Document:

Exhibit 10.2

ACTIVECARE, INC.

RESTRICTED STOCK AGREEMENT

THIS RESTRICTED STOCK AGREEMENT (the "Agreement") is made and entered into as of the ____ day of __________, 20__ (the "Effective Date") by and between ActiveCare, Inc., a Delaware corporation (the "Company"), having an address at 1365 West Business Park Drive, Orem, UT 84058 and __________________ ("Grantee"), having an address at _________________________________________.

1. Grant of Restricted Shares.  Pursuant to this Agreement, the Company grants to Grantee a restricted stock award (the "Restricted Stock Award") of ________________ shares of the Company's common stock, par value $0.00001 per share (the "Common Stock"). The Restricted Stock Award is granted pursuant to the ActiveCare, Inc. 2016 Equity and Incentive Plan (the "Plan") and is subject to the terms, conditions and restrictions of the Plan and this Agreement.  The Common Stock subject to the Restricted Stock Award are referred to collectively as the "Restricted Shares."  Capitalized terms used and not otherwise defined in this Agreement have the meanings given such terms in the Plan.

2. Basic Terms of Restricted Shares.

(a) Restrictions.  (i) The Restricted Shares granted hereby are non-transferable and subject to forfeiture until they become Vested as set forth herein.  Upon any attempt to Transfer Unvested Restricted Shares, the Restricted Shares and all rights and privileges given hereby shall immediately terminate and the Restricted Shares shall be forfeited to the Company.  Restricted Shares, once Vested, shall be fully tradable, subject to applicable federal and state securities laws.

	
(ii)

	
As used in this Agreement:

	
(A)

	
"Restrictions" means the Transfer restrictions and forfeiture conditions applicable to Restricted Shares under this Agreement and the Plan;

	
(B)

	
"Transfer" means a transfer, assignment, pledge, hypothecation or other disposition of the Restricted Shares or any right or privilege pertaining thereto, otherwise than by will or by the laws of descent and distribution, or upon the levy of any execution, attachment or similar process thereupon;

	
(C)

	
"Unvested" means Restricted Shares that have not yet become Vested (as defined herein); and

	
(D)

	
"Vest" or "Vested" means the lapse or removal of the Restrictions (as defined above).

(b) Vesting.

(i) Except as otherwise provided in this Agreement, and subject to the continuous employment of Grantee with the Company until the date on which the Restricted Shares are scheduled to Vest, an aggregate amount of ________ Restricted Shares (the "Time-Based Restricted Shares") shall Vest in accordance with Schedule A hereto.

(ii) Subject to the continuous employment of Grantee with the Company until the date on which the Restricted Shares are scheduled to Vest, the remainder of the Restricted Shares shall Vest upon the satisfaction of the conditions contained in Schedule B attached hereto (the "Performance-Based Restricted Shares").

(c) Except as otherwise provided herein, Grantee will not be required to make any payment to the Company (other than past and future services to the Company) with respect to Grantee's receipt of the Restricted Shares, the vesting of the Restricted Shares or the delivery of the Common Stock to be issued in respect of this Agreement.

(d) Grantee agrees that upon receipt of any stock certificates for Unvested Restricted Shares, Grantee shall deposit each certificate with the Company, or other escrow agent as the Company may appoint, together with a stock power endorsed in blank or other appropriate instrument of Transfer, to be held by the Company or escrow holder until the time at which the Company delivers unrestricted shares of Common Stock to Grantee. If at any time Grantee forfeits any Unvested Restricted Shares pursuant to this Agreement, the Grantee agrees to return the certificate or certificates for such Unvested Restricted Shares to the Company duly endorsed in blank or accompanied by a stock power duly executed in blank.

