1991 Stock Option Plan - Alfalfa's Inc.
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ALFALFA'S INC.
1991 STOCK OPTION PLAN
(as amended effective December 8, 1995)
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TABLE OF CONTENTS
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SECTION 1 - Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2 - Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 3 - Plan Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Eligible Employees, Consultants and Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 4 - Stock Subject to the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.1 Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.2 Unused and Forfeited Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.3 Adjustments for Stock Split, Stock Dividend, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.4 Dividend Payable in Stock of Another Corporation, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.5 Other Changes in Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.6 Rights to Subscribe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.7 General Adjustment Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.8 Determination by the Committee, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 5 - Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.1 Eligible Employees, Consultants and Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 6 - Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6.1 Grant of Options to Eligible Employees, Consultants and Directors . . . . . . . . . . . . . . . . . . . 5
6.2 Option Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.3 Restrictions on Incentive Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.4 Shareholder Privileges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 7 - Reorganization or Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.1 Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.2 Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 8 - Rights of Option Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8.1 Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8.2 Nontransferability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
SECTION 9 - General Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
9.1 Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
9.2 Compliance with Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
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SECTION 10 - Other Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 11 - Plan Amendment, Modification and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 12 - Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12.1 Withholding Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12.2 Withholding With Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 13 - Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
13.1 Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
13.2 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 14 - Duration of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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ALFALFA'S INC.
1991 STOCK OPTION PLAN
SECTION 1
INTRODUCTION
1.1 Establishment. Alfalfa's Inc., a Colorado corporation
(hereinafter referred to, together with its Affiliated Corporations (as defined
in subsection 2.1(a)) as the "Company" except where the context otherwise
requires), previously established the Alfalfa's Inc. 1991 Stock Option Plan
(the "Plan") for certain employees of the Company. The Plan is hereby amended
and restated in its entirety, effective as of December 8, 1995.
1.2 Purposes. The purposes of the Plan are to provide those who
are selected for participation in the Plan with added incentives to continue in
the long-term service of the Company and to create in such persons a more
direct interest in the future success of the operations of the Company by
relating incentive compensation to increases in shareholder value, so that the
income of the those participating in the Plan is more closely aligned with the
income of the Company's shareholders. The Plan is also designed to provide a
financial incentive that will help the Company attract, retain and motivate the
most qualified employees, consultants and directors.
1.3 Effective Date. The effective date of the Plan shall be
August 13, 1991 (the "Effective Date"). This Plan and each option granted
hereunder is conditioned on and shall be of no force or effect until approval
of the Plan by the holders of a majority of the shares of voting stock of the
Company.
SECTION 2
DEFINITIONS
2.1 Definitions. The following terms shall have the meanings set
forth below:
(a) "Affiliated Corporation" means any corporation or
other entity (including but not limited to a partnership) which is affiliated
with Alfalfa's, Inc. through stock ownership or otherwise and is treated as a
common employer under the provisions of Sections 414(b) and (c) of the Internal
Revenue Code, and, for purposes of Incentive Stock Options granted pursuant to
the Plan, means any parent or subsidiary of the Company as defined in Section
424 of the Internal Revenue Code.
(b) "Board" means the Board of Directors of the Company.
(c) "Committee" means a committee consisting of members
of the Board who are empowered hereunder to take actions in the administration
of the Plan. Members of the
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Committee shall be appointed from time to time by the Board, shall serve at the
pleasure of the Board and may resign at any time upon written notice to the
Board.
(d) "Eligible Employees" means those full-time employees
(including, without limitation, officers and directors who are also employees)
of the Company, whose judgment, initiative and efforts are important to the
Company for the management and growth of its business. For purposes of the
Plan, an employee is an individual whose wages are subject to the withholding
of federal income tax under Section 3401 of the Internal Revenue Code.
(e) "Eligible Consultants" means those consultants to the
Company who are determined, by the Committee, to be individuals whose services
are important to the Company and who should be eligible to receive Non-
Qualified Options under the Plan.
