation or similar
transaction, or through the sale of the properties and assets of
the Corporation substantially as an entirety (collectively referred
to as a “transaction”), the Board may provide for one or more of
the following:

	(a)	 	That all outstanding Incentive Stock
Options, Nonqualified Stock Options or Stock
Appreciation Rights shall, immediately prior to the
consummation of the transaction, become exercisable,
whether or not such Options had become exercisable prior
to the transaction, and any risks of forfeiture on
Restricted Stock Awards or Other Stock-Based Awards
shall lapse;
	 
	(b)	 	The complete termination of this Plan
and the cancellation of all outstanding Incentive Stock
Options, Nonqualified Stock Options or Stock
Appreciation Rights not exercised prior to a date
specified by the Board (which date shall give
Participants the right to exercise such Options prior to
the effectiveness of the transaction), and the
cancellation of any Restricted Stock Award or Other
Stock-Based Award for which the risks of forfeiture have
not lapsed;

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	(c)	 	The continuance of this Plan with
respect to the exercise of Incentive Stock Options,
Nonqualified Stock Options or Stock Appreciation Rights
which were outstanding as of the date of the Board’s
adoption of the plan for such transaction and, if
applicable, provide Participants the right to exercise
their respective Options or Stock Appreciation Rights as
to an equivalent number of shares of stock of any
corporation succeeding the Corporation by reason of such
transaction;
	 
	(d)	 	The continuance of this Plan with
respect to Restricted Stock Awards or Other Stock-Based
Awards for which the risks of forfeiture have not lapsed
as of the date of adoption by the Board of the plan for
such transaction and, if applicable, provide to
Participants holding such Awards the right to receive an
equivalent number of shares of stock of the corporation
succeeding the Corporation by reason of such
transaction;
	 
	(e)	 	That Participants holding outstanding
Incentive Stock Options, Nonqualified Stock Options or
Stock Appreciation Rights shall receive, with respect to
each share of Stock subject to such Options, as of the
effective date of any such transaction, cash in an
amount to be determined by the Board based on the per
share amount of consideration to be received by holders
of Stock as a result of the transaction; provided that
the Board may, in lieu of such cash payment, distribute
to such Participants shares of Stock or shares of stock
of any corporation succeeding the Corporation by reason
of such transaction, such shares having a value equal to
the cash payment provided by this Section 4.03(e);
	 
	(f)	 	That Participants holding outstanding
Restricted Stock Awards or Other Stock-Based Awards
shall receive, with respect to each share of Stock
subject to such Awards, as of the effective date of any
such transaction, cash in an amount to be determined by
the Board based on the per share amount of consideration
to be received by holders of Stock as a result of the
transaction; provided that the Board may, in lieu of
such cash payment, distribute to such Participants
            shares of Stock or shares of stock of any corporation
succeeding the Corporation by reason of such
transaction, such shares having a value equal to the
cash payment herein;

	 	 	provided, however, that the Board may restrict the rights of, or
the applicability of this Section 4.03 to Section 16(b)
Participants to the extent necessary to comply with the
requirements of Section 16(b), or any successor provision, of the
Securities Exchange Act of 1934, as amended, the Internal Revenue
Code or any other applicable law or regulation. The grant of an
Award pursuant to the Plan

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	 	 	shall not limit in any way the right or power of the Corporation to
make adjustments, reclassifications, reorganizations or changes in
its capital or business structure or to merge, exchange or
consolidate or to dissolve, liquidate, sell or transfer all or any
part of its business or assets.

ARTICLE V - PARTICIPATION

	5.01	 	Participants. Participants in the Plan shall be those Eligible
Employees, Outside Directors, consultants or advisors who, in the judgment
of the Administrator, following recommendation by management of the
Corporation or its Affiliates, have performed, are performing or during
the period of their Award will perform, services in the management,
operation and development of the Corporation or its Affiliates, and have
contributed, are contributing or are expected to contribute to the
achievement of long-term corporate objectives. Participants may be
granted from time to time one or more Restricted Stock Awards, Other
Stock-Based Awards, Incentive Stock Options, Nonqualified Stock Options or
Stock Appreciation Rights; provided, however, that the grant of each Award
shall be separately approved by the Administrator; and, provided further,
that the receipt of one such Award shall not result in the automatic
receipt of any other Award. Upon determination by the Administrator that
an Award is to be granted to a Participant, an Award Agreement shall be
executed by the Corporation and by such Participant, specifying the terms,
conditions, rights and duties related thereto.

ARTICLE VI - INCENTIVE STOCK OPTIONS

	6.01	 	Grant of Incentive Stock Options. In accordance with the provisions of
the Plan, the Administrator shall, following recommendation by management
of the Corporation or its Subsidiaries, approve the Eligible Employees to
whom Incentive Stock Options shall be granted. The Administrator shall
determine the number of shares to be subject to each Incentive Stock
Option, the time at which such Option shall be granted, whether such
Option shall be granted in exchange for the cancellation and termination
of a previously granted Incentive Stock Option under the Plan or
otherwise, the extent to which an Incentive Stock Option may be
exercisable upon the Participant’s termination of employment, which may
differ depending upon the reason for such termination, the manner in which
an Incentive Stock Option may be exercised and the form of the Award
Agreement that shall evidence each Incentive Stock Option. Except as
otherwise provided in this Article VI, the Administrator shall determine
the terms, conditions and other provisions of each Award Agreement, which
may vary from Participant to Participant and which may contain such
limitations and restrictions as shall be necessary to ensure that such
Option will be considered an Incentive Stock Option as defined in Internal
Revenue Code Section 422 or to conform to any change

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	 	 	therein. Each Participant shall enter into an Award Agreement with
the Corporation with respect to the grant of each Incentive Stock
Option.
	 
	6.02	 	Option Price. To the extent required to qualify the Option as an
Incentive Stock Option under Internal Revenue Code Section 422, the option
price per share shall not be less than one hundred percent (100%) of the
Fair Market Value of one share of Stock as of the Date of Grant except
that, if a Participant owns stock possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the
Corporation or any of its Affiliates, the option price per share shall not
be less than one hundred ten percent (110%) of the Fair Market Value of
one share of Stock as of the Date of Grant.
	 
	6.03	 	Duration and Exercise of Options.

	(a)	 	Duration of Incentive Stock Options. The period
during which an Incentive Stock Option granted under the Plan
may be exercised shall be established by the Administrator,
and shall be set forth in the Award Agreement. To the extent
required to qualify an Option as an incentive stock option
under Internal Revenue Code Section 422, (i) no Incentive
Stock Option shall be exercisable during a term of more than
ten (10) years after the Date of Grant; and (ii) with respect
to a Participant who owns stock possessing more than ten
percent (10%) of the total combined voting power of all
classes of stock of the Corporation or its Affiliate, an
Incentive Stock Option granted to such Participant shall be
exercisable during a period of not more than five (5) years
after the Date of Grant.
	 
	(b)	 	Exercisability of Incentive Stock Options.

	(1)	 	The Administrator shall have
discretion to determine when an Incentive Stock Option
becomes exercisable and may provide that the Incentive
Stock Option shall become exercisable in installments.
If a Participant does not purchase in any year the full
number of shares which the Participant is entitled to
purchase in that year, the Participant may, if provided
in the Award Agreement, purchase in any subsequent year
such previously unpurchased shares in addition to those
that the Participant is otherwise entitled to purchase.
	 
	(2)	 	In the event an Incentive Stock
Option is immediately exercisable at the Date of Grant,
the manner of exercising such Option in the event it is
not immediately exercised in full shall be specified in
the Award Agreement.
	 
	(3)	 	The Administrator may accelerate the
exercise date of any Incentive Stock Option which is not
immediately exercisable at the

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	 	 	Date of Grant as the Administrator, in its discretion,
deems advisable.
	 
	(4)	 	The Award Agreement shall set forth
all provisions relating to the exercisability of
Incentive Stock Options.

	6.04	 	Payment of Option Price. Upon the exercise of any Incentive Stock Option
granted pursuant to this Plan, the purchase price for such shares of Stock
subject to such Option shall be paid in cash, certified check, promissory
note (with such terms as may be acceptable to the Administrator),
previously-owned shares of Stock, or such other form of payment authorized
by the Administrator and specified in the Award Agreement on the Date of
Grant. For purposes of this Section 6.04, “previously-owned shares of
Stock” means shares of Stock which the Participant has owned for at least
six (6) months prior to exercise of the Incentive Stock Option, or for
such other period required by generally accepted accounting principles.
	 
	6.05	 	Rights as a Shareholder. The Participant shall have no rights as a
shareholder with respect to any shares of Stock subject to an Incentive
Stock Option until the Participant becomes the holder of record of such
shares. Except as provided in Section 4.03, no adjustments shall be made
for dividends or other cash distributions or for other rights that have a
record date preceding the date the Participant becomes the holder of
record of such shares of Stock.

ARTICLE VII - NONQUALIFIED STOCK OPTIONS

	7.01	 	Grant of Nonqualified Stock Options. In accordance with the provisions
of the Plan, the Administrator shall, following recommendation by
management of the Corporation or its Subsidiaries, approve the Participant
to whom Nonqualified Stock Options shall be granted under this Article
VII. The Administrator shall determine the number of shares to be subject
to each Nonqualified Stock Option, the time at which such Option shall be
granted, whether such Option shall be granted in exchange for the
cancellation and termination of a previously granted Nonqualified Stock
Option under the Plan or otherwise, the extent to which a Nonqualified
Stock Option may be exercisable upon the Participant’s termination of
employment, which may differ depending upon the reason for such
termination, the manner in which a Nonqualified Stock Option may be
exercised and the form of the Award Agreement that shall evidence each
Nonqualified Stock Option. Except as otherwise provided in this Article
VII, the Administrator shall determine the terms, conditions and other
provisions of each Award Agreement, which may vary from Participant to
Participant. Each Participant shall enter into an Award Agreement with the
Corporation with respect to the grant of each Nonqualified Stock Option.

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	7.02	 	Option Price. Unless otherwise determined by the Administrator, the
option price per share shall not be less than fifty percent (50%) of the
Fair Market Value of one share of Stock as of the Date of Grant.
	 
	7.03	 	Duration and Exercise of Options.

	(a)	 	Duration of Nonqualified Stock Options. The
period during which a Nonqualified Stock Option granted under
the Plan may be exercised shall be established by the
Administrator, and shall be set forth in the Award Agreement.
	 