(e) Termination of Service.  Unvested Restricted Shares are subject to forfeiture upon Grantee's termination of employment ("Termination of Service").  If Grantee incurs a Termination of Service, Grantee may continue to hold any Restricted Shares that have Vested prior to such Termination of Service subject to the terms of this Agreement and on the following terms and conditions:

(i) Involuntary Termination of Service for Cause or Voluntary Termination of Service without Good Reason. If Grantee incurs an involuntary Termination of Service as the result of a dismissal by the Company for Cause (as defined below) or as the result of Grantee's voluntary Termination of Service without Good Reason (as defined below), all Restricted Shares that have not Vested prior to such Termination of Service shall be immediately forfeited to the Company without payment of any consideration or amount to Grantee or any other "person" (as such term is defined in Section 3(a)(9) and as used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) ("Person") in connection with such forfeiture. For purposes of this Agreement, "Good Reason" shall mean, to the extent that there is an employment or other agreement governing the relationship between Grantee and the Company that contains a definition of "good reason," Good Reason shall have the meaning as defined therein.  Otherwise, "Good Reason" shall have the definition contained in the Plan.  Likewise, for purposes of this Agreement, "Cause" shall mean, to the extent that there is an employment or other agreement governing the relationship between Grantee and the Company that contains a definition of "cause," Cause shall have the meaning as defined therein.  Otherwise, "Cause" shall have the definition contained in the Plan.

(ii) Involuntary Termination of Service without Cause or Voluntary Termination of Service for Good Reason.  If Grantee incurs an involuntary Termination of Service as the result of a dismissal without Cause or as the result of Grantee's voluntary Termination of Service for Good Reason, then any Restricted Shares that have not Vested prior to such Termination of Service shall be forfeited to the Company without payment of any consideration or amount to Grantee or any other Person in connection with such forfeiture and Grantee may continue to hold any Restricted Shares that have Vested prior to termination subject to the terms of this Agreement.

(iii) Death.  If Grantee incurs a Termination of Service as the result of Grantee's death, then any Restricted Shares that have not Vested prior to such Termination of Service but would have been Vested in the twelve (12) month period after the effective date of such Termination of Service shall become Vested.  The remainder shall be forfeited to the Company without payment of any consideration or amount to Grantee or any other Person in connection with such forfeiture.  Grantee may continue to hold any Restricted Shares that have Vested prior to termination subject to the terms of this Agreement.

(iv) Disability, Normal Retirement or Early Retirement.  If Grantee incurs a Termination of Service as the result of Grantee's Disability, Normal Retirement or Early Retirement, then any Restricted Shares that have not Vested prior to such Termination of Service but would have been Vested in the ninety (90) day period after the effective date of such Termination of Service shall become Vested.  The remainder shall be forfeited to the Company without payment of any consideration or amount to Grantee or any other Person in connection with such forfeiture.  Grantee may continue to hold any Restricted Shares that have Vested prior to termination subject to the terms of this Agreement.

3. Transfer of the Unvested Shares upon Forfeiture.  Grantee hereby authorizes and directs the Committee to take such steps as may be necessary to cause the Transfer to the Company of the Unvested Shares that have been forfeited by Grantee.

4. Issuance of Shares.  Restricted Shares shall be evidenced by stock certificates, which certificates shall be registered in the name of Grantee and shall bear the restrictive legends described in Section 8 hereof.

5. Rights as a Stockholder.  Except as otherwise provided in this Agreement or the Plan, Grantee shall have all rights of a stockholder with respect to the Restricted Shares (including Unvested Shares), including, without limitation, the right to receive dividends and the right to vote the Restricted Shares, for record dates occurring on or after the Effective Date and prior to the date, if any, on which the Restricted Shares are forfeited in accordance with the Plan and this Agreement. With respect to Unvested Restricted Shares, property that Grantee is entitled to receive with respect to such Unvested Restricted Shares shall be subject to the Restrictions. Notwithstanding the foregoing, nothing herein or in the Plan shall be deemed to confer on Grantee any right to continued employment with the Company or limit in any way the right of the Company to terminate such employment at any time.

6. Adjustment Transactions.  In the event of that any special or extraordinary dividend or other extraordinary distribution is declared (whether in the form of cash, Company Stock, or other property), or there occurs any recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange or other similar corporate transaction or event, an appropriate and proportionate equitable adjustment shall be made in accordance with Section 8 of the Plan in the number and kind of Restricted Shares subject to this Agreement.  Any additional or different shares or securities issued as the result of such an adjustment will be held or delivered in accordance with this Agreement and will be deemed to be included within the term "Restricted Shares."  The Company will make cash payments in lieu of any fractional shares.

