Exhibit 10.6


 


ICOP DIGITAL, INC.


 


2002
STOCK OPTION PLAN


 


ARTICLE I


PURPOSE


 


The
purpose of the ICOP Digital, Inc. Stock Option Plan (the “Plan”) is to
attract and retain directors, officers, other employees and consultants of ICOP
Digital, Inc. and its subsidiaries (collectively the “Company”) and to
provide such persons with incentives to continue in the long-term service of
the Company and to create in such persons a more direct interest in the future
success of the operations of the Company by relating incentive compensation to
increases in stockholder value.


 


ARTICLE II


STRUCTURE OF THE PLAN


 


The
Plan is divided into three separate programs:


 


A.                                   The
Discretionary Stock Option Grant Program under which eligible persons may, at
the discretion of the Committee or the Board, be granted Stock Options;


 


B.                                     The
Restricted Stock Program under which eligible persons may, at the discretion of
the Committee or the Board, be granted rights to receive shares of Common
Stock, subject to certain restrictions; and


 


C.                                     The
Supplemental Bonus Program under which eligible persons may, at the discretion
of the Committee or the Board, be granted a right to receive payment, in cash,
shares of Common Stock, or a combination thereof, of a specified amount.


 


ARTICLE III


DEFINITIONS


 


As
used in this Plan:


 


“10% Stockholder” shall mean any owner of stock (as
determined under Section 424(d) of the Code) possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any Subsidiary.


 


“Award”
shall mean a grant made under this Plan in the form of Stock Options,
Restricted Stock or Supplemental Bonuses.


 


“Board”
shall mean the Company’s Board of Directors.


 





















 


“Change
in Control” shall mean a change in ownership or control of the Company effected
through any of the following transactions:


 


1.                                       The
acquisition, directly or indirectly by any person or group (within the meaning
of Sections 13(d) and 14(d)(2) of the Exchange Act) other than a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, of beneficial ownership (within the meaning of Rule 13d-3 of
the Exchange Act) of securities possessing more than thirty percent (30%) of
the total combined voting power of the Company’s outstanding securities;


 


2.                                       A
change in the composition of the Board over a period of eighteen (18)
consecutive months or less such that fifty percent (50%) or more of the Board
members cease to be directors who either (A) have been directors
continuously since the beginning of such period or (B) have been
unanimously elected or nominated by the Board for election as directors during
such period;


 


3.                                       A
stockholder-approved merger or consolidation to which the Company is a party
and in which (A) the Company is not the surviving entity or (B) securities
possessing more than thirty percent (30%) of the total combined voting power of
the Company’s outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to such
transaction; or


 


4.                                       The
sale, transfer or other disposition of all or substantially all of the Company’s
assets in complete liquidation or dissolution of the Company.


 


“Code” shall mean the Internal Revenue Code of 1986,
as amended from time to time.


 


“Committee” shall mean the Employee Committee and/or
the Incentive Plan Committee, as applicable.


 


“Common Stock” shall mean the Company’s common stock,
..01 par value.


 


“Company”
shall mean ICOP Digital, Inc., a Nevada corporation.


 


“Date
of Grant” shall mean the date specified by the Committee on which a grant of an
Award shall become effective, which shall not be earlier than the date on which
the Committee takes action with respect thereto.


 


“Employee”
shall mean an individual who is in the employ of the Company or any Subsidiary.


 


“Employee Committee” shall mean a committee composed
of at least one member of the Board of Directors who may, but need not, be a
Non-Employee Director. The Employee Committee is empowered hereunder to grant
Awards to Eligible Employees who are not directors or “officers” of the Company
as that term is defined in Rule 16a-1(f) of the Exchange Act nor “covered
employees” under Section 162(m) of the Code, and to establish the terms of
such Awards at the time of grant, but shall have no other authority with
respect to the Plan or


 


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outstanding Awards except as expressly granted by the Plan.


 


“Exchange Act” shall mean the Securities Exchange Act
of 1934, as amended.


