Document:

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                                 Exhibit 10.14
                        UROPLASTY, INC. AND SUBSIDIARIES
        Employment Agreement between Uroplasty, Inc. and Larry Heinemann
                             dated December 7, 1999

                                 UROPLASTY, INC.
                              EMPLOYMENT AGREEMENT

     This Employment Agreement (the "Agreement") is made and entered into
effective the 7th day of December, 1999, between Uroplasty, Inc., a Minnesota
corporation, located at 2718 Summer Street N.E., Minneapolis, Minnesota, 55413
(hereinafter referred to as the "Company") and Larry R. Heinemann, who resides
at 1102 Golden Oaks Drive, Hudson, Wisconsin 54016 (hereinafter referred to as
"Employee").

     1.   EMPLOYMENT. The Company hereby employs Employee as Vice President of
Sales and Marketing of the Company and Employee accepts such employment and
agrees to serve the Company with undivided loyalty and to the best of his
ability promote the interests and business of the Company and to devote his full
business time, energy and skill to such employment.

     2.   DUTIES AND POWERS.

          (a)  Employee shall report to the President and Chief Executive
Officer of the Company.

          (b)  Employee shall perform such duties as a Vice President of Sales
and Marketing would customarily perform and such other duties as may be assigned
to him from time to time by the President and Chief Executive Officer.

     3.   TERM. The term of this Agreement shall commence on December 7, 1999,
and shall continue indefinitely, until such time, if any, that this Agreement is
terminated pursuant to Section 10 herein.

     4.   BASE SALARY. The Company shall pay to Employee a base salary of
Seventy Eight Thousand Dollars ($78,000.00) per year, which shall be paid in
installments payable at least twice per month, and such amount shall be adjusted
at least on an annual basis pursuant to the mutual agreement of the Company and
Employee.

     5.   BONUS. Employee shall be paid a bonus based on all worldwide sales.
Bonus amounts shall be calculated as a percentage of sales denominated in United
States Dollars as reported in the Company's consolidated financial statements,
and shall be paid on a quarterly basis within thirty (30) days after the end of
each fiscal quarter. The terms of the bonus calculation shall be determined and
adjusted on an annual basis, or more frequently as needed, pursuant to the
mutual agreement of the Company and Employee.

     6.   FRINGE BENEFITS. During the term of Employee's employment with the
Company, the Company shall provide to Employee the right to participate in all
fringe benefits and perquisite and benefits programs as are made available to
employees or executives of the Company from time to time, including, without
limitation, health-care coverage provided by the Company or a third party under
contract with the Company, and three weeks per year paid vacation.

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     7.   REIMBURSEMENT OF BUSINESS EXPENSES. The Company shall reimburse
Employee for the reasonable and necessary expenses incurred in connection with
the performance of his duties in accordance with the policies and procedures of
the Company governing such expenses, upon presentation of appropriate vouchers
for said expenses.

     8.   CONFIDENTIALITY AGREEMENT. Contemporaneously herewith and in
connection with this Agreement, the parties have also entered into that certain
Employee Confidentiality, Inventions, Non-Solicitation and Non-Compete
Agreement, which shall supercede any other agreement entered into previously
between the Company and employee having a similar purpose or effect, such as but
not limited to the Employee Patent and Confidential Information Agreement.
Agreements referred to in this Section 8 of this Agreement shall collectively be
referred to herein as the "Confidentiality Agreements".

     9.   EMPLOYEE STOCK OPTION AGREEMENT. Contemporaneously herewith and in
connection with this Agreement, the parties hereto have entered into that
certain Employee Stock Option Agreement No. 61.

     10.  TERMINATION. Employee's employment with the Company may be terminated
by the Company or Employee, with or without cause, upon thirty (30) days'
written notice to the other party. Such employment may also be terminated
immediately by the Company by written notice to Employee for the following
events which would constitute "Cause": (a) Employee is convicted of a felony,
(b) Employee has committed any theft or fraudulent act or has acted dishonestly
with respect to any business of the Company, (c) Employee has engaged in
substance abuse, or (d) Employee has breached any agreement made between
Employee and the Company, including, without limitation, the Confidentiality
Agreements, as defined in Section 8 hereto. In no event shall termination for
Cause be based solely on Employee's employment performance.

