HACH COMPANY
1993 STOCK OPTION PLAN
AS AMENDED AND RESTATED AS OF NOVEMBER 25, 1997
1. PURPOSE OF THE PLAN.
The purposes of this Stock Option Plan are to attract and retain the
best available personnel for positions of substantial responsibility, to
provide additional incentive to such individuals, and to promote the success
of the Company's business by aligning employee financial interests with
long-term shareholder value.
Options granted hereunder may be either Incentive Stock Options or
Non-qualified Stock Options, at the discretion of the Board and as reflected
in the terms of the written option agreement.
2. DEFINITIONS.
As used herein, the following definitions shall apply:
(a) "Board" shall mean the Committee, if such Committee has been
appointed, or the Board of Directors of the Company, if such Committee has
not been appointed.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan, if one
is appointed; provided, however, if the Board of Directors appoints more
than one Committee pursuant to Section 4, then "Committee" shall refer to
the appropriate Committee, as indicated by the context of the reference.
(d) "Common Stock" shall mean the $1.00 par value Common Stock of
Hach Company.
(e) "Class A Common Stock" shall mean the $1.00 par value Class A
Common Stock of the Company.
(f) "Stock" shall include Common Stock and Class A Common Stock as
indicated by the context of the reference.
(g) "Company" shall mean Hach Company, a Delaware corporation, and
any successor thereto.
(h) "Continuous Status as an Employee" shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status
as an Employee shall not be considered interrupted in the case of sick
leave, maternity leave, infant care leave, medical emergency leave,
military leave, or any other leave of absence authorized in writing by a
Vice President of the Company prior to its commencement.
(i) "Disinterested Person" shall have the same meaning as defined in
Rule 16b-3(c)(2) promulgated by the Securities and Exchange Commission
pursuant to its authority under the Exchange Act.
(j) "Employee" shall mean any person, including officers, employed by
the Company or any Parent or Subsidiary of the Company.
(k) "Incentive Stock Option" shall mean any Option intended to
qualify as an incentive stock option within the meaning of Section 422 of
the Code.
(l) "Maximum Annual Employee Grant" shall have the meaning set forth
in Section 5(e).
(m) "Nonqualified Stock Option" shall mean an Option not intended to
qualify as an Incentive Stock Option.
(n) "Option" shall mean a stock option granted pursuant to the Plan.
(o) "Optioned Stock" shall mean the Stock subject to an Option.
(p) "Optionee" shall mean an Employee who receives an Option.
(q) "Outside Director" shall have the same meaning as defined or
interpreted for purposes of Section 162(m) of the Code.
(r) "Parent" shall mean a "parent corporation" whether now or
hereafter existing, as defined in Section 424(e) of the Code.
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(s) "Plan" shall mean this 1993 Stock Option Plan, including any
amendments hereto.
(t) "Share" shall mean one share of Stock, as adjusted in accordance
with Section 12 of the Plan.
(u) "Subsidiary" shall mean a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN.
Subject to the provisions of Section 11 of the Plan, the maximum
aggregate number of Shares which may be optioned and sold under the Plan is
Six Hundred Twenty-Five Thousand (625,000) shares of Common Stock and Two
Million, One Hundred Twenty-Five Thousand (2,125,000) shares of Class A
Common Stock. The Shares may be authorized, but unissued, or reacquired
shares of Stock.
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were
subject thereto shall, unless the Plan shall have been terminated, become
available for future Option grants under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE. The Plan shall be administered by the Board of
Directors of the Company.
(i) The Board of Directors may appoint one or more Committees
each consisting of not less than two members of the Board of Directors
to administer the Plan on behalf of the Board of Directors, subject to
such terms and conditions as the Board of Directors may prescribe.
Once appointed, such Committees shall continue to serve until
otherwise directed by the Board of Directors.
(ii) Any grants of Options to officers who are subject to
Section 16 of the Securities Exchange Act of 1934 (the "Exchange Act")
shall only be made by a Committee of two or more directors, each of
whom is a Disinterested Person provided, however, that in the case of
grants as to which Section 162(m) might otherwise apply such grant
shall only be made by a Committee comprised solely of Outside
Directors.
