Document:

Exhibit 10.2

 

NON QUALIFIED STOCK OPTION AGREEMENT

 

NON QUALIFIED STOCK OPTION AGREEMENT
made this ___ day of ___________, 20__ between PSYCHEMEDICS CORPORATION, a Delaware corporation (hereinafter called the
Corporation), and ____________________, an employee, director, or independent contractor of the Corporation or one or more
of its subsidiaries (hereinafter called the Optionee).

 

The Corporation desires, by affording the
Optionee an opportunity to purchase shares of its Common Stock, $.005 par value (hereinafter called the Common Stock), as hereinafter
provided, to carry out the purpose of the Corporation's 2006 Incentive Plan, as amended (the Plan).

 

NOW, THEREFORE, in consideration of the
mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto have agreed, and do hereby
agree as follows:

 

1. Grant of Option. The Corporation
hereby irrevocably grants to the Optionee the right and option (hereinafter called the Option) to purchase all or any part of an
aggregate of __________ shares of the Common Stock (such number being subject to adjustment as provided in paragraph 7 hereof)
on the terms and conditions herein set forth. The Option is not intended by the parties hereto to be, and shall not be treated
as, an incentive stock option (as such term is defined under Section 422 of the Internal Revenue Code of 1986 (hereinafter called
the Code)).

 

2. Purchase Price. The purchase price
of the shares of the Common Stock covered by the Option shall be $_____ per share.

 

3. Term of Option; Exercisability.
The term of the Option shall be for a period of ten (10) years from the date hereof, subject to earlier termination as provided
in paragraph 6 hereof. Except as otherwise provided in paragraph 6 hereof, the Option shall become exercisable with respect to
20% of the total number of shares subject to the Option on the first anniversary date of the date hereof, and with respect to an
additional 20% of such total number of shares at the end of each twelve-month period thereafter during the succeeding four years,
provided however, that the Corporation may, at any time during the period in which the Option is not then exercisable in full,
accelerate the exercisability of the Option subject to such terms as the Corporation deems necessary and appropriate. The purchase
price of the shares as to which the Option shall be exercised shall be paid at the time of exercise as provided in paragraph 8
hereof.

 

4. Non-transferability. The Option
shall not be transferable otherwise than by will or the laws of descent and distribution, or pursuant to a qualified domestic relations
order as defined in the Code, or Title I of the Employee Retirement Income Security Act of 1974, as amended or the regulations
thereunder. Subject to the foregoing, the Option may be exercised, during the lifetime of the Optionee, only by him. More particularly
(but without limiting the generality of the foregoing), the Option may not be assigned, transferred (except as provided above),
pledged, or hypothecated in any way, shall not be assignable by operation of law and shall not be subject to execution, attachment,
or similar process. Any attempted assignment, transfer, pledge, hypothecation, or other disposition of the Option contrary to the
provisions hereof, and the levy of any execution, attachment, or similar process upon the Option shall be null and void and without
effect.

 

    

     

    

 

5. Registration of Shares. The Corporation
may, in its discretion, require as conditions to the right to exercise this Option that (a) a Registration Statement under the
Securities Act of 1933, as amended, shall be in effect and current with respect to the shares issuable upon exercise of this Option,
or (b) the Optionee has given to the Corporation prior to the purchase of any shares pursuant hereto, assurances satisfactory to
it that such shares are being purchased for the purpose of investment and not with a view to or for sale in connection with any
distribution thereof, including without limitation, a written agreement of the Optionee that the shares will not be transferred
unless registered under the Securities Act of 1933, as amended, or unless counsel for the Corporation gives a written opinion that
such transfer is permissible under Federal and State law without registration.

 

6. Termination of Business Relationship.
Except as otherwise provided in this paragraph, the Option shall terminate and be canceled on the first to occur of the expiration
date of this Option as set forth in paragraph 3 hereof or the date which is three (3) months following the date on which the Optionee
ceases to be an employee, director or independent contractor of the Corporation or one or more of its subsidiaries (the “Business
Relationship”). The Option shall be exercisable during such three month period to the extent it was exercisable on the date
of such termination. In the event that the Business Relationship shall be terminated on account of the Optionee's death, retirement
(at the age 65 or earlier as may be permitted by the Corporation), or permanent disability (as such term is defined in Section
22(e)(3) of the Code), the Option may be exercised in full, without regard to any installments under Section 3 hereof, by the Optionee
or, by his heirs, legatees, or legal representatives, as the case may be, during its specified term prior to one (1) year after
the date of death, permanent disability, or retirement, but in any event not later than ten (10) years from the date hereof. For
purposes of the preceding sentence, in the event the Optionee is a non-employee director of the Corporation at the time of the
grant of this Option, the failure of the Optionee to be re-elected as a director of the Corporation, for any reason, at any annual
or special meeting of stockholders of the Corporation, provided the Optionee continues to serve as a director of the Corporation
through the date of such annual or special meeting, shall be deemed to be a termination on account of retirement. So long as the
Business Relationship shall continue, the Option shall not be affected by any change of duties or position. Nothing in this Option
Agreement shall confer upon the Optionee any right to continue the Business Relationship or interfere in any way with the right
of the Corporation or any such subsidiary to terminate the Business Relationship at any time.