 


“Fair
Market Value” of a share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:


 


1.                                       If
the Common Stock is at the time listed on any stock exchange, or traded on the
Nasdaq National Market, or any other securities trading market that reports
daily the closing selling price per share of Common Stock, the Fair Market
Value shall be deemed equal to the closing selling price per share of Common
Stock on the date in question on the stock exchange or other securities trading
market determined by the Committee to be the primary market for the Common
Stock, as such price is officially quoted on such exchange or trading market.


 


2.                                       If
there is no closing selling price for the Common Stock on the date in question,
or if the Common Stock is neither listed on a stock exchange or traded on a
securities trading market that reports daily the closing selling price per
share of the Common Stock, then the Fair Market Value shall be deemed to be the
average of the representative closing bid and asked prices on the date on
question as reported by the Nasdaq Stock Market or other reporting entity
selected by the Committee.


 


3.                                       In
the event the Common Stock is not traded publicly, the Fair Market Value of a
share of Common Stock 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.


 


“Incentive Plan Committee”
shall mean a committee consisting entirely of Non-Employee Directors of the
Board, who are empowered hereunder to take all action required in the
administration of the Plan and the grant and administration of Awards
hereunder. The Incentive Plan Committee shall be so constituted at all times as
to permit the Plan to comply with Rule 16(a) 3 or any successor rule promulgated
under the Exchange Act. Members of the Incentive Plan Committee shall be
appointed from time to time by the Board, shall serve at the pleasure of the
Board and may resign at any time upon written notice to the Board.
Notwithstanding the foregoing, at any time that there are fewer than two
Non-Employee Directors on the Board or when no Incentive Plan Committee has
been appointed by the Board, all powers of the Incentive Plan Committee shall
be vested in the Board.


 


“Incentive
Stock Option” shall mean a Stock Option that (i) qualifies as an “incentive
stock option” under Section 422 of the Code or any successor provision;
and (ii) is intended to be an incentive stock option.


 


“Non-Employee Director” shall mean a director of the
Company who meets the definition of (i) a “non-employee director” set
forth in Rule 16b-3 under the Exchange Act, as amended, or any successor
rule; and (ii) an “outside director” set forth in Treasury Regulation 1.
162-27, as amended, or any successor rule.


 


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“Non-Statutory Option” shall mean a Stock Option that (i) does
not qualify as an “incentive stock option” under Section 422 of the Code
or any successor provision; or (ii) is not intended to be an incentive
stock option.


 


“Optionee”
shall mean the person so designated in an agreement evidencing an outstanding
Stock Option.


 


“Option
Price” shall mean the purchase price payable by a Participant upon the exercise
of a Stock Option.


 


“Participant”
shall mean a person who is selected by the Committee to receive benefits under
this Plan and (i) is at that time a director, officer or other Employee of
the Company or any Subsidiary; (ii) is at that time a consultant or other
independent advisor who provides services to the Company or a Subsidiary; or (iii) has
agreed to commence serving in any capacity set forth in (i) or (ii) of
this definition.


 


“Plan”
shall mean the Company’s Stock Option Plan as set forth herein.


 


“Plan
Effective Date” shall mean June 19, 2002, the date on which this Plan was
approved by the Company’s Board of Directors.


 


“Redemption
Value” shall mean 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.


 


“Restricted
Stock” shall mean shares of Common Stock granted under Article VII that
are subject to restrictions imposed pursuant to said Article.


 


“SEC” shall mean the U.S. Securities and Exchange
Commission and any successor thereto.


 


“Stock
Option” shall mean a right granted under the Plan to a Participant to purchase
Common Stock at a stated price for a specified period of time.


 


“Subsidiary”
shall mean a corporation, partnership, joint venture, unincorporated
association or other entity in which the Company has a direct or indirect
ownership or other equity interest; provided, however, for purposes of
determining whether any person may be a Participant for purposes of any grant
of Incentive Stock Options,


 


“Subsidiary” means any subsidiary corporation of the
Company as defined in Section 424(f) of the Code.


 


“Supplemental
Bonus” shall mean the right to receive payment in cash of an amount determined
pursuant to Article IX of this Plan.


