1999 Stock Option Plan - Medix Resources Inc.
MEDIX RESOURCES, INC.
1999 STOCK OPTION PLAN
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1. Purpose. This 1999 Stock Option Plan (the "Plan") is intended to
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provide incentives: (a) to the officers and other employees of Medix
Resources, Inc., a Colorado corporation (the "Company"), and any present or
future 50% or more owned subsidiaries of the Company (individually a "Related
Corporation" and collectively "Related Corporations") by providing them with
opportunities to purchase stock in the Company pursuant to options granted
hereunder that qualify as "incentive stock options" under Section 422A(b) of
the Internal Revenue Code of 1986, as amended and the regulations thereunder
(the "Code") (individually an "ISO" and collectively "ISOs"); and (b) to
directors, officers, employees and consultants of the Company and Related
Corporations by providing them with opportunities to purchase stock in the
Company pursuant to options granted hereunder that do not qualify as ISOs
(individually a "Non-Qualified Option" and collectively "Non-Qualified
Options"). Both ISOs and Non-Qualified Options are referred to hereinafter
individually as an "Option" and collectively as "Options". As used herein,
the terms "parent" and "subsidiary" mean "parent corporation" and "subsidiary
corporation", respectively, as those terms are defined in Section 425 of the
Code.
2. Administration of Plan.
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(a) Board or Committee Administration. This Plan shall be
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administered solely by the Company's Board of Directors (the "Board"), or by
a Compensation Committee (the "Committee") consisting of not less than two
(2) members of the Board, all of whom are Non-Employee Directors, as
defined in Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
as amended (the "1934 Act"). Hereinafter, all references in this Plan to the
"Committee" shall mean the Board if no Committee has been appointed. Subject
to the terms of this Plan, the Committee shall have the authority to (i)
determine the employees of the Company and Related Corporations (from among
the class of employees eligible under Section 3 below to receive ISOs) to
whom ISOs may be granted, and to determine (from among the class of
individuals and entities eligible under Section 3 below to receive
Non-Qualified Options) to whom Non-Qualified Options may be granted; (ii)
determine the time or times at which Options may be granted; (iii) determine
the exercise price of shares subject to each Option, which price shall not be
less than the minimum price specified in Section 6 below; (iv) determine
whether each Option granted shall be an ISO or a Non-Qualified Option; (v)
determine (subject to Section 7 below) the time or times when each Option
shall become exercisable and the duration of the exercise period; (vi)
determine whether restrictions such as repurchase options are to be imposed
on shares subject to Options and the nature of such restrictions, if any; and
(vii) interpret this Plan and prescribe and rescind rules and regulations
relating to this Plan. If the Committee determines to issue a Non-Qualified
Option, the Committee shall take whatever actions it deems necessary under
Section 422A of the Code and the regulations promulgated thereunder, to
ensure that such Option is not treated as an ISO. The interpretation and
construction by the Committee of any provisions of this Plan or of any Option
granted under this Plan shall be final unless otherwise determined by the
Board. The Committee may from time-to-time adopt such rules and regulations
for carrying out this Plan as it may deem appropriate. No member of the
Board or of the Committee shall be liable for any action or determination
made in good faith with respect to this Plan or any Option granted under this
Plan.
(b) Committee Actions. The Committee may select one of its members as
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its chairman, and shall hold meetings at such times and places as it may
determine. Except as otherwise provided by the Company's Bylaws, acts by a
majority of the Committee, or acts reduced to or approved in writing by
unanimous consent of the members of the Committee, shall be the valid acts of
the Committee. From time-to-time the Board may increase the size of the
Committee and appoint additional members thereof, who are Non-Employee
Directors, may remove members (with or without cause) and may appoint new
members in substitution therefor, fill vacancies (however caused), or remove
all members of the Committee and thereafter directly administer this Plan.
(c) Compliance with Federal and State Securities Laws and State
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Corporate Law. Various restrictions apply to officers and directors and
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others who may be deemed insiders under federal and state securities laws and
state corporate law. These laws impose certain restrictions on insiders.
