THE AMENDED
1999 STOCK COMPENSATION PLAN
OF
MESA LABORATORIES, INC.
(a Colorado corporation)
TABLE OF CONTENTS
* * *
THE AMENDED
1999 STOCK COMPENSATION PLAN
OF
MESA LABORATORIES, INC.
SECTION SUBJECT PAGE
1. Purpose of Plan
2. Stock Subject to the Plan
3. Administration of the Plan
(a) General
(b) Changes in Law Applicable
4. Types of Awards Under the Plan
5. Persons to Whom Options Shall Be Granted
(a) Nonqualified Options
(b) Incentive Options
6. Factors to Be Considered in Granting Options
7. Time of Granting Options
8. Terms and Conditions of Options
(a) Number of Shares
(b) Type of Option
(c) Option Period
(1) General
(2) Termination of Employment
(3) Cessation of Service as Director
or Advisor
(4) Disability
(5) Death
(6) Acceleration and Exercise Upon
Change of Control
(d) Option Prices
(1) Nonqualified Options
(2) Incentive Options
(3) Determination of Fair Market
Value
(e) Exercise of Options
(f) Nontransferability of Options
(g) Limitations on 10% Shareholders
(h) Compliance with Securities Laws
(i) Additional Provisions
9. Medium and Time of Payment
10. Rights as a Shareholder
11. Optionee's Agreement to Serve
12. Adjustments on Changes in Capitalization
(a) Changes in Capitalization
(b) Reorganization, Dissolution or
Liquidation
(c) Change in Par Value
(d) Notice of Adjustments
(e) Effect Upon Holder of Option
(f) Right of Company to Make Adjustments
13. Investment Purpose.
14. No Obligation to Exercise Option
15. Modification, Extension, and Renewal of Options
16. Effective Date of the Plan
17. Termination of the Plan
18. Amendment of the Plan
19. Withholding
20. Indemnification of Committee
21. Application of Funds
22. Governing Law
THE AMENDED
1999 STOCK COMPENSATION PLAN
OF
MESA LABORATORIES, INC.
1. Purpose of Plan. This Amended 1999 Stock Compensation Plan ("Plan") is
intended to encourage ownership of the common stock of MESA LABORATORIES,
INC., a Colorado corporation, ("Company"), by certain officers, directors,
employees and advisors of the Company or any Subsidiary or Subsidiaries of
the Company (as hereinafter defined) in order to provide additional
incentive for such persons to promote the success and the business of the
Company or its Subsidiaries and to encourage them to remain in the employ
of the Company or its Subsidiaries by providing such persons an opportunity
to benefit from any appreciation of the common stock of the Company through
the issuance of stock options to such persons in accordance with the terms
of the Plan. It is further intended that options granted pursuant to this
Plan shall constitute either incentive stock options ("Incentive Options")
within the meaning of Section 422 (formerly Section 422A) of the Internal
Revenue Code of 1986, as amended ("Code"), or options which do not
constitute Incentive Options ("Nonqualified Options") as determined by the
Committee (as hereinafter defined) at the time of issuance of such options.
Incentive Options and Nonqualified Options are herein sometimes referred to
collectively as "Options." As used herein, the term Subsidiary or
Subsidiaries shall mean any corporation (other than the employer
corporation) in an unbroken chain of corporations beginning with the
employer corporation if, at the time of granting of the Option, each of the
corporations other than the last corporation in the unbroken chain owns
stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such
chain.
2. Stock Subject to the Plan. Subject to adjustment as provided in Section 12
hereof, there will be reserved for the use upon the exercise of Options to
be granted from time to time under the Plan, an aggregate of five hundred
thousand (500,000) shares of the common stock, no par value, of the Company
("Common Stock"), which shares in whole or in part shall be authorized, but
unissued, shares of the Common Stock or issued shares of Common Stock which
shall have been reacquired by the Company as determined from time to time
by the Board of Directors of the Company ("Board of Directors"). To
determine the number of shares of Common Stock available at any time for
the granting of Options under the Plan, there shall be deducted from the
total number of reserved shares of Common Stock, the net number of shares
of Common Stock in respect of which Options have been granted pursuant to
the Plan which remain outstanding or which have been exercised. If and to
the extent that any Option to purchase reserved shares shall not be
exercised by the optionee for any reason or if such Option to purchase
shall terminate as provided herein, such shares which have not been so
purchased hereunder shall again become available for the purposes of the
Plan unless the Plan shall have been terminated, but such unpurchased
shares shall not be deemed to increase the aggregate number of shares
specified above to be reserved for purposes of the Plan (subject to
adjustment as provided in Section 12 hereof).
