SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
December 14, 1995
DELTA PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
Colorado 0-16203 84-1060803
(State of Commission (I.R.S. Employer
Incorporation) File No. Identification No.)
Suite 3310
555 17th Street
Denver, Colorado 80202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 293-9133
ITEM 5. OTHER EVENTS
A. On December 14, 1995, the Company was informed that
Underwriters Financial Group, Inc. ("UFG") had filed for Chapter 11
bankruptcy protection with the United States Bankruptcy Court for the
Southern District of New York on December 11, 1995. UFG is obligated to
the Company to discharge indebtedness encumbering certain
properties owned by the Company including stock representing
approximately 72% of the Company's 92% owned subsidiary, Amber
Resources Company ("Amber"). 3,357,003 shares of the common stock
of Amber owned by the Company are pledged to secure a note (the
"Snyder Note") payable by UFG to Snyder Oil Corporation ("SOCO") in
the approximate current amount of $2,333,333 at September 30, 1995
including accrued interest.
The Company has disclosed in previous filings with the
S.E.C., including its Form 10-KSB for the fiscal year ended June
30, 1995, that the Company believes there is substantial risk that
UFG will be unable to repay the Snyder Note, which is currently in
default, and that the encumbered portion of the Amber shares owned
by the Company could be lost. The UFG bankruptcy filing may
increase this risk.
The Company holds 888,063 shares of Delta Petroleum
Corporation common stock owned by UFG as collateral pending the
discharge of UFG's obligations to SOCO and to the Company. The
Company's position and alternative courses of action are being
reviewed by its legal counsel and accountants.
B. On December 6, 1995, the Company's Compensation Committee
of the Board of Directors approved and the Company entered into
employment agreements with Aleron H. Larson, Jr. and Roger A.
Parker, the Company's Chairman and President, respectively. Copies
of the employment agreements are attached hereto as Exhibit 99.1.
C. On December 6, 1995, the Company's Board of Directors
adopted the 1995 Non-employee Director Stock Plan ("Plan") a copy
of which is attached hereto as Exhibit 99.2. The Plan will be
submitted to a vote of the shareholders for ratification and
adoption at the next shareholder's meeting.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
99.1 Copies of Aleron H. Larson, Jr. and Roger A. Parker
Employment Agreements.
99.2 Copy of the 1995 Nonemployee Director Stock Plan.
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
DELTA PETROLEUM CORPORATION
(Registrant)
Date: December 14, 1995 By:/s/Aleron H. Larson, Jr.
Aleron H. Larson, Jr.
Chairman/C.E.O.
INDEX TO EXHIBITS
(1) Underwriting Agreement. Not applicable.
(2) Plan of Acquisition, Reorganization, Arrangement, Liquidation
or Succession. Not applicable.
(3) (i) Articles of Incorporation. Not applicable.
(ii) Bylaws. Not applicable.
(4) Instruments Defining the Rights of Security Holders, including
Indentures. Not applicable.
(5) Opinion: re: Legality. Not applicable.
(6) Opinion: Discount on Capital Shares. Not applicable.
(7) Opinion: re: Liquidation Preference. Not Applicable.
(8) Opinion: re: Tax Matters. Not Applicable.
(9) Voting Trust Agreement. Not Applicable.
(10) Material Contracts. Not Applicable.
(11) Statement re: Computation of Per Share Earnings.
Not Applicable.
(12) Statement re: Computation of Ratios. Not Applicable.
(13) Annual Report to Security Holders, etc. Not Applicable.
(14) Material Foreign Patents. Not Applicable.
(15) Letter re: Unaudited Interim Financial Information.
Not Applicable.
(16) Letter re: Change in Certifying Accountant.
Not applicable.
(17) Letter re: Director Resignation. Not applicable.
(18) Letter re: Change in Accounting Principles. Not Applicable.
(19) Report Furnished to Security Holders. Not Applicable.
(20) Other Documents or Statements to Security Holders.
Not applicable.
(21) Subsidiaries of the Registrant. Not Applicable.
(22) Published Report Regarding Matters Submitted to Vote of
Security Holders. Not Applicable.
(23) Consents of Experts and Counsel. Not applicable.
(24) Power of Attorney. Not applicable.
(25) Statement of Eligibility of Trustee. Not Applicable.
(26) Invitations for Competitive Bids. Not Applicable.
(27) Financial Data Schedule. Not Applicable.
(99) Additional Exhibits.
99.1 Copies of Aleron H. Larson, Jr. and Roger A. Parker
Employment Agreements.
99.2 Copy of the 1995 Nonemployee Director Stock Plan.
EMPLOYMENT AGREEMENT
This agreement is entered into as of December 6, 1995, by and
between Delta Petroleum Corporation ("Delta" or the "Company") and
Aleron H. Larson, Jr. ("Employee").