 

7. Changes in Capital Structure.
Adjustments and other matters relating to stock dividends, stock splits, recapitalizations, reorganizations, Corporate Events and
the like shall be made and determined in accordance with Section 7 of the Plan, as in effect on the date of this Agreement.

 

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8. Method of Exercising Option. Subject
to the terms and conditions of this Option Agreement, the Option may be exercised by written notice to the Corporation at its principal
business address attention of the Secretary. Such notice shall state the election to exercise the Option and the number of shares
in respect of which it is being exercised, and shall be signed by the person or persons so exercising the Option. At that time,
this Option Agreement shall be turned in to the Corporation for action by the Corporation to reduce the number of shares to which
it applies. Such notice shall be accompanied by payment in cash or by check, or by shares of the Common Stock, or by a combination
of these methods of payment. Payment may also be made by delivery of a notice of “net exercise” to the Corporation,
pursuant to which the Optionee shall receive the number of shares of Stock underlying the Option so exercised reduced by the number
of shares of Stock equal to the aggregate exercise price of the Option divided by the Fair Market Value on the date of exercise,
or by delivery (including delivery by facsimile transmission) to the Corporation or its designated agent of an executed irrevocable
option exercise form together with irrevocable instructions to a broker-dealer to sell a sufficient portion of the shares and deliver
the sale proceeds directly to the Corporation to pay for the exercise price. In the event that payment is made in shares of the
Common Stock, the per share value of the Common Stock shall be the Fair Market Value of such stock on the date of exercise. The
certificate or certificates for the shares as to which the Option shall have been so exercised shall be registered in the name
of the person or persons so exercising the Option, (or, if the Option shall be exercised by the Optionee and if the Optionee shall
so request in the notice exercising the Option, the certificate or certificates shall be registered in the name of the Optionee
and another person jointly, with the right of survivorship) and shall be delivered as provided above to or upon the written order
of the person or persons exercising the Option. In the event the Option shall be exercised by any person or persons other than
the Optionee (to the extent permitted under this Non-Qualified Stock Option Agreement), such notice shall be accompanied by appropriate
proof of the right of such person or persons to exercise the Option.

 

9. General. The Corporation shall
at all times during the term of the Option reserve and keep available such number of shares of Common Stock as will be sufficient
to satisfy the requirements of this Non-Qualified Stock Option Agreement, shall pay all original issue taxes with respect to the
issue of shares pursuant hereto and all other fees and expenses necessarily incurred by the Corporation in connection therewith,
and will from time to time use its best efforts to comply with all laws and regulations which, in the opinion of counsel for the
Corporation, shall be applicable thereto. The Corporation makes no representation or warranty that this Option or shares issued
pursuant hereto qualify under any Federal or State law for any special tax treatment. The terms of this Option Agreement shall
be construed to conform with, and shall be governed by the provisions of the Plan, as amended, and in the event of any inconsistency
between the provisions of this Non-Qualified Stock Option Agreement and the Plan, the provisions of the Plan shall control. Any
term used herein and not defined in this Agreement but defined in the Plan, shall have the meaning set forth in the Plan.

 

10.  Subsidiary.
As used herein, the term "subsidiary" shall mean any present or future corporation which would be a "subsidiary
corporation" of the Corporation, as the term is defined in Section 424 of the Code.

 

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11.  Section 409A of the Code.
This Agreement is intended to comply with the provisions of Section 409A of the Code to the extent they are applicable, and
shall be administered in a manner consistent with this intent. Without limiting the foregoing, any requirements imposed under the
Treasury Regulations promulgated under said Section 409A as finally adopted, in order for the Option granted hereunder to
remain in compliance with said Section 409A, are hereby incorporated by reference into this Agreement.