(f) "Eligible Directors" means those outside directors of
the Company who are determined, by the Committee, to be individuals whose
services are important to the Company and who should be eligible to receive
Non-Qualified Options under the Plan.
(g) "Fair Market Value" shall be determined in good faith
by the Committee using all relevant data and information reasonably available
to the Committee.
(h) "Incentive Stock Option" means any Option designated
as such and granted in accordance with the requirements of Section 422 of the
Internal Revenue Code.
(i) "Internal Revenue Code" means the Internal Revenue
Code of 1986, as it may be amended from time to time.
(j) "Non-Qualified Option" means any Option other than an
Incentive Stock Option.
(k) "Option" means a right to purchase Stock at a stated
price for a specified period of time.
(l) "Option Holder" means an Eligible Employee, an
Eligible Consultant or an Eligible Director designated by the Committee or in
the Plan from time to time during the term of the Plan to receive one or more
Options under the Plan.
(m) "Option Price" means the price at which shares of
Stock subject to an Option may be purchased, determined in accordance with
subsection 6.2(b).
(n) "Share" means a share of Stock.
(o) "Stock" means the common stock, $0.01 par value, of
the Company.
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2.2 Gender and Number. Except when otherwise indicated by the
context, the masculine gender shall include the feminine gender, and the
definition of any term herein in the singular shall also include the plural.
SECTION 3
PLAN ADMINISTRATION
3.1 In General. The Committee shall be responsible for the
administration of the Plan. The Committee shall determine the form or forms of
the agreements with Option Holders which shall evidence the particular
provisions, terms, conditions, rights and duties of the Company and the Option
Holders with respect to Options granted pursuant to the Plan, which provisions
need not be identical except as may be provided herein. The Committee may from
time to time adopt such rules and regulations for carrying out the purposes of
the Plan as it may deem proper and in the best interests of the Company. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any agreement entered into hereunder in the
manner and to the extent it shall deem expedient and it shall be the sole and
final judge of such expediency. No member of the 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 Plan shall be binding and conclusive for all purposes and on all
persons.
3.2 Eligible Employees, Consultants and Directors. Subject to
Section 3.3 below and in accordance with the provisions of the Plan, the
Committee shall, in its sole discretion, select Option Holders from among
Eligible Employees, Eligible Consultants and Eligible Directors to whom Options
will be granted, the number of Shares subject to each Option and any other
terms and conditions of each Option as the Committee may deem necessary or
desirable and consistent with the terms of the Plan, provided, however, that
only Non-Qualified Options may be granted to Eligible Consultants and Eligible
Directors and provided further that no member of the Committee shall
participate in any decision with respect to the grant of an Option to such
member of the Committee.
SECTION 4
STOCK SUBJECT TO THE PLAN
4.1 Number of Shares. A total of 50,000 Shares are authorized for
issuance under the Plan in accordance with the provisions of the Plan and
subject to such restrictions or other provisions as the Committee may from time
to time deem necessary. This authorization may be increased from time to time
by approval of the Board and by the shareholders of the Company if, in the
opinion of counsel for the Company, such shareholder approval is required.
Shares that may be issued upon the exercise of Options shall be applied to
reduce the maximum number of Shares remaining available for use under the Plan.
The Company shall at all times during the term of the Plan and while any
Options are outstanding retain as authorized and unissued Stock, or as treasury
Stock, at least the number of Shares from time to time required under the
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provisions of the Plan, or otherwise assure itself of its ability to perform
its obligations hereunder.
4.2 Unused and Forfeited Stock. Any Shares that are subject to an
Option under this Plan that are not used because the terms and conditions of
the Option are not met, including any Shares that are subject to an Option that
expires or is terminated for any reason shall automatically become available
for use under the Plan.