3. Administration of the Plan
(a) General. The Plan shall be administered by the full Board of Directors
or by a Compensation Committee ("Committee") appointed by the Board of
Directors, which Committee shall consist solely of not less than two
(2) non-employee Directors. All references in this Plan to the
Committee shall be deemed to refer instead to the full Board of
Directors at any time there is not a committee qualified to act
hereunder. The Board of Directors may from time to time appoint
members of the Committee in substitution for or in addition to members
previously appointed and may fill vacancies, however caused, in the
Committee. If the Board of Directors does not designate a Chairman of
the Committee, the Committee shall select one of its members as its
Chairman. The Committee shall hold its meetings at such times and
places at it shall deem advisable. A majority of its members shall
constitute a quorum. Any action of the Committee shall be taken by a
majority vote of its members at a meeting at which a quorum is
present. Notwithstanding the preceding, any action of the Committee
may be taken without a meeting by a written consent signed by all of
the members, and any action so taken shall be deemed fully as
effective as if it had been taken by a vote of the members present in
person at the meeting duly called and held. The Committee may appoint
a Secretary, shall keep minutes of its meetings, and shall make such
rules and regulations for the conduct of its business at it shall deem
advisable.
The Committee shall have the sole authority and power, subject to the
express provisions and limitations of the Plan, to construe the Plan
and option agreements granted hereunder, and to adopt, prescribe,
amend, and rescind rules and regulations relating to the Plan, and to
make all determinations necessary or advisable for administering the
Plan, including, but not limited to, (i) who shall be granted Options
under the Plan, (ii) the term of each Option, (iii) the number of
shares covered by such Option, (iv) whether the Option shall
constitute an Incentive Option or a Nonqualified Option, (v) the
exercise price for the purchase of the shares of the Common Stock
covered by the Option, (vi) the period during which the Option may be
exercised, (vii) whether the right to purchase the number of shares
covered by the Option shall be fully vested on issuance of the Option
so that such shares may be purchased in full at one time or whether
the right to purchase such shares shall become vested over a period of
time so that such shares may only be purchased in installments, and
(viii) the time or times at which Options shall be granted. The
Committee's determinations under the Plan, including the above
enumerated determinations, need not be uniform and may be made by it
selectively among the persons who receive, or are eligible to receive,
Options under the Plan, whether or not such persons are similarly
situated.
The interpretation by the Committee of any provision of the Plan or of
any option agreement entered into hereunder with respect to any
Incentive Option shall be in accordance with Section 422 of the Code
and the regulations issued thereunder, as such section or regulations
may be amended from time to time, in order that the rights granted
hereunder and under said option agreements shall constitute "Incentive
Stock Options" within the meaning of such section. The interpretation
and construction by the Committee of any provision of the Plan or of
any Option granted hereunder shall be final and conclusive, unless
otherwise determined by the Board of Directors. No member of the Board
of Directors or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any
Option granted under it. Upon issuing an Option under the Plan, the
Committee shall report to the Board of Directors the name of the
person granted the Option, whether the Option is an Incentive Option
or a Nonqualified Option, the number of shares of Common Stock covered
by the Option, and the terms and conditions of such Option.
(b) Changes in Law Applicable. If the laws relating to Incentive Options
or Nonqualified Options are changed, altered or amended during the
term of the Plan, the Board of Directors shall have full authority and
power to alter or amend the Plan with respect to Incentive Options or
Nonqualified Options, respectively, to conform to such changes in the
law, unless the changes require shareholder approval.
4. Type of Awards Under the Plan. Awards under the Plan shall be in the form
of Options.
5. Persons to Whom Options Shall Be Granted.
(a) Nonqualified Options. Nonqualified Options shall be granted only to
officers, directors, employees and advisors of the Company or a
Subsidiary who, in the judgment of the Committee, are responsible for
or contribute to the management or success of the Company or a
Subsidiary and who, at the time of the granting of the Nonqualified
Options, are either officers, directors, employees or advisors of the
Company or a Subsidiary.
(b) Incentive Options. Incentive Options shall be granted only to
employees of the Company or a Subsidiary who, in the judgment of the
Committee, are responsible for or contribute to the management or
success of the Company or a Subsidiary and who, at the time of the
granting of the Incentive Option, are an employee of either the
Company or a Subsidiary pursuant to an effective employment agreement.
