Attached files
Exhibit 10.1
LIFELOC
TECHNOLOGIES, INC.
STOCK
OPTION PLAN
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I.
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Purpose
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The LIFELOC TECHNOLOGIES, INC.
Stock Option Plan (the "Plan") provides for the grant of Stock Options, Stock
Appreciation Rights and Supplemental Bonuses to Employees of Lifeloc
Technologies, Inc. (the "Company"), and such of its subsidiaries (as defined in
Section 424(f) of the Internal Revenue Code of 1986, as amended (the "Code")) as
the Board of Directors of the Company (the "Board") shall from time to time
designate ("Participating Subsidiaries"), in order to advance the interests of
the Company and its Participating Subsidiaries through the motivation,
attraction and retention of their respective Employees.
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II.
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Incentive Stock
Options and Non-Incentive Stock
Options
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The Stock Options granted under the
Plan may be either:
(a) Incentive Stock Options
("ISOs") which are intended to be "Incentive Stock Options" as that term is
defined in Section 422 of the Code; or
(b) Nonstatutory Stock
Options ("NSOs") which are intended to be options that do not qualify as
"Incentive Stock Options" under Section 422 of the Code.
All Stock Options shall be ISOs unless
the Option Agreement clearly designates the Stock Options granted thereunder, or
a specified portion thereof, as NSOs. Subject to the other provisions
of the Plan, a Participant may receive ISOs and NSOs at the same time, provided
that the ISOs and NSOs are clearly designated as such.
Except as otherwise expressly provided
herein, all of the provisions and requirements of the Plan relating to Stock
Options shall apply to ISOs and NSOs.
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III.
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Administration
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3.1 Committee. With
respect to grants of Stock Options, Stock Appreciation Rights and Supplemental
Bonuses to Employees other than officers and directors of the Company, the Plan
shall be administered by a committee ("Committee") composed of at least two
members of the Board of Directors. With respect to grants of Stock
Options, Stock Appreciation Rights and Supplemental Bonuses to officers and
directors, the Plan shall be administered by the Board of Directors, if each
director is a Disinterested Person, or by a committee of two or more directors,
all of whom are Disinterested Persons. Such committee may be the
Committee if all of the members thereof are Disinterested Persons, or a special
committee appointed by the Board of Directors composed of at least two
Disinterested Persons. The Committee or the Board, as the case may
be, shall have full authority to administer the Plan, including authority to
interpret and construe any provision of the Plan and any Stock Option, Stock
Appreciation Right or Supplemental Bonus granted thereunder, and to adopt such
rules and regulations for administering the Plan as it may deem necessary in
order to comply with the requirements of the Code, in order that Stock Options
that are intended to be ISOs will be classified as incentive stock options under
the Code, or in order to conform to any regulation or to any change in any law
or regulation applicable thereto. The Committee or the Board may
delegate any of its responsibilities under the Plan, other than its
responsibility to grant Stock Options, to determine whether the Stock
Appreciation Rights or Supplemental Bonuses, if any, payable to a Participant
shall be paid in cash, in shares of Common Stock or a combination thereof, or to
interpret and construe the Plan. If the Board of Directors is
composed entirely of Disinterested Persons, the Board of Directors may reserve
to itself any of the authority granted to the Committee as set forth herein, and
it may perform and discharge all of the functions and responsibilities of the
Committee at any time that a duly constituted Committee is not appointed and
serving. All references in the Plan to the "Committee" shall be
deemed to refer to the Board of Directors whenever the Board is discharging the
powers and responsibilities of the Committee, and to any special committee
appointed by the Board to administer particular aspects of the
Plan.
3.2 Actions of the
Committee. All actions taken and all interpretations and
determinations made by the Committee in good faith (including determinations of
Fair Market Value) shall be final and binding upon all Participants, the Company
and all other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan, and all members of the Committee shall, in
addition to their rights as directors, be fully protected by the Company with
respect to any such action, determination or interpretation.
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IV.
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Definitions
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4.1 "Stock
Option". A Stock Option is the right granted under the Plan to
an Employee to purchase, at such time or times and at such price or prices
("Option Price") as are determined by the Committee, the number of shares of
Common Stock determined by the Committee.
4.2 "Stock Appreciation
Right". A Stock Appreciation Right is the right to receive
payment, in shares of Common Stock, cash or a combination of shares of Common
Stock and cash, of the Redemption Value of a specified number of shares of
Common Stock then purchasable under a Stock Option.
4.3 "Redemption
Value". The Redemption Value of shares of Common Stock
purchasable under a Stock Option shall be the amount, if any, by which the Fair
Market Value of one share of Common Stock on the date on which the Stock Option
is exercised exceeds the Option Price for such share.
4.4 "Common
Stock". A share of Common Stock means a share of authorized
but unissued or reacquired Common Stock (par value $ per share) of
the Company.
4.5 "Fair Market
Value". If the Common Stock is not traded publicly, the Fair
Market Value of a share of Common Stock on any date shall be determined, in good
faith, by the Committee after such consultation with outside legal, accounting
and other experts as the Committee may deem advisable, and the Committee shall
maintain a written record of its method of determining such value. If
the Common Stock is traded publicly, the Fair Market Value of a share of Common
Stock on any date shall be the average of the representative closing bid and
asked prices, as quoted by the National Association of Securities Dealers
through NASDAQ (its automated system for reporting quotes), for the date in
question or, if the Common Stock is listed on the NASDAQ National Market System
or is listed on a national stock exchange, the officially quoted closing price
on NASDAQ or such exchange, as the case may be, on the date in
question.
4.6 "Employee". An
Employee is an employee of the Company or any Participating
Subsidiary.
4.7 "Participant". A
Participant is an Employee to whom a Stock Option, Stock Appreciation Right or
Supplemental Bonus is granted.
4.8 "Disinterested
Person." A Disinterested Person is a director of the Company
who, during the shorter of (a) the one year prior to service as an administrator
of the Plan, or (b) the period between the date on which the Company's Common
Stock is registered pursuant to Section 12 of the Securities Exchange Act of
1934, as amended, (the "1934 Act") and the director's service as an
administrator of the Plan, has not been granted or awarded equity securities
pursuant to the Plan or any other plan of the Company or any of its affiliates
except as may be permitted by Rule 16b-3(c)(2) under the 1934 Act or any
successor to such rule.
4.9 "Supplemental
Bonus". A Supplemental Bonus is the right to receive payment,
in shares of Common Stock, cash or a combination of shares of Common Stock and
cash, of an amount determined under Section 7.7.
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V.
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Eligibility and
Participation
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Grants of Stock Options, Stock
Appreciation Rights and Supplemental Bonuses may be made to Employees of the
Company or any Participating Subsidiary, including directors of the Company who
are also Employees, but directors who are not Employees shall not be eligible to
receive Stock Options, Stock Appreciation Rights or Supplemental Bonuses under
the Plan. The Committee shall from time to time determine the
Employees to whom Stock Options shall be granted, the number of shares of Common
Stock subject to each Stock Option to be granted to each such Employee, the
Option Price of such Stock Options and other terms and provisions of such Stock
Options, all as provided in the Plan. The Option Price of any ISO
shall be not less than the Fair Market Value of a share of Common Stock on the
date on which the Stock Option is granted, but the Option Price of an NSO may be
less than the Fair Market Value on the date the NSO is granted if the Committee
so determines. If an ISO is granted to an Employee who then owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company or any parent or subsidiary corporation of the Company,
the Option Price of such ISO shall be at least 110% of the Fair Market Value of
the Common Stock subject to the ISO at the time such ISO is granted, and such
ISO shall not be exercisable after five years after the date on which it was
granted. Each Stock Option shall be evidenced by a written agreement
("Option Agreement") containing such terms and provisions as the Committee may
determine, subject to the provisions of the Plan.
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VI.
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Shares of Common Stock
Subject to the Plan
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6.1 Maximum
Number. The maximum aggregate number of shares of Common Stock
that may be made subject to Stock Options shall be 750,000 authorized
but unissued shares. The aggregate Fair Market Value (determined as
of the time the ISO is granted) of the Common Stock as to which all ISOs granted
to an Employee may first become exercisable in a particular calendar year may
not exceed $100,000. If any shares of Common Stock subject to Stock
Options are not purchased or otherwise paid for before such Stock Options
expire, such shares may again be made subject to Stock Options.
6.2 Capital
Changes. In the event any changes are made to the shares of
Common Stock (whether by reason of merger, consolidation, reorganization,
recapitalization, stock dividend in excess of ten percent (10%) at any single
time, stock split, combination of shares, exchange of shares, change in
corporate structure or otherwise), appropriate adjustments shall be made
in: (i) the number of shares of Common Stock theretofore made subject
to Stock Options, and in the purchase price of said shares; and (ii) the
aggregate number of shares which may be made subject to Stock
Options. If any of the foregoing adjustments shall result in a
fractional share, the fraction shall be disregarded, and the Company shall have
no obligation to make any cash or other payment with respect to such a
fractional share.
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VII.
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Exercise of Stock
Options
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7.1 Time of
Exercise. Subject to the provisions of the Plan, including
without limitation Section 7.5, the Committee, in its discretion, shall
determine the time when a Stock Option, or a portion of a Stock Option, shall
become exercisable, and the time when a Stock Option, or a portion of a Stock
Option, shall expire. Such time or times shall be set forth in the
Option Agreement evidencing such Stock Option. An ISO shall expire,
to the extent not exercised, no later than the tenth anniversary of the date on
which it was granted, and an NSO shall expire, to the extent not exercised, no
later than ten years after the date on which it was granted. The
Committee may accelerate the vesting of any Participant's Stock Option by giving
written notice to the Participant. Upon receipt of such notice, the
Participant and the Company shall amend the Option Agreement to reflect the new
vesting schedule. The acceleration of the exercise period of a Stock
Option shall not affect the expiration date of that Stock Option.
7.2 Exchange of Outstanding
Stock. The Committee, in its sole discretion, may permit a
Participant to surrender to the Company shares of Common Stock previously
acquired by the Participant as part or full payment for the exercise of a Stock
Option. Such surrendered shares shall be valued at their Fair Market
Value on the date of exercise.
7.3 Use of Promissory Note;
Exercise Loans. The Committee may, in its sole discretion,
impose terms and conditions, including conditions relating to the manner and
timing of payments, on the exercise of Stock Options. Such terms and
conditions may include, but are not limited to, permitting a Participant to
deliver to the Company his promissory note as full or partial payment for the
exercise of a Stock Option; provided that, with respect to any promissory note
given as payment or partial payment for the exercise of an ISO, all terms of
such note shall be determined at the time a Stock Option is granted and set
forth in the Option Agreement. The Committee, in its sole discretion,
may authorize the Company to make a loan to a Participant in connection with the
exercise of Stock Options, or authorize the Company to arrange or guarantee
loans to a Participant by a third party.
7.4 Stock Restriction
Agreement. The Committee may provide that shares of Common
Stock issuable upon the exercise of a Stock Option shall, under certain
conditions, be subject to restrictions whereby the Company has a right of first
refusal with respect to such shares or a right or obligation to repurchase all
or a portion of such shares, which restrictions may survive a Participant's term
of employment with the Company. The acceleration of time or times at
which a Stock Option becomes exercisable may be conditioned upon the
Participant's agreement to such restrictions.
7.5 Termination of Employment
Before Exercise. If a Participant's employment with the
Company or a Participating Subsidiary shall terminate for any reason other than
the Participant's disability, any Stock Option then held by the Participant, to
the extent then exercisable under the applicable Option Agreement(s), shall
remain exercisable after the termination of his employment for a period of 30
days (but, in the case of an ISO, in no event beyond ten years from the date of
grant of the ISO). If the Participant's employment is terminated
because the Participant is disabled within the meaning of Section 22(e)(3) of
the Code, any Stock Option then held by the Participant, to the extent then
exercisable under the applicable Option Agreement(s), shall remain exercisable
after the termination of his employment for a period of three months (but, in
the case of an ISO, in no event beyond ten years from the date of grant of the
ISO). If the Stock Option is not exercised during the applicable
period, it shall be deemed to have been forfeited and of no further force or
effect.
7.6 Disposition of Forfeited
Stock Options. Any shares of Common Stock subject to Stock
Options forfeited by a Participant shall not thereafter be eligible for purchase
by the Participant but may be made subject to Stock Options granted to other
Participants.
7.7 Grant of Supplemental
Bonuses. The Committee, either at the time of grant or at any
time prior to exercise of any Stock Option or Stock Appreciation Right, may
provide for a Supplemental Bonus from the Company or Participating Subsidiary in
connection with a specified number of shares of Common Stock then purchasable,
or which may become purchasable, under a Stock Option, or a specified number of
Stock Appreciation Rights which may be or become exercisable. Such
Supplemental Bonus shall be payable upon the exercise of the Stock Option or
Stock Appreciation Right with regard to which such Supplemental Bonus was
granted. A Supplemental Bonus shall not exceed the amount necessary
to reimburse the Participant for the income tax liability incurred by him upon
the exercise of the Stock Option or upon the exercise of such Stock Appreciation
Right, calculated using the maximum combined federal and applicable state income
tax rates then in effect and taking into account the tax liability arising from
the Participant's receipt of the Supplemental Bonus. The Committee
may, in its discretion, elect to pay any part or all of the Supplemental Bonus
in: (i) cash; (ii) shares of Common Stock; or (iii) any combination
of cash and shares of Common Stock. The provisions of Section 8.3
shall apply to the giving of notice, the determination of the number of shares
to be delivered, and the time for delivering shares. In applying
Section 8.3, the Supplemental Bonus shall be treated as if it were a Stock
Appreciation Right that the Participant exercised on the day the Supplemental
Bonus became payable. Shares of Common Stock issued pursuant to this
Section 7.7 shall not be deemed to have been issued upon the exercise of a Stock
Option for purposes of the limitations imposed by Section 6.1 of the
Plan.
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VIII.
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Stock Appreciation
Rights
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8.1 Grant of Stock Appreciation
Rights. The Committee may, from time to time, grant Stock
Appreciation Rights to a Participant with respect to not more than the number of
shares of Common Stock which are, or may become, purchasable under any Stock
Option held by the Participant. The Committee may, in its sole
discretion, specify the terms and conditions of such rights, including without
limitation the time period or time periods during which such rights may be
exercised and the date or dates upon which such rights shall expire and become
void and unexercisable; provided, however, that in no event shall such rights
expire and become void and unexercisable later than the time when the related
Stock Option is exercised, expires or terminates. Each Participant to
whom Stock Appreciation Rights are granted shall be given written notice
advising him of the grant of such rights and specifying the terms and conditions
of the rights, which shall be subject to all the provisions of this
Plan.
8.2 Exercise of Stock
Appreciation Rights. Subject to Section 8.3, and in lieu of
purchasing shares of Common Stock upon the exercise of a Stock Option held by
him, a Participant may elect to exercise the Stock Appreciation Rights, if any,
he has been granted and receive payment of the Redemption Value of all, or any
portion, of the number of shares of Common Stock subject to such Stock Option
with respect to which he has been granted Stock Appreciation Rights; provided,
however, that the Stock Appreciation Rights may be exercised only when the Fair
Market Value of the Common Stock subject to such Stock Option exceeds the
exercise price of the Stock Option. A Participant shall exercise his
Stock Appreciation Rights by delivering a written notice to the Committee
specifying the number of shares with respect to which he exercises Stock
Appreciation Rights and agreeing to surrender the rights to purchase an
equivalent number of shares of Common Stock subject to his Stock
Option. If a Participant exercises Stock Appreciation Rights, payment
of his Stock Appreciation Rights shall be made in accordance with Section 8.3 on
or before the 90th day after the date of exercise of the Stock Appreciation
Rights.
8.3 Form of
Payment. If a Participant elects to exercise Stock
Appreciation Rights as provided in Section 8.2, the Committee may, in its
absolute discretion, elect to pay any part or all of the Redemption Value of the
shares with respect to which the Participant has exercised Stock Appreciation
Rights in: (i) cash; (ii) shares of Common Stock; or (iii) any
combination of cash and shares of Common Stock. The Committee's
election pursuant to this Section 8.3 shall be made by giving written notice to
the Participant within said 90-day period, which notice shall specify the
portion which the Committee elects to pay in cash, shares of Common Stock or a
combination thereof. In the event any portion is to be paid in shares
of Common Stock, the number of shares to be delivered shall be determined by
dividing the amount which the Committee elects to pay in shares of Common Stock
by the Fair Market Value of one share of Common Stock on the date of exercise of
the Stock Appreciation Rights. Any fractional share resulting from
any such calculation shall be disregarded. Said shares, together with
any cash payable to the Participant, shall be delivered within said 90-day
period.
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IX.
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No Contract of
Employment
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Nothing in this Plan shall confer upon
the Participant the right to continue in the employ of the Company, or any
Participating Subsidiary, nor shall it interfere in any way with the right of
the Company, or any such Participating Subsidiary, to discharge the Participant
at any time for any reason whatsoever, with or without cause. Nothing
in this Article IX shall affect any rights or obligations of the Company or any
Participant under any written contract of employment.
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X.
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No Rights as a
Stockholder
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A Participant shall have no rights as a
stockholder with respect to any shares of Common Stock subject to a Stock
Option. Except as provided in Section 6.2, no adjustment shall be made in the
number of shares of Common Stock issued to a Participant, or in any other rights
of the Participant upon exercise of a Stock Option by reason of any dividend,
distribution or other right granted to stockholders for which the record date is
prior to the date of exercise of the Participant's Stock Option.
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XI.
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Assignability
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No Stock Option, Stock Appreciation
Right or Supplemental Bonus right granted under this Plan, nor any other rights
acquired by a Participant under this Plan, shall be assignable or transferable
by a Participant, other than by will or the laws of descent and distribution or,
in the case of an NSO, pursuant to a qualified domestic relations order as
defined by the Code, Title I of the Employee Retirement Income Security Act, or
the rules thereunder. Notwithstanding the preceding sentence, the
Committee may, in its sole discretion, permit the assignment or transfer of an
NSO by a Participant other than an officer or director, and the exercise thereof
by a person other than such Participant, on such terms and conditions as the
Committee in its sole discretion may determine. Any such terms shall
be determined at the time the NSO is granted, and shall be set forth in the
Option Agreement. In the event of his death, the Stock Option or any
Stock Appreciation Right or Supplemental Bonus right may be exercised by the
Personal Representative of the Participant's estate or, if no Personal
Representative has been appointed, by the successor or successors in interest
determined under the Participant's will or under the applicable laws of descent
and distribution.
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XII.
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Merger or Liquidation
of the Company
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If the Company or its stockholders
enter into an agreement to dispose of all, or substantially all, of the assets
or outstanding capital stock of the Company by means of a sale or liquidation,
or a merger or reorganization in which the Company is not the surviving
corporation, all Stock Options outstanding under the Plan as of the day before
the consummation of such sale, liquidation, merger or reorganization, to the
extent not exercised, shall for all purposes under this Plan become exercisable
in full as of such date even though the dates of exercise established pursuant
to Section 7.1 have not yet occurred, unless the Board shall have prescribed
other terms and conditions to the exercise of the Stock Option, or otherwise
modified the Stock Options.
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XIII.
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Amendment
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The Board may from time to time alter,
amend, suspend or discontinue the Plan, including, where applicable, any
modifications or amendments as it shall deem advisable in order that ISOs will
be classified as incentive stock options under the Code, or in order to conform
to any regulation or to any change in any law or regulation applicable thereto;
provided, however, that no such action shall adversely affect the rights and
obligations with respect to Stock Options at any time outstanding under the
Plan; and provided further that no such action shall, without the approval of
the stockholders of the Company, (i) increase the maximum number of shares of
Common Stock that may be made subject to Stock Options (unless necessary to
effect the adjustments required by Section 6.2), (ii) materially increase the
benefits accruing to Participants under the Plan, or (iii) materially modify the
requirements as to eligibility for participation in the Plan.
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XIV.
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Registration of
Optioned Shares
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The Stock Options shall not be
exercisable unless the purchase of such optioned shares is pursuant to an
applicable effective registration statement under the Securities Act of 1933, as
amended (the "1933 Act"), or unless, in the opinion of counsel to the Company,
the proposed purchase of such optioned shares would be exempt from the
registration requirements of the 1933 Act and from the registration or
qualification requirements of applicable state securities laws.
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XV.
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Withholding
Taxes
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The Company or Participating Subsidiary
may take such steps as it may deem necessary or appropriate for the withholding
of any taxes which the Company or the Participating Subsidiary is required by
any law or regulation or any governmental authority, whether federal, state or
local, domestic or foreign, to withhold in connection with any Stock Option,
Stock Appreciation Right or Supplemental Bonus, including, but not limited to,
the withholding of all or any portion of any payment or the withholding of
issuance of shares of Common Stock to be issued upon the exercise of any Stock
Option or Stock Appreciation Right or upon payment of any Supplemental Bonus,
until the Participant reimburses the Company or Participating Subsidiary for the
amount the Company or Participating Subsidiary is required to withhold with
respect to such taxes, or canceling any portion of such payment or issuance in
an amount sufficient to reimburse itself for the amount it is required to so
withhold.
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XVI.
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Brokerage
Arrangements
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The Committee, in its discretion, may
enter into arrangements with one or more banks, brokers or other financial
institutions to facilitate the disposition of shares acquired upon exercise of
Stock Options, Stock Appreciation Rights or Supplemental Bonuses, including,
without limitation, arrangements for the simultaneous exercise of Stock Option,
Stock Appreciation Rights or Supplemental Bonuses, and sale of the shares
acquired upon such exercise.
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XVII.
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Nonexclusivity of the
Plan
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Neither the adoption of the Plan by the
Board nor the submission of the Plan to stockholders of the Company for approval
shall be construed as creating any limitations on the power or authority of the
Board to adopt such other or additional incentive or other compensation
arrangements of whatever nature as the Board may deem necessary or desirable or
preclude or limit the continuation of any other plan, practice or arrangement
for the payment of compensation or fringe benefits to employees generally, or to
any class or group of employees, which the Company or any Participating
Subsidiary now has lawfully put into effect, including, without limitation, any
retirement, pension, savings and stock purchase plan, insurance, death and
disability benefits and executive short-term incentive plans.
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XVIII.
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Effective
Date
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This Plan was adopted by the Board of
Directors and became effective on March 4, 2002 and was
approved by the Company's stockholders on
. No Stock Options shall be granted subsequent to ten years
after the effective date of the Plan. Stock Options outstanding
subsequent to ten years after the effective date of the Plan shall continue to
be governed by the provisions of the Plan.