Document:

ex4x2.htm

    Exhibit 4.2

     

     

    
      
        	
                CERTIFICATE
      NUMBER:

              	
                NUMBER
      OF SHARES OF COMMON STOCK:

              

      

       

      THIS WARRANT WILL BE VOID IF NOT
EXERCISED PRIOR TO 5:00 P.M. MOUNTAIN TIME, MAY 3, 2020

       

      WARRANT

      to
Purchase

             
SHARES OF COMMON STOCK

      NO
PAR VALUE

      of

      LIFELOC
TECHNOLOGIES, INC.

      a
Colorado Corporation

       

      ORIGINAL
ISSUE DATE: JUNE        
, 2010

       

      This Warrant
Certificate certifies that the undersigned, or his,
her or its registered assigns, is the registered holder of warrants (the “Warrants”)
to purchase shares of Common Stock, no par value (the “Common
Stock”), of Lifeloc Technologies, Inc., a Colorado corporation (the
“Company”).
Each Warrant entitles the holder, upon exercise during the period set forth in
the Warrant Agreement referred to below, to receive from the Company that number
of fully paid and nonassessable shares of Common Stock (each, a “Warrant
Share”) as set forth below, at the exercise price of $1.00 per share (the
“Exercise
Price”), payable in lawful money of the United States of America upon
surrender of this Warrant Certificate and payment of the Exercise Price at the
office or agency of the Warrant Agent referred to below, subject to the
conditions set forth herein and in the Warrant Agreement. Defined terms used in
this Warrant Certificate but not defined herein shall have the meanings given to
them in the Warrant Agreement.

       

      Each
Warrant is initially exercisable for one fully paid and non-assessable share of
Common Stock. The number of Warrant Shares issuable upon exercise of the
Warrants is subject to adjustment upon the occurrence of certain events set
forth in the Warrant Agreement.

       

      Warrants
may be exercised only during the Exercise Period subject to the conditions set
forth in the Warrant Agreement and to the extent not exercised by the end of
such Exercise Period such Warrants shall become void.

       

      Reference
is hereby made to the further provisions of this Warrant Certificate set forth
on the reverse hereof and such further provisions shall for all purposes have
the same effect as though fully set forth at this place.

       

      This
Warrant Certificate shall not be valid unless countersigned by the Warrant
Agent, as such term is used in the Warrant Agreement.

       

      This
Warrant Certificate shall be governed and construed in accordance with the
internal laws of the State of Colorado, without regard to conflicts of laws
principles thereof.

       

      
        	LIFELOC
      TECHNOLOGIES, INC.	 	
                Countersigned:

                _______,

                as
      Warrant Agent

              	 
	 	 	 	 	 	 
	By:	 	 	By:	 	 
	Name:	 	 	Name:	 	 
	Title:	 	 	Title:	 	 

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    
      THE
WARRANTS EVIDENCED BY THIS WARRANT CERTIFICATE ARE PART OF A DULY AUTHORIZED
ISSUE OF WARRANTS ENTITLING THE HOLDER ON EXERCISE TO RECEIVE SHARES OF COMMON
STOCK AND ARE ISSUED OR TO BE ISSUED PURSUANT TO A WARRANT AGREEMENT DATED AS
OF               ,
2010 (THE “WARRANT
AGREEMENT”), DULY EXECUTED AND DELIVERED BY THE COMPANY TO             
, A CORPORATION, AS WARRANT AGENT (THE “WARRANT
AGENT”), WHICH WARRANT AGREEMENT IS HEREBY INCORPORATED BY REFERENCE IN
AND MADE A PART OF THIS INSTRUMENT AND IS HEREBY REFERRED TO FOR A DESCRIPTION
OF THE RIGHTS, LIMITATION OF RIGHTS, OBLIGATIONS, DUTIES AND IMMUNITIES
THEREUNDER OF THE WARRANT AGENT, THE COMPANY AND THE HOLDERS (THE WORDS “HOLDERS”
OR “HOLDER”
MEANING THE REGISTERED HOLDERS OR REGISTERED HOLDER) OF THE WARRANTS. A COPY OF
THE WARRANT AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF UPON WRITTEN REQUEST
TO THE COMPANY. DEFINED TERMS USED IN THIS WARRANT CERTIFICATE BUT NOT DEFINED
HEREIN SHALL HAVE THE MEANINGS GIVEN TO THEM IN THE WARRANT
AGREEMENT.

       

      WARRANTS
MAY BE EXERCISED AT ANY TIME DURING THE WARRANT EXERCISE PERIOD SET FORTH IN THE
WARRANT AGREEMENT. THE HOLDER OF WARRANTS EVIDENCED BY THIS WARRANT CERTIFICATE
MAY EXERCISE THEM BY SURRENDERING THIS WARRANT CERTIFICATE, WITH THE FORM OF
ELECTION TO PURCHASE SET FORTH HEREON PROPERLY COMPLETED AND EXECUTED, TOGETHER
WITH PAYMENT OF THE EXERCISE PRICE AS SPECIFIED IN THE WARRANT AGREEMENT AT THE
PRINCIPAL CORPORATE TRUST OFFICE OF THE WARRANT AGENT. IN THE EVENT THAT UPON
ANY EXERCISE OF WARRANTS EVIDENCED HEREBY THE NUMBER OF WARRANTS EXERCISED SHALL
BE LESS THAN THE TOTAL NUMBER OF WARRANTS EVIDENCED HEREBY, THERE SHALL BE
ISSUED TO THE HOLDER HEREOF OR HIS ASSIGNEE A NEW WARRANT CERTIFICATE EVIDENCING
THE NUMBER OF WARRANTS NOT EXERCISED.

