Document:

Ex10.17

 

 

PRO-DEX, INC.

1994 AMENDED STOCK OPTION PLAN

            This
Stock Option Plan (the "Plan") is adopted in consideration for services
rendered and to be rendered to Pro-Dex, Inc. and related companies.

1.   Definitions.  The terms used in this Plan shall, unless otherwise
indicated

or required by the particular
context, have the following meanings:

Board:    
The Board of Directors of Pro-Dex, Inc.

Code:     
The Internal Revenue Code of 1986, as amended.

Common
Stock:    The no par value common stock of Pro-Dex, Inc.

Company: 
       Pro-Dex, Inc., a corporation incorporated under the laws of California, and any successors in
interest by merger, operation of law, assignment or purchase of all or
substantially all of the property, assets or business of the Company.

Date of
Grant:    The date on which an Option (see below) is granted under the
Plan.

Disinterested
Person:  A director who has not been granted or awarded equity securities
pursuant to any plan of the Company or of any Related Company of the Company
during one year prior to that director's service as an administrator of the
Plan, except as otherwise provided in Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") with respect
to (a) participation in formula plans or ongoing securities acquisitions plans,
and (b) an election to receive securities for an annual retainer fee.

                        Employee:   
An Employee is an employee of the Company or any Related Company.

1

Fair
Market Value:   The Fair Market Value of the Option Shares.  Such Fair
Market Value as of any date shall be determined by the Option Committee as of
the last business day for which the prices or quotes discussed in this sentence
are available prior to the date an Option is granted and shall mean (a) the
average (on that date) of the high and low prices of the Common Stock on the
principal national securities exchange by which the Common Stock is traded, if
the stock is then traded on a national securities exchange; or, (b) the last
reported sale price (on that date) of the Common Stock on NASDAQ, if the stock
is not then traded on a national securities exchange; or (c) the 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 stock is not reported
on NASDAQ.  However, if the Common Stock is not publicly-traded at the time an
Option is granted under the Plan, Fair Market Value shall be deemed to be the
fair value of the stock as determined in good faith by the Board or the Option
Committee, and a written record of the method of determining such value shall
be maintained.

Incentive
Stock Options ("ISOs"):  "Incentive Stock Options" as that term is defined
in Section 422A of the Code.

Key
Employee:     A person designated by the Option Committee who either is
employed by the Company or a Related Company (see below) and upon whose
judgment, initiative and efforts the Company or a Related Company is largely
dependent for the successful conduct of its business; provided, however, that
Key Employees shall not include those members of the Board who are not
employees of the Company or a Related Company.

Non-Incentive
Stock Options ("Non-ISOs"):     Options which are not intended to qualify
as "Incentive Stock Options" under Section 422A of the Code.

Option:    
The rights granted to an Employee to purchase Common Stock pursuant to the
terms and conditions of an Option Agreement (see below).

Option
Agreement:     The written agreement (and any amendment or supplement thereto)
between the Company and an Employee designating the terms and conditions of an
Option.

Option
Committee:     With respect to grants of Options to Employees who are not
also Officers and/or Directors of the Company, the Plan shall be administered by
an Option Committee ("Option Committee") composed of the Board or at least two
members of the Board.  With respect to grants of Options to Employees who are
also Officers or Directors, the Plan shall be administered by a committee,
selected by the Board, consisting of two or more persons, each of whom is a
Disinterested Person.  Such committee may also be deemed an Option Committee.

Option
Shares:     The shares of Common Stock underlying an Option granted to an
Employee.

Optionee:    
An Employee who has been granted an Option.

Related
Company:     Any corporation that is a "parent corporation" or a
"subsidiary corporation" with respect to the Company, as those terms are
defined in Section 425 of the Code.  The determination of whether a corporation
is a Related Company shall be made without regard to whether the corporation or
the relationship between the corporation and the Company now exists or comes
into existence hereinafter.

2.   Purpose and Scope.

(a)    The
purpose of this Plan is to advance the interests of the Company and
its shareholders by affording Employees an opportunity for investment in the
Company and the incentive advantages inherent in stock ownership in this
Company.

2

(b)       This
Plan authorizes the Option Committee to grant Options to purchase
shares of Common Stock to Employees selected by the Option Committee while
considering criteria such as employment position or other relationship with the
Company, duties and responsibilities, ability, productivity, length of service
or association, morale, interest in the Company, recommendations by
supervisors, and other matters.