Employee has in the past and does at present act as an officer
and director by the Company.
The Company desires to retain the services of Employee as an
employee upon the conditions contained in this Agreement and
Employee desires to provide services to the Company under such
conditions.
NOW THEREFORE, in consideration of the mutual covenants and
conditions hereafter set forth, the Company and Employee agree as
follows:
1. Employment. The Company hereby agrees to engage
Employee, and Employee does hereby agree to be engaged by the
Company, upon the terms and conditions set forth in the following
paragraphs. This agreement replaces and supersedes all prior
employment agreements.
2. Employment Period. The Company hereby engages Employee
for the period commencing December 6, 1995 and ending on the fifth
anniversary of such date ("Employment Period") to continue to serve
in all present positions with the Company and to render such other
services in an executive capacity as the Company shall reasonably
require. Employee hereby agrees to remain in the employ of the
Company for the Employment Period, provided that Employee may, by
90 days written notice to the Company, terminate his employment
with the Company; in which case this Agreement shall terminate,
except as to provisions which survive termination of employment as
provided herein, without liability one to the other upon the date
specified by Employee.
3. Duties. Employee agrees that at all times during the
Employment Period, he will faithfully and diligently endeavor to
promote the business and business interests of the Company, and
that he will devote such time and attention to the affairs of the
Company as is necessary and appropriate to its proper management;
provided, however, that this Agreement shall not restrict Employee
from engaging, directly or indirectly, in any business, investment
or activity which is not inconsistent with the performance by the
Employee of his duties under this Agreement.
4. Salary and Benefits. Subject to the provisions of
Paragraph 8 below, during the Employment Period, Employee shall be
compensated as follows:
a) Employee shall earn a salary of $180,000 per annum,
payable in monthly installments, subject to the customary payroll
deductions for Federal, State and local taxes, and which salary
shall escalate each year by 10% beginning January 1, 1996;
b) the Board of Directors and/or the Compensation Committee
of the Board of Directors of the Company may review Employee's
salary from time to time with a view to making such increases in
Employee's salary or declaring such bonuses or other benefits to
Employee as maybe merited and warranted in light of factors
considered pertinent;
c) Employee shall have the use of a Company automobile,
receive free of cost parking for his automobile and health,
hospitalization and life insurance with coverage exceeding or equal
to that now in force, plus such other benefits as the Board shall
vote; and
d) Employee shall be entitled to four weeks vacation per
year to be taken at such times as do not interfere with the
performance of his duties hereunder; and
5. Expenses. All reasonable and necessary expenses incurred
by Employee in the performance of his duties under this Agreement,
including but not limited to expenses for entertainment, travel and
similar items, will be paid or reimbursed monthly by the Company.
The Company will furnish Employee with an office in its principal
executive offices in Denver and necessary secretarial, geological,
engineering, legal, accounting and other services necessary to
properly support Employee's performance of his duties at the
Company's expenses.
6. Disability of Employee. In the event of the disability
(as defined herein) of Employee prior to the expiration of the
Employment Period, Employee shall nevertheless continue to be
compensated for a period of one year following the date of
disability at the annual rate and with such benefits provided for
in Paragraph 4 hereof. For purposes of this Agreement, Employee
shall be deemed to be disabled if, because of illness or other
physical or mental condition, he is unable to perform for two
successive months, or for short periods aggregating over two months
in any twelve successive calendar months, his duties under this
Agreement. Such benefit period shall run from the time disability
commenced until Employee's condition improves sufficiently to
permit him to work after which date he must be available at the
Company's option.
7. Termination Upon Death and Disability. The Employment
Period shall automatically terminate upon the death of Employee;
provided, however, that in the event of the Employee's death, all
compensation Employee is entitled to receive under this Agreement
at the time of his death shall be paid to his legal representative
in accordance with the provisions of Paragraph (4)(a) hereof for
the shorter of a period of one year following the date of
Employee's death or the remainder of the Employment Period. The
Employment Period shall automatically terminate upon the payment
for twelve consecutive months of disability benefits to Employee
(as defined in Paragraph 6 above).
8. Termination for Cause. Upon the occurrence of any of the
events listed below, the Company may terminate the Employee without
further obligation under this Agreement except as to provisions
which survive termination of employment or termination of this
agreement as provided herein:
a) Employee's conviction of any criminal act directly related
to Employee's duties hereunder including without limitation
misappropriation of funds or property of the Company or a felony
criminal act directly related to Employee's duties hereunder.
b) Employee's misfeasance or malfeasance in office, which
the parties agree shall mean fraud, dishonesty, wilful misconduct
or gross neglect of duties.
c) Breach by Employee of any material provision of this
Agreement.
9. Termination without Cause. In the event Employee is
terminated by the Company for any reason except as set forth at
Paragraph 8 above, he shall continue to be compensated for the
duration of the Employment Period in the full amounts provided for
in Paragraphs 4, 5, 6 and 7 hereof.
