<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Analytical Surveys, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of filing fee (Check the appropriate box):
[X] No filing fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
5) Total fee paid:
- --------------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
- --------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
3) Filing Party:
- --------------------------------------------------------------------------------
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
ANALYTICAL SURVEYS, INC.
1935 JAMBOREE DRIVE
COLORADO SPRINGS, COLORADO 80920
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 10, 1998
Notice is hereby given that an Annual Meeting of Shareholders of Analytical
Surveys, Inc. ("Company" or "ASI"), a Colorado corporation, will be held on
February 10, 1998 at 3:30 p.m. MST at the Antlers Doubletree Hotel, 4 South
Cascade Avenue, Colorado Springs, Colorado, for the following purposes:
1. To elect seven Directors to serve until the next Annual Meeting of the
Shareholders and until the election and qualification of their respective
successors; and
2. To ratify and approve the Analytical Surveys, Inc. 1997 Stock Option Plan;
and
3. To ratify the selection of KPMG Peat Marwick LLP as the independent public
accountants for the Company for the year ending September 30, 1998; and
4. To act upon such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The Company's Board of Directors has fixed the close of business on December 22,
1998, as the record date for determining those shareholders who will be entitled
to notice of and to vote at the Annual Meeting.
Representation of at least a majority of all outstanding shares of Common Stock
of the Company is required to constitute a quorum. Accordingly, it is important
that your stock be represented at the meeting.
A Proxy statement explaining the matters to be acted upon at the meeting is
enclosed. Also enclosed is a copy of the Annual Report of the Company for the
fiscal year ended September 30, 1997.
Whether or not you plan to attend the meeting, please complete, date and sign
the enclosed proxy card and return it in the enclosed envelope. Your proxy may
be revoked at any time prior to the time it is voted.
By Order of the Board of Directors
/s/ Scott C. Benger
---------------------------
Scott C. Benger
Secretary/Treasurer
January 8, 1998
<PAGE>
ANALYTICAL SURVEYS, INC.
1935 JAMBOREE DRIVE
COLORADO SPRINGS, COLORADO 80920
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 10, 1998
This Proxy Statement is submitted with the Notice of the Annual Meeting of
Shareholders of Analytical Surveys, Inc. ("Company" or "ASI") to be held on
February 10, 1998 at 3:30 p.m. MST at the Antlers Doubletree Hotel, 4 South
Cascade Avenue, Colorado Springs, Colorado.
The specific purposes to be considered and acted upon at the Annual Meeting are
summarized as follows:
1. To elect seven Directors to serve until the next Annual Meeting of the
Shareholders and until the election and qualification of their respective
successors; and
2. To ratify and approve the Analytical Surveys, Inc. 1997 Stock Option Plan;
and
3. To ratify the selection of KPMG Peat Marwick LLP as the independent public
accountants for the Company for the year ending September 30, 1998; and
4. To act upon such other business as may properly come before the meeting or
any adjournment or postponement thereof.
Each of the foregoing proposals is described in more detail in this Proxy
Statement.
PROXIES AND VOTING AT THE ANNUAL MEETING
This solicitation of proxies is made on behalf of the Board of Directors of the
Company (the "Board of Directors" or the "Board").
The Proxy Statement and the proxies solicited hereby are being first sent or
delivered to shareholders of the Company beginning on or about January 8, 1998.
<PAGE>
The expenses of the solicitation of proxies for the meeting will be paid by the
Company. Employees of the Company may communicate with shareholders to solicit
their proxies. Brokers, banks and others holding stock in their names, or in
names of nominees, may request and forward copies of the proxy solicitation
material to beneficial owners and seek authority for execution of proxies, and
the Company will reimburse them for their expenses in so doing at the rates
approved by the New York Stock Exchange.
The holders of record of the common stock of the Company ("Common Stock") at the
close of business on December 22, 1997, will be entitled to notice of, and to
vote at, the meeting. Each share of Common Stock represented at the Annual
Meeting is entitled to one vote on each matter properly brought before the
meeting. There are no cumulative voting rights. Please specify your choices by
marking the appropriate boxes on the enclosed proxy card and signing it.
In the election of directors, the nominees equaling the number of directors to
be elected that receive the most votes cast in favor of their election are
elected to the Board of Directors. All other matters submitted at the meeting
will be determined by a majority of the votes cast. Shares represented by
proxies that are marked "withhold authority" with respect to the election of one
or more nominees for election as directors, proxies which are marked "abstain"
on other proposals and proxies that are marked to deny discretionary authority
on other matters will not be counted in determining the number of votes cast for
such matters. If no directions are given and the signed proxy card is returned,
the shares will be voted in favor of the election of all listed nominees, in
accordance with the directors' recommendations on the other matters listed on
the proxy card, and at the proxies' discretion on any other matter that may
properly come before the meeting. In instances where brokers are prohibited
from exercising discretionary authority for beneficial owners who have not
returned proxies to the brokers (so-called "broker non-votes"), those shares
will be counted for the purpose of determining if a quorum is present but will
not be included in the vote totals and, therefore, will have no effect on the
vote. Shareholders voting by proxy may revoke that proxy at any time before it
is voted at the meeting by delivering to the Company a proxy bearing a later
date or by attending in person and casting a ballot.
On the record date, December 22, 1997, there were 6,127,390 shares of Common
Stock outstanding and entitled to vote. The presence in person or by proxy of at
least a majority of the outstanding shares will constitute a quorum.
YOUR VOTE IS IMPORTANT. PLEASE RETURN YOUR MARKED PROXY CARD PROMPTLY SO YOUR
SHARES CAN BE REPRESENTED, EVEN IF YOU PLAN TO ATTEND THE MEETING IN PERSON.
2
<PAGE>
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES
The Board of Directors has determined that the number of Directors of the
Company shall be seven. The Directors are to be elected to serve until the next
Annual Meeting of Shareholders and until their successors are elected and
qualified. All of the nominees are presently Directors of the Company. It is
the intention of the nominees named as proxies in the accompanying form of Proxy
to vote FOR the election of the persons named below. If any such person should
be unable to serve or become unavailable for any reason, or if a vacancy should
occur before the election (which events are not anticipated), the Proxy will be
voted for such other person or persons as shall be determined by the persons
named in the Proxy in accordance with their judgment. The following sets forth
certain information concerning the nominees as of December 22, 1997:
John A. Thorpe: (63) Mr. Thorpe, the founder of Analytical Surveys, Inc., was
elected to serve as director of the Company in February 1981. He served as
Chairman of the Board until March 1997. He has been Chief Technical Officer of
the Company since November 1993. Prior to his founding the Company he owned and
operated Photosurveys (Pty.) Ltd., an aerial survey company in Johannesburg,
South Africa. Mr. Thorpe is a Certified Photogrammetrist and has presented
various technical papers on computerized mapping methods in the United States,
South Africa, and Europe.
Sidney V. Corder: (55) Mr. Corder was elected to serve as a Director of the
Company on November 6, 1992 and Chairman of the Board in March, 1997 and is the
President and Chief Executive Officer of the Company. Mr. Corder joined the
Company in August 1990 as President and became the Chief Executive Officer in
1993.
Richard P. MacLeod: (60) Mr. MacLeod was elected to serve as a Director of the
Company on December 17, 1987. Mr. MacLeod was President of the United States
Space Foundation, a private foundation, from prior to 1992 until his retirement
in 1996.
James T. Rothe: (54) Dr. Rothe was elected to serve as a Director of the
Company on December 17, 1987. Dr. Rothe has been a Professor of Business at the
College of Business and Administration, University of Colorado at Colorado
Springs since 1986. Since 1988 Dr. Rothe has been a principal in Phillips-Smith
Specialty Retail, Inc. a venture capital firm. He is a director of Medlogic
Global Corporation, which develops, markets and sells medical devices for the
wound-management market. He also is a trustee of the Janus Funds. He served as
Dean of the College of Business and Administration, University of Colorado at
Colorado Springs from 1986 to 1994. Dr. Rothe has published extensively in the
Marketing and Strategic Management areas, and has served as a consultant to
numerous corporations throughout the United States.
Robert H. Keeley: (56) Dr. Keeley was elected to serve as a Director of the
Company on December 11, 1992. Since September 1992, Dr. Keeley has been the El
Pomar Professor of Business Finance at the College of Business and
Administration, University of Colorado at Colorado Springs, where he also is
associated with the Colorado Institute for Technology Transfer and
Implementation. Dr. Keeley also serves on the boards of directors of Simtek
Corporation, a designer, developer, producer and marketer of high performance
nonvolatile semiconductor memories, and Molecular Dynamics, Inc., a developer,
manufacturer and marketer of systems that accelerate genetic discovery and
analysis.
Willem H.J. Andersen: (56) Mr. Andersen was appointed to serve as a Director of
the Company on October 24, 1995. he presently is a consultant with the National
Semiconductor Corporation and is a member of the board of directors of Iomega
Corporation, a manufacturer of computer data storage devices. From prior to
1992 until his retirement, he held various positions with a number of divisions
of Phillips N.U. of the Netherlands, including President and Chief Executive
Officer of Laser Magnetic Storage International Company, a North American
Phillips company.
Sol C. Miller: (60) Mr. Miller was appointed to serve as a Director of the
Company on August 22, 1997. From 1960 until July 1997, when it was acquired by
the Company, he was a co-founder and Chairman of the Board of MSE Corporation
("MSE").
3
<PAGE>
BOARD OF DIRECTORS
DIRECTORS' COMPENSATION
Directors who are not also employees of the Company (the "outside directors")
receive a retainer of $6,500 per year, plus $1,000 per meeting of the Board of
Directors. Directors who are also employees of the Company do not receive any
additional compensation for their service on the Board of Directors.
The outside directors also receive stock option awards under the Analytical
Surveys, Inc. 1993 Non-Qualified Stock Option Plan (the "1993 Option Plan")
approved by the shareholders at the February 23, 1993 Annual Meeting. Pursuant
to the 1993 Option Plan, such outside directors are granted options to purchase
9,000 Shares of Common Stock annually for the life of the plan. Each of the
nominees received options to purchase 9,000 Shares of Common Stock in fiscal
1997.
Mr. Miller also serves as a consultant to the Company for an annual consulting
fee of $150,000 plus medical benefits. In addition, the Company pays premiums on
a life insurance policy payable to his designated beneficiaries. The amounts
paid by the Company pursuant to these arrangements in fiscal 1997 were $40,621.
DIRECTORS' MEETINGS AND COMMITTEES
During the year ended September 30, 1997, the Board of Directors met nine times.
Each Director standing for re-election attended at least 75 percent of the
meetings of the Board of Directors and each committee of which he is a member
except Mr. Andersen who attended 67 percent of the Board Meetings and
Compensation Committee meetings.
The Compensation Committee is chaired by Robert H. Keeley with Messrs. MacLeod,
Andersen, and Rothe as members. The Compensation Committee met three times
during 1997. The duties of the Compensation Committee are to: review and
recommend to the Board salary and incentive compensation, including bonus, stock
options and restricted stock for the Chief Executive Officer; review and approve
the salaries and incentive compensation for all corporate officers and senior
executives; and advise the Board with respect to the incentive compensation to
be allocated to employees. The Compensation Committee does not include any
employees or former or current officers of the Company.
The Audit Committee is chaired by James T. Rothe with Messrs. MacLeod, Andersen,
Rothe and Keeley as members. The Audit Committee met one time during 1997. The
duties of the Audit Committee are to recommend the appointment of the Company's
independent accountants; review the scope and results of the audit plans of the
independent accountants and the internal auditors; oversee the scope and
adequacy of the Company's internal accounting control and record-keeping
systems; review non-audit services to be performed by the independent
accountants; and determine the appropriateness of fees for audit and non-audit
services performed by the independent accountants.
There is no nominating committee of the Board.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee is a former or current officer or
employee of the Company or any of its subsidiaries. No executive officer of the
Company serves as an officer, director or member of a compensation committee of
any entity, an executive officer or director of which is a member of the
Compensation Committee of the Company.
4
<PAGE>
EXECUTIVE OFFICERS
The following persons serve as executive officers of the Company. Mr. Corder is
also a member of the Board of Directors and his biographical information is
presented above under the caption "Election of Directors."
<TABLE>
<CAPTION>
Name Position Officer since
- ---------------- ------------------------------------ -------------
<S> <C> <C>
Sidney V. Corder Chairman of the Board, President and 1990
Chief Executive Officer
Scott C. Benger Secretary/Treasurer and 1990
Senior Vice President, Finance
John J. Dillon Chief Administrative Officer 1997
Randal J. Sage Chief Operations Officer 1997
</TABLE>
Scott C. Benger: (48) Mr. Benger joined the Company in September 1990 as
controller. He became Secretary/Treasurer and Vice President, Finance in
January 1991 and Senior Vice President, Finance in November 1993.
John J. Dillon: (38) Mr. Dillon joined the Company as Chief Administrative
Officer in July 1997. Prior to joining the Company, Mr. Dillon was Senior Vice
President of MSE from January 1997 until July 1997 when MSE was acquired by the
Company. From July 1993 until January 1997 he served as the director of the
Hoosier Lottery, the Indiana state lottery, and from prior to 1992 until July
1993 he served as a legislative liaison to the Governor of Indiana.