     11.  SEVERANCE PAYMENT. If the Company, its successors or assigns terminate
this Agreement without Cause, the Company, its successors or assigns shall
continue to pay to Employee his monthly base salary for a period equal to one
month following such termination for each full year of employment with the
Company, provided, however, that the Company shall have no obligation to make
such payments if Employee has breached any term or provision of the
Confidentiality Agreement, as defined in Section 7 hereto. In no event shall
post-termination payments payable pursuant to this paragraph be made to Employee
for a period less than four (4) or greater than twelve (12) months.

     12.  SEVERABILITY. If any provision of this Agreement shall be held by any
court of competent jurisdiction to be illegal, invalid or unenforceable, such
provision shall be construed and enforced as if it had been more narrowly drawn
so as not to be illegal, invalid or unenforceable, and such illegality,
invalidity or unenforceability shall have no effect upon and shall not impair
the enforceability of any other provision of this Agreement.

     13.  ATTORNEYS' FEES AND COSTS. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which he or it may be entitled.

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     14.  WAIVER OF BREACH. Any waiver by either party of compliance with any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any other provision of this Agreement, or of any subsequent
breach by such party of a provision of this Agreement.

     15.  AMENDMENT. This Agreement may be amended only in writing, signed by
both parties.

     16.  ENTIRE AGREEMENT. This Agreement contains the entire understanding of
the parties with regard to all matters contained herein. Other than those
agreements referred to in this Agreement, there are no other agreements,
conditions or representations, oral or written, expressed or implied, with
regard thereto. This Agreement supersedes all prior agreements, if any, relating
to the employment of Employee by the Company.

     17.  BINDING EFFECT. This Agreement is and shall be binding upon the heirs,
personal representatives, legal representatives, successors and assigns of the
parties hereto; provided, however, Employee may not assign this Agreement.

     18.  NO THIRD PARTY BENEFICIARIES. Nothing herein expressed or implied is
intended or shall be construed as conferring upon or giving to any person, firm
or corporation other than the parties hereto any rights or benefits under or by
reason of this Agreement.

     19.  NOTICES. Any notice to be given under this Agreement by either
Employee or the Company shall be in writing and shall be effective upon personal
delivery or delivery by mail, registered or certified, postage prepaid with
return receipt requested. Mailed notices shall be addressed to the party at the
address set forth at the beginning of this Agreement, but each party may change
its or his address by written notice in accordance with this paragraph. Notice
delivered personally shall be deemed given as of actual receipt and mailed
notices shall be deemed given as of three business days after mailing.

     20.  COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute but one and the same agreement.

     21.  GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Minnesota, without giving effect to
conflict of law principles contained therein. The venue for any action hereunder
shall be in the State of Minnesota, whether or not such venue is or subsequently
becomes inconvenient, and the parties consent to the jurisdiction of the courts
of the State of Minnesota, County of Hennepin, and the U.S. District Court,
District of Minnesota.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above:

<TABLE>
UROPLASTY, INC.                                               EMPLOYEE:

<S>                                                           <C>
Signature:
          -------------------------------------------         -----------------------------------------------------
                                                              Larry R. Heinemann

Print Name:                                                   Date:
           ------------------------------------------              ------------------------------------------------

Title:                                                        Date:
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</TABLE><PAGE>   1
                                 Exhibit 10.15
                        UROPLASTY, INC. AND SUBSIDIARIES

                                 UROPLASTY, INC.
                             1997 STOCK OPTION PLAN
                  AS AMENDED JULY 29, 1999 AND DECEMBER 7, 1999

      1.  PURPOSE

          The purpose of this 1997 Stock Option Plan (the "Plan") is to promote
          the interests of UROPLASTY, INC., a Minnesota Corporation (the
          "Company") by providing employees of the Company with an opportunity
          to acquire a proprietary interest in the Company and thereby develop a
          stronger incentive to contribute to the Company's continued success
          and growth. In addition, the opportunity to acquire a proprietary
          interest in the Company by the offering and availability of stock
          options will assist the Company in attracting and retaining key
          personnel of outstanding ability.

      2.  DEFINITIONS

          Wherever used in the Plan, the following terms have the meanings set
          forth below:

          2.1  "Board" means the Board of Directors of the Company.

