1996 KEY EXECUTIVE STOCK OPTION PLAN

EXHIBIT 10.12



CARESIDE, INC.

1996 KEY EXECUTIVE STOCK OPTION PLAN

(AS AMENDED AND RESTATED)

EFFECTIVE SEPTEMBER 9, 1998



Section 1. Purposes.

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The purposes of the Plan are (a) to promote the long-term growth and profitability of the Company by providing key executives with incentive to improve shareholder value; (b) to contribute to the growth and financial success of the Company; and (c) to enable the Company to attract, retain and award the best available persons for positions of substantial responsibility. The Plan is intended to comply with the conditions and requirements for employee benefit plans under Rule 16b-3, promulgated under Section 16 of the Exchange Act. The Options issued pursuant to the Plan are intended to constitute either Incentive Stock Options, or non-qualified stock options, as determined by the Committee, or the Board, if no Committee has been appointed, at the time of Award. The type of Options awarded will be specified in the Option Agreement between the Company and the Optionee. The terms of this Plan shall be incorporated into the Option Agreement to be executed by the Optionee.



Section 2. Definitions.

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(a) "Administrator" shall be the Board or a Committee appointed by the Board pursuant to Section 4 of the Plan, which shall administer the Plan.



(b) "Award" shall mean a grant of Options to an Employee pursuant to the provisions of this Plan. Each separate grant of Options to an Employee and each group of Options which matures on a separate date is treated as a separate Award.



(c) "Board" shall mean the Board of Directors of the Company, as constituted from time to time.



(d) "Change of Control" shall mean the happening of an event, which shall be deemed to have occurred upon the earliest to occur of the following events: (i) the date the stockholders of the Company (or the Board, if stockholder action is not required) approve a plan or other arrangement pursuant to which the Company will be dissolved or liquidated, or (ii) the date the stockholders of the Company (or the Board, if stockholder action is not required) and the stockholders of the other constituent corporations (or their respective boards of directors, if and to the extent that stockholder action is not required) have approved a definitive agreement to merge or consolidate the Company with or into another corporation, other than, in either case, a merger or consolidation of the Company in which holders of shares of the Company's voting capital stock immediately prior to the merger or consolidation will have at least 30% of the ownership of voting capital stock of the surviving corporation immediately after the merger or consolidation (on a fully diluted basis), which voting capital stock is to be held in the same proportion (on a fully diluted basis) as such holders' ownership of voting capital stock of the Company immediately before the merger or consolidation, or (iii) the date any entity, person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act), other than (A) the Company, or (B) any of its Subsidiaries, or (C) any of the holders of the capital stock of the Company, as determined on the date that this Plan is adopted by the Board, or (D) any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Subsidiaries or (E) any Affiliate (as such term is defined in Rule 405 promulgated under the Securities Act) of any of the foregoing, shall have acquired beneficial ownership of, or shall have acquired voting control over, more than 70% of the outstanding shares of the Company's voting capital stock (on a fully diluted basis), unless the transaction pursuant to which such person, entity or group acquired such beneficial ownership or control resulted from the original issuance by the Company of shares of its voting capital stock and was approved by at least a majority of directors who shall have been either members of the Board on the date that this Plan is adopted by the Board or members of the Board for at least twelve (12) months prior to the date of such approval, or (iv) the first day after the date of this Plan when directors are elected such that there shall have been a change in the composition of the Board such that a majority of the Board shall have been members of the Board for less than twelve (12) months, unless the nomination for election of each new director who was not a director at the beginning of such twelve (12) month period was approved by a vote of at least sixty percent (60%) of the directors then still in office who were directors at the beginning of such period, or (v) the date upon which the Board determines (in its sole discretion) that based on then current available information, the events described in clause (iii) are reasonably likely to occur.



(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.



(f) "Committee" shall mean the Committee appointed by the Board in accordance with Section 4 of the Plan, if one is appointed, in which event the Committee shall possess the power and authority of the Board.



(g) "Company" shall mean CARESIDE, Inc., a Delaware corporation.



(h) "Common Stock" shall mean common stock of the Company, $.01 par value per share.



