Page 5
(EXHIBIT
4.1)
STORAGE TECHNOLOGY CORPORATION
AMENDED AND RESTATED
1995 EQUITY PARTICIPATION PLAN
May 2000
SECTION I
INTRODUCTION
1.1 Establishment. The Storage Technology Corporation (the "Company")
original 1995 Equity Participation Plan (the "Original Plan") was effective as
of March 8, 1995, the date it was adopted by the Board of Directors (the
"Board") of the Company. The Original Plan was approved by stockholders of the
Company on May 24, 1995. The Original Plan was amended in September 1996,
February 1997, March 1998, March 1999 and March 2000 (individually, an
"Amendment"), in each instance receiving stockholder approval when required. The
Company has determined that, for sake of clarity, it is advisable to incorporate
all the Amendments to the Original Plan into this Amended and Restated 1995
Equity Participation Plan (the "1995 Plan").
Effective as provided in Section 22, the Company hereby establishes a plan
of long-term stock-based compensation incentives for selected employees,
directors and consultants of the Company and its affiliated corporations.
1.2 Purpose. The purpose of the 1995 Plan is to provide employees,
directors and consultants selected for participation in the 1995 Plan with added
incentives to continue in the service of the Company and its affiliates and to
create in such employees, directors and consultants a more direct interest in
the future success of the operations of the Company and its affiliated
corporations by relating incentive compensation to the achievement of long-term
corporate economic objectives. The 1995 Plan is also designed to attract key
employees, directors and consultants and to retain and motivate participating
employees, directors and consultants by providing an opportunity for equity
investment in the Company.
1.3 No Effect on 1987 Plan Options. Options granted pursuant to the
Storage Technology Corporation 1987 Equity Participation Plan (the "1987 Plan")
shall be governed by the terms and provisions of the option agreements covering
such grants and by the provisions of the 1987 Plan.
<PAGE>
SECTION II
DEFINITIONS
2.1 Definitions. The following terms shall have the meanings set forth
below:
(a) "Affiliated Corporation" means any corporation that is either a parent
corporation with respect to the Company or a subsidiary corporation with respect
to the Company (within the meaning of Sections 424(e) and (f), respectively, of
the Internal Revenue Code).
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means performance or conduct problems resulting in discharge,
as determined by the Company or Affiliated Company, which determination will be
conclusive.
(d) "Committee" means a committee designated by the Board to administer
the Plan or, if no committee is so designated, the Board.
(e) "Common Stock" means the Company's $.10 par value voting common stock.
(f) "Common Stock Equivalent" means a right to receive Common Stock in the
future that may be granted to a Participant pursuant to Sections 12, 13 or 15 in
lieu of a current issuance of Common Stock, subject to certain conditions and
limitations imposed in accordance with such Sections.
(g) "Consultant" means a natural person who performs services for the
Company, or any Affiliated Corporation, or any division thereof in exchange for
consideration, but who is not an Employee.
(h) "Director" means a member of the Board.
(i) "Effective Date" means the effective date of the 1995 Plan, as set
forth in Section 22 hereof.
(j) "Eligible Employees" means those Employees upon whose judgment,
initiative and efforts the Company or the Affiliated Corporations are, or are
expected to become, largely dependent for the successful conduct of their
business.
(k) "Employee" means a natural person who is deemed an employee
(including, without limitation, an officer or director who is also an employee)
<PAGE>
of the Company, or any Affiliated Corporation, in accordance with the rules
contained in Section 3401(c) of the Internal Revenue Code and the regulations
thereunder.
(l) "Fair Market Value" means with respect to Common Stock, as of any
date, the closing price of a share of Common Stock on the New York Stock
Exchange as reported by The Wall Street Journal for the last trading day prior
to that date. If no such prices are reported, then Fair Market Value shall mean
the average of the high and low sale prices for the Common Stock (or if no sale
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.
(m) "Incentive Stock Option" means the right to purchase Common Stock
granted to an Employee pursuant to Sections 6 and 7, which constitutes an
incentive stock option within the meaning of Section 422 of the Internal Revenue
Code, and which may or may not be issued with related Stock Appreciation Rights.
(n) "Internal Revenue Code" means the Internal Revenue Code of 1986, as it
may be amended from time to time.
(o) "Long-Term Employee" means a person who, as of the date he or she
ceases to be an Employee of the Company or any Affiliated Corporation, has been
an Employee of the Company or any Affiliated Corporation for six years or more,
with no break in such employment of longer than one year.
(p) "MBO Payment" means a payment to a Participant pursuant to the
Company's MBO Plan, which payment may be made either in shares of Common Stock,
Common Stock Equivalents or in cash, or partly in Common Stock, partly in Common
Stock Equivalents and partly in cash, as determined in accordance with the
provisions of Section 13.
(q) "MBO Equity Plan" means the Company's Management By Objective Plan, as
established by the Board or the Committee from time to time, pursuant to which
MBO Payments are made from time to time in the manner and under the conditions
established by the Board or the Committee.
(r) "Non-Qualified Option" means a right to purchase Common Stock granted
to a Participant pursuant to Sections 6 and 8, which does not qualify as an
Incentive Stock Option or which is designated as a Non-Qualified Option, and
which may or may not be issued with related Stock Appreciation Rights.
(s) "Outside Director" means a Director who is not an Employee.
<PAGE>
(t) "Participant" means an Eligible Employee, Director or Consultant
designated by the Committee from time to time during the term of the 1995 Plan
to receive one or more of the stock-based compensation incentives provided under
the 1995 Plan.
(u) "Reduction in Force" means any termination of employment that, in the
sole judgment of the Company, is (i) made at the request of the Company or an
Affiliated Corporation and is due to the elimination of the Employee's position,
or (ii) a reduction in the number of persons employed by the Company, either
overall or in the Employee's function, department, division or other relevant
workplace unit.
(v) "Restricted Stock Award" means an award of Common Stock granted to a
Participant pursuant to Section 10 that is subject to certain restrictions
imposed in accordance with the provisions of such Section.
(w) "Retire" means any termination of employment that is deemed to be a
"Retirement" by a resolution of the Board of Directors, or any termination of
employment made at the request of the Employee if, as of the date of such
termination, such Employee (a) is age 62 or older and (b) has, at the time of
such termination, been employed by the Company or any Affiliated Corporation for
six years or more, with no break in such employment of longer than one year.
(x) "Retired" means the status of any former Employee after he or she
Retires.
(y) "Stock Appreciation Right" means a right granted to a Participant
pursuant to Section 9 to receive a payment from the Company equal to the
difference between the Fair Market Value of one or more shares of Common Stock
subject to a Non-Qualified Option or an Incentive Stock Option and the exercise
price of such shares under the terms of such Stock Option.
(z) "Stock Option" means an Incentive Stock Option or a Non-Qualified
Option.
2.2 Gender and Number. Except when otherwise indicated by the context, the
masculine gender shall also include the feminine gender, and the definition of
any term herein in the singular shall also include the plural.
