STOCK OPTION PLAN OF
MW MEDICAL, INC.
A Nevada Corporation
1. Purpose of the Plan
The purpose of this Plan is to strengthen MW Medical, Inc.
(hereinafter the "Company") by providing incentive stock options as
a means to attract, retain and motivate key corporate personnel,
through ownership of stock of the Company, and to attract
individuals of outstanding ability to render services to and enter
the employment of the Company or its subsidiaries.
2. Types of Stock Options
There shall be two types of Stock Options (referred to herein as
"Options" without distinction between such different types) that
may be granted under this Plan: (1) Options intended to qualify as
Incentive Stock Options under Section 422 of the Internal Revenue
Code ("Qualified Stock Options"), and (2) Options not specifically
authorized or qualified for favorable income tax treatment under
the Internal Revenue Code ("Non-Qualified Stock Options").
3. Definitions
The following definitions are applicable to the Plan:
(a) Board. The Board of Directors of the Company.
(b) Code. The Internal Revenue Code of 1986, as amended from
time to time.
(c) Common Stock. The shares of Common Stork of the Company.
(d) Company. MW Medical, Inc., a Nevada corporation.
(e) Consultant. An individual or entity that renders
professional services to the Company as an independent
contractor and is not an employee or under the direct supervision
and control of the Company.
(f) Disabled or Disability. For the purposes of Section 7, a
disability of the type defined in Section 22(e)(3) of the Code.
The determination of whether an individual is Disabled or has a
Disability is determined under procedures established by the Plan
Administrator for purposes of the Plan.
(g) Fair Market Value. For purposes of the Plan, the "fair market
value" per share of Common Stock of the Company at any date shall
be: (a) if the Common Stock is listed on an established stock
exchange or exchanges or the NASDAQ National Market, the closing
price per share on the last trading day immediately preceding
such date on the principal exchange on which it is traded or as
reported by NASDAQ; or (b) if the Common Stock is not then listed
on an exchange or the NASDAQ National Market, but is quoted on
the NASDAQ Small Cap Market, the NASDAQ electronic bulletin board
or the National Quotation Bureau pink sheets, the average of the
closing
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bid and asked prices per share for the Common Stock as quoted
by NASDAQ or the National Quotation Bureau, as the case
may be, on the last trading day immediately preceding such date;
or (c) if the Common Stock is not then listed on an exchange or
the NASDAQ National Market, or quoted by NASDAQ or the National
Quotation Bureau, an amount determined in good faith by the Plan
Administrator.
(h) Incentive Stock Option. Any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of
Section 422 of the Code.
(i) Non-Qualified Stock Option. Any Stock Option that is not an
Incentive Stock Option.
(j) Optionee. The recipient of a Stock Option.
(k) Plan Administrator. The board or the Committee designated by
the Board pursuant to Section 4 to administer and interpret the
terms of the Plan.
(l) Stock Option. Any option to purchase shares of Common Stock
granted pursuant to Section 7.
4. Administration of the Plan
This Plan shall be administered by a Compensation Committee
(hereinafter the "Committee" or "Plan Administrator") composed of
members selected by, and serving at the pleasure of, the Board of
Directors. Subject to the provisions of the Plan, the Plan
Administrator shall have authority to construe and interpret the
Plan, to promulgate, amend, and rescind rules and regulations
relating to its administration, to select, from time to time, among
the eligible employees and non-employee consultants (as determined
pursuant to Section 5) of the Company and its subsidiaries those
employees and consultants to whom Stock Options will be granted, to
determine the duration and manner of the grant of the Options, to
determine the exercise price, the number of shares and other terms
covered by the Stock Options, to determine the duration and purpose
of leaves of absence which may be granted to Stock Option holders
without constituting termination of their employment for purposes of
the Plan, and to make all of the determinations necessary or
advisable for administration of the Plan. The interpretation and
construction by the Plan Administrator of any provision of the Plan,
or of any agreement issued and executed under the Plan, shall be
final and binding upon all parties. No member of the Committee or
Board shall be liable for any action or determination undertaken or
made in good faith with respect to the Plan or any agreement
executed pursuant to the Plan.