Randal J. Sage: (41) Mr. Sage joined the Company in July 1997 as its Chief
Operations Officer. Prior to joining the Company Mr. Sage served as President
of MSE from January 1997 until its acquisition by the Company in July 1997.
Prior to January 1997 he served in various positions of increasing
responsibility with MSE's GIS Division, most recently as the Division's Vice
President.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth a summary of certain information regarding the
compensation of the Chief Executive Officer and, the two other executive
officers and one former executive officer whose salary and bonus exceeded
$100,000 during fiscal 1997 (the "named executive officers") for the fiscal
years ended September 30, 1997, 1996, and 1995.
Summary Compensation Table
<TABLE>
<CAPTION> Long Term
Annual Compensation Compensation
Awards
All Other
Name and Other Annual Stock Compensa-
Principal Salary Bonus Compensation Options/(1)/ tion/(2)/
Position Year $ $ $ (#) $
-------- ---- ------ ----- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Sidney V. Corder 1997 203,769 398,750 (3) 50,000 8,643
Chairman of the 1996 163,578 102,487 (3) 22,500 7,308
Board, President and 1995 141,711 69,387 (3) 202,500 6,872
Chief Executive
Officer
John A. Thorpe 1997 114,989 0 (3) 9,000 14,086
Chief Technical 1996 145,422 46,220 (3) 9,000 15,232
Officer 1995 141,000 38,235 (3) 15,000 15,143
Scott C. Benger 1997 123,154 203,000 (3) 41,000 2,608
Secretary/Treasurer 1996 92,845 62,248 (3) 21,000 1,857
and Senior Vice 1995 83,308 33,985 (3) 15,000 1,666
President
William D. Nantell 1997 157,250 55,674 (3) 22,000 2,972
President, ASI Data 1996/(4)/ 96,663 18,600 (3) 7,500 1,997
Solutions Division
</TABLE>
/(1)/ Long term compensation consists only of stock options. There were no
grants of restricted stock or payments from other long term incentive
plans, therefore columns for "Restricted Stock Awards" and "LTIP Payouts"
are omitted.
/(2)/ Other compensation for 1997 includes $7,315 deferred compensation accrued
for Mr. Thorpe, $4,568, $4,339 and $580 in life insurance premiums for Mr.
Corder, Mr. Thorpe, and Mr. Nantell, respectively, and employer's matching
contributions to the 401(k) Incentive Savings Plan of $4,075 for Mr.
Corder, $2,434 for Mr. Thorpe, $2,463 for Mr. Benger and $2,392 for Mr.
Nantell.
/(3)/ Certain perquisites and other personal benefits did not exceed the lesser
of $50,000 or 10% of the total amounts reported in the Salary and Bonus
columns in any of the fiscal years reported.
/(4)/ For period from December 22, 1995 (date of hire) through end of fiscal
year.
6
<PAGE>
The following table sets forth certain information with respect to grants made
by the Company of stock options to the named executive officers pursuant to the
Company's stock option plans during fiscal year 1997. No stock appreciation
rights ("SARs") were granted to executive officers during fiscal year 1997.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
% of Total Potential Realizable
Options to Exercise Value/(2)/ At Assumed Annual
Options Employees Price Expiration Rates of Stock Appreciation
Name Granted/(1)/ in Fiscal Year ($/sh) Date for Option Term
---- ------------ -------------- -------- ---------- -----------------------------
<S> <C> <C> <C> <C> <C>
5%($) 10%($)
Sidney V. Corder 30,000 4.7% 12.50 6/16/07 580,823 942,641
20,000 3.1% 13.75 7/2/07/(3)/ 427,932 693,265
John A. Thorpe 9,000 1.4% 12.50 6/16/07 174,238 282,784
Scott C. Benger 21,000 3.3% 12.50 6/16/07 406,572 659,845
20,000 3.1% 13.75 7/2/07/(3)/ 427,932 693,265
William D. Nantell 12,000 1.9% 12.50 6/16/07 232,322 377,049
10,000 1.6% 13.75 7/2/07/(3)/ 213,959 346,626
</TABLE>
/(1)/ All options vest as follows: 25% at six months; 25% at one year; 25% at
two years; and 25% at three years after date of grant.
/(2)/ "Potential Realizable Value" is calculated based on the assumption that
the price of the Common Stock will appreciate at the rates shown. The 5%
and 10% assumed rates are mandated by the rules of the Securities Exchange
Commission and do not reflect the Company's estimate or projection of
future stock prices. Actual gains, if any, realized upon future exercise
of these options will depend on the actual performance of the Common Stock
and the continued employment of the named executive officer through the
vesting period of the option.
/(3)/ Granted pursuant to the Analytical Surveys, Inc. 1997 Incentive Stock
Option Plan.
7
<PAGE>
The following table sets forth certain information with respect to the exercise
of stock options by the named executive officers during fiscal year 1997 and
information concerning the number and value of unexercised stock options at
September 30, 1997. The value of unexercised stock options is based on the
closing price per share of Common Stock of $22.875 on September 30, 1997, the
last trading day of fiscal year 1997. As of that date, no SARs were
outstanding.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
and FY-End Option Values
Number of Unexercised Value of Unexercised In-the
Securities Underlying Money Options
Options at FY-End (#) at FY-End ($)
----------------------- -----------------------------
Shares Value Exercisable Exercisable
Acquired on Realized ----------- -----------
Name Exercise (#) ($) Unexercisable Unexercisable
- ---- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sidney V. Corder 95,000 1,226,323 85,750 111,875 1,470,553 1,540,705
John A. Thorpe 116,294 1,165,349 21,375 17,250 385,174 217,220
Scott C. Benger 0 0 61,500 55,250 1,188,191 594,972
William D. Nantell 0 0 3,750 25,750 44,220 259,970
</TABLE>
EMPLOYMENT CONTRACTS
On June 27, 1994 the Company entered into an employment agreement with Mr.
Corder, providing for a base salary of $131,000 per year, which salary is
reviewed in October of each year beginning in October 1994. The term of the
employment agreement extends until June 26, 1998 and is automatically extended
for successive two-year periods thereafter. Mr. Corder's salary for 1998 is
$250,000. While he is employed by the Company pursuant to his employment
agreement Mr. Corder is entitled to participate in the Company's Incentive Bonus
Plan and Stock Option Plan and any and all other plans, to the extent he meets
eligibility requirements, maintained by the Company for the benefit of the
Company's executives or employees generally.
Upon termination of Mr. Corder's employment without cause, Mr. Corder will
continue to receive salary and benefits for 24 months, and receive a bonus
during such period equal to the amount of bonuses received by him during the 24
months prior to termination. During such period any stock options held by Mr.
Corder will continue to vest and he will have the right to exercise such options
that are or become exercisable during such period. If Mr. Corder resigns his
employment for "cause" (as defined in the employment agreement), he will
continue to receive salary and benefits for 36 months. During such period any
stock options held by Mr. Corder will continue to vest and he will have the
right to exercise such options that are or become exercisable during such
period. If Mr. Corder is terminated by the Company for "cause" (as defined in
the employment agreement) he will not be entitled to receive any termination pay
or benefits beyond the effective date of termination. If Mr. Corder terminates
his employment without "cause" the Company may accept his resignation or require
him to continue his employment at the same salary and benefits for a period not
to exceed six months. In the event of termination upon a Change of Control the
aggregate amount of severance paid under the employment agreement or otherwise
(but exclusive of any amount payable under any incentive benefit plan upon a
change of control) will not include any amount that the Company is prohibited
from deducting under Section 2806 of the Internal Revenue Code or any successor
provision. If Mr. Corder dies or becomes disabled (as defined in the employment
agreement) his salary will continue to be paid for 12 months after his death or
termination by reason of disability. The Company agreed to provide Mr. Corder
with a $250,000 life insurance policy (plus $250,000 accidental death coverage)
payable to his designated beneficiaries.
Under the employment agreement Mr. Corder has agreed that during the term of the
employment agreement he will not, directly or indirectly, engage in any
activities in conflict with the best interests of the Company. He has further
agreed
8
<PAGE>
not to be employed by or otherwise engage or be interested in any other
business, whether or not in competition with the Company, except he is permitted
to have an investment in certain non-competing businesses and to provide
consulting services to non-competing businesses, if expressly approved by the
Company. In addition, Mr. Corder has agreed that he will not at any time
disclose any confidential information of the Company that he obtains as a result
of his employment with the Company.
The Company entered into an employment agreement with Mr. Benger on September
20, 1995. Under the terms of the employment agreement, Mr. Benger was paid a
base salary of $84,000, which salary is reviewed annually in November of each
year beginning November 1995. Mr. Benger's salary for 1998 is $170,000. The
term of the employment agreement originally extended until September 20, 1997,
but was automatically renewed for a successive two-year period until September
20, 1999 and is automatically extended for successive two-year periods
thereafter. The remaining terms of the employment agreement are the same as
those in the previously described employment agreement of Mr. Corder except as
follows: Mr. Benger will continue to receive salary and benefits for (i) 12
months following termination by the Company without cause; and (ii) 18 months
following termination of his employment by Mr. Benger for cause. In addition,
Mr. Benger has agreed that he will not, directly or indirectly, own, operate,
manage, consult, own shares in, be employed by or otherwise participate in any
entity whose primary business is the same or substantially similar to the
business of the Company within the territory in which the Company does business
(the "Non-Compete") during the term of the employment agreement and for one year
following the termination of employment.
Mr. Thorpe is a party to an employment agreement on terms comparable to the
previously described employment agreement of Mr. Corder; except, as described
below. Mr. Thorpe's employment agreement was entered into on June 27, 1997, for
the period through September 30, 1999 extendable at the option of Mr. Thorpe
until September 30, 2000. Under the terms of the employment agreement, Mr.
Thorpe will be paid an annual salary of $38,250. Mr. Thorpe will not be
eligible to participate in the Company's bonus incentive plan. He will be
subject to the Non-Compete for a period of 10 years after termination of his
employment, subject to waiver by the Company in certain instances. If Mr.
Thorpe dies or becomes disabled his salary will continue to be paid for six
months after his death or termination by reason of disability. Mr. Thorpe is
provided a $500,000 life insurance policy (plus $500,000 in accidental death
coverage).
Mr. Nantell's employment agreement was entered into on December 22, 1995, for
the period through December 31, 1996, was extended pursuant to the terms of the
employment agreement at the election of the Company until December 31, 1997, in
consideration of payment of $10,000 to Mr. Nantell and his agreement not to
voluntarily terminate his employment prior to the end of the extended term. Mr.
Nantell was paid an additional $10,000 upon continuing to be employed to January
1, 1998. Under the terms of the employment agreement, Mr. Nantell will be paid
a base salary of $130,000, which salary will be reviewed annually in January of
each year beginning January 1997. Mr. Nantell's salary for 1997 was $145,000.
If Mr. Nantell is terminated without cause by the Company he will continue to
receive salary and benefits for the term of the agreement and will be subject to
the Non-Compete for seven months. Following termination of his employment by
Mr. Nantell with cause he will continue to receive salary and benefits and he
will be subject to the Non-Compete for seven months after termination; and if
Mr. Nantell terminates his employment without cause or his employment is
terminated by the Company with cause, Mr. Nantell will be subject to the Non-
Compete for a period of 12 months following termination. Certain other
provisions of the employment agreement provide for the continuation of the Non-
Compete and the payment to Mr. Nantell of 75% of his salary and benefits under
certain circumstances. If Mr. Nantell dies or becomes disabled his salary will
continue to be paid for six months after his death or termination by reason of
disability. Mr. Nantell is provided with a $150,000 life insurance policy (plus
$150,000 in accidental death coverage). In addition, Mr. Nantell participates
in the Company's commission plan to which he receives commissions based on sales
made by employees of the Company reporting to him.
REPORT OF THE COMPENSATION COMMITTEE
This Report of the Compensation Committee shall not be deemed to be incorporated
by reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended or under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), except to
the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed "filed with" or "soliciting
material" under such Acts.
9
<PAGE>
The following is the Report of the Compensation Committee describing the
compensation policies and rationales applicable to the Company's executive
officers with respect to the compensation paid to such executive officers for
the fiscal year ended September 30, 1997.
General. The duties of the Compensation Committee are to: review and recommend
to the Board salary and incentive compensation, including bonus, stock options
and restricted stock, for the Chief Executive Officer; review and approve the
salaries and incentive compensation for all corporate officers and senior
executives; and advise the Board with respect to the incentive compensation to
be allocated to employees. The Compensation Committee does not include any
employees or former or current officers of the Company. The Committee's
fundamental policy is to establish a compensation program for executive officers
that will (i) allow the Company to attract and retain the services of highly-
qualified individuals or (ii) offer the Company's executive officers competitive
compensation opportunities based upon overall Company performance, their
individual contribution to the financial success of the Company and their
personal performance. It is the Committee's objective to have a substantial
portion of each officer's compensation contingent upon the Company's
performance, as well as upon such officer's own level of performance.