3.   Administration of the Plan.  The Plan shall be administered by the
Option Committee.  The Option Committee
shall have the authority granted to it under this section and under each other
section of the Plan.

In accordance
with and subject to the provisions of the Plan, the Option Committee shall select the
Optionees, shall determine (a) the number of shares of Common Stock to be
subject to each Option, (b) the time at which each Option is to be granted, (c)
whether an Option shall be granted in exchange for the cancellation and
termination of a previously granted option or options under the Plan or
otherwise, (d) the purchase price for the Option Shares, (e) the option period,
and (f) the manner in which the Option becomes exercisable.  In addition, the
Option Committee shall fix such other terms of each Option as the Option
Committee may deem necessary or desirable.  The Option Committee shall
determine the form of Option Agreement to evidence each Option.

The Option
Committee from time to time may adopt such rules and regulations for carrying out the
purposes of the Plan as it may deem proper and in the best interests of the
Company.  The Option Committee shall keep minutes of its meetings and those
minutes shall be distributed to every member of the Board.

The Board may
from time to time make such changes in and additions to the Plan as it may
deem proper and in the best interest of the Company; provided, however, that no
such change or addition shall impair any Option previously granted under the
Plan, and that the approval by the affirmative vote of the holders of a
majority of the Company's securities entitled to vote and represented at a
meeting duly held in accordance with the applicable laws of the State of
California, shall be required for any amendment which would:

(a)    modify
the eligibility requirements for receiving Options under the Plan;

(b)    increase
the benefits accruing to Employees under the Plan; or

(c)    increase
the number of shares of Common Stock that may be issued under the
Plan.

3

All actions
taken and all interpretations and determinations made by the Option Committee in good
faith (including determinations of Fair Market Value) shall be final and
binding upon all Employees, the Company and all other interested persons.  No
member of the Option Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan, and
all members of the Option Committee shall, in addition to rights they may have
as Directors of the Company be fully protected by the Company with respect to
any such action, determination or interpretation.

4.     
Number of Shares.  The Board is authorized to appropriate, issue
and sell for the purposes of the Plan, and
the Option Committee is authorized to grant Options with respect to, a total
number, not in excess of 1,500,000 shares of Common Stock, either treasury or
authorized but unissued, or the number and kind of shares of stock or other
securities which in accordance with Section 9 shall be substituted for the
1,500,000 shares or into which such 1,500,000 shares shall be adjusted.  All or
any unsold shares subject to an Option that for any reason expires or otherwise
terminates, may again be made subject to Options under the Plan.

5.     
Eligibility.  Options which are intended to qualify as ISOs will
be granted only to Key Employees.  Key
Employees and other Employees may hold more than one Option under the Plan and
may hold Options under the Plan and options granted pursuant to other plans or
otherwise.

6.     
Option Price.  The Option Committee shall determine the purchase
price for the Options Shares, provided
that the purchase price to be paid by Optionees for the Option Shares which are
intended to qualify as ISOs shall not be less than 100 percent of the Fair
Market Value of the Option Shares at the time the ISO is granted.  The purchase
price to be paid by Optionees for Option Shares which are not intended to
qualify as ISOs may be less than the Fair Market Value of the Option Shares at
the time the Non-ISO is granted.  The purchase price for the Option Shares
shall be a fixed, and cannot be a fluctuating, price.

7.     
Duration and Exercise of Options.

(a)      Each
Option granted under the Plan shall be exercisable on such date or dates
and during such period and for such number of shares as shall be determined
pursuant to the provisions of the instrument evidencing such Option.  The
Option Committee shall have the right to accelerate the date of exercise of any
Option, provided that the Option Committee shall not accelerate the exercise of
any ISO granted if such acceleration would violate the annual vesting
limitation contained in Section 422(d) (1) of the Code.

(b)       Except
as otherwise permitted under Section 11, during the lifetime of
the Optionee, the Option shall be exercisable only by the Optionee; provided,
that in the event of the legal disability of an Optionee, the guardian or
personal representative of the Optionee may exercise the Option.  However, if
the Option is an ISO it may be exercised by the guardian or personal
representative of the Optionee only if such guardian or personal representative
obtains a ruling from the Internal Revenue Service or an opinion of counsel to
the effect that neither the grant nor the exercise of such power is violative
of Section 422A(b) (5) of the Code.  Any opinion of counsel must be both from
counsel arid in a form acceptable to the Option Committee.

