15
As filed with the Securities and Exchange Commission on June 10, 1997.
Registration No. 333-_____
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Earth Sciences, Inc.
(Exact name of registrant as specified in its charter)
Colorado 84-0503749
(State of incorporation) (IRS Employer Identification
No.)
910 12th Street, Golden, Colorado 80401
(Address of principal executive offices, including Zip Code)
(Registrant's telephone number, including area code): (303) 279-7641
EARTH SCIENCES, INC. STOCK BONUS PLAN
(Full title of plan)
Mark H. McKinnies
910 12th Street, Golden, Colorado 80401
(303) 279-7641
(Name, address, including zip code and telephone number,
including area code, of agent for service of process)
CALCULATION OF REGISTRATION FEE
______________________________________________________________________________
Proposed Proposed
Title of maximum of- maximum ag- Amount of
securities to be Amount to be fering price gregate of- registration
registered registered per share fering price fee
______________________________________________________________________________
Common Stock, $.01
par value: 69,900 Shares $ 3.25 (1) $227,175 (1) $ 68.84
______________________________________________________________________________
(1) Determined solely for the purposes of calculating the registration fee
based on the average price of the Common Stock on NASDAQ's SmallCapSM Market
on June 6, 1997. Fee calculated pursuant to section (c) of Rule 457 of
Regulation C.
1
<PAGE>
PART II
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company (File No. 0-6088) with the
Commission are incorporated herein by reference.
1. The Company's annual report on Form 10-KSB, as amended, for the year
ended December 31, 1996 ("1996 10-KSB").
2. The Company's quarterly report on Form 10-QSB for the quarter ended
March 31, 1997.
3. The Company's current report on Form 8-K, as amended, dated April 30,
1997.
4. A description of the Company's Common Stock contained in the
Registration Statement on Form 8-A as declared effective by the Securities and
Exchange Commission.
5. All documents filed by the Company pursuant to Section 13(a), 13(c),
14 and 15(d) of the Securities Exchange Act of 1934, as amended, subsequent to
the date hereof, which documents shall be deemed to be incorporated by
reference into this Registration Statement as a part hereof from the date of
filing such documents until a post-effective amendment to this Registration
Statement is filed which indicates that all shares of Common Stock being
offered hereby have been sold or which deregisters all shares of Common Stock
then remaining unsold.
Item 4. DESCRIPTION OF SECURITIES.
Not Applicable
Item 5. INTEREST OF NAMED EXPERTS AND COUNSEL.
Not Applicable
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 7-109 of the Colorado Business Corporation Act authorizes the
indemnification of directors and officers against liability incurred by reason
of being a director or officer and against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement and reasonably incurred
in connection with any action seeking to establish such liability, in the case
of third-party claims, if the officer or director acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and in the case of actions by or in the right of the
corporation, if the officer or director acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and if such officer or director shall not have been adjudged
liable to the corporation, unless a court otherwise determines.
Indemnification is also authorized with respect to any criminal action or
proceeding where the officer or director also had no reasonable cause to
believe his conduct was unlawful.
The above discussion of the Colorado Business Corporation Act is only a
summary and is qualified in its entirety by the full text of the foregoing.
Article VIII of the Registrant's Bylaws provides as follows:
Each past, present and future director and officer of the corporation
shall be indemnified by the corporation against all expenses, penalties, and
liabilities, including attorneys' fees, reasonably incurred by or imposed upon
him in connection with any actual or threatened claim, demand, action or
proceeding, whether civil or criminal, or in connection with any settlement
thereof, to which he may be made a party, or in which he may become involved,
by reason of his being or having been a director or officer of the
corporation, whether or not he is a director or officer at the time such
expenses, penalties or liabilities are incurred, except in cases where he
shall be finally adjudged in such action or proceeding to be liable for
2
<PAGE>
willful misconduct in the performance of his duties as such director or
officer. The right of indemnification herein provided shall be in addition
to, and not exclusive of, all other rights to which such director or officer
may be entitled and the right of indemnification herein provided shall inure
to the benefit of the personal representatives of deceased directors and
officers.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable
Item 8. EXHIBITS.
Exhibit
Number Description
3.1 Amended and Restated Certificate of Incorporation of the Company (1)
5.1* Opinion of by Parcel, Mauro, Hultin & Spaanstra, P.C. as to legality
of the shares
23.1* Consent of Hein + Associates LLP
23.2* Consent of by Parcel, Mauro, Hultin & Spaanstra, P.C.