(i) "Disability" or "Disabled" shall mean the inability of an Optionee to perform his or her normal employment duties for the Company, its Parent, any of its Subsidiaries or its successors, as the case may be, resulting from a mental or physical illness, impairment or any other similar occurrence which can be expected to result in death or which has lasted or can be expected to last for a period of twelve (12) consecutive months, as determined by the Board; provided, however, that a Disability shall not be determined to occur any earlier than it would under the provisions of any employment agreement applicable to the Optionee.





(j) "Employee" shall mean key executive officers employed by the Company, its Parent, any of its Subsidiaries or its successors.



(k) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.



(l) "Fair Market Value" shall mean the fair market value of a share of Common Stock, as determined pursuant to Section 8 hereof.



(m) "Incentive Stock Option" shall mean an Option which is an incentive stock option as described in Section 422 of the Code.



(n) "Non-Employee Director" shall have the meaning set forth in Rule 16b-3(b)(3)(i) promulgated by the Securities and Exchange Commission under the Exchange Act, or any successor definition adopted by the Securities and Exchange Commission; provided, however, that the Administrator may, to the extent the Administrator deems it necessary or desirable to comply with Section 162(m) of the Code and applicable regulations thereunder, ensure that each Non-Employee Director also qualifies as an "outside director" as that term is defined in the regulations under Section 162(m) of the Code.



(o) "Option" shall mean an Incentive Stock Option or a non-qualified stock option to purchase Shares that is awarded pursuant to the Plan.



(p) "Option Agreement" shall mean a written agreement executed by the Optionee and the Company in such form as the Board (subject to the terms and conditions of this Plan) may from time to time approve evidencing and reflecting the terms of an Option.



(q) "Optionee" shall mean an Employee to whom an Option is awarded.



(r) "Parent" shall mean a "parent corporation" whether now or hereafter existing, as defined in Sections 424(e) and (g) of the Code.



(s) "Plan" shall mean the CARESIDE, Inc. 1996 Key Executive Stock Option Plan, as amended from time to time.



(t) "Pool" shall mean the pool of shares of Common Stock subject to the Plan, as described and set forth in Section 6 hereof.



(u) "Private Asset Sale" shall mean a transaction which constitutes a sale of all or substantially all of the Company's assets, which transaction shall be deemed to have occurred upon the date the stockholders of the Company (or the Board, if stockholder action is not required) approve a definitive agreement to sell or otherwise dispose of all or substantially all of the assets of the Company.





(v) "Public Offering" shall mean the consummation of a firm commitment underwritten public offering of equity securities of the Company registered under the Securities Act.



(w) "Securities Act" shall mean the Securities Act of 1933, as amended.



(x) "Shares" shall mean shares of Common Stock contained in the Pool, as adjusted in accordance with Section 9 of the Plan.



(y) "Stock Purchase Agreement" shall mean an agreement in such form as the Board (subject to the terms and conditions of this Plan) may from time to time approve, which an Optionee shall be required to execute as a condition of purchasing Shares upon the exercise of an Option.



(z) "Subsidiary" shall mean a subsidiary corporation, whether now or hereafter existing, as defined in Sections 424(f) and (g) of the Code.



Section 3. Participation.

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Participants in the Plan shall be selected by the Board or the Committee from the Employees (including Employees who also may be members of the Board) of the Company, its Parent and its Subsidiaries or their successors. The Board, or the Committee, may make Awards at any time and from time to time to Employees on terms and conditions described in Section 7. Any Award may include or exclude any Employee, as the Board or the Committee shall determine in its sole discretion.



Section 4. Administration.

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(a) Procedure. The Plan shall be administered by the Board or by a

--------- Committee consisting of not less than two (2) persons appointed by the Board, which shall be the Administrator. In the event the Company has a class of equity securities registered under the Exchange Act, the Board shall administer the Plan; provided that it may appoint a Committee in accordance with Section 4(b).



(b) Committees. If a Committee is appointed by the Board, then the

---------- Committee shall possess the power and authority of the Board in administering the Plan on behalf of the Board, subject to the terms and conditions as the Board may prescribe. Members of the Committee shall be members of the Board and shall serve for such period of time as the Board may determine. From time to time, the Board may increase the size of the Committee and appoint additional members thereto, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies however caused, or remove all members of the Committee and thereafter directly administer the Plan. Notwithstanding the foregoing, in the event the



Company has a class of equity securities registered under the Exchange Act, the Committee shall be composed solely of two (2) or more Non-Employee Directors.