7. Withholding Taxes.  The Company's obligation to issue Restricted Shares and to recognize the Vesting of any such Shares is subject to Grantee's satisfaction of all applicable federal, state and local income and employment tax withholding requirements in connection with such issuance or Vesting (the "Withholding Amount").  If Grantee fails to timely remit to the Company an amount in cash equal to the Withholding Amount, the Company shall have the right and is hereby authorized to withhold from Grantee's Vested Restricted Shares or from any compensation or other amount otherwise payable by the Company to Grantee in an amount up to, but not to exceed, the Withholding Amount.

8. Legend; Transfer Restrictions.

(a) Legend.  Grantee consents to the placing on the certificate for any Restricted Shares (including shares received as a result of stock dividends, stock splits or other forms of recapitalization) prior to the Vesting of the Restricted Shares relating thereto of the following legend (in addition to any other legend or legends required under the Securities Act of 1933, as amended, and other applicable federal and state securities laws):

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS UPON TRANSFER AND VESTING REQUIREMENTS (THE "RESTRICTIONS") AS SET FORTH IN THE 2016 EQUITY AND INCENTIVE PLAN OF ACTIVECARE, INC. AND AN AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND ACTIVECARE, INC., COPIES OF WHICH ARE ON FILE WITH THE COMPANY.  ANY ATTEMPT TO DISPOSE OF THESE SHARES IN CONTRAVENTION OF THE RESTRICTIONS, INCLUDING BY WAY OF SALE, ASSIGNMENT, TRANSFER, ALIENATION, PLEDGE, HYPOTHECATION OR OTHERWISE, SHALL BE NULL AND VOID AND WITHOUT EFFECT.

(b) Transfer Restrictions. The Restricted Shares that have Vested may not be sold or otherwise disposed of in any manner that would constitute a violation of any applicable federal or state securities laws. Grantee agrees that the Company (i) may refuse to cause the Transfer of Restricted Shares that have Vested to be registered on the applicable stock transfer records if such proposed Transfer would in the opinion of counsel satisfactory to the Company constitute a violation of any applicable securities law and (ii) may give related instructions to the transfer agent to stop registration of the transfer of the Vested Restricted Shares.

9. Miscellaneous.

(a) Except as provided herein, this Agreement may not be amended or otherwise modified unless evidenced in writing and signed by the Company and Grantee.

(b) Any notices or other communications required or permitted under this Agreement ("Notices") shall be in writing and shall be either personally delivered, sent by express or first class mail (postage prepaid), return receipt requested, sent by nationally recognized overnight courier service (overnight delivery, charges prepaid) or by facsimile delivery as follows:

 

	 	
If to the Company:

	 
	 	 	 
	 	
ActiveCare, Inc.

	 
	 	
1365 West Business Park Drive

	 
	 	
Orem, UT 84058

	 
	 	
Attn: Jeffrey S. Peterson

	 
	 	
Facsimile:  _____________

	 
	 	 	 
	 	
With a copy to:

	Lucosky Brookman LLP
	 	
(which shall not

	101 Wood Avenue South, 5th Floor
	 	
constitute notice)

	
Woodbridge, NJ 08830

	 	 	
Attn:  Joseph M. Lucosky, Esq.

	 	 	
Facsimile: (732) 395-4401

Either party hereto may change its address for Notices by written Notice to the other given in accordance with this Section 9(b).  Notices shall be deemed given when delivered personally, three days after deposit in the U.S. mail, two business days after deposit with a nationally recognized overnight courier service and upon receipt of confirmation of facsimile transmission, as applicable.

(c) The Restricted Stock Award and the rights and obligations of the Company and Grantee hereunder are subject to the terms and conditions of the Plan. In the event of any conflict between the terms of the Plan and the terms of this Agreement, the terms of the Plan shall govern. Any Committee interpretation of the provisions of the Plan or this Agreement shall be final and binding on all parties.

(d) This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

(e) In the event that one or more of the provisions of this Agreement is invalidated for any reason by a court of competent jurisdiction, any provision so invalidated will be deemed to be separable for the other provisions thereof and the remaining provisions hereof will continue to be valid and fully enforceable.