(contained in Exhibit 5.1)
99.1* Stock Bonus Plan
* Filed herewith.
- ------------------------------------------------------------------------------
(1) Incorporated by reference from the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1996.
Item 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for purposes of determining liability under the Securities
Act, treat each post-effective amendment as a new registration statement of
the securities offered, and the offering of the securities at that time to be
the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any if
the securities that remain unsold at the end of the offering.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant hereby certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused
this Registration Statement and any amendment thereto to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Golden,
State of Colorado on June 10, 1997.
EARTH SCIENCES, INC.
Date: June 10, 1997 /s/ Ramon E. Bisque
-----------------------------------------------
Ramon E. Bisque
Principal Executive Officer
3
<PAGE>
Date: June 10, 1997 /s/ Mark H. McKinnies
-----------------------------------------------
Mark H. McKinnies
President, Principal Financial and
Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1933, as
amended, this Registration Statement and any amendment thereto has been signed
below by the following persons in the capacities and on the dates indicated.
Date: June 10, 1997 /s/ Ramon E. Bisque
-----------------------------------------------
Ramon E. Bisque, Director
Date: June 10, 1997 /s/ Duane N. Bloom
-----------------------------------------------
Duane N. Bloom, Director
Date: June 10, 1997 /s/ Michael D. Durham
-----------------------------------------------
Michael D. Durham, Director
Date: June 10, 1997 /s/ Robert H. Lowdermilk
-----------------------------------------------
Robert H. Lowdermilk, Director
Date: June 10, 1997 /s/ Mark H. McKinnies
-----------------------------------------------
Mark H. McKinnies, Director
4
<PAGE>
Exhibit 5.1
Parcel, Mauro, Hultin & Spaanstra, P.C.
Attorneys at Law
Suite 3600
1801 California Street
Denver, Colorado 80202-2636
Telephone (303) 292-6400
Telecopier (303) 295-3040
June 10, 1997
Earth Sciences, Inc.
910 12th Street
Golden, Colorado 80401
Gentlemen:
In connection with the Registration Statement on Form S-8 being filed by
the Earth Sciences, Inc. (the "Company") with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, relating to the
registration of 69,900 shares of the Company's Common Stock, $.01 par value,
to be offered under the Company's Stock Bonus Plan (the "Plan"), we are of
the opinion that:
1. The Company is a corporation duly organized and validly existing
under the laws of the State of Colorado.
2. All necessary corporate action has been taken to authorize the
establishment of the Plan and the issuance of 69,900 shares of the Company's
Common Stock under the Plan: and
3. The shares of the Company's Common Stock, when issued in accordance
with the Plan, will be legally issued, fully paid and nonassessable shares of
Common Stock of the Company.
We hereby consent to the filing of a copy of this opinion as an exhibit
to the Registration Statement referred to above.
Very truly yours,
/s/ Parcel, Mauro, Hultin & Spaanstra, P.C.
Parcel, Mauro, Hultin & Spaanstra, P.C.
5
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference of our report dated February 3,
1997 accompanying the financial statements of Earth Sciences, Inc. to Form S-3
Registration Statement of Earth Sciences, Inc. and to the use of our name as
appearing under the heading "Required Opinions and Consents" in the
Registration Statement.
/s/ Hein + Associates LLP
HEIN + ASSOCIATES
Denver, Colorado
June 10, 1997
6
<PAGE>
Earth Sciences, Inc.
910 12th Street
Golden, Colorado 80401
Telephone (303) 279-7641
Telecopier (303) 279-1180
June 10, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Registration Statement on Form S-8
Covering the Registration of 69,900
Common Shares of Earth Sciences, Inc.
Gentlemen and Ladies:
On behalf of Earth Sciences, Inc., a Colorado Corporation (the
"Company"), we transmit through EDGAR, pursuant to the Securities Act of 1933,
as amended (the "1933 Act"), a registration statement on Form S-8 (the
"Registration Statement") covering 69,900 shares of Common Stock, par value
$.01 per share (the "Securities").
The Securities are being registered in connection with the issuance of
69,900 shares of Common Stock of the Company pursuant to the Earth Sciences,
Inc. Stock Bonus Plan authorized by the shareholders of the Company in 1979.
In connection with the foregoing, we are transmitting one copy of the
Registration Statement and copies of the exhibits listed beneath the caption
"Item 8. EXHIBITS" contained in Part II of the Registration Statement.