Any Option granted to any director is subject to those restrictions. Holders
of Options should consult with their legal and tax advisors regarding the
securities law, tax law, corporate law and other effects of transactions
under this Plan. The Company does not provide any advice to an optionee on
such matters. Restrictions under such laws relate to holding periods,
alternative minimum tax calculations and other matters and should be clearly
understood by the holders of Options. The granting of Options is subject to
any applicable restrictions under state corporate law, including without
limitation, restrictions applicable to conflicting interest transactions
involving directors.
(d) Purpose and Intent of Plan. The purpose of this Plan is to
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advance the interest of the Company and its Related Corporations by
stimulating the efforts of employees on behalf of the Company and Related
Corporations, and heightening the desire of employees to continue employment
with the Company and Related Corporations, assisting the Company and Related
Corporations in competing effectively with other enterprises for the services
of new employees necessary for the continued improvement of operations, and
to attract and retain the best available personnel for service as directors
to the Company and Related Corporations and for services as consultants to
the Company and Related Corporations. This Plan is intended to be an
"employee benefit plan" under Rule 16b-3 promulgated under Section 16(b) of
the 1934 Act. Transactions under this Plan are intended to comply with Rule
16b-3. To the extent any provisions of this Plan or any action by the
Committee or the Board fails to comply with such Rule and to the extent any
provisions of this Plan or any action by the Committee or the Board fails to
comply with the requirements of the Code (for options intended to be ISOs
hereunder), each such provision(s) and action(s) shall be deemed to be null
and void, to the extent permitted by applicable law and as deemed advisable
by the Committee or the Board.
(e) Shareholder Approval. Grants of incentive stock options hereunder
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shall be subject to shareholder approval of this Plan within twelve (12)
months following the date this Plan is authorized and approved by the Board.
3. Eligible Employees and Others. ISOs may be granted to any employee
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of the Company or any Related Corporation. Any officer or director of the
Company who is not also an employee of the Company may not be granted ISOs
under this Plan. Non-Qualified Options may be granted to any employee,
officer or director (whether or not such person is also an employee of the
Company) or to any consultant to the Company or to any Related Corporation.
The Committee may take into consideration a recipient's individual
circumstances in determining whether to grant an ISO or a Non-Qualified
Option. The granting of a Option to any individual or entity shall neither
entitle that individual or entity to, nor disqualify that individual or
entity from, participation in any other grant of Options.
4. Stock. The stock subject to Options shall be authorized but unissued
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shares of Common Stock of the Company, $.001 par value per share (the "Common
Stock"), or shares of Common Stock reacquired by the Company in any manner.
Subject to the foregoing, the aggregate maximum number of shares of Common
Stock that may be issued pursuant to this Plan is 10,000,000, subject to
adjustment as provided in Section 13. Any such shares may be issued as ISOs
or Non-Qualified Options, so long as the number of shares so issued does not
exceed such number, as adjusted. If any Option granted under this Plan shall
expire or terminate for any reason without having been exercised in full or
shall cease for any reason to be exercisable in whole or in part, the
unpurchased shares subject to such Options shall again be available for
grants of Options under this Plan.
5. Granting of Options. Options may be granted under this Plan at any
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time until ten (10) years after the date of the authorization and approval of
this Plan by the Board. The date of grant of a Option under this Plan will
be the date specified by the Committee at the time it grants the Option;
provided, however, that such date shall not be prior to the date on which the
Committee acts to approve the grant. The Committee shall have the right,
with the consent of the optionee, to convert an ISO granted under this Plan
into a Non-Qualified Option pursuant to Section 16 below.
6. Minimum Option Price; ISO Limitations.
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(a) Price for Non-Oualified Qptions. The exercise price per share
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specified in the agreement relating to each Non-Qualified Option granted
under this Plan shall in no event be less than the fair market value per
share of the Common Stock on the date of such grant. Subject to the
foregoing sentence, the exercise price for Non-Qualified Options granted
hereunder shall be determined by the Committee or the Board in its sole
discretion, taking into account factors it deems relevant.
(b) Price for ISOs. The exercise price per share specified in the
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agreement relating to each ISO granted under this Plan shall not be less than
the fair market value per share of the Common Stock on the date of such
grant. In the case of an ISO to be granted to an employee owning stock
possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or of any Related Corporation, the price
per share specified in the agreement relating to such ISO shall not be less
than one hundred ten percent (110 %) of the fair market value per share of
the Common Stock on the date of grant.
