Document:

EX-10.1 1992 STOCK OPTION PLAN

 

Exhibit 10.1

HOME DIAGNOSTICS, INC.

1992 STOCK OPTION PLAN

 

 

HOME DIAGNOSTICS, INC.

1992 STOCK OPTION PLAN

Table of Contents

	 	 	 	 	 	 	 
	Section	 	Page
	1 .

	 	Purpose
	 	 	1	 
	 
	 	 	 	 	 	 
	2.

	 	Definitions
	 	 	2	 
	 
	 	 	 	 	 	 
	3.

	 	Shares subject to the Plan
	 	 	3	 
	 
	 	 	 	 	 	 
	4.

	 	Grant of Stock Options
	 	 	4	 
	 
	 	 	 	 	 	 
	5.

	 	Certificates for Awards of Stock
	 	 	10	 
	 
	 	 	 	 	 	 
	6.

	 	Beneficiary
	 	 	12	 
	 
	 	 	 	 	 	 
	7.

	 	Administration of the Plan
	 	 	13	 
	 
	 	 	 	 	 	 
	8.

	 	Amendment or Discontinuance
	 	 	14	 
	 
	 	 	 	 	 	 
	9.

	 	Adjustment in Event of Change in Common Stock
	 	 	15	 
	 
	 	 	 	 	 	 
	10.

	 	Miscellaneous
	 	 	16	 
	 
	 	 	 	 	 	 
	11.

	 	Effective Date and Stockholder Approval
	 	 	19	 

 

 

HOME DIAGNOSTICS, INC.

1992 STOCK OPTION PLAN

1. Purpose

     The purpose of the Home Diagnostics, Inc. 1992 Stock Option Plan is to attract and
retain persons of ability as employees of Home Diagnostics, Inc., its subsidiaries and affiliates
and encourage such employees to continue to exert their best efforts on behalf of the Company, its
subsidiaries and affiliates.

2. Definitions

     When used herein, the following terms shall have the following meanings:

     “Beneficiary” means the beneficiary or beneficiaries designated pursuant to Section 6 to
receive the benefit, if any, provided under the Plan upon the death of an Employee.

     “Board” means the Board of Directors of the Company.

     “Code” means the Internal Revenue Code of 1986, as now in effect or as hereafter amended. (All
citations to sections of the Code are to such sections as they may from time to time be amended or
renumbered.)

     “Company” means Home Diagnostics, Inc., and its successors and assigns.

     “Employee” means an employee of a Participating Company who, in the judgment of the
Committee, is responsible for or contributes to the growth or profitability of the business of the
Company.

     “Exchange” means the New York Stock Exchange, or if the Stock is not listed on the New York
Stock Exchange, the principal exchange on which the Stock is listed or the NASDAQ system of the
National Association of Securities Dealers.

     “Fair Market Value” means, as of any date, the mean between the reported high and low sales
prices on the Exchange for one share of Stock on such date, or, if no sales of Stock have taken
place on such date, the Fair Market Value of one share of Stock on the most recent date on which
selling prices

 

 

were reported on the Exchange. In the event that the Company’s shares are not publicly traded on
an Exchange, the Board shall determine the fair market value for all purposes.

     “Option” means an option to purchase Stock subject to the applicable provisions of Section 4
and awarded in accordance with the terms of the Plan and which may be an incentive stock option
qualified
under Section 422 of the Code or a non qualified stock option.

     “Option Agreement” means the written agreement evidencing each Option granted to an Employee
under the Plan.

     “Participating Company” means the Company or any corporation which at the time such option is
granted qualifies as a “subsidiary corporation” of the Company under Section 424(f) of the Code.

     “Plan” means the Home Diagnostics, Inc. 1992 Stock Option Plan, as the same may be amended,
administered or interpreted from time to time.

     “Stock” means the common stock of the Company.

     “Total Disability” means the complete and permanent inability of an Employee to perform all
of his or her duties under the terms of his or her employment with any Participating Company, as
determined by the Board upon the basis of such evidence, including independent medical reports and
data, as the Board deems appropriate or necessary.