          2.2  "Code" means the Internal Revenue Code of 1986, as amended, and
               the rules and regulations promulgated thereunder.

          2.3  "Committee" means the Committee which may be designated from time
               to time by the Board pursuant to Section 3.5 of the Plan.

          2.4  "Incentive Stock Option" or "ISO" means a stock option which is
               intended to qualify as an incentive stock option as defined in
               Section 422 of the Code.

          2.5  "Non-Statutory Stock Option" or "NSO" means a stock option to
               purchase stock that does not qualify as an incentive stock option
               as defined in Section 422 of the Code.

          2.6  "Option" means, where required by the context of the Plan, an ISO
               and/or NSO granted pursuant to the Plan.

          2.7  "Optionee" means a Participant in the Plan who has been granted
               one or more Options under the Plan.

          2.8  "Participant" means an individual described in Section 5 of this
               Plan who may be granted Options under the Plan.

          2.9  "Stock" means the Common Stock, $.01 par value, of the Company.

          2.10 "Subsidiary" means any corporation other than the Company in an
               unbroken chain of corporations beginning with the Company if each
               of the corporations other than the last corporation in the
               unbroken chain owns 50% or more of the voting stock in one of the
               other corporations in such chain.

      3.  ADMINISTRATION

          3.1  The Plan shall be administered by the Board, which shall have
               full power, subject to the provisions of the Plan, to grant
               Options, construe and interpret the Plan, establish rules and
               regulations

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               with respect to the Plan and Options granted hereunder, and
               perform all other acts, including the delegation of
               administrative responsibilities, that it believes reasonable and
               necessary.

          3.2  (a) The Board shall have the sole discretion, subject to the
                   provisions of the Plan, to determine the Participants
                   eligible to receive Options pursuant to the Plan and the
                   amount, type and terms of any Options and the terms and
                   conditions of option agreements relating to any Option,
                   including vesting restrictions and minimum performance
                   targets.

               (b) Performance targets may be based on financial criteria, such
                   as the fair market value of Stock or other measures of
                   financial performance of the Company, or may be based on the
                   performance of a Subsidiary or division of the Company or
                   the performance of a Participant.

               (c) Minimum performance targets may include (i) the achievement
                   by the Company of a specified target earnings per share,
                   return on equity or net income, all as adjusted to exclude
                   items that the Board determines to be inappropriate for
                   purposes of the Option, (ii) the Company's stock price,
                   (iii) the achievement by a business unit of the Company of a
                   specified target net income as adjusted to exclude items
                   that the Board determines to be inappropriate for purposes
                   of the Option or market share, or (iv) any combination of
                   the goals set forth in (i) through (iii) above. If an Option
                   is granted on such basis, the Board shall establish such
                   goals prior to the beginning of the Company's fiscal plan
                   year or other period during which the performance is
                   measured. As a condition to the exercise of any Option
                   granted under this Section 3.2 (c), the Board shall, within
                   120 days after the end of such period, certify in writing
                   the goals used as the basis for any such Option and any
                   other material terms were satisfied.

          3.3  The Board may correct any defect, supply any omission or
               reconcile any inconsistency in the Plan or in any Option granted
               hereunder in the manner and to the extent it shall deem necessary
               to carry out the terms of the Plan.

          3.4  Any decision made or action taken by the Board arising out of or
               in connection with the interpretation and administration of the
               Plan shall be final, conclusive and binding upon Optionees.

          3.5  The Board may designate a Committee from time to time to
               administer the Plan. If designated, the Committee shall be
               composed of not less than three persons (who need not be members
               of the Board) who are appointed from time to time by the Board.
               If the Board has appointed a Committee pursuant to this Section
               3.5, then the Committee may administer the Plan and exercise all
               of the rights and powers granted to the Board in this Plan
               including, without limitation, the right to grant Options
               pursuant to the Plan and to establish the Option price as
               provided in the Plan.

      4.  SHARES SUBJECT TO THE PLAN

          4.1  NUMBER. The total number of shares of Stock reserved for issuance
               upon exercise of Options under the Plan is eight hundred thousand
               (800,000). Such shares shall consist of authorized but unissued
               Stock. If any Option granted under the Plan lapses or terminates
               for any reason before being completely exercised, the shares
               covered by the unexercised portion of such Option may again be
               made subject to Options under the Plan.