(c) $100,000 Annual Limitation on ISOs. Each eligible employee may be
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granted ISOs only to the extent that (in the aggregate under this Plan and
all incentive stock option plans of the Company and any Related Corporation),
such ISOs do not become exercisable for the first time by such employee
during any calendar year in a manner that would entitle the employee to
purchase more than $100,000 in fair market value (determined at the time the
ISOs were granted) of the Common Stock in that calendar year. Any options
granted to an employee in excess of that amount will be granted as
Non-Qualified Options.
(d) Determination of Fair Market Value. If, at the time an Option is
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granted under this Plan, the Company's Common Stock is publicly-traded, "fair
market value" shall be determined as of the last business day for which the
prices or quotes discussed in this sentence are available prior to the date
such Option is granted and shall mean (i) the average (on that date) of the
high and low prices of the Common Stock on the principal national securities
exchange on which the Common Stock is traded, if the Common Stock is
then-traded on a national securities exchange; or (ii) the last reported sale
price (on that date) of the Common Stock on the NASDAQ National Market, if
the Common Stock is not then traded on a national securities exchange; or
(iii) the last sale price, closing bid price or average of bid prices last
quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the
NASDAQ National Market. However, if the Common Stock is not publicly-traded
at the time an Option is granted under this Plan, "fair market value" shall
be deemed to be the fair value of the Common Stock as determined by the
Committee or the Board in its sole discretion, after taking into
consideration all factors that it deems appropriate, including, without
limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.
7. Option Duration. Subject to earlier termination as provided in
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Sections 9 and 10 below, each Option shall expire on the date specified by
the Committee or the Board, but not more than (i) ten (10) years and one (1)
day from the date of grant in the case of Non-Qualified Options, (ii) ten
(10) years from the date of grant in the case of ISOs generally and (iii)
five (5) years from the date of grant in the case of ISOs granted to an
employee owning stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of any
Related Corporation. Subject to earlier termination as provided in Sections
9 and 10 below, the term of each ISO shall be the term set forth in the
original instrument granting such ISO, except with respect to any part of
such ISO that is converted into a Non-Qualified Option pursuant to Section 16
below.
8. Exercise of Options. Subject to the provisions of Sections 9
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through 12 below, each Option granted under this Plan shall be exercisable as
follows:
(a) Vesting. The Option shall either be fully exercisable on the date
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of grant or shall become exercisable thereafter in such installments as the
Committee or Board may specify.
(b) Full Vesting . Once an installment becomes exercisable it shall
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remain exercisable until expiration or termination of the Option, unless
otherwise specified by the Committee or the Board.
(c) Partial Exercise. Each Option or installment may be exercised at
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any time or from time-to-time, in whole or in part, for up to the total
number of shares with respect to which it is then exercisable.
(d) Acceleration of Vesting. The Committee or the Board shall have the
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right to accelerate the date of exercise of any installment of any Option;
provided, however, that the Committee or the Board shall not, without the
consent of the optionee, accelerate the exercise date of any installment of
any Option granted to any employee as an ISO (and not previously converted
into a Non-Qualified Option pursuant to Section 16 below) if such
acceleration would violate the annual vesting limitation contained in the
Code, as described in Section 6(c) above.