	(b)	 	Exercisability of Nonqualified Stock Options.

	(1)	 	The Administrator shall have
discretion to determine when a Nonqualified Stock Option
becomes exercisable and may provide that the
Nonqualified Stock Option shall become exercisable in
installments. If the Participant does not purchase in
any year the full number of shares which the Participant
is entitled to purchase in that year, the Participant
may, if provided in the Award Agreement, purchase in any
subsequent year such previously unpurchased shares in
addition to those that the Participant is otherwise
entitled to purchase.
	 
	(2)	 	In the event a Nonqualified Stock
Option is immediately exercisable at the Date of Grant,
the manner of exercising such Option in the event it is
not immediately exercised in full shall be specified in
the Award Agreement.
	 
	(3)	 	The Administrator may accelerate the
exercise date of any Nonqualified Stock Option which is
not immediately exercisable at the Date of Grant as the
Administrator, in its discretion, deems advisable.
	 
	(4)	 	The Award Agreement shall set forth
all provisions relating to the exercisability of
Nonqualified Stock Options.

	7.04	 	Payment of Option Price. Upon the exercise of any Nonqualified Stock
Option granted pursuant to this Plan, the purchase price for such shares
of Stock subject to such Option shall be paid in cash, certified check,
promissory note (with such terms as may be acceptable to the
Administrator), previously-owned shares of Stock, or such other form of
payment authorized by the Administrator and specified in the Award
Agreement on the Date of Grant. For purposes of this Section 7.04,
“previously-owned shares of Stock” means shares of Stock which the
Participant has owned for at least six (6) months prior to exercise of the
Incentive Stock Option, or for such other period required by generally
accepted accounting principles.

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	7.05	 	Rights as a Shareholder. The Participant shall have no rights as a
shareholder with respect to any shares of Stock subject to a Nonqualified
Option until the Participant becomes the holder of record of such shares.
Except as provided in Section 4.03, no adjustments shall be made for
dividends or other cash distributions or for other rights that have a
record date preceding the date the Participant becomes the holder of
record of such shares of Stock.

ARTICLE VIII - RESTRICTED AND OTHER STOCK AWARDS

	8.01	 	Grant of Restricted Stock Awards. In accordance with the provisions of
the Plan, the Administrator shall, following recommendation by management
of the Corporation or its Subsidiaries, approve the Participants to whom
Restricted Stock Awards shall be granted, shall determine the number of
shares to be subject to each Restricted Stock Award, the time at which the
Restricted Stock Award is to be granted, the manner in which restrictions
on the transferability of shares of Stock represented by the Restricted
Stock Award will lapse including the extent to which such restrictions may
lapse upon the Participant’s termination of employment, which may differ
depending upon the reason for such termination, subject to the provisions
of Section 8.03, and such other provisions of the Restricted Stock Award
as the Administrator may deem necessary or desirable. The Administrator
shall determine the form of Award Agreement that shall evidence each
Restricted Stock Award and shall determine the terms, conditions and other
provisions of each Award Agreement, which may vary from Participant to
Participant. Each participant shall enter into an Award Agreement with
the Corporation with respect to the grant of each Restricted Stock Award.
	 
	8.02	 	Restrictions on Transfer. Unless otherwise provided in the Award
Agreement, the shares of Stock awarded pursuant to a Restricted Stock
Award shall be subject to the following restrictions:

	(a)	 	No such share of Stock may be sold,
transferred, assigned, pledged, encumbered or otherwise
alienated or hypothecated unless and only to the extent
that restrictions shall have lapsed in accordance with
the Plan and the Award Agreement.
	 
	(b)	 	Upon the grant of a Restricted Stock
Award, the Corporation shall cause to be issued stock
certificates representing the shares subject to such
Restricted Stock Award in the Participant’s name. The
Corporation shall hold such stock certificates until the
restrictions set forth in Section 8.02(a) lapse in
accordance with the Plan and the Award Agreement. Once
the restrictions have lapsed with respect to all or part
of the shares subject to the Restricted Stock

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	 	 	Award, such stock certificates shall be distributed to
the Participant.
	 
	(c)	 	Notwithstanding the provisions of
Section 8.02(b), and subject to any terms, conditions or
other restrictions set forth in the Award Agreement, a
Participant receiving a Restricted Stock Award shall, as
of the Date of Grant, have the right to vote such shares
of Stock and to receive dividends and other
distributions made with respect to such shares, but the
Participant shall not, unless otherwise determined by
the Administrator, have any other rights as a
shareholder. The terms, conditions and restrictions set
forth in the Award Agreement shall also apply to any
additional shares of Stock received by a Participant as
the result of any dividend paid on the shares of Stock
subject to the Restricted Stock Award or as the result
of any stock split, stock distribution or combination of
shares that affects the shares of Stock subject to the
Restricted Stock Award.

	8.03	 	Lapsing of Restrictions. The Administrator shall have the discretion to
determine the times and extent to which restrictions on the
transferability of shares under each Restricted Stock Award shall lapse,
and the Award Agreement shall set forth all provisions relating to the
lapsing of such restrictions.
	 
	8.04	 	Modification of Lapsing Schedule. The Administrator may, in its sole
discretion, modify the rate at which restrictions on transferability of
shares under a Restricted Stock Award shall lapse. Any such modification
shall apply only to those shares of Stock which are restricted as of the
effective date of the modification, and shall be reflected in a resolution
adopted by the Administrator and, if deemed appropriate by the
Administrator, in an amendment to any Award Agreement with respect to
which it applies.
	 
	8.05	 	Other Stock-Based Awards. In accordance with the provisions of the Plan,
the Administrator shall, following recommendation by management of the
Corporation or its Subsidiaries, approve the Participants to whom Other
Stock-Based Awards shall be granted and the terms and conditions of such
Awards. The Administrator shall determine the form of Award Agreement
that shall evidence each Other Stock-Based Award and shall determine the
terms, conditions and other provisions of each Award Agreement, which may
vary from Participant to Participant. Each Participant shall enter into
an Award Agreement with the Corporation with respect to the grant of each
Other Stock-Based Award.

ARTICLE IX – STOCK APPRECIATION RIGHTS

	9.01	 	Grant of Stock Appreciation Rights. Upon the Date of Grant of an
Incentive Stock Option or Nonqualified Stock Option to a Participant (or,
with respect to

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	 	 	Nonqualified Stock Options, at any time thereafter), the
Administrator may, following recommendation by the management of
the Corporation or its Affiliate, grant to such Participant a Stock
Appreciation Right (“SAR”) for all or any portion of the shares of
Stock subject to such Incentive or Nonqualified Stock Option
(hereinafter referred to as the “Tandem Option”). If the SAR is
granted for less than all of the shares of Stock subject to a
Tandem Option which is a Nonqualified Stock Option, the
Administrator may, in its sole discretion, grant additional SARs
for additional shares of Stock subject to the same Tandem Option;
provided, however, that the aggregate number of shares of Stock
subject to all such SARs shall not exceed the number of shares of
Stock subject to such Tandem Option. Subject to the provisions of
this Article IX, the Administrator shall determine the form of
Award Agreement that shall evidence each SAR and shall determine
the terms, conditions and other provisions of each Award Agreement,
which may vary from Participant to Participant. Each Participant
shall enter into an Award Agreement with the Corporation with
respect to the grant of each SAR.
	 
	9.02	 	Tandem Rights. Any SAR granted to a Participant may be exercised as an
alternative to, but not in addition to, the Tandem Option to which it
relates. Any exercise of an SAR shall reduce the number of shares subject
to the Tandem Option by the same number of shares as to which the SAR is
exercised. The Participant’s failure to exercise an SAR shall not reduce
the number of shares subject to the Tandem Option.
	 
	9.03	 	Duration and Exercise of Stock Appreciation Rights.

	(a)	 	Duration of Nonqualified Stock Options. The
period during which an SAR granted under the Plan may be
exercised shall not exceed the period established by the
Administrator for the Tandem Option and shall be set forth in
the Award Agreement.
	 
	(b)	 	Exercisability of Nonqualified Stock Options. An
SAR shall become exercisable at the same time and in the same
manner as the Tandem Option and shall be set forth in the
Award Agreement.

	9.04	 	Manner of Exercise and Payment of Stock Appreciation Rights.

	(a)	 	Notice of Exercise. If the Participant elects to
exercise all or any portion of the SAR in lieu of the Tandem
Option, the Participant shall provide notice of such election
to the Administrator, which notice shall specify the number of
shares for which the SAR is being exercised. An SAR may be
exercised only if the per share Fair Market Value of the
Corporation’s Stock exceeds the per share exercise price
stated in the Tandem Option.
	 
	(b)	 	Payment of SAR. The amount payable to the
Participant upon the exercise of an SAR shall equal (i) the
excess of (X) the per share Fair Market Value

- 13 -

 

	 	 	of the Corporation’s Stock on the date of exercise, over (Y)
the per share exercise price stated in the Tandem Option,
multiplied by (ii) the number of shares as to which the SAR
is exercised. Upon the exercise of an SAR, the Participant
may receive cash, shares of Stock having an equivalent Fair
Market Value or any combination thereof, as determined by the
Administrator in its sole discretion. The Participant’s
notice of exercise may specify what portion, if any, of the
SAR the Participant requests to be paid in cash and what
portion, if any, of the SAR the Participant requests to be
paid in shares of Stock, but such request shall not be
binding on the Administrator. As soon as administratively
practicable after receipt of the Participant’s notice of
exercise, the Administrator shall distribute such cash or
shares of Stock to Participant.

	9.05	 	Rights as a Shareholder. The Participant shall have no rights as a
shareholder with respect to any shares of Stock subject to an SAR unless
and until the Participant becomes the holder of record of shares of Stock
upon the exercise of the SAR. Except as provided in Section 4.03, no
adjustments shall be made for dividends or other cash distributions or for
other rights that have a record date preceding the date the Participant
becomes the holder of record of such shares of Stock.

ARTICLE X - SECURITIES LAW COMPLIANCE

	10.01	 	General. No shares of Common Stock shall be issued pursuant to the Plan
unless and until there has been compliance, in the opinion of
Corporation’s counsel, with all applicable legal requirements, including
without limitation, those relating to securities laws and stock exchange
listing requirements. As a condition to the issuance of Stock to a
Participant, the Administrator may require the Participant to (i)
represent that the shares of Stock are being acquired for investment and
not resale and to make such other representations as the Administrator
shall deem necessary or appropriate to qualify the issuance of the shares
as exempt from the Securities Act of 1933 and any other applicable
securities laws, and (ii) represent that the Participant shall not dispose
of the shares of Stock in violation of the Securities Act of 1933 or any
other applicable securities laws.
	 