6. Factors to Be Considered in Granting Options. In making any determination
as to persons to whom Options shall be granted and as to the number of
shares to be covered by such Options, the Committee shall take into account
the duties and responsibilities of the respective officers, directors,
employees, or advisors, their current and potential contributions to the
success of the Company or a Subsidiary, and such other factors as the
Committee shall deem relevant in connection with accomplishing the purpose
of the Plan.
7. Time of Granting Options. Neither anything contained in the Plan or in any
resolution adopted or to be adopted by the Board of Directors or the
Shareholders of the Company or a Subsidiary nor any action taken by the
Committee shall constitute the granting of any Option. The granting of an
Option shall be effected only when a written Option Agreement acceptable in
form and substance to the Committee, subject to the terms and conditions
hereof including those set forth in Section 8 hereof, shall have been duly
executed by or on behalf of the Company. No person shall have any rights
under the Plan until such time, if any, as a written Option Agreement shall
have been duly executed as set forth in this Section 7.
8. Terms and Conditions of Options. All Options granted pursuant to this Plan
must be granted within ten (10) years from the date the Plan is adopted by
the Board of Directors of the Company. Each Option Agreement governing an
Option granted hereunder shall be subject to at least the following terms
and conditions, and shall contain such other terms and conditions, not
inconsistent therewith, that the Committee shall deem appropriate:
(a) Number of Shares. Each Option shall state the number of shares of
Common Stock which it represents.
(b) Type of Option. Each Option shall state whether it is intended to be
an Incentive Option or a Nonqualified Option.
(c) Option Period.
(1) General. Each Option shall state the date upon which it is
granted. Each Option shall be exercisable in whole or in part
during such period as is provided under the terms of the Option
subject to any vesting period set forth in the Option, but in no
event shall an Option be exercisable either in whole or in part
after the expiration of ten (10) years from the date of grant.
(2) Termination of Employment. Except as otherwise provided in case
of Disability (as hereinafter defined), death or Change of
Control (as hereinafter defined), no Option shall be exercisable
after an optionee who is an employee of the Company or a
Subsidiary ceases to be employed by the Company or a Subsidiary
as an employee; provided, however, that the Committee shall have
the right in its sole discretion, but not the obligation, to
extend the exercise period following the date of termination of
such optionee's employment; provided further, however, that no
Option shall be exercisable after the expiration of ten (10)
years from the date it is granted.
(3) Cessation of Service as Director or Advisor. Except as otherwise
provided in case of Disability, death or Change of Control, no
Option shall be exercisable after an optionee who was a director
or advisor of the Company or a Subsidiary ceases to be a director
or advisor of the Company or a Subsidiary; provided, however,
that the Committee shall have the right in its sole discretion,
but not the obligation, to extend the exercise period following
the date such optionee ceases to be a director or advisor of the
Company or a Subsidiary; provided further, however, that no
Option shall be exercisable after the expiration of ten (10)
years from the date it is granted.
(4) Disability. If an optionee's employment is terminated by reason
of the permanent and total Disability of such optionee or if an
optionee who is a director or advisor of the Company or a
Subsidiary ceases to serve as a director or advisor by reason of
the permanent and total Disability of such optionee, the
Committee shall have the right in its sole discretion, but not
the obligation, to extend the exercise period following the date
of termination of the optionee's employment or the date such
optionee ceases to be a director or advisor of the Company or a
Subsidiary, as the case may be, subject to the condition that no
Option shall be exercisable after the expiration of ten (10)
years from the date it is granted. For purposes of this Plan, the
term "Disability" shall mean the inability of the optionee to
fulfill such optionee's obligations to the Company or a
Subsidiary by reason of any physical or mental impairment which
can be expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than twelve
(12) months as determined by a physician acceptable to the
Committee in its sole discretion.
(5) Death. If an optionee dies while in the employ of the Company or
a Subsidiary, or while serving as a director or advisor of the
Company or a Subsidiary, and shall not have fully exercised
Options granted pursuant to the Plan, such Options may be
exercised in whole or in part at any time within one (1) year
after the optionee's death, by the executors or administrators of
the optionee's estate or by any person or persons who shall have
acquired the Options directly from the optionee by bequest or
inheritance, but only to the extent that the optionee was
entitled to exercise such Option at the date of such optionee's
death, subject to the condition that no Option shall be
exercisable after the expiration of ten (10) years from the date
it is granted.