4

 

(c)       The
Option Committee may determine whether any Option shall be exercisable
as provided in Paragraph (a) of this Section 7 or whether the Options shall be
exercisable in installments only; if the Option Committee determines the
latter, it shall determine the number of installments and the percentage of the
Option exercisable at each installment date.  All such installments shall be
cumulative.

(d)       If
the Optionee ceases to be employed by either the Company or a Related
Company because of the death or permanent and total disability (as defined in
Section 22(e) (3) of the Code) of the Optionee, any Option held by the Optionee
at the time his employment ceases may be exercised within 90 days after the
date his employment ceased, but only to the extent that the Option was exercisable
according to its terms on the date the Optionee's employment ceased.  After
such 90-day period, any unexercised portion of an Option shall expire.

(e)        Notwithstanding
the provisions of Paragraph (d) of this Section 7, if an
Optionee's employment by the Company or a Related Company ceases for any reason
other than the Optionee's death or permanent and total disability, any
unexercised portion of any Option held by the Optionee at the time his
employment ceases may be exercised within 30 days after the date his employment
ceased, but only to the extent that the Option was exercisable according to its
terms on the date the Optionee's employment ceased.  After such date, any
unexercised portion of an Option shall expire.

(f)    
    Each Option shall be exercised in whole or part by delivering to the office of
the Treasurer of the Company written notice of the number of shares with
respect to which the Option is to be exercised and by paying in full the
purchase price for the Option Shares purchased as set forth in Section 8;
provided, that an Option may not be exercised in part unless the purchase price
for the Option Shares purchased is at least $2,000.

(g)        To
the extent required to qualify for the exemption provided by Rule 16b-3
under the Exchange Act, and any successor provision, at least six months must
elapse from the date of acquisition of an Option by any person who is subject
to the reporting requirements of Section 16(a) of the Exchange Act to the date
of exercise of such Option or disposition of the Option Shares.

5

8.     
Payment for Option Shares.  If the purchase price of the Option
Shares purchased by any Optionee at one
time exceeds $2,000, the Option Committee may permit all or part of the
purchase price for the Option Shares to be paid by the Optionee by (a)
delivering to the Company shares of the Company's common Stock previously owned
by the Optionee with a Fair Market Value as of the date of payment equal to the
portion of the purchase price for the Option Shares that the Optionee does not
pay in cash, (b) having shares withheld from the amount of shares to be
received by the Optionee, (c) delivering an irrevocable subscription agreement
obligating the Optionee to take and pay for the shares to be purchased within
one year of the date of such exercise, or (d) complying with any other payment
mechanisms as the Option Committee may approve from time to time.  As a
condition to the exercise of any Option granted under this Plan, the Optionee
shall make such arrangements as the Option Committee may require for the
satisfaction of any federal, state or withholding tax obligations which may
arise in connection with such exercise.  The issuance, transfer or delivery of
certificates of shares of Common Stock pursuant to the exercise or Options may
be delayed, at the discretion of the Option Committee, until the Option
Committee is satisfied that the applicable requirements of federal and state
securities laws and the withholding provisions of the Code have been met. 
Until such person has been issued a certificate or certificates for the Option
Shares so purchased, he or she shall possess no rights of a recordholder with
respect to any of such shares.

9.     
Change in Stock, Adjustments, Inc.

(a)      In
the event that each of the outstanding shares of Common Stock (other than
shares held by dissenting shareholders which are not changed or exchanged)
should be changed into, or exchanged for, a different number or kind of shares
of stock or other securities of the Company, or, if further changes or exchanges
of any stock or other securities into which the Common Stock shall have been
changed, or for which it shall have been exchanged, shall be made (whether by
reason of merger, consolidation reorganization, recapitalization, stock
dividends, reclassification, split-up, combination or shares or otherwise(,
then there shall be substituted for each share of Common Stock that is subject
to the Plan but not subject to an outstanding Option thereunder, the number and
kind of shares of stock or other securities into which each outstanding share
of Common Stock (other than shares held by dissenting shareholders which are
not changed or exchanged) shall be so changed or for which each outstanding
share of Common Stock (other than shares held by dissenting shareholders) shall
be exchanged.  Any securities so substituted shall be subject to similar
successive adjustments.

 

 

6

In the event of
any such changes or exchanges, the Option Committee shall determine whether, in
order to prevent dilution or enlargement of rights, an adjustment should be
made in the number, or kind, or Option price of the shares or other securities
then subject to an Option or Options granted pursuant to the Plan and the
Option Committee shall make any such adjustment, and such adjustments shall be
made and shall be effective and binding for all purposes of the Plan.