 


“Term” shall mean the length of time during which a
Stock Option may be exercised.


 


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ARTICLE IV


ADMINISTRATION
OF THE PLAN


 


A.                                   Delegation
to the Committee.  This Plan shall be
administered by the Incentive Plan Committee. References herein to the “Committee”
shall mean the Employee Committee and/or the Incentive Plan Committee, as
applicable. References herein to the Incentive Plan Committee refer solely to
the Incentive Plan Committee.


 


Members
of the Incentive Plan Committee and the Employee Committee shall serve for such
period of time as the Board may determine and may be removed by the Board at
any time. The action of a majority of the members of the Incentive Plan
Committee and the Employee Committee present at any meeting, or acts
unanimously approved in writing, shall be the acts of the Incentive Plan
Committee and the Employee Committee, respectively.


 


B.                                     Powers
of the Committee.  The Incentive Plan
Committee shall have full power and authority, subject to the provisions of
this Plan, to establish such rules and regulations as it may deem
appropriate for proper administration of this Plan and to make such
determinations under, and issue interpretations of, the provisions of this Plan
and any outstanding Awards as it may deem necessary or advisable. In addition,
the Incentive Plan Committee shall have full power and authority to administer
and interpret the Plan and make modifications as it may deem appropriate to
conform the Plan and all actions pursuant to the Plan to any regulation or to
any change in any law or regulation applicable to this Plan.


 


C.                                     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 director or 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 directors
and 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.


 


D.                                    Awards
to Officers and Directors.


 


1.                                       All
Awards to officers shall be determined by the Incentive Plan Committee. If the
Incentive Plan Committee is not composed as prescribed in the definition of
Incentive Plan Committee in Article III, the Board shall have the right to
take such action with respect to any Award to an officer as it deems necessary
or advisable to comply with Rule 16b-3 of the Exchange Act and any related
rules, including but not limited to seeking stockholder ratification of such
Award or restricting the sale of the Award or any shares of Common Stock
underlying the Award for a period of six months.


 


2.                                       Discretionary
awards to Non-Employee Directors, if any, shall be determined by the Board.


 


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ARTICLE V


ELIGIBILITY


 


A.                                   Discretionary
Stock Option Grant Program, Restricted Stock Program and  Supplemental
Bonus Program.  The persons eligible
to participate in the Discretionary Stock Option Grant Program, the Restricted
Stock Program and the Supplemental Bonus Program are as follows:


 


1.                                       Employees
of the Company or a Subsidiary;


 


2.                                       Members
of the Board; and


 


3.                                       Consultants
and other independent advisors who provide services to the Company or a
Subsidiary.


 


B.                                     Selection
of Participants.  The Committee shall
from time to time determine the Participants to whom Awards shall be granted
pursuant to the Discretionary Stock Option Grant Program, the Restricted Stock
Program and the Supplemental Bonus Program.


 


ARTICLE VI


SHARES AVAILABLE UNDER THE PLAN


 


A.                                   Maximum
Number. The number of shares of Common Stock issued or transferred and
covered by outstanding awards granted under this Plan shall not in the
aggregate exceed 5,000,000 shares of Common Stock, which may be Common Stock of
original issuance or Common Stock held in treasury, or a combination thereof.
This authorization shall be increased automatically on each succeeding annual
anniversary of the Plan Effective Date by an amount equal to that number of
shares equal to one-half of one percent of the Company’s then issued and
outstanding shares of Common Stock. The shares may be divided among the various
Plan components as the Incentive Plan Committee shall determine, except that no
more than 3,000,000 shares shall be issued in connection with the exercise of
Incentive Stock Options under the Plan. Any portion of the shares added on each
succeeding anniversary of the Plan Effective Date which are unused during the
Plan year beginning on such anniversary date shall be carried forward and be
available for grant and issuance in subsequent Plan years, while up to 100% of
the shares to be added in the next succeeding Plan year (calculated on the
basis of the current Plan year’s allocation) may be borrowed for use in the
current Plan year. Shares of Common Stock that may be issued upon the exercise
of Stock Options shall be applied to reduce the maximum number of shares
remaining available for use under the Plan. The Company shall at all times
during the term of the Plan, and while any Stock Options are outstanding,
retain as authorized and unissued Common Stock or as treasury Common Stock, at
least the number of shares of Common Stock required under the provisions of
this Plan, or otherwise assure itself of its ability to perform its obligations
hereunder.