The registration fee in the amount of $ 68.84 has been wired transferred
to the SEC by the Company.
The following supplemental information is supplied in order to facilitate
timely review of the Registration Statement by the Staff:
(1) The Company has reviewed the various criteria for eligibility for
use of Form S-8 and we believe that such criteria are satisfied. Moreover, we
believe that the Registration Statement is in compliance with the applicable
Form, instructions and rules pertaining thereto and (except as otherwise
indicated herein) is complete.
7
<PAGE>
Securities and Exchange Commission
June 10, 1997
Page 2
(2) Concurrently with this filing, we are filing the Registration
Statement with the National Association of Securities Dealers, Inc., ("NASD").
We undertake to furnish the Staff with copies of any letter of comment or
other documents received from the staff of NASD.
The Staff is requested to address any correspondence, comment or inquiry
to the undersigned, at the address or telephone number, as the case may be,
set forth above.
Very truly yours,
Earth Sciences, Inc.
/s/ Mark H. McKinnies
Mark H. McKinnies
President
8
<PAGE>
Exhibit 99.1
EARTH SCIENCES, INC.
STOCK BONUS PLAN
ARTICLE I
Purpose of Plan
The purpose of this Plan is to promote the growth and profitability of Earth
Sciences, Inc. and its subsidiaries by awarding rights to receive shares of
the Common Stock of the corporation to certain select employees in recognition
of their exceptional achievements on behalf of the Corporation and its
subsidiaries.
ARTICLE II
Definitions
2.1 "Award" means a grant to an employee of a right to be issued shares of
Common Stock under this Plan. An Award may be either a "Deferred Award" or an
"Immediate Award", as hereinafter defined.
2.2 "Board of Directors" means the board of directors of the Corporation.
2.3 "Common Stock" means the $0.01 par value common stock of the Corporation.
2.4 "Corporation" means Earth Sciences, Inc., and any corporate successor
thereto (whether by merger, acquisition, consolidation, liquidation or other
reorganization) which has adopted this Plan and assumed the Corporation's
obligations hereunder.
2.5 "Date of Award" means the date on which the Board of Directors authorizes
an Award to a Participant under this Plan.
2.6 "Deferred Award" means an Award, described in Section 4.1, providing for
the deferred issuance of the shares of Common Stock subject to the Award over
a specified period of time conditioned on the Participant's remaining in the
Continuous Employment of the Corporation or a Subsidiary throughout such
period of time.
2.7 "Disability" means the inability of a Participant to perform the usual
duties of the position in which he is then employed by the Corporation or a
Subsidiary by reason of any medically determinable physical or mental
incapacitation. The determination as to whether a Participant has incurred a
Disability shall be made by the Executive Committee upon the basis of a
medical evaluation of the Participant by a licensed physician selected by the
Executive Committee.
2.8 "Executive Committee" means the executive committee of the Board of
Directors of the Corporation.
2.9 "First Anniversary Date" means, with respect to a particular Award to a
particular Participant, the date one year after the Date of Award.
2.10 "Immediate Award" means an Award, described in Section 4.3, providing for
the immediate issuance of the shares of Common Stock subject to the Award but
providing for the forfeiture of such shares if the Participant does not remain
in the Continuous Employment of the Corporation or a Subsidiary for a
specified period of time.
2.11 "Participant" means any employee of the corporation or any Subsidiary who
has been granted an Award pursuant to this Plan.
2.12 "Second Anniversary Date" means, with respect to a particular Award to a
particular Participant, the date two years after the Date of Award.
2.13 "Subsidiary" means any corporation 50 percent or more of the voting stock
of which is owned by the Corporation or another Subsidiary, or any partnership
or joint venture, 50 percent or more of the capital and profits interest in
which is owned by the Corporation or any other Subsidiary, or any limited
liability company 50 percent or more of the voting membership interests of
which is owned by the Corporation or another Subsidiary.
9
<PAGE>
ARTICLE III
Award of Common Stock
3.1 Recommendations by Executive Committee.
Prior to the close of each calendar year, the Executive Committee shall
identify those employees, if any, of the Corporation or any Subsidiary who,
because of their exceptional contributions to the growth and successful
operation of the Corporation or a Subsidiary during such year, deserve to be
granted Awards. The Executive Committee shall then recommend to the Board of
Directors that it grant Awards to such employees, specify the number of shares
of Common Stock to be the subject of the Award to each such employee and
specify whether each such Award shall be a Deferred Award or an Immediate
Award.