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(iii) Subject to the foregoing subparagraphs (1) and (2),
from time to time the Board of Directors may increase the size of the
Committee(s) and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution
therefor, or fill vacancies however caused.
(b) POWERS OF THE BOARD. Subject to the provisions of the Plan, the
Board shall have the authority, in its discretion: (i) to grant Incentive
Stock Options or Nonqualified Stock Options; (ii) to grant options to
purchase solely Common Stock or solely Class A Common Stock or a
combination of both Common Stock and Class A Common Stock; (iii) to
determine, in accordance with Section 8(b) of the Plan, the fair market
value of the Stock; (iv) to determine, in accordance with Section 8(a) of
the Plan, the exercise price per share of Options to be granted; (v) to
determine the Employees to whom, and the time or times at which, Options
shall be granted and the number of Shares to be represented by each Option;
(vi) to interpret the Plan; (vii) to prescribe, amend, and rescind rules
and regulations relating to the Plan; (viii) to determine the terms and
provisions of each Option granted (which need not be identical) and, with
the consent of the holder thereof, modify or amend each Option; (ix) to
reduce the exercise price per share of outstanding and unexercised Options;
(x) to accelerate or defer (with the consent of the Optionee) the exercise
date of any Option; (xi) to authorize any person to execute on behalf of
the Company any instrument required to effectuate the grant of an Option
previously granted by the Board; and (xii) to make all other determinations
deemed necessary or advisable for the administration of the Plan.
(c) EFFECT OF BOARD'S DECISION. All decisions, determinations, and
interpretations of the Board shall be final and binding on all Optionees
and any other holders of any Options granted under the Plan.
5. ELIGIBILITY.
(a) Options may be granted only to Employees. Notwithstanding the
foregoing, Kathryn Hach-Darrow is not eligible to participate in the Plan.
For avoidance of doubt, directors are not eligible to participate in the
Plan unless they are full-time Employees.
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(b) Each Option shall be designated in the written option agreement
as either an Incentive Stock Option or a Nonqualified Stock Option and
shall specify whether they relate to Common Stock or Class A Common Stock
or both classes. However, notwithstanding such designations, to the extent
that the aggregate fair market value of the Shares with respect to which
options designated as Incentive Stock Options are exercisable for the first
time by any Optionee during any calendar year (under all plans of the
Company) exceeds $100,000, such Options shall be treated as Nonqualified
Stock Options.
(c) For purposes of Section 5(b), Options shall be taken into account
in the order in which they were granted, and the fair market value of the
Shares shall be determined as of the time the Option with respect to such
Shares is granted.
(d) Nothing in the Plan or any Option granted hereunder shall confer
upon any Optionee any right with respect to continuation of employment with
the Company, nor shall it interfere in any way with the Optionee's right or
the Company's right to terminate the employment relationship at any time,
with or without cause.
(e) The maximum number of Shares with respect to which an Option or
Options may be granted to any Employee in any one taxable year of the
Company shall not exceed fifty thousand (50,000) shares (the "Maximum
Annual Employee Grant").
6. TERM OF PLAN.
The Plan shall become effective as of December 17, 1993; provided that
the Plan and any Options granted prior to the 1994 Annual Meeting of the
Company's stockholders are subject to the approval by the stockholders at
that meeting. It shall continue in effect until December 17, 2003, unless
sooner terminated under Section 15 of the Plan.
7. TERM OF OPTION.
The term of each Option shall be no more than ten (10) years from the
date of grant. However, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of
the Company or any Parent or Subsidiary, the term of the Option shall be no
more than five (5) years from the date of grant.
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8. EXERCISE PRICE AND CONSIDERATION.
(a) The per Share exercise price under each Option shall be such
price as is determined by the Board, subject to the following:
(1) In the case of an Incentive Stock Option
(i) granted to an Employee who at the time of the grant of
such Incentive Stock Option, owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of
the Company or any Parent or Subsidiary, the per Share exercise
price shall be no less than 110% of the fair market value per
Share on the date of grant.