<PAGE>
SECTION III
PLAN ADMINISTRATION
3.1 Administration Generally. The 1995 Plan shall be administered by the Board
or Committee. In accordance with the provisions of the 1995 Plan, the Committee,
in its sole discretion:
(a) shall select the Participants from Eligible Employees, Directors
and Consultants;
(b) shall determine the number of shares of Common Stock to be subject to
Incentive Stock Options, Non-Qualified Options, Stock Appreciation Rights,
Restricted Stock Awards and other Common Stock or Common Stock Equivalent awards
granted pursuant to the 1995 Plan;
(c) shall determine the number of shares of Common Stock or Common Stock
Equivalents to be issued as MBO Payments;
(d) shall determine the time at which such options, rights, awards and
payments are to be granted;
(e) shall fix the exercise price, period and the manner in which a Stock
Option becomes exercisable;
(f) shall establish the duration and nature of Restricted Stock Award
restrictions;
(g) shall determine the Fair Market Value of the Common Stock, in
accordance with Section 2.1(l) of the 1995 Plan;
(h) shall determine whether and under what circumstances, if any, a Stock
Option or Stock Appreciation Right may be settled in cash or Common Stock
Equivalents instead of Common Stock;
(i) [Intentionally Deleted]
(j) may modify or amend the terms and conditions of any Stock Option,
Stock Appreciation Right, Restricted Stock Award or other Common Stock award,
subject to Section 19 of the Plan (including, but not limited to, accelerating
vesting or waiving forfeiture restrictions);
(k) may institute an option exchange program;
(l) may authorize any person to execute on behalf of the Company any
instrument required to effect the grant of a Stock Option, Stock Appreciation
<PAGE>
Right, Restricted Stock Award or other Common Stock or Common Stock Equivalent
award previously granted by the Committee; and
(m) shall establish such other terms and requirements of the various
compensation incentives under the 1995 Plan as the Committee may deem necessary
or desirable and consistent with the terms of the 1995 Plan.
The Committee shall determine the form or forms of the agreements with
Participants, which shall evidence the particular provisions, terms, conditions,
rights and duties of the Company and the Participants with respect to Incentive
Stock Options, Non-Qualified Options, Stock Appreciation Rights, Common Stock
Equivalent and Restricted Stock Awards granted pursuant to the 1995 Plan, which
provisions need not be identical except as may be provided herein. The Committee
may from time to time adopt such rules and regulations for carrying out the
purposes of the 1995 Plan as it may deem proper and in the best interests of the
Company. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the 1995 Plan or in any agreement entered into
hereunder in the manner and to the extent it shall deem expedient to carry the
1995 Plan into effect, and it shall be the sole and final judge of such
expediency. No member of the Committee shall be liable for any action or
determination made in good faith. The determinations, interpretations and other
actions of the Committee pursuant to the provisions of the 1995 Plan shall be
binding and conclusive for all purposes and on all persons, subject only to the
review and control of the Board on all Plan matters, except selection of
Participants.
3.2 Multiple Administrative Bodies. If permitted by Rule 16b-3, the 1995
Plan may be administered by different bodies with respect to Directors who are
Employees, Outside Directors, officers (within the meaning of Rule 16a-1(f)) who
are not Directors, and Employees who are neither Directors nor officers.
3.3 Administration With Respect to Directors and Officers. With respect to
grants of Stock Options, Stock Appreciation Rights, Restricted Stock Awards or
other Common Stock or Common Stock Equivalent awards under the 1995 Plan to
Employees who are also officers or Directors, the 1995 Plan shall be
administered by:
(a) the Board, if the Board may administer the 1995 Plan and still have
transactions under the 1995 Plan qualify for exemption under Rule 16b-3; or
(b) a Committee designated by the Board to administer the 1995 Plan, which
Committee shall be constituted (i) in such a manner as to permit awards granted
under the 1995 Plan to qualify for exemption under Rule 16b-3 and (ii) in such a
manner as to satisfy applicable laws. <PAGE>
3.4 Administration With Respect to Other Persons. With respect to grants
of Stock Options, Stock Appreciation Rights, Restricted Stock Awards or other
Common Stock or Common Stock Equivalent awards to Employees who are neither
Directors nor officers, the 1995 Plan shall be administered by:
(a) the Board; or
(b) a Committee designated by the Board, which Committee shall be
constituted in such a manner as to satisfy applicable laws.
3.5 Committee Composition. Once a Committee has been appointed pursuant to
Section 3.3 or 3.4, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of any Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies (however caused) or remove all members of the Committee
and thereafter directly administer the Plan, all to the extent permitted by
applicable laws and, in the case of a Committee appointed under Section 3.3, to
the extent permitted by Rule 16b-3 as it applies to transactions intended to
qualify thereunder as exempt transactions.
SECTION IV
STOCK SUBJECT TO THE PLAN
4.1 Number of Shares. Twenty Three Million Five Hundred Fifty Thousand
(23,550,000) shares of Common Stock are authorized for issuance under the 1995
Plan in accordance with the provisions of the 1995 Plan and subject to such
restrictions or other provisions as the Committee may from time to time deem
necessary or appropriate. This authorization may be increased from time to time
by approval of the Board and the stockholders of the Company. Shares of Common
Stock that are issued upon exercise of Incentive Stock Options, Non-Qualified
Options, or Stock Appreciation Rights or pursuant to MBO Payments, shares of
Common Stock that are issued as Restricted Stock Awards, shares of Common Stock
that are issued in connection with Common Stock Equivalents, and shares of
Common Stock that are issued pursuant to a plan adopted pursuant to Section 15,
shall be applied to reduce the number of shares of Common Stock remaining
available for future issuance under the 1995 Plan.
4.2 Unused and Forfeited Stock. Any shares of Common Stock that are
subject to an Incentive Stock Option or a Non-Qualified Option that expires or
for any reason is terminated unexercised, and with respect to which no related
Stock Appreciation Right has been exercised, any shares of Common Stock that are
subject to Common Stock Equivalents or to a Restricted Stock Award and that are
<PAGE>
forfeited (the "Forfeited Restricted Stock"), and any shares of Common Stock
that for any other reason are not issued to a Participant (not including shares
withheld pursuant to Section 20.2) or are forfeited (if forfeited, the "Other
Forfeited Stock"), shall automatically become available for use under the 1995
Plan; provided, however, that (i) no shares of Forfeited Restricted Stock or
Other Forfeited Stock may be subject to Incentive Stock Options and (ii) such
shares shall not be returned to the 1995 Plan if prohibited by Rule 16b-3.
4.3 Capital Adjustments. (a) Changes in Capitalization. Subject to any
required action by the stockholders of the Company, the number of shares of
Common Stock covered by each outstanding Stock Option, Stock Appreciation Right
and Common Stock Equivalent ("Rights"), and the number of shares of Common Stock
that have been authorized for issuance under the Plan but as to which no Stock
Options, Stock Appreciation Rights or Common Stock Equivalents have yet been
granted or that have been returned to the Plan upon cancellation or expiration
of a Stock Option, Stock Appreciation Right or Common Stock Equivalents (the
"Shares Available for Future Grant"), as well as the price per share of Common
Stock covered by each outstanding Stock Option or Stock Appreciation Right,
shall be proportionately adjusted for any increase or decrease in the number of
issued and outstanding shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, or any other increase or decrease in the number of issued and
outstanding shares of Common Stock effected without receipt of consideration by
the Company; provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such proportionate adjustment shall be made by the Committee,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into or exercisable for shares of
stock of any class, shall affect, and no adjustment by reason thereof shall be
made with respect to, the number of Shares Available for Future Grant or the
number or price of shares of Common Stock subject to outstanding Stock Options
or Stock Appreciation Rights.
(b) Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, to the extent that a Stock Option or Stock
Appreciation Right has not been previously exercised, it will terminate
immediately prior to the consummation of such proposed action. The Committee
may, in the exercise of its sole discretion in such instances, declare that any
Stock Option or Stock Appreciation Right shall terminate as of a date fixed by
the Committee and give each Participant the right to exercise his or her Stock
Option or Stock Appreciation Right in whole or in part, including with respect
to shares as to which the Stock Option or Stock Appreciation Right would not
otherwise be exercisable. Unless determined otherwise by the Committee, Common
Stock Equivalents shall convert into shares of Common Stock immediately prior to
the consummation of any such dissolution or liquidation.