Accordingly each executive officer's compensation package is comprised of three
elements: (i) base salary reflects individual performance and is designed to be
competitive with salary levels of similarly sized companies which compete with
the Company for executive talent; (ii) annual variable performance awards
payable in cash and tied to the Company's achievement of financial performance
goals and the executive's contribution; and (iii) long-term stock option awards,
which create common interests for the executive officers and the shareholders.
Base Salary. Individual salaries are determined based on individual experience,
performance and breadth of responsibility within the Company. The Compensation
Committee reviews these factors for each executive officer each year. In
addition, the Compensation Committee considers executive officers' salaries for
relative competitiveness within the Company's industry.
Commissions and Bonuses. On September 26, 1991, the Compensation Committee
adopted an Incentive Bonus Plan for its executive officers. The Incentive Bonus
Plan is based on the year-to-year growth in net profit and on the return on
equity. In fiscal 1997, nine Company officers and other executives earned total
bonuses of $725,000 under the plan. In addition, the Company has a commission
plan for its sales and marketing executives in lieu of the Incentive Bonus Plan.
In fiscal year 1997, three marketing executives earned total commissions of
$164,456.
Stock Option Plans. The Company has the 1993 Option Plan and the Analytical
Surveys, Inc. 1997 Incentive Stock Option Plan, as amended and supplemented (the
"1997 Option Plan" and together with the 1993 Option Plan, the "Option Plans"),
which is subject to shareholder approval at the Annual Meeting (See
"Ratification and Approval of the Analytical Surveys, Inc. 1997 Stock Option
Plan"). The Option Plans are long-term incentive plans for employees. The
Option Plans are intended to align shareholder and employee interests by
creating a direct link between long-term rewards and the value of the Company's
shares. The Compensation Committee believes that long-term stock incentives for
executive officers and employees is an important factor in retaining valued
employees and in achieving growth in share value. The options utilize vesting
periods that encourage employees to continue in the employ of the Company.
Because the value of an option bears a direct relationship to the Company's
stock price, the Compensation Committee believes that options motivate executive
officers and employees to manage the Company in a manner that will benefit all
shareholders.
The 1993 Option Plan authorizes the Compensation Committee to award stock
options to employees at any time, whereas the 1997 Option Plan provided for
specific one-time grants. See "Ratification of the Analytical Surveys, Inc.
1997 Incentive Stock Option Plan." The size of stock option grants is
determined by a number of factors, including comparable grants to executive
officers and employees by other young, growing companies, as well as the
relative position and responsibilities of executive officers and other employees
with the Company, the individual performance of the executive officer or
employee over the previous fiscal year and the anticipated contribution of the
executive officer or employee to the attainment of the Company's long-term
strategic performance goals. The exercise price per share of each stock option
is generally equal to the prevailing market value of a share of the Company's
Common Stock on the
10
<PAGE>
date such option is granted. The Committee views stock option grants as an
important component of its long-term, performance-based compensation philosophy.
CEO Compensation. The compensation of Sidney Corder, President and Chief
Executive Officer consists of base salary, typically an annual bonus and
occasionally stock options. The Board of Directors periodically reviews Mr.
Corder's base salary and bonus and revises his compensation based on the Board's
overall evaluation of his performance toward the achievement of the Company's
financial, strategic and other goals, with consideration given to chief
executive officer compensation information at similar companies. The
Compensation Committee believes that the Company's success is dependent in part
upon the efforts of its Chief Executive Officer. In fiscal 1997, Mr. Corder
earned a base salary of $191,000 as set by the Compensation Committee and under
the Incentive Bonus Plan earned $398,750. See the table entitled "Option Grants
in Last Fiscal Year" on page 7 for options granted to Mr. Corder in fiscal 1997.
Internal Revenue Code Section 162(m) Implications for Executive Compensation.
The Compensation Committee is responsible for addressing the issues raised by
Internal Revenue Code Section 162(m) ("Section 162(m)"). This Section limits to
$1 million the Company's deduction for compensation paid to certain executive
officers of the Company which does not qualify as "performance-based." To
qualify as performance based under Section 162(m), compensation payments must be
made pursuant to a plan that is administered by a committee of outside directors
and must be based on achieving objective performance goals. In addition, the
material terms of the plan must be disclosed to and approved by shareholders,
and the Compensation Committee must certify that the performance goals were
achieved before payments can be awarded. The Company believes that all
compensation paid to the executive officers listed on page 6 in fiscal 1997 is
fully deductible and that compensation paid under the plans will continue to be
deductible. The Committee's present intention is to comply with the
requirements of Section 162(m) unless and until the Committee determines that
compliance would not be in the best interest of the Company and its
shareholders.
By the Compensation Committee
Robert H. Keeley, Chair
Richard P. MacLeod
James T. Rothe
Willem H.J. Andersen
11
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Company's Common
Stock with the index of the cumulative total return for the Nasdaq Stock Market
(U.S.) ("Total U.S.") and the index of the Nasdaq Computer and Data Processing
Services Stocks ("DP&S"). The graph assumes that $100 was invested on October
1, 1992, and that all dividends, if any, were reinvested.
[GRAPHIC OMITTED - GRAPH DESCRIPTION] a line graph plotting the points shown in
the chart below which compares the yearly percentage change in the cumulative
total shareholder return on the Common Stock against the cumulative total return
of the Nasdaq Stock Market (U.S.) Index ("Total U.S.") and the index of the
Nasdaq Computer and Data Processing Services Stock ("DP&S") for the period
commencing October 1, 1992 and ending September 30, 1997.
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
The Company 100 134 144 293 644 1339
Nasdaq DP&S 100 119 133 212 263 356
Nasdaq Total U.S. 100 131 132 182 216 297
</TABLE>
12
<PAGE>
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
The following tables show, as of November 30, 1997, the ownership of Common
Stock of (a) all persons known by the Company to be the beneficial owners of
more than 5% of Company Common Stock and their addresses, (b) each nominee for
election as a Director of the Company, (c) each executive officer of the
Company, and (d) all executive officers and Directors as a group:
<TABLE>
<CAPTION>
Name of Shares of Stock
Beneficial Owner Beneficially Owned Percent of Class
---------------- ------------------ ----------------
<S> <C> <C>
John A. Thorpe
1935 Jamboree Drive 460,269/(1)/ 7.5%
Colorado Springs, Colorado 80920
Sidney V. Corder 106,650/(1)/ 1.7%
Richard P. MacLeod 49,352/(1)/ *
Sol C. Miller 925,000 15.1%
James T. Rothe 42,654/(1)/ *
Robert H. Keeley 11,250/(1)/ *
Willem H.J. Andersen 26,650/(1)/ *
Scott C. Benger 73,250/(1)/ 1.2%
John J. Dillon 5,438/(1)/
Randal J. Sage 22,328/(1)/
All Directors and executive officers as 1,722,841/(2)/ 26.7%
a Group (10 persons)
</TABLE>
- --------------------
*Less than 1%
/(1)/ Includes shares of Common Stock underlying options which are exercisable
within 60 days of November 30, 1997 as follows: 23,625 for Mr. Thorpe;
98,250 for Mr. Corder; 47,252 for Mr. MacLeod; 40,404 for Mr. Rothe; 6,750
for Mr. Keeley; 15,750 for Mr. Andersen; 71,750 for Mr. Benger; 5,438 for
Mr. Dillon; and 22,328 for Mr. Sage.
/(2)/ Includes 331,547 shares of Common Stock underlying options which are
exercisable within 60 days of November 30, 1997.
RATIFICATION AND APPROVAL OF THE ANALYTICAL SURVEYS, INC. 1997 STOCK OPTION PLAN
(ITEM 2 ON PROXY CARD)
GENERAL
The Board of Directors of the Company has adopted the 1997 Option Plan and
directed that the 1997 Option Plan be submitted to the shareholders for their
ratification and approval at the Annual Meeting. The Option Plan was adopted by
the Board of Directors in connection with the acquisition of MSE to provide
specific grants as an incentive to certain executives and employees of MSE to
remain in the Company following the acquisition and to certain Company
executives and employees so that outstanding options held by them were
comparable to those held by former MSE employees. The 1997 Option Plan was
amended and supplemented to provide for future grants of options pursuant to the
terms of the Option Plan. The specific grants awarded under the Option Plan to
Mr. Corder and Mr. Benger were granted subject to shareholder approval; if
shareholders do not approve the 1997 Option Plan, such grants will be
terminated. The approval of the holders of a majority of the shares of Common
Stock represented and entitled to vote at the Annual Meeting is necessary to
approve the 1997 Option Plan. The purpose of the 1997 Option Plan is to provide
an inducement to selected persons to acquire a proprietary interest in the
Company, to gain an added incentive to advance the interests of the Company and
to remain affiliated with the Company. Specific grants of options not qualified
as incentive stock options ("Non-Qualified Stock Options") under Section 422 of
the Internal Revenue Code of 1986, as
13
<PAGE>
amended (the "Code") to purchase an aggregate of 345,000 shares of Common Stock
at $13.75 per share were granted effective July 2, 1997 (the "July 2 grants").
In addition a total of 540,000 shares of Common Stock may be issued pursuant to
options granted in the future under the 1997 Option Plan.
The following is a brief summary of the 1997 Option Plan. This description is
qualified in its entirety by the full text of the Option Plan, copies of which
will be provided to shareholders, without charge, upon written request directed
to: Scott C. Benger, Secretary/Treasurer, 1935 Jamboree Drive, Colorado Springs,
Colorado 80920.
PRINCIPAL FEATURES OF THE JULY 2 GRANTS
Non-Qualified Stock Options to purchase an aggregate of 345,000 shares of Common
Stock at $13.75 per share were granted effective July 2, 1997. Each option
vests in 25% increments at six months, one year, two years, and three years
after the grant date; provided that such options are subject to termination as
described below. The specific grants awarded under the Option Plan to Mr.
Corder and Mr. Benger were granted subject to shareholder approval; if
shareholders do not approve the 1997 Option Plan, such grants will be
terminated. See "Executive Compensation--Option Grants in Last Fiscal Year" for
grants made to certain executive officers, including Mr. Corder and Mr. Benger,
under the 1997 Option Plan. The following discussion relates only to the July 2
grants and does not apply to grants of options that may be made pursuant to the
1997 Option Plan in the future. See "Principal Features of the 1997 Option
Plan" for a discussion of the provisions of the 1997 Option Plan that will apply
to future grants of options under the 1997 Option Plan.
Options awarded pursuant to the July 2 grants are not transferable, other than
by will or the laws of descent and distribution. The term of the options are 10
years, and, subject to limited exceptions for termination, disability and death,
options are exercisable during the life of the optionee only by him.
Upon exercise, the holder of the option must pay the exercise price by delivery
of cash; cashier's check; delivery of a notice and irrevocable instructions to a
broker to promptly deliver the amount of sale proceeds required to pay the
exercise price; or delivery of shares of Common Stock having a fair market value
equal to the aggregate exercise price of the shares as to which such option is
exercised. Whenever shares of Common Stock are to be issued under the July 2
grants, the Company may permit the option holder to transfer shares of Common
Stock to the Company or direct the Company to withhold from the shares of Common
Stock otherwise issuable to such holder, a number of shares of Common Stock
having a fair market value equal to the amount of withholding taxes.
If an optionee dies while employed as an employee or during any extended
exercise period, options may be exercised by those entitled to do so under the
optionee's will or by the laws of descent and distribution within 180 days
following the optionee's death, to the extent such options were exercisable at
the time of such death. If the optionee becomes disabled, as defined, while
employed by the Company or retires from employment with the Company after age
65, all unvested options held by the optionee at his disability or retirement
will continue to vest and may be exercised for a period of 36 months from the
date of such disability or retirement; provided that the optionee survives for
such 36-month period. If the optionee terminates his employment with the
Company for cause, as defined under the optionee's employment agreement, or if
the Company terminates the optionee's employment for any reason other than
cause, all options held by the optionee will immediately vest as of such
termination of employment, and the options will be exercisable for a period of
90 days after such termination of employment. If the Company terminates the
employment of the optionee for cause all unvested options will be terminated and
will be void for all purposes and all vested options may be exercised for a
period of 15 days after such termination.
In the event of any change in the capitalization of the Company as a result of a
stock dividend or other distribution upon the Common Stock payable in Common
Stock or through a stock split, subdivision, consolidation, combination,
reclassification, or recapitalization involving the Common Stock, the numbers,
rights and privileges of the shares reserved for issuance under the 1997 Option
Plan and the shares covered by each outstanding option may be increased,
decreased or changed as if such shares had been issued and outstanding at the
time of such occurrence.
14
<PAGE>
In the event of an approved transaction, as defined, all outstanding July 2
grants not vested or exercisable under the Option Plan will become fully vested
at the date determined by the committee, which will be at least 30 days prior to
the date of the approved transaction and will remain exercisable for 30 days
after the vesting date; provided that if any agreement relating to an approved
transaction provides for the assumption, exchange or conversion of options for
securities of the surviving corporation, no accelerated vesting will occur.