3. Share Subject to the Plan

     The aggregate number of shares of Stock which may be awarded under the 1992 Plan or subject
to purchase by exercising Options is 1,187,879 shares. Such shares shall be made available either
from authorized and unissued shares or shares held by the Company in its treasury. If, for any
reason, any shares of Stock subject to purchase or payment by exercising an Option under the Plan
are not delivered or are reacquired by the Company, for reasons including, but not limited to,
termination of employment, or expiration or a cancellation with the consent of an Employee of an
Option, such shares of Stock shall again become available for award under the Plan.

4. Grant of Stock Options

     (a) Subject to the provisions of the Plan, the Board shall (i) determine and designate from
time to time those Employees to whom Options are to be granted; (ii) determine the number of
shares of Stock

 

 

subject to each Option; (iii) determine the time or times when and the manner in which each Option
shall be exercisable and the duration of the exercise period; and (iv) determine whether such
Option shall be incentive stock options or non qualified-stock options or a combination of
incentive stock options and non qualified stock options;
provided, however, that (A) no
Option shall be granted after the expiration of ten
years from the effective date of the Plan and (B) the aggregate Fair Market Value (determined as of
the date an Option is granted) of the Stock for which incentive stock options granted to any
Employee under this Plan that may first become exercisable in any calendar year shall not exceed
$100,000.

     (b) The exercise period for Options shall be no more than ten years from the date of grant,
except that in the case of 10 percent Shareholders described in Section 4(c), the exercise period
shall be no more than five years.

     (c) The Option exercise price per share shall be determined by the Board at the time the
Option is granted and shall be at least equal to the par value of one share of Stock if the Stock
has a par value; provided, however, that the exercise price for an incentive stock option
shall be not less than the Stock’s Fair Market Value at date of grant, or in the case of an
incentive stock option granted to an Employee who, at the time of grant, owns stock possessing
more than 10 percent of the total combined voting power of all classes of stock of the Company,
110 percent of the Fair Market Value on the date of grant, all as determined by the Board.

     (d) No part of any Option may be exercised by an Employee until such Employee shall have
(i) remained in the employ of one or more Participating Companies for one year, unless
employment is
terminated on account of death or Total Disability, or (ii) achieved such performance or other
criteria, as
the Board may specify, if any, of the Company or any other Participating Company, and the
Board may
further require exercisability in installments.

     (e) (i) If the Employee’s employment terminates because of (a) involuntary termination
of employment by the Participating Company other than for cause, as determined by the Board of
Directors in its sole discretion, (b) voluntary resignation of the Employee, or (e) retirement
in accordance
with the terms and conditions of a retirement plan adopted by the Participating Company; he or
she may
exercise his or her Options to the extent that he or she shall have been entitled to do so at
the date of

 

 

the termination of his or her employment, at any time, or from time to time, within three months
after the date of the termination of his or her employment or within such other period, and subject
to such terms and conditions as the Board may specify, but not later than the expiration date
specified in Section 4(b) above.

          (ii) If an Employee who has been granted an Option dies while an Employee of
a Participating Company, his or her Options may be exercised, to the extent that the Employee
shall have been entitled to do so on the date of his or her death or such termination of
employment, by his or her Beneficiary including, if applicable, his or her executors or
administrators, at any time, or from time to time, within three months after the date of the
Employee’s death or within such other period, and subject to such terms and conditions as the
Board may specify, but no later than the expiration date specified in Section 4(b) above.

          (iii) If the Employee’s employment by a Participating Company terminates because of his or
her Total Disability, he or she may exercise his or her options, to the extent that he or she
shall have been entitled to do so at the date of the termination of his or her employment, at any
time, or from time to time, within one year after the date of the termination of his or her
employment or within such other period, and subject to such terms and conditions as the Board may
specify, but not later than the expiration date specified in Section 4(b) above.

     (f) No Option granted under the Plan shall be transferable other than by will or by the laws
of descent and distribution. During the lifetime of the optionee, an Option and SAR shall be
exercisable only by him or her.

     (g) With respect to an incentive stock option, the Board shall specify such terms and
provisions as the Board may determine to be necessary or desirable in order to quality such
Option as an
incentive stock option within the meaning of Section 422 of the Code.