4.3 Adjustments for Stock Split, Stock Dividend, Etc. If the
Company shall at any time increase or decrease the number of its outstanding
Shares or change in any way the rights and privileges of such Shares by means
of the payment of a stock dividend or any other distribution upon such Shares
payable in stock, or through a stock split, subdivision, consolidation,
combination, reclassification or recapitalization involving the Stock, then in
relation to the Stock that is affected by one or more of the above events, the
numbers, rights and privileges of the following shall be increased, decreased
or changed in like manner as if they had been issued and outstanding, fully
paid and nonassessable at the time of such occurrence: (i) the shares of Stock
as to which Options may be granted under the Plan; and (ii) the Shares then
subject to each outstanding Option.
4.4 Dividend Payable in Stock of Another Corporation, Etc. If the
Company shall at any time pay or make any dividend or other distribution to the
holders of Stock payable in securities of another corporation or other property
(except money or Stock), a proportionate part of such securities or other
property shall be set aside and delivered to any Option Holder then holding an
Option for the particular type of Stock for which the dividend or other
distribution was made, upon exercise thereof. Prior to the time that any such
securities or other property are delivered to an Option Holder in accordance
with the foregoing, the Company shall be the owner of such securities or other
property and shall have the right to vote the securities, receive any dividends
payable on such securities, and in all other respects shall be treated as the
owner. If securities or other property that have been set aside by the Company
in accordance with this Section are not delivered to an Option Holder because
an Option is not exercised, then such securities or other property shall remain
the property of the Company and shall be dealt with by the Company as it shall
determine in its sole discretion.
4.5 Other Changes in Stock. If there shall be any change, other
than as specified in Sections 4.3 and 4.4, in the number or kind of outstanding
Shares of Stock or of any stock or other securities into which the Stock shall
be changed or for which it shall have been exchanged, and if the Committee
shall in its discretion determine that such change equitably requires an
adjustment in the number or kind of Shares subject to outstanding Options or
which have been reserved for issuance pursuant to the Plan but are not then
subject to an Option, then such adjustments shall be made by the Committee and
shall be effective for all purposes of the Plan and on each outstanding Option
that involves the particular type of stock for which a change was effected.
4.6 Rights to Subscribe. If the Company shall at any time grant
to the holders of its Stock rights to subscribe pro rata for additional shares
thereof or for any other securities of the Company or of any other corporation,
there shall be reserved with respect to the Shares then
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subject to an Option held by any Option Holder of the particular class of Stock
involved, the Stock or other securities which the Option Holder would have been
entitled to subscribe for if immediately prior to such grant the Option Holder
had exercised his entire Option. If, upon exercise of any such Option, the
Option Holder subscribes for the additional Stock or other securities, the
Option Holder shall pay to the Company the price that is payable by the Option
Holder for such Stock or other securities.
4.7 General Adjustment Rules. No adjustment or substitution
provided for in this Section 4 shall require the Company to issue a fractional
share under any Option agreement and the total substitution or adjustment with
respect to each Option agreement shall be limited by deleting any fractional
share. In the case of any such substitution or adjustment, the Option Price
per Share in each such Option agreement shall be equitably adjusted by the
Committee to reflect the greater or lesser number of shares of Stock or other
securities into which the Stock subject to the Option may have been changed.
4.8 Determination by the Committee, Etc. Adjustments under this
Section 4 shall be made by the Committee, whose determinations with regard
thereto shall be final and binding.
SECTION 5
PARTICIPATION
5.1 Eligible Employees, Consultants and Directors. The Committee,
in its sole and absolute discretion, shall select those Eligible Employees,
Consultants and Directors to be Option Holders in the Plan. Eligible Employees
shall be selected from the employees of the Company who are performing services
in the management, operation and growth of the Company, and contribute, or are
expected to contribute, to the achievement of long-term corporate objectives.