(ii) granted to any other Employee, the per Share exercise
price shall be no less than 100% of the fair market value per
Share on the date of grant.
(2) In the case of a Nonqualified Stock Option the per Share
exercise price may be less than, equal to, or greater than the fair
market value per Share on the date of grant.
(b) The fair market value per Share shall be the closing price per
share of the Common Stock or the Class A Common Stock, as applicable, on
the National Association of Securities Dealers Automated Quotation
("NASDAQ") National Market System on the date of grant. If there is no
reported closing price of such shares of Common Stock or Class A Common
Stock on NASDAQ on such day the closing price for such day for such stock
will be deemed to be the mean of the closing bid and asked quotations on
NASDAQ for that day. If the Common Stock ceases to be listed on the NASDAQ
National Market System, the Board shall designate an alternative method of
determining the fair market value of the Common Stock or Class A Common
Stock.
(c) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined
by the Board at the time of grant and may consist of cash and/or check.
Payment may also be made by delivering a properly executed exercise notice
together with irrevocable instructions to a broker to promptly
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deliver to the Company the amount of sale proceeds necessary to pay the
exercise price. An Optionee may also in addition pay all or a part of the
purchase price with Shares of Common Stock and/or Shares of Class A Common
Stock, provided, however that in the case of Options granted before
September 10, 1997, the date the Company's dual class capital structure
became effective, options must be exercised in tandem (i.e. both the option
on Common Stock and the companion option on Class A Common Stock which
resulted from the change to a dual class capital structure must be
exercised at the same time) and, provided further, that the number of
shares of each class which may be so utilized in payment of the options
shall be subject to such additional rules and restrictions as the Committee
or the Board may promulgate for such exercises. Shares used to pay the
exercise price shall be valued at their fair market value on the exercise
date. With the approval of the Board, the Optionee may borrow from the
Company all or any portion of the funds needed to pay the price on such
terms and conditions as the Board deems appropriate, provided that (i) the
interest rate for any such loan by the Company shall not be less than the
"applicable federal rate" (as defined by Code Section 1274(d)(1)(A)) in
effect on the date of such loan or any other rate as necessary to avoid
the imputation of interest under the Code or other applicable law, (ii)
proceeds of the loan are used solely to pay the exercise price of an
Option granted pursuant to this Plan, and (iii) the Optionee executes a
promissory note and such other documents as the Board deems appropriate to
evidence the Optionee's indebtedness to the Company, and pledges the
Shares received in exchange for such borrowed funds as collateral for
such loan.
(d) Prior to issuance of the Shares upon exercise of an Option, the
Optionee shall pay any federal, state, and local withholding obligations of
the Company, if applicable. If any disqualifying disposition described in
Section 421(b) of the Code is made with respect to Shares acquired upon
exercise of an Incentive Stock Option granted pursuant to the Plan or any
election described in Section 10 is made, then the person making such
disqualifying disposition or election shall notify the Company promptly in
writing of such event and remit to the Company an amount sufficient to
satisfy all federal, state, and local withholding taxes thereby incurred;
provided that, in lieu of or in addition to the foregoing, the Company
shall have the right to withhold such sums from compensation otherwise due
to the Optionee or from any Shares due to the Optionee under the Plan. An
Optionee may elect to pay such
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withholding tax obligations by having the Company withhold Shares of
Common Stock having a value equal to the amount required to be withheld.
The value of the Shares to be withheld shall equal the fair market value
of the Shares on the day the Option is exercised. The following provisions
shall apply to such elections if made by an Optionee who is a Section 16
officer (i) if an Optionee has received multiple Options, a separate
election must be made for each Option; (ii) the election may be a "standing
election," i.e., upon making an election, a fixed date need not be set for
the exercise of the Option to which the election relates; (iii) the
election will be subject to the approval or disapproval of the Board, which
approval or disapproval may be given at any time after the election to
which it relates; (iv) the election may not be made within six months
following the date of grant of the Option to which it relates; (v) the
election must be made six months prior to the day the Option is exercised,
or both the election and exercise must be made in the ten-day
"window period" beginning on the third day following the release of the
Company's quarterly or annual summary statement of sales and earnings;
and (vi) an election may be revoked, or may be reinstituted after a
revocation, only upon six months' prior notice.
9. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable at such times and under such
conditions as determined by the Board at the time of grant, and as shall be
permissible under the terms of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise (designating the class of stock being exercised if the Option was
granted for both classes and both classes are then subject to exercise) has
been given to the Company in accordance with the terms of the Option by the
person entitled to exercise the Option and full payment for the Shares with
respect to which the Option is exercised has been received by the Company.
In the event no class is specified in the written notice, the notice of
exercise shall be deemed to first apply to Class A Common Stock and secondly
to the Common Stock if both classes are subject to exercise at the time
written notice of exercise is given. Full payment may, as authorized by the
Board, consist of any consideration and method of payment allowable under
Section 8(c) of the Plan. Until the
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issuance (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or
any other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Company shall issue
(or cause to be issued) such stock certificate promptly upon exercise of the
Option. In the event that the exercise of an Option is treated in part as
the exercise of an Incentive Stock Option and in part as the exercise of a
Nonqualified Stock Option pursuant to Section 5(b), the Company shall issue a
stock certificate evidencing the Shares treated as acquired upon the exercise
of an Incentive Stock Option and a separate sock certificate evidencing the
Shares treated as acquired upon the exercise of a Nonqualified Stock Option,
and shall identify each such certificate accordingly in its stock transfer
records. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except
as provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares of the class of stock as to which such exercise relates
which thereafter may be available, both for purposes of the Plan and for sale
under the Option, by the number of Shares as to which the Option is exercised.
(b) TERMINATION OF STATUS AS EMPLOYEE. In the event of termination
of an Optionee's Continuous Status as an Employee, such Optionee may
exercise stock options to the extent exercisable on the date of
termination. Such exercise must occur within three (3) months (or such
shorter time as may be specified in the grant), after the date of such
termination (but in no event later than the date of expiration of the term
of such Option as set forth in the Option Agreement). To the extent that
the Optionee was not entitled to exercise the Option at the date of such
termination, or does not exercise such Option within the time specified
herein, the Option shall terminate.
(c) DISABILITY OF OPTIONEE. Notwithstanding the provisions of
Section 9(b) above, in the event of termination of an Optionee's Continuous
Status as an Employee as a result of total and permanent disability (i.e.,
the inability to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last
for a continuous period of twelve (12)
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months), the Optionee may exercise the Option, but only to the extent of
the right to exercise that would have accrued had the Optionee remained
in Continuous Status as an Employee for a period of twelve (12) months
after the date on which the Employee ceased working as a result of the
total and permanent disability. Such exercise must occur within eighteen
(18) months (or such shorter time as is specified in the grant) from the
date on which the Employee ceased working as a result of the total and
permanent disability (but in no event later than the date of expiration
of the term of such Option as set forth in the Option Agreement). To the
extent that the Optionee was not entitled to exercise such Option within
the time specified herein, the Option shall terminate.
(d) DEATH OF OPTIONEE. Notwithstanding the provisions of Section
9(b) above, in the event of the death of an Optionee:
(i) who as at the time of death was an Employee of the Company,
the Option may be exercised, at any time within six (6) months
following the date of death (but in no event later than the date of
expiration of the term of such Option as set forth in the Option
Agreement), by the Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to
the extent of the right to exercise that would have accrued had the
Optionee continued living and remained in Continuous Status as an
Employee twelve (12) months after the date of death; or
(ii) whose Option has not yet expired but whose Continuous Status
as an Employee terminated not more than three (3) months prior to the
date of death, the Option may be exercised, at any time within six (6)
months following the date of death (but in no event later than the
date of expiration of the term of such Option as set forth in the
Option Agreement), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance,
but only to the extent of the right to exercise that had accrued at
the date of termination.
(e) EXTENSION OF EXERCISE PERIOD. Notwithstanding subsections (b),
(c), and (d) above, the Board shall have the authority to extend the
expiration date of any outstanding option in circumstances in which it
deems such action to be appropriate (provided that no such extension shall
extend the
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term of an option beyond the date on which the option would have
expired if no termination of the Employee's Continuous Status as an
Employee had occurred).