	 	 	As a further condition to the grant of any Incentive Stock Option,
Nonqualified Stock Option, Restricted Stock Award or Other
Stock-Based Award, or the issuance of Stock to a Participant, the
Participant must agree to the following:

	(a)	 	In the event the Corporation advises
the Participant that it plans to file a registration or
offering statement (the “Registration Statement”) with
the Securities and Exchange Commission to facilitate an
underwritten public offering of Stock in compliance with
the Securities Act of 1933, as amended, and to the
extent required by the managing underwriter of such
offering, Participant will not, without

- 14 -

 

	 	 	the prior written consent of the Corporation and such
underwriter, during a period of up to 180 days
commencing on the effective date of the Registration
Statement, (i) sell, transfer or otherwise dispose of
or agree to sell, transfer or otherwise dispose of any
Incentive or Nonqualified Stock Option, Restricted
Stock Award or Other Stock-Based Award granted to
Participant pursuant to the Plan, or any shares of
Stock, or (ii) sell or grant, or agree to sell or
grant, options, rights with respect to any shares of
Stock.
	 
	(b)	 	In the event the Corporation makes
any public offering of its securities and determines in
its sole discretion that it is necessary to reduce the
number of issued but unexercised stock purchase rights
so as to comply with any state’s securities or Blue Sky
law limitations with respect thereto, the Board of
Directors of the Corporation shall have the right (i) to
accelerate the exercisability of any Incentive Stock
Option or Nonqualified Stock Option and the date on
which such Option must be exercised, provided that the
Corporation gives Participants prior written notice of
such acceleration, and (ii) to cancel any Options or
portions thereof which Participants do not exercise
prior to or contemporaneously with such public offering.
	 
	(c)	 	In the event of a transaction (as
defined in Section 12 of the Plan) which is treated as a
“pooling of interests” under generally accepted
accounting principles, Participant will comply with Rule
145 of the Securities Act of 1933 and any other
restrictions imposed under other applicable legal or
accounting principles if Participant is an “affiliate”
(as defined in such applicable legal and accounting
principles) at the time of the transaction, and
Participant will execute any documents necessary to
ensure compliance with such rules.

	 	 	The Corporation reserves the right to place a legend on any stock
certificate issued upon exercise of an option granted or upon the
grant of a restricted stock award pursuant to the Plan to assure
compliance with this Article X.

ARTICLE XI - RIGHTS OF PARTICIPANTS

	11.01	 	Relationship to Employment. Nothing contained in the Plan, nor in any
Award granted pursuant to the Plan, shall confer upon any Participant any
right with respect to the continuance of such Participant’s employment by,
or other relationship with, the Corporation or its Subsidiaries, nor
interfere in any way with the right of the Corporation or its Subsidiaries
to terminate the Participant’s employment by, or other relationship with,
the Corporation or its Subsidiaries at any time.

- 15 -

 

	11.02	 	Nontransferability of Award. No Incentive Stock Option, Restricted
Stock Award, Stock Appreciation Right or Other Stock-Based Award shall be
transferable, in whole or in part, by the Participant, either voluntarily
or involuntarily, except by will or the laws of descent or distribution.
If a Participant attempts to transfer an Incentive Stock Option,
Restricted Stock Award, Stock Appreciation Right or Other Stock-Based
Award, or any portion of such Option or Award, such transfer shall be void
and the Incentive Stock Option, Restricted Stock Award, Stock Appreciation
Right or Other Stock-Based Award shall terminate. An Incentive Stock
Option or Stock Appreciation Right shall be exercisable during a
Participant’s lifetime only by the Participant or by such Participant’s
guardian or other legal representative.
	 
	 	 	Subject to the approval of the Administrator, a Nonqualified Stock
Option granted under the Plan may be transferred, for no
consideration, by a Participant to a member of the Participant’s
immediate family, to a trust for the benefit of such family members
or to a partnership in which such family members are the only
partners. The family member to whom, or the trust or partnership
to which, a Nonqualified Stock Option has been transferred shall
not be permitted to subsequently transfer the Option, either
voluntarily or involuntarily, unless such transfer is to another
family member, trust or partnership which meets the requirements of
this Section 11.02. No other transfers of Nonqualified Stock
Options, in whole or in part, by a Participant shall be permitted,
voluntarily or involuntarily, except by will or the laws of descent
and distribution. If a Participant attempts to transfer a
Nonqualified Stock Option, or any portion of such Option, in a
manner not permitted by this Section 11.02, such transfer shall be
void and the Nonqualified Stock Option shall terminate.

ARTICLE XII - AMENDMENT OR MODIFICATION

	12.01	 	Authority to Amend and Procedure. The Administrator may, at any time
and without further action on the part of the shareholders of the
Corporation, terminate this Plan or make such amendments thereto as it
deems advisable and in the best interests of the Corporation or its
Subsidiaries; provided, however, that no such termination or amendment
shall, without the consent of a Participant materially adversely affect or
impair the right of a Participant with respect to an Award already
granted; and provided, further, that no amendment shall, either directly
or indirectly:

	(a)	 	Materially increase the total number
of shares of Stock that may be awarded under this Plan
to all Participants except for adjustments described in
Section 4.03 of this Plan;
	 
	(b)	 	Materially increase the benefits
accruing to Participants under the Plan; or

- 16 -

 

	(c)	 	Materially modify the requirements as
to eligibility for participation in the Plan;

	 	 	without the approval of the shareholders of the Corporation, but
only if such approval is required for compliance with the
requirements of any applicable law or regulation. Furthermore, the
Plan may not, without the approval of the shareholders of the
Corporation, be amended in any manner that will cause Incentive
Stock Options to fail to meet the requirements of Internal Revenue
Code Section 422.

ARTICLE XIII - EFFECTIVE DATE AND DURATION OF PLAN

	13.01	 	Effective Date of Plan. The Plan shall be deemed effective upon its
adoption by the Board, subject to the approval by the shareholders of the
Corporation within twelve (12) months following the adoption of the Plan
by the Board. If the Plan is not approved by the shareholders of the
Corporation, all provisions of the Plan shall have no further force and
effect.
	 
	13.02	 	Duration of the Plan. To the extent required under Internal Revenue
Code Section 422, Incentive Stock Options (and Stock Appreciation Rights
granted in tandem with Incentive Stock Options) may be granted pursuant to
this Plan from time to time during a period of ten (10) years from the
Effective Date of the Plan. Nonqualified Stock Options (and Stock
Appreciation Rights granted in tandem with Nonqualified Stock Options),
Restricted Stock Awards and Other Stock-Based Awards may be granted
pursuant to this Plan from time to time after the Effective Date of the
Plan and until the Plan is discontinued or terminated by the
Administrator.

ARTICLE XIV - GENERAL PROVISIONS

	14.01	 	Construction and Headings. The headings of the Articles, Sections and
their subparts within the Plan are for convenience only and are not meant
to be of substantive significance, and such headings shall not add to or
detract from the meaning of such Article, Section or subpart.
	 
	14.02	 	Governing Law. The Plan and all rights and obligations thereunder shall
be construed in accordance with and governed by the laws of the State of
Minnesota, without regard to the conflict of laws provisions of any
jurisdiction.
	 
	14.03	 	Successor and Assigns. This Plan shall be binding upon and inure to the
benefit of the successors and assigns of the Corporation and its
Subsidiaries, including,

- 17 -

 

	 	 	without limitation, whether by way of merger, consolidation,
operation of law, assignment, purchase or other acquisition of
substantially all of the assets or business of the Corporation or
any of its Subsidiaries, and any and all such successors and
assigns shall absolutely and unconditionally assume all of the
Corporation’s or the Affiliate’s obligations hereunder; provided,
however, that this Section 14.03 shall not apply with respect to
the successors or assigns of an Affiliate in the event that, prior
to a Change of Control, the Affiliate is sold, merged, contributed
or in any other manner transferred or for any other reason ceases
to be an Affiliate of the Corporation.
	 
	14.04	 	Survival of Provisions. The rights, remedies, agreements, obligations
and covenants of the parties contained in or made pursuant to the Plan,
any Award Agreement and any other notices or agreements in connection
therewith, including, without limitation, any notice of exercise of an
Incentive Stock Option, a Nonqualified Stock Option or a Stock
Appreciation Right, shall survive the execution and delivery of such
notices and agreements and shall survive the exercise of any Incentive
Stock Option, Nonqualified Stock Option or Stock Appreciation Right, the
payment of such Option’s exercise price and the delivery and receipt of
the shares of Stock subject to such Option, and shall remain in full force
and effect.
	 
	14.05	 	Absence of Liability of Directors and Committee Members. No member of
the Board or of the Compensation Committee shall be liable, with respect
to this Plan, for any act, whether by commission or omission, taken by any
other member of the Board or the Compensation Committee, or by any
officer, agent, or employee of the Corporation or its Subsidiaries, nor
shall any member of the Board or the Compensation Committee be liable,
except in circumstances involving such member’s own bad faith, for
anything done or omitted to be done by any person in connection with this
Plan.
	 
	14.06	 	Withholding Taxes. The Corporation or its Subsidiaries is entitled to:

          (a) Withhold and deduct from future wages of a Participant or
from the cash portion of any Award, or make other arrangements for
the collection of, all legally required amounts necessary to
satisfy any and all federal, state and local withholding and
employment-related tax requirements attributable to the
Participant’s exercise of a Nonqualified Stock Option or Stock
Appreciation Right, attributable to the lapse of restrictions on a
Restricted Stock Award or attributable to an Other Stock-Based
Award, or otherwise incurred with respect to any other provisions
of the Plan; or

	(b)	 	Require the Participant promptly to
remit the amount of such withholding tax obligations to
the Corporation or the Affiliate before acting on the
Participant’s notice of exercise of a Nonqualified Stock
Option or Stock Appreciation Right, before taking any
further action with respect to the Nonqualified Stock

- 18 -

 

	 	 	Option or Stock Appreciation Right, or before the
issuance of any certificate with respect to any shares
of stock awarded under a Nonqualified Stock Option,
Stock Appreciation Right, Restricted Stock Award or
Other Stock-Based Award.