<PAGE>
(c) Merger or Asset Sale. In the event of a merger or consolidation of the
Company with or into another corporation, or the sale of all or substantially
all of the assets of the Company, each outstanding Stock Option, Stock
Appreciation Right and Common Stock Equivalent may be assumed or an equivalent
Stock Option, Stock Appreciation Right or Common Stock Equivalent may be
substituted by the successor corporation or a parent or subsidiary of the
successor corporation. The Committee may, in lieu of such assumption or
substitution of Stock Options and Stock Appreciation Rights, provide for
Optionees to have the right to exercise his or her Stock Option or Stock
Appreciation Right in whole or in part, including with respect to shares as to
which it would not otherwise be exercisable. If the Committee makes a Common
Stock Equivalent convertible into shares of Common Stock or makes a Stock Option
or Stock Appreciation Right exercisable in lieu of assumption or substitution in
the event of a merger, consolidation or sale of assets, the Committee shall
notify the Participants and, in the case of a Stock Option or Stock Appreciation
Right, shall notify the Optionee that the Stock Option or Stock Appreciation
Right shall be fully exercisable for a period of thirty (30) days from the date
of such notice, and the Stock Option or Stock Appreciation Right shall terminate
upon the expiration of such period. For the purposes of this paragraph, the
Stock Option, Stock Appreciation Right or Common Stock Equivalent shall be
considered assumed if, following the merger, consolidation or sale of assets,
the Stock Option, Stock Appreciation Right or Common Stock Equivalent confers
the right to purchase or receive, for each share of Common Stock subject to the
Stock Option, Stock Appreciation Right or Common Stock Equivalent immediately
prior to the merger, consolidation or sale of assets, the consideration (whether
stock, cash or other securities or property) received in the merger,
consolidation or sale of assets by holders of Common Stock for each share held
on the effective date of the transaction (and, if holders were offered a choice
of consideration, the type of consideration chosen by the holders of a majority
of the outstanding shares); provided, however, that if such consideration
received in the merger, consolidation or sale of assets was not solely common
stock of the successor corporation or its parent, the Committee may, with the
consent of the successor corporation, provide for the consideration to be
received upon conversion of a Common Stock Equivalent or upon the exercise of
the Stock Option or Stock Appreciation Right, for each share of Common Stock
subject to the Stock Option, Stock Appreciation Right or Common Stock Equivalent
to be solely common stock of the successor corporation or its parent equal in
fair market value to the per share consideration received by holders of Common
Stock in the merger, consolidation or sale of assets.
<PAGE>
SECTION V
PARTICIPATION
5.1 Eligibility. Participants in the 1995 Plan shall be those Eligible
Employees, Directors and Consultants who, in the judgment of the Committee, are
performing, or during the term of their service to the Company are expected to
perform, vital services in the management, operation and development of the
Company or an Affiliated Corporation, and significantly contribute or are
expected to significantly contribute to the achievement of long-term corporate
economic objectives. Participants who are Employees may be granted from time to
time one or more Incentive Stock Options (with or without Stock Appreciation
Rights), and Participants (whether or not they are Employees) may be granted one
or more Non-Qualified Options (with or without Stock Appreciation Rights), one
or more Restricted Stock Awards, one or more MBO Payments in Common Stock
Equivalents or in shares of Common Stock, Common Stock equivalents pursuant to
Section 12, and one or more other Common Stock or Common Stock Equivalent awards
pursuant to Section 15; provided, however, that the grant of each such option,
right, award or payment shall be separately approved by the Committee, and
receipt of one such option, right, award or payment shall not result in
automatic receipt of any other option, right, award or payment. Upon
determination by the Committee that a Stock Option, Stock Appreciation Right,
Restricted Stock Award, MBO Payment or other Common Stock or Common Stock
Equivalent award is to be granted to a Participant, written notice shall be
given to such person, specifying the terms, conditions, rights and duties
related thereto. Each Participant shall, if required by the Committee, enter
into an agreement with the Company, in such form as the Committee shall
determine and as is consistent with the provisions of the 1995 Plan, specifying
such terms, conditions, rights and duties. Stock Options, Stock Appreciation
Rights, Restricted Stock Awards, MBO Payments and other Common Stock or Common
Stock Equivalent awards shall be deemed to be granted as of the date specified
in the grant resolution of the Committee, which date shall be the date of any
related agreement with the Participant. In the event of any inconsistency
between the provisions of the 1995 Plan and any such agreement entered into
hereunder, the provisions of the 1995 Plan shall govern.
5.2 Limitations. The following limitations shall apply to grants of Stock
Options and Stock Appreciation Rights to Participants:
(a)(i) Except as set forth in Section 5.2(a)(ii) hereof, no Participant
shall be granted, in any fiscal year of the Company, Stock Options and Stock
Appreciation Rights to purchase more than two million (2,000,000) shares (the
"Individual Limit").
(ii) No individual who is a newly-hired employee of the Company (a "New
Hire") shall be granted in the fiscal year (the "Initial Fiscal Year") in which
he or she became a New Hire, Stock Options and Stock Appreciation Rights to
purchase shares more than twice the Individual Limit. <PAGE>
(b) If a Stock Option or Stock Appreciation Right is canceled in the same
fiscal year of the Company in which it was granted (other than in connection
with a transaction described in Section 4.3), the canceled Stock Option or Stock
Appreciation Right shall be counted against the limit set forth in Section
5.2(a).
(c) Incentive Stock Options may not be granted to Outside Directors or to
Consultants.
5.3 Rule 16b-3. Stock Options, Stock Appreciation Rights, Restricted Stock
Awards, MBO Payments and other Common Stock or Common Stock Equivalent awards
granted to Participants who are subject to Section 16 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), must comply with the applicable
provisions of Rule 16b-3 and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum exemption
from Section 16 of the Exchange Act with respect to 1995 Plan transactions.
SECTION VI
STOCK OPTIONS
6.1 Grant of Stock Options. Coincident with or following designation for
participation in the 1995 Plan, a Participant may be granted one or more Stock
Options. The Committee in its sole discretion may designate whether a Stock
Option granted to an Employee is to be considered an Incentive Stock Option or a
Non-Qualified Option. The Committee may grant both an Incentive Stock Option and
a Non-Qualified Option to the same Employee at the same time or at different
times. Incentive Stock Options and Non-Qualified Options, 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 will the exercise of one
Stock Option affect the right to exercise any other Stock Option or affect the
number of shares of Common Stock for which any other Stock Option may be
exercised. All Stock Options granted to Participants who are not Employees shall
be Non-Qualified Options.
6.2 Manner of Stock Option Exercise. A Stock Option may be exercised by a
Participant in whole or in part from time to time, subject to the conditions
contained herein, (i) by delivery of written notice of exercise to the Company
at its principal office in Louisville, Colorado (Attention: Corporate
Secretary), in person or through mail, facsimile or electronic mail, or by
delivery of notice of exercise in such other method as has been approved by the
Committee, and (ii) by paying in full, with the written notice of exercise or at
such other time as the Committee may establish, the total exercise price under
the Stock Option for the shares being purchased. Such notice shall be in a form
satisfactory to the Committee and shall specify the particular Stock Option (or
<PAGE>
portion thereof) that is being exercised and the number of shares with respect
to which the Stock Option is being exercised. The exercise of the Stock Option
shall be deemed effective upon receipt of such notice by the Corporate Secretary
and payment to the Company. As soon as practicable after the effective exercise
of the Stock Option, and upon satisfaction of all applicable withholding
requirements pursuant to Section 20, the Participant shall be recorded on the
stock transfer books of the Company as the owner of the shares purchased and the
Company shall deliver to the Participant one or more duly issued and executed
stock certificates evidencing such ownership.