          4.2  CHANGES IN CAPITALIZATION. In the event of any change in the
               outstanding shares of Stock in the Company by reason of any stock
               dividend, split, recapitalization, reorganization, merger,
               consolidation, combination, exchange of shares or rights offering
               to purchase stock at a price

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               substantially below fair market value or other similar corporate
               change, the aggregate number of shares which may be subject to
               Options under the Plan and the terms of any outstanding Option,
               including the number and kind of shares subject to such Options
               and the purchase price per share thereof, shall be appropriately
               adjusted by the Board consistent with such change and in such
               manner as the Board, in its sole discretion, may deem equitable
               to prevent substantial dilution or enlargement of the rights
               granted to or available for Optionees. Notwithstanding the
               preceding sentence, in no event shall any fraction of a share of
               Stock be issued upon the exercise of an Option.

     5.   ELIGIBLE PARTICIPANTS

          The following persons are eligible to participate in the Plan:

          5.1  INCENTIVE STOCK OPTIONS. Incentive Stock Options may be granted
               only to employees of the Company or any Subsidiary, including
               officers and directors who are also employees of the Company or
               any Subsidiary.

          5.2  NON-STATUTORY STOCK OPTIONS. Non-Statutory Stock Options may be
               granted to (i) any employee of the Company or any Subsidiary,
               including any officer or director who is also an employee of the
               Company or any Subsidiary, (ii) any non-employee, director of the
               Company or any Subsidiary and (iii) any consultant to, or other
               independent contractor of, the Company.

      6.  GRANT OF OPTIONS

          6.1  OPTIONS TO BE GRANTED. Subject to the terms, conditions and
               limitations set forth in this Plan, the Company, by action of its
               Board, may from time to time grant Options to purchase shares of
               the Company's Stock to those eligible Participants as may be
               selected by the Board in such amounts and on such other terms as
               the Board in its sole discretion shall determine. Such Options
               may be (i) "Incentive Stock Options" so designated by the Board
               and which, when granted, are intended to qualify as incentive
               stock options as defined in Section 422 of the Code; (ii)
               "Non-Statutory Stock Options" so designated by the Board which,
               when granted, do not qualify as incentive stock options under
               Section 422 of the Code; or (iii) a combination of both. The date
               on which the Board approves the granting of an Option shall be
               the date of grant of such Option. Notwithstanding the foregoing,
               with respect to the grant of any Incentive Stock Option under the
               Plan the aggregate fair market value of Stock (determined as of
               the date of the Option is granted) with respect to which such
               Options are exercisable for the first time by an Optionee in any
               calendar year (under all such stock option plans of the Company
               or Subsidiaries) shall not exceed $100,000.

          6.2  OPTION AGREEMENT. Each grant of an Option under the Plan shall be
               evidenced by a written stock option agreement between the Company
               and the Optionee setting forth the terms and conditions, not
               inconsistent with the Plan, under which the Option so granted may
               be exercised pursuant to the Plan and containing such other terms
               with respect to the Option as the Board in its sole discretion
               may determine.

          6.3  CHANGE IN CONTROL. If a change in control occurs, the
               exercisability of all outstanding options, including those
               subject to vesting and/or performance targets, will automatically
               accelerate immediately before the effective date of the change in
               control. This means that all options outstanding immediately
               before the effective date of the change in control shall become
               fully exercisable for all of the shares of common stock subject
               to each option at that time.

                 A change in control is defined as:
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              (i)   a third person, including a syndicate or group deemed to be
                    a person under Section 13(d)(3) of the Exchange Act, becomes
                    the beneficial owner (as so determined) of Stock having
                    thirty percent (30%) or more of the total number of votes
                    which may be cast for the election of members of the Board;

              (ii)  all or substantially all of the assets and business of the
                    Company are sold, transferred or assigned to, or otherwise
                    acquired by, any other entity or entities; or

              (iii) as a result of, or in connection with, any cash tender or
                    exchange offer, merger or other business combination, sale
                    of assets or contested election, or any combination of the
                    foregoing transactions, the persons who are members of the
                    Board before any such transaction shall cease to constitute
                    a majority of the Board of the Company or any successor to
                    the Company.