All of the members of the Committee shall be persons who, in the
opinion of counsel to the Company, are outside directors and
"non-employee directors" within the meaning of Rule l6b-3(b)(3)(i)
promulgated by the Securities and Exchange Commission. From time to
time, the Board may increase or decrease the size of the Committee,
and add additional members to, or remove members from, the
Committee. The Committee shall act pursuant to a majority vote, or
the written consent of a majority of its members, and minutes shall
be kept of all of its meetings and copies thereof shall be provided
to the Board. Subject to the provisions of the Plan and the
directions of the Board, the Committee may establish and follow
such rules and regulations for the conduct of its business as it
may deem advisable.
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At the option of the Board, the entire Board of Directors of the
Company may act as the Plan Administrator during such periods of
time as all members of the Board are "outside directors" as
defined in Prop. Treas. Regs. 1.162-27(e)(3), except that this
requirement shall not apply during any period of time prior to
the date the Company's Common Stock becomes registered pursuant
to Section 12 of the Securities Exchange Act of 1934, as amended.
5. Grant of Options
The Company is hereby authorized to grant Incentive Stock Options
as defined in section 422 of the Code to any employee or director
(including any officer or director who is an employee) of the
Company, or of any of its subsidiaries; provided, however, that no
person who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company, or
any of its parent or subsidiary corporations, shall be eligible
to receive an Incentive Stock Option under the Plan unless at
the time such Incentive Stock Option is granted the Option price
is at least 110% of the fair market value of the shares subject
to the Option, and such Option by its terms is not exercisable
after the expiration of five years frorn the date such Option
is granted.
An employee may receive more than one Option under the Plan.
Non-Employee Directors shall be eligible to receive Non-Qualified
Stock Options in the discretion of the Plan Administrator. In
addition, Non-Qualified Stock Options may be granted to
Consultants who are selected by the Plan Administrator.
6. Stock Subject to Plan
The stock available for grant of Options under the Plan shall be
shares of the Company's authorized but unissued, or reacquired,
Common Stock. The aggregate number of shares that may be issued
pursuant to exercise of Options granted under the Plan, as amended,
shall not exceed 2,500,000 shares of Common Stock (subject to
adjustment as provided herein), including shares previously issued
under the Plan. The maximum number of shares for which an Option
may be granted to any Optionee during any calendar year shall not
exceed 500,000 shares. In the event that any outstanding Option
under the Plan for any reason expires or is terminated, the shares
of Common Stock allocable to the unexercised portion of the Option
shall again be available for Options under the Plan as if no Option
had been granted with regard to such shares.
7. Terms and Conditions of Options
Options granted under the Plan shall be evidenced by agreements
(which need not be identical) in such form and containing such
provisions that are consistent with the Plan as the Plan
Administrator shall from time to time approve. Such agreements may
incorporate all or any of the terms hereof by reference and shall
comply with and be subject to the following terms and conditions:
(a) Number of Shares. Each Option agreement shall specify the
number of shares subject to the Option.
(b) Option Price. The purchase price for the shares subject to
any Option shall be determined by the Plan Administrator at the
time of the grant, but shall not be less than 85% of Fair Market
Value per share. Anything to the contrary notwithstanding, the
purchase price for the shares subject to
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any Incentive Stock Option shall not be less than 100% of the Fair
Market Value of the shares of Common Stock of the Company on the
date the Stock Option is granted. In the case of any Option granted
to an employee who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company, or
any of its parent or subsidiary corporations, the Option price
shall not be less than 110% of the Fair Market Value per share
of the Common Stock of the Company on the date the Option is
granted. For purposes of determining the stock ownership of an
employee, the attribution rules of Section 424(d) of the Code
shall apply.
