OPTIONS, WARRANTS AND RESTRICTED STOCK | 7. OPTIONS, WARRANTS AND RESTRICTED STOCK Options The Board of Directors adopted the OriginClear, Inc. (formerly OriginOil, Inc.), 2009 Incentive Stock Option Plan (the “2009 Plan”) for the purposes of granting stock options to its employees and others providing services to the Company, which reserves and sets aside for the granting of options for Five Hundred Thousand (500,000) shares of Common Stock. On May 25, 2012, the Board of Directors adopted a new OriginOil, Inc., 2012 Incentive Stock Option Plan (the “2012 Plan”) for the purposes of granting stock options to its employees and others providing services to the Company, which reserves and sets aside for the granting of options for One Million (1,000,000) shares of Common Stock. Options granted under these Plans may be either incentive options or nonqualified options and shall be administered by the Company's Board. Each Option shall be exercisable to the nearest whole share, in installments or otherwise, as the respective option agreements may provide. Notwithstanding any other provision of the Plan or of any option agreement, each Option shall expire on the date specified in the option agreement, which date shall not be later than the tenth (10th) anniversary from the effective date of grant. On June 14, 2013, the Board of Directors adopted a new OriginOil, Inc., 2013 Incentive Stock Option Plan (the “2013 Plan”) for the purposes of granting stock options to its employees and others providing services to the Company, which reserves and sets aside for the granting of options for Four Million (4,000,000) shares of Common Stock. Options granted under the Plan may be either incentive options or nonqualified options and shall be administered by the Company's Board. Each Option shall state the number of shares to which it pertains. The exercise price will be determined by the holders percentage owned as follows: If the holder owns more than 10% of the total combined voting power or value of all classes of stock of the Company, then the exercise price will be no less than 110% of the fair market value of the stock as of the date of grant; if the person is not a 10% holder, then the exercise price will be no less than 100% of the fair market value of the stock as of the date of grant. Notwithstanding any other provision of the 2013 Plan or of any option agreement, each Option shall expire on the date specified in the option agreement, which date shall not be later than the tenth (10th) anniversary from the date of grant. If the status of an employee terminates for any reason other than disability or death, then the Optionee or their representative shall have the right to exercise the portion of any Options which were exercisable as of the date of such termination, in whole or in part, not less than 30 days nor more than three (3) months after such termination. On October 2, 2015, the Board of Directors adopted a new OriginClear, Inc., 2015 Equity Incentive Stock Option Plan (the “2015 Plan”) for the purposes of granting stock options to its employees and others providing services to the Company, which reserves and sets aside for the granting of options for One Hundred Sixty Million (160,000,000) shares of Common Stock. Options granted under these Plans may be either incentive options or nonqualified options and shall be administered by the Company's Board. Each Option shall be exercisable to the nearest whole share, in installments or otherwise, as the respective option agreements may provide. Notwithstanding any other provision of the Plan or of any option agreement, each Option shall expire on the date specified in the option agreement, which date shall not be later than the fifth (5th) anniversary from the effective date of grant. Options granted under these Plans may be either incentive options or nonqualified options and shall be administered by the Company's Board. Each Option shall be exercisable to the nearest whole share, in installments or otherwise, as the respective option agreements may provide. Notwithstanding any other provision of the Plan or of any option agreement, each Option shall expire on the date specified in the option agreement, which date shall not be later than the tenth (5th) anniversary from the effective date of grant. If the status of an employee terminates for any reason other than disability or death, then the Optionee or their representative shall have the right to exercise the portion of any Options which were exercisable as of the date of such termination, in whole or in part, not less than thirty (30) days nor more than three (3) months after such termination. With respect to Non-statutory Options granted to employees, directors or consultants, the Board or Committee may specify such period for exercise that the Option shall automatically terminate following the termination of employment or services as to shares covered by the Option as the Board or Committee deems reasonable and appropriate. During the six months ended June 30, 2016, the Company granted 1,000,000 incentive stock options, and recognized compensation costs of $104,217 based on the fair value of the options vested for the six months ended June 30, 2016. A summary of the Company’s stock option activity and related information follows: June 30, 