	 	 	Subject to such rules as the Administrator may adopt, the
Administrator may, in its sole discretion, permit a Participant to
satisfy such withholding tax obligations, in whole or in part, with
shares of Stock having an equivalent Fair Market Value or by
electing to have the Corporation or Affiliate withhold shares of
Stock otherwise issuable to the Participant having a Fair Market
Value equal to the minimum required tax withholding, based on the
minimum statutory withholding rates for federal and state tax
purposes, including payroll taxes, that are applicable to the
supplemental income resulting from the Award. In no event may the
Corporation or any Affiliate withhold shares having a fair market
value in excess of such statutory minimum required tax withholding.
The Participant’s election to have shares withheld for purposes of
such withholding tax obligations shall be made on or before the
date that triggers such obligations or, if later, the date that the
amount of tax to be withheld is determined under applicable tax
law. Such election shall be approved by the Administrator and
otherwise comply with such rules as the Administrator may adopt to
assure compliance with Rule 16b-3 or any successor provision, as
then in effect, of the General Rules and Regulations under the
Securities and Exchange Act of 1934, if applicable.

- 19 -

 

NONQUALIFIED STOCK OPTION AGREEMENT

CABG MEDICAL, INC.

2000 LONG-TERM INCENTIVE PLAN

          THIS AGREEMENT, made effective as of this     day of    , 20  ,
by and between CABG Medical, Inc., a Minnesota corporation (the “Company”), and
       (“Participant”).

WITNESSETH:

     WHEREAS, Participant on the date hereof is a key employee, officer,
director of or consultant or advisor to the Company or one of its Subsidiaries;
and

     WHEREAS, the Company wishes to grant a nonqualified stock option to
Participant to purchase shares of the Company’s Common Stock pursuant to the
Company’s 2000 Long-Term Incentive Plan (the “Plan”); and

     WHEREAS, the Administrator of the Plan has authorized the grant of a
nonqualified stock option to Participant and has determined that, as of the
effective date of this Agreement, the fair market value of the Company’s Common
Stock is $      per share;

     NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:

     1. Grant of Option. The Company hereby grants to Participant on the date
set forth above (the “Date of Grant”), the right and option (the “Option”) to
purchase all or portions of an aggregate of         (       )
shares of Common Stock at a per share price of $        on the terms and
conditions set forth herein, and subject to adjustment pursuant to Section 4.03
of the Plan. This Option is a nonqualified stock option and is not intended to
be an incentive stock option within the meaning of Section 422, or any
successor provision, of the Internal Revenue Code of 1986, as amended (the
“Code”), and the regulations thereunder.

     2. Duration and Exercisability.

          a. General. The term during which this Option may be exercised shall
terminate on the close of business on the        th day of        , 20       , except
as otherwise provided in Paragraphs 2(b) through 2(e) below. This Option shall
become exercisable according to the following schedule:

 

 

     Vesting Date                        Number of Shares

Once the Option becomes exercisable to the extent of one hundred percent (100%)
of the aggregate number of shares specified in Paragraph 1, Participant may
continue to exercise this Option under the terms and conditions of this
Agreement until the termination of the Option as provided herein. If
Participant does not purchase upon an exercise of this Option the full number
of shares which Participant is then entitled to purchase, Participant may
purchase upon any subsequent exercise prior to this Option’s termination such
previously unpurchased shares in addition to those Participant is otherwise
entitled to purchase.

          b. Termination of Employment For Cause. If Participant’s employment with
the Company or any Subsidiary is terminated for cause, this Option shall
immediately terminate on the date of such termination of employment, and all
rights of Participant under this Option shall be forfeited.

                For purposes of this Paragraph 2(b), “cause” shall mean (i) Participant
being charged with a felony or convicted of any serious criminal act; (ii) any
intentional and/or willful act of fraud or dishonesty by Participant in any
material respect related to or connected with his employment by the Company or
its Subsidiary; (iii) the willful and continued failure, neglect or refusal by
Participant to substantially perform his employment duties with the Company or
its Subsidiary, (iv) a material violation of the Company’s or Subsidiary’s
policies or codes of conduct; or (v) the willful and material breach by
Participant of any agreement between Participant and the Company or its
Subsidiary, including but not limited to an employment agreement or a
noncompetition agreement.

          c. Termination of Employment Without Cause (other than Disability or
Death). If Participant’s employment with the Company or any Subsidiary is
terminated for any reason other than for cause, disability or death, this
Option shall completely terminate on the earlier of (i) the close of business
on the three-month anniversary following such termination of employment, and
(ii) the expiration date of this Option stated in Paragraph 2(a) above. In
such period following the termination of Participant’s employment, this Option
shall be exercisable only to the extent the Option was exercisable on the
vesting date immediately preceding such termination of employment, but had not
previously been exercised. To the extent this Option was not exercisable upon
such termination of employment, or if Participant does not exercise the Option
within the time specified in this Paragraph 2(c), all rights of Participant
under this Option shall be forfeited.

          d. Disability. If Participant’s employment terminates because of
disability (as defined in Code Section 22(e), or any successor provision), this
Option shall terminate on the earlier of (i) the close of business on the
twelve-month anniversary of such termination of employment, and (ii) expiration
date of this Option stated in Paragraph 2(a) above. In such period following
the

2

 

termination of Participant’s employment, this Option shall be exercisable to
the extent of 100% of the shares specified in Paragraph 1, less any shares
purchased on any previous exercise. If Participant does not exercise the
Option within the time specified in this Paragraph 2(d), all rights of
Participant under this Option shall be forfeited.

          e. Death. In the event of Participant’s death, this Option shall
terminate on the earlier of (i) the close of business on the twelve-month
anniversary of the date of Participant’s death, and (ii) the expiration date of
this Option stated in Paragraph 2(a) above. In such period following
Participant’s death, this Option shall be exercisable by the person or persons
to whom Participant’s rights under this Option shall have passed by
Participant’s will or by the laws of descent and distribution to the extent of
100% of the shares specified in Paragraph 1, less any shares purchased on any
previous exercise. If such person or persons do not exercise this Option
within the time specified in this Paragraph 2(e), all rights under this Option
shall be forfeited.

     3. Manner of Exercise.

          a. General. The Option may be exercised only by Participant (or other
proper party in the event of death or incapacity), subject to the conditions of
the Plan and subject to such other administrative rules as the Administrator
may deem advisable, by delivering within the Option Period written notice of
exercise to the Company at its principal office. The notice shall state the
number of shares as to which the Option is being exercised and shall be
accompanied by payment in full of the Option price for all shares designated in
the notice. The exercise of the Option shall be deemed effective upon receipt
of such notice by the Company and upon payment that complies with the terms of
the Plan and this Agreement. The Option may be exercised with respect to any
number or all of the shares as to which it can then be exercised and, if
partially exercised, may be so exercised as to the unexercised shares any
number of times during the Option period as provided herein.

          b. Form of Payment. Subject to approval by the Administrator, payment of
the option price by Participant shall be in the form of cash, personal check,
certified check, promissory note (with such terms as may be acceptable to the
Administrator) or previously acquired shares of Common Stock of the Company, or
any combination thereof. Any stock so tendered as part of such payment shall
be valued at its Fair Market Value as provided in the Plan. For purposes of
this Agreement, “previously acquired shares of Common Stock” shall include
shares of Common Stock that are already owned by Participant at the time of
exercise.

          c. Stock Transfer Records. As soon as practicable after the effective
exercise of all or any part of the Option, Participant shall be recorded on the
stock transfer books of the Company as the owner of the shares purchased, and
the Company shall deliver to Participant one or more duly issued stock
certificates evidencing such ownership. All requisite original issue or
transfer documentary stamp taxes shall be paid by the Company.

     4. Miscellaneous.

          a. Employment; Rights as Shareholder. This Agreement shall not confer on
Participant any right with respect to continuance of employment by the Company
or any of its

3

 

Subsidiaries, nor will it interfere in any way with the right of the Company to
terminate such employment. Participant shall have no rights as a shareholder
with respect to shares subject to this Option until such shares have been
issued to Participant upon exercise of this Option. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
other property), distributions or other rights for which the record date is
prior to the date such shares are issued, except as provided in Section 4.03 of
the Plan.

          b. Securities Law Compliance. The exercise of all or any parts of this
Option shall only be effective at such time as counsel to the Company shall
have determined that the issuance and delivery of Common Stock pursuant to such
exercise will not violate any state or federal securities or other laws.
Participant may be required by the Company, as a condition of the effectiveness
of any exercise of this Option, to agree in writing that all Common Stock to be
acquired pursuant to such exercise shall be held, until such time that such
Common Stock is registered and freely tradable under applicable state and
federal securities laws, for Participant’s own account without a view to any
further distribution thereof, that the certificates for such shares shall bear
an appropriate legend to that effect and that such shares will be not
transferred or disposed of except in compliance with applicable state and
federal securities laws.

          c. Mergers, Recapitalizations, Stock Splits, Etc. Pursuant and subject to
Section 4.03 of the Plan, certain changes in the number or character of the
Common Stock of the Company (through sale, merger, consolidation, exchange,
reorganization, divestiture (including a spin-off), liquidation,
recapitalization, stock split, stock dividend or otherwise) shall result in an
adjustment, reduction or enlargement, as appropriate, in Participant’s rights
with respect to any unexercised portion of the Option (i.e., Participant shall
have such “anti-dilution” rights under the Option with respect to such events,
but shall not have “preemptive” rights).

          d. Shares Reserved. The Company shall at all times during the option
period reserve and keep available such number of shares as will be sufficient
to satisfy the requirements of this Agreement.

          e. Withholding Taxes. In order to permit the Company to comply with all
applicable federal or state income tax laws or regulations, the Company may
take such action as it deems appropriate to insure that, if necessary, all
applicable federal or state payroll, income or other taxes are withheld from
any amounts payable by the Company to Participant. If the Company is unable to
withhold such federal and state taxes, for whatever reason, Participant hereby
agrees to pay to the Company an amount equal to the amount the Company would
otherwise be required to withhold under federal or state law. Participant may,
subject to the approval and discretion of the Administrator or such
administrative rules it may deem advisable, elect to have all or a portion of
such tax withholding obligations satisfied by delivering shares of the
Company’s Common Stock or by electing to have the Company withhold shares of
Common Stock otherwise issuable to Participant. Such shares shall have a Fair
Market Value equal to the minimum required tax withholding, based on the
minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes, that are applicable to the supplemental income
resulting from the exercise of this Option. In no event may the Company
withhold shares having a Fair Market Value in excess of such statutory minimum
required tax withholding.