       

      NOTWITHSTANDING
ANYTHING ELSE IN THIS WARRANT CERTIFICATE OR THE WARRANT AGREEMENT, NO WARRANT
MAY BE EXERCISED UNLESS AT THE TIME OF EXERCISE (I) A REGISTRATION STATEMENT
COVERING THE WARRANT SHARES TO BE ISSUED UPON EXERCISE IS EFFECTIVE UNDER THE
ACT AND A PROSPECTUS THEREUNDER RELATING TO THE WARRANT SHARES IS CURRENT, OR
(II) AN APPLICABLE EXCEPTION ALLOWS THE ISSUANCE OF THE WARRANT SHARES WITHOUT
REGISTRATION.  IN NO EVENT SHALL THE COMPANY BE REQUIRED TO ISSUE
UNREGISTERED SHARES UPON THE EXERCISE OF ANY WARRANT IF PROHIBITED BY LAW,
OR TO SETTLE WARRANTS ON A NET CASH BASIS.

       

      THE
WARRANT AGREEMENT PROVIDES THAT UPON THE OCCURRENCE OF CERTAIN EVENTS THE NUMBER
OF WARRANT SHARES SET FORTH ON THE FACE HEREOF MAY, SUBJECT TO CERTAIN
CONDITIONS, BE ADJUSTED. IF, UPON EXERCISE OF A WARRANT, THE HOLDER THEREOF
WOULD BE ENTITLED TO RECEIVE A FRACTIONAL INTEREST IN A SHARE OF COMMON STOCK,
THE COMPANY WILL, UPON EXERCISE, ROUND UP TO THE NEAREST WHOLE NUMBER OF SHARES
OF COMMON STOCK TO BE ISSUED TO THE WARRANT HOLDER.

       

      WARRANT
CERTIFICATES, WHEN SURRENDERED AT THE PRINCIPAL CORPORATE TRUST OFFICE OF THE
WARRANT AGENT BY THE REGISTERED HOLDER THEREOF IN PERSON OR BY LEGAL
REPRESENTATIVE OR ATTORNEY DULY AUTHORIZED IN WRITING, MAY BE EXCHANGED, IN THE
MANNER AND SUBJECT TO THE LIMITATIONS PROVIDED IN THE WARRANT AGREEMENT, BUT
WITHOUT PAYMENT OF ANY SERVICE CHARGE, FOR ANOTHER WARRANT CERTIFICATE OR
WARRANT CERTIFICATES OF LIKE TENOR EVIDENCING IN THE AGGREGATE A LIKE NUMBER OF
WARRANTS.

       

      UPON DUE
PRESENTATION FOR REGISTRATION OF TRANSFER OF THIS WARRANT CERTIFICATE AT THE
OFFICE OF THE WARRANT AGENT, A NEW WARRANT CERTIFICATE OR WARRANT CERTIFICATES
OF LIKE TENOR AND EVIDENCING IN THE AGGREGATE A LIKE NUMBER OF WARRANTS SHALL BE
ISSUED TO THE TRANSFEREE(S) IN EXCHANGE FOR THIS WARRANT CERTIFICATE, SUBJECT TO
THE LIMITATIONS PROVIDED IN THE WARRANT AGREEMENT, WITHOUT CHARGE EXCEPT FOR ANY
TAX OR OTHER GOVERNMENTAL CHARGE IMPOSED IN CONNECTION THEREWITH.

       

      THE
COMPANY AND THE WARRANT AGENT MAY DEEM AND TREAT THE REGISTERED HOLDER(S)
THEREOF AS THE ABSOLUTE OWNER(S) OF THIS WARRANT CERTIFICATE (NOTWITHSTANDING
ANY NOTATION OF OWNERSHIP OR OTHER WRITING HEREON MADE BY ANYONE), FOR THE
PURPOSE OF ANY EXERCISE HEREOF, OF ANY DISTRIBUTION TO THE HOLDER(S) HEREOF, AND
FOR ALL OTHER PURPOSES, AND NEITHER THE COMPANY NOR THE WARRANT AGENT SHALL BE
AFFECTED BY ANY NOTICE TO THE CONTRARY. NEITHER THE WARRANTS NOR THIS WARRANT
CERTIFICATE ENTITLES ANY HOLDER HEREOF TO ANY RIGHTS OF A STOCKHOLDER OF THE
COMPANY.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      WARRANT
AGREEMENT

      by
and  between

      LIFELOC
TECHNOLOGIES, INC.

      and

             ,
as Warrant Agent

      Dated
as of       
, 2010

       

      THIS
WARRANT AGREEMENT (this “Agreement”),
dated as of  , 2010, is by
and between Lifeloc Technologies, Inc., a Colorado corporation (the “Company”),
and  , a
 
corporation, as Warrant Agent (the “Warrant
Agent”).

       

      WHEREAS,
the shareholders of the Company have approved the non-cash distribution of
2,422,416 warrants (the “Warrants”)
to purchase the Company’s common stock, no par value (such common stock issuable
on exercise of the Warrants, the “Warrant
Shares”), for no consideration, to shareholders of record, in accordance
with the number of shares of common stock owned as of the date of declaration of
such distribution;

       

      WHEREAS,
the Company has filed with the Securities and Exchange Commission a Registration
Statement on Form S-1, No.
333-            (the
“Registration
Statement”), for the registration, under the Securities Act of 1933, as
amended (the “Securities
Act”), of the Warrants and the Warrant Shares;

       

      WHEREAS,
following the closing of the offering, the Warrants will be tradeable separately
from the Warrant Shares and other common stock of the Company, and may be listed
on the OTC Bulletin Board commencing after the effective date of the
Registration Statement and through May 3, 2020, when the Warrants will
expire;

       

      WHEREAS,
the Company desires the Warrant Agent to act on behalf of the Company, and the
Warrant Agent is willing to so act, in connection with the issuance,
registration, transfer, exchange and exercise of the Warrants;

       

      WHEREAS,
the Company desires to provide for the form and provisions of the Warrants, the
terms upon which they shall be issued and exercised, and the respective rights,
limitation of rights, and immunities of the Company, the Warrant Agent, and the
holders of the Warrants; and

       

      WHEREAS,
all acts and things have been done and performed which are necessary to make the
Warrants, when executed on behalf of the Company and countersigned by or on
behalf of the Warrant Agent, as provided herein, the valid, binding and legal
obligations of the Company, and to authorize the execution and delivery of this
Agreement.

