INCENTIVE STOCK OPTION AGREEMENT



         INCENTIVE STOCK OPTION AGREEMENT made this ___ day of ______, _______

between PSYCHEMEDICS CORPORATION, a Delaware corporation (hereinafter called the

Corporation), and ___________________ (hereinafter called the Employee).



         The Corporation desires, by affording the Employee an opportunity to

purchase shares of its Common Stock, $.005 par value (hereinafter called the

Common Stock), as hereinafter provided, to carry out the purpose of the

Corporation's 2000 Stock Option Plan adopted March 21, 2000 (hereinafter called

the Plan).



         NOW, THEREFORE, in consideration of the mutual covenants hereinafter

set forth and for other good and valuable consideration, the parties hereto have

agreed, and do hereby agree as follows:



         1. GRANT OF OPTION. The Corporation hereby irrevocably grants to the

Employee the right and option (hereinafter called the Option) to purchase all or

any part of an aggregate of _________ shares of the Common Stock (such number

being subject to adjustment as provided in paragraph 7 hereof) on the terms and

conditions herein set forth. The Option is intended by the parties hereto to be,

and shall be treated as, an incentive stock option (as such term is defined

under Section 422 of the Internal Revenue Code of 1986) (hereinafter called the

Code).



         2. PURCHASE PRICE. The purchase price of the shares of the Common Stock

covered by the Option shall be $________ per share.



         3. TERM OF OPTION. The term of the Option shall be for a period of ten

years from the date hereof, subject to earlier termination as provided in

paragraphs 5 and 6 hereof. The Option shall become exercisable with respect to

25% of the total number of shares subject to the Option twelve months after the

date hereof and with respect to an additional 25% of such total number of shares

at the end of each twelve-month period thereafter during the succeeding three

years provided however, that the Corporation may, at any time during the period

in which the Option is not then exercisable in full, accelerate the

exercisability of the Option subject to such terms as the Corporation deems

necessary and appropriate. The purchase price of the shares as to which the

Option shall be exercised shall be paid at the time of exercise as provided in

paragraph 8 hereof. Except as provided in paragraphs 5 and 6 hereof, the Option

may not be exercised at any time unless the Employee shall have been in the

continuous employ of the Corporation or one or more of its subsidiaries, from

the date hereof to the date of the exercise of the Option.



{PAGE}   2







         The Corporation may, in its discretion, require as conditions to the

right to exercise this Option that (a) a registration statement under the

Securities Act of 1933, as amended, shall be in effect and current with respect

to the shares issuable upon exercise of this Option, or (b) the Employee (and

any other person in whose name, as joint tenant with the Employee, are

registered the certificate or certificates representing the shares being

purchased on exercise hereof) has given to the Corporation prior to the purchase

of any shares pursuant hereto, assurances satisfactory to it that such shares

are being purchased for the purpose of investment and not with a view to or for

sale in connection with any distribution thereof, including without limitation,

a written agreement of the Employee (and any other person in whose name, as

joint tenant with the Employee, are registered the certificate or certificates

Home        Intelligence        Services        Subscriptions        News        About Us

Contact Us       Terms of Use       Resend Documents       Shopping Cart

Copyright © 2008 The Consus Group LLC