 


B.                                     Unused
and Forfeited Stock. The following shares of Common Stock shall
automatically become available for use under the Plan: (i) any shares of
Common Stock that are subject to an Award under this Plan that are not used
because the terms and conditions of the


 


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Award are not met,
including any shares of Common Stock that are subject to a Stock Option that
expires or is terminated for any reason; (ii) any shares of Common Stock
with respect to which a Stock Option is exercised that are used for full or
partial payment of the Option Price; and (iii) any shares of Common Stock
withheld by the Company in satisfaction of the withholding taxes incurred in
connection with the exercise of a Non-Statutory Option.


 


C.                                     Capital
Changes. If any change is made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class
without the Company’s receipt of consideration, appropriate adjustments shall
be made to (i) the maximum number and/or class of securities issuable
under the Plan; (ii) the number and/or class of securities for which
grants are subsequently to be made pursuant to Article VI of this Plan;
and (iii) the number and/or class of securities then included in each
Award outstanding hereunder and the Option Price per share in effect under each
outstanding Stock Option under this Plan. Such adjustments to the outstanding
Stock Options are to be effected in a manner that shall preclude the
enlargement or dilution of rights and benefits under such Stock Options. The
adjustments determined by the Committee shall be final, binding and conclusive.


 


ARTICLE VII


DISCRETIONARY STOCK OPTION GRANT PROGRAM


 


A.                                   Discretionary
Grant of Stock Options to Participants. The Committee may from time to time
authorize grants to Participants of options to purchase shares of Common Stock
upon such terms and conditions as the Committee may determine in accordance
with the following provisions (in connection with any grants under this
paragraph VII.A to Non-Employee Directors, “Committee” shall mean the entire
Board of Directors):


 


1                                          Each
grant shall specify the number of shares of Common Stock to which it pertains.


 


2.                                       Each
grant shall specify the Option Price per share.


 


3.                                       Each
grant shall specify the form of consideration to be paid in satisfaction of the
Option Price and the manner of payment of such consideration, which may include
(i) cash in the form of currency or check or other cash equivalent
acceptable to the Company; (ii) shares of Common Stock that are already
owned by the Optionee and have a Fair Market Value at the time of exercise that
is equal to the Option Price; (iii) shares of Common Stock with respect to
which a Stock Option is exercised; (iv) a recourse promissory note in
favor of the Company; (v) any other legal consideration that the Committee
may deem appropriate; and (vi) any combination of the foregoing.


 


4.                                       Any
grant may provide for deferred payment of the Option Price from the proceeds of
sale through a broker of some or all of the shares of Common Stock to which the
exercise relates.


 


5.                                       Any
grant may provide that shares of Common Stock issuable upon the


 


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exercise of a Stock
Option shall be subject to restrictions whereby the Company has the right or
obligation to repurchase all or a portion of such shares if the Participant’s
service to the Company is terminated before a specified time, or if certain
other events occur or conditions are not met.


 


6.                                       Successive
grants may be made to the same Participant regardless of whether any Stock
Options previously granted to the Participant remain unexercised.


 


7.                                       Each
grant shall specify the conditions to be satisfied before the Stock Option or
installments thereof shall become exercisable, which conditions may include a
period or periods of continuous service by the Optionee to the Company or any
Subsidiary, the attainment of specified performance goals and objectives, or
the occurrence of specified events; as may be established by the Committee with
respect to such grant.


 


8.                                       All
Stock Options that meet the requirements of the Code for incentive stock
options shall be Incentive Stock Options unless (i) the option agreement
clearly designates the Stock Options granted thereunder, or a specified portion
thereof, as a Non-Statutory Option; or (ii) a grant of Incentive Stock
Options to the Participant would be prohibited under the Code or other
applicable law.