Eligible Consultants shall be selected from those non-employee consultants to
the Company who are performing services important to the operation and growth
of the Company. Eligible Directors shall be selected from those non-employee
directors of the Company whose services are determined to be important to the
operation and growth of the Company. Eligible Employees, Consultants and
Directors may be granted from time-to-time one or more Options; provided,
however, that the grant of each such Option shall be separately approved by the
Committee, and receipt of one such Option shall not result in automatic receipt
of any other Option. Upon determination by the Committee that an Option is to
be granted to an Eligible Employee, Consultant or Director, written notice
shall be given to such person, specifying the terms, conditions, rights and
duties related thereto.
SECTION 6
STOCK OPTIONS
6.1 Grant of Options to Eligible Employees, Consultants and
Directors. Coincident with or following designation for participation in the
Plan, an Eligible Employee, Consultant or Director may be granted one or more
Options. The Committee in its sole discretion shall designate whether an
Option is to be considered an Incentive Stock Option or a Non-Qualified
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Option, provided, however, that only Non-Qualified Options may be granted to
Eligible Consultants and Directors. The Committee may grant both an Incentive
Stock Option and a Non-Qualified Option to the same Eligible 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 and shall be clearly identified, and in no
event shall the exercise of one Option affect the right to exercise any other
Option or affect the number of Shares for which any other Option may be
exercised.
6.2 Option Agreements. Each Option granted under the Plan shall
be evidenced by a written Option agreement which shall be entered into by the
Company and the Option Holder to whom the Option is granted, and which shall
contain the following terms and conditions, as well as such other terms and
conditions, not inconsistent herewith, as the Committee may consider
appropriate in each case.
(a) Number of Shares. Each Option agreement shall state
that it covers a specified number of Shares, as determined by the Committee.
(b) Price. Each Option granted pursuant to the Plan
shall have an Option Price that is equal to or greater than the Fair Market
Value of the Stock on the date the Option is granted.
(c) Duration and Exercise of Options. Each Option
agreement shall state the period of time, as determined by the Committee within
which the Option may be exercised by the Option Holder (the "Option Period").
The Option Period must end, in all cases, not more than ten years from the date
an Option is granted. Each Option agreement shall also state the periods of
time, if any, as determined by the Committee, when incremental portions of each
Option may be exercised.
(d) Termination of Service, Death, Disability, Etc. Each
Option agreement shall provide as follows with respect to the exercise of the
Option:
(i) If the service of the Option Holder with the
Company is terminated within the Option Period for cause, as
determined by the Company, the Option shall thereafter be void for all
purposes. As used in this subsection 6.2(d), "cause" shall mean a
gross violation, as determined by the Company of the Company's
established policies and procedures, provided that the effect of this
subsection 6.2(d) shall be limited to determining the consequences of
a termination and that nothing in this subsection 2.2(d) shall
restrict or otherwise interfere with the Company's discretion with
respect to the termination of any employee, consultant or director.
(ii) If the Option Holder shall become disabled
within the meaning of Section 22(e)(3) of the Internal Revenue Code
within the Option Period, the Option may be exercised by the Option
Holder (or, in the case of his death, by those entitled to do so under
his will or by the laws of descent and distribution) within one year
following his termination of service because of such disability (if
otherwise within the Option Period), but not thereafter. In any such
case, the Option may be exercised as to all shares then
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subject to the Option regardless of whether all conditions of exercise
relating to continuation of service for specified periods of time have
been satisfied.
(iii) If the Option Holder dies within the Option
Period, while employed by or in the service of the Company, the
Option may be exercised by those entitled to do so under his will or
by the laws of descent and distribution within one year following his
death (if otherwise within the Option Period), but not thereafter. In
any such case the Option may be exercised as to all shares then
subject to the Option, regardless of whether all conditions of
exercise relating to continuation of service for specified periods of
time have been satisfied.
(iv) If the service of the Option Holder with the
Company is terminated (which for this purpose means that the Option
Holder is no longer employed by or retained as a director or
consultant by the Company or by an Affiliated Corporation), within the
Option Period for any reason other than for cause, disability or
death, the Option may be exercised by the Option Holder within three
months following the date of such termination (if otherwise within the
Option Period), but not thereafter. In any such case, the Option may
be exercised only as to the Shares as to which the Option had become
exercisable on or before the date of termination of service.