       

      NOW,
THEREFORE, in consideration of the premises and the mutual agreements set forth
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:

       

      Section 1. Appointment of Warrant
Agent. The Company hereby appoints the Warrant Agent to act as agent for
the Company in accordance with the instructions set forth in this Agreement, and
the Warrant Agent hereby accepts such appointment.

       

      Section 2. Warrant Certificates. The
certificates evidencing the Warrants (the “Warrant
Certificates”) to be delivered pursuant to this Agreement shall be in
registered form only and shall be substantially in the form set forth in Exhibit A attached
hereto.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Section 3. Execution of Warrant
Certificates. Warrant Certificates shall be signed on behalf of the
Company by its Chairman of the Board or its President or Chief Executive Officer
or a Vice President and by its Secretary or an Assistant Secretary. Each such
signature upon the Warrant Certificates may be in the form of a facsimile
signature of the present or any future Chairman of the Board, President, Chief
Executive Officer, Vice President, Secretary or Assistant Secretary and may be
imprinted or otherwise reproduced on the Warrant Certificates and for that
purpose the Company may adopt and use the facsimile signature of any person who
shall have been Chairman of the Board, President, Chief Executive Officer, Vice
President, Secretary or Assistant Secretary, notwithstanding the fact that at
the time the Warrant Certificates shall be countersigned and delivered or
disposed of he or she shall have ceased to hold such office.

       

      In case
any officer of the Company who shall have signed any of the Warrant Certificates
shall cease to be such officer before the Warrant Certificates so signed shall
have been countersigned by the Warrant Agent, or disposed of by the Company,
such Warrant Certificates nevertheless may be countersigned and delivered or
disposed of as though such person had not ceased to be such officer of the
Company; and any Warrant Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Warrant Certificate,
shall be a proper officer of the Company to sign such Warrant Certificate,
although at the date of the execution of this Warrant Agreement any such person
was not such officer. Warrant Certificates shall be dated the date of
countersignature by the Warrant Agent.

       

      Section 4. Registration and
Countersignature. Warrant Certificates shall be countersigned by the
Warrant Agent and shall not be valid for any purpose unless so countersigned.
The Warrant Agent shall, upon the written instructions of the Chairman of the
Board, the President or Chief Executive Officer, a Vice President, the Treasurer
or the Chief Financial Officer of the Company, countersign, issue and deliver
Warrants as provided in this Agreement.

       

      The
Company and the Warrant Agent may deem and treat the registered holder(s) of the
Warrant Certificates as the absolute owner(s) thereof (notwithstanding any
notation of ownership or other writing thereon made by anyone), for all
purposes, and neither the Company nor the Warrant Agent shall be affected by any
notice to the contrary.

       

      Section 5. Registration of Transfers and
Exchanges. The Warrant Agent shall from time to time, subject to the
limitations of this Section 5, register
the transfer of any outstanding Warrant Certificates upon the records to be
maintained by it for that purpose, upon surrender thereof duly endorsed or
accompanied by an assignment substantially in the form attached hereto as Exhibit B executed by
the registered holder or by his duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment or authority to
transfer. Upon any such registration of transfer, a new Warrant Certificate
shall be issued to the transferee(s) and the surrendered Warrant Certificate
shall be cancelled by the Warrant Agent. Cancelled Warrant Certificates shall
thereafter be disposed of by the Warrant Agent in its customary
manner.

       

      The
Warrant Agent is hereby authorized to countersign, in accordance with the
provisions of this Section 5 and of Section 4 hereof, the new Warrant
Certificates required pursuant to the provisions of this Section 5.

       

      Section 6. Terms of
Warrants.

       

      (a) Exercise Price and Exercise
Period.

       

      The
initial exercise price per share at which Warrant Shares shall be purchasable
upon the exercise of Warrants (the “Exercise
Price”) shall be $1.00 per share, and each Warrant shall be initially
exercisable to purchase one share of Common Stock.

       

      2

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Subject
to the terms of this Agreement (including without limitation Section 6(c) below),
each Warrant holder shall have the right, which may be exercised commencing at
the opening of business on the first day of the applicable Warrant Exercise
Period set forth below and until 5:00 p.m., Mountain time, on the last day of
such Warrant Exercise Period, to receive from the Company the number of fully
paid and nonassessable Warrant Shares which the holder may at the time be
entitled to receive on exercise of such Warrants and payment of the Exercise
Price then in effect for such Warrant Shares.

       

      The
“Warrant
Exercise Period” shall commence (subject to Section 6(c) below)
on the original issue date set forth in the Warrant Certificates and shall end
at 5:00 p.m. Mountain Time on May 3, 2020. Each Warrant not exercised prior to
5:00 p.m., Mountain Time, on the last day of the Warrant Exercise Period shall
become void and all rights thereunder and all rights in respect thereof under
this Agreement shall cease as of such time.

       

      (b) Exercise
Procedure.

       

      All
Warrants must be exercised through a broker-dealer registered pursuant to
Section 15(b) of the Securities Exchange Act of 1934. The Company shall pay a
commission equal to six percent (6%) of the aggregate Exercise Price (the “Broker
Fee”) to all such broker-dealers. The holder of the Warrant shall be
liable for any additional commission charged by such broker-dealer.

       

      A Warrant
may be exercised upon surrender, through a broker-dealer, to the Company at the
principal stock transfer office of the Warrant Agent, which is currently located
at the address listed in Section 16 hereof, of
(i) the certificate or certificates evidencing the Warrants to be exercised with
the form of election to purchase substantially in the form set forth in Exhibit C attached
hereto, duly filled in and signed, and such other documentation as the Warrant
Agent may reasonably request, and (ii) payment to the Warrant Agent for the
account of the Company of the Exercise Price (adjusted to give effect to the
Broker Fee) for the number of Warrant Shares in respect of which such Warrants
are exercised. Payment of the adjusted aggregate Exercise Price shall be made in
cash or by certified or official bank check payable to the order of the Company.
In no event will any Warrants be settled on a net cash basis.