(6) Acceleration and Exercise Upon Change of Control. Notwithstanding
the preceding provisions of this Section 8(c), if any Option
granted under the Plan provides for either (a) an incremental
vesting period whereby such Option may only be exercised in
installments as such incremental vesting period is satisfied or
(b) a delayed vesting period whereby such Option may only be
exercised after the lapse of a specified period of time, such as
after the expiration of one (1) year, such vesting period shall
be accelerated upon the occurrence of a Change of Control (as
hereinafter defined) of the Company, or a threatened Change of
Control of the Company as determined by the Committee, so that
such Option shall thereupon become exercisable immediately in
part or its entirety by the holder thereof, as such holder shall
elect. For the purposes of this Plan, a "Change of Control" shall
be deemed to have occurred if:
(i) Any "person", including a "group" as determined in
accordance with Section 13(d)(3) of the Securities Exchange
Act of 1934 ("Exchange Act") and the Rules and Regulations
promulgated thereunder, is or becomes, through one or a
series of related transactions or through one or more
intermediaries, the beneficial owner, directly or
indirectly, of securities of the Company representing 25% or
more of the combined voting power of the Company's then
outstanding securities, other than a person who is such a
beneficial owner on the effective date of the Plan and any
affiliate of such person;
(ii) As a result of, or in connection with, any tender offer or
exchange offer, merger or other business combination, sale
of assets or contested election, or any combination of the
foregoing transactions ("Transaction"), the persons who were
Directors of the Company before the Transaction shall cease
to constitute a majority of the Board of Directors of the
Company or any successor to the Company;
(iii)Following the effective date of the Plan, the Company is
merged or consolidated with another corporation and as a
result of such merger or consolidation less than 40% of the
outstanding voting securities of the surviving or resulting
corporation shall then be owned in the aggregate by the
former stockholders of the Company, other than (x) any party
to such merger or consolidation, or (y) any affiliates of
any such party;
(iv) A tender offer or exchange offer is made and consummated for
the ownership of securities of the Company representing 25%
or more of the combined voting power of the Company's then
outstanding voting securities; or
(v) The Company transfers more than 50% of its assets, or the
last of a series of transfers results in the transfer of
more than 50% of the assets of the Company, to another
corporation that is not a wholly-owned corporation of the
Company. For purposes of this subsection 8(c)(6)(v), the
determination of what constitutes more than 50% of the
assets of the Company shall be determined based on the sum
of the values attributed to (i) the Company's real property
as determined by an independent appraisal thereof, and (ii)
the net book value of all other assets of the Company, each
taken as of the date of the Transaction involved.
In addition, upon a Change of Control, any Options
previously granted under the Plan to the extent not already
exercised may be exercised in whole or in part either
immediately or at any time during the term of the Option as
such holder shall elect.
(d) Option Prices.
(1) Nonqualified Options. The purchase price or prices of the shares
of the Common Stock which shall be offered to any person under
the Plan and covered by a Nonqualified Option shall be the price
determined by the Committee at the time of granting of the
Nonqualified Option, which price shall be one hundred percent
(100%) of the fair market value of the Common Stock at the time
of granting the Nonqualified Option or such higher purchase price
as may be determined by the Committee at the time of granting the
Nonqualified Option.
(2) Incentive Options. The purchase price or prices of the shares of
the Common Stock which shall be offered to any person under the
Plan and covered by an Incentive Option shall be one hundred
percent (100%) of the fair market value of the Common Stock at
the time of granting the Incentive Option or such higher purchase
price as may be determined by the Committee at the time of
granting the Incentive Option.
(3) Determination of Fair Market Value. During such time as the
Common Stock of the Company is not listed upon an established
stock exchange, the fair market value per share shall be deemed
to be the closing bid price of the Common Stock on The Nasdaq
Stock Market ("Nasdaq") on the day the Option is granted, as
reported by Nasdaq, if the Common Stock is so quoted, and if not
so quoted, the average of the "bid" and "ask" prices of the
Common Stock on the Electronic Bulletin Board on the day the
Option is granted, as reported by the National Association of
Securities Dealers, Inc. If the Common Stock is listed upon an
established stock exchange or exchanges, such fair market value
shall be deemed to be the closing price of the Common Stock on
such stock exchange or exchanges on the day the Option is granted
or, if no sale of the Common Stock of the Company shall have been
made on an established stock exchange on such day, on the next
preceding day on which there was a sale of such stock. If there
is no market price for the Common Stock, then the Board of
Directors and the Committee may, after taking all relevant facts
into consideration, determine the fair market value of the Common
Stock.