4

 

          f. Nontransferability. During the lifetime of Participant, the accrued
Option shall be exercisable only by Participant or by the Participant’s
guardian or other legal representative, and shall not be assignable or
transferable by Participant, in whole or in part, other than by will or by the
laws of descent and distribution.

          g. 2000 Long-Term Incentive Plan. The Option evidenced by this Agreement
is granted pursuant to the Plan, a copy of which Plan has been made available
to Participant and is hereby incorporated into this Agreement. This Agreement
is subject to and in all respects limited and conditioned as provided in the
Plan. The Plan governs this Option and, in the event of any questions as to
the construction of this Agreement or in the event of a conflict between the
Plan and this Agreement, the Plan shall govern, except as the Plan otherwise
provides.

          h. Lockup Period Limitation. Participant agrees that in the event the
Company advises Participant that it plans an underwritten public offering of
its Common Stock in compliance with the Securities Act of 1933, as amended, and
that the underwriter(s) seek to impose restrictions under which certain
shareholders may not sell or contract to sell or grant any option to buy or
otherwise dispose of part or all of their stock purchase rights of the
underlying Common Stock, Participant hereby agrees that for a period not to
exceed 180 days from the prospectus, Participant will not sell or contract to
sell or grant an option to buy or otherwise dispose of this option or any of
the underlying shares of Common Stock without the prior written consent of the
underwriter(s) or its representative(s).

          i. Blue Sky Limitation. Notwithstanding anything in this Agreement to the
contrary, in the event the Company makes any public offering of its securities
and determines in its sole discretion that it is necessary to reduce the number
of issued but unexercised stock purchase rights so as to comply with any state
securities or Blue Sky law limitations with respect thereto, the Board of
Directors of the Company shall have the right (i) to accelerate the
exercisability of this Option and the date on which this Option must be
exercised, provided that the Company gives Participant 15 days’ prior written
notice of such acceleration, and (ii) to cancel any portion of this Option or
any other option granted to Participant pursuant to the Plan which is not
exercised prior to or contemporaneously with such public offering. Notice
shall be deemed given when delivered personally or when deposited in the United
States mail, first class postage prepaid and addressed to Participant at the
address of Participant on file with the Company.

          j. Accounting Compliance. Participant agrees that, if a merger,
reorganization, liquidation or other “transaction” as defined in Section 4.03
of the Plan is treated as a “pooling of interests” under generally accepted
accounting principles and Participant is an “affiliate” of the Company or any
Subsidiary (as defined in applicable legal and accounting principles) at the
time of such transaction, Participant will comply with all requirements of Rule
145 of the Securities Act of 1933, as amended, and the requirements of such
other legal or accounting principles, and will execute any documents necessary
to ensure such compliance.

          k. Stock Legend. The Administrator may require that the certificates for
any shares of Common Stock purchased by Participant (or, in the case of death,
Participant’s successors)

5

 

shall bear an appropriate legend to reflect the restrictions of Paragraph 4(b)
and Paragraphs 4(h) through 4(j) of this Agreement.

          l. Scope of Agreement. This Agreement shall bind and inure to the benefit
of the Company and its successors and assigns and Participant and any successor
or successors of Participant permitted by Paragraph 2 or Paragraph 4(f) above.

          m. Arbitration. Any dispute arising out of or relating to this Agreement
or the alleged breach of it, or the making of this Agreement, including claims
of fraud in the inducement, shall be discussed between the disputing parties in
a good faith effort to arrive at a mutual settlement of any such controversy.
If, notwithstanding, such dispute cannot be resolved, such dispute shall be
settled by binding arbitration. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. The
arbitrator shall be a retired state or federal judge or an attorney who has
practiced securities or business litigation for at least 10 years. If the
parties cannot agree on an arbitrator within 20 days, any party may request
that the chief judge of the District Court for Hennepin County, Minnesota,
select an arbitrator. Arbitration will be conducted pursuant to the provisions
of this Agreement, and the commercial arbitration rules of the American
Arbitration Association, unless such rules are inconsistent with the provisions
of this Agreement. Limited civil discovery shall be permitted for the
production of documents and taking of depositions. Unresolved discovery
disputes may be brought to the attention of the arbitrator who may dispose of
such dispute. The arbitrator shall have the authority to award any remedy or
relief that a court of this state could order or grant; provided, however, that
punitive or exemplary damages shall not be awarded. The arbitrator may award
to the prevailing party, if any, as determined by the arbitrator, all of its
costs and fees, including the arbitrator’s fees, administrative fees, travel
expenses, out-of-pocket expenses and reasonable attorneys’ fees. Unless
otherwise agreed by the parties, the place of any arbitration proceedings shall
be Hennepin County, Minnesota.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.

	 	 	 	 	 
	 	CABG MEDICAL, INC.

 
	 	By:  	 	 
	 	 	

	 	 	Its:	 	 
	 	 	 	

	 
	 	

	 	Participant 

6

 

RESTRICTED STOCK AGREEMENT

CABG MEDICAL, INC.

2000 LONG-TERM INCENTIVE PLAN

     THIS AGREEMENT, made effective as of this       day of       
        , 20     , by and between CABG Medical, Inc. a Minnesota corporation (the
“Company”), and         (“Participant”).

WITNESSETH:

     WHEREAS, the Participant on the date hereof is an officer, employee,
director, consultant or advisor of the Company; and

     WHEREAS, the Company wishes to grant a restricted stock award to
Participant for shares of the Company’s Common Stock pursuant to the Company’s
2000 Long-Term Incentive Plan (the “Plan”); and

     WHEREAS, the Administrator of the Plan has authorized the grant of a
restricted stock award to the Participant;

     NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:

     1. Grant of Restricted Stock Award. The Company hereby grants to
Participant on the date set forth above a restricted stock award (the “Award”)
for        (       ) shares of Common Stock on the
terms and conditions set forth herein, and subject to adjustment pursuant to
Section 4.03 of the Plan. The Company shall cause to be issued a stock
certificate representing such shares of Common Stock in the Participant’s name,
and shall deliver such certificate to the Participant; provided, however, that
the Company shall place a legend on such certificate describing the risks of
forfeiture and other transfer restrictions set forth in this Agreement and
providing for the cancellation and return of such certificate if such shares of
Common Stock are forfeited as provided in Section 2 below. Until such risks of
forfeiture have lapsed or the shares subject to this Award have been forfeited
pursuant to Section 2 below, the Participant shall be entitled to vote the
shares represented by such stock certificates and shall receive all dividends
attributable to such shares, but the Participant shall not have any other
rights as a shareholder with respect to such shares.

     2. Vesting of Restricted Stock.

     a. The shares of Stock subject to this Award shall remain forfeitable
until the        anniversary of the date of the Award (the “vesting
date”). If the Participant’s employment or other relationship with the Company
ceases for any reason [, other than termination by the Company without
“cause,”] at any time prior to the vesting date for the Award, the Participant
shall immediately forfeit all shares of Stock subject to this Award. If

1

 

the
Participant’s employment or other relationship is terminated by the Company
without
“cause” prior to the vesting date for this Award, all risks of forfeiture on
the shares of Stock subject to this Award shall immediately lapse.

     b. For purposes of Section 2(a), the Participant shall be terminated for
“cause” if the termination results from any of the following events:

     (i) The Participant’s conviction of a felony under federal or state
law, any act of dishonesty or disloyalty (including, but not limited to,
the willful misappropriation of the Company’s funds), or the commission
of any act involving moral turpitude;

     (ii) The Participant’s willful and material breach of the Company’s
policies or the Participant’s willful and material failure, neglect or
refusal to perform any of the duties that may be assigned to him from
time to time; or

     (iii) The Participant’s willful misconduct that: (A) materially and
adversely effects the reputation of the Company’s business, (B) is
contrary to the best interests of the Company, or (C) conflicts with or
is competitive with the business activities of the Company;

provided, however, that an act or failure to act by the Participant shall not
be “willful” unless it is done, or omitted to be done, in bad faith and without
any reasonable belief that the Participant’s action or omission was in the best
interests of the Company. With respect to the events listed in clause (ii) or
(iii) the Participant’s employment or other relationship shall not be deemed to
have been terminated for cause unless and until the Company provides the
Participant with a written notice that describes in detail the conduct
supporting such termination for cause and that grants the Participant a period
of at least 10 days from the date of such notice to take whatever steps are
necessary to discontinue the conduct described therein or to correct the
effects of the Participant’s prior conduct to the satisfaction of the Company.
If the Participant fails to discontinue such conduct described in such written
notice or cannot correct the effects of such prior conduct within such ten-day
period, the Participant’s employment or other relationship shall immediately
terminate upon the expiration of such ten-day period, and such termination
shall be deemed to be for cause.