PRINCIPAL FEATURES OF THE 1997 OPTION PLAN FOR FUTURE OPTION GRANTS
The 1997 Option Plan provides for the granting of options in the future to
selected employees, directors and consultants of the Company and its affiliates.
Options can either be incentive stock options ("Incentive Stock Options" or
"ISOs") within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), or Non-Qualified Stock Options. Only Non-Qualified
Stock Options may be granted to consultants and non-employee directors.
Employees may be granted either Incentive Stock Options or Non-Qualified Stock
Options. A total of 540,000 shares of Common Stock may be issued pursuant to
options granted in the future under the 1997 Option Plan. The 1997 Option Plan
is effective for 10 years after its adoption by the Board of Directors, unless
earlier terminated.
The 1997 Option Plan is to be administered by a committee of the Board of
Directors, which will be comprised of one or more members of the Board and or
such other persons appointed by the Board or, in the absence of such committee,
the entire Board; provided that any grant of any options to persons subject to
the reporting requirements of the Exchange Act, will be granted by the 16b-3
Committee consisting of at least two "non-employee directors" within the meaning
of Rule 16b-3 under the Exchange Act or the entire Board, if the options granted
are intended to be exempt from the short-swing profit liability provision of
Section 16 of the Exchange Act; and any grant of options intended to comply with
Section 162(m) of the Code, will be granted by a committee consisting of at
least two "outside directors" within the meaning of Section 162(m) of the Code
and the regulations thereunder. The Board or the committee administering the
1997 Option Plan (as applicable, the "Administrator") (i) selects those
employees, directors and consultants to whom options will be granted and
determines the type and amount of each option and the other terms and conditions
of such options. Any consultant or employee of the Company or any affiliates of
the Company or non-employee director whose judgment, initiative and efforts are,
or are expected to be, important to the successful conduct of the Company's
business is eligible to receive an option grant under the 1997 Option Plan. As
of December 22, 1997, approximately 810 employees and non-employee directors
were eligible to participate in the 1997 Option Plan. The Administrator also
may interpret provisions of the 1997 Option Plan. If any option expires or
terminates without having been exercised or payment having been made in respect
thereof, the shares of Common Stock subject to the option, and any shares which
are used to pay the exercise price of an option may again become available for
grant under the 1997 Option Plan.
The per share exercise price for shares issued pursuant to all options granted
under the 1997 Option Plan is determined by the Administrator. However, the
exercise price of all Incentive Stock Options must be at least equal to 100% of
the fair market value per share of Common Stock on the date of grant (or 110% of
the fair market value per share of Common Stock on the date of grant in the case
of Incentive Stock Options granted to employees who own more than 10% of the
voting power of Company stock at the time of grant). Non-Qualified Stock
Options may be granted at less than fair market value. Options awarded under
the 1997 Option Plan are not transferable other than by will or the laws of
descent and distribution, except pursuant to a qualified domestic relations
order; provided that Non-Qualified Stock Options may be transferred to certain
entities for estate planning purposes with the consent of the committee. The
term of each individual option can be no longer than 10 years (five years for
Incentive Stock Options granted to 10% or more shareholders), and, subject to
limited exceptions for termination, disability and death, is exercisable during
the life of the optionee only by him or her.
Upon exercise, the holder of the option must pay the exercise price by delivery
of cash; cashier's check or certified check or other instrument acceptable to
the Company; if authorized by the Company, by the withholding from the number of
shares of Common Stock issuable upon exercise of the option, a number of shares
the fair market value of which equals the exercise price; delivery of a notice
and irrevocable instructions to a broker to promptly deliver the amount of sale
proceeds required to pay the exercise price; or delivery of shares of Common
Stock having a fair market value equal to the aggregate exercise price of the
shares as to which said option is exercised. Whenever shares are to be issued
under the 1997 Option Plan, the Company may elect to withhold from such number
of shares issuable upon the exercise of an
15
<PAGE>
option, a number of shares of Common Stock having a fair market value equal to
the withholding taxes with respect to such exercise; withhold an amount equal to
the withholding taxes from future compensation of the option holder or permit
the option holder to transfer shares of Common Stock to the Company having a
fair market value equal to the amount of withholding taxes.
If an optionee dies or becomes disabled while employed as an employee or serving
as a consultant or director or dies or becomes disabled within three months
following termination, options may be exercised by those entitled to do so under
the optionee's will or by the laws of descent and distribution within 12 months
following the optionee's death or disability, to the extent such options were
exercisable at the time of such death or disability. If the status of an
optionee as an employee, director or consultant is terminated for any reason
other than death or disability or cause, as defined, the option may be exercised
by the optionee (to the extent then exercisable unless otherwise determined by
the Administrator) within three months after termination (but no later than the
expiration date of the option). If the status of an optionee is terminated for
cause, as defined, all outstanding options held by such persons will terminate.
In the event of any change in the capitalization of the Company as a result of a
stock dividend, stock split, subdivision, consolidation, combination,
reclassification, or recapitalization or other change in corporate structure
affecting the shares of Common Stock, the total number and kind of shares
reserved for issuance under the 1997 Option Plan and the number of shares
covered by each outstanding option and the purchase price per share may be
appropriately adjusted as determined by the Administrator.
Upon a change in control of the Company, as defined, unless the applicable stock
agreement provides otherwise, all outstanding options not vested or exercisable
under the 1997 Option Plan will become immediately and fully vested and
exercisable provided that the Administrator may in its sole discretion (i) grant
a cash bonus in an amount necessary to pay the exercise price, (ii) pay cash in
exchange for the cancellation of the outstanding options and (iii) make other
adjustments or amendments to outstanding options, including a determination that
no acceleration of options will occur, if the Board or the surviving corporation
shall have made or agreed to make an equitable and appropriate substitution of a
new option or assume the old option in order to make the new or assumed option
the practical equivalent of the old option.
The Board of Directors may amend, modify or terminate the 1997 Option Plan,
provided that no such action may adversely affect any outstanding option and
shareholder approval will be required to the extent necessary or desirable to
comply with any statutory or regulatory requirements.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary is for general information only and is limited to a
discussion of federal income tax consequences of participation in the 1997
Option Plan, as described, based upon the Code, regulations thereunder, rulings
and decisions now in effect, all of which are subject to change. The summary
does not discuss all aspects of income taxation that may be relevant to a
particular participant in light of his or her personal circumstances.
ISOs. The grant of an ISO will not create tax consequences to either the
optionee or the Company. If the optionee has held the shares of Common Stock
acquired upon exercise of an ISO for at least two years after the date of grant
and for at least one year after the date of exercise, when the optionee disposes
of the shares, the difference, if any, between the sales price of the shares and
the exercise price of the option will be treated as long-term capital gain or
loss. If the optionee disposes of the shares prior to satisfying these holding
period requirements (a "disqualifying disposition"), the optionee will recognize
ordinary income (treated as compensation subject to withholding) at the time of
the disqualifying disposition, generally in an amount equal to the excess of the
fair market value of the shares at the time the option was exercised over the
exercise price of the option. The balance of the gain realized, if any, will be
long-term or short-term capital gain, depending upon the actual period for which
the stock was held. If the optionee sells the shares in a disqualifying
disposition at a price below the fair market value of the shares at the time the
option was exercised, the amount of ordinary income (treated as compensation
subject to withholding) will be limited to the amount realized on the sale over
the exercise price of the option. The Company and its subsidiaries will be
allowed a business expense deduction to the extent the optionee recognizes
ordinary income.
16
<PAGE>
Non-Qualified Stock Options. In general, an optionee who receives a Non-
Qualified Stock Option will recognize no income at the time of the grant of the
option. Upon exercise of a Non-Qualified Stock Option, an optionee will
recognize ordinary income (treated as compensation subject to withholding) in an
amount equal to the excess of the fair market value of the shares of Common
Stock on the date of exercise over the exercise price of the option. The basis
in shares acquired upon exercise of a Non-Qualified Stock Option will equal the
fair market value of such shares at the time of exercise, and the holding period
of the shares (for capital gain purposes) will begin on the date of exercise.
The Company will be entitled to a business expense deduction in the same amount
and at the same time as the optionee recognizes ordinary income.
Other. Generally, if an optionee delivers previously-owned shares to pay the
exercise price, such exercise generally will not be considered a taxable
disposition of the previously-owned shares and thus no gain or loss will be
recognized in respect of the shares delivered, and there will be a carryover
basis and holding period for a like number of shares acquired. If, however, the
shares delivered were acquired upon exercise of an ISO and are delivered prior
to the optionee's satisfying the ISO holding period requirements described
above, the delivery of shares will constitute a disqualifying disposition as to
which the rules described above will apply. If the option being exercised is a
Non-Qualified Stock Option, ordinary income (treated as compensation subject to
withholding) will be recognized only on the additional shares acquired and will
be equal to the fair market value of the shares on the date of exercise less any
additional cash paid. Special rules apply in computing the amount and character
of an optionee's income (or loss) upon the subsequent sale of shares acquired
upon the exercise of an ISO, where the exercise price is paid by the delivery of
previously-owned shares.
In general, if an option is surrendered for payment in connection with a change
of control, the optionee will recognize ordinary income (treated as compensation
subject to withholding) in an amount equal to the cash payment or the fair
market value of the shares of Common Stock received, and the Company will be
entitled to a business expense deduction in the same amount.
In addition, if an option is accelerated or surrendered for payment in
connection with a change in control, the optionee may, in certain circumstances,
be subject to a 20% excise tax on a portion of the income relating to the
option, under the rules applicable pursuant to Section 4999 of the Code. These
rules are fairly complex and the excise tax would only apply in cases where the
amount of all payments to be received by an optionee contingent upon the change
in control exceed certain thresholds established under the rules.
MARKET PRICE OF COMMON STOCK
On December 22, 1997 the closing price per share of the Common Stock on the
Nasdaq National Market System was $31.75.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE
1997 OPTION PLAN.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
(ITEM 3 ON PROXY CARD)
Pursuant to the Bylaws of the Company, shareholders will be asked to ratify the
selection of KPMG Peat Marwick LLP as independent auditors of the Company for
the year ending September 30, 1998. KPMG Peat Marwick LLP has no relationship
with the Company except in its capacity as the Company's auditors.
A representative of KPMG Peat Marwick LLP is expected to be present at the
Annual Meeting and will be available to respond to appropriate inquiries.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION OF
KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE YEAR ENDING
SEPTEMBER 30, 1998.
17
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE 1934 SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and any persons who own more than 10 percent
of the Company's Common Stock, to file with the Securities and Exchange
Commission ("SEC") initial reports of ownership and reports of changes in
ownership of Common Stock.
To the Company's knowledge, based solely on review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, during the year ended September 30, 1997, all such Section 16(a)
filing requirements were met, except Mr. Andersen's late filing of one Form 4.
SHAREHOLDER PROPOSALS
Shareholder Proposals intended to be considered at the 1999 Annual Meeting of
Shareholders must be received by the Secretary of the Company not later than
September 9, 1998. Such proposals may be included in next year's Proxy
Statement if they comply with certain rules and regulations promulgated by the
Securities and Exchange Commission.
ANNUAL REPORT
THE ANNUAL REPORT FOR ANALYTICAL SURVEYS, INC., FOR THE YEAR ENDED SEPTEMBER 30,
1997, IS MAILED WITH THIS PROXY STATEMENT. COPIES OF THE ANNUAL REPORT AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K, INCLUDING FINANCIAL
STATEMENTS AND SCHEDULES THERETO MAY BE OBTAINED BY REQUEST FROM SCOTT C.
BENGER, SECRETARY, 1935 JAMBOREE DRIVE, COLORADO SPRINGS, COLORADO 80920.
OTHER MATTERS
Management is not aware of any matters to come before the meeting which will
require the vote of shareholders other than those matters indicated in the
Notice of Shareholder Meeting and this Proxy Statement. However, if any other
matter calling for shareholder action should properly come before the meeting or
any adjournments thereof, those persons named as proxies in the enclosed Proxy
Form will vote thereon according to their best judgment.
By Order of the Board of Directors
/S/ Scott C. Benger
------------------------
January 8, 1998 Scott C. Benger
Secretary/Treasurer
18
<PAGE>
FORM OF PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANALYTICAL SURVEYS, INC.
1935 Jamboree Drive
Colorado Springs Colorado
80920
The undersigned hereby appoints John A. Thorpe and James T. Rothe and each of
them, with full power of substitution, the proxies of the undersigned to vote
all shares of Common Stock of Analytical Surveys, Inc., which the undersigned is
entitled to vote at the Annual Meeting of Shareholders of the Corporation to be
held at the Antlers Doubletree Hotel, 4 South Cascade Avenue, Colorado Springs,
Colorado, on February 10, 1998, at 3:30 p.m.
ANNUAL MEETING FEBRUARY 10, 1998
1. ELECTION OF DIRECTORS
[_] FOR all nominees listed below [_] WITHHOLD AUTHORITY to vote for
all nominees listed below
(except as marked to the contrary below)
Willem H.J. Andersen Sidney V. Corder Robert H. Keeley Richard P.
MacLeod
Sol C. Miller James T. Rothe John A. Thorpe
INSTRUCTION: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE
THROUGH OR OTHERWISE STRIKE THE NOMINEE'S NAME IN THE LIST ABOVE.
