INNOVATIVE MEDICAL SERVICES
2001 DIRECTORS AND OFFICERS
STOCK OPTION PLAN
ARTICLE I
DEFINITIONS
As used herein, terms have the meaning hereinafter set forth unless the context
should clearly indicate the contrary:
(a) "Board" shall mean the Board of Directors of the Company;
(b) "Days" shall mean for calculation purposes the days of the week in which the
NASDAQ System conducts and is open for regular trading activity;
(c) "Company" shall mean Innovative Medical Services, a California corporation;
(d) "Director" shall mean a member of the Board;
(e) "Fair Market Value" shall mean the average closing low bid price for the
Company's common stock for the previous five (5) trading days ending on the date
of grant;
(f) "Grant" means the issuance of an Option hereunder to an Optionee entitling
such Optionee to acquire Stock on the terms and conditions set forth in a Stock
Option Agreement to be entered into with the Optionee;
(g) "Officer" shall mean a Executive Officer of the Company and any Employee,
Consultant or Advisor which has been confirmed by the Board as eligible to
participate under this Plan;
(h) "Option" shall mean the right granted to an Optionee to acquire Stock of the
Company pursuant to the Plan;
(i) "Optionee" shall mean an Officer of the Company or a Director of the Company
to whom a Grant hereunder has been made;
(j) "Plan" shall mean the Innovative Medical Services 2001 Directors and
Officers Stock Option Plan, the terms of which are herein set forth;
(k) "Stock" shall mean the common stock of the Company or, in the event the
outstanding shares of stock are hereafter changed into or exchanged for shares
of different stock or securities of the Company or some other corporation, such
other stock or securities;
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(l) "Stock Option Agreement" shall mean the agreement between the Company and an
Optionee under which an Optionee may acquire Stock pursuant to the Plan.
ARTICLE II
THE PLAN
2.1 NAME. The plan shall be known as the "Innovative Medical Services 2001
Directors and Officers Stock Option Plan."
2.2 PURPOSE. The purpose of the Plan is to advance the business and
development of the Company and its shareholders by affording to the Directors
and Officers of the Company the opportunity to acquire a propriety interest in
the Company by the grant of Options to such persons under the terms herein set
forth. By doing so, the Company seeks to motivate, retain and attract highly
competent, highly motivated Executive Officers and Directors to lead the Company
through this critical time in its evolution and ensure the success of the
Company. The Options to be granted hereunder are non-statutory Options made
available to Directors and Officers of Innovative Medical Services.
2.3 EFFECTIVE DATE. The Plan shall become effective upon its adoption by
the Board of the Company and approval by the company's shareholders.
2.4 TERMINATION DATE. The Plan shall terminate ten (10) years from the date
the Plan is adopted by the Board of the Company and at such time any Options
granted hereunder shall be void and of no further force or effect.
ARTICLE III
PARTICIPANTS
Only Officers and Directors of the Company shall be eligible to be granted
an Option under the Plan. The Board may grant Options to any Director or Officer
in accordance with such determinations as the Board may, from time to time, in
its sole discretion make.
ARTICLE IV
ADMINISTRATION
4.1 The Plan shall be administered by an Administrative Committee of the
Board of Directors of the Company consisting of a majority of independent
directors. Subject to the express provisions of the Plan, the Administrative
Committee shall have the sole discretion and authority to determine from among
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eligible persons those to whom and the time or times at which Options may be
granted and the number of shares of Stock to be subject to each Option. Subject
to the express provisions of the Plan, the Administrative Committee shall also
have complete authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations related to it and to determine the details and provisions
of each Stock Option Agreement and to make all other determinations necessary or
advisable in the administration of the Plan. The Administrative Committee shall
also have the authority to modify outstanding Options and the provisions therein
subject to the agreement of the Optionee.
4.2 RECORDS OF PROCEEDINGS. The Administrative Committee shall maintain
written minutes of its actions which shall be maintained among the records of
the Company.
4.3 COMPANY ASSISTANCE. The Company shall supply full and timely
information to the Board in all matters relating to eligible Optionees, their
status, death, retirement, disability and such other pertinent facts as the
Board may require. The Company shall furnish the Administrative Committee with
such clerical and other assistance as is necessary in the performance of its
duties.
ARTICLE V
SHARES OF STOCK SUBJECT TO THE PLAN
5.1 LIMITATION. The number of shares of Stock which may be issued and sold
hereunder shall not exceed 1,000,000 shares.