(e) Exercise of Options. To the extent that a holder of an Option has a
current right to exercise, the Option may be exercised from time to
time by written notice to the Company at its principal place of
business. Such notice shall state the election to exercise the Option,
the number of whole shares in respect of which it is being exercised,
shall be signed by the person or persons so exercising the Option, and
shall contain any investment representation required by Section 8(i)
hereof. Such notice shall be accompanied by payment of the full
purchase price of such shares and by the Option Agreement evidencing
the Option. In addition, if the Option shall be exercised pursuant to
Section 8(c)(4) or Section 8(c)(5) hereof by any person or persons
other than the optionee, such notice shall also be accompanied by
appropriate proof of the right of such person or persons to exercise
the Option. The Company shall deliver a certificate or certificates
representing such shares as soon as practicable after the aforesaid
notice and payment of such shares shall be received. The certificate
or certificates for the shares as to which the Option shall have been
so exercised shall be registered in the name of the person or persons
so exercising the Option. In the event the Option shall not be
exercised in full, the Secretary of the Company shall endorse or cause
to be endorsed on the Option Agreement the number of shares which has
been exercised thereunder and the number of shares that remains
exercisable under the Option and return such Option Agreement to the
holder thereof.
(f) Nontransferability of Options. An Option granted pursuant to the Plan
shall be exercisable only by the optionee or the optionee's court
appointed guardian as set forth in Section 8(c)(4) hereof during the
optionee's lifetime and shall not be assignable or transferable by the
optionee otherwise than by Will, the laws of descent and distribution,
or as permitted by the rules and regulations of the Securities and
Exchange Commission. An Option granted pursuant to the Plan shall not
be assigned, pledged or hypothecated in any way (whether by operation
of law or otherwise other than by Will, the laws of descent and
distribution, or as permitted by the rules and regulations of the
Securities and Exchange Commission) and shall not be subject to
execution, attachment, or similar process. Any attempted transfer,
assignment, pledge, hypothecation, or other disposition of any Option
or of any rights granted thereunder contrary to the foregoing
provisions of this Section 8(f), or the levy of any attachment or
similar process upon an Option or such rights, shall be null and void.
(g) Limitations on 10% Shareholders. If required by law or regulation
applicable to the Company, no Incentive Option may be granted under
the Plan to any individual who, immediately before such Incentive
Option was granted, would own more than ten percent (10%) of the total
combined voting power or value of all classes of stock of the Company
("10% Shareholder") unless (i) such Incentive Option is granted at an
option price not less than one hundred ten percent (110%) of the fair
market value of the shares on the day the Incentive Option is granted
and (ii) such Incentive Option expires on a date not later than five
(5) years from the date the Incentive Option is granted.
(h) Compliance with Securities Laws. The Plan and the grant and exercise
of the rights to purchase shares hereunder, and the Company's
obligations to sell and deliver shares upon the exercise of rights to
purchase shares, shall be subject to all applicable federal, foreign
and state laws, rules and regulations, and to such approvals by any
regulatory or governmental agency as may, in the opinion of counsel
for the Company, be required, and shall also be subject to all
applicable rules and regulations of any stock exchange upon which the
Common Stock of the Company may then be listed. At the time of
exercise of any Option, the Company may require the optionee to
execute any documents or take any action which may then be necessary
to comply with the Securities Act of 1933, as amended ("Securities
Act"), and the rules and regulations promulgated thereunder, or any
other applicable federal or state laws regulating the sale and
issuance of securities, and the Company may, if it deems necessary,
include provisions in the stock option agreements to assure such
compliance. The Company may, from time to time, change its
requirements with respect to enforcing compliance with federal and
state securities laws, including the request for and enforcement of
letters of investment intent, such requirements to be determined by
the Company in its judgment as necessary to assure compliance with
said laws. Such changes may be made with respect to any particular
Option or stock issued upon exercise thereof. Without limiting the
generality of the foregoing, if the Common Stock issuable upon
exercise of an Option granted under the Plan is not registered under
the Securities Act, the Company at the time of exercise may require
that the registered owner execute and deliver an investment
representation agreement to the Company in form acceptable to the
Company and its counsel, and the Company may place a legend on the
certificate evidencing such Common Stock restricting the transfer
thereof, which legend shall be substantially as follows:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAW BUT HAVE BEEN ACQUIRED FOR THE PRIVATE
INVESTMENT OF THE HOLDER HEREOF AND MAY NOT BE OFFERED, SOLD OR
TRANSFERRED UNTIL EITHER (i) A REGISTRATION STATEMENT UNDER SUCH
SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE
BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) THE COMPANY SHALL HAVE
RECEIVED AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY AND ITS
COUNSEL THAT REGISTRATION UNDER SUCH SECURITIES ACT OR SUCH APPLICABLE
STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED
OFFER, SALE OR TRANSFER.