9. Termination of Employment. If an ISO optionee ceases to be
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employed by the Company or any Related Corporation other than by reason of
death or disability as defind in Section 10 below, no further installments of
such optionee's ISOs shall become exercisable, and (i) if the employee is
terminated "for cause," as defined below, while holding one or more ISOs,
that portion of each ISO that is vested but which has not already been
exercised shall expire coincident with the termination of the optionee's
status as an employee, or (ii) if for a reason other than "for cause," such
optionee's vested ISOs shall terminate after the passage of ninety (90) days
from the date of termination of such optionee's employment, but in no event
later than on their specified expiration date(s), except to the extent that
such ISOs (or the unexercised installments thereof) have been converted into
Non-Qualified Options pursuant to Section 16 below. Employment shall be
considered as continuing uninterrupted during any bona fide leave of absence
(such as those attributable to illness, military obligations or governmental
service), provided that the period of such leave does not exceed ninety (90)
days or, if longer, any period during which such optionee's right to
reemployment is guaranteed by statute. A bona fide leave of absence with the
written approval of the Committee or the Board shall not be considered an
interruption of employment under this Plan, provided that such written
approval contractually obligates the Company or any Related Corporation to
continue the employment of the optionee after the approved period of
absence. ISOs granted under this Plan shall not be affected by any change of
employment within or among the Company and any Related Corporations, so long
as the optionee continues to be an employee of the Company or any Related
Corporation. Nothing in this Plan shall be deemed to give any grantee of any
Option the right to be retained in employment or other service by the Company
or any Related Corporation for any period of time. For purposes of this
Agreement, "for cause" shall mean termination of a position with the Company
because of such employee's (i) misfeasance, waste of corporate assets, gross
negligence or willful continued failure to substantially perform his
reasonably assigned duties or (ii) engagement in dishonest or illegal conduct
that is demonstrably injurious to the Company.
10. Death; Disability.
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(a) Death. If an ISO optionee ceases to be employed by the Company or
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any Related Corporation by reason of such optionee's death, any ISO of such
optionee may be exercised, to the extent of the number of shares with respect
to which the optionee could have exercised on the date of the optionee's
death, by the optionee's estate, personal representative or beneficiary who
has acquired the ISO by will or by the laws of descent and distribution, at
any time prior to the earlier of the specified expiration date of the ISO or
one year from the date of the optionee's death.
(b) Disability. If an ISO optionee ceases to be employed by the
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Company or any Related Corporation by reason of disability, such optionee (or
such optionee's custodian) shall have the right to exercise any ISO held by
such optionee on the date of termination of employment, to the extent of the
number of shares with respect to which the optionee could have exercised on
that date, at any time prior to the earlier of the specified expiration date
of the ISO or one year from the date of the termination of the optionee's
employment. For purposes of this Plan, the term "disability" shall mean
"permanent and total disability" as defined in Section 22(e)(3) of the Code
or any successor statute.
11. Assignabilitv. No Option shall be assignable or transferable by
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the optionee except as permitted by the laws of descent and distribution, and
during the lifetime of the optionee each Option shall be exercisable only by
the optionee. No ISO shall be transferable except as permitted by the Code.
12. Terms and Conditions of Options. Options shall be evidenced by
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instruments (which need not be identical) in such form as the Committee or
the Board may from time-to-time approve. Such instruments shall conform to
the terms and conditions set forth in Sections 6 through 11 above and may
contain such other provisions as the Committee or the Board deems advisable,
which are not inconsistent with this Plan, including, without limitation,
restrictions applicable to shares of the Company's Common Stock issuable upon
exercise of Options. In granting Non-Qualified Options, the Committee or the
Board may specify that Non-Qualified Options shall be subject to the
restrictions set forth herein with respect to ISOs, or to such other
termination and cancellation provisions as the Committee or the Board may
determine. The Committee or the Board may from time-to-time confer authority
and responsibility on one or more of its members and/or one or more officers
of the Company to execute and deliver such instruments. The proper officers
of the Company are authorized and directed to take any and all action
necessary or advisable from time-to-time to carry out the terms of such
instruments.
13. Adjustments. Upon the occurrence of any of the following events,
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an optionee's rights with respect to Options granted to the optionee
hereunder shall be adjusted as hereinafter provided, unless otherwise
specifically provided in the written agreement between the optionee and the
Company regarding such Option:
(a) Stock Dividends and Stock Splits. If the shares of the Company's
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Common Stock shall be subdivided or combined into a greater or smaller number
of shares or if the Company shall issue any shares of Common Stock as a stock
dividend on its outstanding Common Stock, the number of shares of Common
Stock deliverable upon the exercise of Options shall be appropriately
increased or decreased proportionately, and appropriate adjustments shall be
made in the purchase price per share to reflect such subdivision, combination
or stock dividend.