10. Termination Upon Change in Control.
In the event that a Change in Control (as defined in Delta's
1993 Incentive Plan) of the Company shall occur at any time during
the Employment Period, as a result of which the Board of Directors
appoints a person other than Employee to serve in the capacity for
which Employee is employed hereunder, or as a result of which
Employee shall elect to resign his executive position hereunder,
Employee nevertheless shall be entitled to the benefits of and
subject to all of the terms and conditions set forth herein,
including, without limitation, the right to receive full
compensation as provided in Paragraphs 4, 5, 6 and 7 hereof
regardless of whether Employee continues to perform any services
for the Company.
11. Notice of Termination. Prior to termination, for any
reason (with or without cause), Employee will be given notice
thereof sufficient to allow Employee to exercise any and all
options granted to Employee under Delta's 1993 Incentive Plan but
which notice in any event shall be given not less than thirty (30)
days prior to such termination.
12. Parties in Interest. This Agreement shall be binding
upon, and shall inure to the benefit of the Company and its
successors and assigns and any person acquiring, whether by merger,
consolidation, liquidation, purchase of assets or otherwise, all or
substantially all of the Company's equity or assets, and business.
13. Choice of Law. It is the intention of the parties hereto
that this Agreement and the performance hereunder and all suits and
special proceedings hereunder be construed in accordance with and
under the laws of the State of Colorado and that in any action,
special proceeding or other proceeding that may be brought arising
out of, in connection with, or by reason of this Agreement, the
laws of the State of Colorado shall be applicable and shall govern
to the exclusion of the law of any other forum, without regard to
the jurisdiction in which any action or special proceeding may be
instituted.
14. Severance of Invalid Provisions. In case any one or more
of the provisions, or portions thereof, of this Agreement should be
determined to be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or
impaired thereby.
15. Integrated Agreement. This Agreement shall constitute
the entire agreement between the parties hereto relating to the
Engagement of Employee.
IN WITNESS WHEREOF, Employee has executed this Agreement and
the Company has caused this Agreement to be duly executed on its
behalf by its duly authorized officer, all as of the date first
above written.
DELTA PETROLEUM CORPORATION
By: /s/Roger A. Parker
Authorized Officer
EMPLOYEE:
/s/Aleron H. Larson, Jr.
Aleron H. Larson, Jr.
RATIFIED AND APPROVED BY DELTA
PETROLEUM CORPORATION COMPENSATION
COMMITTEE:
By: /s/Terry D. Enright
Terry D. Enright
/s/Don E. Mettler
Don E. Mettler
EMPLOYMENT AGREEMENT
This agreement is entered into as of December 6, 1995, by and
between Delta Petroleum Corporation ("Delta" or the "Company") and
Roger A. Parker ("Employee").
Employee has in the past and does at present act as an officer
and director by the Company.
The Company desires to retain the services of Employee as an
employee upon the conditions contained in this Agreement and
Employee desires to provide services to the Company under such
conditions.
NOW THEREFORE, in consideration of the mutual covenants and
conditions hereafter set forth, the Company and Employee agree as
follows:
1. Employment. The Company hereby agrees to engage
Employee, and Employee does hereby agree to be engaged by the
Company, upon the terms and conditions set forth in the following
paragraphs. This agreement replaces and supersedes all prior
employment agreements.
2. Employment Period. The Company hereby engages Employee
for the period commencing December 6, 1995 and ending on the fifth
anniversary of such date ("Employment Period") to continue to serve
in all present positions with the Company and to render such other
services in an executive capacity as the Company shall reasonably
require. Employee hereby agrees to remain in the employ of the
Company for the Employment Period, provided that Employee may, by
90 days written notice to the Company, terminate his employment
with the Company; in which case this Agreement shall terminate,
except as to provisions which survive termination of employment as
provided herein, without liability one to the other upon the date
specified by Employee.
3. Duties. Employee agrees that at all times during the
Employment Period, he will faithfully and diligently endeavor to
promote the business and business interests of the Company, and
that he will devote such time and attention to the affairs of the
Company as is necessary and appropriate to its proper management;
provided, however, that this Agreement shall not restrict Employee
from engaging, directly or indirectly, in any business, investment
or activity which is not inconsistent with the performance by the
Employee of his duties under this Agreement.
