ACCUIMAGE DIAGNOSTICS CORP.
STOCK OPTION PLAN
1. Purpose and Scope.
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The purposes of this Plan are to induce persons of outstanding ability and
potential to join and remain with AccuImage Diagnostics Corp. (the "Company"),
to provide an incentive for such employees as well as for non-employee
consultants to expand and improve the profits and prosperity of the Company by
enabling such persons to acquire proprietary interests in the Company, and to
attract and retain key personnel through the grant of Options to purchase shares
of the Company's common stock. As used herein, the term "Option" includes both
Incentive Stock Options and Non-Qualified Stock Options
2. Definitions.
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Each term set forth in this Section 2 shall have the meaning set forth
opposite such term for purposes of this Plan unless the context otherwise
requires, and for the purposes of such definitions, the singular shall include
the plural and the plural shall include the singular:
(a) "Affiliate" shall mean any parent corporation or subsidiary
corporation of the Company as those terms are defined in Sections 424(e) and (f)
respectively of the Internal Revenue Code of 1986, as amended.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Committee" shall have the meaning set forth in Section 3 hereof.
(d) "Company" shall mean AccuImage Diagnostics Corp., a Nevada
corporation.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Fair Market Value" for a share of Stock means the price that the
Board or the Committee acting in good faith determines, through any reasonable
valuation method (including but not limited to reference to prices existing in
any established market in which the Stock is traded), to be the price at which a
share of Stock might change hands between a willing buyer and a willing seller,
neither being under any compulsion to buy or to sell and both having reasonable
knowledge of the relevant facts.
(g) "Option" shall mean a right to purchase Stock granted pursuant to
the Plan.
(h) "Exercise Price" shall mean the purchase price for Stock under an
Option, as determined in Sections 7 - "Incentive Stock Options" - and 8 -
"Non-Incentive Stock Options" - below.
(i) "Participant" shall mean an employee or non-employee consultant to
the Company to whom an Option is granted under the Plan.
(j) "Plan" shall mean this AccuImage Stock Option Plan.
(k) "Stock" shall mean the $0.001 par value common stock of the
Company.
(l) "1934 Act" means the Securities Exchange Act of 1934, as amended.
3. Administration.
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(a) The Plan shall be administered (i) with respect to individuals who
receive options under the Plan and who are or become subject to the reporting
requirements and short-swing liability provisions of Section 16 of the
Securities Exchange Act of 1934, as amended (the "1934 Act") ("Reporting
Persons") by a committee consisting of at least two members of the Board of
Directors of the Company (the "Board"), each of whom is a non-employee director
(as such term is defined under Rule 16b-3 of the 1934 Act) (the "Reporting
Persons Committee") and (ii) with respect to all individuals who receive Options
under the Plan and who are not Reporting Persons, by a committee which consists
of at least two members of the Board (the "Stock Option Committee"). For
purposes of this Plan, references to the "Committee" shall mean the Reporting
Persons Committee, the Stock Option Committee, or both, as the context may
require.
(b) The Committee shall have full authority in its discretion, subject
to and not inconsistent with the express provisions of the Plan, to grant
Options, to determine the Exercise Price and term of each Option, the persons to
whom, and the time or times at which, Options shall be granted and the number of
shares of Stock to be covered by each Option; to interpret the Plan; to
prescribe, amend, and rescind rules and regulations relating to the Plan; to
determine the terms and provisions of the option agreements (which need not be
identical) entered into in connection with the grant of Options under the Plan;
and to make all other determinations deemed necessary or advisable for the
administration of the Plan. The Board may delegate to one or more of their
members, or to one or more agents, such administrative duties as it may deem
advisable, and the Board or any person to whom it has delegated duties as
aforesaid may employ one or more persons to render advice with respect to any
responsibility the Board or such person may have under the Plan. The Board may
employ attorneys, consultants, accountants, or other persons, and the Board
shall be entitled to rely upon the advice, opinions, or valuations of such
persons. All actions taken and all interpretations and determinations made by
the Board in good faith shall be final and binding upon all Participants, the
Company, and all other interested persons. No member of the Board shall be
personally liable for any action, determination, or interpretation made in good
faith with respect to the Plan; and all members of the Board shall be fully
protected by the Company in respect of any such action, determination, or
interpretation.