6.3 Payment of Stock Option Exercise Price. At the time of the exercise of
a Stock Option, payment of the total Stock Option exercise price for the shares
to be purchased shall be made in the manner specified in the option agreement
relating to such Stock Option, which may include any or all of the following
methods of payment:
(a) in cash or by check;
(b) by transfer from the Participant to the Company of shares of Common
Stock (other than shares of Common Stock that the Committee determines by rule
may not be used to exercise Stock Options) with a then current aggregate Fair
Market Value equal to the total Stock Option exercise price;
(c) delivery to the Company of: (i) a properly executed exercise notice,
(ii) irrevocable instructions to a broker to sell a sufficient number of the
shares being exercised to cover the exercise price and to promptly deliver to
the Company the amount of sale proceeds required to pay the exercise price and
any required tax withholding relating to the exercise, and (iii) such other
documentation as the Committee and the broker shall require to effect a same-day
exercise and sale;
(d) delivery to the Company of (i) a properly executed exercise notice,
(ii) irrevocable instructions to a broker or other third party acceptable to the
Company to hold the shares being exercised as collateral for a loan to the
Optionee of an amount sufficient to cover the exercise price and to promptly
deliver to the Company the amount of loan proceeds required to pay the exercise
price and any required tax withholding relating to the exercise and (iii) such
other documentation as the Committee and the broker or other third party shall
require to effect the transaction;
(e) a reduction in the amount of any Company liability to the Optionee,
including any liability attributable to the Optionee's participation in any
Company-sponsored deferred compensation program or arrangement;
(f) any combination of the foregoing methods of payment; or
<PAGE>
(g) such other consideration and method of payment for the issuance of
Shares to the extent permitted by applicable laws, rules and regulations and by
the agreement relating to the Stock Option being exercised.
In the event that the option agreement does not specify the acceptable
methods of payment of the exercise price, payment may be made by any of the
methods specified in clauses (a) through (c), inclusive, of this Section 6.3, or
any combination of such methods of payment.
6.4 Stockholder Privileges. No Participant shall have any rights as a
stockholder with respect to any shares of Common Stock covered by a Stock Option
until the Participant becomes the holder of record of such Common Stock, and 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 Participant becomes
the holder of record of such Common Stock.
SECTION VII
INCENTIVE STOCK OPTIONS
7.1 Incentive Stock Option Exercise Price. The per share price to be paid
by a Participant at the time an Incentive Stock Option is exercised shall be
determined by the Committee at the time an Incentive Stock Option is granted (or
deemed to have been granted under applicable tax rules), but in no event shall
such exercise price be less than:
(a) one hundred percent of the Fair Market Value, on the date the
Incentive Stock Option is granted (or deemed to have been granted under
applicable tax rules), of one share of the stock to which such Stock Option
relates; or
(b) one hundred and ten percent of the Fair Market Value, on the date the
Incentive Stock Option is granted (or deemed to have been granted under
applicable tax rules), of one share of the stock to which such Stock Option
relates if, at the time the Incentive Stock Option is granted, the Participant
owns, directly or indirectly (as determined pursuant to Section 424(d) of the
Internal Revenue Code), ten percent or more of the total combined voting power
of all classes of stock of the Company or of any Affiliated Corporation (such a
Participant is referred to as a "10% Holder").
7.2 Number of Option Shares. The number of shares of Common Stock subject
to an Incentive Stock Option shall be designated by the Committee at the time
the Committee decides to grant an Incentive Stock Option.
<PAGE>
7.3 Aggregate Limitation of Stock Exercisable Under Options. To the extent
the aggregate Fair Market Value, determined as of the time an Incentive Stock
Option is granted, of the shares of Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by an Option Holder in any
calendar year under the 1995 Plan or otherwise, granted by the Company and
Affiliated Corporations, exceeds $100,000, such excess shall be treated as a
Non-Qualified Option.
7.4 Duration of Incentive Stock Options. The period during which an
Incentive Stock Option may be exercised shall be fixed by the Committee, but in
no event shall such period be more than ten years from the date the Stock Option
is granted, or, in the case of Participants who are 10% Holders as described in
Section 7.1(b), five years from the date the Stock Option is granted. No
Incentive Stock Option with respect to which Stock Appreciation Rights have been
granted may be exercised during the six-month period following the date on which
such Stock Option was granted. Upon the expiration of such exercise period, the
Incentive Stock Option, to the extent not then exercised, shall terminate.
Except as otherwise provided in Section 11, all Incentive Stock Options granted
to a Participant hereunder shall terminate and may no longer be exercised if the
Participant ceases to be an Employee.
7.5 Restrictions on Exercise of Incentive Stock Options. Incentive Stock
Options may be granted subject to such restrictions as to the timing of exercise
of all or various portions thereof as the Committee may determine at the time it
grants Incentive Stock Options to Participants.
7.6 Disposition of Stock Acquired Pursuant to the Exercise of Incentive
Stock Options ? Withholding. In the event that a Participant makes a disposition
(as defined in Section 424(c) of the Internal Revenue Code) of any Common Stock
acquired pursuant to the exercise of an Incentive Stock Option prior to the
expiration of two years from the date on which the Incentive Stock Option was
granted or prior to the expiration of one year from the date on which the Stock
Option was exercised, the Participant shall send written notice to the Company
at its principal office in Louisville, Colorado (Attention: Corporate Secretary)
of the date of such disposition, the number of shares disposed of, the amount of
proceeds received from such disposition and any other information relating to
such disposition as the Company may reasonably request. The Participant shall,
in the event of such a disposition, make appropriate arrangements with the
Company to provide for the amount of additional withholding required by federal,
state and local income and other tax laws. <PAGE>
SECTION VIII
NON-QUALIFIED OPTIONS
8.1 Option Exercise Price. The per share price to be paid by the
Participant at the time a Non-Qualified Option is exercised shall be determined
by the Committee at the time the Stock Option is granted or amended, but in no
event shall such exercise price per share be less than one hundred percent of
the Fair Market Value of one share of Common Stock on the date the Stock Option
is granted or amended.
8.2 Number of Option Shares. The number of shares of Common Stock subject
to a Non-Qualified Option shall be designated by the Committee at the time the
Committee decides to grant a Non-Qualified Option.
8.3 Duration of Non-Qualified Options; Restrictions on Exercise. The
period during which a Non-Qualified Option may be exercised, and the installment
restrictions on option exercise during such period, if any, shall be fixed by
the Committee, but in no event shall such period be more than ten years from the
date the Stock Option is granted, and no Non-Qualified Option with respect to
which Stock Appreciation Rights have been granted may be exercised during the
six-month period immediately following the date on which such Stock Option was
granted. Upon the expiration of such exercise period, the Non-Qualified Option,
to the extent not then exercised, shall terminate. Except as otherwise provided
in Section 11, all Non-Qualified Options granted to a Participant hereunder
shall terminate and may no longer be exercised if the Participant ceases to be
an Employee, Director or Consultant.
SECTION IX
STOCK APPRECIATION RIGHTS
9.1 Grant of Rights. A Stock Appreciation Right may be granted to a
Participant in conjunction with any Incentive Stock Option or Non-Qualified
Option granted to such Participant, as determined by the Committee, (a) at the
time of the grant of such Stock Option in the case of an Incentive Stock Option
or (b) at the time of grant, or at any subsequent time during the term of the
Stock Option, in the case of a Non-Qualified Option. Once granted, the term of a
Stock Appreciation Right shall be equal to the term of its related Stock Option.
Upon exercise of a Stock Appreciation Right by a Participant for a share of
Common Stock, the related Stock Option shall be terminated with respect to such
share. Incentive Stock Options and Non-Qualified Options shall not be
exercisable with respect to shares of Common Stock for which Stock Appreciation
Rights have been exercised. Upon such Stock Appreciation Right exercise, the
Participant shall be entitled to receive the economic value of such Stock
Appreciation Right determined in the manner prescribed in Section 9.2.