 


9.                                       Each
grant shall specify the Term of the Stock Option, which Term shall not be
greater than 10 years from the Date of Grant.


 


10.                                 Each
grant shall be evidenced by an agreement, which shall be executed on behalf of
the Company by any officer thereof and delivered to and accepted by the
Optionee and shall contain such terms and provisions as the Committee may
determine consistent with this Plan.


 


B.                                     Special
Terms Applicable to Incentive Stock Options. The following additional terms
shall be applicable to all Incentive Stock Options granted pursuant to this
Plan. Stock Options that are specifically designated as Non-Statutory Options
shall not be subject to the terms of this paragraph VII.B.


 


1.                                       Incentive
Stock Options shall be granted only to Employees of the Company or a
Subsidiary.


 


2.                                       The
Option Price per share shall not be less than the Fair Market Value per share
of Common Stock on the Date of Grant.


 


3.                                       The
aggregate Fair Market Value of the shares of Common Stock (determined as of the
respective Date(s) of Grant) with respect to which Incentive Stock Options
granted to any Employee under the Plan (or any other plan of the Company or a
Subsidiary) are exercisable for the first time during any one calendar year
shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such Stock Options that become
exercisable for the first time in the same calendar year, the foregoing
limitation on the treatment of such Stock Options as Incentive Stock Options
shall be applied on the basis of the order in which such Stock Options are
granted.


 


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4.                                       If
any Employee to whom an Incentive Stock Option is granted is a 10% Stockholder,
then the Option Price per share shall not be less than one hundred ten percent
(110%) of the Fair Market Value per share of Common Stock on the Date of Grant,
and the Option Term shall not exceed five (5) years measured from the Date
of Grant.


 


ARTICLE VIII


RESTRICTED
STOCK PROGRAM


 


A.                                   Awards
Granted.  Coincident with or
following designation for participation in the Plan, a Participant may be
granted one or more Restricted Stock Awards consisting of shares of Common
Stock. The number of shares granted as a Restricted Stock Award shall be
determined by the Committee.


 


B.                                     Restrictions.  A Participant’s right to retain a Restricted
Stock Award granted to such Participant under Article VII.A shall be
subject to such restrictions, including but not limited to his or her continuous
employment by the Company for a restriction period specified by the Committee,
or the attainment of specified performance goals and objectives, or the
occurrence of specified events, as may be established by the Committee with
respect to such Award. The Committee may in its sole discretion require
different periods of employment or different performance goals and objectives
with respect to different Participants, to different Restricted Stock Awards or
to separate, designated portions of the shares constituting a Restricted Stock
Award.


 


C.                                     Privileges
of a Stockholder, Transferability.  A
Participant shall have all voting, dividend, liquidation and other rights with
respect to shares of Common Stock in accordance with its terms received by him
or her as a Restricted Stock Award under this Article VIII upon his or her
becoming the holder of record of such shares; provided, however, that the
Participant’s right to sell, encumber or otherwise transfer such shares shall
be subject to the restrictions established by the Committee with respect to
such Award.


 


D.                                    Enforcement
of Restrictions.  The Committee may
in its sole discretion require a legend to be placed on the stock certificates
referring to the restrictions referred to in paragraphs VIII.B. and VIII.C., in
order to enforce such restrictions.


 


ARTICLE IX


SUPPLEMENTAL BONUS  PROGRAM


 


A.                                   Non-Statutory
Stock Options.  The Committee, at the
time of grant or at any time prior to exercise of any Non-Statutory Option, may
provide for a Supplemental Bonus from the Company or a Subsidiary in connection
with a specified number of shares of Common Stock then purchasable, or which
may become purchasable, under such Non-Statutory Option. Such Supplemental
Bonus shall be payable in cash upon the exercise of the Non-Statutory Option
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 or


 


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her upon the exercise of
the Non-Statutory Option, 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.