PLEASE CONTINUE ON REVERSE SIDE
2. PROPOSAL TO RATIFY AND APPROVE THE COMPANY'S 1997 STOCK OPTION PLAN:
[_] FOR [_] AGAINST [_] ABSTAIN
3. PROPOSAL TO RATIFY THE SELECTION OF KPMG PEAT MARWICK LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 1998:
[_] FOR [_] AGAINST [_] ABSTAIN
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, AND 3.
Dated . . . . . . . . . . . . .,1998 Signed . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . .
Signed . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . .
NOTE: Signature should agree with name on Stock Certificate as printed thereon.
Executors, administrators, trustees and other fiduciaries should so indicate
when signing.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE>
APPENDIX 1
ANALYTICAL SURVEYS, INC.
AMENDED AND RESTATED 1997 INCENTIVE STOCK OPTION PLAN
SECTION 1
INTRODUCTION
1.1 Establishment. Analytical Surveys, Inc. a Colorado corporation,
hereby establishes the Analytical Surveys, Inc. 1997 Incentive Stock Option Plan
(the "Plan") for certain key employees of Analytical Surveys, Inc. and its
Affiliated Corporations (collectively, the "Company").
1.2 Purposes. The purposes of the Plan are to provide certain key
management employees with added incentives to continue in the service of the
Company and to create in such employees a more direct interest in the future
success of the operations of the Company by relating incentive compensation to
increases in stockholder value, so that the income of the key management
employees is more closely aligned with the income of the Company's stockholders.
SECTION 2
DEFINITIONS
2.1 Definitions. The following terms shall have the meanings set
forth below:
(a) "Affiliated Corporation" means any corporation or other
entity (including, but not limited to, a partnership) which is affiliated with
the Issuer through stock ownership or otherwise and is treated as a common
employer under the provisions of Code Sections 414(b) and (c).
(b) "Approved Transaction" means any transaction in which the
Board (or, if approval of the Board is not required as a matter of law, the
stockholders of the Issuer) shall approve (i) any consolidation or merger of the
Issuer, or binding share exchange, pursuant to which shares of Stock would be
changed or converted into or exchanged for cash, securities or other property,
other than any such transaction in which the holders of the Stock immediately
prior to such transaction have the same proportionate ownership of the common
stock of, and voting power with respect to, the surviving corporation
immediately after such transaction, (ii) any merger, consolidation or binding
share exchange to which the Issuer is a party as a result of which the persons
who are holders of the Stock immediately prior thereto have less than a majority
of the combined voting power of the outstanding capital stock of the Issuer
ordinarily (and apart from the rights accruing under special circumstances)
having the right to vote in the election of directors immediately following such
merger, consolidation or binding share exchange, (iii) the adoption of any plan
or proposal for the liquidation or dissolution of the Issuer, or (iv) any sale,
lease, exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Issuer, but not
a pledge of assets in the context of a bona fide loan.
<PAGE>
(c) "Board" means the Board of Directors of the Issuer.
(d) "Code" means the Internal Revenue Code of 1986, as it may
be amended from time to time.
(e) "Disabled" or "Disability" means a disability for which
the Option Holder is entitled to disability payments under the Option Holder's
Employment Agreement. For purposes of this Plan, such Disability will be deemed
to have commenced on the first date on which the Option Holder is absent from
work with the Company due to such Disability.
(f) "Effective Date" means the effective date of the Plan,
which will July 2, 1997.
(g) "Eligible Employees" means Scott Benger, David Coates,
Sidney Corder, John J. Dillon III, William M. Howell, Steve Jenkins, Mark
Klimiuk, David Lewis, Jeffrey A. Meyerrose, Robert J. Montgomery, William
Nantell and Randal J. Sage. No other employee of the Company will be considered
an Eligible Employee for purposes of this Plan.
(h) "Employment Agreement" means the employment contract or
employment agreement between the Eligible Employee and the Company, as it may be
amended and in effect at the time such contract or agreement is subject to
reference under this Plan. If no such contract or agreement is in effect at the
time of reference under this Plan, "Employment Agreement" will mean the
Employment Agreement most recently in effect prior to the time of reference
under this Plan.
(i) "Fair Market Value" means the officially quoted closing
price of the Stock on the NASDAQ National Market System on a particular date. If
there are no Stock transactions on such date, the Fair Market Value shall be
determined as of the immediately preceding date on which there were Stock
transactions. If no such prices are reported on the NASDAQ National Market
System, then Fair Market Value shall mean the average of the high and low sale
prices for the Stock (or if no sales prices are reported, the average of the
high and low bid prices) as reported by the principal regional stock exchange,
or if not so reported, as reported by NASDAQ or a quotation system of general
circulation to brokers and dealers. If the Stock is not publicly traded, the
Fair Market Value of the Stock on any date shall be determined in good faith by
the Incentive Plan Committee after such consultation with outside legal,
accounting and other experts as the Incentive Plan Committee may deem advisable.
(j) "Incentive Plan Committee" means a committee consisting of
all of the members of the Board.
(k) "Issuer" means Analytical Surveys, Inc.
(l) "Option" means a right to purchase Stock at a stated price
for a specified period of time. All Options granted under this Plan well be
non-statutory stock options which are not intended to qualify as incentive stock
options under Code Section 422.
-2-
<PAGE>
(m) "Option Price" means the price at which shares of Stock
subject to an Option may be purchased, determined in accordance with section
6.2(b).
(n) "Option Holder" means each Eligible Employee who is granted
Options under the Plan.
(o) "Plan Year" means each 12-month period beginning January 1
and ending the following December 31, except that for the first year of the Plan
the Plan Year shall begin on the Effective Date and extend to the first December
31 following the Effective Date.
(p) "Share" or "Shares" means a share or shares of Stock.
(q) "Stock" means the common stock of the Issuer.
2.2 Gender and Number. Except where otherwise indicated by the
context, the masculine gender also shall include the feminine gender, and the
definition of any term herein in the singular also shall include the plural.
SECTION 3
PLAN ADMINISTRATION
The Plan shall be administered by the Incentive Plan Committee. In
accordance with the provisions of the Plan, the Incentive Plan Committee may
from time to time 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
Incentive Plan Committee may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or in any agreement entered into
hereunder in the manner and to the extent it shall deem expedient and it shall
be the sole and final judge of such expediency. No member of the Incentive Plan
Committee shall be liable for any action or determination made in good faith,
and all members of the Committee shall, in addition to their rights as
directors, be fully protected by the Company with respect to any such action,
determination or interpretation. The determinations, interpretations, and other
actions of the Incentive Plan Committee pursuant to the provisions of the Plan
shall be binding and conclusive for all purposes and on all persons.
SECTION 4
ADJUSTMENTS TO STOCK SUBJECT TO THE PLAN
4.1 Adjustments for Stock Split, Stock Dividend, Etc. If the Company
shall at any time increase or decrease the number of its outstanding Shares of
Stock, or change in any way the rights and privileges of such Shares by means of
the payment of a stock dividend or any other distribution upon such Shares
payable in Stock, or through a stock split, subdivision, consolidation,
combination, reclassification or recapitalization involving the Stock, then in
relation to the Stock that is affected
-3-
<PAGE>
by one or more of the above events, the numbers, rights and privileges of the
following shall be increased, decreased or changed in like manner as if such
Shares had been issued and outstanding, fully paid and nonassessable at the time
of such occurrence: (i) the shares of Stock as to which Options may be granted
under the Plan; and (ii) the Shares of Stock then included in each outstanding
Option granted hereunder.
4.2 General Adjustment Rules. If any adjustment or substitution
provided for in this Section 4 shall result in the creation of a fractional
Share under any Option, the Company shall, in lieu of issuing such fractional
Share, pay to the Option Holder a cash sum in an amount equal to the product of
such fraction multiplied by the Fair Market Value of a Share on the date the
fractional Share otherwise would have been issued.
4.3 Determination by Incentive Plan Committee, Etc. Adjustments under
this Section 4 shall be made by the Incentive Plan Committee, whose
determinations with regard thereto shall be final and binding upon all parties.
SECTION 5
STOCK OPTIONS
5.1 Grant of Options. Subject to Section 5.2(g), the Eligible
Employees hereby are granted Options as follows:
<TABLE>
<S> <C>
Jeff Armstrong 10,000 Shares
Scott Benger 20,000 Shares
David Coates 10,000 Shares
Sidney Corder 20,000 Shares
John J. Dillon III 21,750 Shares
William M. Howell 40,730 Shares
Steve Jenkins 10,000 Shares
Mark Klimiuk 10,000 Shares
David Lewis 10,000 Shares
Jeffrey A. Meyerrose 35,480 Shares
Robert J. Montgomery 57,730 Shares
William Nantell 10,000 Shares
Randal J. Sage 89,310 Shares
</TABLE>
5.2 Provisions Applicable to Options. Each Option granted under the
Plan shall be subject to all of the terms and conditions of this Plan, including
the following:
(a) Price. The price at which each Share covered by an Option
may be purchased shall be $13.75 per Share.
-4-
<PAGE>
(b) Date of Grant. Each Option shall be considered as having
been granted on July 2, 1997 (the "Grant Date").
(c) Duration of Options. Each Option must be exercised within
ten (10) years from the Grant Date (the "Option Period").
(d) Vesting of Options. Subject to the exercise and termination
provisions set forth in Section 5.2(e) and Section 5.2(g) below, the Options
will vest in accordance with the following schedule:
<TABLE>
<CAPTION>
Vesting Date Percentage of Original Options Vested
------------ -------------------------------------
<S> <C>
Six months from Grant Date 25%
One year from Grant Date 50%
Two years from Grant Date 75%
Three years from Grant Date 100%
</TABLE>
(e) Exercise and Termination of Options. Notwithstanding any
other provision of this Plan, and subject to Section 5.2(g), an Option will be
subject to the exercise and termination provisions set forth below:
(i) Option Holder's Voluntary Termination of Employment.
If the employment of the Option Holder is terminated voluntarily by the Option
Holder within the Option Period for any reason (other than for cause, as
determined under the Option Holder's Employment Agreement), all Options held by
the Option Holder, whether or not vested, thereafter shall be terminated and
shall be void for all purposes.
(ii) Option Holder's Termination of Own Employment For
Cause. If the employment of the Option Holder is terminated by the Option Holder
within the Option Period for cause, as determined under the Option Holder's
Employment Agreement, all Options held by the Option Holder shall become
immediately 100% vested as of such termination of employment, and the Options
shall be exercisable for a period of ninety (90) days after such termination of
employment. Upon the expiration of the 90-day exercise period, all unexercised
Options held by the Option Holder thereafter shall be terminated and shall be
void for all purposes.
(iii) Option Holder's Death. If the Option Holder dies
while employed by the Company (or if the Option Holder dies after termination of
employment but during any exercise period set forth in paragraphs (ii), (iv),
(v), (vi), or (vii)), and such death occurs within the Option Period, all
unvested Options held by the Option Holder at his death thereafter shall be
terminated and shall be void for all purposes. All Options vested as of the
Option Holder's death may be exercised by the person so entitled to exercise
such Option for a period of 180 days after such death. Upon the expiration of
the 180-day exercise period, all unexercised Options thereafter shall be
terminated and shall be void for all purposes.
-5-
<PAGE>
(iv) Option Holder's Disability. If the Option Holder
becomes Disabled while employed by the Company and within the Option Period, all
unvested Options held by the Option Holder at his Disability will continue to
vest in accordance with paragraph (i) for a period of 36 months from the date of
such Disability; provided that the Option Holder survives for the 36- month
Disability vesting period. All Options vested as of the Option Holder's
Disability, and all Options which become vested during the 36-month period
following such Disability, may be exercised by the Option Holder during the 36-
month period following the Disability. Upon the expiration of the 36-month
exercise period, all unexercised Options thereafter shall be terminated and
shall be void for all purposes.
(v) Option Holder's Retirement After Age 65. If the
Option Holder retires after attaining age 65 while employed by the Company and
within the Option Period, all unvested Options held by the Option Holder at his
retirement will continue to vest in accordance with Section 5.2(d) for a period
of 36 months from the date of such retirement; provided that the Option Holder
survives for the 36-month retirement vesting period. All Options vested as of
the Option Holder's retirement, and all Options which become vested during the
36-month period following such retirement, may be exercised by the Option Holder
during the 36-month period following the retirement. Upon the expiration of the
36-month exercise period, all unexercised Options thereafter shall be terminated
and shall be void for all purposes.
(vi) Termination of Option Holder's Employment by
Company Without Cause. If the Company terminates the employment of the Option
Holder within the Option Period for any reason other than for cause (as
determined under the Option Holder's Employment Agreement), all unvested Options
held by the Option Holder at the date of such termination of employment shall
become immediately 100% vested as of such termination of employment, and the
Options shall be exercisable for a period of ninety (90) days after such
termination of employment. Upon the expiration of the 90-day exercise period,
all unexercised Options held by the Option Holder thereafter shall be terminated
and shall be void for all purposes.