 

12.  Withholding Taxes.
If the Corporation in its discretion determines that it is obligated to withhold any tax in connection with the exercise of this
Option, or in connection with the transfer of, or the lapse of restrictions on, any Common Stock or other property acquired pursuant
to this Option, the Optionee hereby agrees that the Corporation may withhold from the Optionee’s remuneration the appropriate
amount of tax. At the discretion of the Corporation, the amount required to be withheld may be withheld in cash from such remuneration
or in kind from the Common Stock or other property otherwise deliverable to the Optionee on exercise of this Option. The Optionee
further agrees that, if the Corporation does not withhold an amount from the Optionee’s remuneration sufficient to satisfy
the withholding obligation of the Corporation, the Optionee will make reimbursement on demand, in cash, for the amount underwithheld.

 

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IN WITNESS WHEREOF, the Corporation
has caused this Non-Qualified Stock Option Agreement to be duly executed by its officer thereunto duly authorized, and the Optionee
has hereunto set his hand and seal all on the day and year first above written.

 

	 	PSYCHEMEDICS CORPORATION
	 	 	 
	 	By: 	 
	 	 	Name:
	 	 	Title:
	 	 	 
	 	 
	 	[name of Optionee]
	 	 
	 	 
	 	Address
	 	 
	 	 

 

    5Exhibit 10.3

 

STOCK UNIT AWARD AGREEMENT 

 

(For Non-employee Directors;
granted under the Psychemedics Corporation 2006 Incentive Plan)

 

1.           Award
of Stock Unit Awards.   Psychemedics Corporation (hereinafter the “Company”), in the exercise of its
sole discretion pursuant to the Psychemedics Corporation 2006 Incentive Plan, as amended (the “Plan”), does on ______________
(the “Award Date”) hereby award to _________________ (the “Awardee”) _________ Stock Unit Awards (“SUAs”)
upon the terms and subject to the conditions hereinafter contained. Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Plan. SUAs represent the Company’s unfunded and unsecured promise to issue shares of Common
Stock at a future date, subject to the terms of this Award Agreement and the Plan. Awardee has no rights under the SUAs other than
the rights of a general unsecured creditor of the Company.

 

2.           Vesting
Schedule and Conversion of SUAs.  

 

(a)          Subject
to the terms of this Award Agreement and the Plan and provided that Awardee continues to serve as a director of the Company throughout
the vesting periods set out below, the SUAs shall vest and be converted into an equivalent number of shares of Common Stock that
will be distributed to the Awardee as follows; provided that fractional SUAs shall be converted into shares of Common Stock as
set out in Section 6 of this Award Agreement:

 

	Vesting Date
 
	 	Percentage
 of SUAs	 
	[one year from date of grant]	 	 	50	%
	[two years from date of grant]	 	 	50	%

 

     

     

    

 

(b)          Notwithstanding
the vesting schedule set forth in subsection (a) above, if there is a Change in Control of the Company (as defined below), then
so long as the Awardee shall have continued to serve as a director of the Company through the date which is one day prior to the
actual closing date of the transaction giving rise to such Change in Control (the “Acceleration Date”), then all of
the SUA’s that are unvested on the Acceleration Date shall become vested in full on the Acceleration Date, subject, however,
to the provisions of Section 18 of this Award Agreement. For the purpose of this Agreement, a “Change in Control” shall
mean (i) the consummation of a reorganization, merger or consolidation or sale or disposition of all or substantially all of the
assets of the Company (a “Business Combination”), unless, in each case following such Business Combination, (A) all
or substantially all of the individuals and entities who were the beneficial owners of the Common Stock of the Company immediately
before the consummation of such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively,
the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation that as a result of the transaction owns the Company or all or substantially all of the assets
of the Company either directly or indirectly through one or more subsidiaries); and (B) no person or group (as defined in Section
13(d) or 14(d)(2) of the Securities Exchange Act of 1934) of the Company or the corporation resulting from the Business Combination)
beneficially owns, directly or indirectly, more than 30% of the then outstanding shares of the common stock of the corporation
resulting from the Business Combination; (ii) Individuals who, as of the date of this Agreement, constitute the Board of Directors
of the Company (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board of Directors
of the Company, provided, however, that any individual's becoming a director after the date of this Agreement whose election, or
nomination for election by the stockholders of the Company, was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board will be considered as though the individual were a member of the Incumbent Board, but excluding,
for this purpose, any individual whose initial assumption of office occurs as a result of an actual or threatened election contest
with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or (iii) any person (as defined in Section 13(d) or 14(d)(2) of the Securities Exchange
Act of 1934) shall become at any time or in any manner the beneficial owner of capital stock of the Company representing more than
30% of the voting power of the Company.