(f) The provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of Grantee, and the successors and assigns of the Company.

(g) It is intended that this Agreement will comply with or be exempt from Section 409A of the Code and any regulations and guidelines issued thereunder, and the Agreement shall be interpreted on a basis consistent with such intent. This Agreement may be amended in any respect deemed necessary by the Committee in order to preserve compliance with Section 409A of the Code and the following shall be construed accordingly –

 (1) For the purposes of Code section 409A, the entitlement to a series of installment payments will be treated as the entitlement to a single payment.

(2) Other provisions of the Plan notwithstanding, if, upon the written application of the Grantee, the Committee determines that the Grantee has an Unforeseeable Emergency, the Committee may, in its sole discretion, direct the payment to the Grantee of all or a portion of the balance of his or her vested interest in a Restricted Stock Award in a lump sum payment, provided that any such withdrawal shall be limited by the Committee to the amount reasonably necessary to meet the emergency, including amounts needed to pay any income taxes or penalties reasonably anticipated to result from the payment.  No payment may be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Grantee's assets or to the extent the liquidation of such assets would not cause severe financial hardship.

 (3) Except as otherwise provided for in this paragraph (3), the Committee may not otherwise permit the acceleration of the time or schedule of any vesting of a Restricted Stock Award scheduled to be paid pursuant to the Plan, unless such acceleration of the time or schedule is (i) necessary to fulfill a domestic relations order (as defined in section 414(p)(1)(B) of the Code) or to comply with a certificate of divestiture (as defined in section 1043(b)(2) of the Code), (ii) de minimis in nature (as defined in regulations promulgated under section 409A of the Code), (iii) to be used for the payment of FICA taxes on amounts deferred under the Plan, or (iv) equal to amounts included in the federal personal taxable income of the Grantee under section 409A of the Code.

 (4)   An election to defer the lapse of restrictions on a Restricted Stock Award shall not take effect until at least 12 months after the date on which the election is made and in the event that an election to defer the lapse of restrictions is made other than in the event of death, Disability or the occurrence of an Unforeseeable Emergency, payment of such award must be deferred for a period of not less than 5 years from the date that restrictions would have otherwise lapsed.  For purposes of this Agreement, the term "Unforeseeable Emergency" shall mean a severe financial hardship to the Grantee resulting from an illness or accident of the Grantee, the Grantee's spouse, or a dependent (as defined in Code section 152(a)) of the Grantee, loss of the Grantee's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Grantee.

 (5) The Company may, in its sole discretion, terminate the Plan (in whole or in part) with respect to one or more Grantees and distribute to such affected Grantees their vested interest in any Restricted Stock Award in a lump sum as soon as reasonably practicable following such termination, but if, and only if, (i) all nonqualified defined contribution deferred compensation plans maintained by the Company are terminated, (ii) no payments other than payments that would be payable under the terms of the Plan if the termination had not occurred are made within 12 months of the termination of the Plan, (iii) all payments of the vested interest in Restricted Stock Awards are made within 24 months of the termination of the Plan, and (iv) the Company acknowledges to the Grantees that it will not adopt any new nonqualified defined contribution deferred compensation plans at any time within five (5) years following the date of the termination of the Plan.

(h) Grantee shall keep the terms of this Agreement strictly confidential, other than as may be necessary to enforce his or her rights hereunder or as otherwise required by law.

(i) This Agreement may be executed in counterparts, all of which together shall constitute one and the same instrument.

	 	
ACTIVECARE, INC.

	 	 
	 	 
	 	
By:  ______________________

	 	
       Name:

	 	
       Title:

 GRANTEE'S ACCEPTANCE

The undersigned hereby accepts the foregoing Restricted Stock Agreement, acknowledges receipt of a copy of the ActiveCare, Inc. 2016 Equity and Incentive Plan and agrees to the terms and conditions of both.