(c) Notice and Payment. Any exercisable portion of a Stock
Option may be exercised only by: (a) delivery of a written notice
to the Company prior to the time when such Stock Option becomes
unexercisable herein, stating the number of shares bring
purchased and complying with all applicable rules established by
the Plan Administrator; (b) payment in full of the exercise price
of such Option by, as applicable, delivery of: (i) cash or check
for an amount equal to the aggregate Stock Option exercise price
for the number of shares being purchased, (ii) in the discretion
of the Plan Administrator, upon such terms as the Plan
Administrator shall approve, a copy of instructions to a broker
directing such broker to sell the Common Stock for which such
Option is exercised, and to remit to the Company the aggregate
exercise price of such Stock Option (a "cash1ess exercise"), or
(iii) in the discretion of the Plan Administrator, upon such
terms as the Plan Administrator shall approve, shares of the
Company's Common Stock owned by the Optionee, duly endorsed for
transfer to the Company, with a Fair Market Value on the date of
delivery equal to the aggregate purchase price of the shares with
respect to which such Stock Option or portion is thereby
exercised (a "stock-for-stock exercise"); (c) payment of the
amount of tax required to be withheld (if any) by the Company, or
any parent or subsidiary corporation as a result of the exercise
of a Stock Option. At the discretion of the Plan Administrator,
upon such terms as the Plan Administrator shall approve, the
Optionee my pay all or a portion of the tax withholding by: (i)
cash or check payable to the Company, (ii) a cashless exercise,
(iii) a stock-for-stock exercise, or (iv) a combination of one or
more of the foregoing payment methods; and (d) delivery of a
written notice to the Company requesting that the Company direct
the transfer agent to issue to the Optionee (or his designee) a
certificate for the number of shares of Common Stock for which
the Option was exercised or, in the case of a cashless exercise,
for any shares that were not sold in the cashless exercise.
Notwithstanding the foregoing, the Company, in its sole
discretion, may extend and maintain, or mange for the extension
and maintenance of credit to any Optionee to finance the
Optionee's purchase of shares pursuant to the exercise of any
Stock Option, on such terms as may be approved by the Plan
Administrator, subject to applicable regulations of the Federal
Reserve Board and any other laws or regulations in effect at the
time such credit is extended.
(d) Terms of Option. No Option shall be exercisable after the
expiration of the earliest of: (a) ten years after the date the
Option is granted, (b) three Months after the date the Optionee's
employment with the Company and its subsidiaries terminates, or a
Non-Employee Director or Consultant ceases to provide services to
the Company, if such termination or cessation is for any reason
other than Disability or death, (c) one year after the date the
Optionee's employment with the Company, and its subsidiaries,
terminates, or a Non-Employee Director or Consultant ceases to
provide services to the Company, if such termination or cessation
is a result of death or Disability; provided, however, that the
Option agreement for any Option may provide for shorter periods
in each of the foregoing instances. In the case of an Incentive
Stock Option granted to an employee who owns stock possessing
more than 10% of the total combined voting power of all
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classes of stock of the Company, or any of its parent or
subsidiary corporations, the term set forth in (a) above shall
not be more than five years after the date the Option is granted.
(e) Exercise of an Option. No Option shall be exercisable during
the lifetime of in Optionee by any person other than the
Optionee. Subject to the foregoing, the Plan Administrator shall
have the power to set the time or times within which each Option
shall be exercisable and to accelerate the time or times of
exercise; provided. However the Option shall provide the right to
exercise at the rate of at least 20% per year over five years
from the date the Option is granted. Unless otherwise provided by
the Plan Administrator, each Option granted under the Plan shall
become exercisable on a cumulative basis as to one-third (1/3) of
the total number of shares covered thereby at any time after one
year from the date the Option is granted and an additional
one-third (1/3) of such total number of shares at any time after
the end of each consecutive one-year period thereafter until the
Option has become exercisable as to all of such total number of
shares. To the extent that an Optionee has the right to exercise
an Option and purchase shares pursuant hereto, the Option may be
exercised from time to time by written notice to the Company,
stating the number of shares being purchased and accompanied by
payment in full of the exercise price for such shares.
(f) No Transfer of Option. No Option shall be transferable by
an Optionee otherwise than by will or the laws of descent and
distribution.