     (h) Each Option granted under the Plan shall be evidenced by a written Option Agreement, in a
form approved by the Board. Such agreement shall be subject to and incorporate the express terms
and conditions, if any, required under the Plan or as required by the Board for the form of Option
granted and such other terms and conditions as the Board may specify. Further, each such Option
Agreement

 

 

shall provide that unless at the time of exercise of the Option there shall be, in the opinion of
counsel for the Company, a valid and effective registration statement under the Securities Act of
1933 (“‘33 Act”) and appropriate qualification and registration under applicable state securities
laws relating to the Stock being acquired pursuant to the Option, the Employee shall upon exercise
of the Option give a
representation that he or she is acquiring such shares for his or her own account for investment
and not
with a view to, or for sale in connection with, the resale or distribution of any such
shares. In the absence
of such registration statement, the Employee shall be required to execute a written affirmation,
in a form reasonably satisfactory to the Company, of such investment intent and to further agree
that he or she will not sell or transfer any Stock acquired pursuant to the Option until he or she
requests and receives an opinion of the Company’s counsel to the effect that such proposed sale or
transfer will not result in a violation of the ‘33 Act, or a registration statement covering the
sale or transfer of the shares has been declared effective by the Securities and Exchange
Commission, or he or she obtains a no-action letter from the Securities and Exchange Commission,
or he or she obtains a no-action letter from the Securities and Exchange Commission with respect
to the proposed transfer.

     (i) Except as otherwise provided in the Plan, the purchase price of the shares as to which an
Option shall be exercised shall be paid to the Company at the time of exercise either in cash or
in stock already owned by the optionee, or a combination of cash and stock, or in such other
consideration acceptable to the Board (including, to the extent permitted by applicable law, the
relinquishment of a portion of the Option) as the Board deems appropriate, having a total fair
market value equal to the purchase price. For purposes of this Section 4(i), the fair market value
of the portion of an Option that is relinquished shall be the excess of (i) the Fair Market Value
at the time of exercise of the number of shares of Stock subject to the portion of the Option that
is relinquished over (ii) the aggregate exercise price specified in the Option with respect to
such shares.

     (j) Options granted to Employees may become exercisable on or after one month from
the

 

 

date of the Option Agreement, on or after one year from the date of the Option Agreement or as
follows:

	 	 	 
	Years from Date of Option Agreement	 	Exercisable Percentage
	1
	 	35%
	2
	 	70%
	3
	 	100%  

5. Certificates for Awards of Stock

     (a) Each Employee entitled to receive shares of Stock under the Plan shall be issued a
certificate for such shares. Such certificate shall be registered in the name designated by
the Employee,
and shall bear an appropriate legend reciting the terms, conditions and restrictions, if any,
applicable to
such shares and shall be subject to appropriate stop-transfer orders.

     (b) Shares of Stock shall be made available under the Plan either from authorized and
unissued shares, or shares held by the Company in its treasury.

     (c) All certificates for shares of Stock delivered under the Plan shall also be subject to
such stop-transfer orders and other restrictions as the Board may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission, any stock exchange
upon which the Stock is then listed and any applicable federal or state securities laws, and the
Board may cause a legend or legends to be placed on any such certificates to make appropriate
reference to such restrictions. The foregoing provisions of this Section 5(c) shall not be
effective if an to the extent that the shares of Stock delivered under the Plan are covered by an
effective and current registration statement under the Securities Act of 1933, or if, and so long
as, the Board determines that application of such provisions is no longer required or desirable.
In making such determination, the Board may rely upon an opinion of counsel for the Company.

     (d) Each Employee who receives Stock upon exercise of an Option shall have all of the rights
of a shareholder with respect to such shares, including the right to vote the shares and receive
dividends and other distributions. No Employee awarded an Option shall have any right as a
shareholder with respect to any shares subject to such Option prior to the date of issuance to him
or her of a certificate or certificates for such shares.