     3. General Provisions.

          a. Employment. This Agreement shall not confer on the Participant any
right with respect to continuance of employment or other relationship by the
Company, nor will it interfere in any way with the right of the Company to
terminate such employment or relationship.

          b. Securities Law Compliance. The Participant shall not transfer or
otherwise dispose of the shares of Stock received pursuant to this Award until
such time as

2

 

counsel to the Company shall have determined that such transfer or
other disposition will not violate any state or federal securities or other
laws. The Participant may be required by the
Company, as a condition of the effectiveness of this Award, to agree in writing
that all Stock subject to this Award shall be held, until such time that such
Stock is registered and freely tradable under applicable state and federal
securities laws, for the Participant’s own account without a view to any
further distribution thereof, that the certificates for such shares shall bear
an appropriate legend to that effect and that such shares will be not
transferred or disposed of except in compliance with applicable state and
federal securities laws.

          c. Mergers, Recapitalizations, Stock Splits, Etc. Pursuant and subject to
Section 4.03 of the Plan, certain changes in the number or character of the
Stock of the Company (through sale, merger, consolidation, exchange,
reorganization, divestiture (including a spin-off), liquidation,
recapitalization, stock split, stock dividend or otherwise) shall result in an
adjustment, reduction or enlargement, as appropriate, in the number of shares
subject to this Award. Additional shares which may be credited pursuant to
such adjustment shall be subject to the same restrictions as are applicable to
the shares with respect to which the adjustment relates.

          d. Shares Reserved. The Company shall at all times during the term of the
this Award reserve and keep available such number of shares as will be
sufficient to satisfy the requirements of this Agreement.

          e. Withholding Taxes. In order to permit the Company to comply with all
applicable federal or state income tax laws or regulations, the Company may
take such action as it deems appropriate to insure that, if necessary, all
applicable federal or state payroll, income or other taxes are withheld from
any amounts payable by the Company to the Participant. If the Company is
unable to withhold such federal and state taxes, for whatever reason, the
Participant hereby agrees to pay to the Company an amount equal to the amount
the Company would otherwise be required to withhold under federal or state law
prior to the transfer of any certificates for the shares of Stock subject to
this Award. Participant may, subject to the approval and discretion of the
Administrator, or such other administrative rules it may deem advisable, elect
to have all or a portion of such tax withholding obligations satisfied by
delivering shares of the Company’s Common Stock having a fair market value, as
of the date the amount of tax to be withheld is determined under applicable tax
law, equal to such obligations.

          f. Accounting Compliance. Participant agrees that, in the event a “change
of control transaction” (as defined in Section 3(c) above) is treated as a
“pooling of interests” under generally accepted accounting principles and
Participant is an “affiliate” of the Company or any Subsidiary (as defined in
applicable legal and accounting principles) at the time of such change of
control transaction, Participant will comply with all requirements of Rule 145
of the Securities Act of 1933, as amended, and the requirements of such other
legal or accounting principles, and will execute any documents necessary to
ensure such compliance.

          g. Scope of Agreement. This Agreement shall bind and inure to the benefit
of the Company and its successors and assigns and of the Participant and any
successor or successors of the Participant.

3

 

          h. Arbitration. Any dispute arising out of or relating to this Agreement
or the alleged breach of it, or the making of this Agreement, including claims
of fraud in the
inducement, shall be discussed between the disputing parties in a good faith
effort to arrive at a mutual settlement of any such controversy. If,
notwithstanding, such dispute cannot be resolved, such dispute shall be settled
by binding arbitration. Judgment upon the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof. The arbitrator shall be a
retired state or federal judge or an attorney who has practiced securities or
business litigation for at least 10 years. If the parties cannot agree on an
arbitrator within 20 days, any party may request that the chief judge of the
District Court for Hennepin County, Minnesota, select an arbitrator.
Arbitration will be conducted pursuant to the provisions of this Agreement, and
the commercial arbitration rules of the American Arbitration Association,
unless such rules are inconsistent with the provisions of this Agreement.
Limited civil discovery shall be permitted for the production of documents and
taking of depositions. Unresolved discovery disputes may be brought to the
attention of the arbitrator who may dispose of such dispute. The arbitrator
shall have the authority to award any remedy or relief that a court of this
state could order or grant; provided, however, that punitive or exemplary
damages shall not be awarded. The arbitrator may award to the prevailing
party, if any, as determined by the arbitrator, all of its costs and fees,
including the arbitrator’s fees, administrative fees, travel expenses,
out-of-pocket expenses and reasonable attorneys’ fees. Unless otherwise
agreed by the parties, the place of any arbitration proceedings shall be
Hennepin County, Minnesota.

          i. 2000 Long-Term Incentive Plan. This Award evidenced by this Agreement
is granted pursuant to the Plan, a copy of which Plan has been made available
to the Participant and is hereby incorporated into this Agreement. This
Agreement is subject to and in all respects limited and conditioned as provided
in the Plan. All defined terms of the Plan shall have the same meaning when
used in this Agreement. The Plan governs this Award and, in the event of any
questions as to the construction of this Agreement or in the event of a
conflict between the Plan and this Agreement, the Plan shall govern, except as
the Plan otherwise provides.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.

	 	 	 	 	 
	 	CABG MEDICAL, INC.

 
	 	By:  	 	 
	 	 	

	 	 	Its:	 	 
	 	 	 	

	 
	 	

	 	Participant 
	 

4

 

INCENTIVE STOCK OPTION AGREEMENT

CABG MEDICAL, INC.

2000 LONG-TERM INCENTIVE PLAN

     THIS AGREEMENT, made effective as of this         day of        , 20       ,
by and between CABG Medical, Inc., a Minnesota corporation (the “Company”), and
       (“Participant”).

WITNESSETH:

     WHEREAS, Participant on the date hereof is a key employee or officer of
the Company or one of its Subsidiaries; and

     WHEREAS, the Company wishes to grant an incentive stock option to
Participant to purchase shares of the Company’s Common Stock pursuant to the
Company’s 2000 Long-Term Incentive Plan (the “Plan”); and

     WHEREAS, the Administrator of the Plan has authorized the grant of an
incentive stock option to Participant and has determined that, as of the
effective date of this Agreement, the fair market value of the Company’s Common
Stock is $        per share;

     NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:

     1. Grant of Option. The Company hereby grants to Participant on the date
set forth above (the “Date of Grant”), the right and option (the “Option”) to
purchase all or portions of an aggregate of                (       )
shares of Common Stock at a per share price of $        on the terms and
conditions set forth herein, and subject to adjustment pursuant to Section 4.03
of the Plan. This Option is intended to be an incentive stock option within
the meaning of Section 422, or any successor provision, of the Internal Revenue
Code of 1986, as amended (the “Code”), and the regulations thereunder, to the
extent permitted under Code Section 422(d).

     2. Duration and Exercisability.

          a. General. The term during which this Option may be exercised shall
terminate on the close of business on the        th day of        , 20       , except
as otherwise provided in Paragraphs 2(b) through 2(e) below. This Option shall
become exercisable according to the following schedule:

 

 

	 	 	 
	Vesting Date

	 	Number of Shares

Once the Option becomes exercisable to the extent of one hundred percent (100%)
of the aggregate number of shares specified in Paragraph 1, Participant may
continue to exercise this Option under the terms and conditions of this
Agreement until the termination of the Option as provided herein. If
Participant does not purchase upon an exercise of this Option the full number
of shares which Participant is then entitled to purchase, Participant may
purchase upon any subsequent exercise prior to this Option’s termination such
previously unpurchased shares in addition to those Participant is otherwise
entitled to purchase.

          b. Termination of Employment For Cause. If Participant’s employment with
the Company or any Subsidiary is terminated for cause, this Option shall
immediately terminate on the date of such termination of employment, and all
rights of Participant under this Option shall be forfeited.

            For purposes of this Paragraph 2(b), “cause” shall mean (i) Participant
being charged with a felony or convicted of any serious criminal act; (ii) any
intentional and/or willful act of fraud or dishonesty by Participant in any
material respect related to or connected with his employment by the Company or
its Subsidiary; (iii) the willful and continued failure, neglect or refusal by
Participant to substantially perform his employment duties with the Company or
its Subsidiary, (iv) a material violation of the Company’s or Subsidiary’s
policies or codes of conduct; or (v) the willful and material breach by
Participant of any agreement between Participant and the Company or its
Subsidiary, including but not limited to an employment agreement or a
noncompetition agreement.

          c. Termination of Employment Without Cause (other than Disability or
Death). If Participant’s employment with the Company or any Subsidiary is
terminated for any reason other than for cause, disability or death, this
Option shall completely terminate on the earlier of (i) the close of business
on the three-month anniversary following such termination of employment, and
(ii) the expiration date of this Option stated in Paragraph 2(a) above. In
such period following the termination of Participant’s employment, this Option
shall be exercisable only to the extent the Option was exercisable on the
vesting date immediately preceding such termination of employment, but had not
previously been exercised. To the extent this Option was not exercisable upon
such termination of employment, or if Participant does not exercise the Option
within the time specified in this Paragraph 2(c), all rights of Participant
under this Option shall be forfeited.

          d. Disability. If Participant’s employment terminates because of
disability (as defined in Code Section 22(e), or any successor provision), this
Option shall terminate on the earlier of (i) the close of business on the
twelve-month anniversary of such termination of employment, and (ii) expiration
date of this Option stated in Paragraph 2(a) above. In such period following
the

2

 

termination of Participant’s employment, this Option shall be exercisable to
the extent of 100% of the shares specified in Paragraph 1, less any shares
purchased on any previous exercise. If Participant does not exercise the
Option within the time specified in this Paragraph 2(d), all rights of
Participant under this Option shall be forfeited.

          e. Death. In the event of Participant’s death, this Option shall
terminate on the earlier of (i) the close of business on the twelve-month
anniversary of the date of Participant’s death, and (ii) the expiration date of
this Option stated in Paragraph 2(a) above. In such period following
Participant’s death, this Option shall be exercisable by the person or persons
to whom Participant’s rights under this Option shall have passed by
Participant’s will or by the laws of descent and distribution to the extent of
100% of the shares specified in Paragraph 1, less any shares purchased on any
previous exercise. If such person or persons do not exercise this Option
within the time specified in this Paragraph 2(e), all rights under this Option
shall be forfeited.

     3. Manner of Exercise.

          a. General. The Option may be exercised only by Participant (or other
proper party in the event of death or incapacity), subject to the conditions of
the Plan and subject to such other administrative rules as the Administrator
may deem advisable, by delivering within the Option Period written notice of
exercise to the Company at its principal office. The notice shall state the
number of shares as to which the Option is being exercised and shall be
accompanied by payment in full of the Option price for all shares designated in
the notice. The exercise of the Option shall be deemed effective upon receipt
of such notice by the Company and upon payment that complies with the terms of
the Plan and this Agreement. The Option may be exercised with respect to any
number or all of the shares as to which it can then be exercised and, if
partially exercised, may be so exercised as to the unexercised shares any
number of times during the Option period as provided herein.

          b. Form of Payment. Subject to approval by the Administrator, payment of
the option price by Participant shall be in the form of cash, personal check,
certified check, promissory note (with such terms as may be acceptable to the
Administrator) or previously acquired shares of Common Stock of the Company, or
any combination thereof. Any stock so tendered as part of such payment shall
be valued at its Fair Market Value as provided in the Plan. For purposes of
this Agreement, “previously acquired shares of Common Stock” shall include
shares of Common Stock that are already owned by Participant at the time of
exercise.

          c. Stock Transfer Records. As soon as practicable after the effective
exercise of all or any part of the Option, Participant shall be recorded on the
stock transfer books of the Company as the owner of the shares purchased, and
the Company shall deliver to Participant one or more duly issued stock
certificates evidencing such ownership. All requisite original issue or
transfer documentary stamp taxes shall be paid by the Company.