5.2 OPTIONS GRANTED UNDER THE PLAN. Shares of stock with respect to which
an Option is granted hereunder, but which lapses prior to exercise, shall be
considered available for grant hereunder. Therefore, if Options granted
hereunder shall terminate for any reason without being wholly exercised, new
Options may be granted hereunder covering the number of shares to which such
terminated Options related.
5.3 OPTIONS TO BE GRANTED. Upon election or appointment to the Company's
Board of Directors, or appointment as an Executive Officer, such individual
shall receive an option to acquire 100,000 shares of stock per position
exercisable at the fair market value on the date of appointment. Upon each
anniversary of such date, the individual shall receive an option to acquire
50,000 shares of stock exercisable at the fair market value on the date thereof.
The foregoing not withstanding, the Administrative Committee shall have the
discretion to award additional options to individuals subject to the terms and
conditions of the Plan.
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5.4 ANTI-DILUTION. In the event the Stock subject to this Plan is changed
into or exchanged for a different number or kind of stock or other securities of
the Company or of another organization by reason of merger, consolidation or
reorganization, recapitalization, reclassification, combination of shares, stock
split or stock dividend;
(a) The aggregate number and kind of shares of Stock subject to the
Plan shall be adjusted appropriately;
(b) The Option price of any outstanding Option issued pursuant to the
Plan shall be adjusted appropriately;
(c) Where dissolution or liquidation of the Company or any merger of
consolidation in which the Company is not a surviving corporation is
involved, the Optionee holding any Option issued pursuant to the Plan shall
have the right immediately prior to such dissolution, liquidation, merger
or combination to exercise the Option, in whole or in part, to the extent
that it shall not have been exercised without regard to any installment
exercise provision.
ARTICLE VI
OPTION PROVISIONS
6.1 OPTIONS. Each Option granted hereunder shall be evidenced by minutes of
a meeting of or the written consent of the Administrative Committee and by a
written Stock Option Agreement dated as of the date of grant and executed by the
Company and the Optionee, which agreement shall set forth such terms and
conditions as may be determined by the Board consistent with the Plan.
6.2 LIMITATIONS.
(a) The maximum number of shares for which an Option or Options may be
granted under the Plan to any one Director or Officer shall be 200,000 in
any twelve month period.
(b) The Options granted hereunder are non-statutory Options which do
not satisfy the requisites of Section 422 of the Internal Revenue Code, as
amended.
6.3 OPTION PRICE. The per share Option price for the stock subject to each
Option shall not be less than the fair market value per share on the effective
date of grant or such other price as the Administrative Committee may determine.
6.4 OPTION PERIOD. Each Option granted hereunder must be granted within
five (5) years from the effective date of the Plan. The period for the exercise
of each Option shall be determined by the Administrative Committee, but in no
instance shall such period exceed five (5) years from the date of grant of the
Option.
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6.5 OPTION EXERCISE.
(a) Options granted hereunder may not be exercised until and unless
the Optionee shall meet the conditions precedent established by the
Administrative Committee for the Officers or Directors.
(b) Options may be exercised by the officer or director in whole or
iin part. Optionees may exercise their Option at any time by giving written
notice to the Company with respect to the specified option, delivered to
the Company at its principal office together with payment in full to the
Company of the amount of the Option price for the number of shares with
respect to which the Option(s) are then being exercised. In the
alternative, provided that at the time of exercise the Company's common
stock is publicly traded with an average daily trading volume of 5,000
shares and closing prices quoted daily for at least the past thirty trading
days, (a "Net Exercise"), payment of the exercise price per share may be
made by delivery of this Option with a Net Exercise Notice in the form of
which is attached hereto as Exhibit B. In the event of a Net Exercise, the
Optionee shall exchange the Option for such number of shares underlying the
Option determined by multiplying such number of shares by a fraction, the
numerator of which shall be the difference between the average closing sale
price per share for the five trading days prior to the date of the Net
Exercise Notice and the exercise price per share, and the denominator of
which shall be the average closing sale price per share for the five
trading days prior to the date of the Net Exercise Notice.
6.6 NON-TRANSFERABILITY OF OPTION. No Option or any right relative thereto
shall be transferred by an Optionee otherwise than as permitted under the
instructions to by will or by the laws of descent and distribution. During the
lifetime of an Optionee, the Option shall be exercisable only by him or her.