4. Salary and Benefits. Subject to the provisions of
Paragraph 8 below, during the Employment Period, Employee shall be
compensated as follows:
a) Employee shall earn a salary of $180,000 per annum,
payable in monthly installments, subject to the customary payroll
deductions for Federal, State and local taxes, and which salary
shall escalate each year by 10% beginning January 1, 1996;
b) the Board of Directors and/or the Compensation Committee
of the Board of Directors of the Company may review Employee's
salary from time to time with a view to making such increases in
Employee's salary or declaring such bonuses or other benefits to
Employee as maybe merited and warranted in light of factors
considered pertinent;
c) Employee shall have the use of a Company automobile,
receive free of cost parking for his automobile and health,
hospitalization and life insurance with coverage exceeding or equal
to that now in force, plus such other benefits as the Board shall
vote; and
d) Employee shall be entitled to four weeks vacation per
year to be taken at such times as do not interfere with the
performance of his duties hereunder; and
5. Expenses. All reasonable and necessary expenses incurred
by Employee in the performance of his duties under this Agreement,
including but not limited to expenses for entertainment, travel and
similar items, will be paid or reimbursed monthly by the Company.
The Company will furnish Employee with an office in its principal
executive offices in Denver and necessary secretarial, geological,
engineering, legal, accounting and other services necessary to
properly support Employee's performance of his duties at the
Company's expenses.
6. Disability of Employee. In the event of the disability
(as defined herein) of Employee prior to the expiration of the
Employment Period, Employee shall nevertheless continue to be
compensated for a period of one year following the date of
disability at the annual rate and with such benefits provided for
in Paragraph 4 hereof. For purposes of this Agreement, Employee
shall be deemed to be disabled if, because of illness or other
physical or mental condition, he is unable to perform for two
successive months, or for short periods aggregating over two months
in any twelve successive calendar months, his duties under this
Agreement. Such benefit period shall run from the time disability
commenced until Employee's condition improves sufficiently to
permit him to work after which date he must be available at the
Company's option.
7. Termination Upon Death and Disability. The Employment
Period shall automatically terminate upon the death of Employee;
provided, however, that in the event of the Employee's death, all
compensation Employee is entitled to receive under this Agreement
at the time of his death shall be paid to his legal representative
in accordance with the provisions of Paragraph (4)(a) hereof for
the shorter of a period of one year following the date of
Employee's death or the remainder of the Employment Period. The
Employment Period shall automatically terminate upon the payment
for twelve consecutive months of disability benefits to Employee
(as defined in Paragraph 6 above).
8. Termination for Cause. Upon the occurrence of any of the
events listed below, the Company may terminate the Employee without
further obligation under this Agreement except as to provisions
which survive termination of employment or termination of this
agreement as provided herein:
a) Employee's conviction of any criminal act directly related
to Employee's duties hereunder including without limitation
misappropriation of funds or property of the Company or a felony
criminal act directly related to Employee's duties hereunder.
b) Employee's misfeasance or malfeasance in office, which
the parties agree shall mean fraud, dishonesty, wilful misconduct
or gross neglect of duties.
c) Breach by Employee of any material provision of this
Agreement.
9. Termination without Cause. In the event Employee is
terminated by the Company for any reason except as set forth at
Paragraph 8 above, he shall continue to be compensated for the
duration of the Employment Period in the full amounts provided for
in Paragraphs 4, 5, 6 and 7 hereof.
10. Termination Upon Change in Control.
In the event that a Change in Control (as defined in Delta's
1993 Incentive Plan) of the Company shall occur at any time during
the Employment Period, as a result of which the Board of Directors
appoints a person other than Employee to serve in the capacity for
which Employee is employed hereunder, or as a result of which
Employee shall elect to resign his executive position hereunder,
Employee nevertheless shall be entitled to the benefits of and
subject to all of the terms and conditions set forth herein,
including, without limitation, the right to receive full
compensation as provided in Paragraphs 4, 5, 6 and 7 hereof
regardless of whether Employee continues to perform any services
for the Company.
11. Notice of Termination. Prior to termination, for any
reason (with or without cause), Employee will be given notice
thereof sufficient to allow Employee to exercise any and all
options granted to Employee under Delta's 1993 Incentive Plan but
which notice in any event shall be given not less than thirty (30)
days prior to such termination.
12. Parties in Interest. This Agreement shall be binding
upon, and shall inure to the benefit of the Company and its
successors and assigns and any person acquiring, whether by merger,
consolidation, liquidation, purchase of assets or otherwise, all or
substantially all of the Company's equity or assets, and business.
13. Choice of Law. It is the intention of the parties hereto
that this Agreement and the performance hereunder and all suits and
special proceedings hereunder be construed in accordance with and
under the laws of the State of Colorado and that in any action,
special proceeding or other proceeding that may be brought arising
out of, in connection with, or by reason of this Agreement, the
laws of the State of Colorado shall be applicable and shall govern
to the exclusion of the law of any other forum, without regard to
the jurisdiction in which any action or special proceeding may be
instituted.
14. Severance of Invalid Provisions. In case any one or more
of the provisions, or portions thereof, of this Agreement should be
determined to be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or
impaired thereby.
15. Integrated Agreement. This Agreement shall constitute
the entire agreement between the parties hereto relating to the
Engagement of Employee.