(e) Transferability. Each Option agreement shall provide
that the Option granted therein is not transferable by the Option Holder except
by will or pursuant to the laws of descent and distribution, and that such
Option is exercisable during the Option Holder's lifetime only by him or her,
or in the event of disability or incapacity, by his or her guardian or legal
representative.
(f) Agreement to Continue in Service. Each Option
agreement held by an Option Holder shall contain the Option Holder's agreement
to remain in the employment of the Company, or in service with the Company, at
the pleasure of the Company, for a continuous period of at least one year after
the date of such Option agreement, at the salary rate or other compensation in
effect on the date of such agreement or at such changed rate as may be fixed,
from time to time, by the Company. Nothing in this paragraph shall offset or
impair the Company's right to terminate the services of any employee,
consultant or director.
(g) Exercise, Payments, Etc. Each Option agreement shall
provide that the method for exercising the Option granted therein shall be by
delivery to the Corporate Secretary of the Company of written notice specifying
the number of Shares with respect to which such Option is exercised and payment
of the Option Price. Such notice shall be in a form satisfactory to the
Committee and shall specify the particular Option (or portion thereof) that is
being exercised and the number of Shares with respect to which the Option is
being exercised. The exercise of the Option shall be deemed effective upon
receipt of such notice by the Corporate Secretary and payment to the Company.
The purchase of such Stock shall take place at the principal offices of the
Company upon delivery of such notice, at which time the Option Price of the
Stock shall be paid in full in cash or by certified or cashier's check payable
to the order of the Company. A properly executed certificate or certificates
representing the Stock shall be issued by the Company and delivered to the
Option Holder.
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(h) Date of Grant. An Option shall be considered as
having been granted on the date specified in the grant resolution of the
Committee.
(i) Withholding.
(i) Non-Qualified Options. Each Option agreement
covering Non-Qualified Options shall provide that, upon exercise of
the Option, the Option Holder shall make appropriate arrangements with
the Company to provide for the amount of additional withholding
required by Sections 3102 and 3402 of the Internal Revenue Code and
applicable state income tax laws, if any, including payment of such
taxes through delivery of shares of Stock or by withholding Stock to
be issued under the Option, as provided in Section 12.
(ii) Incentive Options. If an Option Holder makes
a disposition (as defined in Section 424(c) of the Internal Revenue
Code) of any 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 Option was
exercised, the Option Holder shall send written notice to the Company
at its principal office in Denver, 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 Option Holder shall, in the event of such a
disposition, make appropriate arrangements with the Company to provide
for the amount of additional withholding, if any, required by Sections
3102 and 3402 of the Internal Revenue Code and applicable state income
tax laws.
6.3 Restrictions on Incentive Stock Options.
(a) Initial Exercise. Notwithstanding any other
provision of the Plan, the aggregate Fair Market Value of the Shares with
respect to which Incentive Stock Options are exercisable for the first time by
an Option Holder in any calendar year, under the Plan or otherwise, shall not
exceed $100,000. For this purpose, the Fair Market Value of the Shares shall
be determined as of the date of grant of the Option.
(b) Ten Percent Shareholders. Incentive Stock Options
granted to an Option Holder who is the holder of record of 10% or more of the
outstanding Stock of the Company shall have an Option Price equal to 110% of
the Fair Market Value of the Shares on the date of grant of the Option. The
Option Period for any such Option shall not exceed five years.
6.4 Shareholder Privileges. No Option Holder shall have any
rights as a shareholder with respect to any Shares covered by an Option until
the Option Holder becomes the holder of record of such 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 Option Holder
becomes the holder of record of such Stock, except as provided in Section 4.