(b)       The
Company completed a Plan of Reorganization and Merger ("Reorganization")
whereby P-D Acquiring Corp., a California corporation, merged with and into the
Company in exchange for shares of Pro-Dex Holdings, Inc., a Colorado
corporation.  Post Reorganization, the Plan is the Plan of Pro-Dex, Inc.

10.  Relationship
to Employment.  Nothing contained in the Plan, or in any Option granted pursuant to the
Plan, shall confer upon any Optionee any right with respect to continuance of
employment by the Company, or interfere in any way with the right of the
Company to terminate the Optionee's employment at any time.

11.  Nontransferability
of Option.  No Option granted under the Plan shall be transferable by the Optionee,
either voluntarily or involuntarily, except by will or the laws of descent and
distribution, pursuant to a qualified domestic relations order as defined in
the Code, or pursuant to the Employee Retirement Income Security Act or rules
promulgated thereunder; except that (a) Optionees who are not subject to
Section 16(b) of the Exchange Act may upon written notice transfer an Option
(i) to an Optionee's spouse, parents, siblings, or lineal descendants, or (ii)
to a trust for the benefit of the Optionee or any of the Optionee's spouse,
parents, siblings, or lineal descendants, or (iii) to any corporation or
partnership controlled by the Optionee; and (b) Optionees who are subject to
Section 16(b) of the Exchange Act may transfer Options to immediate family
members and family trusts.  No Option shall be subject to execution, attachment
or similar process.  Except as specifically provided herein, any attempt to
transfer the Option shall void the Option.

12.  Rights
as a Shareholder.  No person shall have any rights as a shareholderwith respect to any shares
covered by an Option until that person shall become the holder of record of
such shares and, except as provided in Section 9, no adjustments shall be made
for dividends or other distributions or other rights as to which there is an
earlier record date.

13.  Securities
Laws Requirements.  No Option Shares shall be issued unlessand until, in the opinion of the
Company, any applicable registration requirements of the Securities Act of
1933, as amended ("Securities Act"), any applicable listing requirements of any
securities exchange on which stock of the same class is then listed, and any
other requirements of law or of any regulatory bodies having jurisdiction over
such issuance and delivery, have been fully complied with.  Each Option and
each Option Share certificate may be imprinted with legends reflecting federal
and state securities laws, restrictions and conditions, and the Company may
comply therewith and issue "stop transfer" instructions to its transfer agent
and registrar in good faith without liability.

                                                                       7

14.  Disposition
of Shares.  Each Optionee, as a condition of exercise, shallrepresent, warrant and agree, in
a form of written certificate approved by the Company, as follows:  (a) that
all Option Shares are being acquired solely for his own account and not on
behalf of any other person or entity; (b) that no Option Shares will be sold or
otherwise distributed in violation of the Securities Act, or any other
applicable federal or state securities laws; (c) that if he is subject to
reporting requirements under Section 16(a) of the Exchange Act, he will (i) not
violate Section 16(b) of the Exchange Act, (ii) furnish the Company with a copy
of each Form 4 and Form 5 filed by him, and (iii) timely file all reports
required under the federal securities laws; and (d) that he will report all
sales of Option Shares to the Company in writing on a form prescribed by the
Company.

15.  Effective
Date of Plan; Termination Date of Plan.  The Plan shall be effective on the date of the
approval of the Plan by the affirmative vote of the holders of a majority of
the Company's securities entitled to vote and represented at a meeting duly
held in accordance with applicable law.  The Plan shall terminate on May 25,
2004, except as to Options previously granted and outstanding under the Plan at
that time.  No Options shall be granted after the date on which the Plan
terminates.  The Plan may be abandoned or terminated at any earlier time by the
Board, except with respect to any Options then outstanding under the Plan.

16.  Limitation
on Amount of Option.  With respect to ISOs, the aggregate FairMarket Value (determined as of
the time the ISO is granted) of the stock as to which an ISO may first become
exercisable in a particular calendar year may not exceed $100,000.

17.  Ten
Percent Shareholder Rule.  With respect to ISOs, no Option may be granted to a Key Employee who, at
the time the Option is granted, owns stock possessing more than 10 percent of
the total combined voting power of all classes of stock of the Company or of
any "parent corporation" or "subsidiary corporation" as those terms are defined
in Section 425 of the Code, unless at the time the Option is granted the
purchase price for the Option shares is at least 110 percent of the Fair Market
Value of the Option Shares at the time the ISO is granted and such Option by
its terms is not exercisable after the  expiration of five years from the Date
of Grant.  For purposes of the preceding sentence, stock ownership shall be
determined as provided in Section 425 of the Code.