 

 

6. Beneficiary

     (a) Each Employee shall file with the Company a written designation of one or more
persons
as the Beneficiary who shall be entitled to receive the Option, if any, awarded under the Plan
upon his or
her death. An Employee may from time to time revoke or change his or her Beneficiary
designation
without the consent of any prior Beneficiary by filing a new designation with the Company. The last
such
designation received by the Company shall be controlling; provided, however, that no
designation, or change or revocation thereof, shall be effective unless received by the Company
prior to the Employee’s death, and in no event shall it be effective as of a date prior to such
receipt.

     (b) If no such Beneficiary designation is in effect at the time of an Employee’s death, or if
no designated Beneficiary survives the Employee or if such designation conflicts with law, the
Employee’s estate shall be entitled to receive the Option, if any, awarded under the Plan upon
his or her
death. If the Company is in doubt as to the right of any person to receive such Option, the
Company may retain such Option, without liability for any income thereon, until the Company
determines the rights
thereto, or the Company may transfer such Option into any court of appropriate jurisdiction
and such
payment shall be a complete discharge of the liability of the Company therefor.

7. Administration of the Plan

     (a) The Plan shall be administered by the Board. No member of the Board shall have been
granted an Option under the Plan or have been granted or awarded an option or other right with
respect
to equity securities of the Company pursuant to any other plan of a Participating Company at
any time
within the one-year period immediately preceding adoption of this Plan.

     (b) All decisions, determinations or actions of the Board made or taken pursuant to grants of
authority under the Plan shall be made or taken in the sole discretion of the Board and shall
be final,
conclusive and binding on all persons for all purposes.

     (c) The Board shall have full power, discretion and authority to interpret, construe and
administer the Plan and any part thereof, and its interpretations and constructions thereof and
actions taken thereunder shall be final, conclusive and binding on all persons for all purposes.

 

 

     (d) The Board’s decisions and determination under the Plan need not be uniform and may
be made selectively among Employees, whether or not such Employees are similarly situated.

     (e) The act of a majority of the members present at a meeting duly called and held shall be
the act of the Board. Any decision or determination reduced to writing and signed by all members of
the
Committee shall be fully as effective as if made by unanimous vote at a meeting duly called and
held.

     (f) Notwithstanding anything else herein to the contrary, the Board shall not be required to
direct the Company to grant any Options under this Plan.

8. Amendment or Discontinuance

     The Board may, at any time, amend or terminate the Plan. No amendment shall, without approval
by a majority of the Company’s stockholders, (i) alter the group of persons eligible to
participate in the Plan, (ii) materially increase the benefits provided under the Plan to the
extent that stockholder approval would then be required pursuant to Rule 16b-3 under the
Securities Exchange Act of 1934 or successor rule or regulation, (iii) increase the maximum number
of shares of Stock which are available for awards under the Plan or (iv) extend the period during
which Options may be granted under the Plan beyond the expiration of ten years from the effective
date of the Plan. No amendment or termination shall retroactively impair the rights of any person
with respect to an Option.

9. Adjustments in Event of Change in Common Stock

     (a) Subject to Section 9(b), if the outstanding shares of Stock of the Company are increased,
decreased, or exchanged for a different number or kind of shares or other securities, or if
additional share or new or different shares or other securities are distributed with respect to
such shares of Stock or other securities, through merger, consolidation, sale of all or
substantially all of the property of the Company, reorganization, recapitalization,
reclassification, stock dividend stock split, reverse stock split or other distribution with
respect to such shares of Stock or other securities, then, an appropriate and proportionate
adjustment shall be made in (i) the maximum number and kind of shares provided in Section 3, (ii)
the number and kind of shares or other securities subject to the outstanding Options, if any, and
(iii) the price for each share or other unit of any other securities subject to outstanding
Options without change in the aggregate purchase price or value as to which such Options

 

 

remain exercisable or subject to restrictions. Any adjustment under this Section 9(a) shall be made
by the Company, whose determination as to what adjustments shall be made and the extent thereof
will be final, binding and conclusive. No fractional interest will be issued under the Plan
resulting from any such adjustment.