       

      Subject
to the provisions of Section 7 hereof,
upon such surrender of Warrants and payment of the Exercise Price, the Company
shall issue and cause to be delivered with all reasonable dispatch to and in
such name or names as the Warrant holder may designate, a certificate or
certificates for the number of full Warrant Shares issuable upon the exercise of
such Warrants. Such certificate or certificates shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to have
become a holder of record of such Warrant Shares as of the date of the surrender
of such Warrants and payment of the Exercise Price.

       

      The
Warrants shall be exercisable, at the election of the holders thereof, either in
full or from time to time in part and, in the event that a certificate
evidencing Warrants is exercised in respect of fewer than all of the Warrant
Shares issuable on such exercise at any time prior to the date of expiration of
the Warrants, a new certificate evidencing the remaining Warrant or Warrants
will be issued, and the Warrant Agent is hereby irrevocably authorized to
countersign and to deliver the required new Warrant Certificate or Certificates
pursuant to the provisions of this Section 6 and of
Section 4
hereof, and the Company, whenever required by the Warrant Agent, shall supply
the Warrant Agent with Warrant Certificates duly executed on behalf of the
Company for such purpose. The Warrant Agent may assume that any Warrant
presented for exercise is permitted to be so exercised under applicable law and
shall have no liability for acting in reliance on such assumption.

       

      All
Warrant Certificates surrendered upon exercise of Warrants shall be canceled by
the Warrant Agent. Such canceled Warrant Certificates shall then be disposed of
by the Warrant Agent in its customary manner. The Warrant Agent shall account
promptly to the Company with respect to Warrants exercised and concurrently pay
to the Company all monies received by the Warrant Agent for the purchase of the
Warrant Shares through the exercise of such Warrants.

       

       

      3

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      The
Warrant Agent shall keep copies of this Agreement and any notices given or
received hereunder available for inspection by the holders with reasonable prior
written notice during normal business hours at its office. The Company shall
supply the Warrant Agent from time to time with such numbers of copies of this
Agreement as the Warrant Agent may request.

       

      
        (c) Registration
Requirement. Notwithstanding anything else in this Section 6, no Warrant
may be exercised unless at the time of exercise (A) (i) a registration statement
covering the Warrant Shares to be issued upon exercise is effective under the
Securities Act, and a prospectus thereunder relating to the Warrant Shares is
current,  or (ii) an applicable exception allows the issuance of the
Warrant Shares without registration and (B)  the Company has not
determined that the exercise of the Warrant or the issuance of the Warrant
Shares would otherwise violate applicable law. The Company shall use its
commercially reasonable efforts to have a registration statement in effect
covering Warrant Shares issuable upon exercise of the Warrants from the date the
Warrants become exercisable and to maintain a current prospectus relating to
those Warrant Shares until the Warrants expire. In no event shall the Company be
required to issue unregistered shares upon the exercise of any Warrant if the
Company determines that issuance of such Warrants would violate applicable law,
or to settle Warrants on a net cash basis.

         

      

      Section 7. Payment of Taxes. The
Company will pay all documentary stamp taxes attributable to the initial
issuance of Warrant Shares upon the exercise of Warrants; provided, however, that the
Company shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issue of any Warrant Certificates or any
certificates for Warrant Shares in a name other than that of the registered
holder of a Warrant Certificate surrendered upon the exercise of a Warrant, and
the Company shall not be required to issue or deliver such Warrant Certificates
unless or until the person or persons requesting the issuance thereof shall have
paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.

       

      Section 8. Mutilated or Missing Warrant
Certificates. In case any of the Warrant Certificates shall be mutilated,
lost, stolen or destroyed, the Company shall issue and the Warrant Agent shall
countersign, in exchange and substitution for and upon cancellation of the
mutilated Warrant Certificate, or in lieu of and substitution for the Warrant
Certificate lost, stolen or destroyed, a new Warrant Certificate of like tenor
and representing an equivalent number of Warrants, but only upon receipt of
evidence satisfactory to the Company and the Warrant Agent of such loss, theft
or destruction of such Warrant Certificate and indemnity, also satisfactory to
the Company and the Warrant Agent. Applicants for such new Warrant Certificates
must pay such reasonable charges as the Company may prescribe.

       

      Section 9. Reservation of Warrant
Shares. The Company will at all times reserve and keep available, free
from preemptive rights, out of the aggregate of its authorized but unissued
Common Stock or its authorized and issued Common Stock held in its treasury, for
the purpose of enabling it to satisfy any obligation to issue Warrant Shares
upon exercise of Warrants, the maximum number of shares of Common Stock which
may then be deliverable upon the exercise of all outstanding Warrants. The
Warrant Agent shall have no duty to verify availability of such shares set aside
by the Company.

       

      The
Company or, if appointed, the transfer agent for the Common Stock (the “Transfer
Agent”) and every subsequent transfer agent for any shares of the Common
Stock issuable upon the exercise of any of the Warrants will be irrevocably
authorized and directed at all times to reserve such number of authorized shares
as shall be required for such purpose. The Company will keep a copy of this
Agreement on file with the Transfer Agent and with every subsequent Transfer
Agent for any shares of the Common Stock issuable upon the exercise of the
Warrants. The Warrant Agent is hereby irrevocably authorized to requisition from
time to time from such Transfer Agent the stock certificates required to honor
outstanding Warrants upon exercise thereof in accordance with the terms of this
Agreement. The Company will supply such Transfer Agent with duly executed
certificates for such purposes. The Company will furnish such Transfer Agent a
copy of all notices of adjustments and certificates related thereto, transmitted
to each holder pursuant to Section 12
hereof.

       

       

      4

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Before
taking any action which would cause an adjustment pursuant to Section 10 hereof to
reduce the Exercise Price below the then par value (if any) of the Warrant
Shares, the Company will take any commercially reasonable corporate action which
may, in the opinion of its counsel (which may be counsel employed by the
Company), be necessary in order that the Company may validly and legally issue
fully paid and nonassessable Warrant Shares at the Exercise Price as so
adjusted.