18.  Withholding
Taxes.  The Company, or any Related Company, may take such steps as it may deem
necessary or appropriate for the withholding of any taxes which the Company, or
any Related Company, is required by any law or regulation or any governmental
authority, whether federal, state or local, domestic or foreign, to withhold in
connection with any Option including, but riot limited to, the withholding of
all or any portion of any payment or the withholding of issuance of Option
Shares to be issued upon the exercise of any Option.

19.  Change
in Control, Stock Dividends, Reorganization and Other Extraordinary Actions.

8

(a)     If (i)
the company shall at any time be involved in a transaction described n
Section 424(a) of the Code (or any successor provision) or any "corporate
transaction" described in the regulations thereunder; (ii) the Company shall
declare dividends payable in, or shall subdivide or combine, its Common Stock
or (iii) any other event with substantially the same effect shall occur, the
Option Committee shall, with respect to each outstanding Option,
proportionately adjust the number of Option Shares and/or the exercise price
per share so as to preserve the rights of the Optionee substantially
proportionate to the rights of the Optionee prior to such event, and to the
extent that such action shall include an increase or decrease in the number of
Option Shares subject to outstanding Options, the number of shares available
under this Plan shall automatically be increased or decreased, as this case may
be, proportionately, without further action on the part of the Option
Committee, the Company or the Company's shareholders.

(b)     If the Company is liquidated or dissolved, the Option Committee
may allow the holders of any outstanding Options to exercise all or any part of
the unvested portion of the Options held by them; provided, however, that such
Options must be exercised prior to the effective date of such liquidation or
dissolution.  If the Option Holders do not exercise their Options prior to such
effective date, each outstanding Option shall terminate as of the effective
date of the liquidation or dissolution.

(c)        The
grant of an Option shall not affect in any way the right or power of the Company
to make adjustments, reclassifications, reorganizations or  changes of its
capital or business structure, to merge, consolidate or dissolve, to liquidate
or to sell or transfer all or part of its business or assets.

(d)       In
the event of a Change in Control (as defined below) of the Company, the
Option Committee may, in its discretion, accelerate all outstanding Options so
that they immediately become fully vested and immediately exercisable for the
duration of the Option Term.  For purposes of this subsection (d), "Change in
Control" shall mean either one of the following:  (i) when any "person," as
such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than a
shareholder of the Company on the date of this Plan), the Company, a subsidiary
or a Company Employee Benefit Plan, (including any trustee of such Plan acting
as trustee) becomes, after the date of this Plan, the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 35% or more of the combined voting power
of the Company's then outstanding securities; or (ii) the occurrence of a
transaction requiring shareholder approval, arid involving the sale of all or
substantially all of the assets of the Company or the merger of the Company
with or into another corporation.

9

(e)        If
at any time the Company declares an Extraordinary Dividend,as defined
below, all Options shall accelerate and thereupon become fully vested and
immediately exercisable for the duration of the Option Term.  For purposes of
this subsection (e), "Extraordinary Dividend" shall mean a cash dividend
payable to holders of record of the Common Stock in an amount in excess of 10%
of the then Fair Market Value of the Company's Common Stock.

20.  Other
Provisions.

(a)     
The use of a masculine gender in the Plan shall also include within its
meaning the feminine, and the singular may include the plural, and the plural
may include the singular, unless the context clearly indicates to the contrary.

(b)     
Any expenses of administering the Plan shall be borne by the Company.

(c)     
This Plan shall be construed to be in addition to any and all other compensation
plans or programs.  Neither the adoption of the Plan by the Board nor the
submission of the Plan to the shareholders of the Company shall be construed as
creating any limitations on the power of authority of the Board to adopt such
other additional incentive or other compensation arrangements as the Board may
deem necessary or desirable.

(d)     
The validity, construction, interpretation, administration and effect of the Plan
and its rules and regulations, and the rights of any and all personnel having
or claiming to have an interest therein or thereunder shall be governed by and
determined exclusively and solely in accordance with the laws of the State of
California; provided, however, if the Reorganization described in Section 9(b)
hereof shall be consummated, the laws of the State of Colorado shall govern and
determine construction, etc. of this Plan.

*********

            

10Exhibit 10.18

 

 

PRO-DEX, INC.