     (b) Notwithstanding anything else herein to the contrary, the Board, in its sole
discretion at
the time of grant of an Option or otherwise may, in an Option Agreement or otherwise, provide
that, with an Employee’s consent, upon the occurrence of certain events, including a change in
control of the Company (as determined by the Board) any outstanding Options not therefore
exercisable, shall immediately become exercisable in their entirety and that any such Option may
be purchased by the Company for cash at a price to be determined by the Board.

10. Miscellaneous

     (a) Nothing in this Plan or any Option Agreement hereunder shall confer upon any employee
any right to continue in the employ of any Participating Company or interfere in any way with
the right of
any Participating Company to terminate his or her employment at any time.

     (b) No Option granted under the Plan shall be deemed salary or compensation for the
purpose of computing benefits under any employee benefit plan or other arrangement of any
Participating Company for the benefit of its employees unless any such Participating Company
shall
determine otherwise.

     (c) No Employee shall have any claim to an Option until it is actually granted under the
Plan. To the extend that any person acquires a right to receive payments from the Company under
this Plan, such right shall be no greater than the right of an unsecured general creditor of the
Company.

     (d) Absence on leave approved by a duly constituted officer of a Participating Company
shall not be considered interruption or termination of employment for any purposes of the
Plan; provided, however, that no Option may be granted to an employee while he or she is absent on
leave.

     (e) If the Board shall find that any person to whom any Option, or portion thereof, is awarded
to under the Plan is unable to care for his or her affairs because of illness or accident, or
is a minor, then
any payment due him or her (unless a prior claim therefor has been made by a duly appointed
legal

 

 

representative) may, if the Board so directs the Company, be paid to his or her spouse, a child, a
relative, an institution maintaining or haying custody of such person, or any other person deemed
by the Board to be a proper recipient on behalf of such person otherwise entitled to payment. Any
such payment shall be a complete discharge of the liability of the Company therefor.

     (f) The right of any Employee or other person to any Option or Stock under the Plan may
not be assigned, transferred, pledged or encumbered, either voluntarily or by operation of
law, except as
provided in Section 6 with respect to the designation of a Beneficiary or as may otherwise be
required by
law. If, by reason of any attempted assignment, transfer, pledge, or encumbrance or any
bankruptcy or
other event happening at any time, any amount payable under the Plan would be made subject to
the
debts or liabilities of the Employee or his or her Beneficiary or would otherwise devolve upon
anyone
else and not be enjoyed by the Employee or his or her Beneficiary, then the Board may
terminate such
person’s interest in any such payment and direct that the same be held and applied to or for
the benefit
of the Employee, his or her Beneficiary or any other persons deemed to be the natural objects
of his or
her bounty, taking into account the expressed wishes of the Employee (or, in the event of his
or her
death, those of his or her Beneficiary) in such manner as the Board may deem proper.

     (g) Copies of the Plan and all amendments, administrative rules and procedures and
interpretations shall be made available to all Employees at all reasonable times at the
Company’s
headquarters.

     (h) The
Board may cause to be made, as a condition precedent to the grant of any Option, or
otherwise, appropriate arrangements with the Employee or his or her Beneficiary, for the
withholding of any federal, state, local or foreign taxes.

     (i) The Plan and the grant of Options shall be subject to all applicable federal and state
laws, rules, and regulations and to such approvals by any government or regulatory agency as may
be required.

     (j) All elections, designations, requests, notices, instructions and other communications
from an Employee, Beneficiary or other person to the Board, required or permitted under the Plan,
shall

 

 

be in such form as is prescribed from time to time by the Board and shall be mailed by first class
mail or delivered to such location as shall be specified by the Board.

     (k) The terms of the Plan shall be binding upon the Company and its successors and assigns.

     (l) Captions preceding the sections hereof are inserted solely as a matter of convenience
and in no way define or limit the scope or intent of any provision hereof.

     (m) The Company shall have the right to require an optionee to remit to the Company
an amount sufficient to satisfy any federal, state or local withholding tax
requirements prior to the delivery of any certificate or certificates for Common Stock.