(c) Powers of the Board. Subject to the provisions of the Plan, the

------------------- Board or its Committee shall have the authority, in its discretion: (i) to make Awards of Options; (ii) to determine, upon review of relevant information and in accordance with Section 8 of the Plan, the Fair Market Value per Share; (iii) to determine the exercise price of the Options to be awarded in accordance with Sections 7 and 8 of the Plan; (iv) to determine the Employees to whom, and the time or times at which, Options shall be awarded, and the number of Shares to be subject to each Option; (v) to prescribe, amend and rescind rules and regulations relating to the Plan; (vi) to determine the terms and provisions of each Option awarded under the Plan, each Option Agreement and each Stock Purchase Agreement (which need not be identical with the terms of other Options, Option Agreements and Stock Purchase Agreements) and, with the consent of the Optionee, to modify or amend an outstanding Option, Option Agreement or Stock Purchase Agreement; (vii) to accelerate the vesting or exercise date of any Option; (viii) to determine whether any Optionee will be required to execute a stock repurchase agreement or other agreement as a condition to the exercise of an Option, and to determine the terms and provisions of any such agreement (which need not be identical with the terms of any other such agreement) and, with the consent of the Optionee, to amend any such agreement; (ix) to interpret the Plan or any agreement entered into with respect to the Award or exercise of Options; (x) to authorize any person to execute on behalf of the Company any instrument required to effectuate the Award of an Option previously awarded by the Board or to take such other actions as may be necessary or appropriate with respect to the Company's rights pursuant to Options or agreements relating to the Award or exercise thereof; and (xi) to make such other determinations and establish such other procedures as it deems necessary or advisable for the administration of the Plan.



(d) Effect of the Board's or Committee's Decision. All decisions,

--------------------------------------------- determinations and interpretations of the Board or the Committee shall be final and binding with respect to all Options and Optionees.



(e) Limitation of Liability. Notwithstanding anything herein to the

----------------------- contrary (with the exception of Section 30 hereof), no member of the Board or of the Committee shall be liable for any good faith determination, act or failure to act in connection with the Plan or any Option awarded hereunder.





Section 5. Eligibility.

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Options may be awarded only to Employees. An Employee who has been awarded an Option, if he or she is otherwise eligible, may be awarded additional Options.



Section 6. Stock Subject to the Plan.

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Subject to the provisions of Section 9 of the Plan, the maximum aggregate number of Shares which may be awarded and sold under the Plan is 1,500,000 (collectively, the "Pool"). Options awarded from the Pool may be either Incentive Stock Options or non-qualified stock options, as determined by the Board. The maximum aggregate number of Shares with respect to which Options may be granted under the Plan to any Employee during any calendar year is 50,000 Shares. If an Option should expire or become unexercisable for any reason without having been exercised in full, or, if Shares are subsequently repurchased by the Company, the unpurchased or repurchased Shares which were subject thereto shall, unless the Plan shall have been terminated, return to the Plan and become available for future Awards under the Plan.



Section 7. Terms and Conditions of Options Awarded.

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Each Option awarded pursuant to the Plan shall be authorized by the Board and shall be evidenced by an Option Agreement in such form as the Board may from time to time determine. Each Option Agreement shall incorporate by reference all other terms and conditions of the Plan, including the following terms and conditions:



(a) Number of Shares. The number of Shares subject to the Option,

---------------- which may not include fractional Shares.



(b) Option Price. The price per Share payable on the exercise of any

------------ Option which is an Incentive Stock Option shall be stated in the Option Agreement and shall be no less than the Fair Market Value per share of the Common Stock on the date such Option is awarded, without regard to any restriction other than a restriction which by its terms will never lapse. Notwithstanding the foregoing, if an Option which is an Incentive Stock Option shall be awarded under this Plan to any Employee who, at the time of the Award of such Option, owns stock possessing more than ten percent (10%) of the to ...