IN WITNESS WHEREOF, Employee has executed this Agreement and
the Company has caused this Agreement to be duly executed on its
behalf by its duly authorized officer, all as of the date first
above written.
DELTA PETROLEUM CORPORATION
By: /s/Aleron H. Larson, Jr.
Authorized Officer
EMPLOYEE:
/s/Roger A. Parker
Roger A. Parker
RATIFIED AND APPROVED BY DELTA
PETROLEUM CORPORATION
COMPENSATION
COMMITTEE:
By: /s/Terry D. Enright
Terry D. Enright
/s/Don E. Mettler
Don E. Mettler
DELTA PETROLEUM CORPORATION
1995 NONEMPLOYEE DIRECTOR STOCK PLAN
1. Purposes of the Plan
The purposes of the 1995 Nonemployee Director Stock Plan of Delta
Petroleum Corporation are to provide participating directors with additional
incentives to improve the Company's performance by increasing the level of
stock ownership by nonemployee directors, to reinforce the participating
directors' role in enhancing stockholder value, and to provide an
additional means of attracting and retaining nonemployee directors
through the issuance of Stock Options under the Plan as compensation
to Nonemployee Directors.
2. Definitions
When used herein, the following terms shall have the respective
meanings set forth below:
(a) "Annual Meeting of Stockholders" means the annual meeting of
stockholders of the Company or any Participating Company at which directors
of the Company or the Participating Company, as the case may be, are elected.
(b) "Board" means the Board of Directors of the Company.
(c) "Change in Control" shall mean:
(i) a change in control of the Company of a nature
that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Exchange Act; or
(ii) the occurrence of any of the following events:
(1) any Person, other than Aleron H. Larson,
Jr., or Roger A. Parker, becomes the
"beneficial owner" (as defined in Rule 13d-3
promulgated under the Exchange Act), directly
or indirectly, of securities of the Company
representing 35% or more of the combined
voting power of the Company's then outstanding
securities; or
(2) a majority of individuals who are
nominated by the Board of Directors for
election to the Board of Directors on any
date, fail to be elected to the Board of
Directors as a direct or indirect result of
any proxy fight or contested election for
positions on the Board of Directors; or
(d) "Committee" means a committee whose members
meet the requirements of Section 4(a) hereof, appointed from time
to time by the Board to administer the Plan.
(e) "Common Stock" means the common stock, $0.01
par value, of the Company.
(f) "Company" means Delta Petroleum Corporation,
a Colorado corporation, and any successor corporation.
(g) "Employee" means any officer or employee of
the Company or of any of its direct or indirect subsidiaries or
affiliates (whether or not such subsidiary or affiliate
participates in the Plan).
(h) "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
(i) "Nonemployee Director" or "Participant" means
any person who is elected or appointed to the Board of Directors of
any Participating Company and who is not an Employee.
(j) "Participating Company" means the Company and any direct or
indirect subsidiary or affiliate of the Company whose participation
in the Plan has been approved by the Company and such subsidiary's or
affiliate's Board of Directors.
(k) "Plan" means the Company's 1995 Nonemployee Director Stock
Plan as set forth herein, as it may be amended from time to time.
(l) "Stock Option" means the Option to purchase shares of Common
Stock to be granted to Nonemployee Directors for services rendered
as a director of a Participating Company as provided in Section 6
hereof.
3. Shares of Common Stock Subject to the Plan
Subject to adjustment as provided in Section 8 below, the
maximum aggregate number of shares of Common Stock that may be
issued under the Plan is 310,000 shares. The Common Stock to be
issued under the Plan will be made available from authorized but
unissued shares of Common Stock, and the Company hereby reserves
310,000 shares of Common Stock for issuance pursuant to the Plan.
4. Administration of the Plan
(a) The Plan will be administered by the Committee, which
will consist of two or more persons who are not eligible to
participate in the Plan. Members of the Committee shall be members
of the Board. The Company shall pay all costs of administration of
the Plan.
(b) Subject to the express provisions of the Plan, the
Committee has and may exercise such powers and authority of the
Board as may be necessary or appropriate for the Committee to carry
out its functions under the Plan. Without limiting the generality
of the foregoing, the Committee shall have full power and authority
(i) to determine all questions of fact that may arise under the
Plan,, (ii) to interpret the Plan and to make all other
determinations necessary or advisable for the administration of the
Plan, and (iii) to prescribe, amend, and rescind rules and
regulations relating to the Plan, including, without limitation,
any rules which the Committee determines are necessary or
appropriate to ensure that the Company, each Participating Company
and the Plan will be able to comply with all applicable provisions
of any federal, state or local law, including securities laws and
laws relating to the withholding of taxes. All interpretations,,
determinations, and actions by the Committee will be final,
conclusive., and binding upon all parties. Any action of the
Committee with respect to the administration of the Plan shall be
taken pursuant to a majority vote at a meeting of the Committee (at
which members may participate by telephone) or by the unanimous
written consent of its members.