11. Effective Date and Stockholder Approval

     The effective date of the Plan shall be December 1, 1992, subject to approval by a majority
of the Company’s stockholders. Notwithstanding anything in the Plan to the contrary, if the Plan
shall have been approved by the Board prior to such stockholder approval, Employees may be
selected and award criteria may be determined as provided herein subject to such subsequent
stockholder approval.EX-10.2 FORM OF STOCK OPTION AGREEMENTS

 

Exhibit 10.2

HOME DIAGNOSTICS, INC.

INCENTIVE STOCK OPTION AGREEMENT

     AGREEMENT made this th day of            between HOME DIAGNOSTICS, INC. (the “Company”), a
Delaware corporation, and            an officer, director or key employee (the “Employee”) of
the company.

     WHEREAS, the Board of Directors of the Company (the “Board”) has determined in accordance with
the Home Diagnostics, Inc. 1992 Incentive Stock Option Plan (the “Plan”) (which is attached hereto
and made a part hereof) to grant the option provided for herein to the Employee, and the Employee
has accepted the same evidenced by his/her signature.

     NOW, THEREFORE, in consideration of the mutual convenants herein contained, it is agreed
between the parties hereto as follows:

1. Grant of Option

     The Company grants to the Employee the right and option to purchase from the Company, on the
terms and conditions hereinafter set forth,    shares of the authorized but unissued Class A
Common Stock, par value $0.01 per share (“Common Shares”) of the Company constituting a part of an
aggregate of such shares described in Paragraph 2 of the Plan with the substitution and adjustments
provided therein and in Paragraph 6 hereof, at the purchase
price of $      per share, as the
Employee may from time to time elect, exercisable at the time and for cumulative percentage of
shares as follows:

(a) on
or after one year from the date of this Agreement:  35% of the shares;

(b) on
or after two years from the date of this Agreement:  70% of the shares;

(c) on
or after three years from the date of this Agreement:  100% of the shares,

provided, however, that any option granted pursuant to this Agreement shall not be exercisable
unless the Employee is actively employed by the Company, its parent, or subsidiary corporations
(hereinafter the “employment date”) at the time of exercise, except that this is proviso shall be
of no effect if the Employee’s employment is terminated because of the Employee’s death or
disability (as determined by the Board in its discretion) within three years of the date of grant.
No partial exercise of such options shall be for less than (10) full shares and in no event shall
the Company be required to issue fractional shares.

     Notwithstanding any provision hereof to the contrary, immediately upon the acquisition by any
party or parties (other than the Company or affiliate of the Company) of 50% or more of the voting
share of the Company or the occurrence of a transaction requiring shareholders’ approval otherwise,
all outstanding stock options or any portion thereof, not then exercisable shall become immediately
exercisable in full.

1

 

2. Method of Exercise of Stock Option

     The option granted hereunder shall be paid to the Company in cash of the purchase price of the
shares. The Company shall not be required to issue or deliver any certificate or certificates for
shares of the Company’s Common Shares purchased from time to time upon exercise of the option
granted hereunder until the conditions set forth in Paragraph 9 hereof are satisfied. In addition,
the Employee shall promptly pay upon notification of the amount due and prior to, or concurrently
with, the delivery to the Employee of a certificate representing such shares any amount necessary
to satisfy applicable Federal, State or Local tax requirements. Payment for the shares shall be
accompanied by a written request for the shares to be purchased and such payment and written
request shall be directed to the Chief Financial Officer of the Company.

3. Termination of Option

     Subject to Paragraph 1 hereof, the option granted hereunder, to the extent such option has not
been exercised, shall terminate and become null and void upon the Employee’s ceasing to be employed
by the Company, its parent, or subsidiary corporations (or by a corporation or subsidiary of such
corporation issuing a new stock option or assuming such stock option in a transaction to which
Section 425 of the Code is applicable), unless (i) such cessation of employment shall be because of
(a) involuntary termination of employment by the employer corporation which the Board of Directors
of the employer corporation in its sole discretion shall determine to be without cause, (b)
voluntary resignation of the Employee with the consent of the Board of Directors of the employer
corporation, or (c) retirement in accordance with and as permitted by the terms and conditions of a
retirement plan adopted by the employer corporation, in which case the option shall be exercisable
within a period of three (3) months following the date of such cessation of employment, or (ii)
such cessation of employment shall be because of disability (as determined by the Board in its
discretion), in which case the option shall be exercisable within a period of one (1) year
following the date of cessation of employment by the Employee, his/her guardian or legal
representative, or because of death (or should death occur within three (3) months of such
cessation), in which case the option shall be exercisable within a period of six (6) months
following the date of death by the estate of the Employee or by the person or person(s) to whom the
Employee’s rights under the option shall pass by the Employee’s will or the laws of descent and
distribution. Anything herein to the contrary notwithstanding, the option granted hereunder shall
in all events expire five (5) years from the grant date.