(vii) Termination of Option Holder's Employment by
Company For Cause. If the Company terminates the employment of the Option Holder
within the Option Period for cause, as determined under the Option Holder's
Employment Agreement, all unvested Options thereafter shall be terminated and
shall be void for all purposes. All Options vested as of the Option Holder's
termination of employment may be exercised by the Option Holder for a period of
15 days after such termination of employment. Upon the expiration of the 15-day
exercise period, all unexercised Options thereafter shall be terminated and
shall be void for all purposes.
(viii) Vesting and Exercise Upon Occurrence of Approved
Transaction. In the event of an Approved Transaction, then all outstanding
Options shall become 100% vested at the date determined by the Incentive Plan
Committee, which date shall be at least thirty (30) days prior to the occurrence
of the Approved Transaction. Such vested Options shall be exercisable for a
period of thirty (30) days after such vesting date. Upon the expiration of the
30-day exercise period, all unexercised Options held by the Option Holder
thereafter shall be terminated and shall be void
-6-
<PAGE>
for all purposes. Notwithstanding the above, if any agreement or plan relating
to the Approved Transaction provides for the assumption, exchange, or conversion
of the Options for options for securities in the surviving corporation, all
Options outstanding under this Plan shall be subject to such assumption,
exchange, or conversion, and no accelerated vesting or exercisability shall
apply to such Options.
(f) Manner of Exercise of Option.
(i) An Option may be exercised by delivery to the
Corporate Secretary of the Company of written notice specifying the particular
Option (or portion thereof) which is being exercised, the number of Shares with
respect to which such Option is exercised and including payment of the Option
Price. Such notice shall be in a form satisfactory to the Incentive Plan
Committee. The exercise of the Option shall be deemed effective upon receipt of
such notice by the Corporate Secretary and payment to the Company of the Option
Price. The purchase of such Stock shall take place at the principal offices of
the Company upon delivery of such notice, at which time the purchase price of
the Stock shall be paid in full by any of the methods or any combination of the
methods set forth in (ii) below. A properly executed certificate or certificates
representing the Stock shall be issued by the Company and delivered to the
Option Holder.
(ii) The exercise price shall be paid by any of the
following methods or any combination of the following methods:
(A) in cash;
(B) by cashier's check payable to the order of the
Company;
(C) by delivery to the Company of certificates
representing the number of Shares then owned by the Option Holder, the Fair
Market Value of which equals the purchase price of the Stock purchased pursuant
to the Option, properly endorsed for transfer to the Company. The Fair Market
Value of any Shares delivered in payment of the purchase price upon exercise of
the Option shall be the Fair Market Value as of the exercise date and the
exercise date shall be the day of the delivery of the certificates for the Stock
used as payment of the Option Price; or
(D) by delivery to the Company of a properly
executed notice of exercise together with irrevocable instructions to a broker
to deliver to the Company promptly the amount of the proceeds of the sale of all
or a portion of the Stock or of a loan from the broker to the Option Holder
necessary to pay the exercise price.
(g) The options granted to Scott Benger and Sidney Corder
pursuant to Section 5.1 are contingent upon and subject to approval by the
shareholders of the Company and may not be exercised unless and until such
shareholder approval is obtained. If such shareholder approval
-7-
<PAGE>
is not obtained by July 2, 1998, all such options automatically shall be
terminated and shall be void for all purposes.
5.3 Stockholder Privileges. Prior to the exercise of the Option and
the transfer of Shares to the Option Holder, an Option Holder shall have no
rights as a stockholder with respect to any Shares subject to any Option granted
to such person under this Plan, and until the Option Holder becomes the holder
of record of such Stock, no adjustments shall be made for dividends or other
distributions or other rights as to which there is a record date preceding the
date such Option Holder becomes the holder of record of such Stock, except as
provided in Section 4.
SECTION 6
GENERAL PROVISIONS
6.1 Employment. Nothing contained in the Plan or in any Option shall
confer upon any Eligible Employee any right with respect to the continuation of
his or her employment by the Company, or interfere in any way with the right of
the Company, subject to the terms of any separate employment agreement to the
contrary, at any time to terminate such employment or to increase or decrease
the compensation of such Employee from the rate in existence at the time of the
grant of an Option. Whether an authorized leave of absence, or absence in
military or government service, shall constitute a termination of employment
shall be determined by the Incentive Plan Committee at the time.
6.2 Nontransferability. No right or interest of any Option Holder in
an Option granted pursuant to the Plan shall be assignable or transferable
during the lifetime of the Option Holder, either voluntarily or involuntarily,
or be subjected to any lien, directly or indirectly, by operation of law, or
otherwise, including execution, levy, garnishment, attachment, pledge or
bankruptcy. In the event or an Option Holder's death, an Option Holder's rights
and interests in Options shall, to the extent provided in Section 5 be
transferable by testamentary will or the laws of decent and distribution. In the
opinion of the Incentive Plan Committee, if an Option Holder is disabled from
caring for his affairs because of mental condition, physical condition or age,
such Option Holder's Options shall be exercised by such person's guardian,
conservator or other legal personal representative upon furnishing the Incentive
Plan Committee with evidence satisfactory to the Incentive Plan Committee of
such status.
6.3 Compliance with Securities Laws. Each Option shall be subject to
the requirement that, if at any time counsel to the Company shall determine that
the listing, registration or qualification of the Shares subject to such Option
upon any securities exchange or under any state or federal law, or the consent
or approval of any governmental or regulatory body, is necessary as a condition
of, or in connection with, the issuance or purchase of Shares thereunder, such
Option may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained on conditions acceptable to the Incentive Plan
-8-
<PAGE>
Committee. Nothing herein shall be deemed to require the Company to apply for or
to obtain such listing, registration or qualification.
6.4 Other Employee Benefits. The amount of any compensation deemed to
be received by an Option Holder as a result of the exercise of an Option shall
not constitute "earnings" with respect to which any other employee benefits of
such Option Holder are determined, including without limitation benefits under
any pension, profit sharing, life insurance or salary continuation plan.
6.5 Nonexclusivity of Plan. The adoption of the Plan by the Board
shall not be construed as creating any limitations on the power or authority of
the Board to adopt such other or additional incentive or other compensation
arrangements of whatever nature as the Board may deem necessary or desirable or
preclude or limit the continuation of any other plan, practice or arrangement
for the payment of compensation or fringe benefits to employees generally, or to
any class or group of employees, which the Company now has lawfully put into
effect, including, without limitation, any retirement, pension, savings and
stock purchase plan, insurance, death and disability benefits and executive
short-term incentive plans.
6.6 Plan Amendment, Modification, and Termination. The Board may at
any time terminate, and from time-to-time may amend or modify, the Plan;
provided, however, that no amendment, modification or termination of the Plan
shall in any manner adversely affect any Options theretofore granted under the
Plan, without the consent of the Option Holder holding such Options.
6.7 Duration of Plan. The Plan shall fully cease and expire at
midnight on the date that is ten years from the Effective Date of the Plan.
Options outstanding at the time of the Plan termination may continue to be
exercised in accordance with their terms.
6.8 Withholding Requirement. The Company's obligations to deliver
Shares upon the exercise of an Option shall be subject to the Option Holder's
satisfaction of all applicable federal, state and local income and other tax
withholding requirements. At the time an Option is exercised by the Option
Holder, the Committee, in its sole discretion, may permit the Option Holder to
pay all such amounts of tax withholding, or any part thereof, by transferring to
the Company, or directing the Company to withhold from Shares otherwise issuable
to such Option Holder, Shares having a value equal to the amount required to be
withheld or such lesser amount as may be determined by the Committee at such
time. The value of Shares to be withheld shall be based on the Fair Market Value
of the Stock on the date that the amount of tax to be withheld is to be
determined.
SECTION 7
REQUIREMENTS OF LAW
7.1 Requirements of Law. The issuance of Stock and the payment of
cash pursuant to the Plan shall be subject to all applicable laws, rules and
regulations.
-9-
<PAGE>
7.2 Federal Securities Law Requirements. With respect to persons
subject to Section 16 of the 1934 Act, transactions under this Plan are intended
to comply with all applicable conditions of Rule 16b-3 or its successors under
the 1934 Act. To the extent any provision of the Plan or action by the Committee
fails to so comply, it shall be deemed null and void, to the extent permitted by
law and deemed advisable by the Committee.
7.3 Governing Law. The Plan shall be construed in accordance with and
governed by the laws of the State of Colorado.
-10-
<PAGE>
IN WITNESS THEREOF, the Company and the Option Holders hereby agree to
the provisions set forth herein, and have signed their names as of the dates set
forth below.
ANALYTICAL SURVEYS, INC.
By:
------------------------------------
Title:
---------------------------------
Date:
----------------------------------
OPTION HOLDERS:
---------------------------------------
Jeff Armstrong
Date:
----------------------------------
---------------------------------------
Scott Benger
Date:
----------------------------------
---------------------------------------
David Coates
Date:
----------------------------------
---------------------------------------
Sidney Corder
Date:
----------------------------------
---------------------------------------
John J. Dillon III
Date:
----------------------------------
---------------------------------------
William M. Howell
-11-
<PAGE>
Date:
----------------------------------
---------------------------------------
Steve Jenkins
Date:
----------------------------------
---------------------------------------
Mark Klimiuk
Date:
----------------------------------
---------------------------------------
David Lewis
Date:
----------------------------------
---------------------------------------
Jeffrey A. Meyerrose
Date:
----------------------------------
---------------------------------------
Robert J. Montgomery
Date:
----------------------------------
---------------------------------------
William Nantell
Date:
-----------------------------------
---------------------------------------
Randal J. Sage
Date:
-----------------------------------
-12-
<PAGE>
AMENDMENT TO AND
SUPPLEMENT OF
ANALYTICAL SURVEYS, INC.
AMENDED AND RESTATED 1997 STOCK OPTION PLAN
SECTION 8
INTRODUCTION
Analytical Surveys, Inc., a Colorado corporation, hereby amends and
supplements the Analytical Surveys, Inc. 1997 Stock Option Plan (the "Plan") by
adding to it the provisions set forth below, which provisions will apply to the
granting of options other than the options granted to certain employees as of
July 2, 1997. This portion of the Plan is for the benefit of certain selected
officers, employees, directors, consultants and advisors of Analytical Surveys,
Inc. (the "Company") and any Affiliated Corporations, and is intended as an
inducement to designated persons responsible for the conduct and management of
the Company's business or who are involved in endeavors significant to its
success to acquire a proprietary interest in the Company, to gain an added
incentive to advance the interests of the Company and to remain affiliated with
the Company. This portion of the Plan is intended to have no effect on the
options granted on July 2, 1997, and the terms of this portion of the Plan will
govern the grant of all options under this Plan after July 2, 1997.
SECTION 9
DEFINITIONS
9.1 Definitions. The following terms shall have the meanings set
forth below:
(a) "Affiliated Corporation" means any corporation or other
entity (including, but not limited to, a partnership or a limited liability
company) which is affiliated with Analytical Surveys, Inc. through stock
ownership or otherwise so as to be treated as a common employer under the
provisions of Code Sections 414(b) and (c).
(b) "Board" means the Board of Directors of Analytical Surveys,
Inc.
(c) "Code" means the Internal Revenue Code of 1986, as it may
be amended from time to time.
(d) "Compensation Committee" means one or more of the committees
described below. Members of the Compensation Committee shall serve at the
pleasure of the Board and may resign at any time upon written notice to the
Board.
(i) Generally: If paragraphs (ii) and (iii) below are not
applicable, the "Compensation Committee" shall consist of one or more members of
the Board and/or such other
-1-
<PAGE>
person or persons as may be appointed from time to time by the Board, or the
entire Board if no such Committee has been appointed.
(ii) For Reporting Persons: With respect to the grant or
administration of any Options granted under the Plan to Eligible Employees who
are subject to the reporting requirements under Section 16(a) of the 1934 Act,
unless the Board determines otherwise, the Compensation Committee shall be
constituted so as to comply with Rule 16b-3 promulgated under the 1934 Act and
shall consist of (A) two non-employee directors (as defined in Rule 16b-3) or
(B) the entire Board ("16b-3 Committee"); provided that if a 16b-3 Committee is
-------------
not required for such grant or grants to meet the exemption requirements under
Rule 16b-3, then this sentence shall not be applicable.
(iii) For Compliance with Code Section 162(m): With respect
to the grant or administration of any Options granted under the Plan to an
Eligible Employee subject to Code Section 162(m) and for which the Board
determines, in its discretion, that compliance with Code Section 162(m) is
necessary or desirable, the Compensation Committee shall be constituted so as to
comply with Code Section 162(m) and the Treasury Regulations thereunder and
shall consist of two or more outside directors and no other person; provided
--------
that if a 162(m) Committee is not required for such grant or grants to meet the
- ----
conditions of Code Section 162(m), then this sentence shall not be applicable.
(e) "Disability" means a physical or mental condition which,
in the judgment of the Company, based on medical reports or other evidence
satisfactory to the Company, permanently prevents an employee from
satisfactorily performing his or her usual duties for the Company or the duties
of such other position or job which the Company makes available to him or her
and for which such employee is qualified by reason of his or her training,
education, or experience.