2016 Weighted Number average of exercise Options price Outstanding, beginning of period 119,404,644 $ 0.05 Granted 1,000,000 $ 0.02 Exercised - - Forfeited/Expired (6,474,999 ) $ 0.06 Outstanding, end of period 113,929,645 $ 0.05 Exercisable at the end of period 74,865,478 $ 0.04 Weighted average fair value of options granted during the period $ - The weighted average remaining contractual life of options outstanding issued under the 2009 Plan, 2012 Plan, and 2013 Plan as of June 30, 2016, was as follows: Exercisable Prices Stock Options Outstanding Stock Options Exercisable Weighted Average Remaining Contractual Life (years) $ 0.19 - 4.20 1,846,979 1,443,020 0.04 - 8.27 $ 0.41 - 0.44 1,132,666 778,708 7.21 $ 0.02 - 0.0375 110,950,000 72,643,750 4.27 - 4.75 113,929,645 74,865,478 As of June 30, 2016, there was no intrinsic value with regards to the outstanding options. Restricted Stock CEO On May 12, 2016, the Company entered into a Restricted Stock Grant Agreement (“the RSGA”) with its Chief Executive Officer, Riggs Eckelberry, to create management incentives to improve the economic performance of the Company and to increase its value and stock price. All shares issuable under the RSGA are performance shares and none have yet vested nor have been issued. The RSGA provides for the issuance of up to 60,000,000 shares of the Company’s common stock, with a fair value of $1,218,000 to the CEO, provided certain milestones are met in the following stages: a.) If the Company’s consolidated gross revenue, calculated in accordance with GAAP, equals or exceeds $15,000,000 for the trailing twelve month period, the Company will issue 30,000,000 shares of common stock; b.) If the Company’s consolidated net profit, calculated in accordance to GAAP, equals or exceeds $1,500,000 for the trailing twelve month period, the Company will issue 30,000,000 shares of the Company’s common stock. As the performance goals are achieved, the shares shall become eligible for vesting and issuance. A summary of the restricted stock issuances to the executive officer is as follows: Number of Shares Weighted Average Unvested share balance, January 1, 2016 0 $ 0 Granted 60,000,000 0.0203 Vested 0 0 Forfeited 0 0 Unvested share balance, June 30, 2016 60,000,000 $ 0.0203 Employees On May 12, 2016, the Company entered into a Restricted Stock Grant Agreement (“the RSGA”) with an employee, to create management incentives to improve the economic performance of the Company and to increase its value and stock price. All shares issuable under the RSGA are performance shares and none have yet vested nor have been issued. The RSGA provides for the issuance of up to 20,000,000 shares of the Company’s common stock, with a fair value of $406,000 to the employee, provided certain milestones are met in the following stages: a.) If the Company’s consolidated gross revenue, calculated in accordance with GAAP, equals or exceeds $15,000,000 for the trailing twelve month period, the Company will issue 10,000,000 shares of common stock; b.) If the Company’s consolidated net profit, calculated in accordance to GAAP, equals or exceeds $1,500,000 for the trailing twelve month period, the Company will issue 10,000,000 shares of the Company’s common stock. As the performance goals are achieved, the shares shall become eligible for vesting and issuance. On May 12, 2016, the Company entered into a Restricted Stock Grant Agreement (“the RSGA”) with employee, to create management incentives to improve the economic performance of the Company and to increase its value and stock price. All shares issuable under the RSGA are performance shares and none have yet vested nor have been issued. The RSGA provides for the issuance of up to 30,000,000 shares of the Company’s common stock, with a fair value of $609,000 to the employee, provided certain milestones are met in the following stages: a.) If the Company’s consolidated gross revenue, calculated in accordance with GAAP, equals or exceeds $15,000,000 for the trailing twelve month period, the Company will issue 15,000,000 shares of common stock; b.) If the Company’s consolidated net profit, calculated in accordance to GAAP, equals or exceeds $1,500,000 for the trailing twelve month period, the Company will issue 15,000,000 shares of the Company’s common stock. As the performance goals are achieved, the shares shall become eligible for vesting and issuance. A summary of the restricted stock issuances to the employees is as follows: Number of Weighted Average Unvested share balance, January 1, 2016 0 $ 0 Granted 50,000,000 0.0203 Vested 0 0 Forfeited 0 0 Unvested share balance, June 30, 2016 50,000,000 $ 0.0203 Warrants During the six months ended June 30, 2016, the Company did not grant any warrants. A summary of the Company’s warrant activity and related information follows: June 30, 2016 Options Weighted average exercise price Outstanding - January 1, 2016 23,297,108 $ 0.21 Granted - - Exercised - - Forfeited (5,399,515 ) $ 0.05 Outstanding - June 30, 2016 17,897,593 $ 0.24 At June 30, 2016, the weighted average remaining contractual life of warrants outstanding: Exercisable Warrants Warrants Weighted $ 0.15 - 0.65 16,809,233 16,809,233 0.08- 1.95 $ 0.25 - 1.75 841,692 841,692 0.82 - 2.22 $ 0.90 - 6.90 246,668 246,668 0.21 - 6.38 17,897,593 17,897,593 |