               Notwithstanding the foregoing, in no event shall the distribution
               of stock in a subsidiary by the Company to its stockholders be
               deemed a Change in Control.

      7.  OPTION PRICE AND FORM OF PAYMENT

          The purchase price for a share of Stock subject to an Option granted
          hereunder shall not be less than 100% of the fair market value of the
          Stock. For purposes of this Section 7, the "fair market value" of the
          Stock shall be determined as follows:

               (a)  If the Stock of the Company is listed or admitted to
                    unlisted trading privileges on a national securities
                    exchange, the fair market value on any given day shall be
                    the closing sale price for the Stock, or if no sale is made
                    on such day, the closing bid price for such day on such
                    exchange;

               (b)  If the Stock is not listed or admitted to unlisted trading
                    privileges on a national securities exchange, the fair
                    market value on any given day shall be the closing sale
                    price for the Stock as reported on the National Association
                    of Securities Dealers Automated Quotations ("NASDAQ") System
                    on such day, or if no sale is made on such day, the closing
                    bid price for such day as entered by a market maker for the
                    Stock;

               (c)  If the Stock is not listed on a national securities exchange
                    is not admitted to unlisted trading privileges on any such
                    exchange, and is not eligible for inclusion in the NASDAQ
                    National Market System, the fair market value on any given
                    day shall be the average of the closing representative bid
                    and asked prices as reported by the National Quotation
                    Bureau, Inc. or, if the Stock is not quoted on the NASDAQ
                    System, then as reported in any publicly available
                    compilation of the bid and asked prices of the Stock in any
                    over-the-counter market on which the Stock is traded; or

               (d)  If there exists no public trading market for the Stock, the
                    fair market value on any given day shall be an amount
                    determined in good faith by the Board in such manner as it
                    may be reasonably determined in its discretion, provided
                    that such amount shall not be less than the book value per
                    share, as reasonably determined by the Board as of the date
                    of determination, or less than the par value of the Stock.

          Notwithstanding the foregoing, in the case of an Incentive Stock
          Option granted to any Optionee then owning more than 10% of the voting
          power of all classes of the Company's stock, the purchase price per
          share of the Stock subject to such Option shall not be less than 110%
          of the fair market value of the Stock on the date of grant of the
          Incentive Stock Option, determined as provided above.
<PAGE>   5

          Except as provided herein, the purchase price of each share of Stock
          purchased upon the exercise of any Option shall be paid:

               (a)  In United States dollars in cash or by check, bank draft or
                    money order payable to the order of the Company;

               (b)  At the discretion of the Board, through the delivery of
                    shares of Stock, which have been held by the option holder
                    for one hundred eighty (180) days or more and have an
                    aggregate fair market value (as determined in the manner
                    provided under this Plan) equal to the Option price;

               (c)  At the discretion of the Board, by a combination of both (a)
                    and (b) above; or

               (d)  By such other method as may be permitted in the written
                    Stock Option Agreement between the Company and the Optionee.

          If such form of payment is permitted, the Board shall determine
          procedures for tendering Stock as payment upon exercise of an Option
          and may impose such additional limitations and prohibitions on the use
          of Stock as payment upon the exercise of an Option as it deems
          appropriate.

      8.  EXERCISE OF OPTIONS

          8.1  MANNER OF EXERCISE. An Option, or any portion thereof, shall be
               exercised by delivering a written notice of exercise to the Board
               and paying to the Company the full purchase price of the Stock
               acquired upon the exercise of the Option. Until certificates for
               the Stock acquired upon the exercise of an Option are issued to
               an Optionee, such Optionee shall not have any rights as a
               shareholder of the Company.

          8.2  LIMITATIONS AND CONDITIONS ON EXERCISE OF OPTIONS. In addition to
               any other limitations or conditions contained in this Plan or
               which may be imposed by the Board from time to time or in the
               Stock Option Agreement to be entered into with respect to Options
               granted hereunder, the following limitations and conditions shall
               apply to the exercise of Options granted under this Plan:

               (a)  No Incentive Stock Option may be exercisable by its terms
                    after the expiration of five years from the date of the
                    grant thereof.