3.2 Award of Common Stock.
At least once each year, the Board of Directors shall review the
recommendations made by the Executive Committee pursuant to Section 3.1 and
determine the employees to whom Awards should be made, the number of shares of
Common Stock to be the subject of each such Award, and whether such Award
shall be a Deferred Award or an Immediate Award. The Board of Directors shall
have complete discretion as to the granting of Awards, but shall not be
obligated to make any Awards, if it concludes that such Awards are not
justified or are not in the best interests of the Corporation or its
Subsidiaries. The Board of Directors may follow, modify or reject any
recommendation of the Executive Committee, and may make an Award to a
particular employee of more or less shares of Common Stock than the Executive
Committee recommended. The Board of Directors shall not make an Award to any
employee who has not been recommended for an Award by the Executive Committee.
The Board of Directors may make an award to a Participant to whom an Award has
previously been made. The maximum number of shares of Common Stock which may
be the subject of one or more Awards to any Participant, and the total number
of shares of Common Stock which may be the subject of all Awards outstanding
under the Plan, shall be subject to the limitations of Section 3.4.
3.3 Acceptance of Awards.
An employee to whom an Award has been granted may, upon written notice to
the Executive Committee, decline to accept the Award. An employee who has
declined to accept an Award shall be eligible to receive an Award in any
future year if the Board of Directors shall decide to grant him an Award in
any future year.
3.4 Maximum Number of Shares of Common Stock.
The maximum number of shares of Common Stock subject to any single Award
to a Participant shall not exceed 15,000 shares and, if a Participant has been
granted more than one Award, the aggregate number of shares subject to all
such Awards shall not exceed 25,000 shares. The maximum number of shares of
Common Stock subject to all awards granted to all Participants under this Plan
shall not exceed 125,000 shares. Upon termination of a Participant's
Continuous Employment, the shares of Common Stock represented by the portion
of any Award forfeited by the Participant pursuant to Section 4.2 or 4.5 shall
no longer be considered to be the subject of an Award for the purposes of this
Section 3.4.
ARTICLE IV
Issuance of Common Stock
4.1 Deferred Awards.
The shares of Common Stock represented by a Deferred Award to a
Participant shall be issued to him on the following basis: (i) twenty-five
percent of the number of shares represented by the Deferred Award shall be
issued to the Participant as soon as practicable after the Date of Award; and
(ii) unless forfeited as provided in Section 4.2, an additional twenty-five
percent of the number of shares represented
10
<PAGE>
by the Deferred Award shall be issued to him, on, or as soon as practicable
after, each of the first Anniversary Date, the Second Anniversary Date and the
Third Anniversary Date of the Date of Award. The provisions of this Section
4.1 relating to the issuance of shares of Common Stock shall be applied
separately to each Deferred Award made to a Participant under this Plan. The
Board of Directors may, however, authorize the issuance of Common Stock to
Participants on terms different than those set forth in this Section 4.1.
4.2 Forfeiture of Deferred Awards.
If the Continuous Employment, as defined in Section 4.7, of a Participant
terminates for any reason, other than his Death or Disability, prior to any
Anniversary Date on which he is entitled to be issued a portion of the shares
of Common Stock subject to a Deferred Award to him, the Participant shall
forfeit the right to be issued the remaining shares of Common Stock which are
the subject of all Deferred Awards previously granted to him. However, if a
Participant's employment terminates on or after an Anniversary Date but the
shares of Common Stock which became issuable to him under Section 4.1 on that
Anniversary Date have not been issued, such shares of Common Stock shall not
be forfeited by the Participant but shall be issued to him as soon as
practicable thereafter. If a Participant's Continuous Employment terminates
due to his Disability or Death, he shall not forfeit the right to be issued
the shares of Common Stock which are the subject of any Deferred Award
previously granted to him. In such event, he (or his Beneficiary or
Beneficiaries in the event of his Death) shall be entitled to be issued, on
each Anniversary Date next succeeding the termination of his Continuous
Employment, the shares of Common Stock, if any, which the Participant would
have been entitled to receive on such Anniversary Date had his Continuous
Employment not terminated.