4. Shares Subject to the Plan.
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Subject to adjustment under the provisions of Section 13 - "Effect of
Change in Stock Subject to Plan" - of the Plan, the maximum number of shares of
Stock that may be optioned or sold under the Plan is Two Million One Hundred
Thousand (2,100,000). Such shares may be authorized but unissued shares of Stock
of the Company, or issued shares of Stock reacquired by the Company, or shares
purchased in the open market expressly for use under the Plan. If for any reason
any shares of Stock as to which an Option has been granted cease to be subject
to purchase thereunder, then (unless the Plan shall have been terminated) such
shares shall become available for subsequent awards under this Plan in the
discretion of the Board. The Company shall, at all times while the Plan is in
force, reserve such number of common shares as will be sufficient to satisfy the
requirements of all outstanding Options granted under the Plan.
5. Eligibility; Factors to be Considered in Granting Options.
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(a) Options may be granted to: (i) any regular full-time employee
(including officers and directors) of either the Company or any affiliate of the
Company; and (ii) any non-employee consultant of the Company.
(b) In determining to whom options shall be granted and the number of
shares of Stock to be covered by each Option, the Board shall take into account
the nature the participants' duties, their present and potential contributions
to the success of the Company, and such other factors as it shall deem relevant
in connection with accomplishing the purposes of the Plan. The Board shall also
determine the time(s) of grant, the type and term of Option granted, and the
time(s) of exercise, in whole or part. A Participant who has been granted an
Option under the Plan may be granted new Options, which may be in addition to
prior Options granted under the Plan or may be in exchange for the surrender and
cancellation of prior Options having a higher or lower Exercise Price and
containing such other terms as the Board may deem appropriate.
6. Terms and Conditions of Options.
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(a) General. Options granted pursuant to the Plan shall be authorized
by the Board and shall be evidenced by agreements ("Option Agreements") in such
form as the Board from time to time shall approve. Such Option Agreements shall
comply with and be subject to the following general terms and conditions, and
shall also comply with and be subject to the provisions of Section 7 relating to
Incentive Stock Options or Section 8 relating to Non-Qualified Stock Options, as
applicable, as well as such other terms and conditions as set forth in this Plan
and as the Board may deem desirable, not inconsistent with the Plan.
(b) Employment Agreement. The Committee may, in its discretion,
include in any Option granted under the Plan a condition that the Participant
shall agree to remain in the employ of, and/or to render services to, the
Company for a period of time (specified in the Option Agreement) following the
date the Option is granted. No such Option Agreement shall impose upon the
Company any obligation to employ and/or retain the Participant for any period of
time.
(c) Manner of Exercise. A Participant may exercise an Option by giving
written notice of such exercise to the Company at its principal office,
attention to the Chief Executive Officer, and paying the Exercise Price either
(i) in cash in full at the time of exercise, or (ii) in the discretion of the
Board:
(A) by delivery of other previously outstanding common stock of the
Company,
(B) by an approved deferred payment schedule or other arrangement, which
arrangement shall be contained in writing in the Option Agreement, in
which event an interest rate will be stated which is not less than the
rate then specified which will prevent any imputation of higher
interest under Section 483 of the Code,
(C) by retention by the Company of some of the Stock as to which the
Option is then being exercised, in which case the Optionee's notice of
exercise shall include a statement (1) directing the Company to retain
so many shares that would otherwise have been delivered by the Company
upon exercise of this Option as equals the number of shares that would
have been surrendered to the Company if the purchase price had been
paid with previously outstanding stock of the Company, and (2)
confirming the aggregate number of shares as to which this Option is
being thus exercised and therefore surrendered, or
(D) in any other form of legal consideration acceptable to the Committee
at the time of grant or exercise. (d) Time of Exercise. Promptly after
the exercise of an Option and the payment of the Exercise Price,
either in full or pursuant to the approved payment schedule, the
Participant shall be entitled to the issuance of a stock certificate
evidencing ownership of the appropriate number of shares of Stock. A
Participant shall have none of the rights of a shareholder until
shares are issued to him/her, and no adjustment will be made for
dividends or other rights for which the record date has occurred prior
to the date such stock certificate is issued.
(e) Number of Shares. Each Option shall state the total number of
shares of Stock to which it pertains.
(f) Option Period and Limitations on Exercise. The Board may, in its
discretion, provide that an Option may not be exercised in whole or part for any
period(s) of time specified in the Option Agreement, except that the right to
exercise must be at the rate of at least 25% per year over four years from the
date the Option is granted, subject to the further conditions of the Plan and
the Option Agreement such as continued employment. However, in the case of an
Option granted to officers, directors, or non-employee consultants of the
Company or any of its affiliates, the Option may become fully exercisable,
subject to the further conditions of the Plan and the Option Agreement, at any
time or during any period established by the Company or its affiliates. The
exercise period shall be stated in the Option Agreement. No Option may be
exercised after the expiration of ten years from the Grant Date. No Option may
be exercised as to less than one hundred (100) shares at any one time, or the
remaining shares covered by the Option if less than one hundred (100).