 

3.           Termination
of Awardee’s Status as a Director.   Subject to the provisions of Sections 4 and 5 below, in the event of termination,
for any reason, of Awardee’s status as a director of the Company, Awardee’s rights under this Award Agreement in any
unvested SUAs shall terminate.

 

4.           Disability
or Retirement of Awardee.   Notwithstanding the provisions of Section 3 above, in the event of termination of Awardee’s
status as a director of the Company as a result of disability (within the meaning of Section 409A of the Internal Revenue Code,
and hereinafter referred to as “Disability”), or retirement, all of the SUA’s that are unvested on the date of
the Disability or such retirement shall become vested in full, subject, however, to the provisions of Section 18 of this Award
Agreement. For purposes of the preceding sentence, the failure of the Awardee to be re-elected as a director of the Company, for
any reason, at any annual or special meeting of stockholders of the Company, provided the Awardee continues to serve as a director
of the Company through the date of such annual or special meeting, shall be deemed to be a termination on account of retirement.

 

5.           Death
of Awardee.   Notwithstanding the provisions of Section 3 above, in the event of the death of Awardee during the
time that he is serving as a member of the Board of Directors of the Company, all of the SUA’s that are unvested on the date
of the death shall become vested in full, subject, however, to the provisions of Section 18 of this Award Agreement.

 

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6.           Conversion
of SUAs to shares of Common Stock; Responsibility for Taxes.  

 

(a)           Provided
Awardee has satisfied the requirements of Section 6(b) below, and subject, however, to the provisions of Section 18 of this Award
Agreement, on the vesting of any SUAs, such vested SUAs shall be converted into an equivalent number of shares of Common Stock
that will be distributed to Awardee or, in the event of Awardee’s death, to Awardee’s legal representative, as soon
as practicable. An Awardee’s rights with respect to the SUA’s issued under this Award Agreement shall terminate at
the time such SUAs are converted into shares of Common Stock. The distribution to the Awardee, or in the case of the Awardee’s
death, to the Awardee’s legal representative, of shares of Common Stock in respect of the vested SUAs shall be evidenced
by a stock certificate, appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company, or
other appropriate means as determined by the Company.

 

(b)          Prior
to the issuance of shares of Common Stock upon vesting of SUAs as provided in Section 6(a) above, Awardee shall pay, or make adequate
arrangements satisfactory to the Company (in its sole discretion) to satisfy all withholding obligations of the Company, to the
extent applicable.

 

(c)           In
lieu of issuing fractional shares of Common Stock, on the vesting of a fraction of a SUA, the Company shall round the shares to
the nearest whole share and any such share which represents a fraction of a SUA will be included in a subsequent vest date.

(d)          Until
the distribution to Awardee of the shares of Common Stock in respect to the vested SUAs is evidenced by a stock certificate, appropriate
entry on the books of the Company or of a duly authorized transfer agent of the Company, or other appropriate means, Awardee shall
have no right to vote or receive dividends or any other rights as a shareholder with respect to such shares of Common Stock, notwithstanding
the vesting of SUAs. Subject to the provisions of Section 18 of this Award Agreement, the Company shall cause such distribution
to Awardee to occur promptly upon the vesting of SUAs. No adjustment will be made for a dividend or other right for which the record
date is prior to the date Awardee is recorded as the owner of the shares of Common Stock, except as provided in Section 7 of the
Plan.

 

7.          Non-Transferability
of SUAs.   Awardee’s right in the SUAs awarded under this Award Agreement and any interest therein may not
be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner, other than by will or by the laws of descent
or distribution, prior to the distribution of the shares of Common Stock in respect of such SUAs. SUAs shall not be subject to
execution, attachment or other process.

 

8.          Agreement
of Awardee. By accepting the Award, Awardee agrees to continue to serve as a director of the Company during the term for which
he or she was elected. By accepting the Award of SUAs evidenced by this Award Agreement, Awardee agrees not to sell any of the
shares of Common Stock received on account of vested SUAs at a time when applicable laws or Company policies prohibit a sale. This
restriction shall apply so long as Awardee is a director of the Company.