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SECTION 7
REORGANIZATION OR CHANGE OF CONTROL
7.1 Reorganization. If the Company is merged or consolidated with
another corporation or the Company is a party to a reorganization (other than a
merger, consolidation or reorganization in which the Company is the continuing
corporation and which does not result in any reclassification or change of
outstanding Shares), or if all or substantially all of the assets or more than
50% of the outstanding voting stock of the Company is acquired by any other
corporation, business entity or person (other than a sale or conveyance in
which the Company continues as a holding company of an entity or entities that
conduct the business or businesses formerly conducted by the Company), or in
case of a reorganization (other than a reorganization under the United States
Bankruptcy Code) or liquidation of the Company, the Committee shall, as to the
Plan and outstanding Options, either (i) make appropriate provision for the
adoption and continuation of the Plan by the acquiring or successor corporation
and for the protection of any such outstanding Options by the substitution on
an equitable basis of appropriate stock of the Company or of the merged,
consolidated or otherwise reorganized corporation which will be issuable with
respect to the Stock, provided that no additional benefits shall be conferred
upon the Option Holders holding such Options as a result of such substitution,
and the excess of the aggregate Fair Market Value of the Shares subject to
Options immediately after such substitution over the Option Price thereof is
not more than the excess of the aggregate Fair Market Value of the Shares
subject to such Options immediately before such substitution over the Option
Price thereof, and provided further that any such substitution made with
respect to Incentive Stock Options shall comply with Section 424(a) of the
Internal Revenue Code, or (ii) upon written notice to the Option Holders,
provide that all unexercised Options must be exercised within thirty (30) days
of the date of such notice or they will be terminated. If alternative (i) is
implemented, the Committee may, at its sole discretion, provide that Options
may be exercisable in full without regard to the applicable exercise periods
set forth in the Option agreements and if alternative (ii) is implemented,
Options shall be exercisable in full without regard to the applicable exercise
periods set forth in the Option agreements.
7.2 Change of Control. In the event of a change in control of the
Company, as defined below, all Options shall become exercisable in full,
without regard to applicable exercise periods set forth in the Option
agreements. For purposes of the Plan, a "change in control" shall be deemed to
have occurred if during any period of two consecutive years (not including any
period prior to the Effective Date), individuals who at the beginning of such
period constitute the Board (and any new director whose election by the Board
or whose nomination for election by the Company's shareholders was approved by
a vote of at least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority thereof.
SECTION 8
RIGHTS OF OPTION HOLDERS
8.1 Service. Nothing contained in the Plan or in any Option
granted under the Plan shall confer upon any Option Holder any right with
respect to the continuation of his or her
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employment by, or consulting or director's relationship with, the Company, or
interfere in any way with the right of the Company, subject to the terms of any
separate employment agreement or other contract to the contrary, at any time to
terminate the service of such Option Holder or to increase or decrease the
compensation of the Option Holder from the rate in existence at the time of the
grant of an Option. Whether an authorized leave of absence, or absence in
military or government service, shall constitute a termination of service shall
be determined by the Committee at the time.
8.2 Nontransferability. No right or interest of any Option Holder
in an Option granted pursuant to the Plan shall be assignable or transferable
during the lifetime of the Option Holder, either voluntarily or involuntarily,
or be subjected to any lien, directly or indirectly, by operation of law, or
otherwise, including execution, levy, garnishment, attachment, pledge or
bankruptcy. In the event of an Option Holder's death, an Option Holder's
rights and interests in Options shall, to the extent provided in Section 6, be
transferable by testamentary will or the laws of descent and distribution, and
payment of any amounts due under the Plan shall be made to, and exercise of any
Options may be made by, the Option Holder's legal representatives, heirs or
legatees. If in the opinion of the Committee a person entitled to exercise
rights with respect to the Plan is disabled from caring for his affairs because
of mental condition, physical condition or age, 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 9
GENERAL RESTRICTIONS
9.1 Investment Representations. The Company may require any
person to whom an Option is granted, as a condition of exercising such Option,
to give written assurances in substance and form satisfactory to the Company
and its counsel to the effect that such person is acquiring the Stock subject
to the Option for his own account for investment and not with any present
intention of selling or otherwise distributing the same, and to such other
effects as the Company deems necessary or appropriate in order to comply with
Federal and applicable state securities laws. Legends evidencing such
restrictions may be placed on the certificates evidencing the Stock.