4. Limitation upon Transfer

     During the lifetime of the Employee, the option granted hereunder shall be exercisable only by
the Employee or by his/her guardian or legal representative, and except as otherwise provided in
Paragraph 4 hereof, the option granted hereunder shall not be assigned, transferred, pledged, or
hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Upon any attempt to assign, transfer, pledge,
hypothecate, or otherwise dispose of such option contrary to the provisions hereof, or upon the
levy of any attachment or similar process upon such option, such option shall immediately become
null and void.

5. Stock Subject to Option

     This agreement relates solely to a portion of the shares of authorized but unissued Common
Shares of the Company described in Paragraph 2 of the Plan with the substitutions and adjustments
provided therein and in Paragraph 7 hereof.

2

 

6. Adjustments in Case of Changes in Common Shares

     In the event there is any change in the Common Stock of the Company by reason of a stock
dividend paid with respect to the Common Shares of the Company, or a recapitalization, a stock
split, a reclassification, or a combination of shares with respect to such Common Shares, or if the
outstanding Common Shares of the Company should, by reason of merger, consolidation, acquisition of
stock or property, separation, reorganization, or liquidation to which the Company is a party, be
exchanged for other shares of the Company or of another corporation which is a party to such
transaction, the number of shares which may be made subject to option and issued under the Plan
shall be adjusted as the Board shall determine to be appropriate to reflect the change or exchange.
In the event of any such change or exchange, the option which has been granted hereunder shall
apply to the shares into or for which the Common Shares covered by such option would have been
changed or exchanged, and the option price per share shall be adjusted, as the Board shall
determine to be appropriate without constituting a modification within the meaning of Section 425
of the Code.

7. Listing and Registration of Shares

     The Company shall not be required to list or register any shares of stock upon the exercise of
this option prior to the admission of such shares to listing on any stock exchange. The Company
shall not be required to issue or deliver any shares of stock upon the exercise of an option free
of transfer restriction, of any kind or character, imposed under applicable State or Federal laws,
rules, or regulations.

8. Stock as Investment

     In the event the offering of options under the Plan or Common Shares upon the exercise thereof
are not registered under the Securities Act of 1933, the Employee, by accepting this option,
acknowledges for himself/herself, his/her heirs, and legatees that any and all shares purchased or
received hereunder shall be required for investment and not for distribution, and prior to the
issuance and delivery of any or all of the shares subject to the options and stock appreciation
rights granted hereunder, the Employee or his/her heirs or legatees receiving such shares shall, if
the Company shall so request, deliver to the Company a representation in writing that such shares
are being acquired in good faith for investment and not for distribution.

9. Binding Effect

     This Agreement shall be binding upon and inure to the benefit of the Employee and the Company
and its successors if executed by the Employee.

     Nothing herein contained shall confer upon Employee any rights with respect to continuous
employment by the Company or its parent or subsidiary corporations, nor interfere in any way with
the rights of the Company or its parent or subsidiary corporations to terminate the Employee’s
employment or change his/her compensation at any time.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its President, all as
of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	HOME DIAGNOSTICS, INC.
	 
	 	 	 	 	 	 
	 

	 	BY:	 	 	 	 
	 

	 	 	 	 

President/CEO
	 	 
	 
	 	 	 	 	 	 
	ACCEPTED THIS___DAY OF
	 	 	 	 	 	 
	                                        , 20___
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

Employee:

	 	 	 	 	 	 

3

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