     4. Miscellaneous.

          a. Employment; Rights as Shareholder. This Agreement shall not confer on
Participant any right with respect to continuance of employment by the Company
or any of its

3

 

Subsidiaries, nor will it interfere in any way with the right of the Company to
terminate such employment. Participant shall have no rights as a shareholder
with respect to shares subject to this Option until such shares have been
issued to Participant upon exercise of this Option. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
other property), distributions or other rights for which the record date is
prior to the date such shares are issued, except as provided in Section 4.03 of
the Plan.

          b. Securities Law Compliance. The exercise of all or any parts of this
Option shall only be effective at such time as counsel to the Company shall
have determined that the issuance and delivery of Common Stock pursuant to such
exercise will not violate any state or federal securities or other laws.
Participant may be required by the Company, as a condition of the effectiveness
of any exercise of this Option, to agree in writing that all Common Stock to be
acquired pursuant to such exercise shall be held, until such time that such
Common Stock is registered and freely tradable under applicable state and
federal securities laws, for Participant’s own account without a view to any
further distribution thereof, that the certificates for such shares shall bear
an appropriate legend to that effect and that such shares will be not
transferred or disposed of except in compliance with applicable state and
federal securities laws.

          c. Mergers, Recapitalizations, Stock Splits, Etc. Pursuant and subject to
Section 4.03 of the Plan, certain changes in the number or character of the
Common Stock of the Company (through sale, merger, consolidation, exchange,
reorganization, divestiture (including a spin-off), liquidation,
recapitalization, stock split, stock dividend or otherwise) shall result in an
adjustment, reduction or enlargement, as appropriate, in Participant’s rights
with respect to any unexercised portion of the Option (i.e., Participant shall
have such “anti-dilution” rights under the Option with respect to such events,
but shall not have “preemptive” rights).

          d. Shares Reserved. The Company shall at all times during the option
period reserve and keep available such number of shares as will be sufficient
to satisfy the requirements of this Agreement.

          e. Withholding Taxes on Disqualifying Disposition. In the event of a
disqualifying disposition of the shares acquired through the exercise of this
Option, Participant hereby agrees to inform the Company of such disposition.
Upon notice of a disqualifying disposition, the Company may take such action as
it deems appropriate to insure that, if necessary to comply with all applicable
federal or state income tax laws or regulations, all applicable federal and
state payroll, income or other taxes are withheld from any amounts payable by
the Company to Participant. If the Company is unable to withhold such federal
and state taxes, for whatever reason, Participant hereby agrees to pay to the
Company an amount equal to the amount the Company would otherwise be required
to withhold under federal or state law. Participant may, subject to the
approval and discretion of the Administrator or such administrative rules it
may deem advisable, elect to have all or a portion of such tax withholding
obligations satisfied by delivering shares of the Company’s Common Stock or by
electing to have the Company withhold shares of Common Stock otherwise issuable
to Participant. Such shares shall have a Fair Market Value equal to the
minimum required tax withholding, based on the minimum statutory withholding
rates for federal and state tax purposes, including payroll taxes, that are
applicable to the supplemental income resulting from the disqualifying
disposition of the shares acquired through the exercise of

4

 

this Option. In no event may the Company withhold shares having a Fair Market
Value in excess of such statutory minimum required tax withholding.

          f. Nontransferability. During the lifetime of Participant, the accrued
Option shall be exercisable only by Participant or by the Participant’s
guardian or other legal representative, and shall not be assignable or
transferable by Participant, in whole or in part, other than by will or by the
laws of descent and distribution.

          g. 2000 Long-term Incentive Plan. The Option evidenced by this Agreement
is granted pursuant to the Plan, a copy of which Plan has been made available
to Participant and is hereby incorporated into this Agreement. This Agreement
is subject to and in all respects limited and conditioned as provided in the
Plan. The Plan governs this Option and, in the event of any questions as to
the construction of this Agreement or in the event of a conflict between the
Plan and this Agreement, the Plan shall govern, except as the Plan otherwise
provides.

          h. Lockup Period Limitation. Participant agrees that in the event the
Company advises Participant that it plans an underwritten public offering of
its Common Stock in compliance with the Securities Act of 1933, as amended, and
that the underwriter(s) seek to impose restrictions under which certain
shareholders may not sell or contract to sell or grant any option to buy or
otherwise dispose of part or all of their stock purchase rights of the
underlying Common Stock, Participant hereby agrees that for a period not to
exceed 180 days from the prospectus, Participant will not sell or contract to
sell or grant an option to buy or otherwise dispose of this option or any of
the underlying shares of Common Stock without the prior written consent of the
underwriter(s) or its representative(s).

          i. Blue Sky Limitation. Notwithstanding anything in this Agreement to the
contrary, in the event the Company makes any public offering of its securities
and determines in its sole discretion that it is necessary to reduce the number
of issued but unexercised stock purchase rights so as to comply with any state
securities or Blue Sky law limitations with respect thereto, the Board of
Directors of the Company shall have the right (i) to accelerate the
exercisability of this Option and the date on which this Option must be
exercised, provided that the Company gives Participant 15 days’ prior written
notice of such acceleration, and (ii) to cancel any portion of this Option or
any other option granted to Participant pursuant to the Plan which is not
exercised prior to or contemporaneously with such public offering. Notice
shall be deemed given when delivered personally or when deposited in the United
States mail, first class postage prepaid and addressed to Participant at the
address of Participant on file with the Company.

          j. Accounting Compliance. Participant agrees that, if a merger,
reorganization, liquidation or other “transaction” as defined in Section 4.03
of the Plan is treated as a “pooling of interests” under generally accepted
accounting principles and Participant is an “affiliate” of the Company or any
Subsidiary (as defined in applicable legal and accounting principles) at the
time of such transaction, Participant will comply with all requirements of Rule
145 of the Securities Act of 1933, as amended, and the requirements of such
other legal or accounting principles, and will execute any documents necessary
to ensure such compliance.

5

 

          k. Stock Legend. The Administrator may require that the certificates for
any shares of Common Stock purchased by Participant (or, in the case of death,
Participant’s successors) shall bear an appropriate legend to reflect the
restrictions of Paragraph 4(b) and Paragraphs 4(h) through 4(j) of this
Agreement.

          l. Scope of Agreement. This Agreement shall bind and inure to the benefit
of the Company and its successors and assigns and Participant and any successor
or successors of Participant permitted by Paragraph 2 or Paragraph 4(f) above.

          m. Arbitration. Any dispute arising out of or relating to this Agreement
or the alleged breach of it, or the making of this Agreement, including claims
of fraud in the inducement, shall be discussed between the disputing parties in
a good faith effort to arrive at a mutual settlement of any such controversy.
If, notwithstanding, such dispute cannot be resolved, such dispute shall be
settled by binding arbitration. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. The
arbitrator shall be a retired state or federal judge or an attorney who has
practiced securities or business litigation for at least 10 years. If the
parties cannot agree on an arbitrator within 20 days, any party may request
that the chief judge of the District Court for Hennepin County, Minnesota,
select an arbitrator. Arbitration will be conducted pursuant to the provisions
of this Agreement, and the commercial arbitration rules of the American
Arbitration Association, unless such rules are inconsistent with the provisions
of this Agreement. Limited civil discovery shall be permitted for the
production of documents and taking of depositions. Unresolved discovery
disputes may be brought to the attention of the arbitrator who may dispose of
such dispute. The arbitrator shall have the authority to award any remedy or
relief that a court of this state could order or grant; provided, however, that
punitive or exemplary damages shall not be awarded. The arbitrator may award
to the prevailing party, if any, as determined by the arbitrator, all of its
costs and fees, including the arbitrator’s fees, administrative fees, travel
expenses, out-of-pocket expenses and reasonable attorneys’ fees. Unless
otherwise agreed by the parties, the place of any arbitration proceedings shall
be Hennepin County, Minnesota.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.

	 	 	 	 	 
	 	CABG MEDICAL, INC.

 
	 	By:  	 	 
	 	 	

	 	 	Its:	 	 
	 	 	 	

	 
	 	

	 	Participant 

6exv10w2

 

EXHIBIT 10.2

MANUEL A. VILLAFANA

CONSULTING AGREEMENT

     THIS AGREEMENT is made as of the 1st day of April, 2003 by an between CABG
Medical, Inc., a Minnesota corporation (the “Company”), and Manuel A.
Villafaña, a resident of the States of Minnesota (“MAV”).

     WHEREAS, MAV has served in various capacities with the Company since its
inception and the parties now desire to codify their relationship in the form
of this Consulting Agreement;

     NOW, THEREFORE, for good and valuable consideration, the parties agree to
the following terms and conditions:

     1. Employment. Subject to all of the terms and conditions of this
Agreement, the Company agrees to employ MAV on a “full-time” basis as its
Chairman and Chief Executive Officer and MAV accepts this employment as
consultant.

     2. Duties. MAV will make the best use of his energy, knowledge and
training in advancing the Company’s interests. He will diligently and
conscientiously perform the duties of Chairman and Chief Executive Officer of
the Company, as such duties may be defined by the Company’s Board of Directors
and such other tasks as may from time to time be reasonably required to further
the growth of the Company. During the term of this Agreement, MAV may engage
in any outside consulting activities that do not violate the provisions of
Sections 7 and 8 of this Agreement.

     3. Term. Unless terminated at an earlier date in accordance with the
provisions of this Agreement, the term of MAV’s services hereunder shall
commence on the date of this Agreement and shall terminate on 1 April 2008.
The Company may terminate the relationships created by this Agreement upon 60
days notice to MAV if such termination is without cause (as defined below), and
with no notice if such termination is for cause. If termination is without
cause, MAV’s base salary will continue for the entire term of this Agreement as
defined in Section 4(a) of this Agreement.

          As used in this Agreement, the term “Cause” shall be defined as (i) MAV’s
breach of any of his material duties or obligations under this Agreement, which
breach is not corrected within 30 days of receipt of written notice thereof by
MAV from the Company’s Board of Directors, (ii) embezzlement or other
misappropriation of property of the Company, or (iii) conviction of a felony
offense or gross misdemeanor. No termination of the relationship created by
this Agreement shall relieve MAV of his duties under Sections 5, 6 and 7
hereof.

     4. Compensation.

     (a) Base Salary. The initial base salary will be $16,667 per
month. The Board of Directors may adjust the base salary for MAV in
accordance with its compensation practices.

 

 

     (b) Benefits. MAV shall be entitled to participate in any benefit
plans which may be established by the Board of Directors of the Company
for his benefit.