DIRECTORS' STOCK OPTION PLAN

            This
Directors' Stock Option Plan (the "Plan") adopted by Pro0Dex, Inc. (the
"Company") on May 25, 1994, is amended this 27th day of February
1996.

1.         Definitions.

Unless otherwise indicated or required by the particular context, the
terms used in this Plan shall have the
following meanings:  

Board:    
The Board of Directors of Pro-Dex, Inc.

Code:     
The Internal Revenue Code of 1986, as amended.

Common
Stock:    The no par value common stock of Pro-Dex, Inc.

Company: 
       Pro-Dex, Inc., a corporation incorporated under the laws of California, and any successors in
interest by merger, operation of law, assignment or purchase of all or
substantially all of the property, assets or business of the Company.

Date
of Grant:    The date on which an Option (see below) is granted under the
Plan.

Fair
Market Value:   If, at any time an Option is granted under the 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 an Option is granted and shall
mean (a) the average (on that date) of the high and low prices of the Common
Stock on the principal national securities exchange by which the Common Stock
is traded, if the stock is then traded on a national securities exchange; or,
(b) the last reported sale price (on that date) of the Common Stock on NASDAQ,
if the stock is not then traded on a national securities exchange; or (c) the
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 stock is
not reported on NASDAQ.  However, if the Common Stock is not publicly-traded at
the time an Option is granted under the Plan, Fair Market Value shall be as
determined in good faith by the Board after such consultation with outside
legal, accounting and other experts as the Board may deem advisable.

Nonemployee
Director: A person who is a member of the Board of Directors and who is not
an employee of the Company.

Option:  
The rights to purchase Common Stock granted pursuant to the terms and
conditions of an Option Agreement (defined below

1

Option
Agreement:     The written agreement (including any amendments or
supplements thereto) between the Company and a Nonemployee Director designating
the terms and conditions of an Option.

Option
Shares:  The shares of Common Stock underlying an Option granted to an
Employee.

Optionee: 
   A Nonemployee Director who has been granted an Option.

2.         Purpose and Scope.

(a)    The
purpose of this Plan is to advance the interests of the Company and
its shareholders by affording Nonemployee Directors, whose participation and
guidance contribute to the successful operation of the Company, and affording
them an opportunity for investment in the Company and the incentive advantages
inherent in stock ownership in this Company.

(b)  This Plan
authorizes that Options be granted to Nonemployee Directors according to the
formula set forth in Section 3 of this Plan.

3.         Operation of the Plan.  

(a)        Grant
of Options:  Amount and Timing.  Options to purchase 20,000 in shares of
Common Stock shall be granted under the Plan to each Nonemployee Director at
the later to occur of (i) the date this Plan is adopted by the Company's
shareholders, or (ii) the date he or she is first elected or appointed a
Nonemployee Director of the Company.  In addition, effective on the second and
third anniversary dates of commencement of service on the Board, options to
purchase an additional 15,000 shares shall automatically be granted to the
Optionee provided that, at that time, he or she is a Nonemployee Director.  All
Options shall be exercisable only as set forth in Sections 3(c) and 6 below and
shall be subject to the other terms and conditions set forth in this Plan or
otherwise established by the Company.

(b)     Option
Purchase Price.  The exercise price for each Option Share shall be the
Fair Market Value of the Company's Common Stock on the Date of Grant.

(c)  Term.  Each Option shall expire ten years after the Date
of Grant,  except that an
Option will expire, if not exercised, 90 days after the Optionee ceases to be a
director of the Company.

2

(d)    Amendments.   
This Plan may be changed or modified from time to time provided, however, that,
(A) no such change or modification shall impair any Option previously granted
under the Plan; (B) the provisions relating to the amount, price and timing of
the Options shall not be amended more than once every six months other than to
comport with changes in the Code, the Employee Retirement Income Security Act,
or rules promulgated thereunder; and (C) the approval by the affirmative vote
of the holders of a majority of shares of the Company's securities present, or
represented, and entitled to vote at a meeting duly held in accordance with the
applicable laws of the State of Colorado, shall be required for any amendment
which would do any of the following:

(i)      modify
the eligibility requirements for receiving Options under the Plan;

(ii)   except
as provided in Section 8 relative to capital changes, the number of shares
purchasable pursuant to the granting of any Option hereunder or the exercise
price of each Option;

(iii)    the
maximum term of Options granted;

(iv)   
the minimum price at which Options may be granted;

(v)     the dollar amount pursuant to which Options may be granted at any one
time;

(vi)     the
timing of Option Grants; or

(vii)    the
term of the Plan.