 


B.                                     Restricted
Stock Awards.  The Committee, either
at such time as the restrictions with respect to a Restricted Stock Award lapse
or a Section 83(b) election is made under the Code by the Participant
with respect to shares issued in connection with a Restricted Stock Award, may
provide for a Supplemental Bonus from the Company or a Subsidiary. Such
Supplemental Bonus shall be payable in cash and shall not exceed the amount
necessary to reimburse the Participant for the income tax liability incurred by
him or her with respect to shares issued in connection with a Restricted Stock
Award, 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.


 


ARTICLE X


TERMINATION
OF SERVICE


 


A.                                   Incentive
Stock Options.  The following
provisions shall govern the exercise of any Incentive Stock Options held by any
Employee whose employment is terminated:


 


1.                                       If
the Optionee’s employment with the Company is terminated for any reason other
than such Optionee’s death, disability or retirement, all Incentive Stock
Options held by the Optionee shall terminate on the date and at the time the
Optionee’s employment terminates,


 


unless the Committee expressly provides in the terms of the Optionee’s
Stock Option Agreement that such Stock Options shall remain exercisable, to the
extent vested on such termination date, for a period of three (3) months
following such termination of employment.


 


2.                                       If
the Optionee’s employment with the Company is terminated because of such
Optionee’s death or disability within the meaning of Section 22(e)(3) of
the Code, all incentive Stock Options held by the Optionee shall become
immediately exercisable and shall be exercisable for a period of twelve (12)
months following such termination of employment.


 


3.                                       In
the event Optionee’s employment is terminated due to retirement, all incentive
Stock Options held by the Optionee shall remain exercisable, to the extent such
Stock Options were exercisable on the date the Optionee’s employment
terminated, for a period of three (3) months following such termination of
employment.


 


4.                                       In
no event may any Incentive Stock Option remain exercisable after the expiration
of the Term of the Stock Option. Upon the expiration of any three (3) or
twelve (12) month exercise period, as applicable, or, if earlier, upon the
expiration of the Term of the Stock Option, the Stock Option shall terminate
and shall cease to be outstanding for any shares for which the Stock Option has
not been exercised.


 


B.                                     Non-Statutory
Options.  The following provisions
shall govern the exercise of any Non-Statutory Options:


 


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1.                                       If
the Optionee’s employment, service on the Board or consultancy is terminated
for any reason other than such Optionee’s death, disability or retirement, all
Non-Statutory Options held by the Optionee shall terminate on the date of such
termination, unless the Committee expressly provides in the terms of the
Optionee’s Stock Option Agreement that such Stock Options shall remain
exercisable, to the extent vested on such termination date, for a specified
period following such termination.


 


2.                                       If
the Optionee’s employment, service on the Board or consultancy is terminated
because of such Optionee’s death or disability, all Non-Statutory Options held
by the Optionee shall become immediately exercisable and shall be exercisable
until the expiration of the Term of such Stock Options.


 


3.                                       If
the Optionee’s employment service on the Board or consultancy is terminated
because of such Optionee’s retirement, all Non-Statutory Options held by the
Optionee shall remain exercisable, to the extent such Stock Options were
exercisable on the date of such termination, until the expiration of the Term
of such Stock Options.


 


4.                                       In
no event may any Non-Statutory Option remain exercisable after the expiration
of the Term of the Stock Option. Upon the expiration of any specified exercise
period following termination of Optionee’s employment, service on the Board or
consultancy, or if earlier, upon the expiration of the Term of the Stock
Option, the Stock Option shall terminate and shall cease to be outstanding for
any shares for which the Stock Option has not been exercised.


 


C.                                     Restricted
Stock Awards.  In the event of the
death or disability (within the meaning of Section 22(e) of the
Internal Revenue Code) or retirement of a Participant, all employment period
and other restrictions applicable to Restricted Stock Awards then held by him
or her shall lapse, and such Awards shall become fully non-forfeitable. Subject
to Articles X and XIV, in the event of a Participant’s termination of
employment for any other reason, any Restricted Stock Awards as to which the
employment period or other restrictions have not been satisfied shall be
forfeited.