 

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9.           Acknowledgment
of Nature of Plan and SUAs.   In accepting the Award, Awardee acknowledges that:

 

(a)          the
Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated
by the Company at any time, as provided in the Plan;

 

(b)          the
Award of SUAs is voluntary and occasional and does not create any contractual or other right to receive future awards of SUAs,
or benefits in lieu of SUAs even if SUAs have been awarded repeatedly in the past;

 

(c)          all
decisions with respect to future awards, if any, will be at the sole discretion of the Company;

 

(d)          Awardee’s
participation in the Plan is voluntary;

 

(e)          the
future value of the underlying shares of Common Stock is unknown and cannot be predicted with certainty;

 

(f)          if
Awardee receives shares of Common Stock, the value of such shares of Common Stock acquired on vesting of SUAs may increase or decrease
in value;

 

(g)          Awardee
acknowledges and agrees that, in the event of termination of the Awardee’s service on the Company’s Board of Directors,
regardless of the reasons for such termination, Awardee has no right to, and will not bring any legal claim or action for, (a)
any damages for any portion of the SUAs that have been vested and converted into Common Shares, or (b) termination of any unvested
SUAs under this Award Agreement.

 

10.         Administration.  
The authority to manage and control the operation and administration of this Award Agreement shall be vested in the Committee (as
defined in Section 1 of the Plan), and the Committee shall have all powers and discretion with respect to this Award Agreement
as it has with respect to the Plan. Any interpretation of the Award Agreement by the Committee and any decision made by the Committee
with respect to the Award Agreement shall be final and binding on all parties.

 

11.         Plan
Governs.   Notwithstanding anything in this Award Agreement to the contrary, the terms of this Award Agreement shall
be subject to the terms of the Plan, and this Award Agreement is subject to all interpretations, amendments, rules and regulations
promulgated by the Committee from time to time pursuant to the Plan.

 

12.         Notices.  
Any written notices provided for in this Award Agreement which are sent by mail shall be deemed received three business days after
mailing, but not later than the date of actual receipt. Notices shall be directed, if to Awardee, at the Awardee’s address
indicated by the Company’s records and, if to the Company, at the Company’s principal executive office.

 

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13.         Electronic
Delivery.   The Company may, in its sole discretion, decide to deliver any documents related to SUAs awarded under
the Plan or future SUAs that may be awarded under the Plan by electronic means or request Awardee’s consent to participate
in the Plan by electronic means. Awardee hereby consents to receive such documents by electronic delivery and agrees to participate
in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated
by the Company.

 

14.         Acknowledgment.  
By Awardee’s acceptance as evidenced below, Awardee further acknowledges that Awardee has received and has read, understood
and accepted all the terms, conditions and restrictions of this Award Agreement and the Plan. Awardee understands and agrees that
this Award Agreement is subject to all the terms, conditions, and restrictions stated in this Award Agreement and the Plan, as
the latter may be amended from time to time in the Company’s sole discretion.

 

15.         Governing
Law.   This Award Agreement shall be governed by the laws of the State of Delaware, without regard to Delaware laws
that might cause other law to govern under applicable principles of conflicts of law.

 

16.         Severability.  
If one or more of the provisions of this Award Agreement shall be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and the invalid, illegal
or unenforceable provisions shall be deemed null and void; however, to the extent permissible by law, any provisions which could
be deemed null and void shall first be construed, interpreted or revised retroactively to permit this Award Agreement to be construed
so as to foster the intent of this Award Agreement and the Plan.

 

17.         Complete
Award Agreement and Amendment.   This Award Agreement and the Plan constitute the entire agreement between Awardee
and the Company regarding SUAs. Any prior agreements, commitments or negotiations concerning these SUAs are superseded. This Award
Agreement may be amended only by written agreement of Awardee and the Company, without consent of any other person. Awardee agrees
not to rely on any oral information regarding this Award of SUAs or any written materials not identified in this Section 17.

 

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18.         Section
409A. This Award Agreement is intended to be in compliance with the provisions of Section 409A of the Internal Revenue Code,
as amended (the “Code”), and the regulations thereunder to the extent applicable. To the extent that any provision
of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner
so that all payments hereunder comply with Section 409A of the Code. The parties agree that this Agreement may be amended, as reasonably
requested by either party, and as may be necessary to fully comply with Section 409A of the Code and all related rules and regulations
in order to preserve the payments and benefits provided hereunder without additional cost to either party. Solely for the purposes
of Section 409A of the Code, the share increments issuable on each vesting date on Schedule A shall be considered a separate payment.
The Company makes no representation or warranty and shall have no liability to the Awardee or any other person if any provisions
of this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but do not satisfy an
exemption from, or the conditions of, such Section.

 

 

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blank]

 

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EXECUTED as of the day and year first
above written.

 

	 	PSYCHEMEDICS CORPORATION
	 	 
	 	 	 
	 	By:	 

 

AWARDEE’S ACCEPTANCE: 

 

I have read and fully understood this Award Agreement and I
accept and agree to the terms, conditions and restrictions contained in this Award Agreement and the Plan.

 

	 	 
	[name of non-employee director]	 

 

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