	 	
_____________________________

	 	
Name:  _______________________

SCHEDULE A

TIME VESTED SHARES

 

	
DATE

	
NUMBER OF RESTRICTED SHARES THAT BECOME VESTED

 

	
______________

 

	
_____________

SCHEDULE B

PERFORMANCE VESTED SHARESExhibit 10.3

 

ACTIVECARE, INC.

NON-QUALIFIED STOCK OPTION AGREEMENT

NON-EMPLOYEE

THIS STOCK OPTION AGREEMENT (the "Agreement") entered into as of the _____ day of ____________ 20__ by and between ActiveCare, Inc. (the "Company") and _______________________ (the "Optionee").

WHEREAS, pursuant to the authority of the Board of Directors (the "Board"), the Company has granted the Optionee the right to purchase common stock, $0.00001 par value per share ("Common Stock"), of the Company pursuant to stock options granted under the ActiveCare, Inc. 2016 Equity and Incentive Plan.

NOW THEREFORE, in consideration of the mutual covenants and promises hereafter set forth and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1. Grant of Non-Qualified Options.  The Company hereby irrevocably grants to the Optionee, as a matter of separate agreement and not in lieu of salary or other compensation for services, the right and option to purchase all or any part of an aggregate of [●] shares of authorized but unissued or treasury common stock of the Company (the "Options") on the terms and conditions herein set forth.  The Common Stock shall be unregistered under the Securities Act of 1933, as amended (the "Securities Act"), unless the Company voluntarily files a registration statement covering such shares of Common Stock with the Securities and Exchange Commission.  The Options are not intended to be Incentive Stock Options as defined by Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").  This Agreement replaces any stock option agreement or offer letter previously provided to the Optionee, if any, with respect to the Options.

2. Price.  The exercise price of the shares of Common Stock subject to the Options granted hereunder shall be $[●] per share.

3. Vesting.

(a) The Options shall vest immediately upon execution of this Agreement. In lieu of fractional vesting, the number of Options shall be rounded up each time until fractional Options are eliminated.

(b) Subject to Sections 3(c) and 4 of this Agreement, Options may be exercised by providing to the Company the Notice of Option Exercise in the form attached hereto as Exhibit A after vesting, and remain exercisable until 5:30 p.m. New York time on the date that is the fifth (5th) year anniversary of the date of this Agreement.

(c) However, notwithstanding any other provision of this Agreement, at the option of the Board in its sole and absolute discretion, all Options shall be immediately forfeited in the event any of the following events occur:

(i) The Optionee purchases or sells securities of the Company without written authorization in accordance with the Company's insider trading policy then in effect, if any;

(ii) The Optionee (A) discloses, publishes or authorizes anyone else to use, disclose or publish, without the prior written consent of the Company, any proprietary or confidential information of the Company, including, without limitation, any information relating to existing or potential customers, business methods, financial information, trade or industry practices, sales and marketing strategies, employee information, vendor lists, business strategies, intellectual property, trade secrets or any other proprietary or confidential information or (B) directly or indirectly uses any such proprietary or confidential information for the individual benefit of the Optionee or the benefit of a third party;

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(iii) Except as prior approved by the Board in writing or listed on Schedule I to this Agreement, the Optionee directly or indirectly owns, manages, controls or participates in the ownership, management or control of, or is employed or engaged by or otherwise affiliated or associated as an officer, director, partner, consultant, independent contractor, agent, representative or otherwise, with any other person or entity that competes with the business of the Company or any of its Affiliates (as defined hereinafter) in any geographical area in which the Company or any of its Affiliates conducts its business or promotes its products or services; provided, however, that the ownership of not more than one percent (1%) of the stock of a company whose equity interests are publicly traded on a nationally recognized stock exchange or over-the-counter shall not be deemed a violation of this provision;

(iv) The Optionee disrupts or damages, impairs or interferes with the business of the Company or its Affiliates by recruiting, soliciting or otherwise inducing any of their respective employees to enter into employment or other relationship with any other business entity, or terminate or materially diminish their relationship with the Company or its Affiliates, as applicable; or

(v) The Optionee solicits or directs business of any person or entity who is (A) a customer of the Company or its Affiliates at any time or (B) solicited to be a "prospective customer" of the Company or its Affiliates, in any case either for such Optionee or for any other person or entity; provided that the Optionee has actual knowledge of such prospective customer. For purposes of this clause (v), "prospective customer" means a person or entity that contacted, or is contacted by, the Company or its Affiliates regarding the provision of services to or on behalf of such person or entity.