4.3 Immediate Awards.
One hundred percent of the number of shares of Common Stock represented
by an Immediate Award to a Participant shall be issued to him as soon as
practicable after the Date of Award. The Participant shall have no right,
however, to assign, transfer, discount, pledge or otherwise dispose of
("Restrictions on Transfer") seventy-five percent of the number of shares of
Common Stock so issued to him, or any interest in such shares, until the
Restrictions on Transfer terminate. Unless the shares of Common Stock so
restricted are forfeited as provided in Section 4.5, the Restrictions on
Transfer shall terminate as to one-third of the number of shares so restricted
on each of the First Anniversary Date, the Second Anniversary Date and the
Third Anniversary Date of the Date of Award. The provisions of this Section
4.3 relating to the expiration of Restrictions on Transfer shall be applied
separately to each Immediate Award made to a Participant under this Plan. The
Board of Directors may, however, authorize the termination of Restrictions on
Transfer on terms different than those set forth in this Section 4.3.
4.4 Condition of Grant of Immediate Award.
As a condition of receiving an Immediate Award, any Participant to whom
such an Award has been granted shall be obligated, if the Executive Committee
so requires, to file an election under Section 83(b) of the Internal Revenue
Code of 1954, as amended, to include in his income for Federal income tax
purposes for the year in which the shares of Common Stock are issued to him
the fair market value on the date of the Award of the shares issued to him.
4.5 Forfeiture of Immediate Awards.
If the Continuous Employment, as defined in Section 4.7, of a Participant
terminates for any reason, other than his Death or Disability, prior to any
Anniversary Date on which the Restrictions on Transfer terminate as to a
portion of the shares of Common Stock issued to him under an Immediate Award,
the Participant shall forfeit all of the shares of Common Stock which are the
subject of all Immediate Awards previously granted to him and which remain
subject to Restrictions on Transfer. A Participant shall promptly transfer to
the Corporation any shares so forfeited by him. If the Participant's
Continuous Employment terminates due to his Death or Disability, he shall not
forfeit such shares but they shall remain subject to Restrictions on Transfer.
The Restrictions on Transfer shall terminate on each Anniversary Date
following his death or disability as to the number of shares with respect to
which such restrictions would have terminated had the Participant not died or
become disabled. The Board of Directors may, however, authorize the issuance
of Common Stock to Participants on terms different than those set forth in
this Section 4.5.
11
<PAGE>
4.6 Enforcement of Restrictions on Transfer.
The Restrictions on Transfer imposed by Section 4.3 on shares of Common
Stock issued under an Immediate Award shall be enforced as provided in
subsections (a), (b), and (c) below:
(a) Escrow: The certificates for any shares of Common Stock subject
to Restrictions on Transfer shall be held in escrow by the Corporation (or its
designee) as escrow holder, until the Restrictions on Transfer as to such
shares have terminated. Any purported sale, assignment, transfer, pledge or
other disposition by the Participant of all or a portion of the shares (or any
interest therein) subject to Restrictions on Transfer shall be null and void.
The secretary or other person having custody and control of the stock transfer
records of the Corporation shall not be required to recognize any such
assignment, transfer, pledge, or other disposition, or to issue a new stock
certificate or certificates therefor, unless or until the secretary or such
other person shall have received written evidence satisfactory to the
Corporation that the Restrictions on Transfer as to such shares have
terminated.
(b) Legend on Certificates: The certificates representing any shares
which are subject to the Restrictions on Transfer shall bear on their face a
legend in form satisfactory to the Corporation indicating that such shares are
subject to the Restrictions on Transfer imposed by Section 4.3 of this Plan.
(c) Attorney in Fact: If an employee shall become obligated, pursuant
to Section 4.5, to transfer shares of Common Stock to the Corporation, he
shall be deemed to have irrevocably appointed the president of the Corporation
as his attorney in fact to endorse any certificates for such shares, or to
execute any necessary stock powers, to effectuate the transfer of ownership of
such shares to the Corporation.
4.7 Continuous Employment.
A Participant shall be considered to be continuously employed so long as
such Participant remains an employee of the Corporation or a Subsidiary. A
Participant's Continuous Employment shall terminate as of the date he leaves
the employment of the Corporation or a Subsidiary. A transfer from the
employment of the Corporation to the employment of a Subsidiary, or vice
versa, without intervening employment elsewhere shall not constitute a
termination of the Participant's Continuous Employment. The Executive
Committee may, in its absolute discretion and under conditions imposed by it,
determine that a Participant who has been granted a leave of absence for any
reason by the Corporation or a Subsidiary shall not incur a termination of his
Continuous Employment. Under such circumstances, the Participant shall be
deemed to be employed continuously during the period of his leave of absence.