 


ARTICLE XI


TRANSFERABILITY
OF STOCK OPTIONS


 


During the lifetime of the Optionee, Incentive Stock
Options shall be exercisable only by the Optionee and shall not be assignable
or transferable. In the event of the Optionee’s death prior to the end of the
Term, any Stock Option may be exercised by the personal representative of the
Optionee’s estate, or by the person(s) to whom the Option is transferred
pursuant to the Optionee’s will or in accordance with the laws of descent and
distribution. Upon the prior written consent of the Board and subject to any
conditions associated with such consent, a Non-Statutory Option may be assigned
in whole or in part during the Optionee’s lifetime to one or more members of
the Optionee’s immediate family (as that term is defined in Rule 16a-l(e) of
the Exchange Act) or to a trust established exclusively for one or more such
family members. In addition, the Board, in its sole discretion, may allow a
Non-Statutory Option to be assigned in


 


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other circumstances deemed appropriate. The terms applicable to the
assigned portion shall be the same as those in effect for the Stock Option
immediately prior to such assignment and shall be set forth in such documents
issued to the assignee as the Committee may deem appropriate. Notwithstanding
any assignment or transfer of a Stock Option, in no event may any Stock Option
remain exercisable after the expiration of the Term of the Stock Option.


 


ARTICLE XII


STOCKHOLDER RIGHTS


 


The holder of a Stock Option shall have no stockholder
rights with respect to the shares subject to the Stock Option until such person
shall have exercised the Stock Option, paid the Option Price and become a
holder of record of the purchased shares of Common Stock.


 


ARTICLE XIII


ACCELERATION OF VESTING


 


The Committee may, at any time in its sole discretion,
accelerate the vesting of any Award made pursuant to this Plan by giving written
notice to the Participant. Upon receipt of such notice, the Participant and the
Company shall amend the agreement relating to the Award to reflect the new
vesting schedule. The acceleration of the exercise period of an Award shall not
affect the expiration date of such Award.


 


ARTICLE XIV


CHANGE IN CONTROL


 


In the event of a Change in Control of the Company,
all Awards outstanding under the Plan as of the day before the consummation of
such Change in Control shall automatically accelerate for all purposes under
this Plan so that each Stock Option shall become fully exercisable with respect
to the total number of shares subject to such Stock Option and may be exercised
for any or all of those shares as fully-vested shares of Common Stock as of
such date, without regard to the conditions expressed in the agreements
relating to such Stock Option, and the restrictions on each Restricted Stock
Award shall lapse and such shares of Restricted Stock shall no longer be
subject to forfeiture.


 


ARTICLE XV


CANCELLATION
AND REGRANT OF OPTIONS


 


The
Committee shall have the authority, at any and from time to time, with the
consent of the affected Optionees, to effect the cancellation of any or all
outstanding Stock Options and/or any Restricted Stock Awards and grant in
substitution new Stock Options and/or Restricted Stock Awards covering the same
or different number of shares of Common Stock. In the case of such a regrant of
a Stock Option, the Option Price shall be set in accordance with Article VII
on the new Date of Grant.


 


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ARTICLE XVI


FINANCING


 


The Committee may, in its sole discretion, authorize
the Company to make a loan to a Participant in connection with the exercise of
a Stock Option, and may authorize the Company to arrange or guaranty loans to a
Participant by a third party in connection with the exercise of a Stock Option.


 


ARTICLE XVII


TAX
WITHHOLDING


 


A.                                   Tax
Withholding.  The Company’s
obligation to deliver shares of Common Stock upon the exercise of Stock Options
under the Plan shall be subject to the satisfaction of all applicable federal,
state and local income and employment tax withholding requirements.