(d) For purposes of this Agreement, "Affiliate" means with respect to a person or entity, any other person or entity controlled by, in control of or under common control with such person or entity, and "controlled," "controlled by," and "under common control with" shall mean direct or indirect possession of the power to direct or cause the direction of management or policies (whether through ownership of voting securities, by contract or otherwise) of a person or entity.

4. Termination of Relationship.

(a) If for any reason, except death or disability as provided below, the Optionee ceases to perform the services for which the Options were granted, all unvested options shall be automatically and irrefutably forfeited effective three months from the date the Board has deemed that the Optionee has ceased to perform such services, except as otherwise provided herein.

(b) If the Optionee shall die while performing services for the Company, such Optionee's estate or any Transferee (as defined hereinafter) shall have the right within twelve (12) months from the date of death to exercise the Optionee's vested Options, subject to Section 3(c) hereof. For the purpose of this Agreement, "Transferee" shall mean an individual to whom such Optionee's vested Options are transferred by will or by the laws of descent and distribution.

(c) If the Optionee shall become disabled while performing services for the Company within the meaning of Section 22(e)(3) of the Code, the three-month period referred to in Section 4(a) of this Agreement shall be extended to one year.

5. Profits on the Sale of Certain Shares; Redemption.  If any of the events specified in Section 3(c) of this Agreement occur within one (1) year from the last date the Optionee performed services for which the Options were granted (the "Termination Date"), all profits earned from the sale of the Company's securities, including the sale of shares of Common Stock underlying the Options, during the two (2) year period commencing one (1) year prior to the Termination Date shall be forfeited and forthwith paid by the Optionee to the Company (and a copy of the documentation of the sale, including, without limitation, the purchase price therefor shall be provided to the Company) within ten (10) days after the Optionee receives written demand from the Company for such payment.  Further, in such event, the Company may at its option redeem shares of Common Stock acquired upon exercise of the Options by payment of the exercise price to the Optionee.  The Company's rights under this Section 5 do not lapse one year from the Termination Date, but are a contract right subject to any appropriate statutory limitation period.

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6. Transfer. No transfer of the Options by the Optionee by will or by the laws of descent and distribution shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and a copy of the letters testamentary or such other evidence as the Board may deem necessary to establish the authority of the estate and the acceptance by the Transferee or Transferees of the terms and conditions of the Options.

7. Method of Exercise.  The Options shall be exercisable by a written notice which shall:

(a) state the election to exercise the Options, the number of shares to be exercised, the natural person in whose name the stock certificate or certificates for such shares of Common Stock is to be registered and such person's address and social security number (or if more than one, the names, addresses and social security numbers of such persons);

(b) contain such representations and agreements as to the holder's investment intent with respect to such shares of Common Stock as set forth in Section 11 hereof;

(c) be signed by the person or persons entitled to exercise the Options and, if the Options are being exercised by any person or persons other than the Optionee, be accompanied by proof, satisfactory to counsel for the Company, of the right of such person or persons to exercise the Options; and

(d) be accompanied by full payment of the purchase or exercise price in United States dollars in cash or by bank or cashier's check, certified check or money order.

The certificate or certificates for shares of Common Stock as to which the Options shall be exercised shall be registered in the name of the person or persons exercising the Options.

8. Sale of Shares Acquired Upon Exercise of Options.

Intentionally Omitted.