       

      The
Company covenants that all Warrant Shares which may be issued upon exercise of
Warrants will, upon payment of the Exercise Price therefor and the issuance
thereof, be fully paid, nonassessable, free of preemptive rights and free from
all taxes, liens, charges and security interests with respect to the issue
thereof.

       

      Section 10. Adjustment of Number of Warrant
Shares. The number of Warrant Shares issuable upon the exercise of each
Warrant is subject to adjustment from time to time upon the occurrence of the
events enumerated in this Section 10. For
purposes of this Section 10, “Common
Stock ” means shares now or hereafter authorized of any class of common
stock of the Company and any other stock of the Company, however designated,
that has the right (subject to any prior rights of any class or series of
preferred stock) to participate in any distribution of the assets or earnings of
the Company without limit as to per share amount.

       

      (a) Stock Dividends —
Split-Ups. If after the date hereof, and subject to the provisions of
Section 11
hereof, the number of outstanding shares of Common Stock is increased by a stock
dividend payable in shares of Common Stock, or by a split-up of shares of Common
Stock, or other similar event, then, on the effective date of such stock
dividend, split-up or similar event, the number of shares of Common Stock
issuable on exercise of each Warrant shall be increased in proportion to such
increase in outstanding shares of Common Stock.

       

      (b) Aggregation of
Shares. If after the date hereof, and subject to the provisions of Section 11 hereof,
the number of outstanding shares of Common Stock is decreased by a
consolidation, combination, reverse stock split or reclassification of shares of
Common Stock or other similar event, then, on the effective date of such
consolidation, combination, reverse stock split, reclassification or similar
event, the number of shares of Common Stock issuable on exercise of each Warrant
shall be decreased in proportion to such decrease in outstanding shares of
Common Stock.

       

      (c) Merger, Reorganization,
etc. Upon a
merger, consolidation, sale of substantially all of the assets of the Company,
or other similar transaction, the Warrants shall automatically expire unless
exercised prior to the closing of such transaction. Upon such exercise, the
holders of the Common Stock issued upon exercise of the warrants will
participate on the same basis as the other holders of Common Stock in connection
with the transaction. The Company shall give written notice to each Warrant
holder, at the last address set forth for such holder in the warrant register,
of the Company’s entry or intention to enter into such a transction, and shall
provide a commercially reasonable period in which to effect such exercise.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of such transaction.

       

      (d) Form of Warrant. The
form of Warrant need not be changed because of any adjustment pursuant to this
Section 10, and
Warrants issued after such adjustment may state the same Exercise Price and the
same number of shares as is stated in the Warrants initially issued pursuant to
this Agreement. However, the Company may at any time in its sole discretion make
any change in the form of Warrant that the Company may deem appropriate and that
does not affect the substance thereof, and any Warrant thereafter issued or
countersigned, whether in exchange or substitution for an outstanding Warrant or
otherwise, may be in the form as so changed.

       

       

      5

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (e) Other Events. If any
event occurs as to which the foregoing provisions of this Section 10 are not
strictly applicable or, if strictly applicable, would not, in the good faith
judgment of the Board, fairly and adequately protect the purchase rights of the
registered holders of the Warrants in accordance with the essential intent and
principles of such provisions, then the Board shall make such adjustments in the
application of such provisions, in accordance with such essential intent and
principles, as shall be reasonably necessary, in the good faith opinion of the
Board, to protect such purchase rights as aforesaid.

       

      Section 11. Fractional Interests. If,
upon exercise of the Warrants, a holder would be entitled to receive a
fractional interest in a share, the Company may, but shall not be required to,
issue fractions of a share.  If the Company does not issue fractions
of a share, it shall (1) pay in cash the fair value of fractions of a share as
of the time when those entitled to receive such fractions are determined, or (2)
issue scrip or warrants in registered form (either represented by a certificate
or uncertificated) or bearer form (represented by a certificate) which shall
entitle the holder to receive a full share upon the surrender of such scrip or
warrants aggregating a full share.

       

      Section 12. Notices to Warrant Holders.
Upon every adjustment of the number of shares issuable upon exercise of a
Warrant, the Company shall give written notice thereof to the Warrant Agent,
which notice shall state the increase or decrease, if any, in the number of
shares purchasable at such price upon the exercise of a Warrant, setting forth
in reasonable detail the method of calculation and the facts upon which such
calculation is based. Upon the occurrence of any event specified in Section 10(a), (b), or (c) hereof, then, in
any such event, the Company shall give written notice to each Warrant holder, at
the last address set forth for such holder in the warrant register, of the
record date or the effective date of the event. Failure to give such notice, or
any defect therein, shall not affect the legality or validity of such
event.

       

      Section 13. Merger, Consolidation or Change of
Name of Warrant Agent. Any corporation into which the Warrant Agent may
be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Warrant Agent shall be a party, or
any corporation succeeding to all or substantially all the corporate trust or
agency business of the Warrant Agent, shall be the successor to the Warrant
Agent hereunder (the “Successor Warrant
Agent”) without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a Successor Warrant Agent under the provisions of
Section 15
hereof. In case at the time such Successor Warrant Agent shall succeed to the
agency created by this Agreement, and in case at that time any of the Warrant
Certificates shall have been countersigned but not delivered, any such successor
to the Warrant Agent may adopt the countersignature of the original Warrant
Agent; and in case at that time any of the Warrant Certificates shall not have
been countersigned, any Successor Warrant Agent may countersign such Warrant
Certificates either in the name of the predecessor Warrant Agent or in the name
of the Successor Warrant Agent; and in all such cases such Warrant Certificates
shall have the full force and effect provided in the Warrant Certificates and in
this Agreement.

       

      In case
at any time the name of the Warrant Agent shall be changed and at such time any
of the Warrant Certificates shall have been countersigned but not delivered, the
Warrant Agent whose name has been changed may adopt the countersignature under
its prior name, and in case at that time any of the Warrant Certificates shall
not have been countersigned, the Warrant Agent may countersign such Warrant
Certificates either in its prior name or in its changed name, and in all such
cases such Warrant Certificates shall have the full force and effect provided in
the Warrant Certificates and in this Agreement.

