EXHIBIT 10.3


 


MEDAMICUS, INC. 1999 INCENTIVE STOCK OPTION PLAN


 


(as amended through October 23, 2003)


 


1.                                       Purpose.   The purpose of this Plan is to further the
growth and general prosperity of Medamicus, Inc., the Company, by enabling the
employees of the Company, who have been or will be given responsibility for the
affairs of the Company, to acquire shares of its common stock under the terms
and conditions and in the manner set forth by this Plan, increasing their
personal involvement in the Company and to enable the Company to obtain and
retain the services of those employees.


 


2.                                       Administration.  This Plan shall be administered by a
Committee of at least two (2) Directors who are disinterested administrators
within the meaning of Section 16 of the Securities Exchange Act of 1934
and the rules, regulations and interpretations promulgated thereunder.


 


Each option
granted will be evidenced by a written agreement (Stock Option Agreement) and a
document containing the terms and conditions of the Plan.


 


3.                                       Eligibility
and Participation.  Employees
eligible to receive options under the Plan shall be key personnel including
officers of the Company and directors who are also employees of the Company.
The Committee shall allot to such participant options to purchase shares as the
Committee shall from time to time determine: provided, however, that no
employee shall be allotted an option for any greater number of shares than
would result in him owning directly or indirectly, more than 10% of the total
combined voting power or value of the stock of the Company or any of its
subsidiaries unless the option price is at least 85% of the market value of the
stock on the date of grant, and the option is, by its terms, not exercisable
after six (6) years from the date of grant.


 


4.                                       Shares
Subject to Plan.  Subject to
adjustment as provided in Section 5, an aggregate of up to 900,000(1) shares of the Common Stock of the Company shall be
subject to the Plan and the Committee is authorized to grant options hereunder
with respect to such number of shares. Any unsold shares subject to an option
under the Plan which for any reason expires or otherwise terminates may again
be made subject to option under the Plan at the discretion of the Committee.


 


5.                                       Adjustments
Upon Changes in Capitalization.  In
the event of a merger, consolidation, reorganization, stock dividend, stock
split, or any other change in corporate structure or capitalization affecting
the Company’s common shares, appropriate adjustment shall be made in the
maximum number of shares available under the Plan or to any one individual and


 












(1)   The Plan originally authorized 400,000
shares of Common Shares for issuance. 
An amendment to the Plan to increase the number of shares under the Plan
by 300,000 was authorized by the Board on February 6, 2003 and approved by
the shareholders on April 24, 2003. 
An amendment to the Plan to increase the number of shares under the Plan
by 200,000 was authorized by the Board of Directors on July 21, 2003 and
approved by the shareholders on October 21, 2003.


 

















 


in the number, kind, option,
price, etc. of shares subject to options granted under the Plan.


 


6.                                       Terms
and Conditions of Options.  The
Committee shall have power subject to the limitations contained in the Plan, to
prescribe any terms and conditions in respect to the granting or exercise of
any option under the Plan and in particular shall prescribe the following terms
and conditions:


 


(a)                                  Each
option shall state the number of shares to which it pertains.


 


(b)                                 Each
option shall be granted within ten years of the date the Plan is adopted.


 


(c)                                  Each
option shall be exercisable only within six years of the date of grant.


 


(d)                                 The
purchase price, which shall be at least 85% of the fair market value of the
shares at such time as the option is granted and shall not be less than the par
value of the shares sold.


 


(e)                                  An
option may be exercised at any time after the date of grant, subject to the
provisions of section 6(f) of the Plan and to such other terms and
conditions specified in the Stock Option Agreement, with respect to all or part
of the shares covered by the option. An option may not be exercised for
fractional shares of stock.


 


In the event the Company or the stockholders of the Company enter into
an agreement to dispose of all or substantially all of the assets or stock of
the Company by means of a sale, merger, reorganization, liquidation or
otherwise, an option shall become immediately exercisable with respect to the
full number of shares.


 


(f)                                    An option shall be
exercised when written notice of such exercise has been given to the Company at
its principle business office by the person entitled to exercise the option and
full payment for the shares has been received by the Company. Until the stock
certificates are issued, no right to vote, receive dividends, or any other
rights as a shareholder shall exist with respect to optioned shares,
notwithstanding the exercise of the option.


 


(g)                                 An
option may be exercised by the optionee only while he is, and has continually
been, since the date of the grant of the option, an employee of the Company or
within three months following termination of employment (for reasons other than
death, disability or termination for cause).


 


If the
continuous employment of an optionee terminates by reason of his death, options
which the deceased employee would be entitled to exercise as of the date of
death may be exercised within one year following the date of death by the
person to whom his rights under such option shall have passed by will or by the
laws of descent and distribution, but in no event later than the expiration of
the


 


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option.If the
continuous employment of an optionee terminates by reason of disability,
options which the disabled employee would be entitled to exercise as of the
date of termination of employment may be exercised within one year following
the date of termination, but in no event later than the expiration of the
option.


 


If the
continuous employment of an optionee terminates for cause, any options which
have not been exercised as of the date of termination shall be cancelled.


 


7.                                       Options
Not Transferable.  No option granted
under the Plan will be transferrable by the optionee, either voluntarily or
involuntarily, except by will or the laws of descent and distribution, and then
only to the extent provided in Section 6 hereof, or pursuant to a
qualified domestic relations order (as defined by the Internal Revenue Code of
1986, as amended, or Title I of the Employee Retirement Income Security Act and
the rules thereunder.)


 


8.                                       Amendment
or Termination of the Plan.  The
Board of Directors may amend the Plan from time to time as it deems advisable.
The Board of Directors may at any time terminate the Plan, provided that any
termination of the Plan shall not affect options already granted. The options
shall remain in full force and effect as if the Plan had not been terminated.


 


9.                                       Agreement
and Representation of Employee.  As
a condition to the exercise of any option or portion thereof, the Company may
require the person exercising the option to represent and warrant at the time
of any exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute the shares if in the option
of counsel for the Company such representation is required under the Securities
Act of 1933, or any other applicable law, regulation or rule of any
governmental agency.


 


In the event
legal counsel to the Company renders an opinion to the Company that shares for
options exercised pursuant to this Plan cannot be issued to the optionee
because such act would violate the applicable Federal or State securities law,
then and in that event, the optionee agrees that the Company shall not be
required to issue the shares to the optionee tendered to the Company upon
exercise of the option.


 


10.                                 Effectiveness
and Termination of the Plan.   The
Plan shall become effective upon adoption by the Board of Directors and shall
be subject to approval of the stockholders of Medamicus, Inc. within 12 months
of adoption. The Plan shall terminate on the earliest of:


 


(a)                                  the
date when all the common shares available under the Plan shall have been
acquired through exercising the options granted under the Plan,


 


(b)                                 August 1,
2009,


 


(c)                                  such
other date as the Board may determine.


 


11.                                 Form
of Option.  Options may be issued by
the execution of the Medamicus, Inc. form entitled “Stock Option Agreement.”


 


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