(g) Limit on Incentive Stock Option. The aggregate Fair Market
Value (determined at the time the Option is granted) of the stock
with respect to which an Incentive Stock Option is granted and
exercisable for the first time by an Optionee during any calendar
year (under all Incentive Stock Option plans of the Company and
its subsidiaries) shall not exceed $100,000. To the extent the
aggregate Fair Market Value (determined at the time the Stock
Option is granted) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by an
Optionee during any calendar year (under all Incentive Stock
Option plans of the Company and any parent or subsidiary
corporations) exceeds $100,000, such Stock Options shall be
treated as Non-Qualified Stock Options. The determination of
which Stock Options shall be treated as Non-Qualified Stock
Options shall be made by taking Stock Options into account in the
Order in which they were granted.
(h) Restriction on Issuance of Shares. The issuance of Options
and shares shall be subject to compliance with all of the
applicable requirements of law with respect to the issuance and
sale of securities, including, without limitation, any required
qualification under state securities laws. If an Optionee
acquires shares of Common Stock pursuant to the exercise of an
Option, the Plan Administrator, in its sole discretion, may
require as a condition of issuance of shares covered by the
Option that the shares of Common Stock be subject to restrictions
on transfer. The Company may place a legend on the share
certificates reflecting the fact that they are subject to
restrictions on transfer pursuant to the terms of this Section.
In addition, the Optionee may be required to execute a buy-sell
agreement in favor of the Company or its designee with respect to
all or any of the shares so acquired. In such event, the terms of
any such agreement shall apply to the optioned shares.
(i) Investment Representation. Any Optionee may be required,
as a condition of issuance of shares covered by his or her Option,
to represent that the shares to be acquired pursuant to exercise
will be acquired for investment and without a view toward
distribution thereof, and in such case, the
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Company may place a legend on the share certificate(s) evidencing
the fact that they were acquired for investment and cannot be sold
or transferred unless registered under the Securities Act of 1933,
as amended, or unless counsel for the Company is satisfied that the
circumstances of the proposed transfer do not require such
registration.
(j) Rights as a Shareholder or Employee. An Optionee or
transferee of an Option shall have no right as a stockholder of
the Company with respect to any shares covered by any Option until
the date of the issuance of a share certificate for such shares.
No adjustment shall be made for dividends (Ordinary or
extraordinary, whether cash, securities, or other property), or
distributions or other rights for which the record date is prior
to the date such share certificate is issued, except as provided
in paragraph (m) below. Nothing in the Plan or in any Option
agreement shall confer upon any employee any right to continue in
the employ of the Company or any of its subsidiaries or interfere
in any way with any right of the Company or any subsidiary to
terminate the Optionee's employment at any time.
(k) No Fractional Shares. In no event shall the Company be
required to issue fractional shares upon the exercise of an Option.
(l) Exercise in the Event of Death. In the event of the death of
the Optionee, any Option or unexercised portion thereof granted
to the Optionee, to the extent exercisable by him or her on the
date of death, may be exercised by the Optionee's personal
representatives, heirs, or legatees subject to the provisions of
paragraph (d) above.
(m) Recapitalization or Reorganization of the Company. Except
as otherwise provided herein, appropriate and proportionate
adjustments shall be made (1) in the number and class of shares
subject to the Plan, (2) to the Option rights granted under the
Plan, and (3) in the exercise price of such Option rights, in the
event that the number of shares of Common Stock of the Company
are increased or decreased as a result of a stock dividend (but
only on Common Stock), stock split, reverse stock split,
recapitalization, reorganization, merger, consolidation,
separation, or like change in the corporate or capital structure
of the Company. In the event there shall be any other change in
the number or kind of the outstanding shares of Common Stock of
the Company, or any stock or other securities into which such
common stock shall have been changed, or for which it shall have
been exchanged, whether by reason of a complete liquidation of
the Company or a merger, reorganization, or consolidation with
any other corporation in which the Company is not the surviving
corporation, or the Company becomes a wholly-owned subsidiary of
another corporation, then if the Plan Administrator shall, in its
sole discretion, determine that such change equitably requires an
adjustment to shares of Common Stock currently subject to Options
under the Plan, or to prices or terms of outstanding Options,
such adjustment shall be made in accordance with such
determination.