9.2 Exercise of Stock Appreciation Rights. Stock Appreciation Rights shall
be subject to such terms and conditions consistent with other provisions of the
1995 Plan as may be determined from time to time by the Committee and shall
include the following: <PAGE>
(a) A Stock Appreciation Right shall be exercisable, in whole or in part,
at such time or times and only to the extent that the Stock Option to which it
relates shall be exercisable; provided, however, that, except as otherwise
provided in Section 11, no Stock Appreciation Right shall be exercisable during
the six-month period following the date of its grant. A Stock Appreciation Right
shall be exercised by the giving of notice in the same manner as the Stock
Option to which it relates may be exercised.
(b) Upon the exercise of a Stock Appreciation Right, a Participant shall
be entitled to receive the economic value thereof, which shall be equal to (i)
the excess of the then Fair Market Value of one share of Common Stock over the
exercise price per share specified in the related Stock Option, multiplied by
(ii) the number of shares in respect of which the Stock Appreciation Right is
being exercised.
(c) The Committee shall, in the agreement relating to the Stock
Appreciation Right, either (i) specify the form in which payment of the economic
value of exercised Stock Appreciation Rights will be made to the Participant
upon exercise thereof (i.e., cash, Common Stock, or a specified combination
thereof) or (ii) grant the Participant the right to elect to receive cash in
full or partial payment of such economic value, at the Participant's discretion.
If the agreement relating to the Stock Appreciation Right does not so specify,
then the Participant shall have the right to elect cash or Common Stock, Common
Stock Equivalents or any combination thereof. If the Participant is not an
"officer" or "director" of the Company, as those terms are defined in the rules
under Section 16 of the Exchange Act, at the time of grant or exercise of the
Stock Appreciation Right, then the Committee may retain the right to either
consent to or disapprove of Participant's elected method of payment.
9.3 Stockholder Privileges. No Participant shall have any rights as a
stockholder with respect to any shares of Common Stock covered by a Stock
Appreciation Right until the Participant becomes the holder of record of such
Common Stock, and 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 Participant becomes the holder of record of such Common Stock.
SECTION X
RESTRICTED STOCK AWARDS
10.1 Awards Granted by Committee. Coincident with or following designation
for participation in the 1995 Plan, a Participant may be granted one or more
<PAGE>
Restricted Stock Awards consisting of shares of Common Stock. The number of
shares granted as a Restricted Stock Award shall be determined by the Committee.
The Committee may, in its discretion, require the payment by the Participant of
cash in an amount equal to the par value of the Common Stock subject to the
Restricted Stock Award as a condition precedent to the issuance of Common Stock
to the Participant.
10.2 Restrictions. A Participant's right to retain a Restricted Stock
Award granted to him or her under Section 10.1 shall be subject to such
restrictions, including but not limited to the Participant's continuous status
as an Employee, Director or Consultant for a restriction period specified by the
Committee, or the attainment of specified performance goals and objectives, as
may be established by the Committee with respect to such award. The Committee
may in its sole discretion require different periods of employment, director
service or consulting service or different performance goals and objectives with
respect to different Participants, to different Restricted Stock Awards or to
separate, designated portions of the Common Stock shares constituting a
Restricted Stock Award. Subject to the provisions of Sections 11 and 14, if a
Participant's continuous status as an Employee, Director or Consultant
terminates prior to the end of such restriction period or the attainment of such
goals and objectives as may be specified by the Committee, the Restricted Stock
Award shall be forfeited and all shares of Common Stock related thereto shall be
immediately returned to the Company.
10.3 Privileges of a Stockholder; Transferability. A Participant shall
have all voting, dividend, liquidation and other rights with respect to Common
Stock in accordance with its terms received by him or her as a Restricted Stock
Award under this Section 10 upon becoming the holder of record of such Common
Stock; provided, however, that the Participant's right to sell, encumber, or
otherwise transfer such Common Stock (and any other securities issued in respect
of such shares of Common Stock as a stock dividend, stock split or the like)
shall be subject to the limitations of Section 16.2 hereof.
10.4 Enforcement of Restrictions. The Committee may in its sole discretion
require one or more of the following methods of enforcing the restrictions
referred to in Section 10.2 and 10.3:
(a) Placing a legend on the stock certificates referring to the
restrictions;
(b) Requiring the Participant to keep the stock certificates, duly
endorsed, in the custody of the Company while the restrictions remain in effect;
or
(c) Requiring that the stock certificates, duly endorsed, be held in the
custody of a third party while the restrictions remain in effect.
<PAGE>
SECTION XI
EFFECT OF TERMINATION OF SERVICE ON STOCK OPTIONS,
STOCK APPRECIATION RIGHTS AND RESTRICTED STOCK AWARDS
11.1 Effect of Termination of Service on Stock Options and Stock
Appreciation Rights. No Stock Option or Stock Appreciation Right may be
exercised unless, at the time of such exercise, the Participant is an Employee,
Director or Consultant, except as follows:
(a) The Stock Option or Stock Appreciation Right may be exercised within
such period of time after termination of service as is specified in the Stock
Option or Stock Appreciation Right agreement or instrument, but (i) in no event
may such post-termination period extend beyond the original expiration date of
the Stock Option or Stock Appreciation Right and (ii) only to the extent that
the Participant was entitled to exercise it at the date of termination of
service. In the absence of a specified time in the Stock Option or Stock
Appreciation Right agreement or instrument, the Stock Option or Stock
Appreciation Right shall remain exercisable for the applicable period and to the
extent specified in Section 11.5 below following the Participant's termination
of service as an Employee, Director or Consultant. In the case of an Incentive
Stock Option, such period of time shall not exceed 90 days from the date of
termination of status as an Employee; provided, however, that the agreement may
specify a longer period, in which case Stock Option shall convert to a
Non-Qualified Option on the 91st day following termination of employment;
(b) If the Participant dies while serving as an Employee, Director or
Consultant, or within three months after the Participant ceases such service,
the Stock Option or Stock Appreciation Right may be exercised by the person to
whom it is transferred by will or the laws of descent and distribution within
such period of time after death as is specified in the Stock Option or Stock
Appreciation Right agreement or instrument, but in no event may such post-death
period extend beyond the original expiration date of the Stock Option or Stock
Appreciation Right. In the absence of a specified time in the Stock Option or
Stock Appreciation Right agreement or instrument, the Stock Option or Stock
Appreciation Right shall remain exercisable for the applicable period and to the
extent specified in Section 11.5 below; or
(c) If the Participant becomes disabled (within the meaning of Section
22(e)(3) of the Internal Revenue Code) while serving as an Employee, Director or
Consultant, the Stock Option or Stock Appreciation Right may be exercised within
such period of time after termination of service as is specified in the Stock
Option or Stock Appreciation Right agreement or instrument, but in no event may
such post-termination period extend beyond the original expiration date of the
Stock Option or Stock Appreciation Right. In the absence of a specified time in
<PAGE>
the Stock Option or Stock Appreciation Right agreement or instrument, the Stock
Option or Stock Appreciation Right shall remain exercisable for the applicable
period and to the extent specified in Section 11.5 below.
11.2 Effect of Termination of Service on Restricted Stock Awards. In the
event of the death or disability (as defined in Section 11.1(c)) of a
Participant, all period of service and other restrictions applicable to
Restricted Stock Awards then held by such Participant shall lapse, and such
awards shall become fully vested and nonforfeitable. In the event of a
Participant's termination of service for any other reason, any Restricted Stock
Awards as to which the employment period or other restrictions have not been
satisfied shall be forfeited.
11.3 Meaning of Employment. For all purposes of the 1995 Plan and any
Stock Option or Stock Appreciation Right granted hereunder, "employment" shall
be defined in accordance with the provisions of Section 3401(c) of the Internal
Revenue Code and the regulations thereunder.
11.4 Meaning of Continuous Status. Unless otherwise specified in the Stock
Option or Stock Appreciation Right agreement or instrument, so long as a
Participant is either an Employee or a Director or a Consultant, he or she shall
be considered to be in continuous status as an Employee, Director or Consultant,
even if the person is serving in one capacity when the award is granted and
subsequently changes to service in a different capacity, such as terminating
employment but continuing to serve as a Consultant.