10. NOTIFICATION UNDER CODE SECTION 83(b).
The Board may, on the date of grant of an Option or any later date,
prohibit an Optionee from making the election described in this Section 10.
If the Board has not prohibited such Optionee from making such election, and
the Optionee, in connection with the exercise of any Option, makes the
election permitted under Section 83(b) of the Code (i.e., an election to
include in such Optionee's gross income in the year of transfer the amounts
specified in Section 83(b) of the Code), such Optionee shall notify the
Company of such election within 10 days of filing notice of the election with
the Internal Revenue Service, in addition to any filing and notification
required pursuant to regulations issued under the authority of Section 83(b)
of the Code.
11. NON-TRANSFERABILITY OF OPTIONS.
The Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws
of descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; MERGER OR CHANGE IN
CONTROL.
Subject to any required action by the stockholders of the Company, the
number of shares of Common Stock or Class A Common Stock covered by each
outstanding Option, the Maximum Annual Employee Grant and the number of
shares of Common Stock or Class A Common Stock which have been authorized for
issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per share of Common Stock or Class A Common
Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares,
respectively, of Common Stock or Class A Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination, or reclassification
of the Common Stock or Class A Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock or Class A 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
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of consideration." Such adjustment shall be made by the Board, 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 shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock or Class A Common
Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the Company,
each Option will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. The Board may, in
the exercise of its sole discretion in such instances, declare that any
Option shall terminate as of the date fixed by the Board and give each
Optionee the right to exercise an Option as to all or any part of the
Optioned Stock, including Shares as to which the Option would not otherwise
be exercisable. In the event of a proposed sale of all or substantially all
of the assets of the Company, or the merger of the Company with or into
another corporation, each Option shall be assumed or an equivalent option
shall be substituted by such successor corporation or a parent or subsidiary
of such successor corporation, unless such successor corporation does not
agree to assume an Option or to substitute an equivalent option, in which
case the Board shall, in lieu of such assumption or substitution, provide for
the Optionee to have the right to exercise the Option as to all of the
Optioned Stock, including Shares as to which the Option would not otherwise
be exercisable. If the Board makes an Option fully exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Board shall notify the Optionee that the Option shall be fully exercisable
for a period of thirty (30) days from the date of such notice, and the Option
will terminate upon the expiration of such period.
13. TIME OF GRANTING OPTIONS.
The date of grant of an Option shall, for all purposes, be the date on
which the Company completes the corporate action relating to the grant of an
option and all conditions to the grant have been satisfied, provided that
conditions to the exercise of an option shall not defer the date of grant.
Notice of a grant shall be given to each Employee to whom an Option is so
granted within a reasonable time after the determination has been made.
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14. SUBSTITUTIONS AND ASSUMPTIONS.
The Board shall have the right to substitute or assume Options in
connection with mergers, reorganizations, separations, or other transactions
to which Section 424(a) of the Code applies, provided such substitutions and
assumptions are permitted by Section 424 of the Code and the regulations
promulgated thereunder. The number of Shares reserved pursuant to Section 3
may be increased by the corresponding number of Options assumed and, in the
case of a substitution, by the net increase in the number of Shares subject
to Options before and after the substitution.
15. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable
(including, but not limited to amendments which the Board deems appropriate
to enhance the Company's ability to claim deductions related to stock
option exercises); provided that, the following revisions or amendments
shall require approval of or ratification by the stockholders of the
Company:
(i) any increase in the number of Shares subject to the Plan,
other than in connection with an adjustment under Section 12 of the
Plan; or
(ii) if the Company has a class of equity securities registered
under Section 12 of the Exchange Act at the time of such revision or
amendment, any change which would require stockholder approval
pursuant to Rule 16b-3 promulgated by the Securities and Exchange
Commission pursuant to its authority under the Exchange Act.