(c) Neither the Company, nor any other Participating
Company,, nor any representatives, employees or agents of any
Participating Company, nor any member of the Board or the Committee
or designee thereof will be liable for any damages resulting from
any action or determination made by the Board or the Committee with
respect to the Plan or any transaction arising under the Plan or
any omission in connection with the Plan in the absence of willful
misconduct or gross negligence.
5. Participation in the Plan
(a) All Nonemployee Directors shall participate in the Plan,
subject to the conditions and limitations of the Plan, so long as
they remain eligible to participate in the Plan.
(b) No Nonemployee Director shall be eligible for a Stock
Option if, at the time said Stock Option would otherwise be
granted, such Nonemployee Director (i) is directly or indirectly
the beneficial owner of more than one percent of any class of
equity security of the Company which is registered pursuant to
Section 12 of the Exchange Act or of any security convertible into
or exercisable for such class of equity security (excluding shares
covered by the Plan); or (ii) is an officer, director, 10% or
greater shareholder, employee or agent of a person or entity which
is directly or indirectly the beneficial owner of more than one
percent of any class of equity security of the company which is
registered pursuant to Section 12 of the Exchange Act or of any security
convertible into or exercisable for such class of equity security
(excluding shares covered by the Plan). The compensation, if any, of any
such non-eligible directors shall be determined by the Board.
6. Determination of Stock Options
(a) Stock options shall be determined for all Nonemployee
Directors of the Company and all participating Companies on the date on
which this Plan is approved by the Stockholders and thereafter in each
subsequent calendar year during the term of the Plan on the later of the
first business day immediately following each Annual Meeting of
Stockholders of the Company or December 31. No Stock Option may be
changed after it has been so determined, except pursuant to the Plan.
No Nonemployee Director shall be entitled to receive more than one Stock
Option per year pursuant to the Plan even if such Nonemployee Director
serves as a director for more than one Participating Company. The Stock
Option shall be granted to each Participant by the Company or, if the
Participant is not a Nonemployee Director of the Company, by the
Participating Company for which a Nonemployee Director serves as a
director.
(b) Options shall be granted pursuant to the Plan to eligible
Participants as follows:
(i) Each Participant shall be granted an option for
7,500 shares of Common Stock, or, if a director for less
than the prior 12 months, a pro rata portion of 7,500
shares of Common Stock based upon the number of months
such Participant was a Nonemployee Director of the
Company.
The exercise price of the Stock Options to be granted to Nonemployee
Directors pursuant to the Plan shall be 50% of the Market Price as
determined at the date of grant. The "Market Price" of a share of Common
Stock under the Plan shall be the average of the "Fair Market Value" of
the Common Stock for all trading days during the twelve months preceding
the date on which the Stock Option is determined. The "Fair Market
Value" of a share of Common Stock with respect to any day shall be (i)
the closing sales price of a share of Common Stock as reported on the
principal securities exchange on which shares of Common Stock are then
listed or admitted to trading; or (ii) if not so reported, the last sale
price as reported by the Nasdaq Stock Market; or (iii) if not so
reported, the average of the closing bid and ask prices as reported on
the Nasdaq Stock Market; or (iv) if not so reported, as furnished by any
member of the National Association of Securities Dealers, Inc. selected
by the Committee. Each Stock Option shall be exercisable for a five year
period commencing on the date of grant and shall expire five years after
the date of grant. Certificates evidencing the Stock Options shall be
registered in the respective names of the Participants and shall be
issued to each Participant as soon as practicable following the date of
grant.
(c) Term and Exercise of Option
(1) Each Option shall be exercisable on such date or dates,
during such period and for such number of shares of
Common Stock as shall be determined in accordance with
the Plan on the date on which such Option is granted and
shall be set forth in the Option agreement with respect
to such option; provided, however, that no Option shall
be exercisable after the expiration of five years after
the date such Option was granted; and, provided,
further, that each Option shall be subject to earlier
termination, expiration or cancellation as provided
in the Plan.
(2) Each Option shall be exercisable as set forth in
the Option Agreement; provided, that no partial
exercise of an Option shall be for an aggregate
exercise price of less than $1,000. The partial
exercise of an option shall not cause the
expiration, termination or cancellation of the
remaining portion thereof. Upon the partial
exercise of an option, the agreement evidencing
such option shall be returned to the Participant
exercising such option with appropriate notation of
the partial exercise.