               (b)  No Incentive Stock Option granted to an eligible Participant
                    then owning more than 10% of the voting power of all classes
                    of the Company's Stock may be exercisable by its terms after
                    the expiration of five years from the date of the grant
                    thereof.

      9.  INVESTMENT PURPOSES

          Unless a registration statement under the Securities Act of 1933 is in
          effect with respect to Stock to be purchased upon exercise of Options
          to be granted under the Plan, the Company shall require an Optionee
          agree with and present to the Company in writing he or she is
          acquiring such shares of Stock for the purpose of investment and with
          no present intention to transfer, sell or otherwise dispose of such
          shares of Stock other than by transfers which may occur by will or by
          the laws of descent and distribution, and no shares of Stock may be
          transferred unless, in the opinion of counsel of the Company, such
          transfer would be in compliance with applicable securities laws. In
          addition, unless a registration statement under the Securities Act of
          1933 is in effect with respect to the Stock to be purchased under the
          Plan, each certificate representing any shares of Stock issued to an
          Optionee hereunder shall have endorsed thereon a legend in
          substantially the following form:
<PAGE>   6

               THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED WITHOUT
               REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
               "ACT") AND WITHOUT REGISTRATION UNDER ANY APPLICABLE STATE
               SECURITIES LAWS, IN RELIANCE UPON EXEMPTION(S) CONTAINED THEREIN.
               NO TRANSFER OF THESE SHARES OR ANY INTEREST THEREIN MAY BE MADE
               EXCEPT PURSUANT TO EFFECTIVE REGISTRATION STATEMENTS UNDER SAID
               LAWS UNLESS THE CORPORATION HAS RECEIVED AN OPINION OF COUNSEL
               SATISFACTORY TO IT THAT SUCH TRANSFER OR DISPOSITION DOES NOT
               REQUIRE REGISTRATION UNDER SAID LAWS AND, OR ANY SALES UNDER RULE
               144 OF THE ACT, SUCH EVIDENCE AS IT SHALL REQUEST FOR COMPLIANCE
               WITH THAT RULE, OR APPLICABLE STATE SECURITIES LAWS.

     10.  TRANSFERABILITY OF OPTIONS

          No Option granted under the Plan shall be transferable by an Optionee
          (whether by sale, assignment, hypothecation or otherwise) other than
          by will or the laws of descent and distribution, and Options shall be
          exercisable during the Optionee's lifetime only by the Optionee.

     11.  TERMINATION OF EMPLOYMENT

          11.1 GENERALLY. Except as otherwise provided in this Section 11, if an
               Optionee's employment with the Company or Subsidiary is
               terminated (hereinafter "Termination") other than by death or
               Disability (as hereinafter defined), the Optionee may exercise
               any Option granted under the Plan, to the extent the Optionee was
               entitled to exercise the Option at the date of Termination, for a
               period of three months after the date of Termination or until the
               term of the Option has expired, whichever date is earlier.

          11.2 DEATH OR DISABILITY OF OPTIONEE. In the event of the death or
               Disability of an Optionee prior to expiration of an Option held
               by him or her, the following provisions shall apply:

               (a)  If the Optionee is at the time of his or her Disability
                    employed by the Company or a Subsidiary and has been in
                    continuous employment (as determined by the Board in its
                    sole discretion) since the date of grant of the Option, then
                    the Option may be exercised by the Optionee until the
                    earlier of one year following the date of such Disability or
                    the expiration date of the Option, but only to the extent
                    the Optionee was entitled to exercise such Option at the
                    time of his or her Disability. For the purpose of this
                    Section, the term "Disability" shall have the meaning given
                    to it in Section 22(e)(3) of the Code. The determination of
                    whether an Optionee has a Disability within the meaning of
                    Section 22(e)(3) shall be made by the Board in its sole
                    discretion.

               (b)  If the Optionee is at the time of his or her death employed
                    by the Company or a Subsidiary and has been in continuous
                    employment (as determined by the Board in its sole
                    discretion) since the date of grant of the Option, then the
                    Option may be exercised by the Optionee's estate or by a
                    person who acquired the right to exercise the Option by will
                    or the laws of descent and distribution, until the earlier
                    of one year from the date of the Optionee's death or the
                    expiration date of the Option, but only to the extent the
                    Optionee was entitled to exercise the Option at the time of
                    death.