       

      Section 14. Warrant Agent. The Warrant
Agent undertakes the duties and obligations imposed by this Agreement (and no
implied duties or obligations shall be read into this Agreement against the
Warrant Agent) upon the following terms and conditions, by all of which the
Company and the holders of Warrants, by their acceptance thereof, shall be
bound:

       

       

      6

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (a) The
statements contained herein and in the Warrant Certificates shall be taken as
statements of the Company, and the Warrant Agent assumes no responsibility for
the correctness of any of the same except to the extent that any such statements
describe the Warrant Agent or action taken or to be taken by it. The Warrant
Agent assumes no responsibility with respect to the distribution of the Warrant
Certificates except as otherwise provided herein.

       

      (b) The
Warrant Agent shall not be responsible for any failure of the Company to comply
with any of the covenants contained in this Agreement or in the Warrant
Certificates to be complied with by the Company.

       

      (c) The
Warrant Agent may consult at any time with counsel of its own selection (who may
be counsel for the Company), and the Warrant Agent shall incur no liability or
responsibility to the Company or to any holder of any Warrant Certificate in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with the opinion or the advice of such counsel. The Warrant
Agent may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or through agents or attorneys, and the Warrant Agent
shall not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder.

       

      (d) The
Warrant Agent may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Warrant Agent and conforming to the requirements of this
Agreement. The Warrant Agent shall incur no liability or responsibility to the
Company or to any holder of any Warrant Certificate for any action taken in
reliance on any Warrant Certificate, certificate of shares, notice, resolution,
waiver, consent, order, certificate, or other paper, document or instrument
(whether in its original or facsimile form) believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties.

       

      (e) The
Company hereby agrees to (A) pay to the Warrant Agent such compensation for all
services rendered by the Warrant Agent in the administration and execution of
this Agreement as the Company and the Warrant Agent shall agree to in writing,
(B) reimburse the Warrant Agent for all expenses, taxes and governmental charges
and other charges of any kind and nature incurred by the Warrant Agent in the
execution of this Agreement (including fees and expenses of its counsel) and (C)
indemnify the Warrant Agent (and any predecessor Warrant Agent) and hold it
harmless against any and all claims (whether asserted by the Company, a holder
or any other person), damages, losses, expenses (including taxes other than
taxes based on the income of the Warrant Agent) and liabilities (including
judgments, costs and counsel fees and expenses), suffered or incurred by the
Warrant Agent for anything done or omitted by the Warrant Agent in the execution
of this Agreement except as a result of its negligence or willful misconduct.
The provisions of this Section 15(e) shall
survive the expiration of the Warrants and the termination of this
Agreement.

       

      (f) The
Warrant Agent shall be under no obligation to institute any action, suit or
legal proceeding or to take any other action likely to involve expense unless
the Company or one or more registered holders of Warrant Certificates shall
furnish the Warrant Agent with security and indemnity satisfactory to it for any
costs and expenses which may be incurred, but this provision shall not affect
the power of the Warrant Agent to take such action as it may consider proper,
whether with or without any such security or indemnity. All rights of action
under this Agreement or under any of the Warrants may be enforced by the Warrant
Agent without the possession of any of the Warrant Certificates or the
production thereof at any trial or other proceeding relative thereto, and any
such action, suit or proceeding instituted by the Warrant Agent shall be brought
in its name as Warrant Agent and any recovery of judgment shall be for the
ratable benefit of the registered holders of the Warrants, as their respective
rights or interests may appear.

       

       

      7

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (g) The
Warrant Agent, and any stockholder, director, officer or employee of it, may
buy, sell or deal in any of the Warrants or other securities of the Company or
become pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Warrant Agent under this Agreement.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.

       

      (h) The
Warrant Agent shall act hereunder solely as agent for the Company, and its
duties shall be determined solely by the provisions hereof. The Warrant Agent
shall not be liable for anything which it may do or refrain from doing in
connection with this Agreement except for its own negligence or willful
misconduct. The Warrant Agent shall not be liable for any error of judgment made
in good faith by it, unless it shall be proved that the Warrant Agent was
negligent in ascertaining the pertinent facts. Notwithstanding anything in this
Agreement to the contrary, in no event shall the Warrant Agent be liable for any
special, indirect, punitive or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Warrant
Agent has been advised of the likelihood of the loss or damage and regardless of
the form of the action.

       

      (i) The
Warrant Agent shall not at any time be under any duty or responsibility to any
holder of any Warrant Certificate to make or cause to be made any adjustment of
the number of the Warrant Shares or other securities or property deliverable as
provided in this Agreement, or to determine whether any facts exist which may
require any such adjustments, or with respect to the nature or extent of any
such adjustments, when made, or with respect to the method employed in making
the same. The Warrant Agent shall not be accountable with respect to the
validity or value or the kind or amount of any Warrant Shares or of any
securities or property which may at any time be issued or delivered upon the
exercise of any Warrant or with respect to whether any such Warrant Shares or
other securities will when issued be validly issued and fully paid and
nonassessable, and makes no representation with respect thereto.

       

      (j)
Notwithstanding anything in this Agreement to the contrary, neither the Company
nor the Warrant Agent shall have any liability to any holder of a Warrant
Certificate or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; provided, however, that the
Company must use its commercially reasonable efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as
possible.

       

      (k) Any
application by the Warrant Agent for written instructions from the Company may,
at the option of the Warrant Agent, set forth in writing any action proposed to
be taken or omitted by the Warrant Agent under this Agreement and the date on
and/or after which such action shall be taken or such omission shall be
effective. The Warrant Agent shall not be liable for any action taken by, or
omission of, the Warrant Agent in accordance with a proposal included in such
application on or after the date specified in such application (which date shall
not be less than three Business Days after the date any officer of the Company
actually receives such application, unless any such officer shall have consented
in writing to any earlier date) unless prior to taking any such action (or the
effective date in the case of an omission), the Warrant Agent shall have
received written instructions in response to such application specifying the
action to be taken or omitted.