11.5 Default Provisions for Termination of Service. In the event that the
Stock Option or Stock Appreciation Right agreement or instrument do not specify
the post-termination period of exercisability, the following provisions shall
apply:
(a) Subject to 11.5(f), if such termination is due to the death of the
Participant, or the Participant dies within three months after such termination,
or if such termination occurs after the Participant becomes disabled (within the
meaning of Section 22(e)(3) of the Internal Revenue Code), the Stock Option or
Stock Appreciation Right may be exercised by the Participant (or, in the case of
death, by the person to whom it is transferred by will of the laws of descent
and distribution): (i) for all Incentive Stock Option grants, or for
Non-Qualified Stock Option grants or Stock Appreciation Right grants made before
May 22, 1997, or for Non-Qualified Stock Option grants or Stock Appreciation
Right grants made on or after May 22, 1997, if, at the time of the Participant's
termination, such Participant was not a Long-Term Employee, then within a period
of one year after the date of death (but in no event longer than the term of the
Stock Option or Stock Appreciation Right); and (ii) for grants made on or after
May 22, 1997, if the Participant was a Long-Term Employee at the time of the
Participant's termination, the Non-Qualified Stock Option or Stock Appreciation
Right may be exercised, to the extent it is vested as of the date of the
Participant's termination, for the entire remaining term of such Stock Option or
Stock Appreciation Right. <PAGE>
(b) Subject to 11.5(f), if such termination occurs after the Participant
becomes disabled (within the meaning of Section 22(e)(3) of the Internal Revenue
Code), the Stock Option or Stock Appreciation Right may be exercised: (i) for
all Incentive Stock Option grants, or for Non-Qualified Stock Option or Stock
Appreciation Right grants made before May 22, 1997, or for Non-Qualified Stock
Option grants or Stock Appreciation Right grants made on or after May 22, 1997,
if, at the time of the Participant's termination, such Participant was not a
Long-Term Employee, then within a period of one year after the date of such
termination (but in no event longer than the term of the Stock Option or Stock
Appreciation Right); and (ii) for grants made on or after May 22, 1997, if the
Participant is a Long-Term Employee, a Non-Qualified Stock Option or Stock
Appreciation Right may be exercised to the extent it is vested as of the date of
the Participant's termination for the entire remaining term of such Stock Option
or Stock Appreciation Right.
(c) Subject to 11.5(f), if such termination is due to a Reduction in
Force, then, for grants on or after May 22, 1997, the Stock Option or Stock
Appreciation Right shall be exercisable, to the extent vested at the time of
such termination, for a period of six months from the date of such termination.
(d) Subject to 11.5(f), if the Participant Retires, then, for grants on or
after May 22, 1997, the Stock Option or Stock Appreciation Right shall be
exercisable, to the extent vested at the time the Participant Retires, for the
entire remaining term of such Stock Option or Stock Appreciation Right.
(e) Subject to 11.5(f), if the Participant's employment is terminated for
any reason other than those reasons covered by subsections (a) through (d) of
this Section 11.5, then the Stock Option or Stock Appreciation Right shall be
exercisable, to the extent vested at the time of such termination, for a period
of ninety (90) days after the date of such termination.
(f) Notwithstanding the provisions of Section 11.5(a) through (e) above:
(i) With respect to all grants of Stock Options or Stock
Appreciation Rights occurring on or after May 22, 1997, no such grants
shall be exercisable after the date of termination of employment if either
the termination was for Cause, or if the former Employee, Consultant or
Director is then, in the sole judgment of the Company, in material breach
of any contractual, statutory, fiduciary or other legal obligation to the
Company.
(ii) In addition to the provisions of paragraph (i) above,
unless otherwise provided in the Option or Stock Appreciation Right
agreement, with respect to all grants of Stock Options or Stock
Appreciation Rights occurring on or after March 4, 1998 (or earlier date
<PAGE>
if agreed to by the Company and the participant): (x) if at any time
within six months after termination of the optionee's employment or
service, the former Employee, Consultant or Director is, in the sole
judgment of the Company, engaging or has engaged in any activity in
competition with any activity of the Company, or harmful or contrary to
the interests of the Company, including, but not limited to: accepting
employment with or serving as a consultant or advisor to any employer that
is in competition with the Company or acting against the interests of the
Company, including employing or recruiting any Employee of the Company; or
disclosing or misusing any confidential, proprietary or material
information concerning the Company (such information includes, without
limitation, information regarding the Company's operations, its products,
product designs, business plans, strategic plans, marketing and
distribution plans and arrangements, customers, and financial statements,
budgets and forecasts); or participating in any hostile takeover attempt
of the Company, then (I) any Options or Stock Appreciation Rights still
held by the optionee shall immediately cease to be exercisable and shall
be canceled, and (II) any shares issued upon exercise of Options or Stock
Appreciation Rights after the date of termination of employment or service
shall be sold back to the Company at the exercise price paid for such
shares, and any cash received upon exercise of a Stock Appreciation Right
after termination of employment or service shall be returned to the
Company; (y) if the Employee, Consultant or Director leaves the employment
of the Company within six months of exercising Stock Options or Stock
Appreciation Rights for any reason except death, disability or retirement,
then any gain represented by the fair market value on the date of exercise
over the exercise price multiplied by the number of shares such individual
purchased ("option gain"), without regard to any subsequent market price
decrease or increase, shall be paid by such individual to the Company; and
(z) shares issued upon exercise of Options or Stock Appreciation Rights
after termination of employment or service shall be non-transferable until
six months after such termination and shall be held in escrow by the
Company until such time. The Compensation Committee, in its sole
discretion, may, with respect to a particular Option or Stock Appreciation
Right, omit the provisions of this paragraph (ii) or release the optionee
from the operation of such provisions if the Compensation Committee
determines that such action is in the best interests of the Company.
SECTION XII
DIRECTOR STOCK AND STOCK EQUIVALENTS
12.1 Director Stock and Stock Equivalents. Effective with the beginning of
the Company's fiscal year beginning December 28, 1996, each Outside Director may
receive all or a portion of his or her annual retainer and any meeting fees
(which shall include any additional annual retainer or fees paid to a committee
<PAGE>
chair) in shares of Common Stock or, if elected by the Director, in Common Stock
Equivalents. An election pursuant to this Section 12 must be made in writing on
or before the first day of the beginning of the Outside Director's annual
retainer period and shall entitle the Outside Director to a number of shares of
Common Stock or Common Stock Equivalents determined by dividing (a) the dollar
amount of the portion of the retainer for the fiscal period that is to be paid
in shares of Common Stock or Common Stock Equivalents by (b) the Fair Market
Value of one share of Common Stock as of the last day of each such fiscal
period, rounded up to the next full number of shares. In the event any person
becomes an Outside Director other than at the beginning of an annual retainer
period, such person may elect, within thirty (30) days of the date on which such
person becomes an Outside Director, to receive his or her retainer and any
meeting fees in shares of Common Stock or Common Stock Equivalents as described
above for the balance of such annual retainer period in accordance with the
formula set forth in the preceding sentence.
For purposes of this Section 12, an annual retainer period shall begin on
the date of an Annual Meeting of the Stockholders of the Company and shall end
on the day immediately preceding the next following Annual Meeting.