 


B.                                     Surrender
of Shares.  The Committee may, in its
discretion, provide any or all holders of Non-Statutory Options under the
Discretionary Stock Option Grant Program with the right to use shares of Common
Stock in satisfaction of all or part of the taxes incurred by such holders in
connection with the exercise of such Stock Options. Such right may be provided
to any such holder in either or both of the following formats:


 


1.                                       The
election to have the Company withhold, from the shares of Common Stock
otherwise issuable upon the exercise of such Non-Statutory Option, a portion of
those shares with an aggregate Fair Market Value less than or equal to the
amount of taxes due as designated by such holder; or


 


2.                                       The
election to deliver to the Company, at the time the Non-Statutory Option is
exercised, one or more shares of Common Stock previously acquired by such
holder with an aggregate Fair Market Value less than or equal to the amount of
taxes due as designated by such holder.


 


ARTICLE XVIII


EFFECTIVE
DATE AND TERM OF THE PLAN


 


This Plan shall become effective on the Plan Effective
Date. This Plan shall terminate upon the earliest of (i) ten (10) years
after the Plan Effective Date; or (ii) the termination of all outstanding
Awards in connection with a Change in Control. Upon such plan termination, all
outstanding Awards shall thereafter continue to have force and effect in
accordance with the provisions of the documents evidencing such Awards.


 


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ARTICLE XIX


AMENDMENT
OF THE PLAN


 


A.                                   The
Incentive Plan Committee shall have complete and exclusive power and authority
to amend or modify the Plan in any or all respects, unless stockholder approval
of such amendments or modifications is required under applicable law. No such
amendment or modification shall adversely affect the rights and obligations
with respect to Awards outstanding under the Plan at the time of such amendment
or modification, unless the Participant consents to such amendment or
modification.


 


B.                                     Stock
Options in excess of the number of shares of Common Stock then available for
issuance may be granted under this Plan, provided any excess shares actually
issued under this Plan shall be held in escrow until such further action,
necessary to approve a sufficient increase in the number of shares available
for issuance under the Plan, is taken. If such further action is not obtained
within 12 months after the date the first such excess issuances are made, then (i) any
unexercised options granted on the basis of such excess shares shall terminate
and cease to be outstanding; and (ii) the Company shall promptly refund to
the Optionees the exercise price paid for any excess shares issued under the
Plan and held in escrow, together with interest for the period the shares were
held in escrow, and such shares shall thereupon be automatically cancelled and
cease to be outstanding. If stockholder approval of a sufficient increase in
the number of shares subject to the Plan does not occur within twelve (12)
months of the grant of any Stock Option intended to be an Incentive Stock
Option which is granted pursuant to this Article XIX.B, such Stock Option
shall be deemed to be a Non-Statutory Option.


 


ARTICLE XX


REGULATORY APPROVALS


 


The implementation of the Plan, the granting of any
Award under the Plan and the issuance of any shares of Common Stock under any
Award shall be subject to the Company’s procurement of all approvals and
permits required by regulatory authorities having jurisdiction over the Plan,
the Awards granted pursuant to the Plan and the shares of Common Stock issued
pursuant to any Award under the Plan. No Stock Option shall be exercisable, no
shares of Common Stock or other assets shall be issued or delivered under the
Plan, and no transfer of any Non-Statutory Option shall be approved by the
Committee, unless and until there shall have been compliance with (i) all
applicable requirements of Federal and state securities laws, if applicable,
including the filing and effectiveness of a registration statement on Form S-8
under the Securities Act of 1933, as amended, covering the shares of Common
Stock issuable under the Plan; and (ii) all applicable listing
requirements of any stock exchange or securities market on which the shares of
Common Stock are listed or traded.


 


ARTICLE XXI


NO
EMPLOYMENT/SERVICE RIGHTS


 


Nothing in this Plan shall confer upon any Participant
any right to continue in service for any period or specific duration or
interfere with or otherwise restrict in any way the rights of the


 


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Company (or any Subsidiary employing or retaining such person) or of
the Participant, which rights are expressly reserved by each, to terminate such
person’s service at any time for any reason, with or without Cause.


 


 


	
   

  	
  ICOP DIGITAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Ann Johnson

  
	
   

  	
   

  	
  Ann Johnson, Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  Date: June 19, 2002

  



 


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