       

      (l) No
provision of this Agreement shall require the Warrant Agent to expend or risk
its own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder or in the exercise of its rights.

       

       

      8

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (m) In
addition to the foregoing, the Warrant Agent shall be protected and shall incur
no liability for, or in respect of, any action taken or omitted by it in
connection with its administration of this Agreement if such acts or omissions
are not the result of the Warrant Agent’s reckless disregard of its duty, gross
negligence or willful misconduct and are in reliance upon (A) the proper
execution of the certification concerning beneficial ownership appended to the
form of assignment and the form of the election attached hereto unless the
Warrant Agent shall have actual knowledge that, as executed, such certification
is untrue, or (B) the non-execution of such certification including, without
limitation, any refusal to honor any otherwise permissible assignment or
election by reason of such non-execution.

       

      Section 15. Change of Warrant Agent. The
Warrant Agent may at any time resign as Warrant Agent upon written notice to the
Company. If the Warrant Agent shall become incapable of acting as Warrant Agent,
the Company shall appoint a Successor Warrant Agent. If the Company shall fail
to make such appointment within a period of 30 days after it has been notified
in writing of such resignation or of such incapacity by the Warrant Agent or by
the registered holder of a Warrant Certificate, then the registered holder of
any Warrant Certificate or the Warrant Agent may apply, at the expense of the
Company, to any court of competent jurisdiction for the appointment of a
Successor Warrant Agent. Pending appointment of a Successor Warrant Agent,
either by the Company or by such a court, the duties of the Warrant Agent shall
be carried out by the Company. In the event that the Warrant Agent resigns or
becomes incapable of acting as Warrant Agent, the Company shall not be liable
for any applicable termination fee.

       

      The
holders of a majority of the unexercised Warrants shall be entitled at any time
to remove the Warrant Agent and appoint a Successor Warrant Agent. If a
Successor Warrant Agent shall not have been appointed within 30 days of such
removal, the Warrant Agent may apply, at the expense of the Company, to any
court of competent jurisdiction for the appointment of a Successor Warrant
Agent. Such Successor Warrant Agent need not be approved by the Company or the
former Warrant Agent. After appointment the Successor Warrant Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Warrant Agent without further act or deed; but the
former Warrant Agent upon payment of all fees and expenses due it and its agents
and counsel shall deliver and transfer to the Successor Warrant Agent any
property at the time held by it hereunder and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Failure to give
any notice provided for in this Section 15, however,
or any defect therein, shall not affect the legality or validity of the
appointment of a Successor Warrant Agent.

       

      Section 16. Notices to Company and Warrant
Agent. Any notice or demand authorized by this Agreement to be given or
made by the Warrant Agent or by the registered holder of any Warrant Certificate
to or on the Company shall be sufficiently given or made when and if deposited
in the mail, first class or registered, postage prepaid, or sent via a
nationally recognized overnight courier service, addressed (until another
address is filed in writing by the Company with the Warrant Agent), as
follows:

       

      Lifeloc
Technologies, Inc.

      12441
West 49th Ave., Unit 4

      Wheat
Ridge, Colorado 80033

      Attention:
Secretary

      

      In case
the Company shall fail to maintain such office or agency or shall fail to give
such notice of the location or of any change in the location thereof,
presentations may be made and notices and demands may be served at the principal
corporate trust office of the Warrant Agent.

       

      Any
notice pursuant to this Agreement to be given by the Company or by the
registered holder(s) of any Warrant Certificate to the Warrant Agent shall be
sufficiently given when and if deposited in the mail, first-class or registered,
postage prepaid, addressed (until another address is filed in writing by the
Warrant Agent with the Company) to the Warrant Agent as follows:

       

       

      9

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      Section 17. Supplements and Amendments.
The Company and the Warrant Agent may from time to time supplement or amend this
Agreement without the approval of any holders of Warrant Certificates in order
to cure any ambiguity or to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provision herein, or to
make any other provisions in regard to matters or questions arising hereunder
which the Company and the Warrant Agent may deem necessary or desirable and
which shall not in any way adversely affect the interests of the holders of
Warrant Certificates theretofore issued. Upon the delivery of a certificate from
an appropriate officer of the Company which states that the proposed supplement
or amendment is in compliance with the terms of this Section 17, the
Warrant Agent shall execute such supplement or amendment. Notwithstanding
anything in this Agreement to the contrary, the prior written consent of the
Warrant Agent must be obtained in connection with any supplement or amendment
which alters the rights or duties of the Warrant Agent. The Company and the
Warrant Agent may amend any provision herein with the consent of the holders of
Warrants exercisable for a majority of the Warrant Shares issuable on exercise
of all outstanding Warrants that would be affected by such
amendment.

       

      Section 18. Successors. All the
covenants and provisions of this Agreement by or for the benefit of the Company
or the Warrant Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.

       

      Section 19. Termination. This Agreement
will terminate on any earlier date if all Warrants have been exercised or
expired without exercise. The provisions of Section 14 hereof
shall survive such termination.

       

      Section 20. Governing Law. This
Agreement and each Warrant Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Colorado and for all purposes shall
be construed in accordance with the internal laws of the State of Colorado. The
parties agree that all actions and proceedings arising out of this Agreement or
any of the transactions contemplated hereby shall be brought in the United
States District Court for the District of Colorado or in any Colorado State
Court and that, in connection with any such action or proceeding, the parties
will submit to the jurisdiction of, and venue in, such court. Each of the
parties hereto also irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim arising out of this Agreement or the transactions
contemplated hereby.

       

      Section 21. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company, the Warrant Agent and the registered holders
of the Warrant Certificates any legal or equitable right, remedy or claim under
this Agreement, and this Agreement shall be for the sole and exclusive benefit
of the Company, the Warrant Agent and the registered holders of the Warrant
Certificates.

       

      Section 22. Counterparts. This Agreement
may be executed in any number of counterparts and each of such counterparts
shall for all purposes be deemed to be an original, and all such counterparts
shall together constitute but one and the same instrument.