(b) EMPLOYEES IN FOREIGN COUNTRIES. The Board shall have the
authority to adopt such modifications, procedures, and subplans as may be
necessary or desirable to comply with provisions of the laws of foreign
countries in which the Company or its Subsidiaries may operate to assure
the viability of the benefits from Options granted to Employees employed in
such countries and to meet the objectives of the Plan.
(c) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force
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and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Board, which
agreement must be in writing and signed by the Optionee and the Company.
16. CONDITIONS UPON ISSUANCE OF SHARES.
Shares shall not be issued pursuant to the exercise of an Option unless
the exercise of such Option and the issuance and delivery of such Shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, the Exchange Act,
the rules and regulations promulgated thereunder, and the requirements of any
stock exchange upon which the Shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
17. RESERVATION OF SHARES.
The Company, during the term of this Plan, will at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
18. OTHER COMPENSATION PLANS.
Nothing contained in the Plan shall prevent the Company or any affiliate
from adopting or continuing in effect other or additional compensation
arrangements, and such arrangements may be either generally applicable or
applicable only in specific cases.
19. NO ILLEGAL TRANSACTIONS.
The Plan and all Options granted pursuant to it are subject to all laws
and regulations of any governmental authority which may be applicable
thereto; and notwithstanding any provision of the Plan or any Option,
Optionees shall not be entitled to exercise Options or receive the benefits
thereof and the Company shall not be obligated to deliver any Shares or pay
any benefits to a Optionee if such exercise, delivery, receipt or payment of
benefits would constitute a violation by the Optionee or the Company of any
provision of any such law or regulation.
20. CONTROLLING LAW.
The law of the State of Colorado, except its law with respect to choice
of law and except as to matters relating to corporate law
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(in which case the corporate law of the State of Delaware shall control),
shall be controlling in all matters relating to the Plan.
21. TAX LITIGATION.
The Company shall have the right, but not the obligation, to contest, at
its expense, any tax ruling or decision, administrative or judicial, on any
issue that is related to the Plan and that the Company believes to be
important to Optionees and to conduct any such contest or any litigation
arising therefrom to a final decision.
22. SEVERABILITY.
If all or any part of the Plan is declared by any court or governmental
authority to be unlawful or invalid, such unlawfulness or invalidity shall
not serve to invalidate any portion of the Plan not declared to be unlawful
or invalid. Any Section or part of a Section so declared to be unlawful or
invalid shall, if possible, be construed in a manner in which will give
effect to the terms of such Section or part of a Section to the fullest
extent possible while remaining lawful and valid.
23. INDEMNIFICATION.
Each person who is or at any time serves as a member of the Board shall
be indemnified and held harmless by the Company against and from: (i) any
loss, cost, liability or expense, including attorneys' fees actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, that may be imposed
upon or reasonably incurred by such person in connection with or resulting
from any claim, action, suit, or proceeding to which such person may be a
party or in which such person may be involved by reason of any action or
failure to act under the Plan; and (ii) any and all amounts paid by such
person in satisfaction of judgment in any such action, suit or proceeding
relating to the Plan. Each person covered by this indemnification provision
shall give the Company an opportunity, at its own expense, to handle and
defend the same before such person undertakes to handle and defend it on such
person's own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the By-Laws of the Company, as a matter of law, or otherwise,
or any power that the Company may have to indemnify such person or hold such
person harmless.
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24. RELIANCE ON REPORTS.
Each member of the Board shall be fully justified in relying or acting
in good faith upon any report made by the independent public accountants of,
or counsel for, the Company and upon any other information furnished in
connection with the Plan. In no event shall any person who is or shall have
been a member of the Board be liable for any determination made or other
action taken or any failure to act in reliance upon any such report or
information or for any action taken, including the furnishing of information,
or failure to act, if done in good faith.
25. EXPENSES.
The Company shall bear all expenses of administering the Plan.
26. TITLES AND HEADINGS.
The titles and headings of the sections in the Plan are for convenience
of reference only, and in the event of any conflict, the text of the Plan,
rather than such titles or headings, shall control.
27. STOCKHOLDER APPROVAL.
The Plan is subject to approval by the shareholders of the Company at
the Annual Meeting of Shareholders to be held in September, 1998.
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