9. Adjustments.  Upon the occurrence of any of the following events, the Optionee's rights with respect to Options granted to such Optionee hereunder shall be adjusted as hereinafter provided unless otherwise specifically provided in a written agreement between the Optionee and the Company relating to such Options:

3

(a) If the shares of Common Stock shall be subdivided or combined into a greater or smaller number of shares, respectively, or if the Company shall issue any shares of its Common Stock as a stock dividend on its outstanding shares of Common Stock, the number of shares of Common Stock deliverable upon the exercise of the Options shall be appropriately increased or decreased proportionately, and appropriate adjustments shall be made in the exercise price per share to reflect such subdivision, combination or stock dividend, as applicable;

(b) If the Company is to be consolidated with or acquired by another entity pursuant to an acquisition, the board of directors of any entity assuming the obligations of the Company hereunder (the "Successor Board") shall either (i) make appropriate provision for the continuation of such Options by substituting on an equitable basis for the shares then subject to such Options the consideration payable with respect to the outstanding shares of Common Stock of the Company in connection with such acquisition or (ii) terminate all Options in exchange for a cash payment equal to the excess of the fair market value of the shares of Common Stock subject to such Options over the exercise price thereof;

(c) In the event of a recapitalization or reorganization of the Company (other than a transaction described in Section 9(b) above) pursuant to which securities of the Company or of another corporation are issued with respect to the outstanding shares of Common Stock, the Optionee upon exercising the Options shall be entitled to receive for the purchase price paid upon such exercise, the securities such Optionee would have received if such Optionee had exercised such Optionee's Options prior to such recapitalization or reorganization;

(d) Except as expressly provided herein, no issuance by the Company of shares of Common Stock of any class or securities convertible into shares of Common Stock of any class shall affect, and no adjustment by reason thereof shall be made with respect to, the number or exercise price of shares subject to Options.  No adjustments shall be made for dividends or other distributions paid in cash or in property other than securities of the Company;

(e) No fractional shares shall be issued and the Optionee shall receive from the Company cash based on the fair market value of the shares of Common Stock in lieu of such fractional shares; or

(f) The Board or the Successor Board shall determine the specific adjustments to be made under this Section 9, and its determination shall be conclusive.  If the Optionee receives securities or cash in connection with a corporate transaction described in Section 9(a), (b) or (c) above as a result of owning such restricted Common Stock, such securities or cash shall be subject to all of the conditions and restrictions applicable to the restricted Common Stock with respect to which such securities or cash were issued, unless otherwise determined by the Board or the Successor Board.

10. Necessity to Become Holder of Record.  Neither the Optionee, the Optionee's estate, nor the Transferee have any rights as a shareholder with respect to any shares of Common Stock covered by the Options until such Optionee, estate or Transferee, as applicable, shall have become the holder of record of such shares of Common Stock.  No adjustment shall be made for cash dividends or cash distributions, ordinary or extraordinary, in respect of such shares of Common Stock for which the record date is prior to the date on which such Optionee, estate or Transferee, as applicable, shall become the holder of record thereof.

11. Conditions to Exercise of Options.

(a) In order to enable the Company to comply with the Securities Act and relevant state law, the Company may require the Optionee, the Optionee's estate or any Transferee, as a condition of the exercising of the Options granted hereunder, to give written assurance satisfactory to the Company that the shares of Common Stock subject to the Options are being acquired for such Optionee's, estate's or Transferee's, as applicable, own account, for investment only, with no view to the distribution of same, and that any subsequent resale of any such shares of Common Stock either shall be made pursuant to a registration statement under the Securities Act and applicable state law which has become effective and is current with regard to the shares of Common Stock being sold, or shall be pursuant to an exemption from registration under the Securities Act and applicable state law.

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(b) The Options are subject to the requirement that, if at any time the Board shall determine, in its sole and absolute discretion, that the listing, registration or qualification of the shares of Common Stock subject to the Options upon any securities exchange, quotation system or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary as a condition of, or in connection with the issue or purchase of such shares of Common Stock under the Options, the Options may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected.

12. Duties of Company.  The Company will at all times during the term of the Options:

(a) Reserve and keep available for issue such number of shares of its authorized and unissued shares of Common Stock as will be sufficient to satisfy the requirements of this Agreement;

(b) Pay all original issue taxes with respect to the issue of shares of Common Stock pursuant hereto and all other fees and expenses necessarily incurred by the Company in connection therewith; and

(c) Use its best efforts to comply with all laws and regulations which, in the opinion of counsel for the Company, shall be applicable thereto.

13. Severability.  In the event any parts of this Agreement are found to be void, the remaining provisions of this Agreement shall nevertheless be binding with the same effect as though the void parts were deleted.