4.     
     Number of Shares.  

The Board is
authorized to appropriate, issue and sell for the purposes of the Plan, an aggregate maximum of 500,000
shares of Common Stock, including both treasury and newly issued shares, or the
number and kind of shares of stock or other securities which in accordance with
Section 8 shall be substituted for the 500,000 shares or into which such
500,000 shares shall be adjusted.  All or any unsold shares subject to an
Option that for any reason expires or otherwise terminates before it has been
exercised, again may be made subject to other Options granted under the Plan.

5.     
Eligibility.  

Options shall be granted under
the Plan only to Nonemployee Directors provided that any Nonemployee Director
may waive his right to participate in the Plan.  

6.     
Exercise of Options.  

(a)        Each Option granted pursuant to this Plan shall be exercisable in full
commencing six months after the Date of Grant. 

3

(b)       Except as otherwise provided in Section 9, during the lifetime of the Optionee, the Option shall be exercisable only by the Optionee; provided that,
in the event of the legal disability of an Optionee, the guardian or personal
representative of the Optionee may exercise the Option.

(c)       Each Option shall be exercised in whole or in part by delivering to the
office of the Treasurer of the Company written notice of the number of shares
with respect to which the Option is to be exercised and by paying in full the
purchase price for the Option Shares as set forth in Section 7 herein;
provided, that an Option may not be exercised in part unless the purchase price
for the Option Shares purchased is at least $2,000.

(d)       No Option may be exercised, and no Option Shares may be sold,
transferred or otherwise disposed of for a period of at least six months
following the Date of Grant of the Option.

7.     
      Payment for Option Shares.

        Upon exercise of any Option, the aggregate exercise price shall be paid
to the Company in cash or by certified or cashier's check.  For any single
purchase by an Optionee of Option Shares at a total purchase price in excess of
$2,000, the Company, in its sole discretion, upon request by the Optionee, may
permit all or part of the purchase price for the Option Shares to be paid by
(a) delivery to the Company for cancellation shares of the Common Stock
previously owned by the Optionee ("Previously Owned Shares") with a Fair Market
Value as of the date of the payment equal to the portion of the purchase price
for the Option Shares that the Optionee does not pay in cash; (b) having shares
withheld from the amount of shares to be received by the Optionee; (c)
delivering an irrevocable subscription agreement obligating the Optionee to
take and pay for the shares to be purchased within one year of the date of such
exercise; or (d) complying with any other payment mechanism as the Company may
approve from time to time.  Notwithstanding the above, an Optionee shall be
permitted to exercise his Option by delivering Previously Owned Shares only if
he has held, and provides appropriate evidence of such, the Previously Owned
Shares for more than six months prior to the date of exercise.  This period
(the "Holding Period") may be extended by the Company acting in its sole
discretion as is necessary, in the opinion of the Company, so that, under
generally accepted accounting principles, no compensation shall be considered
to have been or to be paid to the Optionee as a result of the exercise of the
Option in this manner.  At the time the Option is exercised, the Optionee shall
provide an affidavit, and such other evidence and documents as the Company
shall request, to establish the Optionee's Holding Period.  As indicated above,
an Optionee may deliver shares of Common Stock as part of the purchase price
only if the Company, in its sole discretion agrees, on a case by case basis, to
permit this form of payment.

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            8.         Change
in Stock, Adjustments, Etc.

                        In the
event that each of the outstanding shares of Common Stock (other than shares
held by dissenting shareholders which are not changed or exchanged) should be
changed into, or exchanged for, a different number or kind of shares of stock
or other securities of the Company, or if further changes or exchanges of any
stock or other securities into which the Common Stock shall have been changed,
or for which it shall have been exchanged, shall be made (whether by reason of
merger, consolidation, reorganization, recapitalization, stock dividends,
reclassification, split-up, combination of shares or otherwise) then there
shall be substituted for each share of Common Stock that is subject to the Plan
but not subject to an outstanding Option hereunder, the number and kind of
shares of stock or other securities into which each outstanding shares of
Common Stock (other than shares held by dissenting shareholders which are not
changed or exchanged) shall be so changed or for which each outstanding share
of Common Stock (other than shares held by dissenting shareholders) shall be so
changed or for which each such share shall be exchanged.  Any securities so
substituted shall be subject to similar successive adjustments.

            In
the event of any such changes or exchanges, (a) the number, or kind, or
exercise price of the Option Shares or other securities that are then subject
to an Option or Options granted pursuant to the Plan shall be deemed
automatically adjusted in order to prevent dilution or enlargement of rights
and (b) such adjustments shall be effective and binding for all purposes or the
Plan.