4.8 Issuance of Common Stock Subsequent to Termination or Suspension of
the Plan.
If this Plan is terminated or suspended by action of the Board of
Directors of the Corporation: (a) a Participant who has been granted a
Deferred Award shall retain the right to: (i) all shares of Common Stock
which have theretofore been issued to him in accordance with Section 4.1; and
(ii) be issued any shares of Common Stock which are the subject of a Deferred
Award to him, but which have not been issued to him, upon satisfying the
requirements of Section 4.1; and (b) a Participant who has been granted an
Immediate Award shall retain the right to: (i) all shares of Common Stock as
to which the Restrictions on Transfer have terminated in accordance with
Section 4.3; and (ii) have the Restrictions on Transfer terminate as to those
shares remaining subject to such restrictions upon satisfying the requirements
of Section 4.3.
4.9 Treatment of Forfeited Awards or Shares.
If any portion of a Deferred Award to a Participant is forfeited pursuant
to Section 4.2, or if any shares issued to a Participant under an Immediate
Award are forfeited pursuant to Section 4.5, neither the Participant, nor any
other person, shall have any present or future interest in the portion of the
Deferred Award, or in any shares of common Stock issued under the Immediate
Award, so forfeited. For purposes of determining the maximum number of shares
of Common Stock which may be awarded under this Plan as provided in Section
3.4, any shares of Common Stock represented by the portion of any Deferred
Award which has been forfeited, and any shares of Common Stock issued under an
Immediate Award which have been forfeited, shall be deemed not to be the
subject of an Award and shall again be available for award under the Plan.
12
<PAGE>
ARTICLE V
Cash Bonuses
5.1 Award of Cash.
Prior to the end of each calendar year, the Corporation may, in its
discretion, pay a cash bonus to, or on behalf of, each Participant to whom
shares of Common Stock have been issued during such year pursuant to an Award.
Such bonus may be applied for the benefit of the employee by being paid
directly to the Internal Revenue Service as part of the Federal income taxes
withheld from the Participant's compensation. The amount of such bonus, if
any, shall be determined by, or at the discretion of, the Executive Committee
and may be in an amount which shall, based solely on the Participant's
compensation from the Corporation or any Subsidiary, approximate the
additional Federal and Colorado income tax liability, if any, incurred by the
Participant because of the Participant's receipt of the shares of Common Stock
issued to him during such year. Under those circumstances, the amount of the
cash bonus shall be determined without regard to the fact that the cash bonus
itself will constitute taxable income to the Participant and give rise to
additional Federal and Colorado income tax liability. Such cash bonus may be
paid in a single lump-sum payment, or in any number of installments, at the
discretion of the Executive Committee.
ARTICLE VI
Miscellaneous
6.1 Adjustment in Number of Shares.
In the event of any change in the number of outstanding shares of Common
Stock by reason of any stock split, stock dividend, or other capital
transaction, the Executive Committee shall determine, in its absolute
discretion, whether such change equitably requires an adjustment in the
aggregate number of shares of Common Stock which are the subject of an Award,
but which have not yet been issued. If the Executive Committee determines
that an adjustment is required, it shall make such adjustments as it deems
appropriate. The Executive Committee shall not, however, award any fractional
shares as a result of any adjustment made under this Section 6.1.
6.2 Non-Alienation of Benefits.
No Award or other right or benefit under this Plan shall be subject to
anticipation, alienation, sale, assignment, pledge, encumbrance, or charge,
and any attempt to anticipate, alienate, sell, assign, pledge, encumber or
charge the same shall be void. Except with respect to any indebtedness owed
by the Participant to the Corporation or a Subsidiary, no Award or other right
or benefit hereunder shall in any manner be liable for or subject to the
debts, contracts, liabilities or torts of any Participant. If any Participant
hereunder should become bankrupt or attempt to anticipate, alienate, sell,
assign, pledge, encumber or charge any Award, right or benefit hereunder, then
such Award, right or benefit shall, in the discretion of the Executive
Committee, cease and, in such event, the Corporation may hold or apply the
same or any part thereof for the benefit of the Participant, his or her
spouse, children or other dependents, or any of them, in such manner and in
such proportion as the Executive Committee may deem appropriate.