(3) An Option shall be exercised by delivering notice
to the Company's principal office, to the attention
of its Secretary, no less than three business days
in advance of the effective date of the proposed
exercise. Such notice shall be accompanied by the
agreement evidencing the option, shall specify the
number of shares of Common Stock with respect to
which the option is being exercised and the
effective date of the proposed exercise and shall
be signed by the Participant. The Participant may
withdraw such notice at any time prior to the close
of business on the business day immediately
preceding the effective date of the proposed
exercise, in which case such agreement shall be
returned to him. Payment for shares of Common
Stock purchased upon the exercise of an option
shall be made on the effective date of such
exercise either (i) in cash, by certified check,
bank cashier's check or wire transfer or (ii)
subject to the approval of the Committee, in shares
of Common Stock owned by the Participant and valued
at their Fair Market Value on the effective date of
such exercise, or partly in shares of Common Stock
with the balance in cash, by certified check, bank
cashier's check or wire transfer. Any payment in
shares of Common Stock shall be effected by the
delivery of such shares to the Secretary of the
Company, duly endorsed in blank or accompanied by
stock powers duly executed in blank, together with
any other documents and evidences as the Secretary
of the Company shall require from time to time.
(4) Provided that the shares of Common Stock to be
purchased upon exercise of the option may be sold
in compliance with applicable securities laws, any
Option granted under the Plan may be exercised by a
broker-dealer acting on behalf of a Participant if
(i) the broker-dealer has received from the
Participant or the Company a fully-and-duly-
endorsed agreement evidencing such option and
instructions signed by the Participant requesting
that the Company deliver the shares of Common Stock
subject to such option to the broker-dealer on
behalf of the Participant and specifying the
account into which such shares should be deposited,
(ii) adequate provision has been made with respect
to the payment of any withholding taxes due upon
such exercise and (iii) the broker-dealer and the
Participant have otherwise complied with Section
220.3(e)(4) of Regulation T, 12 CFR Part 220.
(5) Certificates for shares of Common Stock purchased
upon the exercise of an Option shall be issued in
the name of the Participant and delivered to the
Participant as soon as practicable following the
effective date on which the option is exercised.
(6) During the lifetime of a Participant, each Option
granted to him shall be exercisable only by him.
An Option shall not be transferred, assigned,
pledged, hypothecated or disposed of in any manner
otherwise than by will, the laws of descent and
distribution, or pursuant to a qualified domestic
relations order.
(d) Effect of Termination as Director
(1) In the event that a Participant's term as a
Director of the Company shall terminate for any
reason other than by a vote of the Stockholders of
the Company to remove such Participant, or the
Participant's retirement at or after age 65, or the
Participant's disability or death (i) options
granted to such Participant, to the extent that
they were exercisable at the time of such
termination, shall remain exercisable until the
expiration of three months after such termination,
on which date they shall expire, and (ii) Options
granted to such Participant, to the extent that
they were not exercisable at the time of such
termination, shall expire at the close of business
on the date of such termination; provided, however,
that no option shall be exercisable after the
expiration of its term.
(2) In the event that a Participant's term as a
Director of the Company shall terminate on account
of the Participant's retirement at or after age 65,
or the disability or death of the Participant (i)
options granted to such Participant, to the extent
that they were exercisable at the time of such
termination, shall remain exercisable until the
expiration of one year after such termination, on
which date they shall expire, and (ii) options
granted to such Participant, to the extent that
they were not exercisable at the time of such
termination, shall expire at the close of business
on the date of such termination; provided, however,
that no option shall be exercisable after the
expiration of its term.
(3) In the event of the termination of a Participant's
term as a Director by vote of the stockholders of
the Company to remove such Participant, all
outstanding options granted to such Participant
shall expire at the commencement of business on the
date of such termination, unless such termination
is due to a change in control.
(e) Acceleration of Exercise Date Upon Change in Control
Upon the occurrence of a change in Control, each Option
granted under the Plan and outstanding at such time shall become
fully and immediately exercisable and shall remain exercisable
until its expiration, termination or cancellation pursuant to the
terms of the Plan.
7. Stockholder Rights
(a) Nonemployee Directors shall not be deemed for any
purpose to be or have rights as stockholders of the Company with
respect to any shares of Common Stock issuable upon exercise of a
Stock Option except as and when such shares are issued and then
only from the date of the certificate therefor. No adjustment
shall be made for dividends or distributions or other rights for
which the record date precedes the date of such stock certificate.
(b) Subject to the provisions of section 7(a) above, a
Participant will have all rights of a stockholder with respect to
Common Stock issued to the Participant, including the right to vote
the shares and receive all dividends and other distributions paid
or made with respect thereto.
8. Adjustment for Changes in capitalization
If the outstanding shares of Common Stock of the Company are
increased, decreased, or exchanged for a different number or kind
of shares or other securities, or if additional shares or new or
different shares or other securities are distributed with respect
to such shares of Common Stock or other securities, through merger,
consolidation, sale of all or substantially all of the property of
the company, reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split, combination of
shares,, rights offering, distribution of assets or other
distribution with respect to such shares of Common Stock or other
securities or other change in the corporate structure or shares of
Common Stock, the maximum number of shares and/or the kind of
shares that may be issued under the Plan and outstanding Option
Agreements, and the exercise price of such options, shall be
appropriately adjusted by the Committee. Any determination by the
Committee as to any such adjustment will be final, binding, and
conclusive. The number of shares issuable under the Plan and any
outstanding option Agreements as a result of any such adjustment
shall be rounded up to the nearest whole share.