12.2 Stock Equivalents. The number of Common Stock Equivalents determined
under Section 12.1 for each Outside Director shall be credited to a bookkeeping
account established in the name of that Director subject to the following terms
and conditions:
(a) If the Company pays a cash dividend with respect to the Common Stock
at any time while Common Stock Equivalents are credited to an Outside
Director's account, there shall be credited to the Outside Director's account
additional Common Stock Equivalents equal to (i) the dollar amount of the cash
dividend the Director would have received had he or she been the actual owner
of the Common Stock to which the Common Stock Equivalents then credited to the
Director's account relate, divided by (ii) the Fair Market Value of one share
of the Company's Common Stock on the dividend payment date. The Company will
pay the Director a cash payment in lieu of fractional stock equivalents on the
date of such dividend payment;
(b) Upon the death or other termination of the Outside Director's service
on the Board, or, if authorized by the Committee, such other time or times as
specified by the Outside Director at the time of his or her annual election(s),
the Company shall deliver to the Outside Director (or his or her designated
beneficiary or estate) a number of shares of Common Stock equal to the whole
number of Common Stock Equivalents then credited to the Director's account,
together with a cash payment equal to the Fair Market Value of any fractional
Common Stock Equivalent; <PAGE>
(c) The Company's obligation with respect to Common Stock Equivalents
shall not be funded or secured in any manner, nor shall an Outside Director's
right to receive Common Stock equivalents be assigned or transferable,
voluntarily or involuntarily, except as expressly provided herein; and
(d) An Outside Director shall not be entitled to any voting or other
stockholder rights as a result of the credit of Common Stock Equivalents to the
Director's account until certificates representing shares of Common Stock are
delivered to the Director (or his or her designated beneficiary or estate)
hereunder.
12.3 Elections. The Committee shall determine the form of Outside
Director's elections pursuant to this Section 12, which form shall evidence the
particular provisions, terms, conditions, rights and duties of the Company and
the Outside Directors with respect to Common Stock and Common Stock Equivalents
paid with respect to the Director's annual retainer and any meeting fees.
SECTION XIII
MBO PAYMENTS
13.1 Participant Election As to MBO Payment. At such time as the Committee
determines that a Participant has or may become eligible for an MBO Payment
pursuant to the MBO Plan, the Committee may notify the Participant as to whether
or not the Participant will be required by the Committee to, or will be given
the right to elect to, accept all or a part of such MBO Payment in the form of
shares of Common Stock or Common Stock Equivalents. If the Committee grants the
Participant the right to elect whether to accept the MBO Payment in Common Stock
or Common Stock Equivalents, then the Participant shall have ten (10) business
days after the receipt of such notice from the Committee to make such election.
The Participant shall notify the Committee with respect to his or her election
on such form as may be provided for this purpose by the Committee, setting forth
thereon the dollar value of the portion of the MBO Payment which he or she
desires to receive in shares of Common Stock or Common Stock Equivalents. If a
Participant fails to make an election pursuant to this Section with respect to
the mode of payment of an MBO Payment, the entire MBO Payment shall be made in
cash.
13.2 Determination of Number of Shares. The number of shares of Common
Stock or Common Stock Equivalents that shall be issued or credited as an MBO
Payment shall be determined by dividing the dollar value of the portion of the
MBO Payment that is to be paid in shares of Common Stock or Common Stock
Equivalents (whether as elected above or as adjusted by the Committee pursuant
to Section 13.3) by the Fair Market Value of the Common Stock on the date the
shares are issued or credited with respect to such Payment. No fractional shares
of Common Stock or Common Stock Equivalent shall be issued or credited as a part
<PAGE>
of an MBO Payment and the value of any such fractional share that would
otherwise be issued pursuant to the Participant's election shall be paid in
cash.
13.3 Decision of Committee. The Committee shall have the sole discretion
to either accept the Participant's election with respect to the payment of an
MBO Payment, in whole or in part, in shares of Common Stock or Common Stock
Equivalents or to determine that a lesser portion, or none, of the MBO Payment
will be made in shares of Common Stock or Common Stock Equivalents, and the
Committee's determination in this regard shall be final and binding on the
Participant.
SECTION XIV
TENDER OFFERS AND ACQUISITIONS
14.1 Tender Offers and Acquisitions. If any person or entity (other than
the Company or any person or entity that is controlled by the Company) shall
make a tender offer or exchange offer for all or any part of the Common Stock or
other capital shares of the Company and shall purchase any part of the Common
Stock or other capital shares tendered to it, and the Board opposes or does not
affirmatively recommend acceptance of such tender offer or exchange offer, then:
(a) all Stock Options with respect to which no Stock Appreciation Rights
have been granted, and all Stock Options with respect to which Stock
Appreciation Rights have been issued (and all such related Stock Appreciation
Rights) that have been outstanding for at least six months, shall become
immediately exercisable in full during the remaining term thereof, whether or
not the Participants to whom such options and rights have been granted remain
Employees, Directors or Consultants of the Company; provided, however, that
Stock Appreciation Rights shall remain subject to the requirements of Section
9.2(a) with respect to the exercise thereof only within prescribed periods after
public release of Company financial information;
(b) all restrictions with respect to outstanding Restricted Stock Awards
shall immediately lapse; and
(c) all Common Stock Equivalents shall convert into shares of Common Stock
as of the date determined by the Committee.
<PAGE>
SECTION XV
OTHER COMMON STOCK PROGRAMS
15.1 Other Common Stock Programs. From time to time during the duration of
the 1995 Plan, the Board may, in its sole discretion, adopt one or more
incentive compensation arrangements for Eligible Employees, Directors or
Consultants pursuant to which such Eligible Employees, Directors or Consultants
may acquire shares of Common Stock or Common Stock Equivalents, whether by
purchase, outright grant or otherwise. Any such arrangements shall be subject to
the general provisions of the 1995 Plan and all shares of Common Stock or Common
Stock Equivalents issued or credited pursuant to such arrangements shall be
issued under the 1995 Plan if so designated by the Committee.
SECTION XVI
RIGHTS OF PARTICIPANTS
16.1 Employment, Directorship or Consulting Relationship. Nothing
contained in the 1995 Plan or in any Stock Option, Stock Appreciation Right,
Restricted Stock Award or other Common Stock or Common Stock Equivalent award
granted under the 1995 Plan shall confer upon any Participant any right with
respect to the continuation of his or her employment, service as a director or
consulting relationship with the Company or any Affiliated Corporation, or
interfere in any way with the right of the Company or any Affiliated
Corporation, subject to the terms of any separate agreement to the contrary, at
any time to terminate such service or to increase or decrease the compensation
of the Participant from the rate in existence at the time of the grant of a
Stock Option, Stock Appreciation Right, Restricted Stock Award or other Common
Stock or Common Stock Equivalent award. Whether an authorized leave of absence,
or absence in military or government service, shall constitute termination of
service shall be determined by the Committee at the time.
16.2 Nontransferability. Except as otherwise approved by the Committee and
set forth in the agreement between the Company and the Participant, no right or
interest of any Participant in a Stock Option, a Stock Appreciation Right, a
Restricted Stock Award prior to the completion of the restriction period
applicable thereto, or other Common Stock or Common Stock Equivalent award
granted pursuant to the 1995 Plan shall be assignable or transferable during the
lifetime of the Participant, either voluntarily or involuntarily, or subjected
to any lien, directly or indirectly, by operation of law, or otherwise,
including execution, levy, garnishment, attachment, pledge or bankruptcy. If
permitted by applicable law (including Rule 16b-3, as amended from time to
time), the Committee may (but need not) permit the transfer of Stock Options,
Stock Appreciation Rights, Restricted Stock Awards and/or other Common Stock or
Common Stock Equivalent awards either generally, to a limited class of persons
or on a case-by-case basis. In the event of a Participant's death, a
Participant's rights and interest in Stock Options, Stock Appreciation Rights,
Restricted Stock Awards and other Common Stock or Common Stock Equivalent awards
<PAGE>
shall be transferable by testamentary will or the laws of descent and
distribution, and payment of any amounts due under the 1995 Plan shall be made
to, and exercise of any Stock Options or Stock Appreciation Rights may be made
by, the Participant's legal representatives, heirs or legatees. If in the
opinion of the Committee a person entitled to payments or to exercise rights
with respect to the 1995 Plan is disabled from caring for his or her affairs
because of mental condition, physical condition, or age, payment due such person
may be made to, and such rights shall be exercised by, such person's guardian,
conservator or other legal personal representative upon furnishing the Committee
with evidence satisfactory to the Committee of such status.