       

      Section 23. Force Majeure. In no event
shall the Warrant Agent or the Company be responsible or liable for any failure
or delay in the performance of its obligations under this Agreement arising out
of or caused by, directly or indirectly, forces beyond its reasonable control,
including without limitation strikes, work stoppages, accidents, acts of war or
terrorism, civil or military disturbances, nuclear or natural catastrophes or
acts of God, and interruptions, loss or malfunctions of utilities,
communications or computer (software or hardware) services.

       

      [Signatures on Following
Page]

       

       

      

      10

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

       

       

      IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

       

       

       

      
        
          	 	
                  LIFELOC
      TECHNOLOGIES, INC.

                   

                	 
	 	 	 	 
	
                   

                	
                  By:
      

                	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

        

      

       

       

      
        
          
            	
                     

                  	
                     

                  	,	as
      Warrant Agent	 
	 	 	 	 	 

          

        

         

        
          
            
              	 	
                       

                    	 
	 	 	 	 
	
                       

                    	
                      By:
      

                    	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

            

          

           

           

           

           

           

           

           

          12

          
 

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

        

      

       

      Exhibit
A

      

      Form of
Warrant Certificate

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      A-1

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      Exhibit
B

      

      ELECTION
TO EXERCISE WARRANT

      (To be
executed only upon exercise of Warrant)

      

      The
undersigned irrevocably elects to exercise the right of purchase represented by
its Warrant for __________ Warrant Shares, and elects to purchase _____________
Warrant Shares, and tenders payment of the purchase price in full in the form of
a certified or official bank check, or wire transfer, in the amount of
$___________.

       

      Please
issue a certificate or certificates for such Warrant Shares in the name
of:

       

      
        	Name	 	 
	Address:	 	 
	 	 	 
	Tel: 	 	 
	Tax ID
      No.: 	 	 
	
                (Please
      Print Name, Address and Social

                Security
      or Taxpayer Identification Number)

              	 

      

       

      If the
number of shares purchased are not all the shares purchasable under the Warrant,
a new Warrant is to be issued in the name of the undersigned for the balance of
the shares remaining purchasable thereunder.

       

      
        	Dated:	 	 

      

       

       

      Note:  The
signature below must correspond exactly with the name on the face of the
Warrant, in every particular, without alteration or change.

       

      
        	 	 	 
	(Signature of
      Registered Owner)	 	 
	
                 

                 

              	 	 
	(Print Name of
      Registered Owner)	 	 
	
                 

                 

              	 	 
	(Street
      Address) 	 	 
	
                 

                 

              	 	 
	(City)                      (State)                      (Zip)	 	 
	
                 

                 

              	 	 
	(Telephone
      Number)	 	 

      

       

       

       

       

       

       

      
 B-1

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

                                                                                

      Exhibit
C

       

      ASSIGNMENT

      (To be
executed only upon assignment of Warrant)

      

      FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers to:

       

      
        
          	Name	 	 
	Address:	 	 
	 	 	 
	Tel: 	 	 
	Tax ID
      No.: 	 	 
	
                  (Please
      Print Name, Address and Social

                  Security
      or Taxpayer Identification Number)

                	 

        

         

        the
Warrant, to purchase ______________ Warrant Shares, hereby irrevocably
constituting and appointing _________________________________________, Attorney
to transfer said Warrant on the books of the Company, with full power of
substitution in the premises.

      

      

       

      
        
          	 	 	 	 	 
	
                  Dated: 
      

                	 	 	
                   

                	 
	
                   

                	 	 	
                  
                    Signature
      of Registered Holder

                  

                	 
	
                   

                	 	 	
                   

                   

                  
                    Note:  The
      above signature must correspond exactly with the name on the face of this
      Warrant.

                  

                	 

        

      

      
 

      
        
          
            	 	 	 	 	 
	
                     

                  	 	
                     

                  	 
	
                    Signature Guarantee

                  	 	
                     

                  	 
	
                     

                  	 	 	
                     

                  	 

          

        

         

      

       

      

      Signatures
should be guaranteed by an eligible guarantor institution which is a member of a
signature guarantee program satisfactory to the Company.

       

       

       

       

       

      C-1ex10x1.htm

    Exhibit 10.1

     

     

    LIFELOC
TECHNOLOGIES, INC.

    STOCK
OPTION PLAN

    
       

       

      
        
          	
                  I. 

                	
                  Purpose

                

        

        

        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.

        

        
          	
                  II. 

                	
                  Incentive Stock
      Options and Non-Incentive Stock
Options

                

        

        

        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.

        

        
          	
                  III. 

                	
                  Administration

                

        

        

        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.

        

        
          	
                  IV. 

                	
                  Definitions

                

        

        

        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.

        

        
          	
                  V. 

                	
                  Eligibility and
      Participation

                

        

        

        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.

        

        
          	
                  VI. 

                	
                  Shares of Common Stock
      Subject to the Plan

                

        

        

        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.

        

        
          	
                  VII. 

                	
                  Exercise of Stock
      Options

                

        

        

        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.

        

        
          	
                  VIII. 

                	
                  Stock Appreciation
      Rights

                

        

        

        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.

      

      
        	
                IX. 

              	
                No Contract of
      Employment

              

      

      

      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.

      

      
        	
                X. 

              	
                No Rights as a
      Stockholder

              

      

      

      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.

      

      
        	
                XI. 

              	
                Assignability

              

      

      

      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.

      

      
        	
                XII. 

              	
                Merger or Liquidation
      of the Company

              

      

      

      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.

      

      
        	
                XIII. 

              	
                Amendment

              

      

      

      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.

      

      
        	
                XIV. 

              	
                Registration of
      Optioned Shares

              

      

      

      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.

       

      
 

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	
                XV. 

              	
                Withholding
      Taxes

              

      

      

      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.

      

      
        	
                XVI. 

              	
                Brokerage
      Arrangements

              

      

      

      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.

      

      
        	
                XVII. 

              	
                Nonexclusivity of the
      Plan

              

      

      

      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.

      

      
        	
                XVIII. 

              	
                Effective
      Date

              

      

      

      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.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00175-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00175-of-00352.parquet"}]]