6.3 Effect of Plan.
Neither the establishment of this Plan, the granting of any Award, nor
the issuance of any shares of Common Stock thereunder, shall be construed as
giving any employee, Participant, or any other person, any legal right, except
as expressly provided herein, against the Corporation, its Subsidiaries,
shareholders, directors or officers, the Executive Committee or the Board of
Directors. Nothing contained in this Plan shall be construed as a contract of
employment between the Corporation (or its Subsidiaries) and any employee or
Participant, as a right of any employee or Participant to be continued in the
employ of the Corporation (or its Subsidiaries), or as a limitation on the
right of the Corporation (or its Subsidiaries) to employ, discipline or
discharge any employee or Participant. No Participant shall acquire any
rights as a shareholder of the Corporation except to the extent that shares of
Common Stock have
13
<PAGE>
been issued to him under Section 4.1 or 4.3. The rights of any Participant
shall be limited to the right to receive shares of Common Stock, if and when
such shares become issuable under the terms and conditions of this Plan, and
the right to receive cash bonuses under the terms and conditions of this Plan.
6.4 Designation of Beneficiaries.
Each Participant shall, by signing a form furnished by the Executive
Committee, designate a person or persons (who may be named contingently or
successively) to whom shares of Common Stock shall be issued in the event of
the Participant's Death. The shares which shall be issued to a Beneficiary or
Beneficiaries in the event of a Participant's Death are those which became
issuable to the Participants under Section 4.1 or 4.3 but were not issued to
him prior to his Death, or those which will become issuable under Section 4.1
to the Participant's Beneficiary or Beneficiaries after the Participant's
death, as provided in Section 4.2. A designation of Beneficiary may be
changed at any time without the consent of a Beneficiary. A designation of
Beneficiary shall not be effective unless and until filed with the Executive
Committee while the Participant is alive and, when so filed, shall supersede
all previous designations. If a deceased Participant failed to name a
Beneficiary as provided above, or if the named Beneficiary dies before the
Participant or before issuance of the Participant's Common Stock, the
Executive Committee shall issue any shares of Common Stock which are or become
issuable under Section 4.1 or 4.3 to the legal representative of the estate of
the last to die of the Participant or his named Beneficiary.
6.5 Withholding of Taxes.
The Corporation shall have the right to deduct from any salary or bonuses
payable to any Participant any and all income or payroll taxes required by law
to be withheld from the compensation, whether in cash or shares of Common
Stock, payable to such Participant.
ARTICLE VII
Continuation and Amendment of Plan
7.1 Discontinuance of Plan.
The continuation of this plan is not assumed as a contractual obligation
by the Corporation, and the right is reserved to the Corporation, by action of
its Board of Directors, to discontinue the Plan at any time. If the Plan
shall be discontinued, no additional Awards shall be made under the Plan after
the date of discontinuance, but the Plan shall continue to be operated in
accordance with its terms, as they may hereafter be amended, with respect to
any Awards made prior to the date of discontinuance.
7.2 Amendment.
The Corporation, by action of its Board of Directors, shall have the
right at any time, whether before or after discontinuance of the Plan, to
amend all or any of the provisions of the Plan in any manner. Any such
amendment may prohibit or postpone the issuance of any shares of Common Stock
even though such shares may have become issuable after the effective date of
the amendment pursuant to any Award granted before the effective date of the
amendment.
ARTICLE VIII
Representations of Participants
8.1 Acceptance of Plan. By accepting any Award, a Participant shall be
deemed to have accepted all the terms and conditions of this Plan.
8.2 Transfer Restrictions. Each Participant upon receiving any shares of
Common Stock shall represent in writing to the Corporation that, if such is
the case, the Common Stock so acquired has not been registered under the
Securities Act of 1933 or any state "Blue Sky" or securities law, that such
Common Stock is not freely transferable and that such Common Stock cannot be
offered, sold or transferred in whole or in part except in compliance with
such laws. Such Participant shall also represent in writing that he is
acquiring such Common Stock for his own account, without any intention to make
an unregistered distribution thereof within the meaning of the Securities Act
of 1933 and that any certificate representing such Common Stock shall bear an
appropriate legend to such effect and the transfer agent for the Common Stock
shall be instructed to enter suitable "stop-transfer" notations in its records
to reflect the foregoing.
14
<PAGE>
ARTICLE IX
Effective Date
This Plan shall become effective as of March 13, 1978, subject to
approval by the shareholders of the Corporation.
15
<PAGE>