9. Continuation of Director or Other Status
Nothing in the Plan or in any instrument executed pursuant to
the Plan or any action taken pursuant to the Plan shall be
construed as creating or constituting evidence of any agreement or
understanding, express or implied, that the Company or any other
Participating Company, as the case may be, will retain a
Nonemployee director as a director or in any other capacity for any
period of time or at a particular retainer or other rate of
compensation, as conferring upon any Participant any legal or other
right to continue as a director or in any other capacity, or as
limiting, interfering with or otherwise affecting the right of a
Participating Company to terminate a Participant in his or her
capacity as a director or otherwise at any time for any reason,
with or without cause, and without regard to the effect that such
termination might have upon him or her as a Participant under the
Plan.
10. Compliance with Government Regulations
Neither the Plan nor the Company shall be obligated to issue
any shares of Common Stock pursuant to the Plan at any time unless
and until all applicable requirements imposed by any federal and
state securities and other laws, rules, and regulations, by any
regulatory agencies, or by any stock exchanges upon which the
Common Stock may be listed, have been fully met. As a condition
precedent to any issuance of shares of Common Stock and delivery of
certificates evidencing such shares pursuant to the Plan, the
Committee may require a Participant to take any such action and to
make any such covenants, agreements and representations as the
committee in its discretion deems necessary or advisable to ensure
compliance with such requirements. The Company shall in no event
be obligated to register the shares of Common Stock issued or
issuable under the Plan pursuant to the Securities Act of 1933, as
now or hereafter amended, or to qualify or register such shares
under any securities laws of any state upon their issuance under
the Plan or at any time thereafter, or to take any other action in
order to cause the issuance and delivery of such shares under the
Plan or any subsequent offer, sale or other transfer of such shares
to comply with any such law, regulation or requirement.
Participants are responsible for complying with all applicable
federal and state securities and other laws, rules and regulations
in connection with any offer, sale or other transfer of the shares
of Common Stock issued under the Plan or any interest therein
including, without limitation, compliance with the registration
requirements of the Securities Act of 1933, as amended (unless an
exemption therefrom is available), or with the provisions of Rule
144 promulgated thereunder, if available, or any other applicable
provisions.
With respect to persons subject to Section 16 of the
Securities Exchange Act of 1934, transactions under this Plan are
intended to comply with all applicable conditions of Rule 16b-3
under the Exchange Act, as such Rule currently exists or may be
amended in the future. 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.
11. Nontransferability of Rights
No Participant shall have the right to assign the right to
receive any Stock Option or any other right or interest under the
Plan, contingent or otherwise, or to cause or permit any
encumbrance, pledge or charge of any nature to be imposed on any
such Stock Option (prior to the issuance of stock certificates upon
exercise of such Stock option) or any such right or interest.
12. Amendment and Termination of Plan
(a) The Board shall have the power, in its discretion, to
amend, suspend or terminate the Plan at any time. No such
amendment will, without approval of the stockholders of the
Company:
Change the class of persons eligible to receive Stock Options
under the Plan or otherwise modify the requirements as to
eligibility for participation in the Plan;
(ii) Materially increase the benefits accruing to
Participants under the Plan; or
(iii) Increase the number of shares of Common Stock which
may be issued under the Plan (except for adjustments as provided in
Section 8 hereof).
(b) No amendment, suspension or termination of the Plan will,
without the consent of the Participant, alter, terminate,, impair,
or adversely affect any right or obligation under any Stock Option
previously granted under the Plan to such Participant, unless such
amendment, suspension or termination is required by applicable law.
(c) Notwithstanding the foregoing, the Board may, without
further action by the stockholders of the Company, (i) amend the Plan not
more than once every six months (A) to comply with changes in
securities or other laws, or rules, regulations or regulatory
interpretations thereof, applicable to the Plan, or (B) to comply
with stock exchange rules or requirements; or (ii) amend the Plan
at any time to comport with changes in the Internal Revenue Code,
the Employee Retirement Income Security Act, or the rules
thereunder.
13. Governing Law
The laws of the State of Colorado shall govern and control the
interpretation and application of the terms of the Plan.
14. Effective Date and Duration of the Plan The Plan shall be
effective as Of December 6, 1995, subject to approval by the
Company's Stockholders at their next Annual or Special Meeting.
The Plan shall terminate on December 6, 2005, unless earlier
terminated pursuant to Section 12. No Option shall be granted
pursuant to the Plan-after December 6, 2005.