To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustment shall be made by the
Plan Administrator, the determination of which in that respect
shall be final, binding, and conclusive. No right to purchase
fractional shares shall result from any adjustment of Options
pursuant to this Section. In case of any such adjustment, the
shares subject to the Option shall he rounded down to the nearest
whole share. Notice of any adjustment shall be given by the
Company to each Optionee whose Options shall have been so
adjusted and such
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adjustment (whether or not notice is given) shall be effective
and binding for all purposes of the Plan.
In the event of a complete liquidation of the Company or a
merger, reorganization, or consolidation of the Company with any
other corporation in which the Company is not the surviving
corporation, or the Company becomes a wholly-owned subsidiary of
another corporation, any unexercised Options granted under the
Plan shall be deemed cancelled unless the surviving corporation
in any such merger, reorganization, or consolidation elects to
assume the Options under the Plan or to issue substitute Options
in place thereof; provided, however, that notwithstanding the
foregoing, if such Options would be cancelled in accordance with
the foregoing, the Optionee shall have the right exercisable
during a ten-day period ending on the fifth day prior to such
liquidation, merger, or consolidation to exercise such Option in
whole or in part without regard to any installment exercise
provisions in the Option agreement.
(n) Modification, Extension and Renewal of Options. Subject
to the terms and conditions and within the limitations of the
Plan, the Plan Administrator may modify, extend or renew
outstanding options granted under the Plan and accept the surrender
of outstanding Options (to the extent not theretofore exercised).
The Plan Administrator shall not, however, without the approval
of the Board, modify any outstanding Incentive Stock Option in
any manner that would cause the Option not to qualify as an
Incentive Stock Option within the meaning of Section 422 of the
Code. Notwithstanding the foregoing. no modification of an Option
shall, without the consent of the Optionee, alter or impair any
rights of the Optionee under the Option.
(o) Other Provisions. Each Option may contain such other terms,
provisions, and conditions not inconsistent with the Plan as may
be determined by the Plan Administrator.
8. Termination or Amendment of the Plan
The Board may at any time terminate or amend the Plan; provided
that, without approval of the holders of a majority of the shares
of Common Stock of the Company represented and voting at a duly
held meeting at which a quorum is present or the written consent
of a majority of the outstanding shares of Common Stock, there
shall be (except by operation of the provisions of paragraph (m)
above) no increase in the total number of shares covered by the
Plan, no change in the class of persons eligible to receive
options granted under the Plan, no reduction in the exercise
price of Options granted under the Plan, and no extension of the
latest date upon which Options may be exercised; and provided
further that, without the consent of the Optionee, no amendment
may adversely affect any then outstanding Option or any unexercised
portion thereof.
9. Indemnification
In addition to such other rights of indemnification as they may
have as members of the Board Committee that administers the Plan,
the members of the Plan Administrator shall be indemnified by the
Company against reasonable expense, including attorney's fees,
actually and necessarily incurred in connection with the defense
of any action, suit or proceeding, or in connection with any appeal
therein to which they, or any of them, may be a party by reason of
any action taken or failure to act under or in connection with the
Plan or any Option granted thereunder, and against any and all
amounts paid by them in settlement thereof (provided such settlement
is approved by independent
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legal counsel selected by the Company). In addition, such members
shall be indemnified by the Company for any amount paid by them in
satisfaction of a judgment in any action, suit, or proceeding,
except in relation to matters as to which it shall have been
adjudged that such member is liable for negligence or misconduct
in the performance of his or her duties, provided however that
within 60 days after institution of any such action, suit, or
proceeding, the member shall in writing offer the Company the
opportunity, at its own expense, to handle and defend the same.
10. Effective Date and Term of the Plan
This Plan shall become effective (the "Effective Date") on the
date of adoption by the board of directors as evidenced by the
date and signature of the President below. Options granted under
the Plan prior to shareholder approval are subject to cancellation
by the Plan Administrator if shareholder approval is not obtained
within 12 months of the date of adoption. Unless sooner terminated
by the Board in its sole discretion, this Plan will expire on
January 1, 2009.
IN WITNESS WHEREOF, the Company by its duly authorized officer, has
caused this Plan to be executed this 23rd day of March, 1999.
MW MEDICAL, INC.
\s\ Jan Wallace
_____________________________________
By: Jan Wallace
Its: Chairman of the Board
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