7. Incentive Stock Options. The Board may grant Incentive Stock Options
("ISOs") which meet the requirements of Section - 422 of
the Code, as amended from time to time.
(a) ISOs may be granted only to employees of the Company or its
affiliates.
(b) Each ISO granted under the Plan must be granted within 10 years
from the date the Plan is adopted or is approved by the shareholders of the
Company, whichever is earlier.
(c) The purchase price shall not be less than the Fair Market Value of
the common shares at the time of grant, except that the purchase price shall be
110% of the Fair Market Value in the case of any person who owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or its affiliates at the time of grant.
(d) No ISO granted under the Plan shall be exercisable more than 10
years from the date of grant, except that in the case of any person who owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company or its affiliates at the time of grant, no ISO shall be
exercisable more than five years from the date of grant.
(e) To the extent that the aggregate Fair Market Value of stock
(determined at the time of grant) with respect to which ISOs are exercisable for
the first time by any individual during any calendar year under all plans of the
Company and its subsidiaries exceeds $100,000, such options shall be treated as
Non-Qualified stock options, but only to the extent of such excess. Should it be
determined that an entire option or any portion thereof does not qualify for
treatment as an ISO by reason of exceeding such maximum, or for any other
reason, such option or portion shall be considered a Non-Qualified stock option.
8. Non-Qualified Stock Options.
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The Board may grant Non-Qualified Stock Options ("NSOs") under the Plan in
addition to or in lieu of Incentive Stock Options. NSOs are not intended to meet
the requirements of Section 422 of the Code, and shall be subject to the
following terms and conditions:
(a) NSOs may be granted to any eligible Participant.
(b) The purchase price of the shares shall be determined by the Board
in its absolute discretion, but in no event shall such purchase price be less
than 85% of the Fair Market Value of the shares at the time of grant. In the
case of any person who owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or its affiliates at the
time of grant, the price shall be 110% of the Fair Market Value.
(c) NSOs shall not be exercisable more than ten years from the date of
grant.
9. Transferability.
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Options granted under this Plan shall not be transferable other than by
will or by the laws of descent and distribution, and during a Participant's life
shall be exercisable only by such Participant. Options granted under this Plan
shall not be subject to execution, attachment or other process.
10. Termination of Employment.
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Options held by employees, directors and non-employee consultants shall
terminate three months after termination of employment or service with the
Company or affiliate, unless:
(a) If employment is terminated for cause, as such term is defined by
California law, the employer's contract of employment or the Option Agreement,
the Option shall immediately terminate.
(b) If termination is due to the employee's permanent and total
disability within the meaning of Section 22(e)(3) of the Code, the Option may be
exercised at any time within one year following termination.
(c) The Option Agreement by its terms specifies whether it shall
terminate later than three (3) months after termination of employment. If the
Option may be exercised later than three months following termination, any
portion exercised beyond three months shall be a non-qualified stock option.
This paragraph shall not be construed to extend the term of any Option nor to
permit anyone to exercise the Option after expiration of its term.
(d) Options granted under this Plan shall not be affected by any
change of duties or position of the Participant so long as Participant continues
to be a regular, full-time employee of the Company. Any Option, or any rules and
regulations relating to the Plan, may contain such provisions as the Board shall
approve with reference to the determination of the date employment terminates.
Nothing in the Plan or in any Option granted pursuant to the Plan shall confer
upon any Participant any right to continue in the employ of the Company or shall
interfere in any way with the right of the Company to terminate such employment
at its will at any time.
11. Rights in the Event of Death.
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If an employee dies during the term of this Option, his/her legal
representative or representatives, or the person or persons entitled to do so
under the employee's last will and testament or under applicable intestate laws,
shall have the right to exercise this Option, but only for the number of shares
as to which the employee was entitled to exercise this Option on the date of his
death, and such right shall expire and this Option shall terminate six (6)
months after the date of Grantee's death or on the expiration date of this
Option, whichever date is sooner. In all other respects, this option shall
terminate upon such death.
12. Leaves of Absence.
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For purposes of the Plan, an employee on approved leave of absence from the
Company shall be considered as currently employed for 90 days following
beginning the leave or for so long as his/her right to reemployment is
guaranteed by statute or contract, whichever is longer.