     (c) Expenses. The Company shall reimburse MAV for all ordinary and
necessary business expenses MAV incurs while performing his duties under
this Agreement, provided that MAV accounts properly for such expenses to
the Company in accordance with the general corporate policy of the
Company as determined by the Company’s Board of Directors and in
accordance with the requirements of Internal Revenue Service regulation
relating to substantiation of expenses.

     (d) Bonuses. MAV shall be eligible to receive discretionary
bonuses in addition to his base salary as and when determined by the
Board of Directors of the Company during the term of this Agreement.

     5. Inventions.

     (a) “Inventions”, as used in this Section 5, means any discoveries,
designs, improvements or software (whether or not they are in writing or
reduced to practice) or works of authorship (whether or not they can be
patented or copyrighted) that MAV makes, authors, or conceives (either
alone or with others) and that:

          (i) concerns directly the Company’s products, research or
development; or

          (ii) results from any work MAV performs for the Company; or

          (iii) uses the Company’s equipment, facilities or trade secret
information.

     (b) MAV agrees that all Inventions he makes during his employment
with the Company will be the sole and exclusive property of the Company.
MAV will, with respect to any such Invention:

          (i) keep current, accurate and complete records, which will
belong to the Company and be kept and stored on the Company’s
premises while MAV is employed by the Company.

          (ii) promptly and fully disclose the existence and describe
the nature of the Invention to the Company in writing (and without
request);

          (iii) assign (and MAV does hereby assign) to the Company all
of his rights to the Invention, any applications he makes for
patents or copyrights in any country, and any patents or copyrights
granted to him in any country; and

          (iv) acknowledge and deliver promptly to the Company any
written instruments, and perform any other reasonable acts
necessary in the Company’s opinion and at its expense to preserve
property rights in the Invention against

2

 

forfeiture, abandonment, or loss and to obtain and maintain
letters, patents and/or copyrights on the Invention and to vest the
entire right and title to the Invention in the Company, provided
that MAV makes no warranty or representation to the Company as to
rights against third parties hereunder.

          The requirements of this subsection 5(b) do not apply to an Invention for
which no equipment, facility, or trade secret information of the Company was
used and which was developed entirely on MAV’s own time, and which (i) does not
relate directly to the Company’s business or to the Company’s actual research
or development, or (ii) does not result from any work MAV performed for the
Company. Except as previously disclosed to the Company in writing, MAF does
not have and will not assert any claims to or rights under any Inventions as
having been made, conceived, authored or acquired by MAV prior to his
employment hereunder.

     6. Confidential Information.

     (a) “Confidential Information” as used in this Section 6 means
information that is not generally known and that is proprietary to the
Company or that the Company is obligated to treat as proprietary. This
information includes, without limitation:

          (i) trade secret information about the Company and its
products or services;

          (ii) “Invention” as defined in subsection 5(a) above;

          (iii) information concerning the Company’s business, as the
Company has conducted it or as it may conduct it in the future; and

          (iv) information concerning any of the Company’s past, current
or possible future products, including (without limitation)
information about the Company’s research, development, engineering,
purchasing, manufacturing, servicing, finances, marketing or
selling.

          Any information that reasonably can be expected to be treated as
Confidential Information will be presumed to be Confidential Information
(whether MAV or others originated it and regardless of how he obtained it).

     (b) Except as required in his duties to the Company, MAV will not,
during his employment or for a period of five (5) years after termination
of his employment with the Company, use or disclose Confidential
Information to any person not authorized by the Company to receive it,
excluding Confidential Information (i) which becomes publicly available
by a source other than MAV, or (ii) which is received by MAV after
termination of his employment hereunder from a source who did not obtain
the information directly or indirectly from employees or agents of the
Company, or (iii) for which disclosure thereof the Company has consented
in writing. When MAV’s employment with the Company ends, he will
promptly turn over to the Company all records and any compositions,
articles, devices or embody Confidential Information,

3

 

     including all copies, reproductions and specimens of the Confidential
Information in his possession, regardless of who prepared them.

     7. Post-employment, Consulting and Competitive Activities. MAV agrees
that during his employment with the Company and for a minimum period of two (2)
years, extendable automatically up to five (5) years in one (1) year increments
unless terminated by the Company with a sixty(60) day notice prior to end of
current consulting year, after his employment with the Company ends:

     (a) He will not alone, or in any capacity with another firm, (i)
directly or indirectly engage in any commercial activity that is
competitive with any of the Company’s business in which MAV participated
while he was employed by the Company or any affiliate thereof, not will
he participate in the management or operation of, or become a significant
investor in, any venture or enterprise of whatever kind as a principal,
officer, director, employee, representative, agent or shareholders of any
entity whose business is the design, development, production, marketing,
or servicing of any product or serve competitive with the business of the
Company as it exists at the time his employment with the Company or any
affiliate thereof is terminated; (ii) solicit or in any way interfere or
attempt to interfere with the Company’s relationships with any of its
current or potential customers; or (iii) employ or attempt to employ any
of the Company’s employees on behalf of any other entity competing with
the Company provided that, nothing in this Section 7 shall restrict MAV’s
employment by or association with any entity, venture or enterprise which
engages in a business with a product or service competitive with any
product or service of the Company so long as the following conditions are
complied with: (A) MAV’s employment or association with such entity,
venture or enterprise is limited to work which does not involve or relate
to the design, development, production, marketing or servicing of a
product or service which is directly competitive with any product or
service of the Company; and (B) MAV’s employer takes reasonable measures
to ensure that MAV is not involved with or consulted in any aspect of the
design, development, production, marketing or servicing or such
competitive product or service and, provided further, that if the Company
is purchased or acquired in a merger or similar transaction, the
provisions of this Section 7(a) shall apply only to MAV’s engaging in
activities competitive with the business in which the Company was engaged
prior to any such purchase or merger and such provisions shall not be
deemed to prohibit MAV from competing with any other aspects of the
business of any purchasing or acquiring person.

     (b) He will, prior to accepting employment with any new employer,
information that employer of this Agreement and provide that employer
with a copy of Section 7 of this Agreement, provided that he reasonably
believes his new position is or may be contrary to this Agreement.

     (c) To compensate for the restrictions and consulting contained in
this Section 7, the Company will make a monthly payment to MAV commencing
with the first month after termination of employment and continuing until
such restrictions expire. The amount paid shall be MAV’s monthly base
salary at the time of any termination of

4

 

     MAV’s employment with the Company adjusted annually to the CPI index.
During the course of this Agreement, MAF shall remain a participant in
the Company’s medical benefits plan which premiums are paid by the
Company except for the contribution required of the employee/consultant,
which shall remain MAV’s responsibility. MAV hereby agrees to accept
such payment, and acknowledges that such payment, as well as other
consideration received in the course of his employment, is sufficient
consideration for the restrictions contained in this Section 7. MAV
agrees that upon acceptance of such payment, the Company shall have no
further liability to MAV and such payment shall, subject to the
limitation described below, constitute a release by MAV of all claims and
liabilities against the Company arising from this employment. The
Company agrees that it shall make a good faith effort to settle any
employment-related claims by MAV prior to making the first payment due
under this Section 7(c).

     (d) He will consult on non-confidential Company matters with the
Board of Directors at their request on a limited time basis not to exceed
20 hours per month.

     8. Conflicting Business. MAV agrees that he will not transact business
with the Company personally, or as agent, owner, partner or shareholder of any
other entity, except as approved by the Board of Directors. MAV further agrees
that he will not engage in any business activity or outside employment that may
be in conflict with the Company’s proprietary or business interests.

     9. No Adequate Remedy. MAV understands that if he fails to fulfil his
obligations under Sections 5, 6, 7 or 8 of this Agreement, the damages to the
Company would be very difficult to determine. Therefore, in addition to any
other rights or remedies available to the Company at law, in equity or by
statute, MAV hereby consents to the specific enforcement of Sections 5, 6, 7 or
8 of this Agreement by the Company through an injunction or restraining order
issued by any appropriate court.

     10. Miscellaneous.

     (a) Successors and Assigns. This Agreement may not be assigned by
MAV. This Agreement may not be assigned by the Company without MAV’s
consent, which consent shall not be unreasonably withheld.

     (b) Modification. This Agreement may be modified or amended only
by a writing signed by each of the parties hereto.

     (c) Construction. Wherever possible, each provision of this
Agreement shall be interpreted so that it is valid under applicable law.
If any provision of this Agreement is to any extent invalid under
applicable law in any jurisdiction, that provision shall still be
effective to the extent it remains valid. The remainder of this
Agreement also shall continue to be valid, and the entire Agreement shall
continue to be valid in other jurisdictions.

5

 

     (d) Non-Waiver. No failure or delay by any of the parties hereto
in exercising any right or remedy under this Agreement shall waive any
provision of the Agreement. Nor shall any single or partial exercise by
any of the parties hereto of any right or remedy under this Agreement
preclude any of them from otherwise or further exercising their rights or
remedies, or any other rights or remedies granted by any law or any
related document.

     (e) Captions. The headings in this Agreement are for convenience
only and shall not affect the interpretation of this Agreement.

     (f) Notices. All notices and other communications required or
permitted under this Agreement shall be in writing and hand delivered or
sent by registered first-class mail, postage prepaid. Such notices and
other communication shall be effective upon receipt if hand delivered and
shall be effective five (5) business days after mailing if sent by mail
to the following addresses, or such other addresses as either party shall
have notified the other party:

	 	 	 	 	 
	

	 	If to the Company:
	 	CABG Medical, Inc.
	

	 	 	 	c/o Tom King
	

	 	 	 	Fredrikson & Byron, P.A.
	

	 	 	 	Pillsbury Center
	

	 	 	 	Minneapolis, MN 55402
	 
	 	 	 	 
	

	 	If to MAV:
	 	Manuel A. Villafaña
	

	 	 	 	1482 Hunter Drive
	

	 	 	 	Medina, Minnesota 55391

     IN WITNESS WHEREOF, the Company and MAV have executed this Agreement as of
the date first above written.

	 	 	 
	

	 	CABG MEDICAL, INC.
	 
	 	 
	

	 	By: /s/ Bonnie L. Hutterer
	

	 	
 
	

	 	Title: Corporate Secretary
	 
	 	 
	

	 	/s/ Manuel A. Villafaña
	

	 	
 
	

	 	Manuel A. Villafaña

6

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