SECTION XVII
GENERAL RESTRICTIONS
17.1 Investment Representations. The Company may require any person to
whom a Stock Option, Stock Appreciation Right, Restricted Stock Award, MBO
Payment or other Common Stock or Common Stock Equivalent award is granted, as a
condition of exercising such Stock Option or Stock Appreciation Right, or
receiving such Restricted Stock Award, MBO Payment or other Common Stock award
or Common Stock Equivalent award, to give written assurances in substance and
form satisfactory to the Company and its counsel to the effect that such person
is acquiring the Common Stock subject to the Stock Option, Stock Appreciation
Right, Restricted Stock Award, MBO Payment or Common Stock or Common Stock
Equivalent award for his or her own account for investment and not with any
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.
17.2 Compliance with Securities Laws. Each Stock Option, Stock
Appreciation Right and Common Stock Equivalent 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 Stock
Option, Stock Appreciation Right or Common Stock Equivalent 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 Stock
Option, Stock Appreciation Right or Common Stock Equivalent may not be accepted
or 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 Committee. Nothing herein shall be deemed to
require the Company to apply for or to obtain such listing, registration or
qualification.
17.3 Changes in Accounting Rules. Notwithstanding any other provision of
the 1995 Plan to the contrary, if, during the term of the 1995 Plan, any changes
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in the financial or tax accounting rules applicable to Stock Options, Stock
Appreciation Rights, Restricted Stock Awards, MBO Payments or other Common Stock
or Common Stock Equivalent awards shall occur that, in the sole judgment of the
Committee, may have a material adverse effect on the reported earnings, assets
or liabilities of the Company, the Committee shall have the right and power to
modify as necessary, or cancel, any then outstanding and unexercised Stock
Options or Stock Appreciation Rights, any then outstanding Restricted Stock
Awards as to which the applicable restriction has not been satisfied and any
other Common Stock awards or Common Stock Equivalent.
SECTION XVIII
OTHER BENEFITS
18.1 Other Benefits. The amount of any compensation deemed to be received
by an Employee, Director or Consultant as a result of the exercise of a Stock
Option, a Stock Appreciation Right or the sale of shares received upon such
exercise or the vesting of any Restricted Stock Awards or the receipt of any
other Common Stock or Common Stock Equivalent award will not constitute
"earnings" with respect to which any other benefits provided by the Company or
an Affiliated Corporation to such person are determined, including without
limitation benefits under any pension, profit sharing, life insurance or salary
continuation plan.
SECTION XIX
PLAN AMENDMENT, MODIFICATION AND TERMINATION
19.1 Amendment or Termination. The Board, upon recommendation of the
Committee or at its own initiative, at any time may terminate and at any time
and from time to time and in any respect, may amend or modify the 1995 Plan. The
Company shall obtain stockholder approval of any amendment to the extent
necessary and desirable to comply with Applicable Laws. "Applicable Laws" means
the requirements relating to the administration of stock option plans under U.S.
state corporate laws, U.S. federal and state securities laws, the Code, any
stock exchange or quotation system on which the Common Stock is listed or quoted
and the applicable laws of any foreign country or jurisdiction where Stock
Options, Stock Appreciation Rights, Restricted Stock Awards or other Common
Stock or Common Stock Equivalent awards are, or will be, granted under the 1995
Plan.
19.2 Effect of Amendment. (a) With regard to any Stock Option, Stock
Appreciation Right, Restricted Stock Award or other Common Stock Equivalent
awards that has been granted to a Participant, the terms and conditions of the
Company's 1995 equity participation plan in effect on the date of such grant was
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made shall govern, notwithstanding subsequent amendments, unless otherwise
agreed upon by the Participant; provided, however, that this sentence shall not
impair the right of the Committee to take whatever action it deems appropriate
under Section 4.3, Section 14, Section 17.3 or Section 19.3; provided further,
that the Board's deletion of its right pursuant to Section 3.1(i) hereof shall
be effective as to all Stock Options and Stock Appreciation Rights issued,
whether under the Original Plan, the Original Plan, as amended by any of the
Amendments or the 1995 Plan.
(b) Except as set forth in Section 19.2(a) hereof, the termination or any
modification or amendment of the 1995 Plan shall not, without the consent of a
Participant, affect his or her rights under a Stock Option, Stock Appreciation
Right, Restricted Stock Award or other Common Stock or Common Stock Equivalent
award previously granted to him or her. With the consent of the Participant
affected, the Committee may amend outstanding option agreements in a manner not
inconsistent with the 1995 Plan.
19.3 Preservation of Incentive Stock Options. The Board shall have the
right to amend or modify the terms and provisions of the 1995 Plan and of any
outstanding Incentive Stock Options granted under the 1995 Plan to the extent
necessary to qualify any or all such Stock Options for such favorable treatment
as may be afforded Incentive Stock Options under Section 422 of the Internal
Revenue Code.
SECTION XX
WITHHOLDING
20.1 Withholding Requirement. The Company's obligations to deliver shares
of Common Stock upon the exercise of any Stock Option or Stock Appreciation
Right granted under the 1995 Plan or upon any MBO Payment under the 1995 Plan or
pursuant to any other Common Stock or Common Stock Equivalent award, shall be
subject to the Participant's satisfaction of all applicable federal, state and
local income and other tax withholding requirements.
20.2 Withholding With Common Stock. The Committee may, in its sole
discretion, allow Participants to pay all or any portion of any tax withholding
obligation that results from Stock Options, Stock Appreciation Rights, MBO
Payments, or any other Common Stock or Common Stock Equivalent award, by
electing to transfer to the Company, or to have the Company withhold from shares
otherwise issuable to the Participant, shares of Common Stock having a value
equal to the amount required to be withheld or such lesser amount as may be
elected by the Participant. Any such withholding election shall be subject to
such terms and conditions as the Committee may, from time to time, establish;
provided, that, in the case of a Participant who is an officer or director of
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the Company within the meaning of Section 16 of the Exchange Act, then the
approval by the Committee of the grant of the award shall be deemed to include
approval by the Committee of the election by such Participant to utilize this
withholding provision, unless otherwise specified in the agreement relating to
the award.
SECTION XXI
REQUIREMENTS OF LAW
21.1 Requirements of Law. The issuance of stock and the payment of cash
pursuant to the 1995 Plan shall be subject to all applicable laws, rules and
regulations.
21.2 Governing Law. The 1995 Plan and all agreements hereunder shall be
construed in accordance with and governed by the laws of the State of Colorado.
SECTION XXII
EFFECTIVE DATE OF THE 1995 PLAN
22.1 Effective Date. The Original Plan became effective as of March 8,
1995, the date it was adopted by the Board of Directors of the Company. Each
subsequent Amendment became effective as of the date it was adopted by the Board
of Directors of the Company. The 1995 Plan is effective as of March 9, 2000.
22.2 Duration of the 1995 Plan. The 1995 Plan shall terminate at midnight
on March 7, 2005, which is the day before the tenth anniversary of the Effective
Date, and may be terminated prior thereto by Board action; and no Stock Option,
Stock Appreciation Right, Restricted Stock Award or other Common Stock or Common
Stock Equivalent award shall be granted after such termination. Stock Options,
Stock Appreciation Rights, Restricted Stock Awards and other Common Stock and
Common Stock Equivalent awards outstanding at the time of the 1995 Plan
termination may continue to be exercised, or become free of restrictions, in