(b) Merger, Consolidation, Sale of Assets. In the event of a
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consolidation or merger in which the Company is not the surviving entity, or
the sale of all or substantially all of the Company's assets, the Committee
or the Board may in its sole discretion (i) accelerate the exercisability of
any or all outstanding Options so that such Options would be exercisable in
full prior to the consummation of such consolidation, merger or asset sale at
such times and on such conditions as the Committee or the Board shall
determine, or (ii) authorize cash payments to optionees equal to the fair
market value of their equity interest in Options and the cancellation of
those Options, unless the successor entity, if any, assumes the outstanding
Options or substitutes substantially equivalent options therefor.
(c) Recapitalization or Reorganization. In the event of a
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recapitalization or reorganization of the Company (other than a transaction
described in Section 13(b) above) pursuant to which securities of the Company
or of another entity are issued with respect to the outstanding shares of
Common Stock, an optionee, upon exercising an Option, shall be entitled to
receive for the purchase price paid upon such exercise the securities the
optionee would have received if the optionee had exercised the Option prior
to such recapitalization or reorganization.
(d) Modification of ISOs. Notwithstanding the foregoing, any
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adjustments made pursuant to Sections 13(a), (b) or (c) above with respect to
ISOs shall be made only after the Committee or the Board, after consulting
with counsel for the Company, determines whether such adjustments would
constitute a "modification" of such ISOs (as that term is defined in Section
425 of the Code) or would cause any adverse tax consequences for the holders
of such ISOs. If the Committee or the Board determines that such adjustments
made with respect to ISOs would constitute a modification of such ISOs, it
may refrain from making such adjustments.
(e) Issuances of Securities. Except as expressly provided herein, no
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issuance by the Company of shares of stock of any class, or of securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares subject to Options. No adjustments shall be made for
dividends paid in cash or in property other than securities of the Company.
(f) Fractional Shares. No fractional shares shall be issued under
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this Plan and each optionee shall receive from the Company cash in lieu of
such fractional shares.
(g) Adjustments. Upon the happening of any of the events described in
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Section 13(a), (b) or (c) above, the class and aggregate number of shares set
forth in Section 4 above that are subject to Options that previously have
been or subsequently may be granted under this Plan shall also be
appropriately adjusted to reflect the events described in such Sections. The
Committee or Board shall determine the specific adjustments to be made under
this Section 13 and, subject to Section 2 above, its determination shall be
conclusive.
If any person or entity owning restricted Common Stock obtained by
exercise of a Option hereunder receives shares or securities or cash in
connection with a corporate transaction described in Sections 13(a), (b) or
(c) above as a result of owning such restricted Common Stock, such shares or
securities or cash shall be subject to all of the conditions and restrictions
applicable to the restricted Common Stock with respect to which such shares
or securities or cash were issued, unless otherwise determined by the
Committee or Board.
14. Means of Exercising Options. An Option (or any part or
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installment thereof) shall be exercised by giving written notice to the
Company at its principal office address. Such notice shall identify the
Option being exercised and specify the number of shares as to which such
Option is being exercised, accompanied by full payment of the purchase price
in any of the following ways: (i) in U.S. dollars in cash or by check, bank
draft or money order; (ii) by the surrender of all or part of an Option
(including the Option being exercised) with an aggregate net value equal to
the aggregate exercise price; (iii) by the tender to the Company of shares of
Common Stock with an aggregate value equal to the exercise price; or (iv) by
a combination of (i), (ii) and (iii) above. The holder of an Option shall
not have the rights of a shareholder with respect to the shares covered by
his, her or its Option until the date of issuance of a stock certificate for
such shares. Except as expressly provided in Section 13 above with respect
to changes in capitalization and stock dividends, no adjustment shall be made
for dividends or similar rights for which the record date is before the date
such stock certificate is issued.
