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 Stock 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
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" 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.
Section 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.
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(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 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 rnethods; 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
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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 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 the 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
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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 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.
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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 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.
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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 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 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
December 31, 2008.
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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