(i) Additional Provisions. The Option Agreement authorized under the Plan
shall contain such other provisions as the Committee shall deem
advisable, including, without limitation, restrictions upon the
exercise of the Option. Any such Option Agreement with respect to an
Incentive Option shall contain such limitations and restrictions upon
the exercise of the Incentive Option as shall be necessary in order
that the Option will be an "Incentive Stock Option" as defined in
Section 422 of the Code.
9. Medium and Time of Payment. The purchase price of the shares of the Common
Stock as to which the Option shall be exercised shall be paid in full
either (i) in cash at the time of exercise of the Option, (ii) by tendering
to the Company shares of the Company's Common Stock having a fair market
value (as of the date of receipt of such shares by the Company) equal to
the purchase price for the number of shares of Common Stock purchased, or
(iii) partly in cash and partly in shares of the Company's Common Stock
valued at fair market value as of the date of receipt of such shares by the
Company. Cash payment for the shares of the Common Stock purchased upon
exercise of the Option shall be in the form of either a cashier's check,
certified check or money order. Personal checks may be submitted, but will
not be considered as payment for the shares of the Common Stock purchased
and no certificate for such shares will be issued until the personal check
clears in normal banking channels. If a personal check is not paid upon
presentment by the Company, then the attempted exercise of the Option will
be null and void. In the event the optionee tenders shares of the Company's
Common Stock in full or partial payment for the shares being purchased
pursuant to the Option, the shares of Common Stock so tendered shall be
accompanied by fully executed stock powers endorsed in favor of the Company
with the signature on such stock power being guaranteed. If an optionee
tenders shares, such optionee assumes sole and full responsibility for the
tax consequences, if any, to such optionee arising therefrom, including the
possible application of Code Section 424(c), or its successor Code section,
which negates any nonrecognition of income rule with respect to such
transferred shares, if such transferred shares have not been held for the
minimum statutory holding period to receive preferential tax treatment.
10. Rights as a Shareholder. The holder of an Option shall have no rights as a
shareholder with respect to the shares covered by the Option until the due
exercise of the Option and the date of issuance of one or more stock
certificates to such holder for such shares. No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the record date
is prior to the date such stock certificate is issued, except as provided
in Section 12 hereof.
11. Optionee's Agreement to Serve. Each employee receiving an Option shall, as
one of the terms of the Option Agreement, agree that such employee will
remain in the employ of the Company or Subsidiary for a period of at least
one (1) year from the date on which the Option shall be granted to such
employee, and that such employee will, during such employment, devote such
employee's time, energy, and skill to the service of the Company or a
Subsidiary as may be required by the management thereof, subject to
vacations, sick leaves, and military absences. Such employment, subject to
the provisions of any written contract between the Company or a Subsidiary
and such employee, shall be at the pleasure of the Board of Directors of
the Company or a Subsidiary, and at such compensation as the Company or a
Subsidiary shall reasonably determine. Any termination of such employee's
employment during the period which the employee has agreed pursuant to the
foregoing provisions of this Section 11 to remain in employment that is
either for cause or voluntary on the part of the employee shall be deemed a
violation by the employee of such employee's agreement. In the event of
such violation, any Option or Options held by such employee, to the extent
not theretofore exercised, shall forthwith terminate, unless otherwise
determined by the Committee. Notwithstanding the preceding, neither the
action of the Company in establishing the Plan nor any action taken by the
Company, a Subsidiary or the Committee under the provisions hereof shall be
construed as granting the optionee the right to be retained in the employ
of the Company or a Subsidiary, or to limit or restrict the right of the
Company or a Subsidiary, as applicable, to terminate the employment of any
employee of the Company or a Subsidiary, with or without cause.
12. Adjustments on Changes in Capitalization.
(a) Changes in Capitalization. The number of shares of Common Stock
covered by the Plan, the number of shares of Common Stock covered by
each outstanding Option and the exercise price per share thereof
specified in each such Option shall be proportionately adjusted for
any increase or decrease in the number of issued shares of Common
Stock of the Company resulting from a subdivision or consolidation of
shares or the payment of a stock dividend (but only on the Common
Stock) or any other increase or decrease in the number of shares
effected without receipt of consideration by the Company after the
date the Option is granted, so that upon exercise of the Option, the
optionee shall receive the same number of shares the optionee would
have received had the optionee been the holder of all shares subject
to such optionee's outstanding Option immediately before the effective
date of such change in the number of issued shares of the Common Stock
of the Company.