(f) "Effective Date" means the effective date of the Plan, which
will be _______, 1998.
(g) "Eligible Employee" means full-time key employees
(including, without limitation, officers and directors who also are employees)
of the Company or any Affiliated Corporation, consultants performing services
for the Company or any Affiliated Corporation, and Outside Directors of the
Company or any Affiliated Corporation, whose judgment, initiative and efforts
are, or are expected to be, important to the successful conduct of the Company's
business.
(h) "Fair Market Value" means the officially quoted closing
price of the Stock on the New York Stock Exchange or any other national exchange
(a "National Exchange") on a particular date. If there are no Stock transactions
on such date, the value will be determined as of the immediately preceding date
on which there were Stock transactions. If no such prices are reported on a
National Exchange, then Fair Market Value means the officially quoted closing
price of the Stock on the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System on a particular date. If there are no
Stock transactions on such date, the Fair
-2-
<PAGE>
Market Value will be determined as of the immediately preceding date on which
there were Stock transactions. If no such prices are reported on NASDAQ, then
Fair Market Value means the average of the high and low sale prices for the
Stock (or if no sales prices are reported, the average of the high and low bid
prices) as reported by the principal regional stock exchange, or if not so
reported, as reported by NASDAQ or a quotation system of general circulation to
brokers and dealers.
(i) "ISO" means an incentive stock option issued under Code
Section 422.
(j) "1934 Act" means the Securities Exchange Act of 1934, as
amended.
(k) "NSO" means a non-statutory (or nonqualified) option that
is not intended to qualify as an incentive stock option under Code Section 422.
(l) "Option" means a right to purchase Stock at a stated price
for a specified period of time.
(m) "Option Holder" means an Eligible Employee who has been
designated by the Compensation Committee from time to time during the term of
the Plan to receive one or more Options under the Plan.
(n) "Option Price" means the price at which Shares of Stock
subject to an Option may be purchased, determined in accordance with Section
5.2(b).
(o) "Optioned Shares" means the Shares subject to an Option.
(p) "Outside Director" means those members of the Board of
Directors and members of the board of directors of any Affiliated Corporation
who are not officers or employees of the Company or any Affiliated Corporation.
(q) "Plan Year" means the 12-month period from October 1 to
September 30 each year, except that the first Plan Year will commence on the
Effective Date and will end on the next following September 30.
(r) "Rule 16b-3" means Rule 16b-3 promulgated under the 1934 Act
or any successor rule.
(s) "Share" or "Shares" means a share or shares of Stock.
(t) "Stock" means the common stock of the Company.
9.2 Gender and Number. Except where otherwise indicated by the
context, the masculine gender also shall include the feminine gender, and the
definition of any term herein in the singular also shall include the plural.
-3-
<PAGE>
SECTION 10
PLAN ADMINISTRATION
10.1 Compensation Committee; Powers. The Plan shall be administered by
the Compensation Committee. In accordance with the provisions of the Plan, the
Compensation Committee shall have full power and authority, in its sole
discretion, to administer the Plan, including authority to interpret and
construe any provision of the Plan and any Option granted hereunder, to select
the Eligible Employees to whom Options will be granted, the type (i.e., ISO or
----
NSO) and amount of each Option, and any other terms and conditions of each
Option as the Compensation Committee may deem necessary or desirable and
consistent with the terms of the Plan. The Compensation Committee shall have
full power and authority to determine the form or forms of the agreements with
Option Holders, which shall evidence the particular provisions, terms,
conditions, rights and duties of the Company and the Option Holders with respect
to Options granted pursuant to the Plan, which provisions need not be identical
except as may be provided herein. The Compensation Committee in granting an
Option may provide for the granting or issuance of additional, replacement or
alternative Options upon the occurrence of specified events, including the
exercise of the original Option. The Board may reserve to itself any of the
authority granted to a committee or committees as set forth herein, and it may
perform and discharge all of the functions and responsibilities of any such
committee at any time that a duly constituted committee is not appointed and
serving.
10.2 Actions of Compensation Committee. The Compensation Committee may
from time to time adopt such rules and regulations for administering the Plan as
it may deem necessary in order to comply with the requirements of the Code or in
order to conform to any regulation or to any change in law or regulation
applicable thereto, or as it may otherwise deem proper and in the best interests
of the Company. The Compensation Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or in any agreement entered
into hereunder in the manner and to the extent it shall deem expedient and it
shall be the sole and final judge of such expediency. No member of the
Compensation Committee shall be liable for any action, interpretation or
determination made in good faith (including determinations of Fair Market
Value), and all members of the Compensation Committee shall, in addition to
their rights as directors, be fully protected by the Company with respect to any
such action, interpretation or determination. All actions taken and all
interpretations and determinations made by the Compensation Committee pursuant
to the provisions of the Plan shall be final, binding and conclusive for all
purposes and on Option Holders, the Company and all other persons. Any
determination reduced in writing and signed by all of the members shall be fully
effective as if it had been made by a majority vote at a meeting duly called and
held.
-4-
<PAGE>
SECTION 11
STOCK RESERVED FOR THE PLAN
11.1 Number of Shares. Subject to the provisions of Section 4.3 below,
the number of shares which are authorized for issuance under the Plan is
500,000, any or all of which may be issued as Incentive Stock Options. Shares
which may be issued upon the exercise of Options shall be applied to reduce the
maximum number of Shares remaining available under the Plan. The Shares reserved
for issuance under the Plan may be either authorized and unissued or held in the
treasury of the Company. The Shares reserved for issuance under the Plan may be
either authorized and unissued or held in the treasury of the Company.
11.2 Unused and Forfeited Stock. Any Shares that are subject to an
Option under this Plan which are not used because the terms and conditions of
the Option are not met, including any Shares that are subject to an Option which
expires or is terminated for any reason, any Shares which are used for full or
partial payment of the purchase price of Shares with respect to which an Option
is exercised and any Shares retained by the Company pursuant to Section 5.2(f)
or Section 10 automatically shall again become available for use under the Plan.
11.3 Adjustments for Stock Split, Stock Dividend, Etc. If the Company
shall at any time increase or decrease the number of its outstanding Shares of
Stock, or change in any way the rights and privileges of such Shares by means of
the payment of a stock dividend or any other distribution upon such Shares
payable in Stock, or through a stock split, subdivision, consolidation,
combination, reclassification, recapitalization, reverse stock split, or other
change in corporate structure affecting the Stock, then in relation to the Stock
that is affected by such events, such that an adjustment (whether such
adjustment is an increase or a decrease) is required in order to preserve the
benefits or potential benefits intended to be made available under this Plan,
then the Compensation Committee shall, in its sole discretion and in such manner
as the Compensation Committee may deem equitable and appropriate, make such
adjustments to any or all of (i) the number and kind of Shares which thereafter
may be made subject to Options under the Plan, (ii) the number and kind of
Shares subject to outstanding Options, and (iii) the purchase or Option Price
with respect to any of the foregoing.
11.4 General Adjustment Rules. If any adjustment or substitution
provided for in this Section 4 shall result in the creation of a fractional
Share under any Option, the Company, in its discretion, may, in lieu of issuing
such fractional Share, pay to the Option Holder a cash sum in an amount equal to
the product of such fraction multiplied by the Fair Market Value of a Share on
the date the fractional Share otherwise would have been issued.
-5-
<PAGE>
SECTION 12
STOCK OPTIONS
12.1 Grant of Options.
(a) Generally. An Eligible Employee may be granted one or more
Options. The Compensation Committee, in its sole discretion, shall designate
whether an Option is to be considered an ISO or an NSO. The Compensation
Committee may grant both an ISO and an NSO to the same Eligible Employee at the
same time or at different times. ISOs and NSOs, whether granted at the same or
different times, shall be deemed to have been awarded in separate grants, shall
be clearly identified, and in no event shall the exercise of one Option affect
the right to exercise any other Option or affect the number of Shares for which
any other Option may be exercised.
(b) Grants to Outside Directors. With respect to Outside
Directors who are Eligible Employees, unless otherwise determined by the
Committee, each such Outside Director shall be granted NSOs representing 9,000
Shares for each Plan Year for the term of the Plan.
12.2 Option Agreements. Each Option granted under the Plan shall be
evidenced by a written stock option agreement which shall be entered into by the
Company and the Option Holder, and which shall contain the following terms and
conditions, as well as such other terms and conditions not inconsistent
therewith, as the Compensation Committee may consider appropriate in each case.
In the event of any inconsistency between the provisions of the Plan and any
such agreement entered into hereunder, the provisions of the Plan shall govern.
Any such agreement may be supplemented or amended from time to time as approved
by the Compensation Committee as contemplated herein.
(a) Number of Shares. Each stock option agreement shall state
that it covers a specified number of Shares, as determined by the Compensation
Committee.
(b) Price. The price at which each Optioned Share may be
purchased shall be determined by the Compensation Committee and set forth in the
stock option agreement. An Option which is an NSO may be granted at any price
equal to or less than Fair Market Value, in the sole discretion of the
Compensation Committee. An Option which is an ISO shall be granted at Fair
Market Value; provided, however, that an ISO which is granted to an Eligible
Employee who then owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company must be at least 110% of the
Fair Market Value of the Stock subject to the ISO on the date the Option is
granted.
(c) Duration of Options. Each stock option agreement shall
state the period of time, determined by the Compensation Committee, within which
the Option may be exercised by the Option Holder (the "Option Period"). The
Option Period must expire, in all cases, not more than ten years from the date
an Option is granted; provided, however, that an ISO which is granted to an
-6-
<PAGE>
Eligible Employee who then owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company must expire not
more than five years from the date the Option is granted. Notwithstanding any
other provision of the Plan, any Option Holder who is subject to Section 16 of
the 1934 Act may not exercise any portion of an Option during the first six
months following the grant of such Option, except that this limitation shall not
apply in the event of the Option Holder's death or disability during such
six-month period.
(d) Termination of Employment, Death, Disability, Etc. Except
as otherwise determined by the Compensation Committee, each stock option
agreement shall provide as follows with respect to the exercise of the Option
upon termination of the employment (or services) or the death of the Option
Holder:
(i) Death or Disability: If the Option Holder dies, or
if the Option Holder becomes Disabled during the Option Period while still
employed (or, in the case of a consultant or advisor, while the Option Holder is
performing services), or within the three-month period referred to in (iii)
below, the Option may be exercised by those entitled to do so under the Option
Holder's will or by the laws of descent and distribution within twelve months
following the Option Holder's death or Disability, but not thereafter. In any
such case, the Option may be exercised only as to the Shares as to which the
Option had become exercisable on or before the date of the Option Holder's death
or Disability.
(ii) Termination for Cause: If the employment of the
Option Holder is terminated within the Option Period for Cause, as determined
under any written employment agreement between the Option Holder and the
Company, the Option (whether or not vested and whether or not then exercisable)
thereafter shall be void for all purposes.
(iii) Other Termination: If the employment of the Option
Holder by the Company is terminated (which for this purpose means that the
Option Holder is no longer employed by the Company or by an Affiliated
Corporation and which, in the case of a consultant or advisor or an Outside
Director, means that the Option Holder is no longer performing services for the
Company or an Affiliated Corporation) within the Option Period for any reason
other than Cause, Disability or the Option Holder's death the Option may be
exercised by the Option Holder within three months following the date of such
termination (provided that such exercise must occur within the Option Period),
but not thereafter. In any such case, the Option may be exercised only as to the
Shares as to which the Option had become exercisable on or before the date of
termination of employment or termination of services.
(e) Transferability. Each stock option agreement shall provide
that the Option granted therein is not transferable by the Option Holder except
by will or pursuant to the laws of descent and distribution or pursuant to a
qualified domestic relations order (QDRO), and that such Option is exercisable
during the Option Holder's lifetime only by him or her, or in the event of
Disability or incapacity, by his or her guardian or legal representative. With
the consent of the Compensation Committee, a transfer of an NSO (whether or not
vested) by the Option Holder to a
-7-
<PAGE>
family trust or a family partnership, corporation, limited liability company, or
similar family entity, as part of the Option Holder's estate planning will not
be treated as a transfer under this Section. Any NSO so transferred will remain
subject to the restrictions in this Plan.
(f) Exercise, Payments, Etc.
(i) Each stock option agreement shall provide that the
method for exercising the Option granted therein shall be by delivery to the
Company of written notice specifying the particular Option (or portion thereof)
which is being exercised, the number of Shares with respect to which such Option
is exercised and including payment of the Option Price. Such notice shall be in
a form satisfactory to the Compensation Committee. An Option for the purchase of
Shares granted hereunder may be exercised either in whole at any time, or from
time to time. The exercise of the Option shall be deemed effective upon receipt
of such notice by the Company and payment to the Company of the Option Price.
The purchase of such Stock shall take place at the principal offices of the
Company upon delivery of such notice, at which time the purchase price of the
Stock shall be paid in full by any of the methods or any combination of the
methods set forth in (ii) below and permitted under the appropriate stock option
agreement. A properly executed certificate or certificates representing the
Stock shall be issued by the Company and delivered to the Option Holder.