9.2 Compliance with Securities Laws. Each Option shall be subject
to the requirement that if at any time counsel to the Company shall determine
that the listing, registration or qualification of the Shares subject to such
Option upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, is necessary as a
condition of, or in connection with, the issuance or purchase of Shares
thereunder, such Option may not be exercised in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained on conditions acceptable to the Committee. Nothing herein
shall be deemed to require the Company to apply for or obtain such listing,
registration or qualification.
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SECTION 10
OTHER EMPLOYEE BENEFITS
The amount of any compensation deemed to be received by an Option
Holder as a result of the exercise of an Option shall not constitute "earnings"
with respect to which any other employee benefits of such person are
determined, including without limitation benefits under any pension, profit
sharing, life insurance or salary continuation plan.
SECTION 11
PLAN AMENDMENT, MODIFICATION AND TERMINATION
The Board may at any time terminate, and from time-to-time may amend
or modify, the Plan provided, however, that no amendment or modification may
become effective without approval of the amendment or modification by the
shareholders if shareholder approval is required to enable the Plan to satisfy
any applicable statutory or regulatory requirements, or if the Company, on the
advice of counsel, determines that shareholder approval is otherwise necessary
or desirable.
No amendment, modification or termination of the Plan shall in any
manner adversely affect any Options theretofore granted under the Plan, without
the consent of the Option Holder holding such Options.
SECTION 12
WITHHOLDING
12.1 Withholding Requirement. The Company's obligations to deliver
Shares upon the exercise of an Option shall be subject to the Option Holder's
satisfaction of all applicable federal, state and local income and other tax
withholding requirements.
12.2 Withholding With Stock. At the time the Committee grants an
Option, it may, in its sole discretion, grant the Option Holder an election to
pay all such amounts of tax withholding, or any part thereof, by electing to
transfer to the Company, or to have the Company withhold from Shares otherwise
issuable to the Option Holder, Shares having a value equal to the amount
required to be withheld or such lesser amount as may be elected by the Option
Holder. All elections shall be subject to the approval or disapproval of the
Committee. The value of Shares to be withheld shall be based on the Fair
Market Value of the Stock on the date that the amount of tax to be withheld is
to be determined (the "Tax Date"). Any such elections by Option Holders to
have Shares withheld for this purpose will be subject to the following
restrictions:
(a) All elections must be made prior to the Tax Date.
(b) All elections shall be irrevocable.
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(c) If the Option Holder is an officer or director of the
Company within the meaning of Section 16 of the 1934 Act ("Section 16") and is
subject to the provisions of Section 16, the Option Holder must satisfy the
requirements of such Section 16 and any applicable rules thereunder with
respect to the use of Stock to satisfy such tax withholding obligation.
SECTION 13
REQUIREMENTS OF LAW
13.1 Requirements of Law. The issuance of Stock and the payment of
cash pursuant to the Plan shall be subject to all applicable laws, rules and
regulations.
13.2 Governing Law. The Plan and all Option agreements hereunder
shall be construed in accordance with and governed by the laws of the State of
Colorado.
SECTION 14
DURATION OF THE PLAN
The Plan shall terminate at such time as may be determined by the
Board of Directors, and no Option shall be granted after such termination. If
not sooner terminated under the preceding sentence, the Plan shall fully cease
and expire at the close of business on August 12, 2001. Options outstanding at
the time of the Plan termination may continue to be exercised or earned in
accordance with their terms.
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