(b) Reorganization, Dissolution or Liquidation. A dissolution or
liquidation of the Company or a merger or consolidation in which the
Company is not the surviving corporation shall cause each outstanding
Option to terminate as of a date to be fixed by the Committee (which
date shall be as of or prior to the effective date of any such
dissolution or liquidation or merger or consolidation); provided, that
not less than thirty (30) days written notice of the date so fixed as
such termination date shall be given to each optionee, and each
optionee shall, in such event, have the right, during the said period
of thirty (30) days preceding such termination date, to exercise such
optionee's Option in whole or in part in the manner herein set forth.
(c) Change in Par Value. In the event of a change in the Common Stock of
the Company as presently constituted, which change is limited to a
change of all of its authorized shares with par value into the same
number of shares with a different par value or without par value, the
shares resulting from any change shall be deemed to be the Common
Stock within the meaning of the Plan.
(d) Notice of Adjustments. To the extent that the adjustments set forth in
the foregoing paragraphs of this Section 12 relate to stock or
securities of the Company, such adjustments, if any, shall be made by
the Committee, whose determination in that respect shall be final,
binding and conclusive, provided that each Incentive Option granted
pursuant to this Plan shall not be adjusted in a manner that causes
the Incentive Option to fail to continue to qualify as an "Incentive
Stock Option" within the meaning of Section 422 of the Code. The
Company shall give timely notice of any adjustments made to each
holder of an Option under this Plan and such adjustments shall be
effective and binding on the optionee.
(e) Effect Upon Holder of Option. Except as hereinbefore expressly
provided in this Section 12, the holder of an Option shall have no
rights by reason of any subdivision or consolidation of shares of
stock of any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class by
reason of any dissolution, liquidation, merger, reorganization, or
consolidation, or spin-off of assets or stock of another corporation.
Any issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall not
affect, and no adjustment by reason thereof shall be made with respect
to, the number or price of shares of Common Stock subject to the
Option. Without limiting the generality of the foregoing, no
adjustment shall be made with respect to the number or price of shares
subject to any Option granted hereunder upon the occurrence of any of
the following events:
(1) The grant or exercise of any other options which may be granted
or exercised under any qualified or nonqualified stock option
plan or under any other employee benefit plan of the Company,
whether or not such options were outstanding on the date of grant
of the Option or thereafter granted;
(2) The sale of any shares of Common Stock in the Company's initial
or any subsequent public offering, including, without limitation,
shares sold upon the exercise of any overallotment option granted
to the underwriter in connection with such offering;
(3) The issuance, sale or exercise of any warrants to purchase shares
of Common Stock, whether or not such warrants were outstanding on
the date of grant of the Option or thereafter issued;
(4) The issuance or sale of rights, promissory notes or other
securities convertible into shares of Common Stock in accordance
with the terms of such securities ("Convertible Securities"),
whether or not such Convertible Securities were outstanding on
the date of grant of the Option or were thereafter issued or
sold;
(5) The issuance or sale of Common Stock upon conversion or exchange
of any Convertible Securities, whether or not any adjustment in
the purchase price was made or required to be made upon the
issuance or sale of such Convertible Securities and whether or
not such Convertible Securities were outstanding on the date of
grant of the Option or were thereafter issued or sold; or
(6) Upon any amendment to or change in the terms of any rights or
warrants to subscribe for or purchase, or options for the
purchase of, Common Stock or Convertible Securities or in the
terms of any Convertible Securities, including, but not limited
to, any extension of any expiration date of any such right,
warrant or option, any change in any exercise or purchase price
provided for in any such right, warrant or option, any extension
of any date through which any Convertible Securities are
convertible into or exchangeable for Common Stock or any change
in the rate at which any Convertible Securities are convertible
into or exchangeable for Common Stock.
(f) Right of Company to Make Adjustments. The grant of an Option pursuant
to the Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations, or
changes of its capital or business structure or to merge or to
consolidate or to dissolve, liquidate or sell, or transfer all or any
part of its business or assets.