14. Arbitration.  Any controversy, dispute or claim arising out of or relating to this Agreement, or its interpretation, application, implementation, breach or enforcement which the parties hereto are unable to resolve by mutual agreement, shall be settled by submission by either party of the controversy, claim or dispute to binding arbitration in New York County, New York (unless the parties agree in writing to a different location), before a single arbitrator in accordance with the rules of the American Arbitration Association then in effect. The decision and award made by the arbitrator shall be final, binding and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof.

15. Benefit.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their legal representatives, successors and assigns.

16. Notices and Addresses.  All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by FedEx or similar receipted delivery, or by facsimile delivery as follows:

 

	 	
The Optionee:

	
___________________

	 	 	
___________________

	 	 	
___________________

	 	
Facsimile:

	
___________________

	 	 	 
	 	 	 
	 	
The Company:

	
ActiveCare, Inc.

	 	 	
1365 West Business Park Drive

	 	 	
Orem, UT 84058

	 	 	
Telephone: ________________

	 	 	 
	 	 	 
	 	
with a copy (which shall not

	
Lucosky Brookman LLP constitute notice) to:

	 	 	
101 Wood Avenue South, 5th Floor

	 	 	
Woodbridge, NJ 08830

	 	 	
Attn: Joseph M. Lucosky, Esq.

	 	 	
Facsimile: (732) 395-4401

5

or to such other address as either of them, by notice to the other, may designate from time to time.  The transmission confirmation receipt from the sender's facsimile machine shall be evidence of successful facsimile delivery. Time shall be counted to, or from, as the case may be, the delivery in person or by mailing.

17. Attorney's Fees.  In the event that there is any controversy or claim arising out of or relating to this Agreement, or to the interpretation, breach or enforcement thereof, and any action or proceeding is commenced to enforce the provisions of this Agreement, the prevailing party shall be entitled from the non-prevailing party to its reasonable attorneys' fee, costs and expenses.

18. Governing Law.  This Agreement and any dispute, disagreement, or issue of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided herein or performance, shall be governed or interpreted according to the laws of the State of New York without regard to choice of law considerations.

19. Oral Evidence.  This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated except by a statement in writing signed by the party or parties against which enforcement or the change, waiver discharge or termination is sought.

20. Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.  The execution of this Agreement may be made by facsimile signature, which shall be deemed to be an original.

21. Section Headings.  Section headings herein have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any matter, or be deemed to interpret in whole or in part, any of the terms or provisions of this Agreement.

6

IN WITNESS WHEREOF the parties hereto have set their hand the day and year first above written.

 

	 	 	
ACTIVECARE, INC.

	 	 	 
	 	 	
By:

	 	 	
Name: Jeffrey S. Peterson

	 	 	
Title: Chief Executive Officer

	 	 	 
	 	 	 
	 	 	
OPTIONEE:

	 	 	 
	 	 	
By:

	 	 	
Name: 

	 	 	
Title: 

	 	 	Address:

 

7

SCHEDULE I

COMPETING ACTIVITIES

8

EXHIBIT A

FORM OF NOTICE OF OPTION EXERCISE

To: ActiveCare, Inc. (the "Company")

(1) The undersigned hereby elects to purchase __________ shares of Common Stock of the Company (the "Shares") pursuant to the terms of the Option Agreement by and between the Company and the undersigned dated as of ________ ___, 20__, and tenders herewith payment of the exercise price in full as set forth below.

(2) Payment shall take the form of (check applicable box):

[  ] in lawful money of the United States in the form of a check made payable by the undersigned to the Company;

[  ] in lawful money of the United States in the form of a wire transfer to the account specified by the Company; or

[  ] in the form of shares of Common Stock pursuant to Section 5(d) of the Plan.

(3) Please issue a certificate or certificates representing the Shares in the name of the undersigned or in such other name as is specified below:

____________________________________

The Shares shall be delivered via overnight courier (with tracking information to be provided to the undersigned) to the following address:

_____________________________

_____________________________

_____________________________

Attn: ________________________

Tel: _________________________

OPTIONEE

__________________________________

9

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