9.         Nontransferability
of Option.

            Except
as herein provided, no Option granted under the Plan shall be transferable by
the Optionee, either voluntarily or involuntarily, except by will, by the laws
of descent and distribution, or pursuant to a qualified domestic relations
order as defined in the Code or the Employee Retirement Income Security Act or
rules promulgated thereunder; and no Option shall be subject to execution,
attachment or similar process.  Any attempt to transfer an Option except as
otherwise herein provided shall void the Option.  Notwithstanding anything
herein to the contrary, an Option may be transferred to an immediate family
member or a family trust if such transfer is then permitted by the rules
adopted under Section 16(b) of the Securities Exchange Act of 1934, as amended.

10.       Rights as a Shareholder.

No person
shall have any rights as a shareholder with respect to any shares covered by an
Option until that person becomes the holder of record of such shares and,
except as provided in Section 8, no adjustments shall be made for dividends or other
distributions or other rights as to which there is an earlier record date.

5

11.       Securities Laws Requirements.

No Option
Shares shall be issued unless and until, in the opinion of the Company, any
applicable registration requirements of the Securities Act of 1933, as amended
("Securities Act"), any applicable listing requirements of any securities
exchange on which stock of the same class is then listed, and any other
requirement of law or of any regulatory bodies having jurisdiction over such
issuance and delivery, have been fully complied with.  Each Option Agreement
and each Option Share certificate may be imprinted with legends reflecting
federal and state securities laws restrictions and conditions, and the Company
may comply therewith and issue "stop transfer" instructions to its transfer
agent and registrar in good faith without liability.

12.       Disposition of Shares.

To the extent
reasonably requested by the Company, each Optionee, as a condition of
exercise, shall represent, warrant and agree, in a form of written certificate
approved by the Company, as follows:  (a) that all Option Shares are being
acquired solely for his/her own account and not on behalf of any other person
or entity; (b) that no Option Shares will be sold or otherwise distributed in violation
of the Securities Act or any other applicable federal or state securities laws;
(c) that he/she will report all sales of Option Shares to the Company in
writing on a form prescribed by the Company; and (d) that if he/she is subject
to the reporting requirements under Section 16(a) of the Exchange Act (i) he
will not violate Section 16(b) of the Exchange Act, (ii) he will furnish the
Company with a copy of each Form 4 and Form 5 filed by him, and (iii) he will
timely file all reports required under the federal securities laws.

13.       Effective Date of Plan; Termination Date of Plan.  

The Plan shall be effective on the date of  the Plan has been approved
by the Board of Directors and the shareholders of the Company and shall
terminate at midnight on a date which is ten years after the effective date,
except as to Options previously granted and outstanding under the Plan at that
time. No Options shall be granted after the date on which the Plan terminates. 
The Plan may be abandoned or terminated at any earlier time by the affirmative
vote of the holders of a majority of the shares of Common Stock present, or
represented, and entitled to vote at a meeting duly held in accordance with the
applicable laws of the State of California, except with respect to any Options
then outstanding under the Plan.

14.       Withholding Taxes. 

The Option Agreement shall provide that the Company may take such steps
as it may deem necessary or appropriate for the withholding of any taxes which
the Company is required by any law or regulation or any governmental authority,
whether federal, state or local, domestic or foreign, to withhold in connection
with any Option including, but riot limited to, the withholding of all or any
portion of any payment or the withholding of issuance of Option Shares upon the
exercise of any Option.

6

15.       Other Provisions.

The following
provisions are also in effect under the Plan:

(a)     The
use of a masculine gender in the Plan shall also include within its meaning the
feminine, and the singular may include the plural, and the plural may include
the singular, unless the context clearly indicates to the contrary. 

(b)     Any expenses of administering the plan shall be borne by the
Company.

(c)     This
Plan shall be construed to be in addition to any and all other compensation
plans or programs.  The adoption of the Plan by the shareholders of the Company
shall not be construed as creating any limitations on the power or authority of
the Board to adopt such other additional incentive or other compensation
arrangements as the Board may deem necessary or desirable. 

(d)    The
validity, construction, interpretation, administration and effect of the Plan
and of its rules and regulations, and the rights of any and all persons having
or claiming to have an interest therein or thereunder shall be governed by and
determined exclusively and solely in accordance with the laws of the State of
Colorado. 

*********

            

7

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