6.7 EFFECT OF DEATH OR OTHER TERMINATION OF EMPLOYMENT OR DIRECTORSHIP.
(a) If the Officer or Director's relationship with the Company shall
be terminated, with or without cause, or by the act of the Officer or
Director, the Optionee's right to exercise such Options shall terminate and
all rights thereunder shall cease three (3) days after the date on which
such person's association is terminated, unless this provision is modified
by the Option Agreement for the Options. Provided however, that if the
Optionee shall die or become permanently and totally disabled while
employed by or serving as a non-employee Director of the Company, as solely
determined by the Board in accordance with its policies, then either his or
her personal representatives or a transferee under the Optionee's will or
pursuant to the laws of descent and distribution, or the disabled Optionee
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may exercise the Option in full six (6) months from the date of such death
or disability unless this provision is modified by the Option Agreement for
the Options. In the case of an Optionee's retirement in accordance with the
Company's established retirement policy, such Option shall remain
exercisable by the Optionee for three (3) days from the date of such
retirement unless this provision is modified by the Option Agreement for
the Options.
(b) No transfer of an Option by the Optionee by will or the laws of
descent and distribution shall be effective to bind the Company unless the
Company shall have been furnished with a written notice thereof and an
authenticated copy of the will and/or such other evidence as the Committee
may deem necessary to establish the validity of the transfer and the
acceptance by the transferee or transferees of the terms and conditions of
such Option.
6.8 RIGHTS AS A SHAREHOLDER.
(a) An Optionee or a transferee of an Option shall have no rights as a
shareholder of the Company with respect to any shares subject to any
unexercised Options.
(b) Unless this provision is modified by the Option Agreement for the
Options, ownership rights shall vest with the Officer or Director according
to the following schedule with respect to the total number of shares
exercised:
Initial Appointment/Election Grant: 100% upon exercise or the first
anniversary of grant, which ever is later;
Anniversary exercise of this option: 100% upon exercise
6.9 REQUIRED FILINGS. An Optionee to whom an Option is granted under the
terms of the Plan is required to file appropriate reports with the Internal
Revenue Service. As a condition of the receipt of an Option hereunder, Optionees
shall agree to make necessary filings with the Internal Revenue Service. The
Company shall assist and cooperate with Optionees by providing the necessary
information required for compliance of this condition.
ARTICLE VII
STOCK CERTIFICATES
7.1 ISSUANCE. The Company shall issue and deliver any certificate for
shares of Stock purchased upon the exercise of any Option granted hereunder.
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7.2 TRANSFER RESTRICTIONS. Unless a registration statement covering the
shares underlying the Options is in effect at the time of execution of an Option
Agreement, the Board shall instruct the Secretary of the Corporation to impose
restrictions of the subsequent transferability of Stock issued pursuant to
Options to be granted hereunder. The Stock of the Company to be issued pursuant
to the exercise of an Option shall have such restrictions prominently displayed
as a legend on such certificate.
ARTICLE VIII
TERMINATION, AMENDMENT, OR MODIFICATION OF THE PLAN
The Board may at any time terminate the plan, and may at any time and from
time to time and in any respect amend or modify the Plan. Provided, however, if
the Plan has been submitted to and approved by the shareholders of the Company
no such action by the Board may be taken without approval of the majority of the
shareholders of the Company which: (a) increases the total number of shares of
Stock subject to the Plan, except as contemplated in Section 5.1 hereof; (b)
changes the manner of determining the Option price; or (c) withdraws the
administration of the Plan from the Administrative Committee.
ARTICLE IX
EMPLOYMENT
9.1 EMPLOYMENT. Nothing in the Plan or any Option granted hereunder or in
any Stock Option Agreement shall confer upon a non-employee Director receiving
such Option or Stock Option Agreement the status as an employee of the Company.
Further, nothing in the Plan or any Option granted hereunder shall in any manner
create in any Optionee the right to continue their relationship with the Company
or create any vested interest in such relationship, including employment.
9.2 OTHER COMPENSATION PLANS. The adoption of the Plan shall not effect any
other stock option, incentive, or other compensation plan in effect for the
Company or any of its subsidiaries, nor shall the Plan preclude the Company or
any subsidiary thereof from establishing any other forms of incentive or other
compensation for employees or non-employee Directors of the Company, or any
subsidiary thereof.
9.3 PLAN EFFECT. The Plan shall be binding upon the successors and assigns
of the Company.
9.4 TENSE. When used herein nouns in the singular shall include the plural.
9.5 HEADINGS OF SECTIONS ARE NOT PART OF THE PLAN. Headings of articles and
sections hereof are inserted for convenience and reference and constitute no
part of the Plan.
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INNOVATIVE MEDICAL SERVICES
By:________________________________________
Michael L. Krall, President
January 8, 2001
By:________________________________________
Dennis Atchley, Secretary
January 8, 2001
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