15. Term and Amendment of Plan. This Plan was authorized and adopted
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by the Board on August 16, 1999 subject (with respect to the validation of
ISOs granted under this Plan) to approval of this Plan by the stockholders of
the Company. If the approval of this Plan by the Company's stockholders is
not obtained by August 16, 2000, any grants of ISOs under this Plan made
prior to that date will be rescinded, and such grants shall deemed to be
grants of an equal number of Non-Qualified Options. This Plan shall expire
on August 16, 2009 (except as to Options outstanding on that date). Subject
to the provisions of Section 5 above, Options may be granted under this Plan
prior to the date of stockholder approval of this Plan. The Board may
terminate or amend this Plan in any respect at any time; provided, however,
that the Board may not amend this Plan in any of the following respects
without the approval of the Company's stockholders obtained within twelve
(12) months before or after the Board adopts a resolution authorizing any of
the following actions: (a) increase of the total number of shares that may be
issued under this Plan (except by adjustment pursuant to Section 13 above);
(b) modification of the provisions of Section 3 above regarding eligibility
for grants of ISOs; (c) modification of the provisions of Section 6(b) above
regarding the exercise price at which shares may be offered pursuant to ISOs
(except by adjustment pursuant to Section 13 above); and (d) extending the
expiration date of this Plan. Except as otherwise provided in this Section
15, in no event may action of the Board or the stockholders alter or impair
the rights of a grantee, without such grantee's consent, under any Option
previously granted to such grantee. The Committee or the Board may amend the
terms of any Option granted if such amendment is agreed to by the recipient
of such Option.
16. Conversion of ISOs Into Non-Qualifled Options; Termination of
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ISOs. The Committee or the Board, at the written request of any optionee,
may in its discretion take such actions as may be necessary to convert such
optionee's ISOs (or any installments or portions of installments thereof)
that have not been exercised on the date of conversion into Non-Qualified
Options at any time prior to the expiration of such ISOs, including at the
time an employee leaves the employment of the Company, regardless of whether
the optionee is an employee of the Company or a Related Corporation at the
time of such conversion. Such actions may include, but shall not be limited
to, extending the exercise period or reducing the exercise price of the
appropriate installments of such Options. At the time of such conversion,
the Committee or the Board (with the consent of the optionee) may impose such
conditions on the exercise of the resulting Non-Qualified Options as the
Committee or the Board in its sole discretion may determine, provided that
such conditions shall not be inconsistent with this Plan. Nothing in this
Plan shall be deemed to give any optionee the right to have such optionee's
ISOs converted into Non-Qualified Options, and no such conversion shall occur
until and unless the Committee or the Board takes appropriate action. The
Committee or the Board, with the consent of the optionee, may also terminate
any portion of any ISO that has not been exercised at the time of such
termination.
17. Application of Funds. The proceeds received by the Company from
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the sale of shares pursuant to Options granted under this Plan shall be used
for general corporate purposes.
18. Governmental Regulation. The Company's obligation to sell and
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deliver shares of Common Stock under this Plan is subject to the compliance
with Federal and applicable state securities laws and the approval of any
governmental authority required in connection with the authorization,
issuance or sale of such shares.
19. Withholding of Additional Income Taxes. Upon the exercise of a
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Non-Qualified Option, the making of a Disqualifying Disposition (as that term
is defined in Section 20 below) or the vesting of restricted Common Stock
acquired upon the exercise of a Option hereunder, the Company, in accordance
with Section 3402(a) of the Code, may require the optionee to pay additional
withholding taxes in respect of the amount that is considered compensation
includable in such individual's gross income. The Committee or the Board in
its discretion may condition (i) the exercise of an Option or the vesting of
restricted Common Stock acquired by exercising a Option, on the grantee's
payment of such additional withholding taxes.
20. Notice to Company of Disqualifying Disposition. Each employee who
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receives an ISO must agree to notify the Company in writing immediately after
the employee makes a Disqualifying Disposition of any shares of the Company's
Common Stock acquired pursuant to the exercise of an ISO. A Disqualifying
Disposition is any disposition (including any sale) of such Common Stock
before the later of (a) two (2) years after the date the employee was granted
the ISO and (b) one (1) year after the date the employee acquired the Common
Stock by exercising the ISO. If the employee dies before such shares of
Common Stock are sold, these holding period requirements do not apply and no
Disqualifying Disposition can occur thereafter.
21. Governing Law; Construction. The validity and construction of
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this Plan and the instruments evidencing Options shall be governed by the
laws of the State of Colorado, or the laws of any jurisdiction in which the
Company or its successors in interest may be organized. In construing this
Plan, the singular shall include the plural and the masculine gender shall
include the feminine and neuter, and vice versa, unless the context otherwise
requires.