               (c)  If the Optionee dies within three months after Termination,
                    the Option may be exercised until the earlier of nine months
                    following the date of death or the expiration date of the
                    Option, by the Optionee's estate or by a person who acquires
                    the right to exercise the Option by will or the laws of
                    descent or distribution, but only to the extent the Optionee
                    was entitled to exercise the Option at the time of
                    Termination.
<PAGE>   7

          11.3 BREACH OF AGREEMENTS; TERMINATION FOR CAUSE. If the Optionee
               breaches any of the Company's Employee Confidentiality,
               Inventions, Non-Compete and Non-Solicitation Agreement, Employee
               Patent and Confidential Information Agreement, any Employment
               Agreement, if applicable, or any similar agreement having an
               equivalent purpose or effect, or if employment of an Optionee is
               terminated by the Company or a Subsidiary for cause, then the
               Board shall have the right to cancel the Options granted to the
               Optionee under the Plan.

     12.  AMENDMENT AND TERMINATION OF PLAN

          12.1 The Board, without approval by the shareholders of the Company,
               may at any time and from time to time suspend or terminate the
               Plan in whole or in part or amend it from time to time in such
               respects as may be in the best interest of the Company; provided,
               however, that no such amendment shall be made without approval of
               the shareholders if it would: (i) materially modify the
               eligibility requirements for Participants; (ii) increase the
               total number of shares of Stock which may be issued pursuant to
               Options, except in accordance with Section 4.2 of the Plan; (iii)
               reduce the minimum Option price per share as set forth in Section
               7 of the Plan, except in accordance with Section 4.2 of the Plan;
               (iv) extend the period of granting Options; or (v) materially
               increase in any other way the benefits accruing to Optionees.

          12.2 No amendment, suspension or termination of this Plan shall,
               without the Optionee's consent, alter or impair any of the rights
               or obligations under any Option theretofore granted to the
               Optionee under the Plan.

          12.3 The Board may amend the Plan, subject to the limitations cited
               above, in such manner as it deems necessary to permit the
               granting of Incentive Stock Options meeting the requirements of
               future amendments to the Code.

     13.  MISCELLANEOUS PROVISIONS

          13.1 RIGHT TO CONTINUED EMPLOYMENT. No person shall have any claim or
               right to be granted an Option under the Plan, and the grant of an
               Option under the Plan shall not be construed as giving an
               Optionee the right to continued employment with the Company. The
               Company further expressly reserves the right at any time to
               dismiss an Optionee or reduce an Optionee's compensation with or
               without cause, free from any liability, or any claim under the
               Plan, except as provided herein or in a stock option agreement.

          13.2 WITHHOLDING TAXES. The Company shall have the right to require
               payment or provision for payment of any and all withholding taxes
               due upon the grant or exercise of an Option hereunder or the
               disposition of any Stock or other property acquired upon exercise
               of an Option be made by an Optionee. In connection herewith, the
               Board shall have the right to establish such rules and
               regulations or impose such terms and conditions in any agreement
               relating to an Option granted hereunder with respect to such
               withholding as the Board may deem necessary and appropriate.

          13.3 RULE 16B-3. This Plan is intended to comply with the applicable
               provisions of Rule 16b-3 under the Securities Exchange Act of
               1934 or any successor provision and to the extent any provision
               of this Plan or any action by the Board or the Committee fails to
               comply with said Rule, such provision or action shall be deemed
               amended so as to cause the provision or action to comply.

          13.4 GOVERNING LAW. The Plan shall be administered in the State of
               Minnesota and the validity, construction, interpretation and
               administration of the Plan

<PAGE>   8

               and all rights relating to the Plan shall be determined solely in
               accordance with the laws of such state, unless controlled by
               applicable federal law, if any.

     14.  EFFECTIVE DATE

          The effective date of the Plan is April 28, 1997. No Option may be
          granted after April 28, 2002 provided, however, the Plan and all
          outstanding Options shall remain in effect until such outstanding
          Options have expired or been cancelled.

                                             UROPLASTY, INC.

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