13. Investment Purpose. Each Option under the Plan shall be granted on the
condition that the purchase of the shares of stock thereunder shall be for
investment purposes, and not with a view to resale or distribution;
provided, however, that in the event the shares of stock subject to such
Option are registered under the Securities Act or in the event a resale of
such shares of stock without such registration would otherwise be
permissible, such condition shall be inoperative if in the opinion of
counsel for the Company such condition is not required under the Securities
Act or any other applicable law, regulation, or rule of any governmental
agency.
14. No Obligation to Exercise Option. The granting of an Option shall impose no
obligation upon the optionee to exercise such Option.
15. Modification, Extension and Renewal of Options. Subject to the terms and
conditions and within the limitations of the Plan, the Committee and the
Board of Directors may modify, extend or renew outstanding Options granted
under the Plan, or accept the surrender of outstanding Options (to the
extent not theretofore exercised). Notwithstanding the foregoing, the
Company may not modify any outstanding Options so as to specify a lower
price nor accept the surrender of outstanding Options and authorize the
granting of new Options in substitution therefor specifying a lower price.
Further, no modification of an Option shall, without the consent of the
optionee, alter or impair any rights or obligations under any Option
theretofore granted under the Plan.
16. Effective Date of the Plan. The Plan shall become effective on the date of
execution hereof, which date is the date the Board of Directors approved
and adopted the Plan ("Effective Date").
17. Termination of the Plan. This Plan shall terminate as of the expiration of
ten (10) years from the Effective Date. Options may be granted under this
Plan at any time and from time to time prior to its termination. Any Option
outstanding under the Plan at the time of its termination shall remain in
effect until the Option shall have been exercised or shall have expired.
18. Amendment of the Plan. The Plan may be terminated at any time by the Board
of Directors of the Company. The Board of Directors may at any time and
from time to time without obtaining the approval of the Shareholders of the
Company or a Subsidiary, modify or amend the Plan (including such form of
Option Agreement as hereinabove mentioned) in such respects as it shall
deem advisable in order that the Incentive Options granted under the Plan
shall be "Incentive Stock Options" as defined in Section 422 of the Code or
to conform to any change in the law, or in any other respect which shall
not change: (a) the maximum number of shares for which Options may be
granted under the Plan, except as provided in Section 12 hereof; or (b) the
periods during which Options may be granted or exercised; or (c) the
provisions relating to the determination of persons to whom Options shall
be granted and the number of shares to be covered by such Options; or (d)
the provisions relating to adjustments to be made upon changes in
capitalization. The termination or any modification or amendment of the
Plan shall not, without the consent of the person to whom any Option shall
theretofore have been granted, affect that person's rights under an Option
theretofore granted to such person. With the consent of the person to whom
such Option was granted, an outstanding Option may be modified or amended
by the Committee in such manner as it may deem appropriate and consistent
with the requirements and purpose of this Plan applicable to the grant of a
new Option on the date of modification or amendment.
19. Withholding. Whenever an optionee shall recognize compensation income as a
result of the exercise of any Option granted under the Plan, the optionee
shall remit in cash to the Company or Subsidiary the minimum amount of
federal income and employment tax withholding, if any, which the Company or
Subsidiary is required to remit to the United States Internal Revenue
Service in accordance with the then current provisions of the Code. The
full amount of such withholding shall be paid by the optionee
simultaneously with the award or exercise of an Option, as applicable.
20. Indemnification of Committee. In addition to such other rights of
indemnification as they may have as Directors or as members of the
Committee, the members of the Committee shall be indemnified by the Company
against the reasonable expenses, including attorneys' fees actually and
necessarily incurred in connection with the defense of any action, suit or
proceedings, or in connection with any appeal therein, to which they or any
of them may be a party by reason of any action taken or failure to act
under or in connection with the Plan or any Option granted thereunder, and
against all amounts paid by them in settlement thereof (provided such
settlement is approved by independent legal counsel selected by the
Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such Committee member is
liable for gross negligence or wilful misconduct in the performance of his
duties; provided that within sixty (60) days after institution of any such
action, suit or proceeding a Committee member shall in writing offer the
Company the opportunity, at its own expense, to pursue and defend the same.
21. Application of Funds. The proceeds received by the Company from the sale of
Common Stock pursuant to Options granted hereunder will be used for general
corporate purposes.
22. Governing Law. This Plan shall be governed by and construed in accordance
with the laws of the jurisdiction of incorporation of the Company.
EXECUTED effective this ____ day of August, 2004.
MESA LABORATORIES, INC.
By:
Luke R. Schmieder
President
ATTEST: