AMDL, INC.
2004 STOCK OPTION PLAN
1.
PURPOSE . The purpose of the AMDL, Inc. 2004 Stock Option
Plan (the “Plan”) is to strengthen AMDL, Inc., a
Delaware corporation (“Corporation”), by providing to
employees, officers, directors, consultants and independent
contractors of the Corporation or any of its subsidiaries
(including dealers, distributors, and other business entities or
persons providing services on behalf of the Corporation or any of
its subsidiaries) added incentive for high levels of performance
and unusual efforts to increase the earnings of the Corporation.
The Plan seeks to accomplish this purpose by enabling specified
persons to purchase shares of the Corporation’s common stock,
$.001 par value, thereby increasing their proprietary interest in
the Corporation’s success and encouraging them to remain in
the employ or service of the Corporation.
2.
CERTAIN DEFINITIONS . As used in this Plan, the following
words and phrases shall have the respective meanings set forth
below, unless the context clearly indicates a contrary
meaning:
2.1
“ Board of Directors ” The Board of Directors of
the Corporation.
2.2
“ Code ” The Internal Revenue Code of 1986, as
amended.
2.3
“ Committee ” The Compensation Committee of the
Board of Directors which shall administer the Plan and consist of a
majority of independent directors.
2.4
“ Fair Market Value Per Share ” The fair market
value per share of the Shares as determined by the Committee in
good faith. The Committee is authorized to make its determination
as to the fair market value per share of the Shares on the
following basis: (i) if the Shares are traded only otherwise
than on a securities exchange and are not quoted on the National
Association of Securities Dealers’ Automated Quotation System
(“NASDAQ”), but are quoted on the bulletin board or in
the “pink sheets” published by the National Daily
Quotation Bureau, the greater of (a) the average of the mean
between the average daily bid and average daily asked prices of the
Shares during the thirty (30) day period preceding the date of
grant of an Option, as quoted on the bulletin board or in the
“pink sheets” published by the National Daily Quotation
Bureau, or (b) the mean between the average daily bid and
average daily asked prices of the Shares on the date of grant, as
published on the bulletin board or in such “pink
sheets;” (ii) if the Shares are traded on a securities
exchange or on the NASDAQ, the greater of (a) the average of
the daily closing prices of the Shares during the ten
(10) trading days preceding the date of grant of an Option, or
(b) the closing price of the Shares on the last trading day
preceding the date of grant of an Option; or (iii) if the
Shares are traded only otherwise than as described in (i) or
(ii) above, or if the Shares are not publicly traded, the
value determined by the Committee in good faith based upon the fair
market value as determined by completely independent and well
qualified experts.
2.5
“ Incentive Stock Option ” An Option intended to
qualify for treatment as an incentive stock option under Code
Sections 421 and 422, and designated as an Incentive Stock
Option.
1
2.6
“ Nonqualified Option ” An Option not qualifying
as an Incentive Stock Option.
2.7
“ Option ” A stock option granted under the
Plan.
2.8
“ Optionee ” The holder of an Option.
2.9
“ Option Agreement ” The document setting forth
the terms and conditions of each Option.
2.10
“ Shares ” The shares of common stock, $.001 par
value, of the Corporation.
2.11
“ Subsidiary ” Any corporation of which fifty
percent (50%) or more of the total combined voting power of all
classes of stock of such corporation is owned by the Corporation or
another Subsidiary (as so defined).
3.
ADMINISTRATION OF PLAN .
3.1
In General . This Plan shall be administered by the
Committee. Any action of the Committee with respect to
administration of the Plan shall be taken pursuant to (i) a
majority vote at a meeting of the Committee (to be documented by
minutes), or (ii) the unanimous written consent of its
members.
3.2
Authority . Subject to the express provisions of this Plan,
the Committee shall have the authority to: (i) construe and
interpret the Plan, decide all questions and settle all
controversies and disputes which may arise in connection with the
Plan and to define the terms used therein; (ii) prescribe,
amend and rescind rules and regulations relating to administration
of the Plan; (iii) determine the purchase price of the Shares
covered by each Option and the method of payment of such price,
individuals to whom, and the time or times at which, Options shall
be granted and exercisable and the number of Shares covered by each
Option; (iv) determine the terms and provisions of the
respective Option Agreements (which need not be identical);
(v) determine the duration and purposes of leaves of absence
which may be granted to participants without constituting a
termination of their employment for purposes of the Plan; and
(vi) make all other determinations necessary or advisable to
the administration of the Plan. Determinations of the Committee on
matters referred to in this Section 3 shall be conclusive and
binding on all parties howsoever concerned. With respect to
Incentive Stock Options, the Committee shall administer the Plan in
compliance with the provisions of Code Section 422 as the same
may hereafter be amended from time to time. No member of the
Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Option.
4.
ELIGIBILITY AND PARTICIPATION .
4.1
In General . Only officers, employees and directors who are
also employees of the Corporation or any Subsidiary shall be
eligible to receive grants of Incentive Stock Options. Officers,
employees and directors (whether or not they are also employees) of
the Corporation or any Subsidiary, as well as consultants,
independent contractors or other service providers of the
Corporation or any Subsidiary shall be eligible to receive grants
of
2
Nonqualified
Options. Within the foregoing limits, the Committee, from time to
time, shall determine and designate persons to whom Options may be
granted. All such designations shall be made in the absolute
discretion of the Committee and shall not require the approval of
the stockholders. In determining (i) the number of Shares to
be covered by each Option, (ii) the purchase price for such
Shares and the method of payment of such price (subject to the
other sections hereof), (iii) the individuals of the eligible
class to whom Options shall be granted, (iv) the terms and
provisions of the respective Option Agreements, and (v) the
times at which such Options shall be granted, the Committee shall
take into account such factors as it shall deem relevant in
connection with accomplishing the purpose of the Plan as set forth
in Section 1. An individual who has been granted an Option may
be granted an additional Option or Options if the Committee shall
so determine. No Option shall be granted under the Plan after
February 23, 2014 but Options granted before such date may be
exercisable after such date.
4.2
Certain Limitations . In no event shall Incentive Stock
Options be granted to an Optionee such that the sum of
(i) aggregate fair market value (determined at the time the
Incentive Stock Options are granted) of the Shares subject to all
Options granted under the Plan which are exercisable for the first
time during the same calendar year, plus (ii) the aggregate
fair market value (determined at the time the options are granted)
of all stock subject to all other incentive stock options granted
to such Optionee by the Corporation, its parent and Subsidiaries
which are exercisable for the first time during such calendar year,
exceeds One Hundred Thousand Dollars ($100,000). For purposes of
the immediately preceding sentence, fair market value shall be
determined as of the date of grant based on the Fair Market Value
Per Share as determined pursuant to Section 2.3.
5.
AVAILABLE SHARES AND ADJUSTMENTS UPON CHANGES IN
CAPITALIZATION .
5.1
Shares . Subject to adjustment as provided in
Section 5.2 below, the total number of Shares to be subject to
Options granted pursuant to this Plan shall not exceed Two Million
Four Hundred Thousand (2,400,000) Shares. Shares subject to the
Plan may be either authorized but unissued shares or shares that
were once issued and subsequently reacquired by the Corporation;
the Committee shall be empowered to take any appropriate action
required to make Shares available for Options granted under this
Plan. If any Option is surrendered before exercise or lapses
without exercise in full or for any other reason ceases to be
exercisable, the Shares reserved therefore shall continue to be
available under the Plan.
5.2
Adjustments . As used herein, the term “Adjustment
Event” means an event pursuant to which the outstanding
Shares of the Corporation are increased, decreased or changed into,
or exchanged for a different number or kind of shares or
securities, without receipt of consideration by the Corporation,
through reorganization, merger, recapitalization, reclassification,
stock split, reverse stock split, stock dividend, stock
consolidation or otherwise. Upon the occurrence of an Adjustment
Event, (i) appropriate and proportionate adjustments shall be
made to the number and kind of Shares and exercise price for the
Shares subject to the Options which may thereafter be granted under
this Plan, (ii) appropriate and proportionate adjustments
shall be made to the number and kind of and exercise price for the
Shares subject to the then outstanding Options granted under this
Plan, and (iii) appropriate amendments to the Option
Agreements shall be executed by the Corporation and the Optionees
if the Committee
3
determines that
such an amendment is necessary or desirable to reflect such
adjustments. If determined by the Committee to be appropriate, in
the event of an Adjustment Event which involves the substitution of
securities of a corporation other than the Corporation, the
Committee shall make arrangements for the assumptions by such other
corporation of any Options then or thereafter outstanding under the
Plan. Notwithstanding the foregoing, such adjustment in an
outstanding Option shall be made without change in the total
exercise price applicable to the unexercised portion of the Option,
but with an appropriate adjustment to the number of Shares, kind of
shares and exercise price for each Share subject to the Option. The
determination by the Committee as to what adjustments, amendments
or arrangements shall be made pursuant to this Section 5.2,
and the extent thereof, shall be final and conclusive. No
fractional Shares shall be issued under the Plan on account of any
such adjustment or arrangement.
6. TERMS
AND CONDITIONS OF OPTIONS .
6.1
Intended Treatment as Incentive Stock Options . Incentive
Stock Options granted pursuant to this Plan are intended to be
“incentive stock options” to which Code
Sections 421 and 422 apply, and the Plan shall be construed
and administered to implement that intent. If all or any part of an
Incentive Stock Option shall not be an “incentive stock
option” subject to Sections 421 or 422 of the Code, such
Option shall nevertheless be valid and carried into effect. All
Options granted under this Plan shall be subject to the terms and
conditions set forth in this Section 6 (except as provided in
Section 5.2) and to such other terms and conditions as the
Committee shall determine to be appropriate to accomplish the
purpose of the Plan as set forth in Section 1.
6.2
Amount and Payment of Exercise Price .
6.2.1
Exercise Price . The exercise price per Share for each Share
which the Optionee is entitled to purchase under a Nonqualified
Option shall be determined by the Committee but shall not be less
than eighty-five percent (85%) of the Fair Market Value Per Share
on the date of the grant of the Nonqualified Option. The exercise
price per Share for each Share which the Optionee is entitled to
purchase under an Incentive Stock Option shall be determined by the
Committee but shall not be less than the Fair Market Value Per
Share on the date of the grant of the Incentive Stock Option;
provided, however, that the exercise price shall not be less than
one hundred and ten percent (110%) of the Fair Market Value Per
Share on the date of the grant of the Incentive Stock Option in the
case of an individual then owning (within the meaning of Code
Section 425(d)) more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation or
of its parent or Subsidiaries.
6.2.2
Payment of Exercise Price . The consideration to be paid for
the Shares to be issued upon exercise of an Option, including the
method of payment, shall be determined by the Committee and may
consist of promissory notes, shares of the common stock of the
Corporation or such other consideration and method of payment for
the Shares as may be permitted under applicable state and federal
laws.
4
6.3
Exercise of Options .
6.3.1
Each Option granted under this Plan shall be exercisable at such
times and under such conditions as may be determined by the
Committee at the time of the grant of the Option and as shall be
permissible under the terms of the Plan; provided, however, in no
event shall an Option be exercisable after the expiration of ten
(10) years from the date it is granted, and in the case of an
Optionee owning (within the meaning of Code Section 425(d)),
at the time an Incentive Stock Option is granted, more than ten
percent (10%) of the total combined voting power of all classes of
stock of the Corporation or of its parent or Subsidiaries, such
Incentive Stock Option shall not be exercisable later than five
(5) years after the date of grant.
6.3.2
An Optionee may purchase less than the total number of Shares for
which the Option is exercisable, provided that a partial exercise
of an Option may not be for less than One Hundred (100) Shares
and shall not include any fractional Shares.
6.4
Nontransferability of Options . All Options granted under
this Plan shall be nontransferable, either voluntarily or by
operation of law, otherwise than by will or the laws of descent and
distribution, and shall be exercisable during the Optionee’s
lifetime only by such Optionee.
6.5
Effect of Termination of Employment or Other Relationship .
Except as otherwise determined by the Committee in connection with
the grant of Nonqualified Options, the effect of termination of an
Optionee’s employment or other relationship with the
Corporation on such Optionee’s rights to acquire Shares
pursuant to the Plan shall be as follows:
6.5.1
Termination for Other than Disability or Cause . If an
Optionee ceases to be employed by, or ceases to have a relationship
with, the Corporation for any reason other than for disability or
cause, such Optionee’s Options shall expire not later than
three (3) months thereafter. During such three (3) month
period and prior to the expiration of the Option by its terms, the
Optionee may exercise any Option granted to him, but only to the
extent such Options were exercisable on the date of termination of
his employment or relationship and except as so exercised, such
Options shall expire at the end of such three (3) month period
unless such Options by their terms expire before such date. The
decision as to whether a termination for a reason other than
disability, cause or death has occurred shall be made by the
Committee, whose decision shall be final and conclusive, except
that employment shall not be considered terminated in the case of
sick leave or other bona fide leave of absence approved by the
Corporation.
6.5.2
Disability . If an Optionee ceases to be employed by, or
ceases to have a relationship with, the Corporation by reason of
disability (within the meaning of Code Section 22(e)(3)), such
Optionee’s Options shall expire not later than one
(1) year thereafter. During such one (1) year period and
prior to the expiration of the Option by its terms, the Optionee
may exercise any Option granted to him, but only to the extent such
Options were exercisable on the date the Optionee ceased to be
employed by, or ceased to have a relationship with, the Corporation
by reason of disability and except as so exercised, such Options
shall expire at the end of such one (1) year period unless
such Options by their terms expire before such date. The decision
as to whether a termination by reason of disability has occurred
shall be made by the Committee, whose decision shall be final and
conclusive.
5
6.5.3
Termination for Cause . If an Optionee’s employment
by, or relationship with, the Corporation is terminated for cause,
such Optionee’s Option shall expire immediately; provided,
however, the Committee may, in its sole discretion, within thirty
(30) days of such termination, waive the expiration of the
Option by giving written notice of such waiver to the Optionee at
such Optionee’s last known address. In the event of such
waiver, the Optionee may exercise the Option only to such extent,
for such time, and upon such terms and conditions as if such
Optionee had ceased to be employed by, or ceased to have a
relationship with, the Corporation upon the date of such
termination for a reason other than disability, cause, or death.
Termination for cause shall include termination for malfeasance or
gross misfeasance in the performance of duties or conviction of
illegal activity in connection therewith or any conduct detrimental
to the interests of the Corporation. The determination of the
Committee with respect to whether a termination for cause has
occurred shall be final and conclusive.
6.6
Withholding of Taxes . As a condition to the exercise, in
whole or in part, of any Options the Board of Directors may in its
sole discretion require the Optionee to pay, in addition to the
purchase price of the Shares covered by the Option an amount equal
to any Federal, state or local taxes that may be required to be
withheld in connection with the exercise of such Option.
6.7
No Rights to Continued Employment or Relationship . Nothing
contained in this Plan or in any Option Agreement shall obligate
the Corporation to employ or have another relationship with any
Optionee for any period or interfere in any way with the right of
the Corporation to reduce such Optionee’s compensation or to
terminate the employment of or relationship with any Optionee at
any time.
6.8
Time of Granting Options . The time an Option is granted,
sometimes referred to herein as the date of grant, shall be the day
the Corporation executes the Option Agreement; provided, however,
that if appropriate resolutions of the Committee indicate that an
Option is to be granted as of and on some prior or future date, the
time such Option is granted shall be such prior or future
date.
6.9
Privileges of Stock Ownership . No Optionee shall be
entitled to the privileges of stock ownership as to any Shares not
actually issued and delivered to such Optionee. No Shares shall be
purchased upon the exercise of any Option unless and until, in the
opinion of the Corporation’s counsel, any then applicable
requirements of any laws or governmental or regulatory agencies
having jurisdiction and of any exchanges upon which the stock of
the Corporation may be listed shall have been fully complied
with.
6.10
Securities Laws Compliance . The Corporation will diligently
endeavor to comply with all applicable securities laws before any
Options are granted under the Plan and before any Shares are issued
pursuant to Options. Without limiting the generality of the
foregoing, the Corporation may require from the Optionee such
investment representation or such agreement, if any, as counsel for
the Corporation may consider necessary or advisable in order to
comply with the Securities Act of 1933 as then in effect, and may
require that the Optionee agree that any sale of the Shares will be
made only in such manner as is permitted by the Committee. The
Committee in its discretion may cause the Shares underlying the
Options to be registered under the Securities Act of 1933, as
amended, by the filing of a Form S-8
6
Registration
Statement covering the Options and Shares underlying such Options.
Optionee shall take any action reasonably requested by the
Corporation in connection with registration or qualification of the
Shares under federal or state securities laws.
6.11
Option Agreement . Each Incentive Stock Option and
Nonqualified Option granted under this Plan shall be evidenced by
the appropriate written Stock Option Agreement (“Option
Agreement”) executed by the Corporation and the Optionee in a
form substantially the same as the appropriate form of Option
Agreement attached as Exhibit I or II hereto (and made a part
hereof by this reference) and shall contain each of the provisions
and agreements specifically required to be contained therein
pursuant to this Section 6, and such other terms and
conditions as are deemed desirable by the Committee and are not
inconsistent with the purpose of the Plan as set forth in
Section 1.
7. PLAN
AMENDMENT AND TERMINATION .
7.1
Authority of Committee . The Committee may at any time
discontinue granting Options under the Plan or otherwise suspend,
amend or terminate the Plan and may, with the consent of an
Optionee, make such modification of the terms and conditions of
such Optionee’s Option as it shall deem advisable; provided
that, except as permitted under the provisions of Section 5.2,
the Committee shall have no authority to make any amendment or
modification to this Plan or any outstanding Option thereunder
which would: (i) increase the maximum number of Shares which
may be purchased pursuant to Options granted under the Plan, either
in the aggregate or by an Optionee (except pursuant to
Section 5.2); (ii) change the designation of the class of
the employees eligible to receive Incentive Stock Options;
(iii) extend the term of the Plan or the maximum Option period
thereunder; (iv) decrease the minimum Incentive Stock Option
price or permit reductions of the price at which Shares may be
purchased for Incentive Stock Options granted under the Plan; or
(v) cause Incentive Stock Options issued under the Plan to
fail to meet the requirements of incentive stock options under Code
Section 422. An amendment or modification made pursuant to the
provisions of this Section 7 shall be deemed adopted as of the
date of the action of the Committee effecting such amendment or
modification and shall be effective immediately, unless otherwise
provided therein, subject to approval thereof (1) within
twelve (12) months before or after the effective date by
stockholders of the Corporation holding not less than a majority
vote of the voting power of the Corporation voting in person or by
proxy at a duly held stockholders meeting when required to maintain
or satisfy the requirements of Code Section 422 with respect
to Incentive Stock Options, and (2) by any appropriate
governmental agency. No Option may be granted during any suspension
or after termination of the Plan.
7.2
Ten (10) Year Maximum Term . Unless previously
terminated by the Committee, this Plan shall terminate on
February 23, 2014 and no Options shall be granted under the
Plan thereafter.
7.3
Effect on Outstanding Options . Amendment, suspension or
termination of this Plan shall not, without the consent of the
Optionee, alter or impair any rights or obligations under any
Option theretofore granted.
7
8.
EFFECTIVE DATE OF PLAN . This Plan shall be effective as of
February 23, 2004, the date the Plan was adopted by the Board
of Directors, subject to the a
|