13. Effect of Change in Stock Subject to Plan.
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(a) In the event that outstanding common shares are hereafter changed
by reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split, combination of shares, stock dividends and the
like, the Board shall make adjustments as it deems appropriate in the aggregate
number of shares advisable under the Plan and the number and price subject to
outstanding option. Any adjustment shall apply proportionately and only to the
unexercised portion of options granted.
(b) In the event the Company dissolves or liquidates or another entity
succeeds to its assets, or in the event of an acquisition or merger or
consolidation in which the Company is not the surviving entity, or in the event
of a reverse merger in which the Company survives but its common stock
immediately preceding the merger is converted into other property by virtue of
the merger, then the exercise dates of all options granted pursuant to this Plan
shall automatically accelerate and all options granted pursuant to this Plan
shall become exercisable in full, notwithstanding any other provision of this
Plan or of any outstanding options granted hereunder. Notwithstanding the
foregoing, in no event shall any Option be exercisable after the date of
termination of the exercise period of such Option specified in Sections 7(d) and
8(c) of this Plan.
14. Agreement and Representation of Employees.
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(a) Acquiring stock for investment purposes. As a condition to the
exercise of any Option, the Company may require the person exercising such
Option to represent and warrant at the time of such exercise that any shares of
Stock acquired at exercise are being acquired only for investment and without
any present intention to sell or distribute such shares if, in the opinion of
Company's counsel, such representation is required or desirable under the
Securities Act of 1933 or any other applicable law, regulation, or rule of any
governmental agency.
(b) Withholding. With respect to the exercise of any Option granted
under this Plan, each Participant shall fully and completely consent to whatever
the Board directs to satisfy the federal and state tax withholding requirements,
if any, which the Board in its discretion deems applicable to such exercise.
(c) Delivery. The Company is not obligated to deliver any common
shares until there has been qualification under or compliance with all state or
federal laws, rules and regulations deemed appropriate by the Company. The
Company will use all reasonable efforts to obtain such qualification and
compliance.
15. Amendment and Termination of Plan.
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The Board, by resolution, may terminate, amend, or revise the Plan with
respect to any shares as to which Options have not been granted; provided
however, that any amendment that would: (i) increase the aggregate number of
shares of common stock that may be issued under the Plan, (ii) materially
increase the benefits accruing to Participants, or (iii) materially modify the
requirements as to eligibility for participation in the Plan, shall be subject
to shareholder approval within 12 months before or after adoption. It is
expressly contemplated that the Board may amend the Plan in any respect
necessary to provide employees with the maximum benefits available under and/or
to satisfy the requirements of or amendments to Section 422 of the Code.
(a) No termination, modification or amendment of the Plan may however,
alter or impair the rights conferred by an Option previously granted without the
consent of the individual to whom the Option was previously granted.
(b) Unless sooner terminated, the Plan shall remain in effect for a
period of ten years from the date of the Plan's adoption by the Board.
Termination or amendment of the Plan shall not affect any Option previously
granted.
16. Use of Proceeds.
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The proceeds from the sale of shares pursuant to Options granted under the
Plan shall constitute general funds of the Company.
17. Effective Date of Plan.
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The Effective Date of this Plan is July 1, 1999, the effective date it was
adopted by the Board, provided the shareholders of the Company approve this Plan
within twelve (12) months after such effective date. Any Options granted after
Board adoption but within twelve months of shareholder approval may qualify as
incentive stock options, provided that all statutory and Plan requirements are
met. Any Options granted prior to Board adoption pursuant to the stock option
plan adopted in January 1998 or that do not qualify as incentive stock options
shall be deemed nonqualified stock options, provided that they meet the
requirements of this Plan. Upon Optionee approval, all Options granted under the
prior plan shall be governed by the terms of this Plan.
18. Indemnification of Committee.
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In addition to such other rights of indemnification as they may have and
subject to limitations of applicable law, the members of the Committee shall be
indemnified by the Company against all costs and expenses reasonably incurred by
them in connection with any action, suit or proceeding 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 rights granted thereunder and against all
amounts paid by them in settlement thereof or paid by them in satisfaction of a
judgment of any such action, suit or proceeding, the Board or Committee member
or members shall notify the Company in writing, giving the Company an
opportunity at its own cost to defend the same before such Committee member or
members undertake to defend the same on their own behalf.
19. Information Requirements.
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The Company shall provide each participant with annual financial
statements.
20. Governing Law.
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The Plan shall be governed by, and all questions arising hereunder, shall
be determined in accordance with the laws of State of California as such laws
are applied to agreements between California residents entered into and to be
performed entirely within California.