(ii) The method or methods of payment of the Option
Price for the Shares to be purchased upon exercise of an Option shall be
determined by the Compensation Committee and may consist of any one or more of
the following methods:
(A) in cash;
(B) by cashier's check, certified check, or
any other similar instrument acceptable to the Company and payable to the order
of the Company;
(C) authorization from the Company to retain
from the total number of Shares as to which the Option is exercised that number
of Shares having a Fair Market Value on the date of exercise equal to the Option
Price for the total number of Shares as to which the Option is exercised;
(D) delivery of a properly executed exercise
notice together with irrevocable instructions to a broker to promptly deliver to
the Company the amount of sale or loan proceeds required to pay the Option
Price;
(E) by delivery to the Company of certificates
representing the number of Shares then owned by the Option Holder, the Fair
Market Value of which equals the Option Price of the Stock purchased pursuant to
the Option, properly endorsed for transfer to the Company; provided however,
that Shares used for this purpose must have been held by the Option Holder for
such minimum period of time as may be established from time to time by the
-8-
<PAGE>
Compensation Committee. The Fair Market Value of any Shares delivered in payment
of the purchase price upon exercise of the Option shall be the Fair Market Value
as of the exercise date and the exercise date shall be the day of the delivery
of the Certificates for the Stock used as payment of the Option Price.
(g) Date of Grant. An Option shall be considered as having
been granted on the date specified as the effective date of the grant in the
grant resolution of the Board or Compensation Committee.
12.3 Stockholder Privileges. Prior to the exercise of the Option
and the transfer of Shares to the Option Holder, an Option Holder shall have no
rights as a stockholder with respect to any Shares subject to any Option granted
to such person under this Plan, and until the Option Holder becomes the holder
of record of such Stock, no adjustments shall be made for dividends or other
distributions or other rights as to which there is a record date preceding the
date such Option Holder becomes the holder of record of such Stock, except as
provided in Section 4.
SECTION 13
CHANGE IN CONTROL
13.1 Change in Control. In the event of a change in control of the
Company, as defined in Section 6.2, at the discretion of the Compensation
Committee and only as expressly provided in the applicable stock option
agreement, each outstanding Option shall become exercisable in full in respect
of the aggregate number of Shares covered thereby, upon the occurrence of the
events described in clause (a) and (b) of Section 6.2 or immediately prior to
the consummation of the events described in clause (c) of Section 6.2. In
addition, the Compensation Committee, in its sole discretion, without obtaining
stockholder approval, to the extent permitted in Section 9, may take any or all
of the following actions: (a) grant a cash bonus award to any Option Holder in
an amount necessary to pay the Option Price of all or any portion of the Options
then held by such Option Holder; (b) pay cash to any or all Option Holders in
exchange for the cancellation of their outstanding Options in an amount equal to
the difference between the Option Price of such Options and the greater of the
tender offer, merger, or other transaction price for the underlying Stock or the
Fair Market Value of the Stock on the date of the cancellation of the Options;
and (c) make any other adjustments or amendments to the outstanding Options.
Notwithstanding the foregoing, unless otherwise provided in the applicable stock
option agreement, the Compensation Committee may, in its discretion, determine
that any or all outstanding Options granted pursuant to the Plan will not vest
or become exercisable on an accelerated basis in connection with an event
described in Section 6.2 and/or will not terminate if not exercised prior to
consummation of such event, if the Board or the surviving or acquiring
corporation, as the case may be, shall have taken, or made effective provision
for the taking of, such action as in the opinion of the Compensation Committee
is equitable and appropriate to substitute a new Option for such Option or to
assume such Option in order to make such new or assumed Option, as nearly as may
be practicable, equivalent to the old Option (before giving effect to any
acceleration of the vesting or exercisability thereof), taking into
-9-
<PAGE>
account, to the extent applicable, the kind and amount of securities, cash or
other assets into or for which the Stock may be changed, converted or exchanged
in connection with such event.
13.2 Definition. A "change in control" shall be deemed to have
occurred if any of the following occur:
(a) Any "person" (as such term is used in Sections 13(d) and
14(d) of the 1934 Act, other than a principal shareholder or any "affiliate" or
family member of such person ("family member" means a spouse, ancestor, sibling
or descendant, any spouse of such person, and any trust for the primary benefit
of any one or more of such persons), acquires or becomes a "beneficial owner"
(as defined in Rule 13d-3 or any successor rule under the 1934 Act), directly or
indirectly, of securities of Employer representing 50% or more of any class of
capital stock that is empowered to vote with respect to the election of
directors of the Company ("Voting Securities"), except that the following will
not constitute a Change in Control pursuant to this Section:
(i) any acquisition of beneficial ownership by the
Company or a subsidiary of the Company; or
(ii) any acquisition of beneficial ownership by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or one or more of its subsidiaries.
(b) A reorganization, merger or consolidation of Company or a
statutory exchange of outstanding Voting Securities of the Company where a
change in beneficial ownership of Voting Securities of the Company occurs of a
magnitude equal to that described in paragraph (a) (but specifically excluding a
merger or consolidation with a subsidiary of the Company, or the creation of a
holding company structure where no material change in beneficial ownership
occurs, or any such transaction where only the state of incorporation of the
Company changes).
(c) A complete liquidation or dissolution of the Company or
the sale of all or substantially all of the assets of the Company (in one or a
series of transactions), in either case if approval of the stockholders of the
Company is required for such a transaction.
A Change in Control will not be deemed to occur if (x) the acquisition of
beneficial ownership of the 50% or greater interest referred to in paragraph (a)
is by any Option Holder or by a group, acting in concert, that includes any
Option Holder or (y) if a majority of the then combined voting power of the then
outstanding Voting Securities (or voting equity interests) of the surviving
corporation or of any corporation (or other entity) acquiring all or
substantially all of the assets of the Company will, immediately after a
reorganization, merger, consolidation, statutory share exchange or disposition
of assets referred to in paragraph (b) or (c), be beneficially owned, directly
or indirectly, by any Option Holder or by a group, acting in concert, that
includes any Option Holder.
13.3 Golden Parachute Payments. If the provisions of this Section
would result in the receipt by any Option Holder of a payment within the meaning
of Code Section 280G and the
-10-
<PAGE>
regulations thereunder and if the receipt of such payment would result in the
denial of any deduction under Section 280G or imposition of any excise tax under
Code Section 4999, then the amount of such payment will be reduced to the extent
required, in the opinion of independent tax counsel, to prevent the application
of such Code Sections; provided, however, that the Compensation Committee, in
its sole discretion, may authorize the payment of all or any portion of the
amount of such reduction to the Option Holder. In such event, the Company will
have no obligation or liability with respect to the Option Holder for the amount
of any excise tax imposed on the Option Holder under Code Section 4999.
SECTION 14
RIGHTS OF EMPLOYEES AND OPTION HOLDERS
14.1 Employment. Nothing contained in the Plan or in any Option
shall confer upon any Eligible Employee any right with respect to the
continuation of his or her employment by the Company (or, in the case of an
Outside Director, advisor or consultant, to the continuation of the performance
of services for the Company), or interfere in any way with the right of the
Company, subject to the terms of any separate employment agreement to the
contrary, at any time to terminate such employment or services or to increase or
decrease the compensation of such Eligible Employee from the rate in existence
at the time of the grant of an Option. Whether an authorized leave of absence,
or absence in military or government service, shall constitute a termination of
employment or a termination of services shall be determined by the Compensation
Committee at the time.
14.2 Nontransferability. No right or interest of any Option Holder
in an Option granted pursuant to the Plan shall be assignable or transferable
during the lifetime of the Option Holder, either voluntarily or involuntarily,
or be subjected to any lien, directly or indirectly, by operation of law, or
otherwise, including execution, levy, garnishment, attachment, pledge or
bankruptcy, except pursuant to a qualified domestic relations order. In the
event of an Option Holder's death, an Option Holder's rights and interests in
Options shall, to the extent provided in Section 5, be transferable by
testamentary will or the laws of decent and distribution. In the opinion of the
Compensation Committee, if an Option Holder is disabled from caring for his
affairs because of mental condition, physical condition or age, such Option
Holder's Options shall be exercised by such person's guardian, conservator or
other legal personal representative upon furnishing the Compensation Committee
with evidence satisfactory to the Compensation Committee of such status.
SECTION 15
MISCELLANEOUS PROVISIONS
15.1 Investment Representations. The Company may require any Option
Holder, as a condition of exercising such Option or receiving Stock under the
Option, to give written assurances, in the substance and form satisfactory to
the Company and its counsel, to the effect that such person is acquiring the
Stock subject to the Option for his own account for investment and not with any
-11-
<PAGE>
present intention of selling or otherwise distributing the same, and to such
other effects as the Company deems necessary or appropriate in order to comply
with federal and applicable state securities laws. Legends evidencing such
restrictions may be placed on the certificates evidencing the Stock.
15.2 Compliance with Securities Laws. Each Option shall be subject
to the requirement that, if at any time counsel to the Company shall determine
that the listing, registration or qualification of the Shares subject to such
Option upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, is necessary as a
condition of, or in connection with, the issuance or purchase of Shares
thereunder, such Option may not be exercised in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained on conditions acceptable to the Compensation Committee.
Nothing herein shall be deemed to require the Company to apply for or to obtain
such listing, registration or qualification.
15.3 Other Employee Benefits: The amount of any compensation deemed
to be received by an Option Holder as a result of the exercise of an Option
shall not constitute "earnings" with respect to which any other employee
benefits of such Option Holder are determined, including without limitation
benefits under any pension, profit sharing, life insurance or salary
continuation plan.
15.4 Nonexclusivity of Plan: The adoption of the Plan by the Board
shall not be construed as creating any limitations on the power or authority of
the Board to adopt such other or additional incentive or other compensation
arrangements of whatever nature as the Board may deem necessary or desirable or
preclude or limit the continuation of any other plan, practice or arrangement
for the payment of compensation or fringe benefits to employees generally, or to
any class or group of employees, which the Company or any Affiliated Corporation
now has lawfully put into effect, including, without limitation, any retirement,
pension, savings and stock purchase plan, insurance, death and disability
benefits and executive short-term incentive plans.
15.5 Requirements of Law. The issuance of Stock and the payment of
cash pursuant to the Plan shall be subject to all applicable laws, rules and
regulations.
15.6 Federal Securities Law Requirements. With respect to Eligible
Employees subject to Section 16 of the 1934 Act, transactions under this Plan
are intended to comply with applicable conditions of Rule 16b-3 or its
successors under the 1934 Act. To the extent any provision of the Plan or action
by the Compensation Committee results in a failure of such transaction to so
comply, it shall be deemed null and void with respect to such Eligible
Employee(s), to the extent permitted by law and deemed advisable by the
Compensation Committee.
15.7 Governing Law. The Plan and all agreements hereunder shall be
construed in accordance with and governed by the laws of the State of Colorado.
-12-
<PAGE>
SECTION 16
PLAN AMENDMENT, MODIFICATION AND TERMINATION
The Board may at any time terminate, and from time-to-time may amend or
modify, the Plan; provided, however, that no amendment or modification may
become effective without approval of the amendment or modification by the
stockholders if stockholder approval is required to enable the Plan to satisfy
any applicable statutory or regulatory requirements, or if the Company, on the
advice of counsel, determines that stockholder approval otherwise is necessary
or desirable.
No amendment, modification or termination of the Plan shall in any
manner adversely affect any Options theretofore granted under the Plan without
the consent of the Option Holder holding such Options.
SECTION 17
WITHHOLDING
17.1 Withholding Requirement. The Company's obligations to deliver
Shares upon the exercise of an Option shall be subject to the Option Holder's
satisfaction of all applicable federal, state and local income and other tax
withholding requirements.
17.2 Satisfaction of Withholding Obligations. Upon timely exercise
of the Option, the Company in its sole discretion may (a) withhold the issuance
of the Stock until the Option Holder provides the Company with cash equal to the
amount of federal, state and local income taxes and related taxes, if any, which
the Company is required to withhold and pay in connection with the exercise of
the Option (the "Withholding Obligation"), (b) withhold an amount in cash equal
to the Withholding Obligation with respect to the issuance of the shares to
Option Holder from future compensation of the Option Holder; provided that if
Option Holder's employment or services terminate under Section 5, any portion of
the Withholding Obligation remaining in connection with the grant of this Option
shall be payable and paid by the Option Holder to the Company in cash no later
than the date of termination, or (c) permit the Option Holder to satisfy the
Withholding Obligation, or any part thereof, by transferring Stock to the
Company, or by having Stock withheld from the Stock otherwise issuable upon
exercise of this Option, with a Fair Market Value on the date that the amount of
tax is to be withheld equal to the Withholding Obligation.
SECTION 18
DURATION OF THE PLAN
The Plan shall terminate at such time as may be determined by the
Board, and no Option shall be granted after such termination. If not sooner
terminated under the preceding sentence, the Plan shall fully cease and expire
at midnight on the date that is ten years from the Effective Date of the
-13-
<PAGE>
Plan. Options outstanding at the time of the Plan termination may continue to be
exercised in accordance with their terms.
-14-
